Public Accounts Committee on May 14th, 2009

[Sheila Fraser]

Over time, I think they're indicating, there is a need to ramp up. There are several pressures on the equipment that we have even talked about in our audits. The equipment is aging. There's a need to replace much of the equipment. And over time, as we note, there will be quite an influx of funds in order to do that.

[Andrew Kania, Liberal, Brampton West, ON]

So whether they require the money immediately or whether it's in the medium term or the long term, the short of it is they've stated they need more money than, for example, the $19 billion budget.

[Sheila Fraser]

Chair, I don't know that they've actually said they need more this year than the $19 billion. They're saying there is a need for additional funds over time in order to support the objectives and the mission they are being asked to do.

[Andrew Kania, Liberal, Brampton West, ON]

If they were given more, the supposition is they would have been able to somehow use it or plan it for the future in some manner.

[Sheila Fraser]

This is really very hypothetical, Chair. I can only presume that if they'd been given more money, they would have used it. But we really can't comment on that.

[The Chair, Liberal, Shawn Murphy]

Mr. Kania, your time is up and I have to interrupt you.

Mr. Kramp.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Mr. Chair.

Welcome again to our guests. As always, it's just a complete validation of the office.

It's that mixed bag of things that we like to see, where we're doing something right in government, but it's also clear identification of areas that need improvement, some of them minor tweaking and others a major re-evaluation of how, why, where, and what we do.

Thank you very kindly for coming here today. There's no doubt that after receiving the number of these chapters of concerns, this committee is going have substantial work ahead of it to come forward with recommendations and to follow your guidance on this.

I have a couple of maybe good thoughts and bad thoughts. I won't dwell on the conflict of interest situation, but that's highly problematic, and at some particular point I will. I'm more concerned with that from the one statement you made on it, which is, “We are very concerned knowing all of the circumstances, the department went ahead....”

Well, regardless of what the individuals are doing right or wrong in there, if the department knowingly still proceeded in a particular direction, that's a governmental decision. Quite frankly, I'm hopeful that down the road as we move on to that, we will potentially explore it.

So thank you for identifying that. That clearly is a classic example of some of the things we need improvement in.

Right off the bat, you mentioned you actually saw some good practices by the National Research Council that other departments and agencies could adopt. I think it's important. Identifying our problems is one thing. But also, if there are some positives that can be either duplicated, replicated, and/or whatever....

I'm wondering if you could specifically identify a few of those positive practices. And would they be transportable or transferrable to some and/or all departments to use as a potential template or potential pattern?

[Sheila Fraser]

Thank you, Chair.

We note in the report on intellectual property that the National Research Council does a good job of identifying intellectual property that can be developed within the council. There are some issues, I think, around their management of information of contracts where, potentially, intellectual property could be produced. But they are very good. And I'm just trying to find some of the issues. They actually have indicated that they would be quite willing to work with other departments to show them their management and reporting systems.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Great. Well, it's a little unfair to ask you to rhyme them off right now. I certainly wouldn't expect that.

[Sheila Fraser]

Thanks to the people at the table with me, I've just been handed something here.

Paragraph 250 indicates they have a policy for managing internally generated intellectual property, which not all departments have. There's guidance on roles and responsibilities, disclosure, ownership.

So they have actually provided, I think, more tools to the people who are working there. They also indicate in this that they would be interested in sharing the framework they've developed with other departments.

Now, I think they probably have more intense activities, perhaps, in this area than others, and that's maybe why they are better at it. But we found they have done a good job. And they actually spend a fair bit of money each year managing various licences.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

But there might also be some best practices we could take out of that.

[Sheila Fraser]

Absolutely.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

In chapter 3, you mentioned that PWGSC did not demonstrate that it consistently corrected the high-priority deficiencies in the buildings. I'm wondering why. Was it due to budgetary restraints, or would it be simply management oversight or inadequacy?

[Sheila Fraser]

I think the main issue is the ability to follow the information through the information systems. They identify high-priority repairs that are required, yet the way they organize that information is not the same way that they organize the information when they actually conduct the repair work. It's very difficult to trace it through.

Moreover, there doesn't seem to be a very good vetting process of what actually is a high priority. When we looked at the number of repairs, they came back and said that many of them had been dropped because they weren't a high priority. It's a question of the management of that list and then of follow-through. If the list exists, they should ask whether the work has actually been done, and someone should be monitoring that. They recognize the problem and have agreed to fix it.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Kramp.

Thank you, Ms. Fraser.

Mr. Desnoyers.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Thank you , Mr. Chair.

Good afternoon, Ms. Fraser.

First of all, I am in complete agreement with the Chair as far as conflict of interest is concerned. Indeed, more relevant and more transparent analysis or research is required. I have one small question about this: have you discovered other cases, or is this the only one?

[Sheila Fraser]

This is the only case that we audited in the context of this report, but the committee will perhaps recall that, when we did an audit of public works contracts, we raised four cases in which the people hired on contract helped define the proposal criteria and then got the contract.

This is why we think that this problem is more widespread and that it exists in more than one department. We want to see the existing policies. Is there any training? Are people sensitized?

I get the impression that there are a lot of policies respecting conflict of interest among public servants, but that there aren't any respecting the people who get contracts with the government.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

So we have to look a bit deeper.

[Sheila Fraser]

That's right.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Like my colleague, these reports struck me with the number of significant deficiencies to be found at practically all levels. I wouldn't make a report about it, but one positive thing struck me. No major deficiencies were found in the systems and practices of the Canada Council. That's one positive note.

Let's talk now about VIA Rail, because that concerns me. These special reports were made public on the Website, they exist. If I understand correctly, your report is a summary of what is found on the Website. So we have a summary of the major analyses.

VIA Rail has to provide safe and effective railway service, and you tell us that this company won't be able to meet some major strategic challenges in the coming years.

Is the problem basically owing to a lack of funding? We know that VIA Rail is funded by the Government of Canada and we know that the last time, long before it received its funding, it nearly went bankrupt or, at the very least, it ended up in a very difficult situation at the time. Is this one of the problems?

[Sheila Fraser]

Yes, we raised two problems in our report. One is the company's ability to manage the railway tracks, because these, as we know, belong to CN. The agreement was coming to an end and VIA Rail had been negotiating a new contract with CN for a month. As far as I know, this has been settled since our report was published, but it was a great worry since, if VIA Rail wants to increase, for instance, the number of trips between Montreal and Ottawa, it is limited by the agreement with CN. It cannot simply decide on its own to use the railway tracks more. Its access to the railway tracks is a strategic issue.

The other problem is linked to funding. We found that its business plan was too optimistic, that it had forecast increased ridership, while the previous business plan had also been very optimistic, but the forecasts had not materialized.

We think there should have been some alternative plans or other scenarios in case the plans didn't materialize, but there weren't any. The financial planning was deficient.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Is that closely linked to funding?

[Sheila Fraser]

Yes, because, if the business plan is too optimistic, there will be a shortage.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

In your report, you say that over 4 million people a year, across the country, use VIA Rail, on the same railway tracks as CN. What percentage of the tracks belongs to VIA Rail and what percentage belongs to CN?

Also, you say that safety is of utmost importance, but we know that there have been several derailments in recent years, involving both CN and Canadian Pacific. The government has decreased the number of inspectors checking the railways. That is the danger. VIA Rail might also have been involved. This leads me to wonder about safety. I don't know whether you looked at that.

[Sheila Fraser]

We didn't look at the issue of tracks, or the regulations respecting safety. To my knowledge—I'd have to check—, the whole railway network belongs to CN. VIA Rail does not have any property and must sign an agreement with CN to have access to the railway tracks.

In the report, we examined the issue of security, but only the security of CN employees, to find out whether there was a validation of the personnel security ratings. We found that some improvements were necessary.