Public Accounts Committee on Feb. 10th, 2009

[Sheila Fraser]

Thank you.

We note in here that there were some weaknesses in the management accountability framework assessments of small agencies around the information that the Treasury Board Secretariat was receiving. As I mentioned in my opening comments, this audit was essentially completed last spring, and we have been advised by the Treasury Board Secretariat that there have been modifications put into the program going forward to address the issues that we have raised in this report.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Weston.

Mr. Christopherson, for five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Further to Mr. Weston's questions on chapter 2, I note that on page 2 it says: “Since 2001, various TBS studies have recognized the problems faced by small entities, and the government committed itself to improvement through shared services. Yet little has been done.” I'm flipping the question the other way. You acknowledge some of the things they're doing, but there's obviously a huge swath of things that need to be done that aren't being done.

This is a big issue. It affects virtually every small entity. Just because they're small doesn't mean they're not important to Canadians' safety, quality of life, and other things that I've mentioned. From my own experience in my past life as a former Ontario solicitor general, one of the problems we ran into as we were increasing the standards for individual police officers and police services was more reporting, more training, more new technologies, and the training for all of that. There was a real pressure on police services, on their budgets. Where it became a critical issue was when we got into small police services. There aren't as many now, partly because of this reason, particularly in northern Ontario. They just couldn't meet the new requirements. They could still do good street policing and community policing, but they could not meet the reporting mechanisms and the training requirements. Ultimately a lot of them ended up either merging or taking out OPP contract policing because the OPP was big enough that they could manage this.

I'm aware of how important this is, but I'm concerned that little has been done. You know what I'm like on things that have been identified before. We get the promises that they'll do it, but then they don't do it.

Colleagues, you're going to get that a lot. There's nothing more frustrating than finding out from former MPs who have been here and done this job years ago on other reports, and on every one of them we get the same thing. This looks to me to be another one.

Auditor, this is a concern and I want to hear what your thoughts are. On page 18 under recommendations 2.60, the requirement is: “The Treasury Board of Canada Secretariat and the Canada Public Service Agency should incorporate into their plans measures that adequately address the reporting burden in small entities, including expected outcomes, timelines, and performance indicators.” The answer worries me. Usually we get the nicest answers with, “The auditor is so right. Thank you for pointing out this one little flaw. We'll polish that and the world will be great.”

Normally I look at them, because every now and then it says something like this. Let's remember, the problem is that the reporting mechanisms are not being met, the requirements for reporting. The answer reads: “Agreed. The Treasury Board of Canada Secretariat and Canada Public Service Agency are committed to reducing the reporting requirements for all departments and agencies, including small entities.” What I'm reading is that we're telling them there's a problem, they're not responding to all of the reports they need to do, but the government's answer is, “Well, rather than give them the support they need to do the job, what we're going to do is lower the number of reports they have to send in.”

This is very troubling, particularly when it's now emerging that it was the deregulation of the financial sector in the U.S. that in large part led to the mess that we're in now. This is deregulation. Maybe I'm reading it wrong, and you've heard how I feel about it, but I would like to know whether you share those concerns. Do you know something I don't?

I read something like that. When somebody is not doing something and they say, “Well, we'll just pull the requirement”, well, I think those reports are there for a reason in most cases.

What are your thoughts?

[Sheila Fraser]

Mr. Chair, I wouldn't presume that all the reports are there for a reason, quite frankly. I think there is a lot of information that can be streamlined. Now, there are important reporting requirements, and obviously the departments and agencies have to account to the central agencies on a number of issues, but there is some question about the utility of all these reports. I interpret this response as being a question of streamlining, not eliminating necessary information, but that might be something the committee would want to take up with the secretariat.

[David Christopherson, NDP, Hamilton Centre, ON]

I appreciate that, and you may be right. But I would like to hear it from somebody who's accountable for whether or not that's the case. If it is, fine. You need to review things constantly, but my experience with governments that head out to cut red tape has been that in many cases what they're cutting out are things that are important.

Thank you.

[The Chair, Liberal, Shawn Murphy]

I would like to follow up on that one point that Mr. Christopherson made, Mrs. Fraser.

Each of the general managers of all these small agencies is now an accounting officer, accountable to Parliament for the proper utilization of the resources for maintaining systems of internal audit and also for signing, personally signing, the accounts. In your opinion, has this state of affairs had an effect on the culture and the mentality of these individuals?

[Sheila Fraser]

We haven't done an assessment of that. I don't know that the government itself has done an assessment, but certainly I think there is an increased awareness of the accounting officer concept, the personal responsibility attached to it, and the importance of good financial management generally.

[The Chair, Liberal, Shawn Murphy]

Thank you.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you for coming out again, Ms. Fraser, Mr. Maxwell, and Mr. Vaughan.

Let me go to chapter 5. I'll be dealing with the environmental report. I may jump around to chapter 3, and I hope I will get the chance.

We talked about the complexities of these reports. For example, I'm going to go to the number of petitions we're dealing with. It says here that there are 56 petitions, a 24% increase, about 13 more than there had been. Ontario accounted for half of this increase. Human environmental assessments and the effects of exposure to electromagnetic radiation seem to compartmentalize the majority of these increases.

You also said that increasing transparency and accountability has been a priority of this government. I think this should be an objective for most governments. It's a great initiative, and we talked a little bit earlier about trust funds and transfers. As for the time delay, because of the increase, you have 86% on time this year, 95% last year. Exhibit 5.4 is called electromagnetic radiation exposure, and it has to do with the concerns caused by cellular towers. So I look at 1, 2, 3, 4, 5. Does that represent one petition, or is that five petitions regarding one cellular tower?

[Scott Vaughan]

Last year there were some petitions in which one petitioner raised a point repeatedly. In one case, the same petitioner wrote four times, and that will go into the total number of increases. On the electromagnetic question, I'd have to look more carefully and get back to you.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I'm just using that as an example.

[Scott Vaughan]

In that case, it was in a community. There were different people within the community who I think might have gotten together and written petitions on a similar topic.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In exhibit 5.5 on page 11, out of the 28 agencies listed, Ag and Food have been listed in five responses, so we had 100%. Then I go down, and one of the closest to that is either the Treasury Board or Finance Canada, which had the number of responses listed as a percentage. In chapter 3, you talk about Agriculture and Agri-Food Canada and the significance of the pollution that agriculture may be causing. I'm trying to figure out the relationship between the exhibit 5.5 and those agencies that I talked about.

[Scott Vaughan]

My colleague Mr. Maxwell may want to chime in on this.

I think the two, chapter 5 and then chapter 3, looking at the environment chapter and the program that's been supported by the department, are different. Obviously, on the issue related to pollution from the farm sector, that has been the subject of some petitions—and you've correctly pointed that out. We haven't drawn the link between the two chapters themselves.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

It's actually on page 5 of the presentation, chapter 3. It says, “Let me begin with environmental programming at Agriculture and Agri-Food Canada. While agriculture generates billions of dollars for Canada's economy, pollution from the farm sector also represents a significant environmental burden. Public concern about its effects is growing.”

When I look at chapter 3 in the book here, it says right at the bottom of page 1, “Agriculture has changed significantly in response to market demands, new production technologies, and larger, more intensive operations.” I'm wondering where the studies have actually come from. I'm someone who has been involved with agriculture all my life. I look back to when I was much younger, in terms of agriculture practices, whether it was livestock or whether it was crops and the growing of crops, and the management of livestock in terms of the manure that comes, which we use now, and the storage of it, and the land it gets used on now because it's all measured. I'm wondering where the studies show the increased stress in terms of the environment.

The second part is this. When you can say that and when we look at it—and I'm just looking for some justification—do we look at the benefits agriculture gives to the environment? There is an incredible offset, as we all know, about agriculture, not only with livestock but particularly in the growing of crops. Is there a balance or is that considered?

Thank you.

[Scott Vaughan]

Maybe I'll turn it over to Mr. Maxwell.

[Neil Maxwell]

Thank you, Chair.

I'll take your points maybe in reverse order. In terms of the notion that agriculture both creates problems and has benefits, absolutely, and we talk extensively in the audit about that. For example, we use the example of carbon sequestration. If soils are well managed, they can in fact sequester carbon. So there's very much a recognition throughout the experts in this field that it's both about problems and benefits.

In terms of studies that have shown the increased impact, one of the things we also note in here is that it really is a mixed picture. I have a specific reference I can give you: paragraph 3.7. If you look over the last 20 years, some things have gotten better and some things have gotten worse. On the soil example, one of the success stories in Canada is how soil conservation has improved in the last 20 years. But equally well on the negative side, if you look at some of the nutrient-loading issues, nitrogen phosphorus runoff, there's been degradation.

The nature of the problem is really, as we say in this chapter, that the department has to be in a much better position than it has been to show how its expenditures, $370 million each year, are actually impacting both the good and the bad.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Shipley, Mr. Maxwell.

Ms. Ratansi, you have five minutes.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you.

Ms. Fraser, I'm going to come back to the accountability issue. An issue that's bothering me is the lack of transparency on this $1.5 billion. There is a statement. I looked at some of the transcripts from the environment committee, when it was asked whether the money had been booked, been drawn down. Neither the previous minister nor the associate deputy minister could answer the question. At one point, they said it's essentially a private matter, $1.5 billion is a private matter between the jurisdiction and the financial institution.

As the Auditor General, can you tell us if these funds were being booked into the public accounts and into the public estimates? Do you consider this a private matter, and how does it reflect on the generally accepted accounting principles or auditing standards?

[Sheila Fraser]

Thank you, Chair.

The $1.5 billion was transferred—and this is the case for all of these trusts—by the federal government into a trust for the benefit of the provinces, and the provinces have to draw down the money over a certain period of time. Once the money is transferred into that trust, the federal government has no longer any control over that money. It essentially belongs to the provinces and they can draw it down as they wish.

It is an expense to the federal government. The government has given up the control over that money and has transferred it to the benefit of the provinces.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Do you agree that this is a private matter? As members of the public accounts committee, what are we supposed to do now? What is the response the department gave you as to why they did it the way they did?

[Sheila Fraser]

It is a policy and political decision that these trusts were set up like this. How the money is taken by the provinces from the trust is really a transaction between a specific province and the trust. It would not involve the federal government.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Fair enough.

My next question would be to Mr. Vaughan. On page 24, you stated that the government said it does not intend to monitor targets on this trust fund. You also stated that the $635 million, which according to the Minister of Finance in his ways and means debate was supposed to be 220,000 tonnes.... It turns out it is not even 35,000 tonnes.

Also, the department stated to the government that this would be totally negligible. This was the tax credit for the public transit tax credit. Is there any evidence that the ridership is up? We know, one, there's been no reduction in GHGs, but does anybody have any evidence that the ridership went up in the four metropolitan areas that use public transit?

Number two, is there any evidence--because I understand that the Canadian government had stated it would cost $800 per tonne, but the actual cost is about $2,000 to $7,000 per tonne--that there is value for money here? Are we dealing with ideology-driven initiatives versus evidence-based initiatives?