Public Accounts Committee on May 13th, 2010

[The Chair, Liberal, Shawn Murphy]

I will now call the meeting to order.

On behalf of all members of the committee, I want to extend to everyone a very warm welcome.

This meeting, called pursuant to the Standing Orders, is to deal with selected departmental performance reports for 2008-09.

For the benefit of everyone, we decided to take two performance reports from the various government departments and we selected them randomly, out of a hat. So you were selected out of a hat. We're very pleased to have you here today.

We're going to divide this meeting into two parts.

First of all, we have with us, from the Department of Transport, Yaprak Baltacioglu, deputy minister. She's accompanied by André Morency, assistant deputy minister, corporate management and crown corporation governance, corporate services.

From the Treasury Board, we have back before us Alister Smith, assistant secretary, who was before us last week, and he's accompanied by Amanda Jane Preece, executive director.

From the Office of the Auditor General of Canada, we have Neil Maxwell, assistant auditor, and Tom Wileman, principal.

Again, welcome.

We are going to start with opening remarks from Madam Baltacioglu.

[Yaprak Baltacioglu, Deputy Minister, Department of Transport]

Thank you, Mr. Chairman.

I congratulate the committee for this process. I think it gives us additional energy to focus further on our reporting documentation. We really appreciate that.

As you said, Mr. Chairman, I have Monsieur Morency with me. He's our chief financial officer. He's also responsible for our planning process.

The departmental performance report is an important document for Transport Canada. It's not only our main accountability document to Parliament but is also a key management tool for our department. The DPR should provide credible information on departmental performance and it should serve to reassure Canadians that their tax dollars are being spent wisely and are providing value for money.

Transport Canada's results-based management approach is a work-in-progress. Today the department is tabling an action plan aimed at improving our departmental performance report. This action plan highlights our progress to date, and it uses the Office of the Auditor General's five criteria.

We have distributed our speaking points to you, Mr. Chairman. Given that this is a short appearance, I'm not going to cover what we've covered in our action plan. I'm hoping that the clerk has distributed it to the members.

Moving on, then, our key message is basically that our departmental performance report is a work-in-progress. We have work to do. We have improvements to make. And our action plan, hopefully, will get us to improve our processes.

With that, Mr. Chairman, I'll turn it over to my colleagues.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

We'll go to Mr. Maxwell.

[Neil Maxwell, Assistant Auditor General, Office of the Auditor General of Canada]

Thank you, Mr. Chairman.

I'm pleased to appear before the committee to discuss two departmental performance reports and chapter 5 of the April 2005 Auditor General's report.

With me, as you've said, is Tom Wileman, the principal responsible for this area.

I wish to thank the committee for this opportunity and would like to emphasize that my comments today are about the overall importance of performance reporting to Parliament. In recent years, the office has not audited the departmental performance reports of either of the departments appearing before you today; therefore, I will not be commenting on those reports.

Mr. Chair, the provision of information to Parliament has been a long-standing interest of the Office of the Auditor General. It is essential for accountability to Parliament and requires that departments and agencies report results using sound performance measurement and reporting practices.

In earlier audits of departmental performance reports, we rated departmental performance reports of selected departments. We found that reports to Parliament were not providing a fully satisfactory basis for accountability and that progress in improving them was disappointingly slow.

It must be recognized that performance reporting takes place in a political environment. Balanced reporting, that is, admitting to shortcomings as well as successes, does not yet appear to be part of the management culture of government.

In those audits, we looked for clear information about programs and about the commitments made. We asked whether key results were reported against objectives, whether the information was reliable, and if it presented the bad as well as the good news. We also asked whether the information was used to improve operations. These questions are as important now as they were at the time these audits were performed.

Although we have not conducted audits focused exclusively on departmental performance reports since 2005, we have made comments about reporting to Parliament in audits of specific departmental programs. We have found many weaknesses, including inadequate information on costs, standards and performance.

While departments are responsible for their reports, the Treasury Board of Canada Secretariat plays an important role in providing leadership and opportunities to increase the understanding and acceptance of the principles and practices of good performance reporting. The secretariat's annual guidelines encourage the preparation of concise, coherent, reliable, and balanced accounts of performance. Your committee might reasonably expect the reports to apply these principles.

Parliament also plays an important role. Interest in and scrutiny of the reports by parliamentary committees, as your committee is demonstrating today, help to encourage departments to improve the quality of their performance reports.

That concludes my opening statement. We will be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Maxwell.

Mr. Smith, do you have any comments?

[Alister Smith, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

Thank you, Chair and members of the committee.

It's a pleasure to be here today and to be part of this discussion of departmental performance reports.

With me today is Amanda Jane Preece, the executive director of the results-based management division of the Treasury Board Secretariat responsible for guidance in this area.

I wish to provide a brief introduction, and then I would be happy to answer any questions you may have.

The financial and non-financial performance information in departmental performance reports is intended to support parliamentary consideration of spending plans and the approval of annual appropriations in the main estimates.

With the implementation of the Federal Accountability Act and the designation of deputy ministers as accounting officers, departmental performance reports have become even more important as vehicles to ensure accountability to Parliament in the use of public resources.

The departmental performance reports also support government accountability more generally since they show how departmental activities make a difference to citizens and provide Canadians with key information about the plans and results achieved by the government.

As a central agency, as Mr. Maxwell has said, the secretariat is responsible for providing strategic advice, guidance, and leadership to departments in producing these reports. As documents of ministerial accountability, the secretariat has an interest in ensuring that they are underpinned by solid evidence of program performance and are balanced in their portrayal of results.

As part of the expenditure management system, improving reporting to Parliament has been and continues to be a priority for the secretariat. With the implementation of the policy on management, resources, and results structure, or MRRS, we now have the foundation in place for the consistent tracking and reporting of financial and non-financial information on programs.

Since 2007 the secretariat has developed and implemented a strategy to improve the content and form of reports to Parliament. The strategy was based on comments from parliamentarians in this committee and from the Auditor General of Canada, most recently in the last audit of departmental performance reports in April of 2005, and is centred on ensuring a more concise, results-focused approach to reporting.

This approach is fully consistent with commonly accepted reporting guidelines issued by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. Specifically, our objectives were to develop stronger linkages between resources used--both planned and actual--and results; provide more useful context within which to frame performance; and improve outcomes-based measures.

The secretariat augmented its annual outreach efforts with departments to ensure adherence to the concise results-focused approach. The secretariat now meets annually with the majority of departments to provide guidance on reporting requirements.

The secretariat also produces a “Good Practices Handbook” for performance reporting, a key reference guide for departments in developing a balanced and credible picture of performance. The secretariat also assesses departmental performance reports annually against commonly accepted public reporting principles through the management accountability framework, or MAF, process.

Since 2007 the results have demonstrated steady progress in improving the quality of departmental reporting. For example, the proportion of departments that received ratings of acceptable or higher has increased by over 45%. Pertinent to today's meeting, the 2008-09 departmental performance reports of Industry Canada and Transport Canada were both assessed positively.

We also recently commissioned a review of practices for performance reporting in other jurisdictions. The study was conducted by the Canadian Comprehensive Auditing Foundation. The study ranked Canada second of the five reporting jurisdictions examined, which included the United Kingdom, the United States, Australia, and New Zealand.

The study highlighted “Canada's Performance”, a report produced by the secretariat to provide an overview of the performance information in over 90 individual DPRs, as a strong example of horizontal, whole-of-government performance reporting. We would be happy to share the study with the committee.

There are areas in which all countries, including Canada, can make improvements. We continue to work with departments to improve performance measures and information and ensure measurement supports management decision-making. Advances can also be made in harnessing innovative Internet-based technologies that offer new models for e-government reporting.

In conclusion, moving forward, the secretariat remains committed to ensuring progress and improving reporting to Parliament and is particularly interested in the views of parliamentarians on how we can continue to improve these reports.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Smith.

Thanks to all of you.

I want to make a couple of comments. As we're probably aware by now, after doing the reading we've done, the issue is complicated. It's complex. There have been many articles written—and Mr. Smith referred to some of them—and presentations given on the whole issue of performance reports.

Of course, the overall goal is to align results with inputs, or in other words, that the department whose performance is being reported is achieving the results. One of the major problems that has been seen over the years is that there aren't really any predetermined results or objectives.

As Mr. Maxwell has indicated, in a political environment, why would I give you a stick to beat me over the head with? And that's probably the reason we don't have that here.

It has been ongoing. A lot of the articles talk about the reports being complex. This is not my own opinion; these are articles written by CCAF and others. They talk about the reports being complex and hard to read. They say they're not consistent from year to year and describe activities and processes rather than results.

As Mr. Maxwell said, they're not balanced. They do not describe the risks or the problems facing the departments. The Auditor General has done a number of audits--at least three, if not four, with the last one in 2005--and all of them have been relatively negative.

I refer the members to the excellent articles written by CCAF. One of the statements coming from the articles—and this is really the test—is that expected users would be parliamentarians, media, and the public, while the empirical evidence that has been done after extensive research shows that there are very few people who actually use these reports.

In my view, parliamentarians share a lot of the blame for that, because they don't spend a lot of time on the performance reports. It's not something for which we, as parliamentarians, can blame others. We should accept some of the blame ourselves.

That is some of the background to this meeting. I think it will be a good meeting. I'm going to start the order, and at around twenty-five minutes after nine I'm going to call in the new slate of witnesses, and we'll continue the order so everyone will get a chance to speak.

That said, we're going to start the first round.

Monsieur Dion, vous avez sept minutes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you, Mr. Chair.

Maybe my first question will be for you. Will the transport committee and the committee on industry review these reports and discuss them in depth?

[The Chair, Liberal, Shawn Murphy]

Mr. Dion, that would be entirely up to the transport committee and the industry committee. You would think they would, but my experience here is that they do not.

Madam Baltacioglu would know whether they do or not. I would be shocked if I heard they did, because I haven't run into too many people who have ever read a performance report.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

A lot of my comments would be about transport policy and would be addressed to the government and the minister.

When you read this report, you get no sense of perspective, no objectives, and no horizon, and that's certainly because government doesn't have any or it hasn't clarified them to the deputy minister. We don't have the sense that we need to de-carbonize this economy and what will be the consideration given by Transport to that. There are some programs about it, but no perspective.

According to the chief economist of the International Energy Agency, peak oil may happen in 2015. What will we do about it in Canada?

What is our strategy for urban sprawl?

What is our strategy for public transportation?

There's no way to know this from this report.

So what I may do is not so much ask questions, because we don't have time in my six minutes, but substantiate the frustration I feel when I read this report. I appreciate that the deputy minister has said that it's a “work-in-progress”, so I cannot imagine the other reports from the years before. I will comment only on this one. I will tell you why I find it very difficult to work with despite the fact that I think I have some experience in reading reports. I will substantiate my comments.

I will do it in French because I read it in French, so as not to take any chances.

I will give some examples. To me, this report is somewhere between a performance report and a classic report, which describes programs without any connection between them: these are our programs, these are our activities. The report sets out quantifiable objectives. But it is up to the reader to try to determine how those objectives relate to the programs.

As far as the quantifiable objectives go, the methodology stinks. The report jumps from one methodology to the next, and we do not know why. The report presents certain figures, and we do not know why it gives one figure over another. We have no idea. I will give you some examples.

On page 7 in English—page 8 in French—it says that $307 million of a $507-million budget was not spent. It says that $204 million plus $45 million was not spent on gateways. Why was it not spent? Perhaps I misread the report. I read it twice and found no explanation. That is a pretty important piece of information, and there is no way to get it.

On page 9, it says that the government, the department, has Sustainable Development Strategy targets. One of the indicators is the percentage of the target achieved. So I look. I go to page 29, in English, and read what it says. Under the heading Performance Measurement, it says:

Sustainable Development Strategy: Most of the targets were met or are on track, as provided in the “Horizontal Initiatives” table on Treasury Board Secretariat's website.

Forgive me, but I would not go and check the Treasury Board Web site. I would think that meeting its sustainable development targets would be important enough to the Department of Transport to include that information in its report and to explain which targets were and were not met, and why.

On page 22, under the heading Performance Measurement, the report mentions productivity gains. I do not know what productivity gain means in relation to transport. The report gives minor changes in tenth-of-one-percent increments from one year to the next. Unless I misread the report, there is nothing explaining what a performance measure is, what the long-term objectives of the government are, where Canada is headed in terms of these performance measures and transportation, whether it is a good or bad thing, these minor changes. I have no clue.

On page 26, under Performance Measurement, the report gives some safety data. The news appears to be good: most of the indicators seem to show that there are fewer accidents in Canada. That being said, the data are presented for periods of time, sometimes one year, sometimes five, sometimes ten; we have no idea why.

The reader could think that you chose to present the numbers that paint a rosy picture. That may not be the case, but it looks that way. If you do not want to be accused of that kind of thing, you should set out a very clear methodology that shows where Canada is headed as far as the safety of its citizens and transportation are concerned.

On page 28, it talks about a voluntary agreement that was reached with the automobile industry to reduce its greenhouse gas emissions. For information on that initiative, the reader has to consult Natural Resources Canada's Web site. You say that you helped NRCan develop a memorandum of understanding. I clearly recall that, under the agreement, you were supposed to tell Canadians how the industry was doing every year in terms of meeting the target of reducing greenhouse gas emissions by 5.3 megatonnes. The industry was told that if it did not stay on track to meet that target, regulations would be imposed, that the agreement was voluntary only if the industry respected it.

How can we make regulations if we do not know where we stand each year? I will not consult the Web site of Natural Resources Canada. I would think that meeting our greenhouse gas reduction targets was important enough to the Department of Transport to include that information in its own reports.

I have just 30 seconds left.

On page 29, the report sets out pollution reduction targets. Again, it appears to be good news. What does “183 marine pollution incidents were detected” mean? What is the outlook over time? How are we doing in terms of marine pollution? That is an important piece of information, in light of what happened in the Gulf of Mexico.

The same goes for contaminated sites: 242 of 526 have been improved. What is the Canadian government's outlook regarding contaminated sites? Where do things stand? Where are we headed? Will there eventually be no contaminated sites? We do not know. There is no way to tell from your report.

My point is that it's not workable for me. I don't know if it's workable for you. We have no perspective, no orientation, and no strict methodology, and I have some doubt that it would be helpful; it seems that it has been done because the Auditor General is asking you to do it.

Maybe I'm too severe; I hope so. But let me tell you, it's a “work-in-progress”, and there is a lot of progress to make, according to my reading of this report.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Monsieur Dion. You're easy on the witnesses.

Madame Faille, vous avez sept minutes.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

I thought our witnesses would have an opportunity to respond. Like Mr. Dion, I am a bit disappointed with the comments of the officials from the Treasury Board Secretariat. That is not at all what I expected to hear. I was expecting to hear a nice presentation by Transport Canada on how it prepared the report. As Mr. Dion said, I expected more substance, I expected the report to give more explanations.

It is hard for me to understand why the gaps between projected spending and actual spending were not explained. I want to give the Transport Canada official a chance to explain the gaps. May I suggest that he start by explaining something I want to know: the Gateways and Border Crossings Fund, as well as all of the efforts towards the Ontario-Quebec corridor requested by the stakeholders. Could the official give us some details on what is happening with that?

My riding is on the Ontario-Quebec border and has done a lot to further this initiative. I am disappointed to see that the report does not include any information on where Transport Canada stands on this initiative.

[Yaprak Baltacioglu]

Thank you very much.

Mr. Chairman, we came to this meeting on the understanding that we were going to be talking about the process by which we got to these various reports. We would be happy to come back and do a substantive presentation on transportation issues to this committee if it wishes.

To answer Mr. Dion as well, while SCOTIC, our committee, doesn't discuss the particular departmental performance report, it actually dissects pieces of it, because this is a big department with big issues.

For example, regarding vehicle safety, we appear. For aviation safety, they call us in. For aviation security, they call us in. For economic elements such as gateways and borders, they call us in. So they do actually get to the substance of it. I wasn't very sure in terms of our presentation here that you wanted an actual presentation on transport policy, but we'd be happy to do that.

Mr. Dion's comments are well put. We agree. While Treasury Board has given us an acceptable rating, there is room for improvement. And I have to be very candid: if we are doing these reports just because the Auditor General has asked us or the Treasury Board has asked us, we are not only failing you folks, but we are failing ourselves as managers.

The basic premise in these reports is very simple: we have to know what our business is. What business are we in, what promises are we making to Canadians, how do we report on that, and how do we say that this is what we have achieved?

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Forgive me for interrupting. I know you are trying to respond to Mr. Dion's criticism, but my questions had to do with what is going on now, specifically. I would like some detailed information on one of the initiatives right now, because we have a limited amount of time.

[The Chair, Liberal, Shawn Murphy]

Ms. Baltacioglu, if you're not prepared to do that, you could just tell the member that you will come back and present a two- or three-page report.

I appreciate that you may not have come here prepared to answer that question. If that is a problem, just tell the member that. You can get back to her in two or three weeks. That's fine.

[Yaprak Baltacioglu]

I would actually like to be able to answer the question--

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

In fact, amounts are allocated yearly. Your partners, including CLDs, business people, those who have supported the initiative, have expectations. Regional planning depends on the decisions made by your departments.

I want to know why the money was not spent.

[Yaprak Baltacioglu]

In terms of the gateways and borders initiatives, there are two sets of gateway funding. One of them was specific gateway funding. That was the initial funding on gateways.

The concept of gateways is simple. You basically connect your transportation infrastructures so that you can get goods to the market and improve the trade situation of Canada.

The other gateway funding was for the Atlantic gateway and what we call the “continental”, which is the Quebec-Ontario corridor. A number of things are being done there.

One of the most important initiatives for the gateway is the Detroit-Windsor bridge and the rail tunnel. Not only does this have a big impact on the economy of Ontario, but it has a huge impact on the economy of Quebec. In terms of real trade routes for the Port of Montreal, if you ask them where their needs are, it is in the Detroit-Windsor crossing, because that's where the majority of the trade goes through.

Now, this is a report from 2008. Things have happened since then. One of the big things we have done is that the Government of Ontario and the federal government have put out the environmental assessments for a second bridge crossing at Detroit-Windsor. The federal government also put in money from the gateways fund to support the connection from Highway 401 to the plaza of the new bridge. So a major portion of the gateway funding is there.

As part of the continental gateway, under the infrastructure stimulus fund and the Building Canada Fund, we used the opportunity of all the work that has been done by the gateway players in Quebec and Ontario. They gave ideas and we actually funded those, so I'd be happy to give you full details of where the money has been spent for the continental gateway. We put money into the ports, for example.

There's a whole report on that, which I'd be happy to provide. But it's very important to know that the Quebec and Ontario corridor is ending at Windsor-Detroit as the main crossing.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Are the amounts that have not been spent to date simply carried over to the following year? How delayed is this spending? Why is it delayed?

[Yaprak Baltacioglu]

First of all, the gateway funds do not lapse and disappear. They are carried from one year to another. The reason gateway funds were not spent is that economies started slowing down, and there were big commitments, like the perimeter highway, as I think it's called, in British Columbia. The projects started getting delayed. It's not a matter of us building the roads. We build them with the provinces and the municipalities. If they start getting delayed, then we can't get the money out, but it's not written in there.

Mr. Chairman, you said that this is a political environment. The reason it's not there is not that it's a political hot potato that our minister is going to worry about. It's the truth that we should have put it in there. When I say that we have to improve things, when I read that, as a manager I think that it should give a good assessment of what our department is doing and why we didn't do what we didn't do. There's nothing wrong with saying that priorities changed, for example, but you have to be transparent about it.

So I agree with that, and we will give more detail on the continental gateway.

[The Chair, Liberal, Shawn Murphy]

Merci, Madame Faille.

Mr. Christopherson, you have seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Thanks to all of you for your attendance today.

First things first. There's a small matter, but I will just mention it anyway. I was disappointed, given the number of times that deputies and representatives from the Treasury Board come here, that we didn't at least have copies of opening statements.

[The Chair, Liberal, Shawn Murphy]

It's my understanding, perhaps, that the Department of Transport has a policy that they don't release them.

Is that correct, Madam Clerk?

[Yaprak Baltacioglu]

Our comments and our action plan were delivered to the clerk yesterday, I was told.

[The Chair, Liberal, Shawn Murphy]

The action plan was delivered yesterday....