Public Accounts Committee on Nov. 16th, 2010

[The Chair (Hon. Joseph Volpe (Eglinton—Lawrence, Lib.)), Liberal, Joe Volpe]

A Good morning, ladies and gentlemen.

We are going to get our meeting started.

We have with us this morning, from the Office of the Auditor General of Canada, Mr. Ronnie Campbell, Assistant Auditor General; Mr. Gordon Stock, Principal; from the Treasury Board Secretariat, Mr. Alister Smith, Associate Secretary; from the Department of Transport, Ms. Yaprak Baltacioglu, Deputy Minister; Mr. John Forster, Associate Deputy Minister, Office of Infrastructure of Canada, and from the Privy Council Office, Mr. Bill Pentney, Deputy Secretary to the Cabinet, Plans and Consultations.

That's all, I think. Did I forget anyone? Oh yes, there is also Mr. Paul Rochon, Associate Deputy Minister and G7 Deputy for Canada. And whom do you have with you?

[Paul Rochon, Associate Deputy Minister and G7 Deputy for Canada, Department of Finance]

With me is Mr. Benoît Robidoux, Assistant Deputy Minister, Department of Finance.

[The Chair, Liberal, Joe Volpe]

Welcome, Mr. Robidoux.

I understand that Mr. John Forster is with you, Ms. Baltacioglu?

[Yaprak Baltacioglu, Deputy Minister, Department of Transport]

You already mentioned his name, Mr. Chairman.

[The Chair, Liberal, Joe Volpe]

Thank you. I hope I haven't forgotten anyone.

I want to thank the department for sending us an action plan this morning. I think I speak for all members in saying that I appreciate getting it before the committee meeting begins, but the expectation, I think, from all members, was that we would have gotten it considerably earlier so that we could actually have read it. I'm going to make a point on that a little later on, but I thought I would thank you for having provided us with it this morning.

As I understand it, I think there has been agreement among the various departments to have one response rather than to have all three respond separately, so I think what we'll do is immediately begin with the Office of the Auditor General.

Monsieur Ronnie Campbell, Assistant Auditor General.

[Ronnie Campbell, Assistant Auditor General, Office of the Auditor General of Canada]

Mr. Chair, thank you for the opportunity to discuss chapter 1 of our 2010 fall report on Canada's economic action plan. With me today is Gordon Stock, the principal who is responsible for this audit.

This audit examined Canada's economic action plan as it was being launched. It focused on how programs were designed and what steps were taken to ensure that only eligible projects were approved.

The economic action plan is a significant undertaking in response to the global economic downturn in late 2008 and early 2009. The overall challenge for the government was to deliver, within a two-year timeframe, about $47 billion in federal stimulus to areas in need.

Our audit examined 11 different programs being delivered by 12 departments and agencies, most of which were related to infrastructure. We examined whether the government designed and approved the programs and selected eligible recipients in a timely manner.

As the economic action plan is ongoing, it is too early to report on whether the programs and projects are achieving their intended results. We are currently in the planning stage of a second audit of this initiative, examining whether departments and agencies monitored and reported on the progress of selected programs including whether they were implemented as intended. We expect to report on the results of our second audit in the fall of 2011.

In our first audit, we found that the central agencies and departments had designed programs and streamlined processes to allow stimulus to flow quickly. In many cases they used existing program delivery frameworks and processes. They also found ways to accelerate policy approvals and funding authorizations from the approximately six months normally required to two months.

Mr. Chair, we also examined whether the projects met the eligibility criteria established by the terms and conditions for the programs we audited. As part of our audit work, we tested 410 projects across the different programs. We found that each of these projects met the eligibility criteria based on the information that departments had received from applicants.

Given the need for speedy delivery of stimulus programs, the government accepted attestations from applicants that their projects were construction ready. We noted that a number of the projects we examined started late, which increases the risk that completion deadlines will not be met. Department officials told us that they have increased their monitoring of projects that are behind schedule. In addition, due to insufficient information being gathered, it was unclear whether some approved projects needed an environmental assessment.

Internal audit groups in departments and agencies played an important role in helping to assess risks and determining whether proper controls were in place. The Office of the Comptroller General of Canada within the Treasury Board of Canada Secretariat provided advice and guidance to these internal audit groups. Risks were also addressed through regular monitoring by departmental audit committees and by senior officials. We found that internal audit groups provided management with timely information and adequate advisory services as well as assurance in the form of audits. We were able to rely on three internal audits and included their results in our audit.

The government met the requirement to provide Parliament with quarterly progress reports on the implementation of the economic action plan but found that it was not possible to present a complete picture of all jobs created as the project level data could not be aggregated. Instead, the Department of Finance Canada used a macro-economic estimate of jobs created or maintained as its overall measure.

The significance of $47 billion in federal spending calls for transparent reporting to Parliament on results. As the Department of Finance Canada and the Privy Council Office shared the responsibility for preparing the quarterly reports, we recommended that they prepare a summary report at the conclusion of the economic action plan showing its impact on the economy. The committee may want to ask the Department of Finance Canada and the Privy Council Office to elaborate on their plan to report on the impact of the economic action plan.

We also made a recommendation to the central agencies to conduct a lessons learned exercise. We found a number of good practices during the course of our audit, which we included in our chapter. We believe that these should be considered in the design and delivery of current and future programs and initiatives. The lessons learned should be applied where appropriate, not only to large initiatives such as this. The central agencies agreed with the recommendation, but the committee may want to ask for an action plan on how they intend to address this recommendation.

Mr. Chair, that concludes my opening statement. We will be pleased to answer any questions your committee may have. Thank you.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Campbell.

I think we'll hear from Mr. Smith at Treasury Board, who is speaking for the other departments. Then we'll go to questions.

[Alister Smith, Associate Secretary, Treasury Board Secretariat]

Thank you, Mr. Chair.

Mr. Chair, thank you for your invitation to appear before the Committee on the Auditor General's Fall report on the implementation of Canada's economic action plan.

I'm joined today by my colleagues from the Privy Council Office, the Department of Finance, Transport Canada, and Infrastructure Canada. I will be providing some brief general comments on behalf of my colleagues. They may wish to add some specific comments as well.

We are gratified by the report's positive findings concerning the efforts of central agencies and departments. The success of the initial economic action plan rollout noted by the Auditor General is a result of much hard work by the government, including many officials.

The Auditor General's report highlights the work of departments and central agencies in developing and reviewing economic action plan initiatives.

She also singles out the important role played by internal audit groups in the departments involved.

The report commends central agencies for working together and in parallel to speed up policy and financial approvals.

In keeping with the commitments we have made to the committee, I am pleased to table the central agencies' action plan, which describes how we are following up on the report's recommendations.

There are three recommendations directed towards the central agencies.

The first of these recommendations concerns reporting to Parliament. As the Auditor General's report notes, Treasury Board Secretariat released guidance for departments to report on EAP initiatives in their 2009-10 departmental performance reports in May 2010 and will do so again for the 2010-11 DPRs. The 2009-10 reports were made public on November 3.

The second recommendation concerns final reporting on the EAP. Six reports have now been tabled on the EAP, in addition to the detailed information provided in budget 2010 on job impacts. With several months still left to go until EAP winds down, the Department of Finance continues to monitor the impact of the economic action plan. A final report will be prepared.

The Auditor General's third recommendation calls for central agencies to assess which practices used to implement the EAP could be implemented, where applicable, to provide more timely and efficient processes for the design and delivery of current and future programs and initiatives.

As we have indicated in our action plan, we are assessing which practices can be applied to other similar initiatives where applicable.

This concludes our opening remarks. My colleagues may have some points to add.

Thank you very much.

[The Chair, Liberal, Joe Volpe]

Colleagues?

Madam Baltacioglu.

[Yaprak Baltacioglu]

Thank you very much, Mr. Chairman.

First of all, our congratulations to you, as our former transport critic, on your appointment to the chairmanship of this committee. While we will miss you on SCOTIC in having long discussions about automobile pedals, we're very pleased that you're here.

As well, we would like, on the record, to thank the Auditor General, and particularly Mr. Stock and Mr. Campbell, for the professionalism and the hard work done by the Auditor General. We very much appreciated that they came into a very complicated situation, but they actually took the time to look in detail at all the efforts that we have put into the departments to balance speed with accountability. We very much appreciate their report and are looking forward to working in their next set of audits that they will be doing.

Thank you.

[The Chair, Liberal, Joe Volpe]

Thank you, Madam Baltacioglu. Thank you for the compliments as well. I can assure everybody here that this is the realization of my greatest ambition.

Mr. Pentney.

[Bill Pentney, Deputy Secretary to the Cabinet, Plans and Consultations, Privy Council Office]

Thank you, Mr. Chairman.

Let me add just a couple of brief opening remarks.

First, to echo what Yaprak said, our thanks go to the Auditor General and their team for the professionalism and for the care they took with the work.

Our congratulations to you.

Thank you for the opportunity to appear before the committee. I'd just like to underline three points that maybe go at this in a slightly different way.

In Canada, there is a lot of talk about the importance of innovation. We think innovation is important for the future of the country, and there is a very good example of innovation in Canadian public policy. It's also a demonstration of the complexity of innovation.

Here we have a government that is willing to adapt to the processes. We have a public service that is willing to do so, with the capacity to meet the requirements and take the necessary innovative steps. We also have partners, the provinces, municipalities and others, who are willing to join with us in a process of innovation, so that we can meet the dual demands of “delivering the goods” quickly and efficiently, and meeting the needs of transparency and accountability to Canadians.

The second point I would make is that in learning lessons about this, we absolutely take on board the importance of thinking about this in a systematic way, but it will be important for us, first of all, to get the job done. While we should start to learn lessons, we are--all of us--focused very much on the completion of the economic action plan measures, and I would note that this timeline is not yet finished.

Finally,

the clerk underlined the importance of renewing the public service. I am not involved in the implementation of that process. I am here on behalf of the Privy Council Office, and it may be easier for me than for the others to say that it's an example of an efficient public service,

with the right people, the right background, the right experience, and the right relationships to respond in supporting the needs of the government, and indeed, responding to the importance of this for Canadians. I'd say that this is an example of the importance of renewing the public service as an institution so that we can continue to provide that sort of service that Canadians rightly expect of us.

Thank you, Mr. Chairman.

[The Chair, Liberal, Joe Volpe]

Thank you very much.

We'll go immediately into questions.

Mr. Bains, you are first.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Chair.

Good morning, everyone. Thank you very much for coming to committee today.

My question is for the Department of Transport first. How many projects is the department aware of that might not meet the March 31 deadline?

[Yaprak Baltacioglu]

Sir, since the beginning of the economic action plan, we have approved 6,200 projects. We are getting updates. We have a number of projects that are reporting. Out of the reported projects, around 99% of them are either under way or complete.

There is a small number of projects that are delayed. Right now we are monitoring those projects, and we are in discussions with the provinces and the territories, because what they are doing is replacing some of the projects that may be delayed with others, so it's a process of evolution. That's what we're doing.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Do you have a number?

[Yaprak Baltacioglu]

Do we have the exact number?

[John Forster, Associate Deputy Minister, Office of Infrastructure of Canada, Department of Transport]

Yes. What we're finding generally across the country is that the vast, vast majority of projects will finish on time for the deadline. The data does come in regularly, so right now we're looking at about 3% to 5% of the projects that we have put at risk of not being completed by the time--

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Okay. So the 3% to 5% translates to how many projects?

[John Forster]

It would be roughly a little over 100 projects, though I would caution that we just got some recent data from Quebec for the first time--sort of detailed project data that we're analyzing.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Could you provide the committee with an updated list of those projects that are at risk, those 100 projects? I know that the number will change and evolve as new information becomes available, but up until this point in time, if you could provide us with a list of those projects that are at risk for not meeting the March 31 deadline it would be greatly appreciated.

[John Forster]

Can I just make two points on that? One, as I said, the data does change as we get new information--

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

I understand.

[John Forster]

--and two, these are projects that we have flagged at risk for extra monitoring. It doesn't mean they won't finish; it means they're large or they were delayed enough. It also doesn't mean that the full federal share of those projects won't be spent. So the large portion could be spent--80%--but 20% might be at risk.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you.

My next question is for the Auditor General's office. How many of the 410 projects that you looked at do you believe will be at risk for not meeting the March 31 deadline? Of the 410 that you sampled...because you did indicate that in your opening remarks.