Public Accounts Committee on April 5th, 2012

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Do you speak to the department about their action plan subsequent to the audit or as a part of the final meetings within the audit process? I ask that in terms of a guidance piece. The words “action plan” make my heart sing, but I'm just curious about your follow-up approach with officials.

[Michael Ferguson]

As part of our process when we're making recommendations to departments and they are responding to us, we would have a discussion about how difficult or how complex it would be to implement some of those recommendations. Then the actual action plan and their implementing of it could possibly be the subject of a follow-up audit, if we chose to do one, or would be information that would come forward to a committee such as this one for the departments to speak to and to be held accountable to.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Okay. And there's—

[The Chair, NDP, David Christopherson]

Sorry, Madam, but time flies when you're having fun.

We are now back to Mr. Byrne; you have the floor, sir.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair.

Mr. Ferguson, could you confirm to the committee that the Department of National Defence and the Department of Public Works and Government Services Canada replied to your office, when presented with the draft findings of your performance audit on the F-35 purchase, that they did not accept the conclusions as outlined in paragraphs 2.80 and 2.81? Did the Department of National Defence and the Department of Public Works reply to you that they did not accept your conclusions?

[Michael Ferguson]

I think, for the record, I will read the section of the report that deals with that. It is paragraph 2.82, which says,

2.82 Both National Defence and Public Works and Government Services Canada disagree with our conclusion that they did not demonstrate due diligence in their respective roles in the replacement of the CF-18 jets. The departments believe that the level of due diligence was appropriate within the time frame covered by this audit.

I think that responds to the honourable member's question.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

It does, Mr. Chair, indeed.

The question, as you raised it, is one of confidence. It's one of confidence that the government has been seized by the issue and is prepared to act accordingly on it.

I don't know how the government is going to circle this square. We just heard statements from the parliamentary secretary and from the Associate Minister of National Defence on the floor of the House of Commons that they accept the conclusions you brought forward in this report, yet you say to us that when you asked them, they didn't accept your conclusions about due diligence being performed. I accept your conclusions.

I'd like to know whether you have confidence that by simply shifting this over to Public Works, lessons will have been learned and the process will now all of a sudden become fruitful.

[Michael Ferguson]

Again, I can't provide an opinion on something we haven't done an audit of. What we've done is brought forward the issues and the problems with the process to date. We'd certainly expect that this would be information the departments and the government would use moving forward.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, and thank you, Mr. Chair.

I want to raise an issue that was brought forward by the The Hill Times just recently. There was an indication in a statement made by government ministers, in reply to the tabling of this audit, that the United States and the joint strike fighter program office of the United States would be providing annual costing forecasts to partner countries and that Canada would table those annual forecasts in Parliament. Do you have any evidence that those annual forecasts were actually provided in the past to the Department of National Defence?

[Michael Ferguson]

It's my understanding that costing information has been coming forward from the joint strike fighter program. I can't give you the exact specifics on what it was, but coming up with costing estimates has been part of the whole program.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

That's very helpful to know. I think we'll ask for the production of those documents as our committee proceeds, hopefully, with our study.

If the Government of Canada does not agree that the Department of National Defence didn't perform basic due diligence on this $25 billion-plus deal and simply move it to Public Works without actually taking responsibility and saying, “You're right, Auditor General; we didn't do this”, I and other Canadians are concerned that this whole notion of learned best practices will fall by the wayside.

What advice would you give this committee, if any, in terms of a study of this particular issue? What specifically should we be looking for in terms of calling forward witnesses who could provide us with advice on best practices and how exactly to conduct a procurement of this magnitude?

[Michael Ferguson]

It's not a question I've given a lot of thought to, but certainly the critical thing is to make sure that any process, moving forward, takes into account the types of problems we identified here in terms of process, in terms of risk mitigation strategy, and in terms of financial cost analysis. As well, this process should be one with proper scrutiny, due diligence, and transparency. I can't give you any more specific response than that, but I think anything needs to take into account the issues we raised here moving forward.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you.

[The Chair, NDP, David Christopherson]

I'm sorry, but your time has expired.

Madam Ambler, welcome to our committee. You have the floor.

[Stella Ambler, Conservative, Mississauga South, ON]

Thank you, Mr. Chair.

Thank you to the Auditor General and your team for appearing today.

I agree that this is an issue of confidence. Whether we're talking about fighter jets or getting the best value for the taxpayer's dollar, this government is about fairness and making sure we do the right thing with valuable public dollars, so I think it's important to note that this government agrees with you and is taking steps to implement your recommendations. That goes for the Canada Revenue Agency as well.

My questions for you are on chapter 4, non-filers and non-registrants. This program has approximately 700 employees and a budget of $39 million. In turn it generates roughly $2.8 billion in additional taxes, interest, and penalties.

In your view, is this an acceptable return on investment for the taxpayer dollars devoted to this activity?

[Michael Ferguson]

We identified in this chapter that Canada Revenue Agency is getting a good return on its investment for the amount of money it's spending. We also identified that there might be some ways they could improve on that, but for the most part they were getting good return on their investment.

[Stella Ambler, Conservative, Mississauga South, ON]

Thank you.

I noted that too in the report, in the sections highlighted in blue in this chapter. All of them were agreed to by CRA, which I think is encouraging. There's always room for improvement, so I'm happy to see there are better ways.

In your view, has the Canada Revenue Agency identified these non-filers and non-registrants appropriately and well? Have they prioritized it in their strategy to combat the underground economy? In other words, how is CRA doing in finding those Canadians who operate within the underground economy?

[Michael Ferguson]

We didn't specifically tie this audit to the underground economy. This audit was about Canada Revenue Agency's procedures and practices for identifying people who should be filing tax returns or companies that should be registering for GST purposes.

We identified that Canada Revenue Agency has been successful in identifying a number of those people or organizations. That has resulted in additional assessment of taxes, interest, and penalties. It's important to remember that while we're able to assess those additional taxes, interest, and penalties, they need to be collected. That's the next step along the continuum.

[Stella Ambler, Conservative, Mississauga South, ON]

Very good. Thank you.

Also on best practices, I note in your report that the agency has been conducting research into the optimal enforcement strategy for individual non-filers. They're essentially using data from past filing histories to identify those who might be at greatest risk of not paying their taxes. You state that the agency has launched a pilot project recently in this area, and the results are encouraging.

Can you give the committee a better understanding of this pilot project?

[Michael Ferguson]

I don't have the details on the pilot project at the front of my mind. At the risk of getting it wrong, I don't think I can give you the exact details on it. We did identify that they were successful in putting in place some pilot projects that were providing them with a good return.

[Stella Ambler, Conservative, Mississauga South, ON]

Thank you.

[The Chair, NDP, David Christopherson]

Please be very brief.

[Stella Ambler, Conservative, Mississauga South, ON]

I was about to talk about other measures the CRA has taken and ask you about the taxpayer bill of rights and the taxpayers' ombudsman, both of which go toward ensuring tax fairness for all Canadians, because when one individual doesn't pay their taxes and do their fair share, then all Canadians suffer. Do you have any comments about those other measures that CRA has taken to ensure taxpayer fairness?

[The Chair, NDP, David Christopherson]

Mr. Ferguson, reply very briefly, sir.

[Michael Ferguson]

Thank you, Mr. Chair.

I will be brief because I can't make any comment on that. It wasn't part of our audit.