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Evidence of meeting #37 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chapter.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Ferguson  Auditor General of Canada, Office of the Auditor General of Canada
Jerome Berthelette  Assistant Auditor General, Office of the Auditor General of Canada
Wendy Loschiuk  Assistant Auditor General, Office of the Auditor General of Canada

9:30 a.m.

Conservative

Jay Aspin Conservative Nipissing—Timiskaming, ON

I'd like to pass my time to Mr. Saxton.

9:30 a.m.

NDP

The Chair NDP David Christopherson

Okay.

Mr. Saxton, you have the floor, sir.

9:30 a.m.

Conservative

Andrew Saxton Conservative North Vancouver, BC

Thank you, Mr. Chair.

I'll just take a brief moment to reiterate what I said earlier, which is that the government has accepted the conclusions and the recommendations of the Auditor General in chapter 2 of his spring report.

I would now like to pass it back to my colleague, Mr. Aspin.

9:30 a.m.

Conservative

Jay Aspin Conservative Nipissing—Timiskaming, ON

Thank you.

Thank you, Chair.

Welcome, Mr. Ferguson, and congratulations on your first audit. Welcome to the other guests as well.

I'd like to focus on chapter 6, “Special Examinations of Crown Corporations—2011”.

As indicated by my colleague Mr. Shipley, the government managed $375 billion worth of assets, hence the importance of this. This chapter essentially presents the main points of special examination reports on three crown corporations that were completed and published in 2011.

Quoting from your statement this morning, Mr. Ferguson, you said that:

We found no significant deficiencies in the systems and practices of the Canadian Dairy Corporation, the Canadian Race Relations Foundation, and the Public Sector Pension Investment Board.

Focusing on that last organization specifically, the Public Sector Pension Investment Board, we support the continued good work of the PSPIB and its prudent and responsible management of public service pension funds.

The Public Sector Pension Investment Board is responsible for managing the retirement savings of the public service, the Canadian Forces, the RCMP, and reserve forces. The examination of this board included in chapter 6 concluded that the board's operations were carried out effectively.

Sir, can you highlight some of the board's best practices?

9:35 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

The first thing to remember is that in a special examination we look at crown corporations over a cycle. We look to see whether they have systems and practices in place to ensure that assets are safeguarded and controlled, that their financial, human, and physical resources are managed economically and efficiently, and that operations are carried out effectively. In each of the three organizations we are reporting on in this report, we didn't find any significant deficiencies.

On the Public Sector Pension Investment Board, we lay out a number of items in the chapter. We say:The Corporation has the key elements of a strong governance framework, and its governance practices are consistent with industry practices for stewardship and oversight by boards of directors.

We state: The Corporation's risk management practices...provide for identification, monitoring, management, and reporting of risks to protect its assets from undue risk of loss.

We report that their compensation framework and practices are comparable with those of industry and that they regularly benchmark their practices against those of comparable organizations.

Consequently, most of the items we identified in here are some of the strengths of what were going on in the organization. We also identified that the lack of the staggering of appointments to the board of directors may potentially lead to significant turnover in the board membership in 2014 and 2015, so we identified that there is a risk in terms of when the terms of board members expire and the process to replace those board members.

9:35 a.m.

Conservative

Jay Aspin Conservative Nipissing—Timiskaming, ON

Thank you, sir. Generally speaking, it's good news indeed.

The Conservative Party election platform and Budget 2011 focused on issues that mattered to farmers, such as protecting supply management. This was not, of course, supported by the opposition.

The Canadian Dairy Commission's objective is to give Canadian dairy producers the opportunity to obtain a fair return for their labour and investment and to provide consumers with an easy and sufficient supply of high-quality dairy products.

Our government has been very vocal in our continued support—

9:35 a.m.

NDP

The Chair NDP David Christopherson

Mr. Aspin, please ask your question. You're over time, actually.

9:35 a.m.

Conservative

Jay Aspin Conservative Nipissing—Timiskaming, ON

Okay.

With that background, Mr. Ferguson, can you please explain to this committee what other major findings on the Canadian Dairy Commission were in this report?

9:35 a.m.

NDP

The Chair NDP David Christopherson

Do that briefly, please, Mr. Ferguson.

9:35 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

We have a section in the report on what we found. It identifies the good practices in the areas of improvement that are required. That can be found in the chapter.

9:40 a.m.

NDP

The Chair NDP David Christopherson

Very good. Thank you both. I appreciate it.

Madame Blanchette-Lamothe, you have the floor.

9:40 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

Thank you, Mr. Chair.

Mr. Ferguson, you made just one recommendation in your report and it is quite broad. I wonder if you can add any more details about possible priorities so that the mistakes made in the F-35 affair do not happen again.

Could you tell us about any steps that could be taken to correct the mistakes you pointed out?

9:40 a.m.

NDP

The Chair NDP David Christopherson

Go ahead, Mr. Ferguson.

9:40 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you, Mr. Chair.

We made one recommendation.

In this chapter, we found problems in three areas. Information was prepared too late or was incomplete; the Department of National Defence overestimated its ability to properly handle the unforeseen, and there were problems in terms of the financial information presented to decision-makers and to Parliament.

We identified weaknesses in three prime areas: the process that was followed, the risk mitigation strategy, and the financial information. We feel that part of any process going forward is to first make sure there will be rigour and scrutiny around the actual steps in the process. Second, the government will need to make sure it has an appropriate risk mitigation strategy and has full cost information available.

9:40 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

What you say is very interesting. I wonder why it is not a recommendation in your report.

In 2010, the report on the helicopter purchase had six recommendations that were intended not only to correct the mistakes that had been pointed out but also to improve the work done by departments in following the processes for future procurement.

It seems to me that what you have just said is precisely about improving the processes and the areas about which you made recommendations.

Is there a reason why they are not recommendations in your report?

9:40 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you, Mr. Chair.

I believe the reason we didn't make more of a recommendation in this chapter was the point in time that we were actually looking at it. The fact that we simply identified that sufficient due diligence was not applied is information that needs to be taken to indicate that throughout the completion of this....

The final objective is to replace the CF-18s. Even though there isn't a recommendation on it, the message in the chapter is clear: to complete this project, there needs to be a very good and rigorous process that people can have confidence in.

9:40 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

Thank you.

Now I would like to ask Mr. Berthelette a question. In 2010, when the report on the helicopters was prepared, I know you were there. On that occasion, the deputy minister of public works said the following:

Second, we need to develop tools and templates for complex procurement activities, which will inform best approaches vis-à-vis lowest-cost compliant or best value to the crown. Finally, we need to provide enhanced training for staff assigned to complex procurement processes.

Those words were spoken in 2010, and you were present. Mr. Berthelette, do you think that the objective that the department set itself has been achieved?

9:45 a.m.

Jerome Berthelette Assistant Auditor General, Office of the Auditor General of Canada

Mr. Chair, we did not follow up on the helicopter chapter. So I am not in a position to provide the member with a specific answer.

9:45 a.m.

NDP

Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC

Is it your view that the observations made in this report on the F-35 process are very similar to what was written about the deficiencies uncovered in the helicopter procurement process?

9:45 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

The critical thing is that we identified in this chapter that there were some significant issues with the purchasing process, the decision process. They speak for themselves. We haven't done a follow-up on the helicopter chapter and that detailed comparison. I think the items we found in this chapter are significant and stand on their own as things that need to be done better as this process moves forward.

9:45 a.m.

NDP

The Chair NDP David Christopherson

Thank you both.

The time has expired.

Madam Bateman, you have the floor.

April 5th, 2012 / 9:45 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

Thank you very much, Mr. Chair.

Thank you very much, sir, for being here with us today, and your colleagues. I really appreciate that the work you do adds value to the work of every public servant and elected official. I would very much like you to share that with your entire team. I understand the complexity and work that go into these reports, and I very much appreciate it.

I'm also a student of French.

Your work really does give us added value, sir.

I am going to choose the interest-bearing debt chapter for a few questions. I'm doing that because, as you know, this is an enormous amount of money, and it's the intention of this government to ensure that the amount goes down in the very near future.

When I look at the details in this chapter of what has been done, I'm very pleased to see that overall your findings were quite positive. As a government, we absolutely support all five of your recommendations in this particular chapter of the report. We are willing to do everything possible to improve this system, and that's where you are the value-added for us always.

The report spoke to the sound decision-making process and the analytical framework supporting efficient management of this government's market debt. Two of your five recommendations have already been acted on, and I believe we've already taken action on the recommendation on public sector pension plan investments; as well, the presentation of a breakdown of interest and other costs within the estimates has already been addressed.

While we're very pleased with your findings, we always want to get it better and make it more efficient and effective for Canadian citizens, so I'm just wondering.... I have to mention that yesterday a Wall Street Journal report indicated that our debt management approach is superlative, and it's worth a read. It says, “Canada Beats America. And we don't mean in hockey. Try taxes, spending and energy.”

On the spending piece, I see you as a valuable tool to make the process better for Canadians. Were you pleased with the openness and the receptiveness of our officials in the Department of Finance to embrace all your recommendations and to cooperate and implement them?

9:45 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Certainly we had cooperation from the Department of Finance, and they agreed with our recommendation, so we didn't have any concerns in that matter.

9:50 a.m.

Conservative

Joyce Bateman Conservative Winnipeg South Centre, MB

You got cooperation. I've already spoken to the fact that two of your recommendations have already been addressed and embraced and implemented.

What is a reasonable timeline to implement the remaining recommendations? Could you speak to that?

9:50 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

When we make a recommendation, it's then the responsibility of the department to which we are making the recommendation to put together an action plan, including a timeline for implementation. I wouldn't have any specific timelines for the individual recommendations, but that's what we would expect the department to come forward with.