Public Accounts Committee on April 5th, 2012

[The Chair, NDP, David Christopherson]

You're right on the nose.

Thank you both very much.

Mr. Shipley, you have the floor, sir.

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

Thank you.

Thank you, Mr. Auditor General, for your report.

Just off the top, you've done a number of them here, and we'll obviously focus on one or two. On the crown corporations, I think these are huge dollar amounts that have an impact on the economy of Canada—up to $375 billion in assets. It's worth noting the ones that have been audited: the Dairy Commission, the Race Relations Foundation, the Public Sector Pension Investment Board. Those are large dollars, and there were no significant deficiencies. I just wanted to highlight that before I move to my questions and comments.

I want to go first to the report on Canada's civil aviation industry. My colleague brought up the point that many of us fly all the time. We consider this to be a safe industry when we get on a plane. My understanding is that somewhere between 2000 and 2010, the accident rate actually decreased by about 25%, while air travel has increased significantly. There are around 5,000 companies operating 34,000 aircraft in Canada.

I think there were nine recommendations in total. Do you think it is reasonable that they would deal with these recommendations by 2013?

[Michael Ferguson]

Certainly we made a number of recommendations in this chapter, and the department agreed with them. They have put timelines on many of their responses. Those are the timelines that the department has committed to, so we would expect that they have put the necessary thought into setting those timelines.

I certainly expect that if they have set a completion date on something, they will make every effort to meet that date.

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

Yes, and I'm just trying to remember the number of flights. In Canada there are three million flights, I think, and 75 million passengers or cargoes that travel each year. Obviously the industry has grown rapidly, so I appreciate the fact that those recommendations will be coming forward.

I wonder if I could just trip forward now to border controls on commercial imports. On one of the issues that has come forward on it, your comment was that the volume of imports into Canada is so large that it is not practical to apply controls on every shipment that enters. We—I think all of us—understand that.

It seems to me that the CBSA released 13 million shipments of commercial products in the last year, between 2010 and 2011. That's just to give the people who perhaps won't read this report, or the few who may listen to this, an understanding of the volume that we deal with.

One of the concerns raised is that there may be high-risk products coming through the border into Canada that will not get looked at. In my riding of Lambton—Kent—Middlesex, we have a lot of agriculture. If a product were to come in through the horticulture or the agriculture industry....

I'll use the example of some apple trees, let's say, that are used for little sprigs. When they leave the original country, they are to have no dirt on them so that when they get through the border.... They are checked, actually, in the original country.

I can tell you that well over 50,000 of those little trees came in, and they got turned around once they landed. I saw these. You can—

[The Chair, NDP, David Christopherson]

Get to a question quickly, sir. You're running out of time.

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

Okay.

On a good day, you could maybe find less than a teaspoon of dirt if you scraped them off. Is that considered a high risk because they may contain some nematode? Is that a product that would be considered a high risk?

[Michael Ferguson]

I can't remember each and every item. Certainly what this chapter was about was how well the Canada Border Services Agency was enforcing controls at the border for products that have been identified as needing controls at the border.

I can't speak to any specific product. This chapter was about how Canada Border Services Agency conducts that control at the border.

[The Chair, NDP, David Christopherson]

Very good.

Thank you both very much.

Mr. Byrne, you have the floor, sir.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses and to the Auditor General.

You conducted a performance audit on the fifth-generation stealth fighter jet acquisition process. The scope of the audit was to determine if due diligence was applied to this process. You have informed us again today that was one of the primary objectives of the audit itself.

You, sir, accomplished what others could not. Through the integrity of your office and your own personal integrity, you successfully focused attention on a serious issue that had been repeatedly reported by the Parliamentary Budget Officer, who could not break through to frame attention on this serious issue.

Advice from foreign governments could not capture the attention of the government on this issue. Parliament could not attract the attention of the government on this issue. In fact, those who spoke out were virtually vilified for suggesting that things could be awry. The Liberal Party of Canada has spoken out about this issue since 2010, but you were able to focus attention to this issue, and successfully so.

You raised one recommendation and one recommendation only, but really what you did was focus attention on the process. You said that DND did not perform basic due diligence on this acquisition, which could turn out to be a deal valued at more than $25 billion. You said DND failed to engage Public Works on basic contracting requirements arising out of the 2006 MOU.

You told us that serious problems had not been communicated to Parliament, and potentially to cabinet, and that the risks were understated for this project. You said that the full life cycle costs of the F-35 were deliberately understated to both Parliament and to cabinet, that Public Works didn't fulfill its responsibilities as the government's procurement authority, and that there was no documentation on any of this. Public Works failed its responsibilities when it accepted National Defence's word that the aircraft had to be sole-sourced.

To put this in plain speak, which is what I think we really need right now, isn't moving this now to Public Works simply rearranging the deck chairs on the Titanic while the band plays on?

How can we have any confidence whatsoever that the government is accepting any of these things? What they are saying, sir, is that DND did indeed perform basic due diligence.

[Andrew Saxton, Conservative, North Vancouver, BC]

I'd like to raise a point of order, Mr. Chair.

The government has repeatedly said that it accepts the recommendation of the Auditor General. My colleague over there continues to misrepresent what the government has said. We accept the recommendation of the Auditor General.

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

Mr. Chair, I'd like to respond to the point of order.

[The Chair, NDP, David Christopherson]

I've heard your point of order. I do not consider it a point of order. It is a point of debate. You have the opportunity to refute anything the opposition members may say. They have a right to say it, unless it's out of order, and it's not out of order.

Mr. Byrne, continue, please.

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

I'd like to reply to the point of order, but I'll say this. I'll state what the government says, and I'm quoting from the report of the Auditor General:Both National Defence and Public Works and Government Services Canada disagree with the conclusions set out in paragraphs 2.80 and 2.81.

Everything that I just talked about is paragraphs 2.80 and 2.81. The government says, and they can't deny this, that they accept the recommendations but they do not accept your conclusions. This report is about your conclusions. This is about the process. This is an audit of the integrity of the process.

Are we, or are we not, simply rearranging deck chairs on the Titanic while the band plays on by simply moving it to Public Works without acknowledging that very serious errors were made on a $25 billion-plus deal and that Parliament was treated in contempt in the process?

[Michael Ferguson]

Again, really all I can speak to are the conclusions in our report, and I think our conclusions are very clear. They are a very frank assessment of what happened and where there were problems. We feel our conclusions were the right conclusions based on the evidence. The departments disagreed with those, and we brought that forward.

It is really now up to this committee, Parliament, to take this report and use it as part of the process going forward.

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

Well, after a very intensive and properly conducted performance audit, your conclusions were rejected, so I'd like to ask your opinion.

Do you feel that if we brought forward the witnesses I listed in my motion, which you heard earlier, from the Department of National Defence and from the Department of Public Works and Government Services, we could get a better idea about why they rejected your conclusions outright? Would they be able to provide us with an informed opinion about why the Government of Canada, the Harper administration, rejected the findings, the conclusions, of the Auditor General of Canada on the F-35 issue?

[Andrew Saxton, Conservative, North Vancouver, BC]

Mr. Chair, I raised a point of order.

[The Chair, NDP, David Christopherson]

There's nothing out of order.

[Andrew Saxton, Conservative, North Vancouver, BC]

Mr. Chairman, he is misrepresenting the government's position. The government has said repeatedly that we accept the recommendation of the Auditor General.

[The Chair, NDP, David Christopherson]

Mr. Saxton, please come to order—

[Andrew Saxton, Conservative, North Vancouver, BC]

He's misrepresenting the government's position. The government has accepted the recommendation of the Auditor General—

[The Chair, NDP, David Christopherson]

Will you stop, please, and respect this meeting?

It's not out of order. If you do it again, there will be consequences. There is nothing out of order. You may not like it, but it's in order.

You have the floor. Continue.

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

Mr. Chair, I'll repeat the government's formal response to the Auditor General of Canada in his report on the F-35 fighter jet acquisition: both National Defence and Public Works and Government Services Canada disagree with the conclusions the Auditor General sets out in paragraphs 2.80 and 2.81.

Those conclusions are as follows: that DND didn't perform basic due diligence of the $25 billion deal, and that DND failed to engage Public Works on a basic contracting requirement arising out the 2006 MOU.

The government says that the Auditor General was wrong in saying that serious problems had not been communicated to Parliament and to cabinet, that the Auditor General was wrong that Public Works didn't fulfill its responsibilities as the government's procurement authority, and that the Auditor General was wrong that Public Works failed its basic responsibilities when it accepted National Defence's word for it that the aircraft had to be sole-sourced.

Will those witnesses I presented to you, sir, help us to uncover whether or not your conclusions were wrong?

[The Chair, NDP, David Christopherson]

Thank you.

Please make a fairly brief response, Mr. Ferguson.

[Michael Ferguson]

I can't speak to the list of individual witnesses.

On the question about why the departments disagreed with our conclusions, they did agree with the facts, but the reason they would have disagreed with the conclusions is something that only the departments can answer.

[The Chair, NDP, David Christopherson]

Very good.

Thank you.

Time has expired. We're moving along.

Mr. Aspin, you have the floor, sir.