Public Accounts Committee on Feb. 28th, 2013

[Ronnie Campbell]

Thank you, Mr. Chairman.

Following from the discussion that has just happened, I mean, certainly there were areas that were not satisfied. There were reports that were required that have not been received, and the department, rather than follow up with the companies, told us that they found other sources of the information. Yes, they've done the site visits, and we noted that by and large I think they had done them all, but we noted that those weren't well documented at all, and that sort of thing.

There are a lot of areas there. I'm referring particularly to paragraph 6.31 and the Bombardier CSeries and other comments where we think that could be improved.

[The Chair, NDP, David Christopherson]

Thank you.

Sorry, the time has expired.

Mr. Williamson, you have the floor, sir.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Chair.

I want to try to split my time between both the AG and Industry.

First, Mr. Davies or Ms. Morgan, there's a line in the auditor's report that reads, “The federal government’s approach—sharing risks and rewards—is intended to encourage private sector investment.”

Do you agree with that?

[Marta Morgan]

Yes.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Okay. That's good. I'm going to come back to you. I want to speak to the assistant auditor general.

I'm concerned with your review of the old programs, TPC and DIPP, particularly the line in section 6.80, “We found that, of the repayments we reviewed as part of our audit, the Department obtained most repayments on time.”

I'd like a very quick answer. This wasn't a value for money audit. It was looking at procedures, I suppose, and how the program worked. Is that right?

[Ronnie Campbell]

It was a performance audit. We looked at the department's performance in a number of areas.

[John Williamson, Conservative, New Brunswick Southwest, NB]

I'm curious to know how you came to that conclusion, because, for example, TPC has handed out $3 billion over the course of its program, and $767 million has been repaid. DIPP was at about $2.15 billion, of which 28% has been repaid. I'm curious to know if you looked at the department's own repayment forecast, which the department never actually released to the public. But access to information reports found, for example, that in 2004-05 Industry officials had pegged TPC's total for repayments at about 21%, yet the records at that time indicated that it was nowhere near that.

When the program was first unveiled, the minister said that the program would recoup $1.50 to $2 back to the federal government. Even David Emerson, when he was named minister, downgraded it in saying that 80% would be recouped. I'm just curious to know how you came to that conclusion in light of access to information reports that are a number of years old now and that show the department was never anywhere near recouping the amount of money that it had projected it would recoup.

[Ronnie Campbell]

Mr. Chairman, I'll respond to the question, and I may ask Mr. Wheeler to help with some of the details.

What we did is that we took a sample. If you look at TPC in exhibit 6.3, that was the number of projects we examined: 41. Of that 41, and Mr. Wheeler will correct me if I'm wrong here, 32 of them triggered the conditions for repayment. From thereon in, it flows out of that. There were 132 payments that were due out of that, and then the numbers flow from that.

Did I miss anything?

[Glenn Wheeler]

No.

I'll just add, Mr. Chair, that the focus of our work here, when we looked at the management regime, was—

[John Williamson, Conservative, New Brunswick Southwest, NB]

I'm actually going to stop you. Did you compare the department's own forecast for repayment, yes or no?

[Glenn Wheeler]

No, we did not.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you.

My time is running out. I want to return to Mr. Davies.

Mr. Davies, you talked about repayments that could in theory total 155% if you look at the interest, but the reality is that past programs never came anywhere near that. Otherwise, repayments would have been much higher and much, much closer to the amounts that were disbursed.

My problem is that we're falling into the trap that existed for the last two programs. You're not being transparent with taxpayers. I want to know how the department is going to respond to this report and the concerns that the assistant auditor general has that you're not meeting those requirements and that we don't end up with another program like TPC and DIPP, which were sold to taxpayers as value for money. At the end of the day, we saw that the forecasts weren't there, and the moneys were never recouped by the government and therefore the taxpayers.

[Mitch Davies]

Mr. Chair, I think that when the government in 2007 introduced SADI the expectations established were that we would raise the bar in respect particularly of transparency around the program. I think that's the thread of some of the recommendations that we've agreed to in this AG report. It's to improve our efforts in that and we're going to undertake that.

In terms of repayment and specifically to your point, our repayment track record on SADI is going to be on the website. It's there now. Obviously, many of the entries are blank because the companies are not in a position where they owe us money. But at that point in time in the next fiscal year when first payments come due on our first round of contracts, any Canadian who wishes to know will be able to check that website and determine whether we're actually collecting those moneys. Over time, you'll have a cumulative story as to whether the goal to have a nominal repayment of the funds that have been issued under the program is being achieved.

Quite frankly, that's what we're interested in—the program, the administration of it, and the way we manage the portfolio—and certainly we'll provide that information for Canadians and parliamentarians to judge the progress against it.

[The Chair, NDP, David Christopherson]

Thank you. Time has expired.

Mr. Allen, you have the floor, sir.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Let me go back to where I was. In his opening comments when he talks about SADI, the strategic aerospace and defence initiative, which is what we should call it because a lot of folks don't necessarily understand the acronyms, Mr. Campbell talked about in point 8 of his remarks, “We found that Industry Canada has yet to report publicly on the results of the strategic aerospace and defence initiative as required by the funding approval it received in 2007.”

As I think Mr. Williamson was trying to get at it and I hear Mr. Davies saying, part of my problem is that we're going to get better, we're putting things in place. The difficulty I think some members of this committee have is we've heard the department say they're not doing this part and they're not doing that part and they're not going to do this part. When that happens the difficulty comes when you say you're working on things. Without a benchmark of a specific piece at a specific time we have no idea whether it's getting done or not. It's similar to my saying that I really want to run a four-minute mile; I probably never will, but I'm going to work toward doing that. It's a wholly unrealistic goal. To be candid to my friends at the end of the table, too often the departments come here and tell us this all the time, once they make commitments to the Auditor General's report, that they're going to work toward it. It doesn't really...especially when you're spending money, and Mr. Williamson has pointed out other programs that were there prior to the programs you have now that didn't necessarily get back the moneys we had spent. I'm not saying that's not going to be the case for you folks who are running this department at the moment.

Ms. Morgan, you outlined in your brief, and I went through how you laid them out in the same way in answer to the recommendations throughout the report. So your first one was “The Department will ensure that the monitoring and reporting requirements...are fully met and documented”. You've done that in your opening piece. For the recommendations that you said you would do by the end of 2012, some in December and some in November, how many of them have you completed working on and how many have you not?

[Mitch Davies]

Five of the seven were implemented. The sixth was essentially the overall program highlights report for 2011-12. We published it on February 8, so we missed December 31.

The last recommendation that we have to complete work on is documentation of our transfer payments policy, which isn't a specific program issue, it's updating procedure manuals, documents inside the department on how we administer all transfer payments. That work is under way. Some is complete, and the remainder will be completed by the end of the next fiscal year.

[Malcolm Allen, NDP, Welland, ON]

Can we get an update in writing as to where that program is? I hear your commitment, and by the way, kudos in getting the vast majority of the work done on time. You missed one by four or five weeks. We could nitpick that one if wanted to, but no, I wanted to know if you hit the deadlines or not. You've done a good job. How's that? I don't want to say “reasonably”, but that would qualify it and that's not fair.

Could we get a sense of where you are with this next one? Are you 10% complete, 20% complete? If you are intending to do it by next year, if it's only 20% done and you've used up 40% of the time, it means trying to rejig things and it makes it really difficult. If we could get that undertaking, I would appreciate it.

[The Chair, NDP, David Christopherson]

Do we have that undertaking?

[Marta Morgan]

Yes.

[The Chair, NDP, David Christopherson]

Very well, thank you. When will you be able to have that to us? What's the timeframe?

[Marta Morgan]

An update on how we've done, or what status we are on that?

[Malcolm Allen, NDP, Welland, ON]

An update on the specific program that Mr. Davies indicated is not done yet.

[Marta Morgan]

We could provide an update to the committee within the next week or so on what stage we're at on that.

[The Chair, NDP, David Christopherson]

Okay, that's good.

[Malcolm Allen, NDP, Welland, ON]

That would suffice.