Public Accounts Committee on Oct. 19th, 2011

[The Chair, NDP, David Christopherson]

I call meeting number 8 of the public accounts committee to order.

I would remind colleagues that this meeting is being televised.

Perhaps our guests could wait for one moment. I want to do a little bit of business quickly and then we'll be right with you.

Colleagues, you see the agenda. There are two items. The first one is, of course, the hearing that we're about to conduct. The second item is committee business, which you have in front of you. It's the fourth report of the steering committee, with one amendment that item number 1 would include a notice that a week today that hearing would be held. We had already agreed on that date, and the rest will come as opportunities arise. That was the recommendation. It's the unanimous recommendation of the committee. I certainly will entertain any questions. I'm hoping, though, that we can deal with this fairly quickly.

Maybe Mr. Kramp would move it. Do you want the floor?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Yes, thank you, Chair.

This was discussed quite extensively at the steering committee. We've come up with a formula, and as such, each individual party had opportunities to state preferences on that. We've come to this conclusion for the assessment of study. I would be prepared to move it at this time so that the clerk can get on with arranging witnesses and we can get into a structured focus for this next session.

[The Chair, NDP, David Christopherson]

Thank you.

It is duly moved and commented on. Are there any further comments or questions?

(Motion agreed to [See Minutes of Proceedings])

Thank you, committee.

Now we will revert to item number 1, which has become item number 2, and welcome our guests and thank them for appearing today.

We'll start with John, because that's the right way to do it, I think. Would you all introduce yourselves?

I understand there are two opening remarks prepared and that they have been duly circulated to committee members.

With that understanding, John, would you introduce yourself and then we'll move to Mr. Barrett and to introductions.

Mr. Wiersema.

[John Wiersema, Interim Auditor General, Office of the Auditor General of Canada]

Thank you, Mr. Chairman, and good afternoon to members of the committee.

As I think you know, my name is John Wiersema and I am the interim Auditor General. With me today are Ronnie Campbell, assistant Auditor General, and Frank Barrett. Ronnie and Frank have been the individuals who have been leading much of our work on aboriginal affairs over a number of years and are very knowledgeable on the subjects.

[Michael Wernick, Deputy Minister, Department of Indian Affairs and Northern Development]

I'm Michael Wernick, deputy minister and accounting officer for the department, now known as Aboriginal Affairs and Northern Development.

[Douglas Stewart, Vice-President, Policy and Planning, Canada Mortgage and Housing Corporation]

I'm Doug Stewart. I am the vice-president of policy and planning for Canada Mortgage and Housing Corporation.

[The Chair, NDP, David Christopherson]

Thank you, and welcome.

[Shelagh Jane Woods, Director General, Primary Health Care and Public Health Directorate, First Nations and Inuit Health Branch, Department of Health]

I am Shelagh Jane Woods, director general, primary health care and public health, First Nations and Inuit Health Branch, Health Canada.

[The Chair, NDP, David Christopherson]

Thank you, and welcome.

We will open with Mr. Wiersema. Your opening remarks, please, sir.

[John Wiersema]

Thank you, Mr. Chairman, and thank you for this opportunity to discuss chapter 4 of our 2011 status report, “Programs for First Nations on Reserves”.

Over the past 10 years, the Office of the Auditor General has audited a broad range of services and federal activities affecting first nations. In this follow-up audit, we examined the government's progress toward achieving the commitments it made to address significant observations and recommendations from seven of those reports, issued between 2002 and 2008. We focused on the areas of education, water quality, housing, child and family services, land claims agreements and reporting requirements.

We noted in our follow-up that some progress was made in implementing some of our recommendations. Overall, however, we concluded that Aboriginal Affairs and Northern Development Canada, the Canada Mortgage and Housing Corporation, and Health Canada have not made satisfactory progress in implementing our recommendations.

In some cases, conditions have worsened since our earlier audits. For example, the education gap has widened, the shortage of adequate housing on reserves has become more acute, the presence of mould on reserves remains a serious problem, and administrative reporting requirements have become even more onerous.

Mr. Chairman, although departments have made efforts to implement our recommendations, the results have not led to significant improvements. This situation has led us to consider some of the causes that have inhibited progress on these issues.

In a preface to the audit, we identified four structural impediments that we believe severely limit the delivery of public services to first nations communities and hinder improvements in living conditions on reserves.

The first impediment is a lack of clarity about service levels. The federal government, mainly through Aboriginal Affairs and Northern Development Canada, supports services such as education and drinking water on reserves that are provided by provincial and municipal governments off reserves. It is not always clear what the federal government is aiming to achieve because it does not define what type or level of service it is committed to supporting.

The second impediment is the lack of a legislative base. Programs delivered on reserves are often designed and delivered based on federal departmental policies. Unlike provincial programs, there is no legislation supporting programs on reserves in such key areas as education, health, and safe drinking water. As a result, the services delivered through these programs on reserves do not always have well-defined roles and responsibilities, eligibility criteria, and other important program elements. There is also often a lack of clarity about federal responsibility for funding these services.

Mr. Chair, a third impediment that we identified is the lack of an appropriate funding mechanism. The federal government uses contribution agreements to fund the delivery of core programs on first nations reserves. Our audit found that many contribution agreements must be renewed yearly, which can cause disruptions and uncertainty for first nations in their ability to provide core services to their members.

With contribution agreements, the federal government does not necessarily accept responsibility for meeting any targets or goals, or for making progress. Contribution agreements often focus on activities rather than on results. They may not include service standards. As a result, it is often unclear who is accountable to first nations members when it comes to improving outcomes or achieving specific levels of service.

The fourth and last impediment I would like to discuss is the lack of organizations to support local service delivery. There are often no organizations, such as school boards, health services boards, and social services organizations, in place to support local delivery of programs and services. In contrast, provinces have established such organizations. Aboriginal Affairs and Northern Development Canada has started to work with groups that represent more than one first nation, but much more work needs to be done in this area.

Mr. Chair, change is needed if first nations are to experience more meaningful outcomes from the services they receive. In our opinion, real improvement in living conditions on first nations reserves will depend on many factors. These include addressing the structural impediments we identified in the preface to our chapter. In effect, Mr. Chairman, what the preface is calling for is a fundamental change in the government's approach to programs for first nations. And frankly, Mr. Chair, I think this is probably a bigger problem than Mr. Wernick, in his department, can address on his own.

We also recognize that the federal government cannot put all of these structural changes in place by itself. Federal officials must work with first nations, who themselves play an important role in bringing about the needed changes. We also recognize that the change required will not happen overnight. Solutions will take many years to fully implement, and they will have to involve many parts of government and include political leadership and the will to make the necessary changes to policies and to legislation.

This committee, Mr. Chairman, may wish to ask Aboriginal Affairs and Northern Development Canada for its views on the structural impediments, as well as what the government would need to change, including political direction, policies, and legislative reforms, in order to bring about the changes needed.

I should note, Mr. Chairman, that our audit work for this chapter was completed on November 1, 2010. We did not audit actions taken by the government since then.

That concludes my opening statement, Mr. Chairman. We would be pleased to answer the committee's questions.

[The Chair, NDP, David Christopherson]

Very good. Thank you very much, Mr. Wiersema.

We go over to Mr. Wernick.

You have the floor, sir.

[Michael Wernick]

Thank you, Mr. Chairman.

This is my fourth appearance at this committee in the 65 months I have served as accounting officer for the department.

During that time, I have had the privilege of working closely with three remarkable ministers. I have worked through three prorogations of Parliament, two federal elections and seen changes at the top of almost all of the national and regional aboriginal organizations, as well as almost all provinces and territories, and almost complete turnover at the House and Senate committees we answer to.

One of the few constants in my time as deputy head has been our working relationship with the Office of the Auditor General. I do want to take this opportunity to go on record conveying my deep personal respect for Sheila Fraser, John Wiersema, Ronnie Campbell, and Frank Barrett, all of whom, alas, are moving on to other things. We've had a spirited, vigorous, and very productive working relationship, which I hope will continue with their successors.

I know, Mr. Chairman, from experience that the committee doesn't appreciate long opening statements, or even long answers to questions for that matter, so I'm not going to make one. There are some issues on which I could quibble with the findings of the chapter by pointing to progress that's been made since the chapter was put to bed last spring, based on a snapshot that was taken even earlier. I'd be happy to table those detailed responses with the committee, or commit to further progress reports if that's what the committee desires.

I'm not doing that to diminish the importance of the chapter--quite the opposite. Madam Fraser's parting gift to this new Parliament is quite simply the best piece of analysis on first nations issues in decades.

I agree with the Auditor General completely so I don't want discussion on the details of any of specific findings to distract from the power of her cogent central message. The six-page preface is the best road map Parliament could ask for.

I'll take just one quotation from page 2 of the report:

We believe that structural impediments severely limit the delivery of public services to First Nations communities and hinder improvements in living conditions on reserves.

Absolutely.

Having participated in the evolution of these issues for the past five years, I am confident that the next year or two can mark a turning point in this area, and for our country, if we listen to that clear advice. I hope we're prepared to work together across departments, across federal and provincial jurisdictions, across public and private sector boundaries, and across partisan political interests to use the road map and make structural changes that are required.

It's quite probable that as members of this new Parliament you will have the opportunity as legislators to put in place modern legislative foundations for education, water standards, new approaches to financing infrastructure, and procedures for free and fair elections; to enhance the capabilities and transparencies of first nations governments; and of course to implement new treaties and settle old historic claims. It's by working together with first nations and others that we'll be able to move on all of the critical aspects highlighted in chapter 4: education, water, housing, child and family services, treaty implementation, and reporting burden.

Let me conclude with one more quote:

Change is needed if first nations are to experience more meaningful outcomes from the services they receive. We recognize that the issues are complex and that solutions will require considered efforts of the federal government and first nations, in collaboration with provincial governments and other parties.

I would be pleased to take your questions and try to explain what the women and men in my department are doing right now to make progress where it's possible with the tools we have, and to discuss the work we have under way with many partners to set the table for structural change.

Thank you, Mr. Chairman.

[The Chair, NDP, David Christopherson]

Thank you.

Thank you both for your presentations.

And again, thank you all for attending today. It's much appreciated.

We'll now begin questions in the rotation previously agreed upon, and we'll begin with Mr. Saxton.

You have the floor, sir.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair, and thank you to our witnesses for being here today.

From the outset I just want to say that our government has a strong and ongoing commitment to improving the lives of aboriginals. We have made progress and we are achieving concrete results in areas such as economic development, infrastructure, education, water, child and family services, and land claim settlements. We recognize that more needs to be done, but we also know that this work needs to be done in collaboration with first nations. We must build and strengthen capacity together and ensure there is transparency and accountability for all first nations communities. We will continue to move forward on initiatives that support progress and improve the lives of aboriginals.

My first question today is for the interim Auditor General. Sheila Fraser took time to pay particular attention to the efforts and actions of the government when it came to the $70 billion in spending to improve aboriginal services. Can you explain to us why Ms. Fraser took such an effort to highlight this component of her report?

[John Wiersema]

Thank you for the question, Mr. Chair.

The former Auditor General, in recognition of the importance of first nations programs, their size, their significance, and the challenges facing government, very early in her mandate identified aboriginal issues as one of her focus areas. So it has been throughout the former Auditor General's mandate an area in which we have undertaken a significant amount of audit activity, as I indicated in my opening statement. We followed up on this particular piece on seven of those audits. Mr. Wernick tells me that over 30 of those audits touched on first nations issues, so it was an area of focus that was identified right at the beginning of Sheila Fraser's mandate. Mr. Campbell, I believe, led the work on Sheila's behalf, on the office's behalf, for the majority of that period.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is for Aboriginal Affairs.

Many agree that we cannot just throw more money at a problem we discussed here, and that there needs to be a new approach to addressing these issues. We recently announced the joint action plan with the AFN, for example, to look at things like education and governance. Can you comment on how partnerships can be a better approach to improving the lives of aboriginals in Canada?

[Michael Wernick]

Thank you for the question.

There are many aspects to the possible answer. I'll try to be very brief.

I think it's very clear from experience over the last 20 or 30 years that it is impossible in this area, as it is in others, to simply legislate or make changes in programs without the direct involvement of the people who are affected. That's especially true of aboriginal people, who have entrenched rights in the Constitution and will very much want to be shaping programs, services, and legislation that affect them.

The challenge for governments is always how far can you move with partners. How much agreement can you get on legislative changes? It's been a very thorny issue for governments and parliaments in the past. There have been successes and legislation has been successfully passed by Parliament, and we hope there'll be more in the coming Parliament.

The other partnership that is becoming very important is the involvement of provincial governments. We create a three-corner conversation, which we tend to call tripartite. That's because the services we've been talking about in this chapter are the kinds of services most Canadians get from provincial governments: education, water, housing, child and family services, and so on.

Whatever public policy or public administration expertise there is out there, it tends to be in provincial governments or provincial institutions. If we can get first nations governments working together--not overseen and not regulated by but working together--with provincial governments, and our involvement of course, financially and otherwise, then we think we have the winning recipe for enduring change.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

My next question is also for Aboriginal Affairs, but also Health could decide to respond to it as well.

We've signed a number of tripartites across the country with provinces and first nations on child and family services. In fact, a tripartite agreement was just signed in north Vancouver recently regarding the delivery of health services. A critical part of these tripartites is defining culturally appropriate services and placement options. Can you explain why this is so important?

[Michael Wernick]

I think in the history of first nations in Canada there is a great deal of concern about what child welfare policies have done in the past. The most striking example would be residential schools, children being forcibly separated from their families and communities and brought to residential school settings. There have also been examples of what they called the “sixties scoop”, of well-meaning child welfare agencies removing children from what they saw as harm by bringing them out of communities and into a non-aboriginal context.

There's been a lot of work done by provincial child welfare ministries, first nations, and the agencies to try to provide for the protection of vulnerable children who may be in harm's way in the community--wherever possible--and to use the extended family structure, which they call kinship care, to provide either prevention or protection services for those children. There have been successes in those. It's an incredibly difficult area, and you're dealing with vulnerable children, but there have been some real successes with that approach. And again, it involves the provincial child welfare authorities and the first nations-run agencies working closely together.

[The Chair, NDP, David Christopherson]

Your time has expired, Mr. Saxton.

Thank you both very much.

We're over to Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chairman.

We're talking about quite significant structural problems. The Auditor General discussed four main structural problems. She mentioned poorly defined service levels, a lack of a legislative base, deficient funding mechanisms and a lack of organization to support local service delivery.

The structural problems are really central to the problems we have observed in relations with first nations, particularly managing or obtaining services. I believe that raises some general questions.

I would like to be able to summarize a few of the Auditor General's past reports. They identified the same problems. Among others, in 2000, 2003 and 2004 in particular, an important factor appears to have been the department's interpretation of its role with regard to services to first nations and on reserves.

In 2004, the Standing Committee on Public Accounts, which had reviewed the 2004 report, indicated that the committee was not satisfied that, even if it had a clear set of roles and responsibilities, the department would want or be able to translate them into practical and useful policies because it did not necessarily have a clearly defined understanding of the role and responsibilities under the Constitution Act.

One thing isn't clear in the subsequent reports. Since that time, has the department clarified its role in program management and its relations with first nations? Is it more a guardian or manager role?

[Michael Wernick]

Thank you.

I believe the report's diagnosis reveals a problem regarding clarification of roles and responsibilities. Our first role is a funding role. All the tools we apply in the context of the services we are concerned about today are the funding agreements. So we provide funding to the government of a first nation, which must use that funding to offer certain services to its members. The reports the first nations governments must submit to us are the only parliamentary accountability mechanism. We're talking about the problem, about the burden that this report constitutes, but it's necessary because there is no other mechanism. I don't have the exact text to hand, but the report states the following.

We over-rely on contribution agreements, so that is a big limitation. We do what we can with funding agreements, but we do not deliver very many services directly to first nations. We do register land, we register people, we negotiate at the table on land claims, but what we're generally doing is financing a first nations government or first nations institution, and they're doing the best they can in the context they have.

There's a problem of scale. Most of those governments are very small.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I believe my next question is for the Interim Auditor General.

Given the structural problems and the limits you have just pointed out, what steps could be taken to increase the level of responsibility? Or do those structural impediments in fact prevent the level of responsibility from rising and thus make an improvement in the situation more likely, easier?

[John Wiersema]

Mr. Chairman, I'll ask Mr. Campbell to elaborate in a moment, but in terms of potential solutions dealing with how the federal government funds these services, there are two things that come to mind.

Earlier this week this committee heard from the Treasury Board Secretariat and the Comptroller General, and they talked about how the main estimates process works, how the expenditure management system works. You heard that, I think it was, two-thirds to three-quarters of federal spending is statutory, where the legislation sets out a certain level of funding requirements and departments and individuals entitled to that receive it automatically because it doesn't need to be voted on annually.

One very good question that the government, this committee, Parliament, could consider is the extent to which it wishes to use statutory funding for providing services on first nations, and I believe the preface to the report talks about that. A lot of these services, education services, are going to be required this year, next year...and one option is to look at changing the basis of funding from voted appropriations to statutory funding.

The other one is the one we've talked about, the use of the contribution agreements. I look at the annual contribution agreements to provide education services on a particular first nation. It's done every year. And there's lots of bureaucracy around that. You have to get the agreement renewed every year. By the time the first nations actually get some money, a good part of the year might be passed.

I know that Michael and his department are already moving towards the use of multi-year funding agreements. If that continues to be the basis of funding--the use of contribution agreements--then absolutely the use of multi-year funding agreements makes incredible sense.

And the other issue, as I said, is funding through statutory appropriations rather than voted appropriations.

Mr. Chairman, if time permits.... It doesn't?

[The Chair, NDP, David Christopherson]

Sorry, no, we're already almost a minute over the time for that rotation, but hopefully we can get that answer in another response.

Thank you both.

Mr. Kramp, you have the floor, sir.