Public Accounts Committee on May 14th, 2014

[The Chair, NDP, David Christopherson]

I now declare the 27th meeting of the Standing Committee on Public Accounts in order.

Colleagues, we're here with our Auditor General again and his staff to review Chapter 8, “Disaster Relief for Producers—Agriculture and Agri-Food Canada” of the fall 2013 report of the Auditor General of Canada.

Just before we do that, though, I would like to ask the committee if we can do some quick committee business afterwards. I can tell you the nature of it. First, one of the hearings that we scheduled in our business meeting can't work because the chosen dates just don't work, and so we need to look at an alternative.

Second, we had deferred at our last business meeting the question of the public accounts conference and there are timeframes involved now, so in my view it's important that we deal with that today.

There likely will be time for that, unless the committee wishes to extend longer than normal. I would be looking for about 10, 15 minutes of committee business at the end. It should be pretty quick, and they are timely matters that I do need to put before you. We'll get to that at the end of the meeting.

Unless there are any other interventions, I am ready to begin this public hearing. Seeing none, we will begin as we usually do by asking our Auditor General, Mr. Michael Ferguson, to please read his opening remarks.

You, sir, now have the floor.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you.

Mr. Chair, thank you for this opportunity to discuss chapter 8, Disaster Relief for Producers, from our 2013 fall report.

Joining me at the table are Dale Shier, Principal, and Dawn Campbell, Director, who were responsible for the audit.

AgriRecovery is a joint federal-provincial initiative that was established to fill gaps in existing programming and provide quick and targeted assistance to producers affected by disaster events.

We examined Agriculture and Agri-Foods assessment and payment processes for disaster events, from the start of AgriRecovery in 2007 to the end of 2012. This included whether the department assessed disasters according to program criteria and whether it communicated with stakeholders and applied lessons learned since the program's inception. We did not audit AgriRecovery activities beyond 2012 and we did not audit the provincial role in this initiative. Our audit was completed in September 2013.

Overall we found that AgriRecovery had significant timeliness issues. We noted that the department had developed two performance indicators related to timeliness: assessing disaster events with 45 days of a provincial request 90% of the time, and processing 75% of payments within nine months of an approved assessment.

While the department does not have a performance indicator for total processing time, the assessment and payment standards add up to 10 and a half months. We found that 67% of initiatives met this combined timeline, while the remaining third exceeded it by 5 months on average.

In these cases the delay occurred because the department seldom met its own 45-day target for the assessment component of the program. Only 16% of initiatives met this target.

On the other hand, the department achieved its target for the payment component of the program, processing payments for 84% of initiatives within nine months of the approved assessment.

Exhibit 8.4 of our report provides examples of the consequences of not receiving financial assistance on a timely basis. For example, some producers had to sell livestock, and some were unable to purchase feed when they needed to.

We also found that although the department has established and documented a process for assessing formal AgriRecovery requests, it does not streamline its processing for smaller, lower-risk initiatives. For example, we found that a small initiative of $44,000 took 228 days, while a large initiative of $150 million was delivered in less than half that time. Both initiatives were responses to excess moisture events for which assessment information is usually promptly available.

The department has not improved the timeliness of payments over the life of the program. The department needs to streamline its processing of smaller initiatives, actively track against the timeliness targets it has set, and publicly report this information.

In one of our previous audits—the Payments to Producers chapter in our 2011 fall report—we found timeliness issues related to two other programs. In our audit on disaster recovery, the subject of today's hearing, we found that the department continues to struggle with timely program delivery.

Agriculture and Agri-Food Canada has agreed with our four recommendations and has set implementation deadlines ranging from March 2014 to March 2018.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, NDP, David Christopherson]

Excellent. Thank you very much.

We will now move to the rotation in the usual fashion.

Oh, I'm sorry. I'm jumping the gun. I need to go to the agriculture department. How could I forget Agriculture, after the great lunch we had today? My apologies.

You have the floor now, if you'd introduce your delegation, please.

[Tina Namiesniowski, Assistant Deputy Minister, Programs Branch, Agriculture and Agri-Food Canada]

Thank you, Mr. Chairman.

And good afternoon everyone.

I'm Tina Namiesniowski, and I'm the assistant deputy minister of the programs branch at Agriculture and Agri-Food Canada. Within my organization, we have responsibility for the AgriRecovery program.

Thank you for the opportunity to speak before this committee this afternoon. Joining me is my colleague, Rosser Lloyd, Director General of our Business Risk Management Program Directorate.

We certainly appreciate your focus on Canadian agriculture and food.

Canadian farmers are at the heart of a sector that's key to the Canadian economy and the lives of Canadians. It generates one in eight jobs, almost 7% of Canada's gross domestic product, over $50 billion in exports, and as you referred to, Mr. Chair, nutritious, high-quality food products for Canadians.

To help advance the core economic sector, Canadian farmers need access to effective programming to help them manage the various business risks they face on a daily basis. Weather, disease, insects, markets, and other risks all generate considerable volatility for Canadian farm businesses.

That is why the five-year federal-provincial-territorial “Growing Forward 2” framework includes a comprehensive suite of business risk management programs.

Also, the BRM, the business risk management suite, has three core programs: AgriInsurance, which assists producers experiencing production losses due to perils, including weather and disease-related events; AgriStability, which helps producers suffering severe income losses resulting from risks, such as low prices, rising input costs, and drops in production; and AgriInvest, which helps producers offset losses, strengthen cashflow, or make investments by drawing from a savings account of producer deposits matched by governments.

Together, these three programs position Canadian farmers well to deal with their business risks and the impact on their outcomes.

But when extreme natural events occur, producers may need additional support, beyond existing programs, to help them with the cost of actions necessary to recover and get back to business.

It's in these situations that we use the AgriRecovery framework, which is the focus of today's discussion.

In 2007, AgriRecovery was a new approach to how we manage ad hoc initiatives in response to disaster events. It's essentially a protocol and guidelines that assist F/P/T governments in determining, in those types of situations, if further assistance is required and the nature of that assistance.

Since its implementation in 2007, we've learned a lot about its use and implemented a number of changes. It brings F/P/T governments together to do the following.

They assess the impacts of natural disasters on agricultural producers; and, where there is need, offer assistance beyond the assistance already available through the existing program. They then respond with timely, targeted initiatives to help with the extraordinary costs of recovery.

The core BRM programs and AgriRecovery work together to provide Canadian farmers with the financial support that they need when natural disasters occur. We work with provinces or a territory to assess whether or not to trigger a response and in that context we take into account the scope and severity of the disaster, the extent of any extraordinary costs that must be incurred by a producer to recover, as well as the assistance farmers have through those core BRM programs.

I want to reiterate that AgriRecovery is a framework for developing a response to a natural disaster. It's not a program to which producers can apply as soon as a disaster occurs. When we reach agreement with a province or a territory that an AgriRecovery response is warranted, both levels of government must then obtain the required authorities for the response and negotiate the terms of the initiatives. AgriRecovery continues to help Canadian farmers get their businesses up and running after droughts, floods, and other disasters. Over the past six years governments have committed about $1 billion through almost 40 initiatives.

In relation to today's focus on the recent audit undertaken by the Office of the Auditor General, Agriculture and Agri-Food Canada was pleased to see that the AG's report recognizes that the department properly apply the AgriRecovery criteria in assessing disasters to determine whether a response is needed, co-ordinated communications efforts with provinces once initiatives were approved, and met the combined ten and a half month timeline for two-thirds of the initiatives examined through the audit process.

That said, we fully recognize that there are opportunities to improve the timeliness of the AgriRecovery processes and payments particularly as mentioned by our Auditor General for low-value, less risky initiatives. We fully agree with the recommendations that were put forward in the audit report and are taking action on all four of them.

To address the first recommendation we've committed to analyze our recovery processes and the timeliness targets with provinces. We've also committed to identify impediments to timeliness and to take corrective action to meet these timelines, including process improvements on impediments identified with the provinces, strengthening assessments and agreements, and better tracking to flag problem assessments.

We have already taken steps to address the second recommendation by enhancing our electronic financial and reporting system so we can better track and report on AgriRecovery timelines on a real-time basis. This will help us track our progress in real time and make course corrections when needed on individual assessments.

We will assess risk for each AgriRecovery initiative and streamline administrative efforts based on the level of risk.

Finally, we will publicly communicate AgriRecovery's performance against our timeliness targets through the departmental performance report starting this year.

In conclusion, we're taking action to improve our service to farmers and our accountability to taxpayers. Once again, we thank the committee for focusing on the framework and look forward to today's discussions.

Thank you, Mr. Chair.

[The Chair, NDP, David Christopherson]

Very good.

Thank you.

I'm ready to turn to the rotation but I'm going to check this time.

Madam clerk, is there anything else I should do first?

[The Clerk of the Committee, Ms. Joann Garbig]

No.

[The Chair, NDP, David Christopherson]

Very good.

Thank you.

Well, once bitten, twice shy.

Colleagues, unless there's a reason not to, we are now ready to begin our question and comments in rotation.

We will begin with Mr. Hayes. You now have the floor, sir.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

Welcome.

On the surface, the report seems highly critical of Agriculture and Agri-Food's management of timelines. Mr. Auditor General, even in your opening statements, if somebody didn't read the full report, they were critical of timelines as well. In reality the problem area seems to be the initial 45-day assessment period. There are two components. There's the 45-day assessment period and then there's the nine-month payment period. The problem area, if I'm reading this correctly, seems quite obviously to be in the assessment phase. As a matter of fact, you mention in paragraph 8.27 there's an average of 126 days versus 45 days in terms of assessments. That being said, the department met its nine-month target for payments 84% of the time.

Is that correct?

[Michael Ferguson]

That's correct.

Certainly we did identify that the biggest part of the issue in terms of timeliness was that assessment part of the whole ten-and-a-half month time period.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Based on that, on page 7, paragraph 8.18, you actually stated:It is our view that the Department should measure overall timeliness against a cumulative 10.5-month timeline, because it is the duration from the request for a disaster assessment until the issuing of payments that matters to producers.

That was in your report, correct?

[Michael Ferguson]

That's right, and our point there is that if you look at this process from the producer's point of view, as the person receiving the cheque, they would want to know that they are going to get it within that ten-and-a-half month timeframe. Certainly, the issue is at the assessment portion of that total timeframe.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Based on your statement in paragraph 8.18, that you should look at the cumulative process from start to finish, that was your reason for your creating the chart at exhibit 8.3 on page 7, which basically looked at the percentage of those items you had looked at that actually made the ten-and-a-half month target from start to finish.

I had a look at that chart. I just want to make some observations and see if you agree. Specifically, when I look at “Excess moisture”, there were 14 events and the average payment was $31 million. Factoring that out, there was $434 million that was paid out for excess moisture events. If you do the same for drought and disease, the total payments were $504 million. In terms of excess moisture, $434 million of the total payments, i.e., 86% of the total payments that were paid out by this program, were actually paid out well within the guideline.

Is that a correct statement?

[Michael Ferguson]

I'm staying with what's in that exhibit. When you look at “Excess moisture”, there were 14 events, the average of which was $31 million, and the processing time for those was all within the ten-and-a-half month timeframe.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

As a matter of fact, for the excess moisture event, there were 227 days on average from start to finish, which is basically 30% less than the ten-and-a-half month target. That indicates to me that 86% of total payments were actually paid out in 30% less time than all payments. Then when we factor in disease, the majority of those were within 10% of the target. So those 10 events were paid out within 30 days of the target. When I look at this I see that 24 out of the 28 events were actually within the ten-and-a-half months. Some of them fell a little bit outside that ten-and-a-half months.

So the majority of these payments were made on time. Is that a correct statement?

[Michael Ferguson]

In terms of dollars, and I think we've certainly made that point throughout this report, many of them were made on time. Again, part of what we raised is the issue that if large payments can be made on a timely basis, why can't the smaller payments be made on a timely basis?

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

To go back to the report, when I look at the types of drought disasters—those four areas there, which represent total payments of about $64 million—that seems to be the problem area, because their average days were 433, and in a ten-and-half month period they really had 315 days.

So it seems to me, if I focus solely on that chart, we have a problem specific to drought types of disasters. Is that a fair analysis by looking at this chart?

[Michael Ferguson]

When you look at the chart you do see that there was an issue with the timeliness in terms of that overall ten-and-a-half months with drought, overall. Again, though, very clearly one of the points that we are bringing out in the report is the fact that you also have to look at these payments on the basis of large payments versus small payments.

[The Chair, NDP, David Christopherson]

I'm sorry, but the time has expired. Thank you very much.

Over now to Mr. Allen, who now has the floor.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Thank you to our witnesses.

And thank you to my colleague across the way.

Far be it for me to argue numbers with my colleague, but I'm actually looking at chart 8.3 on page 7, as he was, and there are 28 events, if my arithmetic is correct: 10 disease, 4 drought, and 14 excess moisture evens, of which the only ones that met the timelines were the latter 14.

Is that correct, Mr. Ferguson?

[Michael Ferguson]

The excess moisture ones, when you look at them in total, met the timeline. The other two did not.

[Malcolm Allen, NDP, Welland, ON]

If I were to do my arithmetic correctly—albeit, I almost added 24 by mistake, instead of 28—14 is half of 28, so 50% didn't meet the timeline in that chart. Is that correct?

[Michael Ferguson]

In terms of the 28 in total, one-third did not meet the timelines.

What this is saying is that on average, when you look at that overall payment process, in terms of the ten-and-a-half-month timeline, you can see that the excess moisture events did meet that timeline. When you break it down into the individual events, I believe one-third did not meet the timeframe.

[Malcolm Allen, NDP, Welland, ON]

I concur with that, Mr. Ferguson, because you actually say that later in the report. I simply highlighted the fact that if I read the chart at face value, like my friend across the way was trying to do, I can make it look as if 50% didn't meet the timeline, when clearly it was only a third. I acknowledge it was only a third—you're absolutely correct. But to pull information out of one place and leave it hanging in isolation does not necessarily give one a true picture.

But let me change tack really quickly and look at the department's action plan, if I could.

In paragraph 8.29, you agreed with the recommendation. Their implementation date is March 2014.

I have simple question: is that complete?

[Tina Namiesniowski]

Sorry, which paragraph did you refer to?

[Malcolm Allen, NDP, Welland, ON]

Paragraph 8.29.

It's on your action plan sheet that you supplied the committee. I appreciate that. In the department's response, they agreed with the recommendation by the AG. You sent a timeline of March 2014. Is that complete?