Public Accounts Committee on Nov. 27th, 2014

[Dennis Bevington, NDP, Northwest Territories, NT]

There was a lot of discussion about whether the program had done certain things. One of them was that it was reported that the sales were up, or the product moved was up, by 25%. Can you tell me a little bit more about what you thought or assumed that meant?

[Michael Ferguson]

As I understand it, that was that they were looking at the volume that was actually shipped. Over the course of a time period, again I would have to.... In paragraph 6.43 it says:

Department data shows that the weight of items subsidized under the Nutrition North Canada program in the 2012–13 fiscal year had increased by about 25 percent compared with the weight subsidized in the final year of the Food Mail Program.

It's simply a comparison of the weight of what was shipped under the two programs between the 2012-13 fiscal year of the nutrition north program and then the last year of the food mail program.

[Dennis Bevington, NDP, Northwest Territories, NT]

Under one program like the food mail program where there were a lot of items that may not have been the same weight or the same description as under the nutrition north program, where things like diapers and a number of other things were not included, would that have changed the relationship do you think?

[Michael Ferguson]

What we indicate at the end of paragraph 6.43 is that we haven't audited those numbers. We were just reporting that was what the department said.

This section of the report is about managing the program. The header we have here is that the department has not collected information needed to manage the nutrition north Canada program or to measure its success.

We're trying to identify that the department has certain measures, and one of them is the number of kilograms of food shipped, but that doesn't really help them understand the program.

[The Chair, NDP, David Christopherson]

Sorry, Mr. Bevington, your time has expired. You know when you're having fun, time just whizzes by.

Mr. Falk, you now have the floor, sir.

[Ted Falk, Conservative, Provencher, MB]

Mr. Ferguson, I also have questions on chapter 6. I know you've been working very hard for the last hour, and if you want to deflect the questions to your assistants, I'm okay with that.

Ice cream, bacon, and processed cheese products may be unhealthy. That's not an audit conclusion, I hope.

[Michael Ferguson]

What we say in paragraph 6.16 is that they “continue to subsidize certain foods that may be less healthy”. That would not have been our conclusion but essentially one that we got from the department.

[Ted Falk, Conservative, Provencher, MB]

Okay, good.

I want to key in a little bit on the scope and approach of the audit, and then draw some parallels with your conclusion.

At the end of the first paragraph on scope and approach, on page 16 of the report, you talk about all the things you did not audit:

We did not audit the processing of retailers’ claims for payment. We also did not audit retailers who received contributions under the Program.

You also did not audit “Health Canada and its nutrition-related educational activities...”.

In your conclusion you state that the “Department has not done the work necessary to verify that the northern retailers are passing on the full subsidy to consumers.”

I'm looking at your opening statements in which you say that not enough has been done by Aboriginal Affairs and Northern Development Canada to meet its objective of making healthy foods more accessible and affordable to residents of isolated....

Would it be fair to say that we didn't perform enough work to verify it?

[Michael Ferguson]

I think that certainly when you look at what we found, we were saying that the department doesn't have the information to know whether the program is achieving what it's supposed to be achieving. I think that's a fair characterization.

[Ted Falk, Conservative, Provencher, MB]

Yes, and I would agree that, based on your audit findings, the department wasn't able to verify that. But you're not really saying that the program isn't meeting its objectives.

[Michael Ferguson]

Again, it's a standard part of program management on the part of a department to be able to demonstrate that a program is meeting its objectives. The department can't demonstrate that, which is the point we're making.

[Ted Falk, Conservative, Provencher, MB]

Good.

I've looked at your recommendations, and I see that the department has agreed with all of them, and I'm certainly pleased with all those recommendations as well. I think the work you've done here is good.

At the end of the last paragraph, you also say:

We met with selected retailers who received contributions, to obtain their views and opinions. We also travelled to a number of isolated communities in the North, to see stores and meet with residents.

Yet in your conclusion you say:

The northern retailers have attested to the Department that they do pass on the full subsidy to consumers.

To me, that indicates the program is working. You didn't audit the retailers and you didn't audit their payment claims and you clearly state that. But you did meet with them and you did find it noteworthy enough to include that in your audit report.

[Michael Ferguson]

Again, the retailers are saying that they are passing on the subsidy, but we feel it's certainly the role of the department to make sure that is the case. Then I think as we say, if the department were to do that, it would help it answer a lot of the questions that are out there about the program, just to make sure that it knows the subsidies are in fact being passed on from the retailers to the consumers.

[Ted Falk, Conservative, Provencher, MB]

Agreed.

Given the price drop of 5.6% in March 2011 and an average monthly reduction of $110 on the revised northern food basket, would you not agree that the program is working?

[Michael Ferguson]

We feel that the northern food basket is not a measure of the nutrition north program for a number of reasons we state in the audit report.

First of all, the food that is subsidized under the nutrition north program is not the same food that's in the northern food basket, so from that point of view, it's different. Similarly, there are about 30 retailers who are not included in the calculation of the food basket. Also, the information is collected for the food basket, but it's not verified. The department doesn't make sure that the information it's collecting is in fact the right information.

We feel that there are enough weaknesses in the northern food basket that.... Certainly it can tell you about what's happening—assuming that all the data it's collecting is right—with the items that are included in the northern food basket, but that doesn't necessarily translate into what's happening under the nutrition north program.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

I think I'm out of time.

[The Chair, NDP, David Christopherson]

Yes, that's perfect.

We're back to Mr. McCallum.

You have the floor again, John.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

In your introductory comments, you said:

When departments do not fully consider the on-the-ground impact of their activities, they are missing opportunities to verify that they are hitting the mark for Canadians.

Then you also said your findings “underscore the disconnect that happens when departments don't have a clear understanding of whether the services they are providing are meeting the needs of their clientele.”

That sounds like a pretty damning overall conclusion. It's pretty aggregate in nature.

In the case of the nutrition north program, I'd like to mention two cases and then, referring back to that quote, ask if you think that these problems are fixable by simply addressing two specific issues, or if there's a more general problem about the department not really seeing to the needs of its clients.

The first one has been referred to before. You have two similarly isolated towns 20 kilometres apart getting vastly different subsidies. One gets $1.60 a kilogram, and the other gets 5¢ a kilogram, so 30 times higher in one case for similar towns. That seems to be a pretty fundamental unfairness built into the program.

The second example is that you say there's no verification of whether or not the subsidy is passed along. Well, the government has a subsidy that's not passed along, so it's pretty well like throwing taxpayers' money into the garbage can if the subsidy is not actually meeting the needs of northerners by providing lower food costs but is just kept by the retailer. You say it can't, or won't, or doesn't measure the extent to which the subsidy is passed along.

I'll mention a third case, although I'm not quite sure of the accuracy of this. Apparently it is claimed that food prices are 8% lower, whereas in fact they went up. I'm not sure if that is right, but let me just keep to the first two: vastly different subsidies for essentially two very similar communities, and no evidence by which to know whether or not subsidies were passed on.

Given your earlier statement, isn't that a pretty general condemnation of this program, or are you saying that everything will be just fine if they fix those two specific issues?

[Michael Ferguson]

I don't think it's a condemnation of the program per se. I think the way this has come back to me—and I think the nutrition north program and the veterans' one are examples of this—is that sometimes what happens in a government department—not always, but sometimes—is they end up measuring the things that are easy to measure. In the case of the nutrition north program, they measure how much food is shipped because that type of thing is easy to measure. They don't necessarily measure the things that really tell them whether the program is achieving what it's supposed to be achieving. In this case what they need to measure is whether the communities are included on the basis of need and if the full amount of the subsidy is actually being passed on to the consumers.

If they were addressing the need, I think that would improve the program. If they were looking at whether the subsidy is being passed on or not, that may or may not improve the program, depending on what they find. But it would help them better understand the program.

In terms of the 8% that you mentioned, if I can just clarify that, it's in paragraph 6.48. Essentially that was a problem that happened with the annual reporting of the department where in one year, I believe it was the 2011-12 year, they reported that the cost of the revised northern food basket went down 8%. The year after that the cost of the revised northern food basket went up 2.4%, but when the department did its second annual report, it forgot to change the wording in that section of the report. In the second report it again said it went down 8%. We identified it really as a quality control issue. When they were preparing that second annual report, they just used the same wording from the previous year in the second year's report, so it was saying there was an 8% reduction when in actual fact there was a 2.4% increase.

[The Chair, NDP, David Christopherson]

Sorry, Mr. McCallum, that's time.

Mr. Woodworth, you have the floor, sir.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you, Mr. Chair.

I'd like to continue my questioning regarding chapter 3.

I will refer you to your statement delivered today and on Monday that from the time they first contact Veterans Affairs Canada, about 20% of veterans have to wait more than eight months before the department gives them a green light to access specialized medical health services.

I am given to understand that this statement does not apply to the veterans who accessed mental health services through the rehabilitation program. Am I correct in that understanding?

[Michael Ferguson]

The comment we made was about the disability program, not the rehabilitation program.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

What I want to know about is which veterans it applies to. Does it apply to the veterans who have only accessed mental health services through the disability program?

[Michael Ferguson]

I guess it applies to all veterans who have applied for benefits under the disability program. Some of those veterans, as we talked about earlier, may have also accessed benefits under the rehabilitation program, but for all of them who have applied under the disability benefit program, 20% of them will wait more than that eight months.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

What I want to understand is whether that figure would be less than 20% if we take into account the reduced times for those who applied under the rehabilitation program.