Public Accounts Committee on Dec. 4th, 2014

[Janet King]

I'm sorry, I just want to make sure I understand the question. That is the start-up of the organization—

When CanNor was implemented it did inherit a number of very capable and knowledgeable officers from its predecessor organization as well, so we do have mature knowledge and continuously try to take in and train younger, newer staff as well.

[The Chair, NDP, David Christopherson]

Thank you. Sorry, the time has expired.

Thank you.

We move over to Mr. Woodworth. You have the floor, sir.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

I would like to welcome all the witnesses and thank them for being here today.

I would like to begin at the beginning. Mr. Ferguson, I notice you have some comments on page 1 of your report, in paragraphs 6.1 and 6.2, about the history of this agency. In paragraph 6.1, you mention some of the unique challenges in the north, including distance from markets, limited physical infrastructure, human resources and organizational challenges, and socio-economic conditions. These are all pretty obvious. They're not hidden. They are well-known challenges in the north. Is that correct?

[Michael Ferguson]

For the most part, yes, those aren't anything new. It was just by way of background. It wasn't something we identified as part of the audit.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

I would say that these challenges in the north have been well known for many years, and certainly throughout the 1990s and early 2000s they were obvious. Would you agree?

[Michael Ferguson]

Yes. Again, we've identified them as being challenges that the agency would face to help develop the economic activity in the north.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

The idea of having a stand-alone agency dedicated to northern economic development or to economic development in that region is one that has been used elsewhere in Canada and is a common and effective means of helping to spur economic development. Wouldn't you say that?

[Michael Ferguson]

I certainly can't speak to the effectiveness of all organizations. This audit was only an audit of CanNor. It is policy to put in place organizations that help focus on economic development in different parts of the country, so I would say it's not uncommon to have that type of agency, but I can't speak to its effectiveness.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Did you discover anything in particular, any study or other triggering event, which led to the establishment of this first stand-alone agency dedicated to northern economic development?

[Michael Ferguson]

We mention in chapter 6, paragraph 6.2 that it was identified in the 2008 Speech from the Throne, which committed to establishing it.

I'll just turn to Mr. Wheeler to see if there was any other study we noted before the creation of the agency.

[Glenn Wheeler, Principal, Office of the Auditor General of Canada]

Mr. Chair, no. As the Auditor General mentioned, paragraphs 6.1 and 6.2 are intended to provide some background in terms of some of the challenges that the government faces in promoting economic development in the north. As the Auditor General mentioned, these challenges are long-standing and well known.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

What I'm really wondering about is whether you can shed any light on why the former Liberal government did not take this action. Why did it have to wait for the election of the new government in 2006 to get down to it? Did you discover anything that would answer that mystery?

[Michael Ferguson]

Again, the audit was an audit of CanNor after it was established, after it got set up, and how it was managing these three particular programs. We don't audit government policy about why something is established. What we do is look at how they fulfill their mandate.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

In any event, we know the history is that within two short years of the establishment of the present government in 2006, this good proposal appeared in the 2008 throne speech. Within a few short months after that, in January 2009, the budget announcement was made. Then your audit began in the 2010-11 fiscal year, about a year after that. Is my timeline correct on all of those points?

[Michael Ferguson]

In paragraph 6.6 we say that our audit work covered the period of August 1, 2009 to August 15, 2013. We covered the work of the agency essentially from the point in time the agency was created.

[The Chair, NDP, David Christopherson]

Thank you. The time has expired.

Moving along over to the third party, Madam Jones, you now have the floor.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you, Mr. Chairman.

I want to thank our guest today for coming and for answering our questions.

There are lots of questions with regard to this report. I'm going to start with section 6.35. In this section you mention that for some contribution agreements that were given out, paperwork was not completed or filed on time, and there was lack of adequate tracking. I know you have already spoken to some of these pieces but I'm using this as a segue into where I'm really going with this.

Where I'm going is from 6.35 to 6.53. In 6.53 it says that CanNor “has affirmed that values and ethics are important in the administration of grants and contributions.” Well, first of all we're looking at the ethics piece and we're also looking at the piece where much of the paperwork was not filed and there was an inadequate tracking system.

On the very day I think the report was released I also submitted through the order paper in the House of Commons a question on the number of contracts given by CanNor that were under $10,000 for the period of about a year that was ending in 2014. So it would have been around the same time that the rules around the ethics portion of this was being reaffirmed. What I noticed were several things.

First of all, I noticed there was a company that was given a contract for speech writing services. It was an Ottawa-based firm by the name of Don Cummer and Associates. This particular company has also been a long-time high-level donor to the Conservative Party of Canada in a number of election campaigns, not just one.

My question is in terms of looking at the values and the ethics and the administration of the grants and contributions of CanNor. How does it fit when those contracts are being awarded to long-time contributors to the Conservative Party?

[Janet King]

I'm unable to speak to the specifics of the particular example that you provide but I can say that all contracts given by CanNor certainly follow the rules and procedures of contract implementation.

[Yvonne Jones, Liberal, Labrador, NL]

Well, according to the findings that were written in the Auditor General's report there were a number of inadequacies that weren't followed within CanNor.

This is not the only example of the list that I recovered, where there have been long-time contributors to the Conservative Party who were given contracts by CanNor, contracts that were signed off, from what I understand, by the minister. In fact, one of those contracts was to a company called True North Properties Group and the company president was Mr. Birrell, who had directly donated to the minister's campaign.

So I'm not sure how the ethics piece measures up in CanNor if direct contracts and services can be given to all of these groups who are long-time donors to either the minister who is responsible or the Conservative Party.

[Janet King]

Again, I would just like to note that with respect to any contracts provided by CanNor we routinely and consistently follow government contracting procedures. Most, if not all—I can check with my colleagues—of our contracts are done through standing offer, so groups that have been cleared to provide contracts.

[Yvonne Jones, Liberal, Labrador, NL]

Does it seem ethical at all for CanNor to benefit donors who are donating to the minister and awarding them direct contracts from the agency?

[Janet King]

Again, I can't speak to the individual contracts you're speaking of. Contracting would be done on the basis of need by the organization using standing offers and the procedures endorsed by the Government of Canada, so done according to all the rules.

[Yvonne Jones, Liberal, Labrador, NL]

In the report it states the following:

The Agency has affirmed that values and ethics are important in the administration of grants and contributions. This is particularly so for the Agency because in small northern communities, there is a higher risk that an employee, family member, or friend of the employee may be able to benefit directly or indirectly from the funding provided. In 2013, the Agency issued its Values and Ethics Code of Conduct. We found the Code to be consistent with federal government requirements.

Someone should be able to tell me: is it an ethical practice of your agency and all other agencies in government that any company directly donating to the governing party and to the minister responsible in that agency would be contracted services?

[Janet King]

Again, it is my view that, as long as government procedures and rules are followed, it would fall within our values and ethics.

[The Chair, NDP, David Christopherson]

Sorry, time has expired. Thank you.

Moving along, we'll go to Mr. Falk.

You have the floor, sir.