Public Accounts Committee on Dec. 4th, 2014

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chairman.

Thank you to our witnesses for attending here this afternoon.

I have a line of questions I want to ask, but before I do that I just want to respond to my Liberal colleague's comments a little bit.

In 2006 our government passed the Federal Accountability Act that banned corporations and unions from making donations to any political party in an effort to get rid of the big money involved in politics. The member opposite here has directly stated that there was a company that donated to the Conservative Party, which is an inaccurate statement. It has to be an inaccurate statement, because companies—

[Voices]

[Inaudible]

[Ted Falk, Conservative, Provencher, MB]

No. Companies—

[The Chair, NDP, David Christopherson]

We're not going to get into a debate.

Continue, Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

I just want to get it on the record that the company couldn't have donated to the Conservative Party. I want to make that clarification.

Ms. King, you joined the company in July. At the time of your recruitment, were you aware of the audit?

[Janet King]

Yes, I was.

[Ted Falk, Conservative, Provencher, MB]

Good for you. Didn't it frighten you?

[Janet King]

No. I'm proud to continue to work in the north. I think the mandate of the Canadian Northern Economic Development Agency is a very important one, for the reasons we've talked about. It is my pleasure to apply any skills I have to help them move forward.

[Ted Falk, Conservative, Provencher, MB]

I always find interesting, when I read an audit, not what the audit says but what it doesn't say. What it doesn't say is often identified by the things it does say.

The conclusion on page 19 is very clear that the weaknesses identified by the audit come in the form of administration, monitoring, measuring, and reporting. It doesn't talk about the effectiveness of the program. I think that's a very important part to note: the effectiveness of the program wasn't audited, but the administration end of it was, and there were some weaknesses identified.

There were some recommendations made to the department. I commend the department. One of the first changes the department made, obviously, was to hire a new president. I think the department is moving in the right direction there.

I would like to just follow up with some of the progress that has been made on the recommendations identified in the audit. I'll look specifically at the fourth recommendation. I'll read it and ask you and perhaps your colleague Mr. Bloom to comment on it:

The Canadian Northern Economic Development Agency should document its recipient and project risk assessments. It should also define appropriate levels of monitoring and reporting to be specified in contribution agreements, proportionate to recipient and project risks.

Can you comment on that and tell me what the department is doing with that recommendation?

[Mitch Bloom]

Doing risk assessments is never easy, certainly not in economics and businesses. It's important, and the agency has reviewed its risk assessment tools to make sure they're up to date, current, and effective, and that happened. It was an opportunity, but it happens anyway. Under the government's policy on transfer payments, we're required to do that, and we do. It's the same thing with our performance measures. We're required to review them, and we do.

We used this as an opportunity. It was cyclical. We've only been around for five years, so you try to get things in a systematic way to completely review the risk assessment framework the department uses, to develop concrete tools that would make it easier for staff to apply them on a case-by-case basis, and also to get consistency. We cover 40% of Canada's land mass. It's not easy, but these kinds of tools help us do that.

[Ted Falk, Conservative, Provencher, MB]

Okay, good. Is there anything you want to add further on that point? No? That's good.

Then I'd like to go to the next recommendation:

The Canadian Northern Economic Development Agency should review recipient reports and follow up on cases where information is incomplete or does not support activities specified in the contribution agreements. It should also document follow-up and monitoring activities to ensure that agreements are being monitored in accordance with the requirements of the Policy on Transfer Payments.

You have agreed to that recommendation. What is the progress to date?

[Janet King]

As we noted earlier, we now have tools. We have noted here that a lot of the issues identified were administrative in nature, so the effort made to date has been to ensure that the files are complete and accurate, that the officers know what an appropriate file is that completely covers the requirements of due diligence for the project. That is in place now, and the monitoring done on files has progressed. We've done Nunavut. We've done Yellowknife. Whitehorse will be done this week, as the first cycle of spot-checking to make sure that the correspondence and project tools are actually being fully used.

That's coming right back to our management committee—I think the results from the Nunavut office were within a week or two—which we then share across the organization to encourage others as well to make sure that files are clean and complete, and continue to inform our officers and managers across the organization.

[The Chair, NDP, David Christopherson]

Thank you. I'm sorry, time has expired.

Moving along, Monsieur Giguère, you have the floor again, sir.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair.

My first question is a quick one for Mr. Ferguson.

I quickly re-read your document, but nowhere did I see that you had pointed out or observed a problem with misappropriation or ethics. Was that not part of your review of this agency?

[Michael Ferguson]

No, the types of things that we identified were not getting reports, not following up on what was spent, what was planned to be spent, and that sort of thing. The issues that we were raising were simply that the agency didn't have the information to really be able to monitor some of the grants that it gave out.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

So you didn't observe any misappropriation or ethical breaches?

[Michael Ferguson]

Certainly there was nothing that we identified.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much.

Perhaps Ms. King can answer my next question.

This report deals with the past and what was observed at the time of the audit. Could you please speak a bit about what isn't in the file, that is, your partnerships with local individuals for developing and improving your services and, if I may, increasing your economic impact in the far north? Could you please tell us a little more about that?

[Mitch Bloom]

Perhaps I can answer your question.

It is absolutely essential to have several partners in the far north. We work closely with all members of the community, particularly when it comes to improving the performance of our programs.

I myself began a process to update all of our programs. I considered it absolutely essential to do so, and I did it. We work directly with community members and major agencies for economic development in the far north. That is how CanNor works. There aren't many people in the far north, so we absolutely must all work together.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

In that respect, there is also discussion of staff training in the far north. That is one of your objectives. Unfortunately, your performance in the far north falls short. In fact, the economic development of large projects is generally done using a “fly-in, fly-out” system, meaning that someone is brought in rather than using local staff.

How can you counterbalance this economic trend with this program?

[Mitch Bloom]

I am proud to say that we are doing a lot to address this issue. As the president mentioned, we have created the northern adult basic education program to start the process that will help them gain the skills they need to work on these major projects. We will no longer have to hire people who work or live in southern Canada. Making this kind of socio-economic change is a long process.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I have one last question, and it is for Mr. Ferguson.

If the agency applies your recommendations properly, would all the problems you observed disappear fairly quickly?

[Michael Ferguson]

Certainly, our recommendations were made with the intention that they would help the organization deal with the types of problems that were identified. Certainly that was the goal of making those recommendations, to help them improve their practices and improve their management of these grants so they can have a better understanding of the impact that the grants are having.

[The Acting Chair, Conservative, Bryan Hayes]

There's 30 seconds left, if you want it.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Since I don't have much time left, I will just say that, when we look into this problem in 10 years, I hope that your agency's experience will have helped strengthen the economy in the north.

Thank you very much.