Evidence of meeting #11 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was data.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Ferguson  Auditor General of Canada, Office of the Auditor General of Canada
Nicholas Swales  Principal, Office of the Auditor General of Canada
Richard Domingue  Principal, Office of the Auditor General of Canada

8:45 a.m.

Conservative

The Chair Conservative Kevin Sorenson

I call the meeting to order.

Good morning, everyone, and welcome. This is meeting number 11 of the Standing Committee on Public Accounts, on Thursday, May 5, 2016.

I would remind everyone today that we are televised. For our audience as well as for members of our committee, I would just remind you to mute your phones or your communication devices.

As we gather here this morning—I'm an Alberta member of Parliament—I think what's happening right now in Fort McMurray is in all our minds, prayers, and thoughts. Certainly we have an emergency there and a crisis. Even though we're taken with the work of this committee, our thoughts and prayers are with the people of Fort McMurray.

Before we get to our main guests, we will welcome a number of people who are here this morning. We're very pleased to have the Auditor General of Nepal, Bhanu Prasad Acharya; the deputy auditor general of Nepal, Sukhadev Bhattarai; the assistant auditor general of Nepal, Baburam Gautam; and the assistant information officer of Nepal, Ganesh Prasad Poudel.

Welcome here. We're so glad that you're able to join us today and we look forward to meeting you, perhaps later.

8:45 a.m.

Voices

Hear, hear!

8:45 a.m.

Conservative

The Chair Conservative Kevin Sorenson

As many guests as we may have, there's no other that we're more pleased to see here than the Auditor General of Canada, Mr. Ferguson. He is with us to present the 2016 spring reports of the Auditor General of Canada. The Auditor General is accompanied by Jerome Berthelette, assistant auditor general, as well as Richard Domingue, principal, and Nicholas Swales, principal.

We know the Auditor General will brief us on a number of areas: report 1, the venture capital action plan; report 2, detecting and preventing fraud in the citizenship program, report 3, the Governor in Council appointment process in administrative tribunals; report 4, drug benefits—Veterans Affairs Canada, and report 5, Canadian Army Reserve—National Defence. As well, the Auditor General includes two special examinations of crown corporations, one for PPP Canada Inc. and one for VIA Rail Canada Inc.

Now I will ask Mr. Ferguson, our Auditor General of Canada, to proceed with his comments.

8:45 a.m.

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

Thank you.

Mr. Chair, I'm pleased to present my spring 2016 reports, which were tabled in the House of Commons this past Tuesday. The reports include the findings of five audits and two special examinations.

One of the themes that ties a number of our audits together is that the data collected by many government organizations is either not usable, not used, or not acted upon.

In the first of our audits, we examined how the Department of Finance Canada, the Business Development Bank of Canada, and Innovation, Science and Economic Development Canada designed and implemented the government's venture capital action plan. This plan dates back to 2012, when the government announced that it would spend $400 million to strengthen venture capital investment in Canada.

Having completed this audit, it is unclear what impact the government's action plan will have on venture capital and innovation.

Overall, we found that investors were initially reluctant to participate in the venture capital action plan for a number of reasons, including high management fees and regulatory constraints. We also noted that the selection process for fund managers lacked fairness, openness, and transparency.

In the areas of monitoring and reporting, activities under the venture capital action plan were properly monitored and reported within government, but little information was publicly shared. We also found that performance indicators were lacking, making it difficult to assess what benefit the action plan will ultimately bring for Canadians.

Let's move on to the citizenship program. In this audit, we concluded that Immigration, Refugees and Citizenship Canada's efforts to detect and prevent citizenship fraud were not adequate.

Some important controls designed to help citizenship officers identify fraud risks were inconsistently applied. Because of weaknesses in the department's database system, officers did not always have accurate or up-to-date information about addresses that were known or suspected to be associated with fraud. For example, one address was not identified as a problem even though it had been used by 50 different applicants, seven of whom were granted Canadian citizenship. In addition, even when information was available in the system, officers did not always act on it. The department's task is further complicated by poor information sharing with the RCMP and the Canada Border Services Agency.

We also found that Immigration, Refugees and Citizenship Canada did not have in place all the elements it needed to successfully manage fraud risks in the citizenship program. For example, the department did not have in place a rigorous process to identify, understand and document the nature and scope of citizenship fraud risks. It also did not have a way to verify that existing measures to detect and prevent fraud were working as intended. These gaps make it difficult for Immigration, Refugees and Citizenship Canada to assess the impact of its efforts to combat citizenship fraud and to ensure that it is focusing its efforts on the right areas.

In the third audit we're presenting today, we examined the process that is used to appoint the heads and members of administrative tribunals. This process is known as Governor in Council appointments. Administrative tribunals regulate specific areas of the law or provide individuals with a way to appeal the government's decisions, such as decisions about immigration status or first nations claims.

Our office last audited this area in 2009. At that time, we found lengthy delays in some appointments. In our most recent audit, we found that this problem persisted in some cases and that these delays have impacted tribunals' ability to make timely decisions.

For example, at the Immigration and Refugee Board of Canada, the average time to process immigration appeals has grown from 10 to 18 months since 2009. Given the importance of the work that these tribunals perform, these delays and the resulting backlogs are concerning. We also found that while the selection processes for chairpersons and full-time appointees were open and transparent, there was no documentation to support several part-time appointments. In our view, without this type of documentation, it is not possible to demonstrate whether the process results in the appointment of individuals with the necessary expertise and skills.

Our spring reports also provide the results of our most recent audit of Veterans Affairs Canada. This audit focused on how the department is managing drug benefits for veterans.

To recap our findings, Veterans Affairs Canada has not managed its drug benefits program in a way that considers the impact on veterans. Veterans Affairs Canada's decisions about which drugs to cover were poorly documented and not clearly based on evidence such as veterans' needs, clinical research or cost-effectiveness. Where decisions were made, there were no timelines to implement them. In one case, a decision to limit access to a narcotic was still not implemented two years after it was made.

We found that while Veterans Affairs Canada used some cost-savings strategies to manage the cost of the drug benefits program, including substituting generics for name brand drugs and negotiating reduced dispensing fees with pharmacies, it has not assessed whether these strategies are working as intended. That means that the department does not know whether it is using the right strategies to prudently manage the taxpayer dollars that are used to fund veterans' drug benefits.

We also found that while the department monitored some high-risk drugs, it has not adequately monitored drug use trends important to veterans' health and the management of its program. For example, the department covers marijuana for medical purposes when authorized by a physician, but it does not monitor whether veterans using marijuana for medical purposes are also using drugs prescribed to treat conditions such as depression. Effective drug utilization monitoring can help improve health outcomes for veterans by flagging cases of higher-risk prescription drug use.

In another audit also linked to the military, we concluded that the number of soldiers in the Canadian army reserve has been shrinking and that gaps in training mean that reserve soldiers were not fully prepared to deploy on missions.

Reserve soldiers make up almost half of the Canadian Army's complement, and they are expected to provide up to 20% of the soldiers deployed on major international missions. We found that the Army Reserve lacked clear guidance on how to train for international missions. The Reserve did not have the number of soldiers it needed, and the Canadian Army lacked key information on whether the soldiers it did have were prepared to deploy when required.

There has been a steady decline in the number of army reserve soldiers because National Defence has been unable to recruit and retain the number of soldiers it needs.

For example, in 2014-15, the Canadian Army funded about 21,000 army reserve soldiers, but only some 14,000 were active and trained. Furthermore, in 2015, only about 3,600 attended their annual large-scale training events.

National Defence has recognized the need to improve its training for army reserve soldiers and to better integrate its part-time soldiers with their counterparts in the regular army.

This brings me now to the final piece of our Spring reports to Parliament, the reports of our special examinations of PPP Canada Inc. and VIA Rail Canada Inc. These reports were issued to the corporations respectively in September 2015 and March 2016. In the case of PPP Canada, we are satisfied that during the period under audit, the Corporation maintained the systems and practices we examined in a manner that provided it with reasonable assurance that its resources and activities were managed economically, efficiently and effectively.

In the case of VIA Rail, while we found strengths in the way the corporation managed its operations, we did find a significant deficiency in the corporation's governance. We observed that for a number of years, VIA has received only short-term approval of its funding and corporate plan, and often late in the fiscal year. This makes it difficult for the corporation to carry out its operations economically, efficiently, and effectively.

Before taking your questions, I want to go back to my earlier remarks about data in government. Weaknesses in the way in which data is collected, used and shared within departments and organizations are having a direct and significant impact on the public service's ability to serve and protect Canadians.

There is no shortage of examples, not just in these most recent audits but also in past ones, to warrant my concern about the way data is collected and used, or not, by government organizations. In these audits, we've seen that serious consequences can arise when government data is either not useful or not acted upon. In the citizenship program, such failings are limiting the effectiveness of efforts to combat citizenship fraud risk.

In National Defence a lack of current data on human resources is keeping the Canadian Army from knowing whether reserve soldiers are trained and ready to deploy, yet the army relies on these soldiers to carry out its international missions.

In the case of Veterans Affairs Canada, the department is not using the data it collects to better understand how its clients use drug benefits. This missed opportunity is not in the best interests of veterans, because data about drug utilization can be used to inform decisions about which drugs to cover for a particular individual. I believe that government departments and organizations urgently need to turn their attention to this issue.

They need to focus on collecting the right data to support their activities, on ensuring that data is well managed and up to date, and on fully using this data not only to inform their core business but also to support reporting and continuous improvement.

Mr. Chair, that concludes my opening statement. We'll be happy to answer any questions you may have.

9 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much.

We'll now move into our first round of questioning, and that goes to the government.

Ms. Shanahan, you have seven minutes.

9 a.m.

Liberal

Brenda Shanahan Liberal Châteauguay—Lacolle, QC

Thank you very much, Mr. Chair.

Thank you again, Mr. Ferguson and your team, for being here this morning to bring us your findings. They are very interesting to us, since we are still new to government. It really lets us know what our job is ahead of us.

I'm going to leave it to my colleagues on the committee to tackle each of the individual reports, because there is considerable substantive detail that we want to get into on each of these, and, frankly, some low-hanging fruit that we need to address, but your overriding concern is the state of data collection and usage across all government departments, and I'd like to understand better from you how we could address that problem.

The way I'm seeing it—and again, I'm new at this—is that when we're collecting data, Mr. Chair, we're first concerned with the collection of it. We know that we're dealing with legacy systems. We know we are dealing with different methods across departments. We know there is a concern about quality and accuracy of the data and we're also concerned about how that data is used and, even when we have it, we are concerned that employees are either not able to use it or are not properly trained on how to use it.

I would like to hear more from you, Mr. Ferguson, or any one of your team, on how we can get to the root causes of this problem and maybe on how we can address it.

9 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you, Mr. Chair.

The reason we decided to make that the theme of this report is, first of all, that it comes up in a number of the audits that we're reporting on in the spring audits. It also it has been something that I've particularly noticed over the four-plus years I have been in this role. It seems to be something that comes up in a lot of different audits we have done.

We are now at a stage where people expect there to be data that is useful, data that can be analyzed, and data that can help governments identify trends to improve their programs, but we're seeing a number of problems in the way that data is collected.

Again, it really comes down, first of all, to making sure departments understand what data they need to collect, why they need to collect it, and what they're going to use it for. Once they have determined that, then they need to have an approach in place that makes sure that they are storing the data in a way that it can be accessed and in a way that ensures that the data is accurate so that it can be used for what they want it to be used for.

Obviously there are a lot of different aspects to this. In some instances there is data that the government is not collecting that they could collect that would help them to analyze and understand programs better, but what we've been putting our emphasis on is simply on the data that the government is already collecting and is already storing in some way, and we're trying to put an emphasis on making sure that at least that data is properly managed.

There is then the bigger issue about whether there should be more data and more sophisticated systems, but we're really trying to say that at the very basic level, it is just making sure that the data that's being collected now is of sufficient quality that it can be used.

Also, there needs to be appropriate attention on the sharing of that data—respecting privacy requirements, of course, but on sharing that data among different departments and programs in cases where that data can help multiple programs, and I think we've seen that problem in the case of the lack of sharing of information between the RCMP, the Canada Border Services Agency, and Immigration, Refugees and Citizenship Canada in terms of detecting citizenship fraud.

Trying to put it in a nutshell, that would be the way I would describe the problem.

9:05 a.m.

Liberal

Brenda Shanahan Liberal Châteauguay—Lacolle, QC

Do I have time? Yes?

Do we have any examples? I'm sure we're not alone in dealing with this problem. This is, of course, a whole new world of data collection, and there are concerns about privacy and accuracy in sharing. Are there examples that we can look to? Do we need something like a data czar, for example, to oversee the use and collection of data across all departments?

9:05 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

I think different organizations have different approaches to this. We did an audit not long ago on Statistics Canada and identified they have an appropriate system of quality assurance to make sure the data they are collecting is being properly stored. Of course, Statistics Canada's business is data. That is their core business, and we did find they had an appropriate system of quality control around the data they collect. I think that would probably be the first place to look.

9:05 a.m.

Conservative

The Chair Conservative Kevin Sorenson

We'll move now to the opposition side and to Mr. Godin.

You have the floor for seven minutes.

9:05 a.m.

Conservative

Joël Godin Conservative Portneuf—Jacques-Cartier, QC

Thank you, Mr. Chair.

My thanks to the Auditor General for his presentation. Thanks also to those who are here with him before the committee today.

Mr. Ferguson, I have some specific questions for you.

In the report on Veterans Affairs Canada’s drug benefits, part 4.5, we find the following:

Veterans Affairs Canada has a Formulary Review Committee, which is responsible for reviewing, maintaining, and revising, when necessary, its drug benefits program.

Is that structure effective?

9:05 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

You are referring to the committee, I believe.

We certainly identified some shortcomings in this committee’s work, in the sense that it has no clear directives and usage criteria on which to base decisions about the medications included in the list of those that are covered. We also observed that there is no fixed timeline for implementing those decisions. We identified problems with the committee, but I believe that it is, in general, a good idea to have a committee with all the skills needed to examine medications and to make decisions of that kind.

9:10 a.m.

Conservative

Joël Godin Conservative Portneuf—Jacques-Cartier, QC

You say that the committee does not have the instructions it needs to do that. In part 4.22, we find:

While it had a process for managing its drug benefits list, it did not systematically ensure…

Is the problem with applying the process or with the structure and the lack of information?

9:10 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

In general, the issue is the lack of clear direction, yes. We observed that it is not possible to identify the reasons for which the committee made certain decisions because of a lack of direction and also a lack of documentation on each of those decisions.

9:10 a.m.

Conservative

Joël Godin Conservative Portneuf—Jacques-Cartier, QC

Let’s move to part 4.26, entitled: “Decisions related to marijuana for medical purposes”. I read the following:

Furthermore, departmental documents indicate that the decision to cover marijuana for medical purposes as a non-formulary product on a case-by-case basis was made at the senior management level, rather than by the Formulary Review Committee.

If I understand that correctly, a senior employee decided on requests on a case-by-case basis, with no set structure and specific criteria.

How could decisions be made like that? Is it the department responsible that did not establish a procedure for that? Or was it done on an individual’s initiative, with the department not bothering to do a self-assessment and to establish a process based on sound management?

9:10 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

That decision was not made by the committee. As we mentioned, it was made by a senior official in the department, meaning someone who was not a member of the committee. That is not a normal situation. Decisions are not normally made in that way. In this particular case, a department employee in a senior management position made the decision. That is why we identified a problem.

9:10 a.m.

Conservative

Joël Godin Conservative Portneuf—Jacques-Cartier, QC

I sincerely appreciate this finding in your audit. It is actually something simple but it can have major significance.

Did you conduct an investigation to find out which criteria that person used in order to make the case-by-case selection?

9:10 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

The decision was based on the fact that medical marijuana is a medication that is covered. So that person did not make the decision in each case. It was certainly a broader decision on the part of the department to pay for that kind of medication.

Once again, that decision is impossible to explain. I feel that it would be a good question to ask the department.

9:10 a.m.

Conservative

Joël Godin Conservative Portneuf—Jacques-Cartier, QC

So basically, you did not examine the situation in more depth to find out how that senior employee could have undertaken such an initiative. From reading the report, I conclude that it was perhaps done on the individual’s own initiative.

9:10 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

I cannot say whether it was a personal decision or not. In the audit, we simply observed that the decision had not been made through a normal process. That is why we pointed out this problem, which your committee may see as more significant. You could ask the department about it.

9:15 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Mr. Ferguson.

Thank you, Mr. Godin.

Now we go to Mr. Christopherson, please, for seven minutes.

9:15 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Thank you very much, Mr. Chair.

Thank you, Mr. Ferguson and your team, for the work you have done and for being here today.

I would like to follow up on the excellent questions of my colleague, Madam Shanahan, with regard to the data. It is not that often that you step back from your micro-focus in your report to talk about things of this nature, and when you do, we need to pay particular attention.

I recall our briefing the other day. To paraphrase you—and correct me if I am wrong—we have spent two or three decades now putting together very sophisticated systems and programs that work. They are state of the art and they are the gold standard in the world, but without the proper data going in, in a timely, efficient, and complete manner, and then being analyzed in the right way, quite frankly, all the efforts of that great, sophisticated system fail us. I very much appreciate your raising this issue.

Also, I think it is very important that you have taken the time to show Canadians, through your report and your public comments today, how this affects individuals. Otherwise, this issue could get lost. It is not very sexy. You are never going to get a headline that has data in it, as a rule, and yet we know that this is the key piece of it. If this doesn't work, the rest of it doesn't work at all.

Again, in outlining the impact on the citizenship program that you've analyzed, your words today were, “...such failings are limiting the effectiveness of efforts to combat citizenship fraud risks.” There is nothing more timely or important than security.

You went on to say:

In National Defence, a lack of current data on human resources is keeping the Canadian Army from knowing whether Reserve soldiers are trained and ready to deploy, yet the Army relies on these soldiers to carry out its international missions.

We have spent some time on that, and I hope I can return to it, if I have time.

Again, you said:

In the case of Veterans Affairs Canada, the Department is not using the data it collects to better understand how its clients use drug benefits.

Here is the thing that matters:

This missed opportunity is not in the best interest of veterans.

How many more alarm bells do we need at the political level to understand that this is important?

I also want to add—and I do have a question in all of this—that ultimately our goal here at the public accounts committee is really not “gotcha”, although some looking in might think so, in terms of how we approach this; at the end of the day, our real objective is to change behaviour.

Some will find this surprising, but nothing makes me happier than a report that says, “You know what? Most things in this department are going tickety-boo.” I mean, it denies me a chance to get up and rail away as an opposition member, but as a parliamentarian.... It's like hearing you say that the annual books are clean—you use that term. That warms my heart. I don't care who is in government at the time. I like that. Our purpose is to change behaviour so that deputies and others who are responsible don't end up here watching what happens to some senior bureaucrats who aren't following things the way they should.

All of that—I am actually going somewhere—is to ask, what can we do? I appreciate that you have raised this, sir. We are now doing what we can in this public arena, and that is part of the partnership between the work you do and the work of this committee, but on an ongoing basis, what can we put in place to allow us to monitor and measure, and to satisfy ourselves that we are getting that change in behaviour—that the deputies and the others who are responsible understand that this is a big deal and that from here on, one of the things we are going to be focusing on is this issue?

Again, I have learned in my time here that if we don't have the ability to measure something, we can't really effectively determine whether we are making any headway.

Do you have any suggestions for us, here at the political level, about anything we can do that would assist you in ensuring that this important component in the work of government is done properly? Do you have any thoughts at all, sir, on what we can do to help in that regard?

9:20 a.m.

Auditor General of Canada, Office of the Auditor General of Canada

Michael Ferguson

Thank you, Chair.

I will start with a couple of things.

The reason I've highlighted this as a theme of concern is that I've been noticing it come up in a number of audits that we've done, and I felt that maybe it hasn't been noticed. Whether at a committee hearing or anywhere else, it hasn't always been noticed, and departments aren't necessarily getting all of the questions about the state of the data that they should be getting, even when we've been highlighting that there have been issues.

The first step was for me to raise it, and I'm encouraged by the fact the committee is understanding the importance of this issue. The first step is that when we bring an audit forward and there is a discussion about the data not being complete or some problems with the data, there will be some pointed questions for the departments about how they're going to fix it.

I think another thing that would be useful for committee members to keep in mind is that sometimes when we go in and look at a system and test it, we can find that maybe the quality of certain data or information is—I'm just going to pick a number—95%. Lots of people will think of 95% as in, “Well, if I got 95% on a test, I'm happy”, but lots of times 95% isn't good enough when you're dealing with collecting data. Make sure when you're seeing results that you don't just take those numbers at face value, and that committee members are thinking about those and perhaps saying, “Okay, well, it looks like a fairly high percentage, but is it good enough?”

The question mentioned the state of the government's financial statements. We've been expressing opinions on financial statements for a number of years. I think it's been 15 or 16 years in a row that the Office of the Auditor General has been able to give a clean audit opinion on the financial statements of the Government of Canada. For 15 years in a row, the government writ large has been able to maintain its financial information in such a way that we can go in, look it, and come out saying that it was appropriately reflected in financial statements—within limits of materiality, of course. It's not as though they've been struggling with that and have only recently done it.

That goes back to my point that we're well beyond the point in time.... Departments should not be having the types of problems with collecting and managing data that we've been seeing in these audits.

9:20 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Mr. Ferguson.

We'll now move over to Ms. Zahid, and you have seven minutes as well, please.

9:20 a.m.

Liberal

Salma Zahid Liberal Scarborough Centre, ON

Thank you, Chair, and I would like to thank the Auditor General and his officials for joining us today.

I'll be focusing my question on report 2, regarding detecting and preventing fraud in the citizenship program.

For me and for all of us, I think, Canadian citizenship is something that is valued and sought after by people all over the world. We have an obligation to protect its integrity. If Bill C-6, which is currently before this Parliament, becomes law, then fraud or misrepresentation will be the only grounds under which we would revoke anyone's citizenship. This speaks to how seriously we take this as a country.

I was disturbed to read that you found the department was not able to adequately detect fraud in the citizenship program. Based on the samples you evaluated for this report, are you able to estimate the scope of the problem? Can you quantify it? What percentage of approved applications may be fraudulent or suspect?