Evidence of meeting #120 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 agency.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jerome Berthelette  Assistant Auditor General, Office of the Auditor General
Jean Goulet  Principal, Office of the Auditor General
Philippe Le Goff  Principal, Office of the Auditor General
James Bezan  Selkirk—Interlake—Eastman, CPC
Casey Thomas  Principal, Office of the Auditor General
Nicholas Swales  Principal, Office of the Auditor General
Martin Dompierre  Principal, Office of the Auditor General
Pat Kelly  Calgary Rocky Ridge, CPC
Carol McCalla  Principal, Office of the Auditor General

4:30 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Good afternoon, colleagues. This is meeting number 120 of the Standing Committee on Public Accounts, for Monday, November 26, 2018.

The committee has already met for the first hour in camera. For the second hour, we are public and televised.

We would like to welcome the Auditor General's office here this afternoon. We're disappointed that the Auditor General is unable to be with us. We look forward to seeing him back again.

In the interim, we are pleased to have Mr. Jerome Berthelette, assistant auditor general of Canada; Mr. Martin Dompierre, principal; Monsieur Jean Goulet, principal; Mr. Philippe Le Goff, principal; Ms. Carol McCalla, principal; Ms. Casey Thomas, principal; and Mr. Nicholas Swales, principal.

I will turn the beginning of this meeting over to Mr. Berthelette. We look forward to your comments.

4:30 p.m.

Jerome Berthelette Assistant Auditor General, Office of the Auditor General

Thank you, Mr. Chair.

I am pleased to present our report audits, which were tabled in the House of Commons last week.

First, let's look at our audit of the Canadian Armed Forces efforts to stop inappropriate sexual behaviour in the military.

In August 2015, the chief of the defence staff launched Operation Honour—a top-down, institution-wide military operation to eliminate this behaviour. He informed all members of the Canadian Armed Forces that he and senior leaders intended to change the culture in the forces and stop inappropriate sexual behaviour.

We found that Operation Honour increased awareness of inappropriate sexual behaviour within the forces. After its implementation, the number of reported complaints increased from about 40 in 2015 to about 300 in 2017. The forces believed that the increase was a sign that members trusted that the organization would effectively respond to inappropriate sexual behaviour.

However, we found that some members still did not feel safe and supported. For example, the duty to report all incidents of inappropriate sexual behaviour increased the number of cases reported by a third party, even if the victim was not ready to come forward at that time. Also, the military police had to conduct an initial investigation of all reported incidents even if the victim would have preferred to resolve the issue informally. This discouraged some victims from coming forward.

According to information gathered by Statistics Canada in 2016, there were many unreported incidents of inappropriate sexual behaviour in the Canadian Armed Forces. In mid-2018, the forces acknowledged that inappropriate sexual behaviour remained a serious problem and that a significant focus on victim support and the use of external independent advice was required.

I'll move now to another audit, which also focused on National Defence. It examined whether the department managed risks to Canada's fighter force so that it could meet Canada's commitments to NORAD and NATO until a replacement fleet is operational.

In 2016, the Government of Canada directed National Defence to have enough fighter aircraft available every day to meet the highest NORAD alert level and Canada's NATO commitment at the same time. This meant that National Defence had to increase the number of fighter aircraft available for operations by 23%. This new requirement came at a time when the Canadian air force faced a growing shortage of trained and experienced pilots and technicians.

To meet the new requirement, the government focused its efforts on increasing the number of aircraft. It first planned to buy 18 new Super Hornets, even though National Defence's analysis indicated that this would make the air force's personnel shortage worse and would not help it meet the new requirement.

The government's focus has remained on buying more aircraft. It is now planning to purchase used fighter jets from Australia, as an interim solution to bridge the gap to 2032, which is the current target date for rolling out a replacement fleet. The Australian jets are about 30 years old and have the same operational limitations as Canada's current fleet of CF-18s.

National Defence expects to spend almost $3 billion to expand the life of its current fleet and to buy, operate, and maintain the interim aircraft. However, without a plan to deal with its biggest obstacles—a shortage of experienced pilots and the CF-18's declining combat capability—these spending decisions will not be enough to ensure that the Air Force will have available on a daily basis the number of aircraft needed to meet the highest NORAD alert level and Canada's NATO commitment at the same time. Until National Defence knows how and when it will solve pilot shortages and get better combat capability, more aircraft won't solve its problems.

Let's turn now to the results of our audit of physical security at Canada's missions abroad.

Overall, we found that Global Affairs Canada had not kept pace with evolving security threats at its missions abroad. The department identified many significant security deficiencies in need of immediate attention in a large number of missions. The department had known about several of them for years, yet it had not put in place all of the recommended measures to address them, such as improved video surveillance, alarms, and installing vehicle barriers at entrances.

We found that most of Global Affairs Canada's capital projects to upgrade security were at least three years behind schedule, usually because of weaknesses in project management and in oversight.

Because security assessments were missing or incomplete for some missions, Global Affairs Canada did not have the information it needed to prioritize investments on the basis of where they were most needed, yet the department is responsible for the safety of its staff working at missions abroad and security upgrades to many missions are urgently needed.

The next audit I'm going to discuss also looked at physical assets that the government safeguards on behalf of Canadians—in this case, the country's national historic sites and heritage buildings.

There are long-standing problems in the conservation of Canada's federal heritage properties, and we saw few improvements since we last audited this area in 2003.

We found that Parks Canada, Fisheries and Oceans Canada and National Defence either did not know how many heritage properties they had or did not know what condition they were in. As a result, the information they provided to the public or to Parliament about these properties was either incorrect or incomplete.

We also found that conservation decisions were based on available resources and operational requirements rather than heritage considerations. The money needed to maintain federal heritage properties was not always available.

Needs have outpaced efforts when it comes to the conservation of federal heritage properties, yet their number continues to grow. Because there has been no additional funding to conserve these properties, there is a risk that more may fall into disrepair and eventually be erased from the country's history.

In another audit, we examined how Correctional Service Canada supervised offenders released into the community. The number of offenders released into community supervision increased by nearly 20% between 2013 and 2018, and the Correctional Service anticipates that this number will keep growing.

The Correctional Service has largely reached the limit of offenders it can house in community-based residential facilities. As a result, offenders ready for release in 2018 had to wait twice as long for a space in the community compared to four years before.

Despite the growing backlog and despite research that shows that gradual supervised release gives offenders a better chance of returning to society as law-abiding citizens, the Correctional Service of Canada did not have a long-term plan to respond to its housing pressures. The audit also found that the Correctional Service of Canada did not properly support and supervise offenders once they were released into the community. For 19 of 50 offenders sampled, we found that parole officers did not meet with offenders as often as they should have. We also found that parole officers did not always receive the information they needed to effectively support offenders in the community, including health care information to prepare release plans.

In our view, the Correctional Service of Canada needs to do more to supervise and support offenders released under community supervision. The Correctional Service of Canada must also plan to ensure that it has the types of community housing offenders need where they need it and when they need it.

I want to turn now to our examination of the government's efforts to ensure that all Canadians have access to reliable and high-quality Internet services. Many examinations of the state of broadband Internet in Canada have recommended that the federal government create a national broadband strategy, but the government only agreed to take that step a few weeks ago in late October, after we had concluded our audit.

In the absence of sufficient funding, Innovation, Science and Economic Development Canada has been reluctant to put in place a strategy to meet the connectivity needs of Canadians in rural and remote areas. This means that almost 3.7 million Canadians have less access to important online services, such as education, banking and health care, and they don't know when they can expect the situation to improve.

In 2016, the department launched a 5-year, $500-million funding program that focused on bringing high speed Internet to 300 rural and remote Canadian communities. However, as a result of a number of weaknesses in the design of the program, it did not ensure maximum broadband expansion for the public money spent.

The difficulty of improving Internet access for 3.7 million Canadians in rural and remote areas has been further compounded by the way Innovation, Science and Economic Development Canada has managed the radio frequency spectrum. We found that small Internet service providers struggle to access high-quality spectrum to support broadband deployment in rural and remote areas. For example, the department auctioned spectrum licences for geographic areas that are too large for smaller service providers to bid on, and a secondary market for unused spectrum did not function well, partly because there is little incentive for licence holders to make available for subordinate licensing the spectrum they are not using in rural and remote areas.

That brings me to the last of the performance audits in this fall release. The audit focused on whether the Canada Revenue Agency consistently applied the Income Tax Act during its compliance activities.

We found that the agency inconsistently applied tax rules when it audited or reviewed taxpayers' files, even though the Taxpayer Bill of Rights requires the agency to apply the rules in the same way to taxpayers in similar situations. There were a number of reasons for these inconsistencies, and they included the judgment of agency staff conducting compliance activities, the region where the file was reassessed, and the type of taxpayer—for example, a small business or a large corporation.

Taxpayers in one region waited an average of seven months longer than those in another region for the agency to complete an audit. In one region, it took the agency more than 40 weeks to process taxpayers' requests for adjustments, while in another region it took 12 weeks.

When it came to the financial impact of the Revenue Agency's compliance activities, we found that CRA did not know the full results of the work it undertakes to ensure that all taxpayers pay they fair share of taxes. The agency's calculation of the additional revenues resulting from its compliance activities, beyond the amount it initially assessed, was incomplete. The agency's number did not reflect the portion of taxes written off as unrecoverable from taxpayers. This means that the amount the agency reported to Parliament as additional revenues resulting from the extra funding it received for compliance activities was an estimate, and the impact on the government's fiscal results was significantly less than the agency's estimate.

The reports also include copies of the audit work we've completed in Crown corporations since the spring. These reports have already been made available to the public by the Crown corporations that received them.

We audited the Canada Mortgage and Housing Corporation, the Canada Council for the Arts and the Canada Development Investment Corporation. We found a significant deficiency related to board appointments in both the Canada Mortgage and Housing Corporation and the Canada Development Investment Corporation.

Mr. Chair, that concludes my opening statement. We are now ready to answer your questions.

4:45 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much, Mr. Berthelette, for that synopsis of the audit in its entirety, which was tabled last week in the House.

For Canadians watching, although they have given us a quick little synopsis of each chapter in each audit, the committee will now call those departments to come and explain and, in some cases, defend their action plan. We'll make sure it's followed up with as well. The next 45 minutes isn't the only response that the public accounts committee has to the audit. This is just the appetizer of what's coming.

Now I'll turn over the first seven minutes to Madam Mendès and Monsieur Massé.

4:45 p.m.

Liberal

Alexandra Mendes Liberal Brossard—Saint-Lambert, QC

Thank you very much, Mr. Chair.

I thank all of the witnesses for being with us again today to provide us with this overview of the audit reports.

I'm going to ask a few questions on one of the reports, for personal interest—actually, it struck a chord with me—and that's the one on heritage buildings, the patrimonial aspect of our country.

I was quite distraught to see that we pay so little attention to what little historic patrimony we have in this country. We are a very new country, so we don't have that many heritage buildings around, or even heritage areas. It seems astounding that we don't put emphasis on preserving and taking care of these buildings as they warrant, in my opinion.

For those who don't know, I am of European origin. In Europe, it's very normal to pay great attention to all heritage properties. I was very shocked to discover the state of our heritage properties.

I'd like to know if this is entirely due to the lack of financial means.

In paragraph 19 of your brief, you say:

“We...found that conservation decisions were based on available resources and operational requirements, rather than heritage considerations.”

Is this mostly an issue with money, rather than a lack of public interest? Is that why we are neglecting our heritage buildings to that extent?

4:45 p.m.

Jean Goulet Principal, Office of the Auditor General

Thank you very much for the question.

According to what we've seen, the designation process ends with the designation. Insofar as the government's policies and laws are concerned, the designation does not lead to an increase in the funding allocated to conservation. To conserve heritage buildings, the departments are forced to use their operating funds, as they do for all the other non-designated buildings. If heritage buildings are not used operationally, under Treasury Board Policy, the departments are not obliged to invest to maintain them.

4:50 p.m.

Liberal

Alexandra Mendes Liberal Brossard—Saint-Lambert, QC

So they are more or less abandoned.

4:50 p.m.

Principal, Office of the Auditor General

Jean Goulet

Exactly.

4:50 p.m.

Liberal

Alexandra Mendes Liberal Brossard—Saint-Lambert, QC

I know this is hypothetical and you did not necessarily have this in mind in your audit, but I'm wondering whether we could consider the creation of a historical society or organization that would take care of Canada's heritage properties, somewhat like what is done in England or in France. Those countries attach a great deal of importance to the conservation and enhancement of heritage buildings. That can be done by using public funds, but also through other quite creative funding arrangements.

It seems to me that the government as such has the obligation to take care of these properties for the generations to come.

Because Parks Canada is so much a part of this discussion, it also goes to our environmental heritage and what we should preserve for future generations.

Would it be something for us to consider, as a committee, to recommend to the government?

4:50 p.m.

Principal, Office of the Auditor General

Jean Goulet

We didn't audit that specific part, obviously.

What I would say, though, is that we made a specific recommendation regarding designation and conservation. We're not suggesting that the government should be investing more funds to conserve the existing buildings; what we're saying is that there is a disconnect between designation and conservation. When you designate and you don't provide the funding to conserve, then you're just looking for trouble.

We have recommended that Parks Canada get together with all of the other departments that have heritage buildings and look at the designation process, and also consider conservation requirements as part of that. That could include anything, including what you're suggesting.

4:50 p.m.

Liberal

Alexandra Mendes Liberal Brossard—Saint-Lambert, QC

Thank you.

4:50 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Mr. Massé, you have the floor.

November 26th, 2018 / 4:50 p.m.

Liberal

Rémi Massé Liberal Avignon—La Mitis—Matane—Matapédia, QC

Thank you, Mr. Chair.

I'll be quick.

First of all, thank you for the work you do. It is important and enlightening work for all the parliamentarians and Canadians who examine your reports.

I am going to focus on one report in particular, because my colleagues will discuss the other ones.

I'm interested in the report on the connectivity of rural and remote regions, just like the other 3.7 millions citizens like myself who only have access to very low speed Internet service. At home, when I am get up and want to download La Presse, I have to tell my sons to get off the Internet so that I can have access to it. Many people are in the same situation.

In your general message, you say that Innovation, Science and Economic Development Canada was reluctant to develop a strategy without the necessary funding. You say that that department has invested $500 million to connect several rural and remote communities in Canada to high speed Internet services.

Why do you say that the department was reluctant to establish a strategy?

4:50 p.m.

Philippe Le Goff Principal, Office of the Auditor General

That hesitation comes from the department itself. It confirmed to the audit team that it was not able to provide long-term funding to develop a strategy to connect all Canadians to high speed Internet services. So the department limited itself to ad hoc programs, like Connect to Innovate, which is the latest version of the program to connect Canadians.

4:50 p.m.

Liberal

Rémi Massé Liberal Avignon—La Mitis—Matane—Matapédia, QC

In his statement, the Assistant Auditor General said that the government had informed you a few weeks ago that it agreed to establish a national strategy to respond to the conclusions of your audit.

Did I correctly understand what the Assistant Auditor General said, Mr. Berthelette?

4:50 p.m.

Principal, Office of the Auditor General

Philippe Le Goff

On October 26, the Minister of Innovation, Science and Economic Development publicly committed, with its provincial and territorial partners, to develop a long-term strategy to improve Canadians' access to high speed Internet services.

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you, Monsieur Massé. I gave you an extra 30 seconds. That's about as good a birthday present as I can give you today. On November 28, happy birthday.

4:55 p.m.

A voice

It's November 26.

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

What's that? It's November 26, you're right.

Go ahead, Mr. Bezan.

4:55 p.m.

James Bezan Selkirk—Interlake—Eastman, CPC

Thank you, Mr. Chair. I hope the 10 seconds of birthday wishes aren't taken out of my time.

4:55 p.m.

Voices

Oh, oh!

4:55 p.m.

Conservative

The Chair Conservative Kevin Sorenson

They aren't, so go ahead.

4:55 p.m.

Selkirk—Interlake—Eastman, CPC

James Bezan

Thank you.

Mr. Chair, I want to thank our witnesses from the Office of the Auditor General for being here and for the great work they do on behalf of Canadians and on behalf of us as parliamentarians in making sure that dollars and programs are fitting the mandate of the Government of Canada.

I want to concentrate on report 3, the fighter jet study.

As we know, early last week there was a report through the access to information office that the term “capability gap” never existed before 2016. I noticed in your report that you never used that term. I am wondering, in the time that you did your research, if “capability gap” existed in the lingo that's used by the Royal Canadian Air Force, or whether it is strictly a misnomer used for political spin.

4:55 p.m.

Casey Thomas Principal, Office of the Auditor General

Thank you very much, Mr. Chair.

In 2016 the government changed the policy requirement of how it wanted National Defence to meet its NORAD and NATO commitments.

In the past, National Defence had risk-managed between NORAD and NATO. In 2016 the government changed the requirement. It asked National Defence to meet NORAD at its highest level, and also to meet its NATO commitments at the same time.

That did create a gap. That meant that National Defence had to increase its production of aircraft by 23%. The gap, however—

4:55 p.m.

Selkirk—Interlake—Eastman, CPC

James Bezan

Is the correct term actually “operational availability”, not a “capability gap”? You do talk about combat capability, which is different from operational availability.

4:55 p.m.

Principal, Office of the Auditor General

Casey Thomas

What we're referring to, Mr. Chair, in the report is a shortage in pilots and technicians. That's where, essentially, we found that there was a need. With respect to that, National Defence was facing a shortage in pilots and technicians prior to the 2016 change. The change in 2016 actually made the shortage worse.