Public Accounts Committee on June 7th, 2016

[The Chair, Conservative, Kevin Sorenson]

Good morning, everyone.

This is meeting number 18 of the Standing Committee on Public Accounts.

I remind everyone today, as I do every meeting, that we are televised. Please turn your phones to silent mode, so that we aren't interrupted and as a courtesy to our guests as well.

Today we're conducting a hearing on Report 5, Canadian Army Reserve—National Defence, of the Spring 2016 Reports of the Auditor General of Canada.

Appearing before us today, we have Michael Ferguson, Auditor General of Canada, and Gordon Stock, principal.

As well, we have from the Department of National Defence, Bill Jones, senior associate deputy minister; Marquis Hainse, commander, Canadian Army; Derek Joyce, deputy commander, military personnel command; Paul Bury, chief, reserves and cadets; and Rob Roy MacKenzie, chief of staff, army reserve.

Welcome to all.

We have an opening statement from the Auditor General.

Mr. Christopherson, on a point of order.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Chair.

I want to point out that we are missing the deputy minister. I appreciate that Mr. Jones is here and I have no doubt he has information that we need, but the law was changed in the last while that makes the deputy minister legally an accounting officer and accountable to this committee.

It's only by exception that we don't let deputies come, because human nature, let's face it, if a deputy can get away with sending somebody else to a meeting that's not going to be a lot of fun, come along. We have a policy that it's only by rare exception, and it's times that people are away, they're travelling, there's an urgency of us getting to this matter, or we do not want to delay.

It does happen, but I want to emphasize the fact that it is a priority, a mandate, an expectation, and a lawful requirement. Unlike when I started here, it's now the law.

Again, I understand in this case we weren't that pointed in our invitation. I'm raising it as a matter of a point of order in the hope that we can get back to the fact that it's deputies we're inviting. Deputies are expected to be here, and by exception, we can hold meetings without them, but in the main, it's the deputies who should be here.

I wanted to point that out, Chair, to ensure that we keep that standard because that's what works best for us.

Thanks.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Christopherson.

That is certainly a point of order and it is something that we do take fairly seriously.

We appreciate, Mr. Jones, that you've appeared before other committees and we know that you are very capable in this, but the buck does stop somewhere.

As Mr. Christopherson has rightly pointed out, in the department, the deputy minister and the minister are responsible. As Mr. Christopherson also said, there are times—and I don't think this is an example of where this is happening more than once—when deputies will send associates in their place.

I agree. Because of the lateness in the year, into June, with only a week or two left, we wanted this meeting, but we will be a little more upfront and clear that we expect the deputy to be here. We will try to accommodate them. If he or she was unable to be here today, then it becomes on us to find a date when he or she can be accommodated. We do thank you for being here and we know that we're going to have a good meeting.

We'll have an opening statement by our Auditor General, a brief statement from Mr. Jones, the senior associate deputy minister of DND, and then Mr. Hainse, commander of the Canadian Army department.

We'll first go to Mr. Ferguson, please.

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

Mr. Chair, thank you for this opportunity to discuss our 2016 spring report on the Canadian army reserve.

In our audit, we examined whether the army reserve was prepared to deploy on domestic and international missions. We concluded that the army reserve had been shrinking and that gaps in training meant that reserve soldiers were not fully prepared to deploy on all missions.

The Canadian Army needs the army reserve in order to carry out assigned missions. The army reserve provides almost half of the Canadian Army's 40,000 soldiers. On major international missions, the Canadian Army expects army reserve units to provide up to 20% of the deployed soldiers.

However, we found that the training of the army reserve was not fully integrated with that of regular army units. Although the army reserve was given clear guidance on preparing for domestic missions, units did not receive the same level of guidance on how to train their soldiers for international missions. We also observed that the army reserve did not always have access to the equipment it needed for training and deployments.

Many army reserve units did not have the number of soldiers they needed. For example, 12 of the 123 army reserve units were smaller than half of their ideal size. Although the Canadian Army provided funding for 21,000 army reserve soldiers, only about 14,000 were active and trained. In 2015, when army reserve units met for their annual large-scale collective training events across Canada, only about 3,600 army reserve soldiers attended.

National Defence knows that the current reserve recruiting system does not work and that it needs to take steps to improve retention. It has set a goal to increase the army reserve by 950 soldiers by 2019, but in our opinion, this goal will be difficult to achieve, given that army reserve numbers have been declining by about 1,000 soldiers a year.

It is critical that National Defence have information on whether soldiers are qualified for deployment. However, the system that records this information indicated that a high percentage of army reserve soldiers did not hold the required qualifications. National Defence told us the information from this system could not be relied upon.

The National Defence Act has established that reserve force members are to serve primarily on a part-time basis when not deployed. However, National Defence has, in effect, created a class of army reserve soldiers who are employed on a continuing, full-time basis. In fiscal year 2014-15, the Canadian Army spent about 27% of its overall budget for army reserve pay and operating expenses on these full-time contracts, leaving less available for other army reserve activities.

The Canadian Army allocates funds for army reserve unit activities, including training. But the funding model is not consistent with expected results. In the 2014-2015 fiscal year, National Defence reallocated funds from the army reserve budget to use as other than those of the army reserve.

We also found that although individual skills training was designed to train the army reserve and regular army soldiers to the same standard for a particular individual skill, army reserve courses were designed to teach significantly fewer skills than were taught in regular army courses.

We found that this skill gap was not always addressed during the pre-deployment training of army reserve soldiers. For example, when Canadian Army soldiers began to deploy as part of NATO's collective defence in eastern Europe, a gap remained in weapons training between army reserve and regular army soldiers.

We made 13 recommendations in our audit report, and National Defence has responded that it will address each recommendation.

Mr. Chair, this concludes my opening remarks.

We'd be please to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, sir.

Now we will move to Mr. Jones.

Welcome.

[Bill Jones, Senior Associate Deputy Minister, Department of National Defence]

Chair, thank you.

I will make four brief points in order to leave time for my colleague Lieutenant-General Hainse to make his remarks.

Point one, Chair, I certainly want to thank you and the members of the standing committee for inviting us to discuss chapter 5 of the Auditor General's spring 2016 report on the Canadian army reserve.

Point two, I do apologize on behalf of the deputy minister who was unable to make it today. I hear the concern of members, and I will certainly make him aware of it. Again, I do apologize on his behalf.

Point three, I'd like to stress that the Department of National Defence respects, appreciates, and thanks the Auditor General, the Office of the Auditor General, and Mr. Stock, for the good and important work they do on a number of issues, including this particular audit.

Point four, I want to assure members of the committee that we have taken the recommendations of the Auditor General very seriously, and work is under way to address these issues.

With that, Chair, I will just remind members that I think we passed out an action plan to all members as to how we're working on dealing with the recommendations.

I will turn it over to Lieutenant-General Hainse, who will provide more detail on what we're doing and how we're doing it.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much.

Lieutenant-General Hainse.

[Lieutenant-General Marquis Hainse, Commander, Canadian Army, Department of National Defence]

Thank you, Mr. Jones.

Mr. Chair, and all of the committee members, good morning.

First of all, I would also like to thank you for inviting us to participate in today's session to speak about the results of the Auditor General's report and about what we are doing in the army and in the Canadian Forces to address some of the concerns raised in the report.

The army welcomes the opportunity to have an audit conducted by the Auditor General. By all accounts, our support to the team was significant, with over 1,600 documents passed from my office to the audit team in a 10-month period, demonstrating the complexity of the subject. Like Mr. Jones, I also want to thank and compliment the audit team for their hard work.

The audit spans a period of three fiscal years, which was inclusive of the former and the present chief of the defence staff. General Vance, the current chief of the defence staff, reinforced his predecessor's vision in October 2015 when he issued a directive to strengthen the primary reserve as a predominantly part-time professional force, located in communities across Canada, ready with reasonable notice to contribute to operations at home and abroad.

The army has embraced that vision and sees the reserve forces as an integral part of the army team. Beyond its operational role, the army reserve acts as the familiar local face of the Canadian Army in communities across Canada.

Based on current infrastructure, 97% of the Canadian population lives within a 45-minute drive of an army reserve armoury. Our local units provide an excellent opportunity for Canadians to experience the Canadian Armed Forces first-hand.

The role of the army reserve is a professional part-time force that provides local engagement and a responsive integrated capability at home or abroad in support of the army mission.

Being part-time, the reserve force will be trained to the same standard, but not to the same breadth as the regular force. Additional preparative training just prior to deployment will always be required.

The tasks assigned to a reserve unit must be commensurate with the level of employment that is nominally based on one night a week and one weekend a month.

For the last 25 years, the army reserve has provided upwards of 20% of the deployed forces in such places as Afghanistan, the Balkans, Haiti, Sierra Leone and in several other missions.

The army reserve is also called upon to augment and support domestic operations including the Vancouver Olympics and the G8 and G20 summits.

As well, over the past few years, our reserve troops have assisted civil authorities during a number of natural disasters such as recent flooding in Manitoba and Calgary, as well as in last year's fires in northern Saskatchewan.

The army reserve force is currently funded for, on average, 37.5 days per year per member. General funding is also planned for a seven-day group event for half of the reserve force.

Furthermore, the army reserve, according to the army strength report dated May 15, 2016, has 18,550 serving members. However, approximately 1,287 of that number have not attended training in the past 30 to 180 days. Currently, 4,082 of that number are undergoing basic training to reach the initial employment standard. This leaves around 13,181 reserve soldiers trained and available for operation.

The army reserve has proven a deployable domestic capability with the development of 10 territorial battalion groups and four Arctic response company groups.

They are also tasked to generate components of the influence activities task force and the persistent surveillance system, and to provide static and mobile force protection.

It's very important to know that the army reserve is designed to be integrated with the regular army component in order to meet domestic and international operational requirements, and to work as one army team. The concept of integration for international operations is in constant evolution and will continue to be built over the next several years to adapt to the operational requirements and the changing demographic. This integration is not solely envisioned as individual augmentation to help fill structure in the regular force. The army reserve will continue to generate task-specific formed elements to support operations at home and abroad.

Let me now address a few points from the Auditor General's report and some of the other initiatives we are taking to ensure that the army reserve remains efficient and responsive to the needs of the Government of Canada in the years to come.

On recruiting, we are working closely with Major-General Joyce and his team to develop a more streamlined recruiting process that sees new soldiers on the armoury floor within 60 to 90 days of beginning the recruitment process.

On the financial side, the army is reviewing the army reserve funding model to create a more transparent process to allocate resources to ensure training objectives are met. Therefore, we have established a corporate-level financial account as of April 1, 2016, that ensures the transparent allocation of funding for the reserve program. Money cannot be repurposed out of that account unless doing so is sanctioned by the deputy minister or the chief of the defence staff.

On medical care, Canadian Forces health services group, which is part of military personnel command, continues to develop a solution for reserves medical care. Communiqués have been issued throughout the health services chain of command so that all medical facilities understand their responsibility to provide health care services to reservists.

On training, we are consistently reviewing the training system to ensure we integrate training and to ensure that all soldiers are ready for domestic and international operations in due time. We are also developing a formalized tracking mechanism to formally record when all 10 territorial battalion groups and the four Arctic response company groups are confirmed ready on an annual basis.

On equipment, the army manages equipment and support available to provide the resources the army reserves need at any given time for training and operations. We prioritize the equipment we have to meet all of our training and operational requirements. We are also investing in minor equipment purchases, like the delivery of civilian vehicles to the territorial battalion groups scheduled for this summer.

In conclusion, Mr. Chair, I would like to emphasize that the army reserves are undergoing a transformation as a result of the CDS directive to strengthen the reserve forces. The Office of the Auditor General's report tabled on May 3, 2016, only adds to the areas that need change.

This is our way of ensuring that the army reserve remains efficient in responding to the needs of the Government of Canada in the years to come.

Mr. Chair, I would like to again thank you and the members of the committee for hearing us today.

We would be happy to take any questions you may have at this time.

Thank you very much.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, sir.

We will move directly into that first round of questioning. The first round is a seven-minute round and we will go first to Mr. Lefebvre.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

I thank all of the witnesses for being here with us today.

Of course, I read the Auditor General's report, and this morning I received your detailed action plan. I have to tell you that I was very concerned when I saw the replies to the recommendations made by the Auditor General, because they are very vague and dubious.

This leads me to conclude straightaway that there really was no plan. It seems clear that when the audit was done, you took things more seriously and prepared a detailed plan. I am going to come back to it because I have just read it. I'm also wondering about the deadlines you included.

I would like to turn to paragraph 5.61 in the Auditor General's report. Here is a bit of the basis of why I am so very worried about this.

It says:

In 2011, a National Defence report on the employment of full-time Reserve soldiers noted the need to determine the legal and policy basis for these full-time contracts. The report recommended that a full regulatory review of Reserve full-time employment be completed immediately. At the time of our audit, National Defence had not concluded this review.

My first question is, and it should be a very quick answer, has this review been concluded since the audit?

[LGen Marquis Hainse]

I would like to ask Major-General Bury, whose area this is, to answer your question.

[Major-General Paul Bury, Chief, Reserves and Cadets, Department of National Defence]

Mr. Chair, thank you for the question.

The PRECS review and the rationalization of the primary reserve studies we were completing over the last few years have been rolled into the strengthening of the primary reserve ID. Those initiatives carry on, and they continue apace as the CDS ID initiative evolves, so this work is continuing.

[Paul Lefebvre, Liberal, Sudbury, ON]

It is continuing. Therefore, it has not been concluded since the audit.

[MGen Paul Bury]

It has not been concluded. It has been rolled into....

[Paul Lefebvre, Liberal, Sudbury, ON]

Okay. I am looking at some of the plans. I went through each recommendation and looked at your responses. Again, as a committee, there is no doubt that we will.... My conclusion is that we will be asking for more information on a go-forward basis because, to me, there is a pattern of saying, “We are going to do this later. It is something we are taking seriously.” However, there is no end date. I see in your action plan that there are some end dates.

Now, of course, people are accountable. Some people will be accountable for putting this action plan through.

I just got this this morning. I am looking at recommendation 5.70 here. Basically, the date you have given yourselves is January 31, 2022. That is one of the dates you have given yourselves to conclude this review, another six years. Some of that is 2018, so two years. Some of it at least is next year, in 2017.

I understand there is a lot of information gathering. There is a lot of data that you guys need to collect. My concern is that the reserves have been around for a long time, and we are just getting around now to seeing what we have.

As a taxpayer, and maybe the grandson of a former person in the military, it is very concerning.

I am going to ask you, very bluntly, why is this time different?

Thank you.

[Major-General Derek Joyce, Deputy Commander, Military Personnel Command, Department of National Defence]

Thank you for the question, Mr. Chair.

On the specific question regarding 5.70, Mr. Chair, I want to point out the fact that this is not necessarily a review that we are talking about. It is a major upgrade to our human resource software.

The project is called military personnel management capability transformation. Essentially, it is an upgrade from PeopleSoft 7.5, which is what we currently use, to PeopleSoft 9.1 or 9.2. That is why the project length reaches out to 2022.

There are a number of interim releases that are going to be let out to the Canadian Armed Forces during that period, the first release coming up in the spring of 2017, in May 2017, which will see a technological upgrade of the HR system to include 9.1.

[Paul Lefebvre, Liberal, Sudbury, ON]

Perfect. With the rest of the recommendations and the dates you give, who is actually responsible for this? A year from now, if we want to ask somebody else to come and say.... Who is making sure that this action plan is being respected throughout the department?

[LGen Marquis Hainse]

Mr. Chair, we all have different responsibilities. As the army commander, I am responsible for most of it, but when you talk about recruiting and transformation of enterprise systems that target the Canadian Forces, it goes to the Canadian Forces. That is why today you have representation from all of us who will be responsible for implementing this action plan.

[Paul Lefebvre, Liberal, Sudbury, ON]

Okay. Maybe we will go back to it a bit later.

With respect to army reserve funding, unit training, and other activities, the Auditor General stated, “In 2009, the Canadian Army took steps to integrate the collective training of Army Reserve and Regular Army units in the same Division.”

According to the Auditor General, with the exception of artillery units, this has not happened.

What steps have been taken to improve collective training and integration between the reserve and the army?

[LGen Marquis Hainse]

There are a lot of steps that have been taken to improve training for the army reserve.

The first thing we have done, Mr. Chair, is look at the affiliation, and we are looking at more integration with the various units.

It is true that from an artillery point of view, it has always been a lot easier, because there are fewer of those units around, and they have a complement gun system to do it.

When you talk about the infantry, which I can use as an example, it is a bit more complicated because there are a lot of those units. There are more units on the reserve side than there are on the regular forces, so they have to make choices, and they have to be proactive in terms of doing some combined training.

What we have done, and the directions that have been given for the next couple of years, is to ensure first and foremost that there exists a link between the reserve units and their regular forces counterparts, and that they create a training plan to work together in order to do some combined training.

[Paul Lefebvre, Liberal, Sudbury, ON]

Is this in your action plan?

[LGen Marquis Hainse]

This is not in the action plan. This is as part of the strengthening of the army reserve plan, for which I gave the direction in the ID, the initiative directive, in February of last year. I will have a formal plan signed in the coming weeks, when the order is being—

[Paul Lefebvre, Liberal, Sudbury, ON]

When do you think this will be put into place, then? Once you've signed the plan, you want to execute the plan. How much time are you giving yourself to execute the plan?

[LGen Marquis Hainse]

If you look at the action plan, at the timing, you see that I don't have the exact timing right now. I can get back to you with it, but the plan is coming in the upcoming years as per the directive of the CDS, the chief of the defence staff.

[Paul Lefebvre, Liberal, Sudbury, ON]

I don't think we have that directive. Can you undertake to provide us with that directive, please?