Thank you, Mr. Chair, for giving us this opportunity to discuss our special examination report on VIA Rail Canada Inc. I am accompanied today by René Béliveau, the principal responsible for this audit.
A special examination of a crown corporation is somewhat similar to a performance audit. In particular, a special examination seeks to determine whether the crown corporation's systems and practices provide reasonable assurance that its assets are safeguarded, its resources are managed economically and efficiently, and its operations are carried out effectively.
Our examination covered the period between November 2013 and September 2015. Our examination identified a significant deficiency in the corporation's governance. We found that, despite VIA's efforts to define a long-term strategic direction, the corporation still did not have a long-term plan or direction approved by the federal government.
For several years now, VIA's five-year corporate plan and funding have been approved only on a short-term basis, and often late in the corporation's fiscal year. In that context, VIA could not fulfill its mandate as economically, efficiently, and effectively as desired. If it continues, this significant deficiency could even compromise the corporation's medium- and long-term viability.
We found that the corporation had improved its practices in several areas. For example, in the strategic planning area, we noted that the corporation had the key elements of a risk management framework, had a performance measurement process that enabled VIA to follow up on its operations, and adequately communicated its results. In the operation area, we found that VIA had systems and practices that enabled it to meet the needs of its customers, mitigate safety risks, and ensure the reliability of its operations, the safeguarding and control of its assets, and the quality of its services.
We also identified room for improvement in some areas. In particular, VIA needs to improve its profitability analysis mechanisms, the documentation of its safety management system, and the mechanisms used to measure the effectiveness of that system. VIA also needs to pursue planned improvements to its project management systems and practices, which did not adequately support the implementation of certain significant projects of the capital investment program approved by the government in 2007 and 2009.
We further found that VIA had not met its strategic objectives of increasing revenues in ridership so as to ensure its longer-term viability. The results analysis for VIA indicated that between the 2010 and 2014 fiscal years, revenues increased by only $5 million, whereas total operating costs increased by $61 million. We also noted that ridership decreased by 350,000 passengers during the same period.
In addition, on-time performance of trains has worsened significantly since 2010, from 82% to 76%, largely because of the significant increase in congestion on the rail network that VIA has to use.
Moreover, VIA did not succeed in increasing the frequency of train departures, as it anticipated when it negotiated the renewal of its main service agreement with the railway companies that own the railway tracks. The corporation will need to find lasting solutions to those problems if it is to ensure its long-term viability.
VIA Rail agreed with all our recommendations, and indicated that it would act quickly to address our concerns. However, since our audit was completed in September 2015, I cannot comment on any measures that have been taken since then. The committee may wish to ask VIA officials to clarify what measures have been taken in response to our recommendations.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you.