Public Accounts Committee on Nov. 29th, 2016

[Capt Sean Griffiths]

I don't believe we have dysfunction, sir. I believe the authority runs quite well. Do we need improvement? Absolutely. The deficiencies found by the Auditor General are of process, not of results. We do admit fully and wholeheartedly that we can improve and tighten up our processes, but I would not call the authority dysfunctional in any means whatsoever. We always need improvement.

[Phil McColeman, Conservative, Brantford—Brant, ON]

On every measure, governance, operations, management, there are deficiencies. Do you agree?

[Capt Sean Griffiths]

Yes, sir.

[Phil McColeman, Conservative, Brantford—Brant, ON]

From what your comments said, the governance board had to be pretty much replaced. Is that true, in your comments?

[Capt Sean Griffiths]

Due to expiries, yes, but not because of competencies. It's due to expiring board positions.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I see. There were management positions where you experienced people leaving, and you weren't able to backfill them with competent people. It strikes me that if we're not willing to pull back that curtain, so be it. I understand. It strikes me that this organization may have gone through a very tough period of, I will say, dysfunction. Coming from the business world, I've seen it corporately in many situations, and there's nothing shameful about it.

Maybe I should ask the chief financial officer who's been there for 22 years or however long.

[Peter MacArthur]

Twenty-eight years.

[Phil McColeman, Conservative, Brantford—Brant, ON]

It's 28 years. It's the longest service. What are your observations on the comments I've just made?

[Peter MacArthur]

I agree with Captain Griffiths. I don't think we were in a dysfunctional situation. We were in a position where I guess timing of the audit was at the same time that we were missing some people in our management, who we later replaced. From the board perspective, Anne Galbraith came in earlier in 2015. We were without a board chairman for about 15 or 16 months before Anne came in.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Perhaps I could stop you there, because I have very little time.

That, in essence, is what I'm saying. You went without a board chair for a long period of time. Why? From 2003, which is 13 years, why did you not have a strategic direction or a strategic plan in place? Why?

[Capt Sean Griffiths]

I can comment on that. Thank you, sir, for the question.

There are a few things. We have no control over board appointments. If a vacancy is left there, it is just the same as today. You would have seen on the slide show—it was quick, but it was there—that the expiry dates of several board members are still expired and not replaced, but we still function.

Further, with the strategic direction, we agreed as a group back in September of last year that it was time to look at our strategic direction and redefine our vision, mission, and mandate. We've done that, and the meeting was set in stone before the audit commenced. It didn't matter, because the audit had to approve the process today, and that process didn't exist. We identified this before the audit kicked off that we had to address this direction.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I'll take it at one more level, if I have a bit of time left, Chair, and that is with the recruitment and staffing of pilots and pilot boat crews. You are unable, again, to provide documentation to demonstrate the fulfillment of ongoing health and competency requirements of pilots and pilot boat crews involved in the delivery of piloting services. These were the findings. This is basic stuff for front-line workers who must be provided and are not being provided, which is again supported by the observations. What's your explanation of that particular recruitment and staffing of pilots being so deficient?

[Capt Sean Griffiths]

This comes down to information management, which we need improvement in. We're aware of that. We couldn't find certain certificates or documentation on file, pieced to our business continuity when we had lost our operations manager due to short notice, as Mr. MacArthur stated earlier. If we had improved information management systems, we would have had that documentation in hand at a certain particular place. We didn't have it. That explained some of it.

The other things that were not on file to ensure health and competence of pilot boats and crew members was due to some certificates that just weren't received from other people. These were under no control of ours either, such as medical certificates. All those cases together made a significant deficiency, as indicated in the Auditor General's report, as to not ensuring the health and competence of pilots and pilot boat crew members.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Is the setting of tariffs a board responsibility or a management responsibility?

[L. Anne Galbraith]

It's the board's responsibility. Management will bring a plan to the board, and then the board will approve it.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Why would the board members accept tariffs that didn't meet expenses?

[L. Anne Galbraith]

It's not that they weren't accepting it; they were being pushed on different sides from our stakeholders. Some of our stakeholders can object to our tariffs.

I guess we were pushed on that a bit. I'm not answering your question very well.

[Peter MacArthur]

May I just make a comment?

Regarding those two years where we had losses, we actually had budgeted to have small profits during those years. We ran into a couple of issues that caused us to lose some revenue. One of the issues, and I won't bore you with it in detail, was that the average size of ships got smaller than what we had forecasted and what we had in previous years. We ended up budgeting...and we were almost dead-on with the number of ships that we had—we were within one per cent of the number of ships that we expected to have over the region—but because of a decline in the size of ships, we were about $1 million short on revenue. That was what happened to us in 2015.

Interestingly enough, we've had a reversal of that, and they're having larger ships come in again this year, so our average revenue per ship is actually higher than what we've budgeted this year.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Christopherson, please.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you for your attendance here today. We do appreciate it.

The first thing I want to note is the percentage of incident-free assignments. It's 99.93%. That's pretty damn good. It's impressive. I suspect that's what you're talking about when you talk about how the result, the actual job you're doing, is doing the job. This isn't all the standards, but that's an important one, and we accept that.

I have to tell you, though, where we have a disconnect from the get-go here, in terms of what's in front of us from the Auditor General and what your testimony is today, is when we're looking at things such as paragraph 5 of the auditor's comments this morning, and they're in the report too. Remember, these are auditors; they're like librarians. They walk softly. They use nice words. They're not mean people. When they say things like “significant deficiencies”, that's harsh in their world. Then, to hear the words “as a result of the pervasiveness of the significant deficiencies”, and then hear the testimony that “oh, no, everything is all fine”, I have to tell you, here's my impression so far going forward: as long as the end works, it justifies the means.

It sounds as if it was a well-functioning organization at one time. We haven't yet identified what changed, but certain people have changed, and now all of a sudden, a lot of the infrastructure that used to be taken care of as well as the good results are not happening.

When I look at some of the things the board hasn't done, it looks a bit like an old boys' network to the extent that they don't worry too much about those details and those reports, as long as they get the job done, and they do. The problem is that when you're a crown corporation for a G7 country, that ain't going to cut it. It would seem that the people who were in charge of this ship before got that, and then somewhere down the line, it fell apart.

I'm going to give you another chance to revisit that answer to what my colleague asked. When I see things like “pervasiveness of significant deficiencies”...boards that at the top of the house—I'm sorry, but you two, a lot of the responsibility is yours.

Before I get into my detailed questions, I'd like to give you a chance to revisit what has gone on there, unless you want, again, to say everything is fine and wonderful. Come on. We want to hear the reality, and I'm not convinced, Chair, that we've heard that yet.

With respect, if you would, please comment.

[The Chair, Conservative, Kevin Sorenson]

Captain Griffiths.

[Capt Sean Griffiths]

Of course. I don't believe everything is fine. Again, I point back to continuous improvement, and we strive for continuous improvement. This is a great exercise for us to identify places to improve, and we agreed with the findings, as mentioned earlier.

We have a lot of work to do. There's no doubt we do, and we're getting there. These issues were identified in the last couple of years before the special exam kicked off further. The lens that is looked at today is different from what it was 10 years ago, completely. The industry has changed. Accountabilities have changed, and it's just a different audit altogether.

As for the significance of the deficiency, I would point to Mr. MacLellan to describe to this committee what that deficiency means. It's not a results deficiency. It's a process deficiency based on audit criteria. So I don't necessarily agree—

[David Christopherson, NDP, Hamilton Centre, ON]

Don't make it sound as if audit criteria is nothing, please.

[Capt Sean Griffiths]

Not at all, I don't. I'm not discrediting the audit material at all, or the way the audit's conducted. But a particular boat, for example, that is not inspected by us annually is still inspected by Transport Canada marine safety and security annually, so to me, the potential or perceived consequence is not significant in our eyes. The process is lapsed, and it needs to be corrected.

[David Christopherson, NDP, Hamilton Centre, ON]

In that case, do you think there needs to be a change so that inspection is not necessary?