Public Accounts Committee on Oct. 19th, 2017

[Stan Lazar]

We work closely with the Government of Manitoba and the water stewardship branch there to understand the fish stocks, and the business plan that we have before the Government of Canada right now recognizes that the fish are sustainable for the foreseeable future. We really don't have anything in place over the long term—

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

The recent science disputes that, and I've read it. Lake Winnipeg has collapsed before and it will collapse again. I think that is a risk that you need to really assess.

The other risk is the allocation of fish stocks. What's developed on Lake Winnipeg, for example, is a very high-value recreational fishery that is far more important to the Manitoba economy from a dollar and cents standpoint than the commercial fishery, and public bodies allocate public resources based on the highest and best use.

Have you factored any reallocation of the walleye fish stocks into your risk analysis?

[Stan Lazar]

No, we haven't.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

In terms of the non-quota species, the off-quota species such as mullet and carp, what are your plans for marketing them, and will you be able to pick up the slack financially if and when your access to walleye stocks have declined?

[Stan Lazar]

We have aggressive marketing plans for a number of those species. I'll use carp as an example. We have a very lucrative market for carp roe. We've done a lot of good work and are earning high margins on that species. Although whitefish isn't in that same category, we sell whitefish roe and tullibee roe, which are very profitable and provide high margins to support the profitability of the corporation.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

I must compliment you on the carp marketing you have done. Just going back to the notion of fishery sustainability, anything we can do to reduce the carp populations in Manitoba is a very good conservation move, so I congratulate you on the carp.

What are your plans for mullet? I understand that you have some really good markets in New York. Are you going to be able to expand that for the mullet cakes you make and that kind of thing?

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Sopuck.

Go ahead, Mr. Lazar. You can finish.

[Stan Lazar]

Yes, New York is a large market for us, and when it comes to mullet, again we have various marketing plans in place to ensure that species is profitable for the corporation.

[The Chair, Conservative, Kevin Sorenson]

We'll now move to Mr. Christopherson, please.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Thank you all for your attendance.

I don't know an awful lot about fish, but I know a lot about auditing, and I'm with Mr. Lefebvre. This audit is a jaw-dropping evisceration of this entire operation. It's the worst that Mr. Lefebvre has seen. He's been here for two years. It's in my top three, and I've been here 14 years. This is among the top three worst audits I have ever seen in terms of how a crown corporation is being operated in this country. What an absolute mess.

I understand that you can only take so much responsibility because you have only been there so long, but you're the face of the organization. You have to wear this.

The first thing I would like to know is how many of the board members and staff from before 2016 are still around?

[David Bevan]

There are two board members still around. Actually, that's an interesting question, because what happened leading up to the audit was that a number of staff who were there in the past were removed and replaced, following a system that was not acceptable.

We had to correct that. Starting in 2016, the new interim president—John Wood at the time—had to correct a number of deficiencies with respect to the staff and replace the capacity within the organization following a proper procedure. That was done. We had to correct issues related to improperly purchased equipment. We had to deal with a badly managed whitefish inventory. All that took a little bit of time to correct, but we got it back on its feet. I think you can see from the results in terms of profitability, earnings, and getting our costs under control that we have made progress.

[David Christopherson, NDP, Hamilton Centre, ON]

Are there still board members who were around from before and are still on the board?

[David Bevan]

There are two, yes.

[David Christopherson, NDP, Hamilton Centre, ON]

Really. I find that very surprising.

[David Bevan]

I would point out, however, that they were among the people who were raising issues with the Government of Canada that led to the appointment of new board members, the replacement of the president who was responsible at the time, and so on. Those are the people who were acting to inform the government that they had a problem, and the government acted in response to that. That was before the audit.

[David Christopherson, NDP, Hamilton Centre, ON]

So are you suggesting you kept the good ones?

[David Bevan]

We kept the ones who were in it for the long haul.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay.

I have one question and then more of a comment.

I'm with Mr. Lefebvre. Where do you begin? It would almost be easier for us to talk about the things that were done right, because it's a much shorter list.

I want to ask a question of the Auditor General's office.

Turn to the profitability slide that the agency has presented. I'm looking at page 8, exhibit 1 at the top of that page. If I understand correctly, you were factoring in some of the value differences of the currency, which you suggested—my words—kind of skewed the result.

This is beyond my academic competency level by a long shot, but I'm looking at that chart, and then I'm looking at theirs. I'm asking you to help me do apples to apples. Are they saying the same thing?

[Clyde MacLellan]

Let me respond. Quite simply, I think they do cover slightly different periods of time. The purpose of the corporation's chart is to reflect the current trend in where they are going and the rising profitability.

We looked at the chart that we had. It starts when we did the audit and goes back.

[David Christopherson, NDP, Hamilton Centre, ON]

Right.

[Clyde MacLellan]

The principal message we were trying to accomplish is what you indicated. One of the drivers of the profitability that the corporation experiences is in relation to the exchange rate. All we wanted to raise was the fact that exchange rates go through cycles, and if the exchange rates become unfavourable to the corporation, it will make it more difficult to generate profitability if the responses are not done to the types of operational issues we identified.

[David Christopherson, NDP, Hamilton Centre, ON]

Very good. Thank you. That's what I thought. It's not quite as solid as it might seem, but really, that's getting into the details here.

When I stand back, colleagues, and I look at this thing with a kind of oversight, I'm looking at this, Chair, and I'm thinking 80%—is there really a possibility that you can exist going forward after you lose 80% of your business? Is that viable?

[David Bevan]

That's assuming that we lose the 80%. We are signing contracts with suppliers in order to secure a supply of fish to keep the infrastructure—

[David Christopherson, NDP, Hamilton Centre, ON]

I don't want to be rude, and I'm sorry for interrupting, but I'm going to run out of time. I'm down to one minute.

What I wanted to say, Chair, is that it seems to me that going through the details of all the things that are wrong is like an exercise in futility. We know it's a mess.

I don't know that they're going to survive. We hope they do, if they're doing good work on behalf of the Canadian people. However, I'm almost inclined, Chair, to say that we almost need to give them a period of time to go back to find out whether we've even got an entity here that we're operating on. If they do have a plan going forward, then it makes sense to get into the details of the numerous issues that are raised here.

I'm just thinking that to go through it all now, they're either not going to be here in a short period of time or they're going to exist in a very different shape or come up with a different business plan. What I'm saying is that we will no longer be auditing apples, but we're going to be auditing oranges.

I'll just leave it with you, Chair, and colleagues, that maybe we need to leave a period of time to let them get their act together and come back to us with the entity that they think they can sustain, going forward. Then we'll talk to them about auditing that and commitments and recommendations, rather than doing it now, because they're in such flux.

I leave that with you, Chair. Thanks so much.

[The Chair, Conservative, Kevin Sorenson]

Our responsibility is to take a look at the Auditor General's report and to make certain that the strategy the entity has is a strategy that's going to satisfy Canadians and satisfy the committee, but more importantly maybe, even satisfy the Auditor General.