Evidence of meeting #80 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 audit.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Michael Ferguson  Auditor General of Canada, Office of the Auditor General
Jean Goulet  Principal, Office of the Auditor General
Martin Dompierre  Principal, Office of the Auditor General
Casey Thomas  Principal, Office of the Auditor General
Carol McCalla  Principal, Office of the Auditor General

8:45 a.m.

Conservative

The Chair Conservative Kevin Sorenson

I call the meeting to order.

Good morning, everyone. Welcome to the Standing Committee on Public Accounts. This is meeting number 80, on Thursday, November 23, 2017.

I would remind everyone this morning that we are televised, so please take your telephones and put them on vibrate or mute or something. It helps, especially when the mikes are on, so please do that.

Today we are having a briefing on the Fall 2017 Report of the Auditor General of Canada.

As our witnesses today, we have Mr. Michael Ferguson, our Auditor General of Canada. He is accompanied by his principals, Jean Goulet, Martin Dompierre, Casey Thomas, and Carol McCalla.

I would invite the Auditor General of Canada to make his comments before we go into the usual first and second rounds of questioning from our committee members.

Welcome again. Good morning, and the floor is yours, sir.

8:45 a.m.

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

Mr. Chair, I am pleased to be here to present the findings of six performance audits and two special examinations that were tabled in the House of Commons on Tuesday.

When I look at these audits together, I find that once again, I am struck by the fact that departments do not consider the results of their programs and services from the point of view of the citizens they serve. I find myself delivering this message audit after audit, and year after year, because we still see that departments are focused on their own activities, and not on the citizen's perspective. The audits we have delivered this week are no exception, as you will see.

Let's start with our audit of the Phoenix pay system. Here, we looked at what Public Services and Procurement Canada and selected departments and agencies were doing to fix problems with the system, and eventually have a system that takes less effort to pay government employees, not more.

We found that a year and a half after the federal government launched the Phoenix pay system, over 150,000 public servants were still waiting for a pay request to be processed. The value of outstanding pay errors, including employees who were paid too little and those who were paid too much, was about half a billion dollars at the end of June 2017.

We found that Public Services and Procurement Canada has been largely reacting to problems since Phoenix was launched. In our view, it will take years to fix the pay system, and it will cost much more than the $540 million the government has so far identified that it will spend.

In a similar situation in Queensland, Australia, it took seven years and $1.2 billion to fix most of the pay problems.

Next, I will turn to our audit of how the Canada Revenue Agency's call centres handle inquiries from taxpayers.

Overall, we found that the customer service results that the Canada Revenue Agency reports make its call centre service look better than it really is.

For example, the agency says that 90% of callers are able to connect with either its self-service system or a call centre agent. While this is technically true, it only reflects part of the caller's experience. The agency's reported rate does not reflect that, on average, a taxpayer has to call about four times in a week just to get through to the agency.

We found that the Canada Revenue Agency's numbers didn't account for the 29 million calls it blocked in a year, more than half its total call volume. Those calls either get a busy signal, a message to visit the agency's website, or a message to call back later. Overall, we found that only 36% of calls were able to connect.

Based on our tests and those done by others, we found that the Canada Revenue Agency gave taxpayers wrong answers to their questions almost 30% of the time. This is significantly higher than the roughly 6.5% error rate estimated by the agency.

Let's go now to an audit that looked at Immigration, Refugees and Citizenship Canada's $257-million initiative to help Syrian refugees settle in Canada.

Overall, we found that the settlement needs of more than 80% of Syrian refugees were assessed.

However, the audit identified two main concerns. First, Immigration, Refugees and Citizenship Canada delayed the transfer of $51 million to its service providers by at least three months, which caused some service reductions.

Second, the department didn't collect all the information it needed to monitor whether Syrian refugees were integrating into Canada. For example, it didn't know what proportion of school-aged Syrian children were enrolled in school.

In another audit, we looked at Health Canada's programs to help Inuit and first nations people improve their oral health.

Overall, we found that Health Canada spends more than $200 million a year on medically necessary dental services for Inuit and first nations people. Even though the department knows that the oral health of Inuit and first nations people is significantly worse than that of the rest of Canadians, it does not know how much of a difference its dental benefit program makes.

Health Canada does know that its $5-million children's oral health initiative, which is focused on prevention, improved the oral health of some first nations and Inuit children. However, the department's data shows that fewer children are now enrolled and fewer services are provided under the initiative than in previous years. Health Canada does not know why this is the case, making it difficult to address the situation.

In our audit of Correctional Service of Canada, we found that CSC's programs and services did not meet the rehabilitation needs of women offenders, especially those with mental illness.

The tool that CSC uses to assign women offenders to security levels and correctional programs was designed to assess men, not women. As a result, some women offenders were held at a higher security level than necessary and were assigned to programs that CSC could not deliver before the majority of offenders were first eligible for parole.

A delayed release means that women offenders do not have a gradual re-entry into the community, and it also costs more to keep them in a correctional facility.

We found that Correctional Service Canada's mental health teams were not fully staffed to provide the mental health services that women offenders need. We also found that CSC placed in segregation cells women offenders who were at risk of harming themselves or committing suicide. It is not appropriate to keep women offenders with serious mental health issues in segregation cells, where they do not get the clinical support they need.

In another audit, we focused on whether the Royal Military College of Canada educates and trains officer cadets at a reasonable cost to take on leadership roles in the Canadian Armed Forces. The Royal Military College of Canada is a federally funded university.

We found that the quality of the college's academic programs is good, but it spends about twice as much per student as other universities. National Defence was unable to show how the military officers trained at the college were more effective in their jobs than those who came into the Canadian Armed Forces through other entry plans.

We also found that the Royal Military College of Canada did not provide officer cadets with adequate training in leadership and in the proper conduct expected of future officers. While the college took action when serious incidents of misconduct were reported, the number of incidents involving senior officer cadets showed that the college had not prepared them to serve as role models for their peers.

In our opinion, the academic environment at the college does not consistently support the teaching of military conduct and ethical behaviour. The college must re-establish its focus as a military training institution so that it can produce the leaders that the Canadian Armed Forces requires.

Our fall reports to Parliament also include copies of the special examination reports that we delivered to Atomic Energy of Canada Limited and the National Capital Commission since the release of our spring reports.

Overall, we found that Atomic Energy of Canada Limited had in place systems and practices it needed to successfully implement its government-owned, contractor-operated business model. The corporation now needs to turn its attention to measuring whether this new model is efficient and effective.

Our examination of the National Capital Commission found that more than one-quarter of the NCC's assets, some of which are of historical value, were in fair, poor, or critical condition. The commission's resources, as authorized in its approved corporate plan, are not sufficient to restore and maintain these assets. The NCC has committed to finalizing an analysis of the resources it needs and developing options to address the situation.

I was hoping to be able to talk about something other than results for citizens. I keep delivering the same message, which is that the government doesn't understand its results from the citizen's perspective. It's possible that our message of citizen-centric service delivery has been heard at the individual program level; however, we see no signs of it being picked up government-wide.

As we begin new audits, we find the same absence of focus on fully understanding what Canadians are getting from government programs—whether it is answers to their tax questions, mental health support for women offenders, improved oral health for Inuit and first nations, or the extent of the problems the government has in paying its employees.

It appears that our message is not being heard at a whole-of-government level, and that concerns me. Government is supposed to be about service to citizens. Getting there requires a concerted effort across government to understand and measure the citizen experience, not just one program at a time, but across all programs and services.

Thank you, Mr. Chair.

I am now ready to take your questions.

8:55 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much, Mr. Ferguson, for your audit and for your words this morning.

We'll now move into the first round of questioning, a seven-minute round, beginning with Monsieur Massé.

8:55 a.m.

Liberal

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

Thank you, Mr. Chair.

Mr. Ferguson, I'd like to thank you and your team for all your hard work every single day. Your reports are fact-based and objective, with a clear view to ensuring that public funds are properly spent and well managed.

For the most part, I'm going to focus on your Phoenix pay system report. It's a report that worries me, as do the others. I want to say that my thoughts are with all the public servants affected by the Phoenix pay problems. My thoughts are with all the people working in Miramichi, Matane, Ottawa, and elsewhere who are working tirelessly in an effort to fix all these problems.

I have no doubt that, like me, my fellow members of Parliament receive emails and calls from public servants experiencing tremendous difficulty because of this problem. They are in our thoughts.

To put things in context, I would point out that the previous system was 40 years old. In 2010, in fact, your predecessor had this to say in one of his 2010 reports. I'm going to read the quote in English, because that's the version I have:

A breakdown would have had wide and severe consequences. At worst, the government could no longer conduct its business and deliver service to Canadians.

It was therefore clear that it was time for a new system.

Seven years later, here we are, trying to understand the extent of the system and its problems. We can all agree that the system is far from simple. With more than 300,000 public-sector employees, just over 100 departments, and 105 collective agreements to manage, the federal public service pay system has to process nine million transactions a year, which total some $20 billion annually. There is no question, then, as to the system's importance.

The Government of Canada chose the PeopleSoft system produced by IBM. My question is very simple.

Let's say we could wave a magic wand and resolve all of the 494,000 outstanding pay requests today. Given your analyses, reports, and discussions with public servants, do you think it is possible to make the system work? Is it possible to perform transactions? Could pay transactions function properly if all the outstanding pay requests were to disappear today?

9 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

That's actually not the case. There are obviously a lot of problems. As you mentioned, we can do a broad review of all the problems, but the fact remains that every person affected is dealing with very specific problems.

Of course, there are all the outstanding problems, but the system is not capable of processing all the pay requests properly, even today. As we indicated in our audit, the number of outstanding requests continued to grow for months, until the end of our audit period in June 2017.

Despite the many months the system has been in place and all the work that has been done in an effort to resolve the problems, the pay system is not capable of processing a variety of pay requests properly.

9 a.m.

Liberal

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

In paragraph 1.54 of the report, you state that:

…the Department restricted user access to the system when it was calculating pay. Therefore, pay advisors could not access parts of Phoenix for about 5 working days out of every pay cycle of 10 working days.

I'd like you to comment on that. I gather that the department wanted to hire hundreds of new staff to handle the problems and use all kinds of workarounds to deal with the system's flaws and shortcomings.

I'd like you to clarify things. Is that still the case? Is it still impossible for pay advisors to access the system 50% of the time?

9 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Go ahead, Mr. Goulet.

9 a.m.

Jean Goulet Principal, Office of the Auditor General

Thank you for your question.

The information contained in the report refers to the state of affairs on June 30, 2017. The department informed us that the situation was improving, but, as I'm sure you can appreciate, we weren't able to verify whether that was in fact the case.

You mentioned the use of workarounds to solve the problem. To deal with the issue, the department devised an approach whereby employees would enter the information in Excel spreadsheets during those five days. Once the applicable part of the pay system came back online, the information would be uploaded to the system server. This process, however, also caused its share of errors. The situation seems to have improved, but we weren't able to verify that.

9 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Be very brief, please, Mr. Massé.

9 a.m.

Liberal

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

I'm not sure whether I can ask you this, Mr. Ferguson, but what is the solution? How should we go about fixing the problem?

9:05 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

Fixing all the problems is extremely tough. I think it's important to follow certain steps. Establishing a sound governance structure to ensure plans are followed is the first step. Having a comprehensive plan containing all the projects needed to resolve the problems is also key. Focusing initially on the function responsible for ensuring employees are paid correctly and on time is another important step. Incorporating mechanisms to make the system effective and efficient would then be advisable.

I think those are also steps that have to be taken on a broader level.

9:05 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much, Mr. Ferguson.

Mr. Deltell, you may go ahead for seven minutes.

9:05 a.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Thank you, Mr. Chair. I want to applaud you on your French skills, which continue to improve. On that front, we have in you, Mr. Ferguson, someone who is leading by example. I want to say thank you and bravo.

Ladies and gentlemen, welcome to your House of Commons.

I want to begin by echoing what my fellow member Mr. Massé said earlier about the Phoenix pay problems. Our thoughts are, first and foremost, with the tens of thousands of Canadian workers who, regrettably, are waiting to be paid correctly. Like all of our ridings, mine is home to employees of the federal public service, albeit fewer than provincial government employees—which I'm sure you can appreciate since I am from the Quebec City area. Two weeks ago, when I was eating breakfast at a restaurant in Val-Bélair, I met a woman who, with tears in her eyes, shared her ordeal with me. Those are the people we are thinking about today. I imagine you and your team also had those people in mind as you were writing this report.

Mr. Chair, in the first few paragraphs of his report, Mr. Ferguson clearly references the fact that the previous pay system was 40 years old and in need of replacement, and that it has taken seven years to get to this point.

Obviously, launching a new system like this doesn't happen without raising a few red flags. That is why, under the previous government, decision-makers decided to put the implementation of the system on hold, not once, but twice in 2015, because it wasn't adequately ready.

History being what it is, on February 24, 2016, the current government chose to pull the trigger on Phoenix, initiating the trail of devastation we are now all too familiar with. It was relaunched in April, and, even though everything seemed to be going fine, it turned out to be a disaster.

Mr. Ferguson, in paragraph 1.86 of your report, you make a rather scathing observation, and I quote:

We found that for the first 16 months after the pay problems started to surface, there was no comprehensive governance and oversight of efforts to respond….Public Services and Procurement Canada did not work with departments….[T]here was no governance structure to define which committees and working groups were needed and what their roles and responsibilities should be to provide clear direction or to coordinate their work.

In a nutshell, they buried their head in the sand. They did not deal with the problem and opted to work in isolation instead of hand in hand with other departments.

How do you explain such a lax approach, Mr. Ferguson?

9:05 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

Once again, it is difficult for me to explain why it happened, but those are our audit findings.

Public Services and Procurement Canada initially felt that there were issues concerning 82,000 employees and that it would resolve those issues in October 2016.

The department did not know that the issues were more serious than it originally thought. It took time for the department and the Treasury Board Secretariat to realize that a governance structure would have to be implemented. It was only at the end of our audit period that those two organizations started to implement the necessary structure. It's very important to have this kind of a structure and to have the department, the secretariat and the departments directly affected by these issues at the same table, in order to figure out a way to resolve the issues.

9:10 a.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Well, that's the main issue, Mr. Chair.

For 16 full months, we have had no coordination. Everybody tried to fix it without speaking to each other. In a case like this, we need leadership. In this case, we need someone to call the shots. In this case, we need education from the top, not from the bottom. Unfortunately, this situation was not fixed, and it took 16 months to address this dramatic issue. That's a shame.

Mr. Chair, the Auditor General in article 1.87 talked about another situation. He talked about Queensland Health Group in Australia. In Australia, after only four months, the Australian people recognized the difficulty of that system and fixed it. How come?

9:10 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

I'll start, and then I'll turn it over to Mr. Goulet to give you some more details.

The difference was that in Queensland, Australia, health authorities identified very quickly that they had a problem. They identified the size of the problem and that it was going to take serious efforts to fix it.

As we say in the report, they then worked on it for going on eight years, and it has taken them that period of time to get most of these problems under control.

I'll ask Mr. Goulet to provide more details.

9:10 a.m.

Principal, Office of the Auditor General

Jean Goulet

Thank you very much.

The situation in Queensland was, fortunately for them, a little different, because it concerned only one department as opposed to 101 departments, so it was easier to establish a sole point of leadership within the department. What is really different in that particular case is that the leadership decided to go out to the public servants over there, to the health workers, and explain to them in a very regular fashion what was going on. They put forward a very structured plan to not only try to stabilize the situation but also to make sure very rapidly that the employees were paid on time and accurately.

That even meant that kiosks were established in the various hospitals so that employees could go to those kiosks and demonstrate that they were not being paid accurately, and a cheque could be written to those employees at that point.

There are some fundamental differences. The scope in Queensland was also not as big as what we're living with here, which probably made an understanding of what was going on easier. We're talking about 78,000 employees, one department, and 20,000 rules. Regardless, it still took all that time.

I want to also clarify that they stabilized the situation quite rapidly, but it took them seven years to get to the point, now, where they're achieving the efficiencies they originally intended.

9:10 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much.

We're going to have to come back to that. Our time is up.

We'll now move to Mr. Christopherson for seven minutes, please.

9:10 a.m.

NDP

David Christopherson NDP Hamilton Centre, ON

Thank you, Chair.

Thank you, Mr. Ferguson, and all your staff.

Where to begin?

For the first time ever, I've talked to a couple of colleagues and I think there's a lot of appetite for doing a hearing on every one of these. Number one, there are only six chapters. Number two, this committee is incredibly efficient when we want to be, and we get a lot of work done. Every one of these touches on not just a one-off but a significant aspect of government services to citizens. I hope, colleagues, that we can find our way clear to allow our schedule to hold a public hearing on each and every one of these chapters.

Chair, given that we're dealing with the macro report as well as the individual chapters, I'd like to spend a bit of my time talking about the macro message that our Auditor General is bringing today, with your permission.

Mr. Ferguson, you both opened your remarks and closed your remarks with the same thing. In terms of auditor-speak, it's pretty strong language. I just want to take a moment to underscore that and then pose a couple of questions about going forward.

Again, colleagues, we have an obligation. We're where the rubber hits the road here, and with all the good work that the Auditor General does, if we're not able to reflect change in government, all this is for nothing. It's really important that we get not only the micro right but also the macro right.

The Auditor General tells us that when he looks at these audits together, he finds that once again he's struck by the fact that departments do not consider the results of their programs and services from the point of view of the citizens they serve.

Again, we've now learned from our Auditor General that in his opinion what that means is that a lot of departments are getting very good at measuring how they move things inside. They do an A and B as part of their process and measure that, and then announce and pronounce whether they're doing really well or really badly, when the point is, at the end of the day, what services are Canadians receiving?

Again, the Auditor General is saying, and I go on, that he finds himself delivering this message audit after audit and year after year because they still see that departments are focused on their own activity and not on the citizen's perspective. I just gave an example of that. The audits they have delivered this week are no exception.

Again, the Auditor General ends by saying, “I was hoping that today, I would be able to talk about something other than results for citizens. I keep delivering the same message that the government doesn’t understand its results from the citizen’s perspective.”

This is strong stuff coming from auditors.

He further says, “It’s possible that our message of citizen-centric service delivery has been heard at the individual program level, however we see no signs of it being picked up government wide.”

Interestingly, my experience normally is that it's the other way around. The top says, “Yes, we understand. We get that. We'll get on that.” Then they leave, and it never seems to filter down to the departments. Now we see that sometimes some of the departments are getting it, but there's still no macro leadership.

I'll jump to the last, and then pose a question, Chair.

Again, continuing with the Auditor General, he says:

It appears that our message is not being heard at a whole-of-government level, and that concerns me. Government is supposed to be about service to citizens. Getting there requires a concerted effort across government to understand and measure the citizen experience, not just one program at a time, but across all programs and services.

Again, if we as a government—all of us, Parliament—are not meeting the needs of Canadians in the services that are delivered, then citizens have every right to believe that their tax money is just being wasted—and we're about eliminating waste.

I want to ask you this, Auditor General. I'm getting kind of old and don't know what the current terminology is—blue-skying, outside the box, whatever the new terms are. Obviously, what we're doing is not working. What can we do that's extraordinary? Are there any steps we can take to really push the limits of what we can do as a committee in working with you?

This can't continue. I've been here 14 years. I don't want to sit here for another 14 years having the Auditor General come in time after time and say the same damn thing, and nothing changes.

We are that agent of change. What can we do, Mr. Ferguson? Push us. Push the limits of what we can do. How can we help you turn government around so that it's meeting the needs of its citizens? How can we do that, sir?

9:15 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

I'll talk about one thing that you have taken a step into, first of all, then perhaps something else as well.

This committee has now held a hearing with a department a second time, bringing them back about a year or a year and a half afterward to talk about an audit that had been done before. I think that sends a good message throughout the whole system, a message that this committee is serious about departments actually fixing the problems that we see. That's something that has already started, and I would encourage the committee to continue to do that. I think that's an important message for the system.

In terms of the message I delivered today, here is part of what I'm trying to get at. We will do an audit. We will identify some issues. We'll make recommendations. The department will say, “Yes, we will deal with those”, and they may very well go back and deal with them, but we won't really know whether they have or how well they've done it until we come back and do a follow-up audit, but they may very well do that.

However, I guess what concerns me is.... I'll take the example of the call centre audit with the CRA. The message in that audit, the overall high-level message in that audit, is not very different from the message we delivered a few years ago about veterans trying to get access to mental health services. I guess what concerns me when I'm talking about the whole-of-government level is that it almost seems departments are only concerned about audits we do about them. They should also be looking at audits that we do about other departments and programs in order to figure out what they should be doing in their programs to get them to a good place, so that when I do come in here with an audit on their programs, I can say, “Yes, they're delivering this program and they seem to be trying to understand the program from the point of view of the citizen.”

I think it's very important that departments learn from the audits of others. Perhaps one thing the committee could think about doing is some sort of overall summary report, perhaps, of some of the common issues that have come out from a number of different reports and things that departments should be learning from a number of audits. What are those common-theme things? Departments should be paying attention to those more.

Then if we come back with an audit that says they haven't done it, the committee will be in the position to say, “Look, we've even given you a bit of a road map for the types of things you should be learning from audits done on other departments.”

Obviously, they're not doing that on their own, so they might need a little bit of help. Maybe that's a role the committee could play.

9:20 a.m.

Conservative

The Chair Conservative Kevin Sorenson

Thank you very much. Those are good, solid suggestions.

We'll now move to Mr. Arya, please, for seven minutes.

November 23rd, 2017 / 9:20 a.m.

Liberal

Chandra Arya Liberal Nepean, ON

Thank you, Mr. Chair. Thank you, Mr. Ferguson, for being here along with your team.

There are thousands and thousands of hard-working public service employees whose pay is affected through no mistake of their own. It's absolutely unacceptable.

You pointed out that the cost to solve this problem is going to be more than $540 million. This is a huge burden, a huge wastage of taxpayers' money. Who is responsible for this?

9:20 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

The audit that we did on the Phoenix pay system did not look at all of the decision points along the way to put the system in place. The audit was about what the departments are doing now to resolve the issue.

We have a second audit under way right now that is going back and looking at the history that led up to the implementation of Phoenix, and we'll report on that in the spring.

9:20 a.m.

Liberal

Chandra Arya Liberal Nepean, ON

Hopefully in that report you'll be able to identify who exactly is responsible for this mess we are in today.

9:20 a.m.

Auditor General of Canada, Office of the Auditor General

Michael Ferguson

I think what we will be able to identify is what information was available along the way that needed to be considered and how it was considered in making the decision. I don't know at this point the extent to which we will be able to get down to more precision. We'll just have to wait and see as we complete that audit.