Public Accounts Committee on May 11th, 2021

[The Chair, Conservative, Kelly Block]

I call the meeting to order. I would like to welcome everyone here, including Mr. Scheer, who is not normally on this committee.

Welcome to meeting number 31 of the Standing Committee on Public Accounts. The committee is meeting in public today and is being televised.

Pursuant to Standing Order 108(3)(g) the committee is meeting today to study report 9, “Investing in Canada Plan”, of the 2021 reports 6 to 9 of the Auditor General of Canada.

Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021; therefore, members may be attending in person in the room or remotely using the Zoom application.

I believe everyone is attending remotely, so interpretation services are available for this meeting. You have the choice at the bottom of your screen of floor, English or French audio. Before speaking, click on the microphone icon to activate your own mike. When you are done speaking, please put your mike on mute to minimize any interference.

When speaking, please speak slowly and clearly. Unless there are exceptional circumstances, the use of headsets with a boom microphone is mandatory for everyone participating remotely.

Finally, should any technical challenges arise, please advise the chair and note that we may need to suspend for a few minutes as we want to ensure all members are able to participate fully.

I would now like to welcome our witnesses. Joining us today from the Office of the Auditor General are Karen Hogan, Auditor General of Canada; Nicholas Swales, principal; and Gabriel Lombardi, director.

From Canada Mortgage and Housing Corporation, we have Romy Bowers, president and chief executive officer; Paul Mason, senior vice-president, client operations; Michel Tremblay, senior vice president, policy and innovation; and Caroline Sanfaçon, vice-president, housing solutions, multi-unit.

From the Department of Indigenous Services we have Christiane Fox, deputy minister; Joanne Wilkinson, senior assistant deputy minister, regional operations sector; and Claudia Ferland, director general, regional infrastructure delivery branch, regional operations sector.

From the Office of Infrastructure of Canada we have Kelly Gillis, deputy minister, infrastructure and communities; Gerard Peets, assistant deputy minister, policy and results; and Sean Keenan, director general, economic analysis and results and chief economist.

From the Privy Council Office we have Matthew Shea, assistant deputy minister, corporate services; and Michelle Lattimore, director of operations, results and delivery.

From the Treasury Board Secretariat we have Peter Wallace, secretary of the Treasury Board of Canada.

What a slate of witnesses we have with us today.

With that, I welcome you all, and we'll turn the floor over to Ms. Hogan for five minutes.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Madam Chair, thank you for this opportunity to present the results of our audit report on the investing in Canada plan.

Joining me are Nicholas Swales, the principal responsible for the audit, and Gabriel Lombardi, who led the audit team.

The investing in Canada plan is important because the government is investing $188 billion over 12 years to generate long-term economic growth, improve the resiliency of communities, support the transition to a green economy and improve social inclusion and socio-economic outcomes for Canadians.

Our audit examined whether Infrastructure Canada and key federal organizations could demonstrate that the plan was meeting its objectives and whether they were providing complete, reliable and timely reporting on the plan to Canadians.

Overall, we found that Infrastructure Canada was unable to present a full picture of the results achieved and progress made under the investing in Canada plan. The absence of clear and complete reporting on the plan makes it difficult for parliamentarians and Canadians to know whether progress is being made against the intended results.

Specifically, we found that the department's reporting on intended results excluded almost half the government's investment. The reporting did not capture the more than $92 billion of funding that was committed before the plan's creation in 2016. Although this issue was raised soon after the creation of the plan by one of its oversight committees and later in a 2019 internal review, we found that this reporting gap remained unresolved.

For the other half of the funding, Infrastructure Canada and its federal partners developed a reporting framework that includes expected results and indicators, but they did not report against the framework consistently and comprehensively. The clarity of the reporting was also affected by inconsistent information received from the partner organizations.

We were further disappointed to observe that the plan made no mention of the United Nations' sustainable development goals, even though the plan could play a significant role in achieving some of them. The government has recognized the importance of collaboration among federal organizations in this area.

We also found that funds weren't being spent as quickly as originally planned. Approximately 20% of the spending intended for the first three years was moved to later years. In addition, half of the total allocated spending is now planned for the last five years of the plan. No organization was tracking the impact of delayed spending on the plan as a whole. This means that the plan's objectives may not be met.

The issues affecting the investing in Canada plan aren't new. We've seen similar problems in several past audits in areas requiring cross-departmental or cross-government collaboration, such as the areas involving indigenous issues and climate change. This audit is yet another example of the need for the government to act on known issues, in this case the need for broad collaboration and clear reporting on results for this large initiative.

We made a comprehensive recommendation to Infrastructure Canada to improve monitoring, tracking and reporting on progress. The department agreed with it.

This concludes my opening remarks.

We would be pleased to answer any questions the committee may have.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Hogan.

We will now turn to Ms. Gillis for five minutes.

[Kelly Gillis, Deputy Minister, Infrastructure and Communities, Office of Infrastructure of Canada]

Good morning. Thank you for inviting me here today to talk about the Auditor General's report on the investing in Canada plan.

I'd like to begin by acknowledging that the land I am joining you from is the traditional unceded territory of the Algonquin Anishinabe people.

I'm pleased to be here with my colleagues from the Canada Mortgage and Housing Corporation, Indigenous Services Canada, the Treasury Board Secretariat and the Privy Council Office.

We want to thank the Auditor General and her staff for their examination of the plan. We accept the Auditor General's recommendations.

Introduced in budgets 2016 and 2017, the investing in Canada plan was created to provide a comprehensive reporting of cross-government effort to deliver infrastructure to communities across Canada.

Infrastructure Canada has a dual role in the plan. The first of these is to deliver infrastructure funding. Infrastructure Canada is one of 21 departments and agencies responsible for administering the programming included in the plan. In our second role, Infrastructure Canada acts as the central hub for reporting on plan-wide data, while each of the 21 departments and agencies that report into the plan is accountable for the management of its programs.

This information gives Canadians a global perspective on how the plan is moving forward. For example, our website provides a full accounting of the $188 billion in funding delivered under the plan: how this funding has been allocated to programs, how much has been approved for specific projects and how much has been paid out to recipients. As a result of this horizontal reporting of the plan’s progress, I am able to say that federal departments and agencies have approved over $81 billion in funding under the plan—43% of the total, 40% of the way through the plan—associated with 67,000 projects, of which 91% have started.

Infrastructure Canada's horizontal results reporting role is set out in the requirements of the Treasury Board. However, we've created additional tools to enrich how we report to Canadians.

These tools include our online geo-map, which makes it possible to identify projects in specific regions and communities.

Also, in response to requests for information from the Parliamentary Budget Officer, we've provided additional project-level information in a way that is as comprehensive and comparable as the source data allows.

It is important to note, however, that not all programs report the same kind of information in the same way. This is because programs have been set up with different requirements, reflecting their diverse policy goals. Some, like the gas tax fund, provide funding as an upfront grant. While funding under such programs is fully accounted for and their performance is audited, very little project-level information is requested of applicants, by design. Others, like the investing in Canada infrastructure program, are application based, permitting federal departments and agencies to collect detailed project-level information.

It is also true that programs operate through long-standing funding mechanisms, which predated the plan—what we call “legacy” programs. The reporting requirements of these programs were preserved when the plan was put in place. Changing them would have caused significant delays, introduced uncertainty for infrastructure investments and been counter to binding agreements. However, as these programs reflect considerable ongoing investments in infrastructure, they were included in the plan as is. Where possible, we have integrated the available data of these programs into the horizontal reporting under the plan.

I would like to underscore that this entire horizontal reporting framework sits on top of existing departmental requirements and accountabilities for individual programs.

Each of the 21 departments and agencies is individually responsible for their respective programs, including the program design, spending, oversight and reporting.

This is information available through each department's own reporting framework, which can be reviewed through such tools as departmental result reports, main estimates, public accounts and proactive disclosures on the open government portal. We have developed a number of tools to report to Canadians and have continued to evolve our reporting, but we know there's room for improvement.

In developing our management action plan, Infrastructure Canada is taking careful consideration of the Auditor General's finding and is working with our delivery partners to ensure that Canadians and parliamentarians have meaningful information about the infrastructure that is being built under the plan.

The Auditor General also noted that 20% of the funds for the first three years of the plan were re-profiled to later years. Five years into a 12-year plan, over 40% of the funds have been committed and, as of January 2021, $48 billion has flowed to recipients.

It is important to note that, for most infrastructure programs, federal spending is made as a reimbursement after the fact. This means that programs are rolled out, projects are started, construction begins and economic activity is spurred along, and federal dollars then are paid out. It is also critical to understand that infrastructure funding does not lapse but rather is re-profiled and carried forward to future years under the plan, so that it is available as infrastructure projects are built.

We appreciate the opportunity the Auditor General's work provides us to improve how we report on the investing in Canada plan.

I would be happy to answer your questions.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Gillis.

We will now go on to Ms. Bowers for five minutes.

[Romy Bowers, President and Chief Executive Officer, Canada Mortgage and Housing Corporation]

Thank you very much, Madam Chair.

Before I begin, I want to acknowledge that I'm joining you today from my home in Toronto, the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinabeg, the Chippewa, the Haudenosaunee and the Wendat peoples.

I'm pleased to have the chance to speak to you today on behalf of the Canada Mortgage and Housing Corporation.

I want to acknowledge the Auditor General's report and show my appreciation for her very important work. We concur with the findings and recommendation and with Infrastructure Canada's response to the report.

Along with Infrastructure Canada, we're committed to providing meaningful reporting to Canadians on the investing in Canada plan and to finding ways to improve our reporting.

Under the investing in Canada plan, we are responsible for $32.8 billion of government investment in various programs over 12 years. Through these programs, CMHC has committed funding to almost 22,000 projects in communities from coast to coast to coast. Those benefiting from these projects include individuals and families living in some of the most vulnerable situations.

Because of these projects, more seniors have suitable homes where they can safely age in place; more low-income families have affordable community housing; more women and children fleeing violence have safe shelter and more on-reserve communities get access to much-needed renovation and upgrades to their homes.

CMHC has taken great strides in recent years to transform itself to become a much more agile company. We've also become much more client-focused and responsive. Over the past year, we've made many adjustments to our national housing co-investment fund, reducing the length of the application process by over 50%. As a result, we've seen much stronger uptake on this program, which means a much greater pace of construction of affordable housing.

[The Chair, Conservative, Kelly Block]

Ms. Bowers, could you lift your mike? That would be great.

Thank you. Please carry on.

[Romy Bowers]

Thank you, Madam Chair.

We continue to be accountable to our ultimate client—Canadians. In addition to ICP reporting, each quarter we report on the progress of our national housing strategy initiatives, many of which are included in the plan and on our website at www.placetocallhome.ca.

Housing projects under the national housing strategy give more families a stable home where they can work, study and stay safe through these challenging times, and plan for a better future.

Many of our legacy programs are delivered through funding agreements that have been in place for many decades, and we report on them in accordance with historic agreements. Our newer national housing strategy programs have more stringent reporting requirements. We will use this opportunity to better coordinate reporting while also ensuring the privacy and safety of some of the most vulnerable people we serve.

We have always worked at CMHC to optimize public funding. We've been able to draw on our close partnerships with the private and non-profit sectors to get the most out of federal investments. We will continue to make public funding count and deliver the best possible results for Canadians.

I thank you for the opportunity to speak to the committee on this matter, Madam Chair, and I'm very happy to take any questions at this time.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Bowers.

We will now go to Ms. Fox for five minutes.

[Christiane Fox, Deputy Minister, Department of Indigenous Services]

Kwe kwe. Ulaakut. Tansi. Hello.

Today I'm speaking to you from the unceded traditional territory of the Algonquin Anishinabeg people.

I would like to begin by confirming that through the programs and investments administered through the investing in Canada plan, Indigenous Services Canada is working very closely with indigenous partners and our colleagues here today to achieve better outcomes.

Since budget 2016, Indigenous Services Canada has received more than $4.29 billion in targeted funding under the plan. As of December 31, 2020, $3.43 billion has been invested to support vital community infrastructure projects on reserve.

Through budget 2021, the federal government is proposing a historic new investment of over $18 billion over the next five years to improve the quality of life and create new opportunities for people living in indigenous communities.

These investments will continue to help indigenous communities deal with the impact of the COVID-19 pandemic. The investments will also support continued action on infrastructure.

In addition to the report's findings, the Auditor General also brings to light the dynamic nature of funding relationships between the Government of Canada and first nations partners, demonstrating a need for cross-government collaboration.

To increase the financial impact and address the infrastructure needs of first nations communities, Indigenous Services Canada uses a portfolio approach for the allocation and reporting of targeted infrastructure investments.

This means that projects may be supported by multiple funding sources, not all of which fall under the investing in Canada umbrella.

To ensure transparency and results, a robust reporting process has been implemented, allowing both Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada to provide regular updates on their overall portfolio of infrastructure projects in first nations communities.

This includes an infrastructure investment interactive map that has been available on our site since June 2018, and which is updated on a quarterly basis. Given the department's focus on water, we also provide information by community as we work hard to eliminate long-term drinking-water advisories.

We're committed to helping first nations achieve their vision of self-determination, and to respecting their autonomy by seeking opportunities to reduce reporting requirements. To this end, the funding requirements, methodology and delivery of the program must reflect the evolving relationship between the federal government and first nations.

While we understand that reporting requirements will be different for every program, a flexible approach is needed for legacy funds, which include programs established prior to budget 2016 and which amount to approximately $14 billion over 12 years.

First nations communities experience different realities than do cities and municipalities across Canada. Indigenous Services Canada does not support increasing reporting requirements for infrastructure legacy funds, as these funds are distributed to first nations for the management of their communities as a whole, not just for infrastructure projects.

As we move forward on the path towards self-determination and fulfill the vision of the department—which is to support and empower indigenous peoples to independently deliver services to their communities—we must note that first nations communities are responsible for carrying out infrastructure projects in their communities.

Through the investing in Canada plan, we've been able to support the health and well-being of indigenous communities by providing clean drinking water, reliable energy solutions and affordable housing units. However, we acknowledge that work remains to be done.

These investments are helping to meet the infrastructure needs of first nations communities and will lay the foundation for a long-term investment strategy in first nation community infrastructure to build healthy, safe and prosperous communities.

We will continue to engage and work with Infrastructure Canada to develop a consistent manner to provide comprehensive reporting on the investing in Canada plan.

Thank you. Meegwetch. Qujannamiik. Marsi. Merci.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Fox.

Colleagues, before I go to our first round of questioning, I would like to ask one question of the Office of Infrastructure Canada.

I would like to ask when the committee can expect to receive the management action plan from your office. I note that it is on your website, but the committee would like to receive that action plan. Do you have a timeline for us?

[Kelly Gillis]

We are working with our 21 departmental colleagues to develop the action plan. Given the importance of the action plan, we are looking at how we bring meaningful, comprehensive, complete and consistent consideration to it. Those are things we are looking at, because we have a number of reports available right now on the plan, but we want to make sure we are carefully and thoughtfully looking at how better to report, and that is why we are taking that time to develop that action plan.

You will certainly receive it before the due date of September 25, and as soon as possible prior to that date.

[The Chair, Conservative, Kelly Block]

Thank you very much for that.

We will now go to our first round of questioning, which is a six-minute round, starting with Mr. Scheer.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you very much, Madam Chair.

I appreciate the Auditor General's work. This is my first time on this committee, but we've been studying the various infrastructure programs at the transport committee, so I appreciate my colleagues' allowing me to sub in today.

There's a lot to unpack, with such a large department administering a large amount of money, as you point out, over many different funding envelopes. I suppose that's one of the reasons we flagged the challenge of getting accurate information back on the department's spending, based on the fact that it is spread out over so many projects.

I have a couple of questions for the Auditor General, just to get some clarity on them.

In your report, you indicated that there was quite a significant delay in terms of the program spending, and that not all the money that was allocated was being spent every year. We just heard from the deputy minister—I believe she said this but she can clarify if I've misquoted her—that they have spent 43% of the funds 40% of the way through the plan.

Is there a contradiction there? Is the plan behind? Have they taken that lapsed money and put it onto later years? Are we currently behind, or am I misreading something?

[Karen Hogan]

I think perhaps the department could also clarify, but what I heard in listening to the opening statement was that those funds were committed. I'm not sure that committed and spent go hand in hand. You can commit, but actual expenditures are what we were looking at in order to measure results.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thanks very much for that clarification. We are hyperaware of the difference between funding commitments and actual results. We've been studying the Canadian infrastructure bank at the transport committee. That is perhaps the most famous example of money allocated without results to show for it: $35 billion allocated and so far not a single project completed, so thank you very much for clarifying that.

Can you speak to the dynamic of the legacy projects and the lack of reporting on those? In your report and your news release, you flagged this, or someone flagged this, because this issue was raised as early as 2017 by one of the plan's oversight committees. Why is it important that the previous government's previous legacy programs be included in terms of the reporting? If they are going to claim the money as money they're spending and allocating, why is it important that the reporting follow it?

[Karen Hogan]

What we found in the audit on the investing in Canada plan is that it included three buckets. It included projects announced in the 2016 and 2017 budgets and also legacy programs. As you mentioned, those legacy programs account for about half of the funding, $92 billion.

When those legacy programs were designed and the reporting structures and accountability mechanisms set up, they weren't thought of in the context of the investing in Canada plan, so an adjustment was not made for their reporting to align with the plan.

Therefore, when half of your spending cannot be tracked in a similar and consistent way, it is difficult to demonstrate whether or not the plan is on target to meet the expected results and its overall objectives. One of our recommendations, then, focuses on the ability to try to find a way to ensure that you can capture the progress, results and outcomes of those legacy programs under the envelope and reporting framework of the investing in Canada plan.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Were there shortfalls in reporting only specific to the legacy projects or, within the newly created programs by the current government, were there also some reporting shortfalls in those envelopes, as well?

[Karen Hogan]

In our audit, we found it was difficult to gauge the progress against the objectives and results of the plan, so it wasn't just because of the legacy programs. That was a large contributor. We also saw inconsistent reporting on results from federal partner organizations to Infrastructure Canada. Hence, when you report in an inconsistent way, it's hard to put a global picture together.

We also saw that, year over year, Infrastructure Canada would report—in a table in its departmental results reports—different results, but they were not the same results year over year. Again, it's very hard to measure progress when you're not reporting against the same baseline and you're not doing so in a comprehensive way to include all the programs.

There were a few elements that contributed to the lack of meaningful reporting on progress towards outcomes.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you very much.

It's so important, because when a government says to Canadians that this is how it is going to address economic decline and kick-start the economy, especially moving out of the impacts of the pandemic, in order to be able to trust the government, we have to be able to see if the money is actually doing what it is intended to do.

I'll go back to your point about committing money. Yes, it's easy to commit money. It's more challenging to spend money, but it's even more challenging to spend money properly. That's why these reporting mechanisms are so important.

If I have time left, Madam Chair, maybe I could ask the deputy minister....

Again, I've tried to take notes as you've spoken, so if I misquote you, please clarify. I believe you said that some of the programs don't require reporting by design. When we're talking about tracking the effectiveness of taxpayers' money, can you explain which types of programs you would specifically design not to have some kind of a reporting or tracking mechanism?

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Sheer.

We are over time, so I would ask for a very brief answer to that question.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

I can come back to that in my follow-up round, Madam Chair, if you'd prefer because of time.

[The Chair, Conservative, Kelly Block]

Thank you very much for that, Mr. Sheer. I will have you do that.

We will now move to Mr. Fergus for six minutes.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you, Madam Chair.

I want to thank the witnesses who are appearing before the committee today to discuss this very important issue. Horizontal programs are often about coordinating government policies and implementing these policies for very practical reasons.

In my opinion, we don't talk enough about the issue of gender-based analysis plus, or GBA+. I want to raise an issue that I'm concerned about. How will we reach people from culturally diverse communities, who are part of the groups included in GBA+?

My first question is for the Auditor General of Canada.

Ms. Hogan, thank you again for being here today.

When your team conducted the audits, did you carry out a GBA+ for certain aspects of this audit? If so, can you share your office's findings?

[Karen Hogan]

Thank you for the question.

As you know, I often appear before the Standing Committee on Public Accounts. I've committed to using gender-based analysis plus more often in our future audits.

The audit of the investing in Canada plan began as a result of a motion in the House of Commons. This occurred before I was appointed Auditor General. We didn't incorporate this analysis into our approach. However, I can assure you that we'll include it in our future audits. We'll also take into account sustainable development targets.

I made this commitment to the committee, but we didn't have the opportunity to conduct the analysis during this audit.