Public Accounts Committee on April 27th, 2026

[The Chair, Conservative, John Williamson]

Good morning, everyone.

I call this meeting to order.

Welcome to meeting number 34 of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format, but I believe all of our members and witnesses are here in the room.

Pursuant to Standing Order 108(3)(g), the committee will begin consideration of the follow-up report on programs for first nations, taken from the fall 2025 reports of the Auditor General of Canada and referred to the committee on Tuesday, October 21, 2025.

I'd like to welcome all our witnesses. Thank you for coming in today.

From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada. It's nice to see you.

We also have Andrew Hayes, deputy auditor general, and Doreen Deveen, director. Thank you for joining us today and for correcting me.

From the Department of Indigenous Services, we have Michelle Kovacevic, deputy minister. It's nice to see you and your team: Richard Goodyear, senior assistant deputy minister and chief financial officer; Candice St-Aubin, senior assistant deputy minister, strategic policy and partnerships; Jennifer Wheatley, assistant deputy minister, regional delivery sector; and Curtis Bergeron, director, strategic water management directorate.

I believe there will be two opening statements.

As per our custom, Ms. Hogan, you'll kick us off. You have approximately five minutes.

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

Good morning, Mr. Chair.

Thank you for the opportunity to appear before the committee today on our follow-up report on programs for first nations, which was tabled on October 21, 2025.

I’d like to begin by recognizing that we are meeting on the traditional, unceded territory of the Algonquin Anishinabe people. I’m grateful for the contributions and stewardship of indigenous peoples across Canada, who for generations have cared for the lands they call home.

Programs for first nations have been a concern for my office for decades. In this follow-up audit, we examined Indigenous Services Canada’s progress on 33 recommendations from six audits my office has conducted since 2015. These audits covered a range of programs important to the health and well-being of first nations communities, including programs providing access to primary health care, emergency management services and safe drinking water, things that many Canadians take for granted.

Despite almost doubling spending on programs over the last five years, we found that Indigenous Services Canada made unsatisfactory progress on more than half of our previous recommendations.

For instance, as early as 2005 we identified concerns with drinking water quality in first nations communities. Although the number of long-term drinking water advisories has diminished since our 2021 audit of access to safe drinking water in first nations communities, we are greatly concerned that nine advisories have remained in effect for a decade or longer.

Similarly, we also recommended in 2013, and again in 2022, that the department establish agreements to ensure that all first nations communities have access to emergency services. In this follow-up audit, we found that even fewer emergency services agreements were in place than in 2022. These agreements are essential for timely, coordinated response to such events as wildfires and floods while mitigating the disruptions to people's lives and damage to critical infrastructure.

Reflecting on our audit findings as well as decades of audit reports on indigenous matters, we identified four barriers that in our opinion hindered the implementation of our recommendations. These are a lack of sustained management attention, a lack of clarity around service levels, insufficient support to bolster first nations' capacity to deliver programs, and a passive and siloed approach to supporting first nations.

One thing is clear: The public service has to do a better job in working with first nations to make meaningful progress on these long-standing issues that have spanned successive governments and impact multiple generations. In my view, this will require a different approach and mindset.

Mr. Chair, this concludes my opening remarks. We'd be pleased to answer any questions committee members may have.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

Ms. Kovacevic, you have the floor for approximately five minutes.

[Michelle Kovacevic, Deputy Minister, Department of Indigenous Services]

Thank you and good morning, Mr. Chair.

I am privileged to be here on the unceded Algonquin territory.

Good morning, everybody.

My name is Michelle Kovacevic, and I am the deputy minister of Indigenous Services Canada. This is my first time appearing before this committee in this new role. I’m quite grateful for the chance to be here so early in my mandate to talk about the path ahead and the important recommendations that the Auditor General and her team have identified. I will be super brief to allow maximum time for discussion.

The Auditor General’s follow-up work offers important insight into where more attention is needed, clearly. The report highlights that, while progress has been made, gaps remain in how federal programs function for first nations.

We agree with the Auditor General’s call for clearer service expectations, stronger coordination, better support for local capacity and sustained management attention. I acknowledge that these are long-standing issues and they require continued attention. I would like to emphasize the words “continued attention”, because I believe that is indeed the key to truly improving services and benefits for indigenous peoples.

Key to our work is strengthening our partnership with first nations, responding to the realities communities face and improving how services are designed and delivered. That includes addressing systemic barriers, improving coordination across departments and supporting indigenous-led approaches grounded in community priorities. We do this by following the lead of first nations partners and moving at the pace they set, where appropriate.

I’d like to thank the committee for the opportunity to speak today, and for your ongoing attention to this work.

I look forward to hearing your perspectives.

I will be happy to take any questions.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

We're going to begin our first round. I understand that there could be bells in the last 30 minutes. We're going to try to get through as much as we possibly can. I'll make a quick call at the end about where we stand with the witnesses.

Kicking things off with our first round of three minutes and six minutes each is Ms. Kusie.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

It's a pleasure to be back here at public accounts. I certainly missed this group over the last couple of weeks. It's fantastic to make the return.

Welcome to all of our witnesses. Thank you for being here today. It's always great to have the Auditor General with us, as well as our public service.

Ms. Hogan, your report states that you found the department made “unsatisfactory progress” in implementing the needed actions to address over 50% of the recommendations your office had made in six audits from 2015 to 2022. The report also shows that Indigenous Services Canada saw an 84% increase in funding from 2019 to 2020.

Why do you think your recommendations have not been implemented, despite the additional funding?

[Karen Hogan]

I believe this shows that it isn't only about funding. So many other elements are needed to make some meaningful progress and move along on the path of reconciliation.

In our report, we identified four barriers. I will quickly list them off.

The first is a “Lack of sustained management attention.” I think there's a flurry of activity after we issue a report and there are action plans, but then that attention dissipates over time, and that lack of sustained attention, I believe, has contributed to that.

The second is a “Lack of clarity around service levels.” That is a clear commitment by the government when you can define a service level.

The third is “Insufficient support to bolster First Nations capacity to deliver programs.” Ultimately, Indigenous Services Canada should be transferring everything, but to do that, you need to make sure that there's capacity within all of the communities.

Finally, my last item for why I believe our recommendations haven't been implemented is the “Passive and siloed approach to supporting First Nations.” I've talked about this many times. There are many programs and you have to apply many times to gain access to funding. That approach works just for communities that have capacity, rather than help those that are the furthest behind and moving them forward as well.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that response. Having worked closely with you in four years, a theme I've seen repeatedly is the government not following through on what it intends to do and having difficulty applying the rules and measuring what it intends to achieve. Again, I'm seeing consistency in your responses and your findings across the government and across reports.

Madame Kovacevic, MPs had the chance to question Minister Gull-Masty about this report last winter, and she refused to provide a simple response as to whether she agreed with the findings of the Auditor General or not. I will ask you the same question. Does ISC agree with the findings in this follow-up report from the Auditor General?

[Michelle Kovacevic]

As I stated in my opening remarks, I agree with the observations, but I would qualify some of them as well. Did we meet the targets that were explicitly articulated? Clearly not, if you look at the percentages and whatnot, but has there been improvement relative to the baseline? Absolutely.

You know this, of course, but 157 long-term drinking water advisories have been lifted and 300 short-term advisories have been lifted. We are seeing massive improvements in our coordinated responses with first nations and provinces to emergencies. We are seeing high school graduation rates actually increase among first nations. There are definitely improvements, but we are falling short on the targets we had set out. It's not for lack of trying.

I also agree, as I said earlier, that sustained management attention is really important, and I take that very seriously as the deputy minister. My team and I need to be held to account—and that's for thorough, sustained attention and our performance agreements—but it's also about in situ, real-time reporting as you're working with nations. If there's a change—you can see there are exogenous factors and something's happening, and you already know the target is in jeopardy—it is our duty to say that so it doesn't come as a surprise two years down the line when the Auditor General reminds us that we've missed the target. That's the ongoing, sustained attention I think we need.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I appreciate your passion and your advocacy.

My observation would be that your department is not unique in not being given the direction to achieve these targets. We've seen this consistently across the government. Whether it is an attempt to reduce the deficit or obtain an agreement with the United States, I think there is always a lot of talk in terms of objectives, but it seems, repeatedly, that the government falls short.

I can certainly see that you feel confident about the improvements that have been made and the progress to date. Thank you very much for that.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Kusie. You were spot-on in your timing.

Up next is Mr. McKinnon for six minutes, please.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

I want to talk about these four barriers that were identified. I'm wondering if something can be done to empower first nations groups to have more effect on whether these things are followed through on.

At this point, it looks like these are impediments on the government side at Indigenous Services and so forth. What about the other side of the equation? Can the groups themselves be empowered, and in what way could we do that?

Either one of you can go ahead. Whoever has the best answer can go first.

[Michelle Kovacevic]

We're fighting over who goes to the microphone. I win, Karen.

It's a great question because, at the end of the day, if the people who are impacted by these things are not involved from the outset, it's silly.

As I mentioned earlier, that capacity support is really important so that first nations and indigenous peoples can organize themselves and have the bandwidth, the human resources and the expertise to contribute. In fact, we've started that. It's not perfect, but if we talk about the emergency management audit, there were many recommendations. With the Assembly of First Nations, my department set up a steering committee, which was tasked with looking at those recommendations and coming together on what we could do to improve and meet those targets going forward.

[Karen Hogan]

What I would add to that answer is capacity building in first nations means that the Department of Indigenous Services Canada has to take a different approach. I talked earlier about the siloed application. What we often see in many of the audits that we followed up on is that they waited for a first nations community to come forward and put in an application, but you have to go and meet the community where they are in some instances, because there are some really small communities. If I look at housing, which wasn't even followed up on here, there are some small communities that really need access to housing infrastructure funding, but they don't have the capacity to apply, so they're not receiving it.

It's about not just sitting back and waiting for them to apply, but going to meet some of those smaller communities where they are to help them gain access to funding.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Do we have to give them new tools to do this? If so, what kinds of tools would you suggest we bring to the table?

[Karen Hogan]

I can't audit the first nations communities, so it's not up to me to tell you what tools they need. I think it's about asking them what they want.

It's clear to me that Indigenous Services Canada, over many decades, has applied the exact same approach and hoped for a different outcome. That's why I fundamentally believe there needs to be a different approach. The current path isn't working.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Indigenous Services would have a perspective on this as well.

[Michelle Kovacevic]

I'm always open to new and different approaches. We would welcome that conversation with first nations and with colleagues.

After the last round of audits and recommendations, we made a fundamental change to how we are delivering services at ISC. We started last year. On April 1 of this year, we implemented a new organizational structure. I know that sounds bureaucratic, but follow me.

Before, for example, health was a sector in headquarters called the first nations and Inuit health branch, which, to the Auditor General's earlier remarks, was siloed. Now we're saying health is something that is administered by all of the regions—I have a regional colleague here—and it isn't siloed in headquarters. There's one access point for all of the communities in the region for all of the services they deliver holistically, including health. That already starts to get at the siloed approach—perhaps not the passive approach—and how one dollar invested in health has to be coordinated, linked and correlated to the rest of the dollars invested in any one community.

We are starting, but we certainly welcome more intelligence on how we can improve going forward.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Is there any area or region that is doing this significantly better than the rest? We'll start with that.

[Michelle Kovacevic]

I will ask my ADM regional colleague, who knows this better, to answer that one.

[Jennifer Wheatley, Assistant Deputy Minister, Regional Delivery Sector, Department of Indigenous Services]

As the deputy spoke about, reorganizing ourselves to create a single window for indigenous communities is positioning us to be able to be more proactive and engage and meet communities where they are, with particular attention—I take the point—on smaller communities with less capacity. I would say there's no region that's cracked this nut. We wouldn't have this audit report if we had cracked it already.

I think there are best practices. We are learning now with this new organizational structure to share those best practices more consistently and quickly across the country.

For example, with the most recent impending flood in Peguis First Nation, we actually deployed people—not for a tour of the community, but to stay in the community—so that we could facilitate, coordinate and be more proactive in our active offer of service at the leadership level and with our engineers and technical staff. I think that region is showing that leaning in more proactively, as the Auditor General suggested, is helpful in meeting communities where they are and helping to fill the gaps.

Alberta is another region that is leaning in more proactively, as the Auditor General suggested we had to. The example there is funding emergency management coordinators. We have the best coverage for emergency management coordinators at the nation level to provide them with the capacity to do the planning we need for the responses they need to address increasing climate change-driven emergency disasters.

[The Chair, Conservative, John Williamson]

Thank you.

That is your time, I'm afraid.

Mr. Lemire, you have six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Thank you, everyone, for being here.

Ms. Hogan, I particularly appreciated hearing you say in your opening remarks that issues affecting indigenous communities throughout Quebec and Canada are close to your heart. This is indeed evident in many of the reports, and I am sure that it helps advance the causes of indigenous communities on a human level. Speaking about this today seems essential. It is a matter of respect.

Ms. Kovacevic, I also want to thank you for being here.

I would like to come back to the committee hearing that the Minister of Indigenous Services, Ms. Gull-Masty, attended. She said that the report did not paint an accurate picture, particularly because the recommendations could not be applied everywhere. She mentioned that we needed to address other barriers, such as language and distance.

How are you currently addressing the barriers identified by the minister that are preventing her from working directly on the issues raised by the Auditor General?

[Michelle Kovacevic]

I cannot speak for the minister, of course, but I agree with what she said. There are certainly other barriers that need to be removed. We need to find solutions so that we can improve our services and, of course, our results.

For example, with regard to the education system, we changed the formula in 2019 to provide funding that would both enable children to attend school and also support language learning. This is what is called “comprehensive resources”. We provide some support to vulnerable people and children so that they can truly learn something at school.

Initiatives like these help us break down small barriers here and there.

That way, the overall results will improve.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I wonder what steps you plan to take to remove these barriers. If you have a plan, I think the committee would be very interested in hearing it, especially if it takes into account the specific circumstances of each community.

There has been a significant increase in funding for first nations. It has risen from $13 billion to $24 billion annually, representing an increase of approximately 84%, yet a substantial amount of money remains unspent in the coffers. According to the Public Accounts of Canada, some $5 billion has not been spent.

It's all well and good to make grand announcements. In fact, I expect there will be some impressive ones tomorrow in the economic update. However, I would like to know, in concrete terms, what your plan is to support small communities so that they have the tools to grow and, of course, spend the funds allocated to them. Often, communities lack the resources to meet the standards required of them. Some communities are able to develop very quickly, while others are doomed to remain in poverty because we demand things they cannot accomplish due to a lack of resources.