Public Safety Committee on May 31st, 2006

[William Baker]

Actually we did, and in some of the cumulative costs that we've reported, we made a reasonable effort to do that, bearing in mind that we didn't have the facility to go in and do an audit of every other organization. But we did reasonable estimates based on input.

[The Chair, Conservative, Garry Breitkreuz]

We can come back to you, as your time has expired.

On this point, did any of the witnesses look at enforcement costs, compliance costs, costs to the economy? These would all be additional indirect costs, but not costs that would be that easy to track. I know that the Library of Parliament did a study, and that's where the second billion comes up. Did any of you track those?

[Sheila Fraser]

No, when federal government departments and agencies report costs, the costs are those they incur. The whole financial reporting system is based upon those costs, not costs that are incurred by others. Those other costs would only really be captured if there were a very large or comprehensive evaluation done, and that has not been done other than some studies, I believe.

[The Chair, Conservative, Garry Breitkreuz]

Was there not an evaluation done by the cabinet and kept secret? I was aware that we could not access that information, because it was a study they had not revealed, and there was no way to get it.

[Peter Kasurak]

Well, there's the so-called Guarnieri report, which you noted correctly, Mr. Chairman, is a cabinet confidence and, as such, was not accessible by us during the audit. So we can't speak any further to that particular report.

[The Chair, Conservative, Garry Breitkreuz]

Okay, thank you.

Ms. Kadis.

[Susan Kadis, Liberal, Thornhill, ON]

Thank you, Mr. Chair.

I'd like to welcome everyone and ask Mr. Baker initially why the Canada Firearms Centre sought a legal opinion in relation to the allocation of the $39 million to 2003 and 2004.

[William Baker]

If I may, Mr. Chair, to be precise, the opinion was with respect to the $21.8 million in 2003-04. As I indicated earlier, the $21.8 million was identified by our own accounting staff at the Firearms Centre. The initial impression, and I think the expected opinion of the accounting professionals, was that it was something that should have been charged to the appropriation in that year. Of course, that would have required supplementary estimates or perhaps to exceed our vote.

When we raised this matter with the Treasury Board Secretariat and with the Department of Public Safety, because Canada Firearms Centre is part of the Public Safety portfolio, questions were raised about the nature of the amounts. Suffice it to say—and I don't think anyone would disagree—this is a complex contractual arrangement, regardless of how you conclude the accounting. It involves contractual amounts, amounts out of the contract, and there are delayed costs, and there are a number of such things.

Questions were raised about those in order to be certain about the actual amounts that should potentially be booked that year. In addition to the work of the accounting people, both in the centre and in the Comptroller General's office in the Treasury Board Secretariat, it was suggested that in order to get behind the issues of debt versus liability—or what's in and out of the contract—it would be useful to have an expert in that field of law do an analysis. That triggered a request, received by the Department of Justice, to identify an expert in that area who would prepare the legal opinion. That will soon be made available to the committee members. It was that opinion that largely determined the decision not to seek supplementary estimates, or the decision that we would not exceed the appropriation.

[Susan Kadis, Liberal, Thornhill, ON]

If I have more time, Mr. Chair, my question is for Mrs. Fraser.

Considering that cost has been an issue, how do you see the government's recent announcement to waive the licence fees for 2 million gun owners, foregoing about $120 million? Amnesty is usually to build up compliance, and not given after one undermines laws that have been put in by Parliament, basically. How do you see that in financial terms, in view of the whole retrospective of what's transpired, and those going forward—

[Sheila Fraser]

Mr. Chair, that is really a decision of policy, and one on which we will not comment or make any remarks.

[Susan Kadis, Liberal, Thornhill, ON]

Okay.

If I can, along those lines somewhat, is it prudent or not prudent, in view of what has transpired financially, and given that the chiefs, as you've mentioned, are finding it to be a great tool—a necessity and an overall enhancement to safety—to then at this point dismantle the program, after the financial expenditures, and when the program is now essentially under control and reasonably managed, as you've said?

[Sheila Fraser]

If I could just clarify what I said in response to a question about performance indicators, the use of the registry and the appreciation of it by police enforcement could be an indicator. I made no comments about the actual effectiveness of the program. As I said, this is really a matter of policy, on which it would be very inappropriate for me to comment.

[Susan Kadis, Liberal, Thornhill, ON]

Okay. Thank you.

[The Chair, Conservative, Garry Breitkreuz]

Ms. Freeman.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

My question has to do with the awarding of contracts.

In its review of the contracts from 1997 to 2005, the Office of the Auditor General found that some of them had been awarded in a non-competitive way, such as the contracts with an initial value of less than the $25,000 ceiling, which were increased considerably subsequently. There were also the many contracts for $24,000.

To what extent has the current management of the Firearms Centre improved its competitive procedures?

[Sheila Fraser]

Mr. Chairman, we have seen a significant improvement. For example in exhibit 4.5 in this chapter, on page 139 in the French text and page 122 in English, we have shown the number of contracts valued at between $24,000 and $25,000. As you can see, there is then a significant decrease in the number of such contracts since the arrival of the new management team.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

You pointed out that the Canada Firearms Centre was making poor use of the methods and contracting services of Public Works and Government Services Canada, particularly the professional computer services and those provided by the Information Technology Services Branch.

To what extent is the current management of the Firearms Centre now making better use of the instruments and services provided by Public Works and Government Services Canada?

[Sheila Fraser]

It is true that in the past we noted that there were a number of problems with the awarding of contracts — this was not being done in a competitive way. Mr. Bennett also mentioned this in his opening remarks. Since 2003-2004, we have seen a significant improvement and greater respect overall for the rules for awarding contracts.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

According to your office, 13 contractors may have established an employment relationship with the Firearms Centre. Could you explain to me how an employer-employee relationship developed and what the possible consequences of such a relationship are?

[Sheila Fraser]

This question is often raised in both the private sector and government when an employee obtains a contract. When it is possible to direct the work, when there is control over an individual's work, when there is only one source of revenue, the Department of Revenue can determine that the individual is not a contract employee, but rather an employee. Once a person is an employee, he or she is entitled to all the benefits, and the source deductions and all the contributions by the employer must be made. This can also mean that as an employee, the individual cannot deduct some expenses that he or she could deduct as a contract worker. So there are some tax implications for both the employer and the employee.

We have therefore said that the government must be careful within these arrangements not to create an employer-employee relationship with the contract holders.

[The Chair, Conservative, Garry Breitkreuz]

There's a minute left on this. I just want to clarify this, Ms. Fraser.

Did you have a question? Okay, you're sharing your time.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

The government has suggested the RCMP take charge of the system. What do you think of the situation? Apparently the system has improved a lot. Do you think that that might be beneficial in some way or another?

[Sheila Fraser]

There are two areas the Auditor General does not comment on: first, politics and, second, what you call the machinery or the organization of government. It is up to the government to do as it sees fit. Mr. Baker may perhaps be able to explain the reasoning behind a possible transfer. I, however, will not comment on the matter.

[Carole Freeman, Bloc, Châteauguay—Saint-Constant, QC]

Does Mr. Baker have anything to add on the matter? Would it be better if another organization...

[William Baker]

First, this is a decision for the Prime Minister, in keeping with the laws and regulations. I don't see any reason to not continue with the achievements made over the past three years, even with the RCMP.