moved that Bill C-263, an act to amend the Financial Administration Act and other acts in consequence thereof (exempted crown corporations), be read the second time and referred to a committee.
Mr. Speaker, the message was loud and clear to every member of Parliament during the last election. Our constituents demanded accountability.
All members of the House were asked by their constituents to come to Ottawa to work toward solutions to the debt problem facing our nation. I am sure all hon. members would agree that as elected representatives of the people we ought to work toward ensuring accountability in every activity of the federal government.
The Canadian people want us to provide the means by which we can all come to trust the government. When it concerns government programs my constituents, and I am sure many MPs feel the same way, are very inquisitive. They are like investigative reporters. They use the five w s: who, what, when, where, why and all the time when it comes to government programs they ask how much it is going to cost. The people of Canada want to know. They want to be proud of the activities and the performance of the federal government.
Bill C-263 provides all members of the House with an opportunity to say to their constituents that at least in some small way we have come together to work toward ensuring that the federal government is accountable to the Canadian taxpayer.
I feel strongly that members from all sides of the House should rally in support of Bill C-263 so that we can honestly say we have tried to respond to the wishes of the people who sent us here.
Bill C-263 is not all encompassing, dictatorial, unable to change or restrictive. Bill C-263 is flexible. I have tried to provide an occasion for all corners of the House to work together and at the end of the day five crown corporations will be more accountable. We will all feel as though we have done a good day's work and proudly report to our constituents what we have done. Our constituents in turn will take note of our work and they will feel we are serious about doing positive and constructive work.
As members know, in the 1993-94 fiscal year crown corporations incurred losses of $57.2 million. Their net borrowing from the Government of Canada amounted to $14.2 billion and they received $4.6 billion from the government through budgetary appropriations.
We say $1 billion so often it just floats by. How much is $1 billion? It is such a massive amount. If you earned $1 per second you would be a millionaire in 11 days; but it would take you 33 years to become a billionaire.
When we are talking of billions of dollars it is very important that we do not just flash by it very quickly and not understand how large a sum of money it is. Our task is to ensure for our constituents that every government department and agency be accountable for every tax dollar spent. I dare say that everyone in the House wants to be able to say to the people at home that we are responsible to the people who ultimately pay the bills, the Canadian taxpayer.
On those occasions when constituents ask us why it is that certain public corporations do not report their financial status, members have no satisfactory response. The average Canadian wants to know about all federal agencies and departments.
When constituents hear about an activity financed by the government and they are not allowed to know about the finances associated with that activity, they become quite interested. They are concerned that maybe there is something to hide.
The Auditor General has a key role to play in this regard. In many cases, which I will refer to in a moment, the Auditor General has not only made available publicly the exact facts and figures concerning the activities and performance of the federal government, but the Auditor General has been able to improve such activities and performance levels by dissecting and evaluating agencies and departments.
There is no shame involved in the work performed by the Auditor General. The auditor's detection of poor performance and recommendations is seen by Canadians as routine and expected. Canadian firms, large and small, perform audits on their own activities and performance. Often the audits show that they are right on track with their objectives. And sometimes they must swallow tough medicine to cure ailments detected in their business audits. This is a fact of life. Canadians expect their government to follow good business practices as well.
No one can deny the performance of the Auditor General in recent history. Progress has been made. The Auditor General has
the power to follow up on recommendations. The result has been that in many cases Canadians are realizing better value for their tax dollars because of the efforts of the Office of the Auditor General.
In May 1994 the members of this place took a step closer to greater accountability by freeing the Office of the Auditor General to report on matters which the auditor deems pressing. Members of the House have already moved in the direction of Bill C-263, by endowing the Auditor General with a measure of discretion. In fact, there was a great deal of agreement on all sides of the House. We saw this as a good thing, a chance that would enhance the Auditor General's ability to do the job expected of the office.
Canadians want their watchdog to have a long enough leash. We all wanted to further empower the watchdog last spring, and I am sure I speak for all of us when I say we were proud to do so.
With reforms instituted in 1984, most crown corporations have operated within the accountability framework established under part X of the Financial Administration Act. Part X of the act requires each crown corporation to do three things:
There must be an annual report. The annual report in addition to its financial statements in the auditor's report also presents information on how well the objectives of corporations were achieved during the reporting period. Crown corporations must submit a corporate plan. They must submit budget summaries for tabling in Parliament.
In my view, these requirements are basic and simple. They are not unreasonable. Yet we have a system where all crown corporations are not required to do these basics.
Canadians expect that their tax dollars are spent within this framework of accountability. Again, when Canadians hear of moneys being spent by the government without the above criteria, they become suspicious. There is good reason for Canadians to feel this way. The Financial Administration Act could be easily made applicable to the crown corporations listed in Bill C-263.
There are 49 crown corporations, seven of which are exempted from the Financial Administration Act. They are the Bank of Canada, the Canadian Broadcasting Corporation, the Canada Council, the Canadian Film Development Corporation, also known as Telefilm Canada, the Canadian Wheat Board, the International Development Research Centre and the National Arts Centre. Bill C-263 would move these crown corporations under the supervision of the Auditor General with the exception of the Bank of Canada and the CBC.
With respect to the Bank of Canada, central banking independence is critical for the proper conduct of monetary policy. Monetary policy is ultimately the responsibility of the federal government, specifically the Minister of Finance and the executive of the Bank of Canada. There are informal avenues of accountability to which the governor of the Bank of Canada is subject.
With respect to the CBC, provisions of the Financial Administration Act were incorporated into the Broadcasting Act in 1991. In short, the CBC is already subject to the accountability requirements of Bill C-263 and the Financial Administration Act.
This latter point is important for all members to note. The CBC is the recipient of about 70 per cent of government funding provided to exempt crown corporations. This means that Bill C-263 is finishing the job already accomplished by Parliament. Since 1991, the CBC has adjusted to the accountability requirements of part X of the Financial Administration Act.
Hon. members may agree with my observation that the CBC, more than any other exempt crown corporation in Bill C-263, was most insistent about the idea of the critical importance of an arm's length relationship to government. Yet the CBC has not had any of the difficulties that it anticipated in adapting to these accountability requirements. The CBC has been operating within this framework for the past four years.
I can remind my colleagues that the Auditor General already performs financial audits on the five crown corporations in this bill. These audits do not permit the Auditor General to comment on the appropriateness of the activities of the five nor is the auditor able to comment on the extent to which each fulfils its mandate. As it stands now these are not value for money audits.
Value for money audits are done every five years. They are different from the annual audits in that they comment on corporate management, goals and objectives. I think it is fair to say that the boards of the exempt corporations should welcome the value for money audits. It is not unthinkable that the board members would look on the audits as helpful to their work as well as a positive accountability measure.
In the course of my work and research concerning this bill, I have stumbled across some very interesting things. For example, I have a letter from Tommy Banks, a member of the Canada Council audit and evaluation committee which he wrote to me shortly after I began working on my bill.
In his letter, Mr. Banks heralds the benefits of special examinations which the Auditor General has been invited to do for the Canada Council every five years since 1986. Mr. Banks
states that "the glaring scrutiny by the Auditor General-is contemplated as an ongoing process". Yet there is no formalization of this process. The problem now is that there is no assurance that these value for money audits will be done in a set time frame with the resulting benefits of regular periodic audits. Clearly a legislated requirement is needed.
It has been 10 years since the accountability framework for crown corporations was established. Exempt corporations have had a decade to review and analyse the effects of the Financial Administration Act on the independence of non-exempt crown corporations. By now it is highly likely that crown corporations exempted from the act would conclude that the Financial Administration Act poses no real threat to them. The CBC is an illustration of this. Provisions of the Financial Administration Act were incorporated into the amended Broadcasting Act of 1991.
The exemption of the seven crown corporations means that they have not been subject to certain provisions that support good management and accountability. As such, their exemption is hard to justify in these times of fiscal restraint. These exempt crown corporations are more than two times more dependent on budgetary appropriations from government as a percentage of total assets than non-exempt corporations and more than four times more dependent on a per employee basis.
I feel it is reasonable to require the five crown corporations to prepare a business plan so that annual reports can allow Canadians to monitor and gauge the performance of the five. There have been some cases where a crown corporation's annual report objectives differ from its business plan objectives.
An example of that is in 1991-92, Telefilm Canada spent 90 per cent of its film funds on projects from Toronto and Montreal. One film of the 24 supported by Telefilm came from western Canada. Moreover, Telefilm spent 41 per cent of its budget that year on French language film and only 2 per cent on the English language film from the west. We know Telefilm has stringent linguistic targets. Having said that, I think hon. members would agree that the objectives of Telefilm were not fulfilled in the business it conducted in 1991-92.
Even though there are provisions for exempt crown corporations to invite the Auditor General to conduct a special examination, the audit itself is only released to their board of directors, not to this place. The problem with making administrative as opposed to legislative arrangements for voluntary audits is that with a change in administration or administrative policy, these agreements may fall apart. Providing the corporations with an option of inviting the Auditor General in to do an audit is just not good enough.
For example, because the National Arts Centre remains one of Canada's most secretive crown corporations, in 1990 the House of Commons communications and culture committee recommended that the Auditor General perform a special examination of the centre. The board's directors jumped at the chance. Yet the process was fudged. The board had problems releasing the report, even though it initially promised to publish the report.
Some 300 days after receiving the report, which the board originally denied receiving, it finally responded. The Ottawa Citizen called the response hilarious. The Auditor General had portrayed the arts centre as an institution that fails to properly define its objectives, plot its future, monitor its expenses and communicate with its board.
In this regard, we can clearly see that inviting the Auditor General to do a special examination or a value for money audit is insufficient. If the Auditor General's office was involved with the corporation on a regular basis, business plan objectives would not deviate from objectives stated in the annual reports.
The benefits are worth the cost of the Auditor General's audit. Reporting is not onerous. It is good management. Value for money audits pay their way.
Another example: In 1992 the Auditor General reported that tax arrangements for foreign affiliates were costing Canadians hundreds of millions of dollars in lost revenue. Following the report, amendments were made to the rules relating to how foreign affiliates were taxed. This ensured that foreign affiliates paid their fair share.
In 1993 another special examination identified overpayments to CPP and old age security, which were between $120 million and $220 million per year. Following the report, an action plan was tabled with the public accounts committee to stop the problem. The government was able to act and produce an action plan.
You may be wondering if the other 42 non-exempt crown corporations included in the Financial Administration Act have increased their accountability since the introduction in 1984 of the act. In 1993 the Auditor General reported that management of crown corporations has improved because of the requirements for planning, strategy, and cost systems, in short, good management practices.
I think we can all agree that in times of restraint those who spend taxpayers' dollars must be more than ever aware that they are answerable for how they spend those dollars. Since part X of the Financial Administration Act has been so effective for other crown corporations, it seems reasonable that the crown corporations outlined in Bill C-263 are in line as well.
In closing, I would like to quote a statement from the director of the National Arts Centre Corporation board, who is recognizing that improvements were needed in the corporation's financial management. The director said: "Given the limited resources which management has at its disposal, tackling the institutional mentality rooted in two decades of lack of accountability has been a monumental task".
I urge all members of the House to support Bill C-263.