Debates of June 4th, 2002

Supply

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, it will take me a moment to dig out those specific statistics. This is quite detailed statistical information. Perhaps it would be acceptable to the hon. member if I filed it with the committee in writing rather than taking the time to read through all the statistics. It is quite a complicated set of numbers. I would be happy to file the paper if I could.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, is the minister able to table that tonight?

[Ralph Goodale, Liberal, Wascana, SK]

Later on this evening. I will advise exactly when, Mr. Chairman, in just a few moments.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, if the minister could table that before the end of the evening so that we could have it for the last go around that would be acceptable. .

The minister talks glowingly about review, review, review. The former public works minister brought in a five point plan and the new minister has added a couple of his own fingerprints to it, which is great, but under the new rules of today, how many contracts that were awarded say last year would not have made it through the mix under the new process? Does the minister have any idea?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, in the days since May 27 we have not had the opportunity to take the hypothesis of the new rules and apply them to an old situation. It is an interesting question and, if the hon. gentleman would permit, I would like to reflect on the question and see what the impact would be.

It is important for us make improvements and to be able to measure the nature of the improvements. I would very much like to take that suggestion under advisement.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, it puzzles me. The minister says that he is reviewing all these files and that he is going back through them to ascertain if there was any criminality or if any moneys should be clawed back. If he is in the middle of doing that, how would he not have a knowledge of what would have been rejected? Those would be the ones that are coming up red-flagged at this time.

I understand he is not quite finished but there must have been some already that he would say “We have to go back after this and claw some money back”. The first one that pops into my mind of course is Groupaction, where the RCMP are stirring the pot and looking around.

I wonder how he could not have an idea of what would have been rejected if he is going back through to look specifically for rejection status.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, I just want to give the committee an idea of the magnitude of this task. What we are reviewing is the time period from 1997 to the year 2000. The year 2000 was the year in which the internal audit took place. That was a very important event in the flow of history here.

However in 1997, 1998 and 1999 there were probably about 500 projects processed per year, so the volume of files we have to review is a significant volume. We are going through them as rapidly as possible. In fairness, it is still just a bit early to draw any statistical conclusions. However, in the improvements we are making, we want to be able to measure progress. That is something that is just as important to me as I am sure it is to him.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, as the minister puts his eagle eye over all the projects that are under his scrutiny now, I am wondering, under his new procedure, of the 200 that are in play now and the other 350 that are sitting in limbo and being looked at one by one, how many have been rejected to this point?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, in doing the review of the files for this year, the problems that we are identifying are not problems associated with the community based projects themselves. The problems appear to be connected to the delivery mechanism rather than the project.

At this stage it is too early to predict whether any of those community based projects per say would be rejected. I suspect few if any of the community based projects would be rejected.

What we will focus on is the methodology of the delivery, which is where the problem is, not with the project itself.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, following up on that, as he gets into this overview and goes further on, who will define criminality in a project? How will it be defined? What is the criteria?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, just as a matter of good practice within the public service and also consistent with the terms of legislation, such as the Financial Administration Act, if and when a public official discovers a circumstance that raises questions about legality, there is an obligation on the public servant to draw that matter to the attention of the appropriate officials, including the police if the police happen to be the appropriate officials.

The officials in my department are applying that principle. If there are suspicious circumstances the reference is made to the appropriate police officials. They decide whether or not an investigation is warranted.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, there is a bit of a glitch in that argument. Many of the files we are reviewing and looking at for criminality were done on a verbal basis. The minister will know as a lawyer that a verbal contract in Canada is binding. How does one decide to proceed with a criminal investigation when there is a verbal contract involved?

Would not a fully independent public inquiry be a better vehicle to go on since there may not be criminality in a verbal contract but still may be morally and ethically reprehensible to Canadian taxpayers?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, we are going at this at several layers. If there were in fact something that looked like illegality, there would be the appropriate reference to police authorities but that is not the only arm or measure that we are taking in terms of our review of this.

My departmental officials are looking at each and every one of those files between 1997 and 2000 once again. The auditor general is doing a government wide examination of all sponsorship and advertising initiatives. The President of the Treasury Board is undertaking a review of the management framework and the governance principles that are involved here.

We are coming at this from three different dimensions covering the perspective of an auditor, law enforcement officers and good government administration.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, these are all wonderful things. They look great and they are also great smoke to hide behind. The problem with the auditor general is that her scope is limited. She can only call certain witnesses.

The problem with an RCMP investigation is that it is looking for criminality. We need to get beyond that. If the government were truly serious about transparency and accountability I suggest that it would have to go the route of a public inquiry. Why does the minister protest so much if accountability and transparency are paramount?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, we have launched four different examinations of this situation over the last number of weeks and months. We are proceeding with this in a solid and methodical way. We are engaging all of the proper techniques for getting to the bottom of what has been wrong, identifying the problems and ensuring that those problems are fixed. We have action moving on a whole variety of fronts that will serve the public interest.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, everyone is cognizant that we have had audit after audit. If we were to go back to former auditor general Denis Desautels nine or ten years ago he would point out these same problems at that time. We have had interdepartmental audits and tremendous work has been done, as the minister said earlier in his opening remarks.

We have no problem with the audits. As taxpayers and opposition parties we have a problem with the lack of action on the problems pointed out by those audits. Why would we believe that the minister will do anything different this time than we have seen over the past nine years?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, I believe that in this regard the action so far has been positive and encouraging.

The problems with these files were identified in the first instance by an internal audit undertaken by the internal audit section of Public Works and Government Services Canada. That was in the year 2000. To ensure that the corrective measures were put in place that internal audit section went back to review the situation in the spring 2000 and confirmed that the corrective action had been implemented in the intervening year and a half.

I would point out again that the auditor general has said the internal audit section of my department is an excellent section and it does very good and courageous work.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Chairman, we have seen a pattern here. There has been no oversight on performance. Did the taxpayers get a bang for their buck?

We have reports that are missing or non-existent. We have analyses of reports that are missing and yet someone got paid for them. We have no contracts or verbal contracts only. We have a Prime Minister who said that we have lost a couple of million dollars and asks: What is the big deal? Does the minister agree with the Prime Minister's analogy that it is only a couple of million dollars?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, the issue here is a matter of different timeframes. In terms of the problems that were identified in relation to the sponsorship program those problems related to the time period between 1997 and 2000. We would agree with both the auditor general, our own internal audit section and with the critic for the official opposition that the management practices that were applied in that period between 1997 and 2000 were not up to snuff. They were not acceptable.

The audit revealed to us how corrections could be made. The review of the audit in 2002 indicated that the corrections had in fact been made. On the matter of old verbal contracts it needs to be noted that if criticism was valid at some point in time it was prior to the year 2000 under the old regime. Ever since the year 2000 corrective action has been underway.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Chairman, I would like to ask the minister if the use of agents with regard to sponsorship programs—known agents such as Groupaction, Groupe Everest, Media IDA Vision and these nine firms that are friends of the Liberal Party—does not cost taxpayers more money than if these functions were performed by public servants employed by the government.

Would that not take away at least the appearance of a conflict of interest? Most of these agents make generous donations to the Liberal Party of Canada and the fees they charge are exorbitant. They try to bite off more than they can chew. This is my first question to the minister, but I have many more.

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, first let me say retroactively to the previous questioner and in the first instance to this hon. member that we are in a formal way being introduced as minister and critics in our first exchange. I appreciate that and I should have said earlier. I am glad to have the opportunity to work with them in the advancement of the public interest.

On the point that the hon. member has just raised, the cost of using external agencies versus the cost of running a program like this in the more conventional, internal style, is a subject matter that I am carefully examining. I want to look at some statistics and see some alternative models in terms of program administration. My initial impression is that it may well be cheaper and more cost effective to administer a program of this kind in the more conventional fashion rather than contracting out.

I do not have hard information yet that would lead me to a definitive conclusion but I share the sense of the question and it is an issue I intend to pursue.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Chairman, to start with these allegations, and I will not speak of corruption, I want to say I think the minister is sincere, and I honestly give him the benefit of the doubt.

But let us take the case of Groupe Everest. It says: we charge 3% of the initial amount of sponsorships. I have many examples here, because I have a document from public works giving the whole list of sponsorships for 1996-97.

Let us take for example the Journal de Montréal and the Journal de Québec , which received $1,647,500. It means a payment of $197,700 to Groupaction, which is always there or almost, but $49,425 for Groupe Everest. This is 3% of $1,647,500 basically to write a $1,647,500 cheque.

I would like to make things crystal clear for the taxpayers who are watching us so they can understand the situation fully. The minister takes money out of his budget, sends a cheque in the amount of $1,647,500 to the firm that is supposed to manage the project, in this case the Groupe Everest. This firm writes a cheque in the same amount of $1,647,500 for the Journal de Montréal and the Journal de Québec . On top of that, it charges $49,425 just for writing that cheque.

I understand that this is a large sum, but will the minister suggest here that 3% of a $1.5 million sponsorship or a $2 million sponsorship is a reasonable payment just for writing a cheque?

Today, we asked a question on another incident. Just to write a $550,000 cheque to Groupaction, Media IDA Vision was paid $16,500. It wrote just that one cheque, and did not check the work, because it was never done. It did not read the report, because it was never found. But it did get $16,500.

Can the minister confirm that he is beginning to find this quite expensive and that this 3% fee is paid just for writing cheques?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, I have made some broad inquiries about the commission percentages that have been apparent in the sponsorship program. It would appear in general terms that these percentages are broadly consistent with the normal practice in the private sector. Still, I have questions in my mind about the dollar values involved.

There is a real issue that needs to be further pursued as to whether or not the Government of Canada could actually run this kind of program directly without the use of intermediaries. It may well be that the answer to that question is yes. I do not have that hard information yet but it is certainly a point that I intend to pursue because it may well be possible to provide good and valuable sponsorship activity without costly interventions by the private sector.

[Ghislain Lebel, Bloc, Chambly, QC]

Mr. Chairman, I would point out to the minister that an intermediary does not work for nothing. In any markets, one pays the intermediaries one uses.

The minister can check with Mr. Bédard from the government of Quebec, with whom I was speaking this morning; he told me that for this kind of intermediary, for Cossette Communication in Quebec City, 3% is the norm for what they do, which is to manage a sponsorship or a budget for a particular event. Cossette Communication charges 3%; that is what the government of Quebec pays.

Here, if we take the case of residential real estate, for instance, for real estate agents who must advertise a house in the local papers, find a buyer and find a vendor who will agree to put his house up for sale, the rate is 6%. If one wants to advertise Canada-wide, in other provinces, it is 7%. We are talking about newspaper ads, which cost quite a bit.

Intermediaries like Groupaction or Groupe Everest often do not have to look for a buyer. There is a vendor, as it were, the government, which is prepared to put millions of dollars into a sponsorship, provided that it gets some visibility; and there are buyers, those being sponsored, who are on their knees at the doors to the offices of Groupaction and Everest. They are saying “Get the money, I need it”. There are no expenses for management and advertising in the newspapers, and they charge 12%.

In terms of percentage, 12% of $200 is not too terrible; not enough to go crying to one's mother about. But once percentages are involved, 12% of $4 million, or 12% of $2 million, the costs are exponential. They are uncontrolled and uncontrollable, as far as I can see.

The minister tells us that 12% is the norm. Whose norm? It is the norm in terms of what one is accustomed to paying without asking any questions, Mr. Minister. That is what I am asking you.

Does it seem logical to you that it is 12%, given that the intermediary has practically nothing to do?

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Chairman, there are two things. First, as I have said in two previous answers, I share some of the concerns that have been expressed by the hon. gentleman about the dollar values involved and the value for money received. I intend to look at this question very carefully to see if there is a better delivery mechanism that would avoid the problems of the past.

I would also point out that it would not be accurate to say that none of the contracting agencies did any work. In fact the opposite is true. Their obligation is to plan the purchases of the appropriate media and sponsorship tools; to provide the necessary databases and measurement techniques; to co-ordinate and adjust the overall sponsorship plans; to co-ordinate with creative agencies to purchase the right material; to stick within the guidelines to confirm media placements and so forth; and to deal with invoices, proofs of performances and so forth. If they are in that agency of record category, which is the 3% that was referred to earlier, there are specific contract obligations that have to be performed.

That having been said, I want to repeat that I am looking at my alternatives for the future because I want transparency and I definitely want value for the taxpayers' money.