Opening Statement to the Standing Committee on Public Accounts

December 2000 Report of the Auditor General

Thank you, Mr. Chairman. We are pleased to have this early opportunity to meet with the new Committee to discuss the December 2000 Report tabled earlier this month.

Before moving on to the priority topics, I would like to draw your attention to the chapter, Matters of Special Importance, which highlights issues that I consider especially significant. This year, I concentrate on how to improve the management of government spending.

This is a theme that is central to our Office and that is dear to my heart. Despite honest efforts and repeated commitments to improvement, expenditure management in the federal sector is still not as good as it should be and can become.

To this end, I set out the following four basic principles that should underpin spending decisions and practices in a parliamentary system of government like our own:

• All government spending should have Parliament’s sanction.
• Government spending should be managed with probity and efficiency.
• The value of government spending should be measured by what it achieves.
• Government spending programs should remain current. The government needs to evaluate its programs regularly and assess whether they are still relevant, effective and affordable.

These principles may appear self-evident. They are nevertheless too frequently breached as evidenced by the number and nature of our audit observations.

Governance of Crown corporations

Turning now to Chapter 18, we report on the governance of Crown corporations. We found that boards of directors lack some of the skills and capabilities that are essential to carrying out their responsibilities for the affairs of the corporation. Also, boards need to be more involved in selecting the corporation’s chief executive officer. We found weaknesses in the audit committees of the boards and in the government's oversight of Crown corporations' strategic direction.

The governance of Crown corporations must be improved to maximize their performance, prevent financial losses and, most importantly, ensure that they achieve their corporate mandate. While the Privy Council Office has provided an overall response to our Report, your Committee may wish to request specific responses to the individual recommendations.

Reporting Performance to Parliament

Chapter 19 examines the planning and reporting documents provided to Parliament. We noted some progress over five years, but overall, departmental reporting has improved only modestly.

In Chapter 20, we found progress was limited in the measurement and use of performance information in the management of departments and agencies. The federal government has demonstrated its commitment to managing for results, although the concept continues to be a challenge and is not always understood.

Departments need stronger leadership from the Treasury Board Secretariat to move beyond just planning for results. I continue to believe that to hold the government to account, members of Parliament need good performance information on what Canadians are getting for their taxes, and this has to start with how individual organizations manage themselves.

Recruitment in the Federal public service

In Chapter 21, we identified serious problems in the recruitment function of the federal public service. We noted that while the Public Service Commission of Canada is recruiting qualified candidates, it recruits too few of them given the significant number of executives, managers and professionals who will be eligible to retire in the near future.

The situation is serious and needs the immediate attention of Parliament.

In October of last year, your Committee began reviewing Chapter 9 of our April 2000 Report. This chapter discusses the need to clarify roles and responsibilities in all areas of human resource management in the government. The Committee may wish to combine its review of chapters 9 and 21. There is a fairly clear link among the issues covered in these two chapters.

Federal health and safety regulatory programs

Chapters 24 to 28 have a common theme — the protection of health and safety through regulatory programs. The Committee may wish to review the chapters as a series. These chapters cover areas such as food inspection, biologics, nuclear power reactors and air traffic safety. There are many regulatory challenges that require determined and co-ordinated action among federal departments, as well as co-operation among federal, provincial and international jurisdictions.

Our main concern is that federal regulatory authorities may not have all the key scientific information and methodology they need to ensure that systems can identify risks quickly and accurately, and thus avoid possible mishaps.

We signal deficiencies in identifying and managing risk, enforcing regulations, and reporting on effectiveness. For example, the Canadian Food Inspection Agency is working to develop a more uniform, consistent and risk-based approach to food inspection. However, it needs to take more action to complete its initiatives.

The government needs to ensure that regulatory authorities appropriately resource their programs based on risk. It needs to recruit enough scientists to deal with the rapid technological advances. Current staffing difficulties have an impact on the delivery of services.

The government also needs to better inform Canadians about levels of risk they face. In doing so, it should explain the balance that it seeks between the need to protect Canadians and the need to address economic and trade objectives.

Fisheries and Oceans — Fleet Management

Chapter 31 focusses on Fisheries and Oceans’ fleet of vessels. The fleet plays a key role in providing services such as aids to navigation, icebreaking, search and rescue, and prevention of marine pollution. It also supports fisheries science and enforcement, hydrography, oceanography and other marine sciences. In our opinion, the Department is not managing its fleet in a cost-effective manner. There are problems in a number of key areas, from planning and accountability for fleet activities to life cycle management, and the management of human resources.

Your Committee may wish to review the Department's progress on its plan to address these issues.

Canada Customs and Revenue Agency and Human Resources Development Canada

And finally, one of our audit observations discusses how Human Resources Development Canada (HRDC) and the Canada Customs and Revenue Agency (CCRA) have not dealt adequately with suspected abuse and fraud in the Employment Insurance (EI) program in British Columbia. This matter involves some employers who issue false Record of Employment forms to employees or other individuals so they can obtain employment insurance benefits.

CCRA and HRDC have known about this problem for many years. I urge them both to take the necessary action to resolve this matter. The Committee may wish to monitor progress in this area to ensure sustained effort.

Before concluding, I would like to remind the Committee about some of the issues raised in my October 2000 Report, tabled just before the dissolution of Parliament.

Weaknesses in the Canadian International Development Agency’s management of contribution agreements together with the issues surrounding grants and contributions by HRDC warrant particular mention here. As well, our audit of airport transfers highlights the importance of proper financial analysis for decision making. We also noted a very troubling situation with First Nations’ health and the slow progress in response to our 1997 audit. Finally, we were concerned with how Downsview Park was created without Parliament’s clear and explicit authority.

Thank you, Mr. Chairman. This completes my opening statement. We would be happy to answer questions.