Opening Statement to the Standing Committee on Public Accounts

April 2002 Report

Mr. Chairman, thank you for the opportunity to meet with the Committee to discuss my Report, tabled on Tuesday. Like its predecessors, this report is about accountability. We looked at all three links of the accountability chain—Parliament; central agencies; and departments.

Parliament must have control over government spending

Accountable government requires that members of Parliament be able to approve the government’s plans for spending and to scrutinize the results of that spending. Our first chapter, "Placing the Public’s Money Beyond Parliament’s Reach," notes that the government has disregarded this essential principle. In many cases, new governance arrangements do not meet essential requirements that government departments would have to meet to ensure accountability to Parliament: credible reporting of results, effective ministerial oversight, and broad scope external audit by the Office of the Auditor General.

In Chapter 8, we provide another example of the erosion of Parliament’s control over government spending: the Treasury Board Secretariat’s administration of the Government Contingencies Vote (Treasury Board Vote 5). Parliament has authorized the government to use this Vote to supplement other departmental votes and to pay "miscellaneous minor and unforeseen expenses not otherwise provided for."

We recognize that the government needs flexibility to deal with minor unforeseen expenses. However, it has used the authority of Vote 5 increasingly for new initiatives that would normally require Parliament’s approval. In my view, the use of this Vote needs to be reviewed to ensure that it reflects Parliament’s intent.

Government, through central agencies, must set the standards and provide leadership

Accountable government also depends on central agencies, such as the Treasury Board Secretariat and the Privy Council Office. They must provide the leadership and guidance needed to ensure that departments meet consistently high standards in approving, monitoring, and controlling expenditures.

Chapter 7 looks at the government’s modern comptrollership initiative. We have identified key areas that need stronger commitment and support if the initiative is to succeed. And we think parliamentarians need better information on how this important reform is progressing and the consequences should it not succeed.

Chapter 3 reviews the current status of information technology security, an important government-wide issue for which the Treasury Board is responsible. Our examination of four departments showed some weak IT security practices that could be symptomatic of weaknesses in other departments. Security standards are out of date, and a plan to update them has not been completed. The government has not assessed the present state of information technology security, an important element of the Government On-Line initiative. The revised Security Policy calls for a report on the effectiveness of IT security across government in 2004, but we recommend doing it sooner.

Departments must follow the rules in managing programs and must report their results

Finally, in carrying out government policies, departments must follow the rules established by the central agencies and use good management practices in general. They must also collect information that will enable them to report fully on the effectiveness of their programs.

Good management practices

Chapter 8 provides two examples of departments who failed to follow good management practices in buying new technology.

Health Canada and Public Works and Government Services Canada failed to follow the government’s contracting rules in awarding a $25 million contract to establish the Canadian Health Network. Work began without a written contract, equipment that was purchased was underused and its ownership not clearly identified, and expenses were overclaimed.

In the second case, National Defence purchased a $174 million military satellite communications system, most of which has been in storage, unused, since its delivery. The system was completed and delivered in 1997-98, but by that time the Department had found a lower-cost alternative and could not afford to operate the new system.

We note a third example of not following the rules. The Canada Customs and Revenue Agency did not ensure that all requirements set out in its own policies and procedures were met when it renewed duty-free shop licences. We note further that despite its commitment to tender a licence at a certain location, the Agency renewed the licence without seeking competitive bids.

Gathering information and reporting results

It is easy to underestimate the importance of managing information well in departments and programs. Without good information, we may be able to tell how much departments have spent but not whether they got the results they expected.

Chapter 2 reports on our review of the system for writing off uncollectible taxes and forgiving interest and penalties. The Canada Customs and Revenue Agency has reasonable systems and practices in place for controlling the write-off of uncollectible taxes of about $1 billion per year. However, it does not collect and analyze information about its decisions to forgive interest and penalties. Such information would confirm whether the Agency’s practices observe the principle of fairness.

In Chapter 4 on the criminal justice system, we looked for information we could use to assess the impact of key challenges (such as justice issues related to youth and Aboriginal people, organized crime, victims’ rights, and wrongful convictions). The criminal justice system involves two and even three levels of government and many organizations—lawmakers, police, courts, correctional institutions—each with its own objectives and its unique information needs. At the national level, information is inadequate to assess the system’s effectiveness. Information systems need to be updated significantly to allow for timely exchange of information on criminals and suspects.

In Chapter 5, which deals with recruitment and retention of military personnel, we note that there are not enough trained personnel in the Canadian Forces to meet current occupational demands. As far back as 1990, this Office reported that human resource managers lacked the data they needed to guide recruiting and attrition decisions for military occupations. Today, efforts to step up recruitment are themselves short-staffed, and the Department lacks employees with experience in human resource policies and practices. Despite its efforts to address the shortage of trained personnel, the results have fallen short of targets. Clearly the Forces need to rethink their approach to recruitment and retention.

Good information is critical to accountability, whether parliamentarians are voting on departments’ annual spending, reviewing future years’ priorities and plans, or examining past performance.

A good departmental performance report tells Parliament what an organization has accomplished and what value Canadians are getting for the public money the department has spent. In Chapter 6, we propose a model for assessing the performance reports that departments submit each year to Parliament. We believe the model can help all departments improve their reporting to Parliament and thereby improve accountability.

Conclusion

Establishing proper governance, providing leadership and guidance from the centre, managing programs effectively in departments, managing people well, collecting information, and reporting results—these are all essential ingredients of delivering good public services. As this report demonstrates, the government still has some distance to go before it achieves these objectives and the accountability that Canadians want and deserve.

Thank you, Mr Chairman, that completes my opening statement. We look forward to meeting with the Committee to discuss a number of these issues and we would be pleased to respond to questions.