Opening Statement to the Standing Committee on Public Accounts

Report of the Auditor General of Canada to the House of Commons—April 2005

11 April, 2005

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chair, I am very pleased to be here to present my April 2005 Report to Parliament, tabled April 5th. I am accompanied by Assistant Auditors General, Hugh McRoberts and Shahid Minto.

Security and intelligence activities account for more than $1 billion in federal expenditures each year. By their very nature, many aspects of these activities must remain secret. But how can Parliament scrutinize the spending and performance of security and intelligence activities if key information is classified?

An example of this arose in preparing this Report. Information related to the effectiveness of air passenger security systems was classified as secret. I must respect the government’s information security regime and, accordingly, we have not reported the information.

Passenger screening at airports is a delicate balancing act that requires weighing the desired degree of security against other factors such as the cost to passengers and society, the inconvenience and waiting times of passengers, and the degree of intrusiveness that Canadians are prepared to accept in the screening process.

Although the government must weigh these issues and make these difficult choices, it is Parliament, on behalf of Canadians, that must hold the government accountable for those choices.

Parliament needs to find a way to receive reports that contain classified information—from security and intelligence agencies, and from organizations such as my Office that are charged with scrutinizing these agencies on Parliament’s behalf. I encourage the government to move quickly to find a way of providing Parliament with the information it needs to do its job without jeopardizing national security. I am pleased to note that the government has taken steps in this direction with its proposal to establish a National Security Committee of Parliamentarians.

Let me turn now to the report.

Chapter 2 — National Security in Canada—The 2001 Anti-Terrorism Initiative: Air Transportation Security, Marine Security, and Emergency Preparedness

I would like to begin with the federal government’s progress toward improving national security since 2001. Simply put, progress has been uneven.

Our latest audit found that marine security programs have improved, but there are serious weaknesses in emergency preparedness and in some aspects of air transport security.

In emergency preparedness, funds were not allocated based on an assessment of risks. Equipment purchased for first responders in different cities was not required to be interoperable, thus missing an opportunity to create a national pool of compatible equipment. Training for first responders is progressing very slowly—fewer than 200 of the needed 6,000 intermediate-level first responders have been trained.

Public Safety and Emergency Preparedness Canada—a new department set up in December 2003—needs to complete its proposed changes to the Emergency Preparedness Act and to finalize the plans, procedures, and chain of command necessary to respond to threats to public safety.

Some key elements of air transport security are being implemented successfully—for example, explosives detection systems worth $1 billion have been installed at Canada’s airports, and the number of air transport security inspectors has increased.

However, while Transport Canada officials say they have “no major problem” with the effectiveness of passenger and baggage screening carried out by the Canadian Air Transport Security Authority, or CATSA, they have neither established performance standards nor carried out an assessment of CATSA’s effectiveness.

Last year, we reported on the management of the government’s anti-terrorism initiative and other aspects of national security. I said then that September 11, 2001 had changed our perception of how safe we are and led to higher expectations for our security. The government still has work to do to meet those expectations.

Chapter 3 — Passport Office—Passport Services

We also found that the Passport Office is not meeting current security expectations for issuing passports. There are many weak points in the process.

For example, watch lists should include the names of individuals on parole or charged with a serious crime. But the watch lists are not complete, because the Passport Office has not found ways to obtain data automatically from other government sources. Without up-to-date watch lists, examiners cannot always determine when an applicant should be refused a passport.

The Passport Office has not developed methods to routinely validate identity data on birth and citizenship certificates against the documents’ original sources. Examiners lacked some basic tools to detect fraudulent documents, and they did not always meet the Passport Office’s own standards for checking documents with guarantors.

While fixing some of these problems will require the co-operation of other government departments and agencies, the Passport Office needs to take urgent action to correct these important weaknesses.

Chapter 4 — National Defence—C4ISR Initiative in Support of Command and Control

We also examined a National Defence initiative—the Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance initiative, or C4ISR for short. This is a major initiative that takes advantage of information technology to improve the way the Department gathers, processes, and uses military information.

Better information for decision making helps commanders exercise faster and more effective command and control in both joint and combined operations. And it helps National Defence keep up with progress and changes being made by allies.

National Defence has already invested about $4 billion in C4ISR projects, and it estimates that by 2015 it will have invested almost $10 billion.

The C4ISR initiative in support of command and control is complex and expensive, involving more than 90 projects. The Department needs to do a better job of co-ordinating projects and ensuring that they follow a common design approach.

Chapter 1 — Natural Resources Canada—Governance and Strategic Management

Canada’s resource industries are a vital part of the national economy and employ more than one million Canadians. Natural Resources Canada is the federal lead on forestry, energy supply and use, minerals and metals, and earth sciences.

In our view, Natural Resources Canada needs a corporate strategic plan to help it focus its efforts and ensure that its activities are aligned with its mandate and corporate priorities. If corporate priorities are not clear, efforts may be misdirected.

Natural Resources Canada co-ordinates the federal response to emergency situations in areas of its responsibility, such as responses to major power failures and mine disasters. However, the Department has not developed appropriate emergency plans, for all its areas of responsibility, as the law requires. We urge it to do so.

Chapter 6 — Indian and Northern Affairs Canada—Development of Non-Renewable Resources in the Northwest Territories

We audited the role played by Indian and Northern Affairs Canada in managing the process for developing non-renewable resources in the Mackenzie Valley of the Northwest Territories.

We found that the Department is not adequately fulfilling its responsibilities. Indian and Northern Affairs Canada’s hands-off approach has contributed to an uncertain investment climate.

For example, the Department has not clarified ambiguous terms in the legislation—terms that are important to anyone with an interest in an application to develop a resource. And while the Act permits the Minister to establish water standards for resource development in the Mackenzie Valley, the Minister has yet to take such action.

The discovery of diamonds and the potential for natural gas development have created significant opportunities in the Northwest Territories. Indian and Northern Affairs Canada should contribute to managing these opportunities in an appropriate way.

Chapter 5 — Rating Selected Departmental Performance Reports

And finally, I continue to be disappointed in the quality of performance reports provided to Parliament by government departments. Departments are not moving quickly enough to improve their performance reports.

We rated the performance reports of three federal departments at three points over the last nine years. Despite modest improvements, the most recent departmental performance reports still fall short of providing complete information to Parliament. By and large, performance reports tend to focus only on good news—they provide little discussion of shortcomings or of any lessons learned.

Parliamentary review of performance reports through the various standing committees is essential to improving the quality of these reports. Only when parliamentarians are engaged with departments in an ongoing dialogue about departmental performance will the quality of these reports improve.

Mr. Chair, that concludes my overview of the Report. We would be pleased to answer your questions.