Opening Statement to the Standing Committee on Public Accounts

Natural Resources Canada—Governance and Strategic Management
(Chapter 1 - April 2005 Report of the Auditor General of Canada)

3 November, 2005

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for the opportunity to discuss Chapter 1 of my April 2005 Report on governance and strategic management at Natural Resources Canada. With me today are Nancy Cheng, Assistant Auditor General, and Crystal Pace, Principal responsible for audits of Natural Resources Canada.

I appreciate the Committee's decision to review this chapter because it focusses on a fundamental issue that affects all organizations—that is, the governance mechanisms and management practices of the department as a whole.

Natural Resources Canada needs good governance and management processes to focus its efforts. We found that the Department did not have a corporate strategic plan. Its strategic planning documents and operational sector business plans had many inconsistencies. Only one of its operational sectors had analyzed its legislative mandate and all the sectors analyzed government priorities in a different way.

As a result, only two of the five operational sectors' business plans referred to sustainable development—an important issue for the Department. The Department needs a corporate strategic plan that will ensure that its strategies are coherent across the organization and adequately address key aspects of legislation and government priorities.

The Department also needs to improve its strategic decision-making and governance processes to help ensure that it manages horizontal issues consistently across the organization. Mechanisms, such as the most senior management committee, executive performance agreements, and how horizontal issues are managed, need to improve for better strategic management.

In order to review strategic management across the Department, we selected emergency preparedness for a more detailed examination.

The Department is the federal lead in developing civil emergency plans for co-ordinating the federal response to emergencies in many natural resource areas, including offshore oil and gas, mine disasters, forest fires and other threats to forests, energy shortages or major power failures, and exports and imports of energy. The Department is also responsible, with Industry Canada, for developing plans on shortages of strategic mineral commodities.

We noted that the Department had good plans in place for offshore oil and gas. However, operating sectors did not use a coherent framework for assessing risk, and the Department did not have appropriate emergency plans in place for all its responsibility areas.

Mr. Chairman, NRCan's responsibilities for emergency preparedness are spelled out in the Emergency Preparedness Act, and the government has had a policy in place since 1995 on NRCan's lead role. The Department informed us that the policy is outdated. However, Canadians cannot wait for further changes to the policy to have appropriate plans. Our audit recommended that the Department, in collaboration with other stakeholders, should ensure that appropriate plans are completed without delay.

The Department has a very broad mandate, and it faces a number of significant challenges. These include cuts to its funding levels by about 50 percent, which were then doubled over the last 10 years. The Department had to wind down programs and significantly reduce its staff in a short period of time, and then re-build its capacity. Almost half its funding is for short-term programs that expire in three to five years. This makes it difficult to hire new staff, especially scientists who are looking for more stable working conditions. In addition, many of its executives and technical specialists are eligible to retire. The Department has taken on a number of important initiatives to deal with these issues. But it is also important for the Department to have good strategic management systems and practices that deal coherently with increasingly horizontal issues.

The Department has an aging, specialized workforce. Yet, it did not have a clear understanding of the competencies of its current workforce and those that it will need. The Department lacked reliable, consistent demographic information about its staff. We noted the importance of collecting this information, along with other data on the labour market, analyzing it, and integrating it into its strategic plan.

We also found that each of the five operational sectors and regional offices we reviewed had its own budgeting and project management system. The systems were not integrated and did not provide consistent information across the Department. The Department needs better information on its research and projects to allow effective corporate oversight.

At the time our report was tabled, the response by the Department indicated that it had accepted our recommendations. The Committee may wish to ask the Department to explain actions underway to address our observations and recommendations and may also wish to request updates on progress.

Mr. Chairman, this concludes my opening statement. We would be happy to answer any questions.