Opening Statement to the Standing Committee on Public Accounts

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

24 November, 2005

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chair, I am very pleased to be here to present my November 2005 report, which was tabled on November 22. I am accompanied by Assistant Auditors General Richard Flageole, Hugh McRoberts and Ronnie Campbell.

This report covers a broad array of government activities, ranging from initiatives involving other jurisdictions and organizations outside government, to government-wide issues, to programs handled by individual departments and agencies.

Chapter 4, Managing Horizontal initiatives

Let me begin with the federal government's management of initiatives that cut across organizational mandates and boundaries—what are called "horizontal" initiatives.

An increasing number of issues facing the government today are complex and require the expertise of more than one department and level of government, as well as the private and voluntary sectors. Climate change, competitiveness, homelessness, and national security are some examples.

In Chapter 4, we looked at how well the federal government manages and co-ordinates horizontal initiatives in general as well as its part in three horizontal initiatives. We found that the government still approaches these initiatives case by case.

Also, current practices tend to reinforce a narrow silo approach, rather than a broader corporate view of government responsibilities. I encourage parliamentarians and the government to pay more attention to the management and accountability of initiatives that cut across organizational boundaries.

Chapter 5, Support to Cultural Industries

In Chapter 5, we looked at cultural industries. Providing support to Canada 's cultural industries is an area of government activity that involves many players.

Canadian Heritage and other organizations spend over $800 million a year to support cultural industries such as television, film and publishing to encourage them to create, produce and disseminate Canadian cultural content.

The support aims to build the country's national identity and develop Canadians' sense of belonging. But Canadian Heritage needs a clearer overall strategy and a better idea of what it's trying to achieve.

We also found that Canadian Heritage, Telefilm Canada, and the Canada Revenue Agency do not apply controls rigorously enough to ensure that requirements covering Canadian content, project selection, and eligibility of expenses are met.

Chapter 2, The Quality and Reporting of Surveys

Turning now to issues of concern to departments throughout government.

In Chapter 2, we looked at public opinion surveys commissioned by departments and agencies. We found problems with the reporting to Parliament on the quality and limitations of survey results.

Survey findings are often presented in departmental performance reports, which are key documents used to hold departments accountable for the money they spend.

But the reports we looked at did not provide enough information for readers to be able to assess the reliability of the surveys.

I urge the Public Opinion Research Directorate at Public Works and Government Services Canada to carry out its assigned role of promoting high quality public opinion surveys across government.

Chapter 7, Indian and Northern Affairs Canada—Meeting Treaty Land Entitlement Obligations

Moving on to activities handled by individual government departments and agencies.

Let me start with Indian and Northern Affairs Canada in Chapter 7. INAC is not moving fast enough to convert lands to reserve status under treaty land entitlement agreements with First Nations in Saskatchewan and Manitoba. When the federal government signed these agreements in the 1990s, it made a commitment to fulfill its original obligations under historic treaties.

So far only 12% of lands selected by First Nations in Manitoba and 58% in Saskatchewan have been converted to reserve status. The Department still has to process more than a million acres selected by First Nations and has no plan in place to meet these outstanding commitments.

It's time for the Department to speed up the process and get the job done.

Chapter 1, Royal Canadian Mounted Police—Contract Policing

In Chapter 1, we report on our audit findings related to RCMP contract policing. Some 20 percent of Canadians depend on the RCMP as their primary police force. The RCMP provides police services under contract to provinces, territories, and municipalities across Canada, except in Ontario and Quebec.

Our audit found that the RCMP's clients appreciate the quality of the peace officers assigned to them, but we noted problems with staffing and training that need to be addressed.

New recruits do not always receive the required six months of training in the field under the supervision of a senior officer. In addition, planning for replacing absentee staff is inadequate and the RCMP risks overloading contract peace officers.

I encourage the RCMP to tackle these important human resource issues.

Chapter 3, Canada Revenue Agency—Verifying Income Tax Returns of Individuals and Trusts

In Chapter 3, we note that the Canada Revenue Agency has a sound approach to selecting personal tax returns to verify the most commonly claimed deductions and credits.

Personal income tax is the single largest source of government revenue, and the Agency is doing a good job of verifying that people are entitled to the deductions and credits they claim. 

However, there are weaknesses in its approach to verifying domestic trust tax returns that the Agency needs to fix.

Chapter 6, Elections Canada—Administering the Federal Electoral Process

In Chapter 6, we report that Elections Canada plans, manages, and administers the federal electoral process well.

Overall, our audit found that Elections Canada is doing a good job of ensuring that it is always ready for a federal election and that eligible voters have the opportunity to cast their ballots.

That said, we saw some opportunities for Elections Canada to improve its efficiency. It could also improve the quality of its performance measures and give Parliament clearer reports on the success of its efforts.

Mr. Chair, we also provide four audit observations in this report, two of which we are reporting for the first time.

Chapter 8, Other Audit Observations

• The Canadian International Development Agency

When the tsunami hit Southeast Asia last year, Canadians were very generous in contributing to relief efforts. In the middle of the disaster, the Canadian International Development Agency provided emergency help through relief agencies and successfully launched a matching-funds program.

We audited CIDA's management of its share of the $425 million in disaster relief committed by the Canadian government. We found that the Agency acted responsibly in the middle of a crisis. The need was great, and CIDA responded quickly to get help to the stricken areas.

In the future, CIDA will need to keep Parliament and Canadians informed about how it is handling the tsunami funds and what impact Canadian aid is having.

• Transport Canada—The Quebec Bridge

The Québec Bridge is an important transportation link as well as a national historic site. However, there is a disagreement between Transport Canada and CN about who should assume the cost of completing the necessary restoration work. I urge Transport Canada to resolve this issue.

Finally, I'd like to report progress on two issues of long-standing concern.

• Parc Downsview Park Inc.

The government has prepared the way to seek Parliament's approval to transfer the Downsview lands to Parc Downsview Park Inc. and for the lands to be used to generate revenue that will finance the creation of an urban recreational green space.

I have noted on many occasions that Parliament had not provided clear and explicit authority to create and operate an urban park, nor had it authorized the related spending of public funds. Effectively, Parliament had been left out of the decision-making process. If its approval is obtained, this issue will be resolved.

• The Employment Insurance Act

For the past six years I have raised concerns about the government's compliance with the intent of the Employment Insurance Act specifically as it relates to the rate-setting process and its impact on the size and the growth of the accumulated surplus in the Employment Insurance Account.  

Recent changes to the Act mean the premium rate will be set on the principle that it will generate just enough revenue to cover the costs of the program each year, without considering the accumulated surplus. As a result, the issue of compliance with the intent of the Act no longer applies.

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