13 April 1999
L. Denis Desautels, FCA
Auditor General of Canada
Thank you for inviting me here this morning. I very much appreciated the opportunity last month to appear before this Committee and discuss our work on the Canadian Food Inspection Agency, and I am here today to discuss our audits of Agriculture and Agri-Food Canada.
I have with me today Neil Maxwell on my immediate right, the Principal responsible overall for our audit work at Agriculture and Agri-Food Canada. On my far right is John Rossetti, the audit director responsible for a number of our audits in the Department.
My opening statement will touch on the variety of work we do in Agriculture and Agri-Food Canada, in particular our audits of the Cash Advance program and the Western Grain Transition Payments Program.
The Cash Advance program is one vehicle the government makes available to producers of storable crops to provide additional flexibility in making marketing decisions. It consists of a short-term loan made available at harvest, a time when financial obligations of producers are often at their peak. The financing provides a bridge for producers until they market their crops and begin to earn revenue. In recent years, these loans have annually totalled between $730 million and over $1.2 billion.
We highlighted two main areas of concern in our report of September 1998:
I will briefly comment on each of these areas.
When the program’s legislation was renewed in 1997, it included a requirement for a legislative review during the fifth year of operation, which begins in 2001. I feel very strongly in the value of provisions like this, as they provide parliamentarians with an important tool for scrutinizing ongoing programs. But we contend that if the review is to be valuable, preparation must start now to ensure that needed data are gathered in time. That requires a decision now on what questions the review will examine. We suggested a number of issues the review should address - for example, whether the program as presently designed provides producers with significant additional access to credit.
We also believe it is critical that the government reveal the objectives of the program’s interest-free element, specifically, whether its purpose is income support or some other goal.
The chapter also highlighted the need to develop better information and performance targets for the management of the program’s loan defaults.
We also concluded that the Department needs to better alert parliamentarians and other stakeholders about the results of evaluations and other departmental studies of its programs. These studies can help contribute to informed public debate about the merits of agriculture programs. A number of concerned stakeholders told us that in recent years the Department had not been forthcoming in making such studies public. We recommended that the Department find ways to better alert interested stakeholders to the existence and the findings of these studies.
At the time of our report last September, the Department made a number of commitments to address these issues. Your Committee may wish to ask about its progress.
The Western Grain Transition Payments Program provided a total of $1.6 billion to Prairie landowners to compensate for the anticipated decline in land values following the termination of the "Crow Benefit" in 1995. One of our findings was that the Department had learned from past problems experienced in similar programs of other departments, notably the Northern Cod Adjustment and Recovery Program. It took appropriate steps to avoid repeating these problems. With the new Agricultural Income Disaster Assistance program (AIDA), the Department again faces the challenge of developing a program delivery apparatus under tight time pressures. The challenge is to ensure that producers receive benefits without delay, but in amounts no higher or lower than their entitlement.
In the report on our follow-up of that audit, we encouraged the Department to establish a target date earlier than 2007 for analyzing the extent to which the Prairie economy is progressing toward the goals of crop diversification and value-added processing. We also encouraged it to consider a broader assessment that could incorporate social and environmental impacts of these changes.
I would like to turn now to a brief mention of our other recent work in Agriculture and Agri-Food Canada.
In 1997, we reported on an audit of the Prairie Farm Rehabilitation Administration (PFRA). We stressed that PFRA needed to clarify its strategic direction and priorities. We also said it needed to reassess its geographic distribution of resources and offices, taking into account the areas of the prairie landscape at greatest risk and most in need. We pointed out that the Department should play a catalytic role of leadership with other levels of government to eliminate gaps in program delivery. We also recommended that it examine opportunities for cost recovery.
One of our audits last year examined action by four departments, including Agriculture and Agri-Food Canada, to implement the 1996 Federal Science and Technology Strategy. We found that the Department was in "the middle of the pack" in putting the principles of the Strategy into practice. I expressed concern that, across government, the Strategy was at risk of losing its momentum.
As part of the May 1998 report of the Commissioner of the Environment and Sustainable Development, we examined Agriculture and Agri-Food Canada’s Biodiversity Action Plan. We noted that the Department had produced, with limited resources, an action plan that sets out ways for the agriculture and agri-food sector to take advantage of biodiversity while raising its awareness of biodiversity issues and conservation. However, we concluded that an overall national strategy was needed, which would require better integration of the agriculture plan with plans from other departments. We also concluded that the usefulness of the plan was limited because it lacked time frames, expected results, performance indicators and resource requirements.
Turning to ongoing work, as I mentioned at our last appearance before this Committee, we are now completing an audit of user charges in the Agriculture and Agri-Food portfolio. We take as a given that the government made a policy decision to impose user charges. Our objective is to determine whether the organizations in the portfolio have implemented the policy properly.
As part of a broader audit of new governance arrangements across the government, we are also examining the accountability and control mechanisms the Department has established for the Canadian Adaptation and Rural Development Fund.
Agriculture and Agri-Food Canada also figures in a number of environmental audits included in the report of the Commissioner of the Environment and Sustainable Development which is expected to be tabled May 25.
In closing, I would again welcome hearing about any issue the Committee thinks we should examine in future audits of Agriculture and Agri-Food Canada.