Opening Statement to the Committee on Public Accounts

The April 1999 Report of the Auditor General

22 April 1999

L. Denis Desautels, FCA
Auditor General of Canada

Thank you, Mr. Chairman. We are pleased to have the opportunity to meet with the Committee to discuss the April Report. I have with me today Deputy Auditor General Sheila Fraser and Assistant Auditor General Maria Barrados. We also have the Deputy Auditor General Raymond Dubois and other auditors present to provide assistance to the Committee.

This Report covers a broad range of issues and programs of interest to parliamentarians. In last December’s "Matters of Special Importance - 1998" I noted that in moving from a traditional bureaucratic model to more flexible forms of management, the government needed to keep its focus on serving the public interest, achieving objectives, ensuring accountability and maintaining transparency. Directly or indirectly, the chapters in this volume touch on all of these issues. We also provide follow-up reports on several issues covered in previous reports. In some cases, departments have taken action to continue to improve their performance. In other departments, progress has been slow.

First, on the positive side, Human Resources Development Canada has been innovative in its approach to implementing new programs in collaboration with the provinces, in particular the National Child Benefit program. Chapter 6 deals with that program along with another, both in the early stages of implementation. Reaching federal-provincial agreement on two major social programs and implementing them in less than two years is a significant achievement. I will address that subject in more detail in a few minutes.

In Chapter 1, we report that Correctional Service Canada has introduced several improvements since our previous audits: a major initiative to streamline its offender reintegration process; international accreditation of its offender rehabilitation programs; and better measurement of the results of its reintegration efforts. However, further improvement is needed in some key areas. Efforts by Correctional Service to address a number of our concerns have just begun and will need to be sustained in order to achieve lasting results.

On a less encouraging note, I am disappointed with the results of Revenue Canada’s Initiative to deal with the underground economy. The tax loss estimated at 12 billion dollars is significant. The underground economy problem requires continuous attention and sustained efforts from Revenue Canada and all Canadians. Revenue Canada needs to do more to make the public aware of the societal costs of unpaid taxes. The Department can improve its targeting of audits for the detection and reassessment of unreported income. Revenue Canada has agreed to take action to address our recommendations.

Moving now to the suggested priorities, as outlined in my letter of April 20, I am very concerned with Fisheries and Oceans Canada’s slowness at developing a framework for sustainable fisheries management.

Chapter 4 on Atlantic Shellfish Management deals with problems with the management of lobster, scallop, snow crab and shrimp fisheries that are similar to those we observed two years ago in the management of the groundfish fisheries. The Atlantic Region shellfish fisheries are a significant part of the overall fisheries, representing 81 percent of the value of all fish landed in the region in 1997.

The audit raises concerns about decisions on the use of the shellfish resource that are not consistent with the fisheries management objectives reported to Parliament or with the Department’s own Fishery of the Future strategy. We found other problems including dramatic increases in harvesting capacity, weaknesses in information needed to decide the use of shellfish resources and gaps in the monitoring and control of fishing activities.

The full impact of these problems is not obvious, as most shellfish fisheries are currently recording high landed values. However, as we reported in 1997 on the management of groundfish fisheries, these are significant concerns that must be addressed to ensure that the fisheries are managed in a sustainable manner.

Next, Chapter 10 covers the issue of funding arrangements to First Nations last reported on in 1996. Indian and Northern Affairs Canada provides approximately $4 billion annually to First Nations through various funding arrangements. The funds are for the delivery by First Nations of several programs including social assistance, education, infrastructure and housing, in Aboriginal communities across Canada. The Department’s primary role is to design and manage funding arrangements that appropriately support program delivery in a manner consistent with devolution and to help First Nations position themselves to assume greater self-government responsibility. I recognize that there are no quick or easy solutions to these significant management challenges faced by the Department and First Nations, but the problems are not insurmountable.

Our 1996 audit revealed serious deficiencies in funding arrangements and their implementation. In 1996, we reported that almost one third of First Nations and tribal councils were in financial difficulty. The 1999 follow-up concludes that despite departmental commitments to take remedial action, serious issues remain unresolved.

The Department needs to ensure that self assessments are completed, reviewed and used to tailor funding arrangements taking into account the capacity and willingness of First Nations to assume full responsibility for those funds. In addition, the Department needs assurance that fair and open mechanisms for addressing allegations of wrongdoing are operating effectively.

I would like to draw your attention now to two suggested priorities that are relatively positive stories. The observations and questions raised are fundamentally important to all Canadians. I believe that your Committee’s review would improve the information provided to Parliament and the public.

First, Chapter 3 – Statistics Canada – Managing the Quality of Statistics, deals with the Agency’s systems and practices for managing the quality of statistics, and for reporting to users on the quality of those statistics and to Parliament and the public on its performance. Statistics play a key role in supporting informed decisions that affect all Canadians. The Agency is strongly committed to producing statistics of high quality and maintaining quality through continuing improvement. However, we concluded that the Agency needs to be more consistent in assessing and reporting the quality of statistics. Many of the necessary systems and practices for doing so are in place, but the Agency needs to integrate them better and adopt a more disciplined approach to documentation.

Although the Agency has responded positively to most of the recommendations, the Committee’s review of the findings would reinforce its commitment to action and would enable the Committee to become more familiar with that organization.

Although this is not a suggested priority for your consideration, I would also like to draw the Committee’s attention to the study presented in Chapter 5 – Collaborative Arrangements: Issues for the Federal Government. Under such arrangements, the federal government, other levels of government and organizations in the private and voluntary sectors agree to share power and authority in decisions on programs and service delivery. Members of the committee may have a particular interest in reading this chapter together with a review of Chapter 6.

These kinds of partnering arrangements outside traditional departmental structures are increasingly being used in other jurisdictions. The U.K. is talking about "joined-up" government and the OECD is looking for lessons in governance and accountability practices when different levels of government collaborate. I spoke this morning to several hundred people at a national conference here in Ottawa on Collaborative Government: Is There a Canadian Way?

The study talks about the risks of federal participation in these arrangements and identifies attributes of good agreements and practices. We believe that serving the public interest, effective accountability and greater transparency are basic elements of a framework for these arrangements and we suggest key questions that parliamentarians may wish to ask about particular collaborative arrangements when assessing them.

Essential for effective accountability in collaborative arrangements is clarity of roles and responsibilities. These relationships are sometimes referred to as "shared accountability" because the partners work together toward common objectives and are collectively accountable for the operations and results of the arrangement, as well as individually accountable for their own contributions. The key is that there should be more, not less, accountability in a collaborative arrangement.

Chapter 6 consists of two case studies that deal with issues of shared accountability for the first two programs of the "social union" - the National Child Benefit and Employability Assistance for People with Disabilities. Both programs are managed by Human Resources Development Canada (HRDC). These programs, aimed respectively at reducing the depth of poverty and helping people with disabilities overcome barriers in the work place, represent new kinds of arrangements between the federal government and the territories and the provinces.

Your Committee’s review of that chapter and of the first progress report on the National Child Benefit expected to be released in May of this year would help to ensure that accountability to Parliament remains an important part of the accountability arrangements for these programs and similar future programs.

I hope that all of the chapters in the April Report will be of interest to you and as usual, we look forward to working with the Committee over the next few months. Thank you Mr. Chairman, that completes my opening statement. We would be happy to respond to questions.