2 December 1999
L. Denis Desautels, FCA
Auditor General of Canada
Thank you, Mr. Chairman. We are pleased to have the opportunity to meet again with the Committee to discuss the Report tabled on Tuesday.
Before moving on to our suggested priorities, I would like to draw the Committee’s attention to some of the issues raised in my annual chapter on matters of special importance for Parliament.
This year, I concentrated on developments in the public sector. I think that in a few years’ time, we will look at the 1990s as a decade of huge change. Over the last decade, the government has eliminated its deficit, reduced the size of the public service, opened up the budget process and is now entering into partnering arrangements with other governments or the private sector to deliver its programs and services.
While significant progress was made during the 1990s in all of these areas, shortcomings still remain. The budgetary process is not sufficiently forward-looking and there is no mechanism in place to encourage ongoing review of programs; departmental reporting and management remain excessively oriented toward activities rather than results; accountability provisions in new governance arrangements are weak; and, the public service needs to be revitalized.
The changes we have witnessed over the last decade in the federal public service bring important challenges. These challenges need the urgent attention of Parliament.
Let me focus on two of these urgent challenges: new governance arrangements and the implementation of the Financial Information Strategy.
The federal government is entering into new governance arrangements with other governments or the private sector to deliver services and programs to Canadians. Whatever the form used to deliver a service, when it involves federal resources and authority, Canadians have a right to expect accountability and good governance through fair and reliable reporting to Parliament.
Chapter 23 identifies more than 70 new governance arrangements across the federal government involving annual expenditures now totalling over $5 billion. Through these arrangements, traditional delivery of government services has shifted to outside organizations that are often not directly accountable to ministers and Parliament.
In my view, accountability for them is not sufficient.
I am not concerned with the existence of new governance arrangements. On the contrary, alternative service delivery mechanisms that are properly implemented offer the promise of more efficient and responsive delivery through arrangements that are more focussed, flexible and client-centred.
When designing new governance arrangements, the government faces the challenge of keeping a balance between giving organizations to which it delegates responsibilities the freedom to make decisions and remaining responsible to Canadians for respecting the public purpose of the funds. Further, it should engage parliamentarians in discussing the accountability they expect of these arrangements.
The government should develop a framework to address accountability and good governance to guide departments in designing new arrangements. We believe that credible reporting, serving the public interest, effective accountability and greater transparency are basic elements of a framework.
The Committee may wish to examine the accountability arrangements governing some of these delivery mechanisms. Chapters 23 and 24 cover this topic as well as Chapter 5 from the April 1999 Report.
The second urgent challenge that needs the attention of Parliament is the implementation of the Financial Information Strategy, known as FIS.
The financial information the government now has is inadequate to serve its needs. It does not tell decision makers how much their programs are costing on an ongoing basis.
If the government does not know exactly how much its programs are costing, it is very difficult to make informed decisions on how to deliver certain programs. and what user fees it can charge.
No large company from the private sector could survive without this basic information. It is the federal government’s duty to give itself the same quality of information as the private sector does.
In his 1995 budget, the Minister of Finance announced the government’s intention to move to the Financial Information Strategy. Over four years later, I still see few tangible signs that the departments are giving this major project the attention it deserves. Several can’t even prepare reliable information on time to meet existing requirements. Further details requested by the Committee on 16 November will be provided shortly in a letter.
Chapter 21 deals with departmental readiness for implementing FIS. We found that most departments are just starting to focus on FIS despite the fact that the target implementation date of 1 April 2001 is less than two years away.
We know that when there is a real urgency, federal departments can mobilize. The Y2K issue is proof of that. The Treasury Board Secretariat, overall project manager for FIS, will need to assume a greater leadership role to bring FIS to fruition.
Turning now to Y2K readiness, Chapter 25 reports on final preparations for the Year 2000 computer problem. Over the last 18 months, the government has made significant progress in preparing the computer systems that support critical government-wide functions.
I am satisfied that those systems are now largely ready for the transition to the next millennium. Measures are being put in place for contingencies and national emergencies.
But a word of caution: it should not be complacent, and must remain vigilant, not only before but also after January 1st 2000.
The Committee may wish to consider an early hearing on Chapter 25 to obtain the most up to date information from the Treasury Board Secretariat.
I will now briefly touch on the remaining suggestions included in the priorities letter in the order in which they appear in the Report.
Chapter 11 examines the management of external user charges within Agriculture and Agri-Food Canada, the Canadian Grain Commission and the Canadian Food Inspection Agency. The three organizations need to improve their management of user charges in a number of areas, including costing their services, assessing the impact of fees, establishing formal appeal processes, and integrating user charges into their strategic planning.
Chapter 14 deals with the national surveillance of communicable and chronic diseases and of injuries which is conducted mainly by Health Canada’s Laboratory Centre for Disease Control (LCDC). Our audit found that, in the absence of a national framework for public health, current national health surveillance activities are largely carried out on an ad hoc basis. Key surveillance systems that we looked at were not working as intended.
Chapter 15 provides a case that illustrates many of the issues discussed in Chapter 14. In the spring of 1998, there was a nation-wide outbreak of a food-borne disease. We looked at how federal and provincial agencies – Health Canada, the Canadian Food Inspection Agency, which reports to the Minister of Agriculture, and provincial and local health departments – responded to this outbreak. Our examination identified a lack of timely exchange of information to identify the scope of the outbreak and a lack of full co-operation among the agencies involved.
Chapter 17 reports on our audit of Phase II of the Canada Infrastructure Works Program. This audit indicates limited progress in addressing the deficiencies we identified in our 1996 audit of Phase I of the Canada Infrastructure Works Program. From an overall federal perspective, the Program is essentially "running on trust" with little accountability. We found that federal officials did not consistently ensure that practices for selecting projects, controlling public funds and mitigating potential harm to the environment were working adequately.
Chapter 27 examines the Alternative Service Delivery Program initiated by National Defence. We looked at 14 completed projects for support services, such as printing, maintenance of buildings, food services and pilot training. Many of the business case analyses were poorly done and options were not always adequately assessed.
Chapter 30 is the second in a series of chapters on government contracting practices. It looks at sole-source contracts for professional services and at the use of Advance Contract Award Notices (ACANs) to see whether they conformed with contracting policy and regulations as well as principles of best value and open access to contracting opportunities. As in last year’s audit of sole-source contracts for professional services, we concluded that the process of awarding most of the contracts audited in this year’s sample would not pass the test of public scrutiny.
For your information, the Standing Committee on Fisheries and Oceans has called a hearing on 7 December on Chapter 20, Fisheries and Oceans — Pacific Salmon: Sustainability of the Fisheries. Also on the 7 December, we will meet with the Industry Committee to discuss Chapter 19 –Investing in Innovation. In addition, the Standing Committee on National Defence and Veterans Affairs has requested a briefing on 9 December on the chapters related to the Department of National Defence.
Mr. Chairman, that completes my opening statement. We would be happy now to answer questions.