Proceedings of the Standing Senate Committee on
National Finance
Issue 4 - Evidence - April 21, 2010
OTTAWA, Wednesday, April 21, 2010
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to examine the Estimates laid before Parliament for the fiscal year ending March 31, 2011 (topic: 2010 Spring Report of the Auditor General of Canada).
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: I call this meeting of the Standing Senate Committee on National Finance to order and thank everyone for being here this evening.
[Translation]
Welcome everyone. Thank you all for being here with us. Yesterday, the Auditor General of Canada submitted her 2010 Spring Report.
[English]
This report contains six chapters addressing such diverse issues as aging information technology systems, modernizing human resources management, rehabilitating parliamentary buildings, sustaining development in the Northwest Territories and scientific research of Agriculture and Agri-Food Canada and Crown corporations.
We are very pleased to welcome back to our committee Ms. Sheila Fraser, who has served as Auditor General of Canada since May 31, 2001. I understand it is a 10-year appointment. We are pleased that you are here and continuing to do the good work that you are doing.
[Translation]
She is accompanied by Assistant Auditors General Sylvain Ricard, Nancy Cheng and Ronald Campbell.
[English]
Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada: Thank you very much, Mr. Chair. We are pleased to be here to present our 2010 Spring Report, which you mentioned was tabled in the House of Commons yesterday. I have also presented an overview report on the electronic health records initiative in Canada. As you mentioned, Assistant Auditors General Ronald Campbell, Nancy Cheng, and Sylvain Ricard accompany me.
Several chapters of my report, along with the overview report on electronic health records, touch on government investments involving billions of dollars. To provide maximum benefits and to ensure that investments produce the anticipated results, I urge the government to plan and budget for them over the long term.
The federal government relies on information technology systems to deliver programs and services to Canadians. Many of these systems are aging and several are at risk of breaking down. Even if systems are currently working, a breakdown could have severe consequences. At worst, some government programs and services could no longer be delivered to Canadians.
We found that the Chief Information Officer Branch of the Treasury Board of Canada Secretariat is aware that aging IT poses significant government-wide risks. However, it has not formally identified the issue as an area of importance for the government. Furthermore, it has not established or implemented government-wide strategic directions to address the issue.
The renewal and modernization of IT systems can take many years and significant investments that must be planned and budgeted for over the long term. The Treasury Board Secretariat should prepare a report on the state of aging IT systems across government and develop a plan to address it.
[Translation]
The report also looks at whether the government has implemented the key changes called for under the Public Service Modernization Act of 2003. This legislation is a complex undertaking designed to transform the way the federal government hires, manages, and supports its employees. While progress has been made, the process is still in transition and the impacts are not yet clear.
We found that while key changes required by the legislation have been made, there is limited information available on what has been achieved. This information is important to determine if results meet expectations.
Sound management of human resources is critical to an effective public service and better service to Canadians. The government needs to ensure that this initiative is successful.
[English]
We also looked at the rehabilitation of the buildings on Parliament Hill. Public Works and Government Services Canada has identified serious risks to key systems that could affect Parliament's operations. These buildings are part of Canada's heritage and are critical to Parliament's operations. The governance arrangements are hindering rehabilitation work while the buildings continue to deteriorate.
Responsibility for the Parliament Buildings is split among many organizations; decision-making and accountability are fragmented and there is a lack of consensus on priorities. These weaknesses result in delayed decisions and projects and contribute to increased project costs and risks.
The long-standing governance problem, which we and others have raised over many years, must be resolved. In our view, responsibility and accountability for the Parliament Buildings should rest with the Senate and the House of Commons.
[Translation]
Let me now turn to the Northwest Territories, where sustained and balanced development depends on several key conditions.
For example, agreements with Aboriginal peoples setting out governance rights and the ownership of land and resource rights are important for environmental protection and economic development. They help provide a level of certainty and predictability for business, industry, communities, and governments.
We found that the Department of Indian and Northern Affairs Canada (INAC) has made constructive efforts to clarify these rights in the negotiation of land claims settled to date.
However, in regions where land claims are still under negotiation, INAC has not put an adequate regulatory system in place to protect the environment. Nor have Environment Canada and INAC met their responsibility to monitor the cumulative impacts of development on the environment.
The federal government has specific obligations relating to effective governance, environmental protection, and capacity building to provide for sustainable development in the Northwest Territories. Not meeting these obligations could mean missed economic opportunities, environmental degradation, and increased social problems in the territory's communities.
[English]
We also looked at whether Agriculture and Agri-Food Canada is managing its research activities to meet its goals of promoting excellence in research and increasing collaboration with other research organizations. The department has a history of successful collaboration on individual research projects with other organizations, but the more complex collaborations we looked at were not managed well, causing a significant loss of goodwill among key players.
In addition, the department has not identified the human and financial resources needed for its strategic direction, nor the equipment and facilities it requires. Much of its laboratory and agricultural equipment is past its useful life.
The department's research is important to Canada's food production and its ability to compete internationally. We found serious problems in areas that are fundamental to conducting research, such as managing funding, capital assets and human resources.
[Translation]
My report also presents the main points of our special examination reports on 11 Crown corporations, issued to the respective boards of directors throughout 2009. The main points do not reflect events that may have occurred after our reports were issued.
In a special examination, any major weakness in a corporation's key systems and practices that could prevent it from safeguarding and controlling its assets or managing efficiently, economically, or effectively is reported as a significant deficiency.
In three of the corporations, we found one or more significant deficiency, which we brought to the attention of the appropriate ministers. The three corporations were Canada Post, Canada Science and Technology Museum, and Marine Atlantic Inc. In two of these — Canada Post and Marine Atlantic — the deficiencies involved capital investments and related funding.
[English]
My office and six provincial audit offices have carried out separate, concurrent audits of the development and implementation of electronic health records. Electronic health records are expected to reduce costs and improve the quality of care. However, this pan-Canadian initiative involves significant investments and challenges.
My colleagues and I encourage stakeholders to report comprehensively on progress made and benefits achieved. We also encourage the committees of each legislature to continue monitoring this complex initiative.
We thank the committee. This concludes my opening statement. We are pleased to answer any questions that committee members may have.
The Chair: Thank you very much, Ms. Fraser. We appreciate the work that you are doing as an officer of Parliament in providing us with this information to help us do our job of oversight.
I think it would be helpful, since we have quite a few new senators on our committee, for you to provide us a little bit of an overview of your office. What is your annual budget? How many people help you perform the function that you are performing?
Ms. Fraser: The independent Auditor General has existed since 1878. It is interesting that at the time of Confederation, there was an Auditor General who was also the Deputy Minister of Finance. I have heard some Deputy Ministers of Finance rue the day that those two positions were separated.
Our role has obviously evolved over the years although we still have the fundamental role to audit the financial statements and the public accounts of government. We are also the auditors of almost all Crown corporations. In addition, we audit the three territories, some 35 territorial agencies, and we have been for many years auditors of agencies of the United Nations. We are currently the auditors of the International Labour Organisation.
To do that work, we have a staff of 635 people and an annual budget approaching $90 million. Most of our staff is based here, of course, in Ottawa, but we do have offices in Halifax, Montreal, Edmonton and Vancouver.
The Chair: Are all of the audits the same, or are some of them financial audits plus performance and value-for- money audits?
Ms. Fraser: No. A little more than one-half of our work is financial attest work with financial statements. Crown corporations are required to have the special examinations that we refer to, which is a review of all of their practices. We actually have to give an opinion as to whether they have appropriate systems and practices in place.
There was a requirement to do these special examinations once every five years. That has now been extended to once every 10 years. We began reporting them publicly once there was a requirement for Crown corporations to post these reports on their websites.
The balance of our work is the performance audits, and we go through a risk assessment to determine which areas we will be looking at. We do about 25 performance audits each year.
Senator Marshall: Ms. Fraser, I am interested in the audit on Marine Atlantic Inc. As you know, Marine Atlantic provides a vital transportation link to Newfoundland and Labrador. In the opinion paragraph of your report, you write about compliance with section 131 of the Financial Administration Act and that ``Marine Atlantic is at risk of being unable to deliver the services it is responsible for providing . . .'' Could you elaborate on that, please?
I read the detailed report and the comments of Marine Atlantic. Could you provide a high-level summary? That is a strong opinion, which has negative tones. I would appreciate if you could elaborate.
Ms. Fraser: As the senator from Newfoundland is able to interpret, this is not a standard opinion that we have provided on Marine Atlantic. In fact, it is only the second time in the history of the office that we have given an adverse opinion to say that the corporation does not have the systems and practices in place that requires it to manage efficiently and effectively.
There were two main weaknesses. One is the question of the aging fleet and the aging shore facilities; the other is the operating procedures of the corporation. One example is that in the summer of 2008, they met their schedule 10 per cent of the time. Some of it is obviously due to equipment failures, but there were issues that are more complex in the whole management of the corporation.
The report was issued in the summer of 2009. Shortly before that, there was a complete change in management. There was also a fairly significant change to the board of directors. I met with the board when we presented the report and they took the report very seriously. We are working hard to improve the management structure.
Part of the problem was that the management team was far too small and did not have the capacity to deal with many of these issues. The most recent budget provides additional funding to improve their facilities and their fleet. There are signs of optimism. It will be interesting to see what the schedule is like this summer.
Senator Marshall: You carried out an audit in 2004, and based on a later report, you indicated that many of the recommendations you had made in 2004 had not been implemented. Given the seriousness of the problems with Marine Atlantic, my concern is, if they have not implemented the recommendations from 2004, how optimistic can we be that they will implement the recommendations from 2009.
Marine Atlantic is responsible for implementing the recommendations. When will you be conducting a follow-up review? The follow-up for 2004 was in 2009. We depend on you to tell us whether it is improving. We as Newfoundlanders and Labradoreans can tell when we travel on the service, but when will you be in a position to indicate whether things have improved?
Ms. Fraser: As I mentioned, the requirements for special exams used to be once every five years. That is why we did it in 2004 and then in 2009. That schedule has moved to 10 years. However, in discussions with the board of directors, I indicated that we should not wait 10 years and we could do it earlier, at the request of the board, the minister or the Auditor General.
We will assess their action plan. We would expect them to have pretty detailed timelines as to when they will meet these commitments, and then we will go in just after that. I would think three or four years, perhaps five years at the outside to go in and see if the situation has improved. Of course, we will be doing some monitoring in our annual financial audits just to get a sense if things are improving.
Senator Marshall: Would the monitoring be reported publicly?
Ms. Fraser: No.
Senator Marshall: Would you be doing that internally?
Ms. Fraser: Yes.
Senator Marshall: There is a reference in the report, in Chapter 6, where you are talking about the Crown corporations. You are talking about the reports you issued for 11 Crown corporations. You indicate the number of Crown corporations. Is the Atlantic Canada Opportunities Agency a Crown corporation?
Ms. Fraser: No. It is an agency.
Senator Marshall: What are the criteria to determine whether an organization produces its own set of financial statements that would be audited, as opposed to being combined with the Public Accounts of Canada?
Ms. Fraser: Certain organizations have produced their financial statements and have asked for audits. The Office of the Superintendent of Financial Institutions is one that comes to mind as sort of having a clear need to have an audited set of financial statements. In 2004, it was announced that all departments would have their financial statements audited by 2009. By the end of 2009 there was one, which was the Department of Justice. This announcement was never actually formalized in policy, and there is a fair bit of discussion going on as to whether government really wants to continue with that initiative.
We have recently taken the position that given the freeze on appropriations and the necessity for us to fund our increase in salaries within our budget, that we will not undertake audits of departmental financial statements because it is not a clear government priority. Should that change, we will obviously reassess that postition.
ACOA, I would suspect, probably produces a financial statements but we do not audit them.
Senator Marshall: Is there no requirement that they be prepared and audited by you?
Ms. Fraser: There is no requirement.
[Translation]
Senator Ringuette: Ms. Fraser, it is always a pleasure to have you here. I still worry about whether there are enough human resources. Last time we met at this committee, you were also worried about not having enough human resources to fulfill your mandate and you were in the process of recruiting. What is your current level of staff?
Ms. Fraser: It is going well. Our staff is now complete. It is always a particular challenge to attract accountants when there is a general shortage of them on the market. We have been very successful lately and I hope that will continue, but it is not easy to compete with the private sector, especially when it comes to accountants.
Senator Ringuette: Will your offices be going through budget cuts too?
Ms. Fraser: Yes, like every department, we must absorb the 1.5 per cent wage increase. For us, that is almost $1 million. We are going over every activity with a fine-toothed comb.
Senator Ringuette: That brings me to the question of whether or not you will have or have had the opportunity to audit the bonus program for public service executives.
Ms. Fraser: No, we have not.
Senator Ringuette: Is it coming up on your agenda?
Ms. Fraser: No.
Senator Ringuette: I will move to the next question then.
[English]
In the last fiscal year, we have had quite an influx of vehicle lease purchasing from the Business Development Bank of Canada, BDC. We have had a major influx of mortgage purchasing from the CMHC, Canada Mortgage and Housing Corporation. We are talking about billions and billions of dollars. Will you be auditing the value for money of those two transactions?
Ms. Fraser: We will obviously audit those transactions as part of our financial audits of both BDC and CMHC. In fact, the mortgage would have been part of the financial audit. It was certainly part of the financial audit in March 2010. We have been going through how those were recorded in the financial statements, have there been appropriate financial provisions taken, if necessary, and so on.
As I mentioned earlier, we do special examinations of Crown corporations. CMHC was part of the 11 corporations that we reported on and BDC as well. Both of those examinations would have taken place before the major transactions. However, we did look at their other transactions and there is significant mortgage financing already that already goes on in, for example, CMHC. With respect to BDC, we did not look at the new credit but we looked at the credit they were giving before that. We would not return to look at those specifically from a performance point of view until we come to next special examination.
Senator Ringuette: In other words, a value-for-money audit will not be performed on these two major programs for the next, what, four or five years?
Ms. Fraser: Probably longer than that because we had very positive reports on both of those Crown corporations that both of them were very well managed. From a risk perspective, we would not audit them probably until eight or nine years from now.
Senator Ringuette: We are looking at $80 billion.
Ms. Fraser: We do look at it, as I said, as part of the financial audit. Were we to see anything that appeared problematic or gave us concerns, then we could obviously do something sooner.
Senator Ringuette: The last time you were here, we discussed the infrastructure program and your flexibility and ability to audit that program. You indicated that you relied on your provincial counterpart for the provincial side. There is a federal part, there is a provincial part and there is either a municipal or a non-profit part.
However, I look at what you have produced for us, and we certainly appreciate it, the overview of the electronic health records and the investments that were put into that. It is a joint federal-provincial audit report. Could we not have a joint federal-provincial audit report for infrastructure?
Ms. Fraser: Yes. Mr. Campbell is leading a team that is doing an audit of the economic action plan. We will be tabling a report in October of this year. To date, we are largely looking at the control mechanisms that have been put in place: Are the program design or objectives clear? Are there measures of performance?
In the second phase, we will be getting into the actual programs of infrastructure because much of the money is still going out. It is a bit early to be auditing that program. Discussions have begun with five or six provincial auditors general to do what we call ``concurrent audits'' and to come up with as well a summary report at the end. The question is on the table that we may involve certain of the municipal auditors, like the City of Toronto, who have very large programs. We will be working on concurrent and collaborative audits in the infrastructure program.
Senator Ringuette: Only six provinces participated in the electronic health record audit. As a New Brunswicker, I see that the Province of New Brunswick did not participate. Can you explain why my province did not participate?
Ms. Fraser: It is up to the decision of the individual auditor general. It could be a question of resources or work planning. Many of the offices are quite small and do not have the same flexibility. It depends on their priorities. It would be very rare that we would be able to get all of the provincial auditors general working on this at the same time. I suspect that infrastructure would have five or six as well.
Senator Ringuette: We might have the same problem in the infrastructure part.
Ms. Fraser: We will certainly try to get the larger ones, but it is up to them to agree to participate.
Senator Ringuette: I would like to highlight something I read in the Canadian Press. It is a statement by the Canadian Construction Association that they are concerned because the federal stimulus money for infrastructure ends March 31, 2010. Many projects will not be completed by that date, so there is concern. Will your audit look at that?
Ms. Fraser: Probably not the audit we will be tabling in October but the subsequent audit would.
Senator Ringuette: My last question is very important: When was the last time there was a Public Works audit?
Ms. Fraser: We do audits of Public Works, almost continually, they would tell you. We did an audit of contracting.
Ronald Campbell, Assistant Auditor General, Office of the Auditor General of Canada: It was an audit of service contracts.
Ms. Fraser: They are often involved in other audits we do, so when we do military purchases, they are part of that. They are a major player in the Parliament Buildings rehabilitation. There is also health and safety, security clearances — we have done a number. We have probably done five or six, perhaps more, in the last few years.
Senator Gerstein: I thought I would preface my question by saying that the question I will ask you will be in my usual very non-partisan spirit.
Chapter 3 of your report indicates very serious problems with the condition of the buildings of Parliament. As you quite correctly point out, these buildings are important for many reasons. Not only are they the operation of government, but they are also an iconic part of our heritage and a great tourist attraction here in Ottawa.
I noted that your recommendation said that the necessary renovations to the Parliament buildings have been delayed by an unwieldy governance structure, and you recommend that the responsibility for these buildings should rest with the Senate and the House of Commons.
I totally agree with your point about the problems with the current governance structure. However, I would sense from the short time I have been here that Parliament may be very reluctant to take the lead on this issue because parliamentarians are concerned about the optics of ordering costly improvements to buildings that they themselves occupy. I might say that this might also be the reason for the substantial deterioration of the residence of our Prime Minister and, I might say, the residence of our Leader of the Opposition. I suspect many around the table would know the problems of each of these places, notwithstanding the recentness of which visits to either of these places may vary for some of us.
Did you consider when you prepared your recommendations, whether there might be some alternative governance approach to dealing with the situation that you have so rightly brought before us?
Ms. Fraser: When we proposed that the responsibility be transferred to Parliament, there is a bit of an implicit suggestion in that some mechanism will have to be put in place to manage that responsibility. We note different models in the report. The U.S. has the chief architect. In Great Britain and Australia, the responsibility has been transferred to Parliament. Various models can be studied, and a number have been looked at over the years. Some were proposed a few years ago by the two clerks. Some unit will have to be created.
Currently, Public Works is the custodian. Parliament is considered the occupant, but Parliament expresses its needs and priorities and has to negotiate all of this with Public Works, who then turns around and negotiates for the funding.
I can tell you, from the interviews we have had and the discussions we have had, everyone in that system is completely frustrated and very upset with the various players. It is not working. The disagreements over priorities, over even criteria, how big offices should be have created significant delays and very bad relationships in this whole thing.
We think it would be much clearer if Parliament were given the responsibility. Even within the accommodation policy in government, it says that the department, not Public Works, should be responsible for any special purpose buildings. If any buildings are special purpose, the Parliament Buildings certainly are.
We think that Parliament should be given the responsibility and the accountability for their requests and priorities, that the negotiation for the funding should be directly between the two parties, and that Public Works should not be in the middle.
Will this be the magic solution? I do not know, but I certainly hope it will reduce some of the delays and some of the current tensions.
Senator Gerstein: Did you think you had an opportunity to go further than the recommendations you have made in terms of what type of model might be looked at?
Ms. Fraser: We felt that going even this far was going very far for us. For 20 years, we have been saying that governance needs to be looked at. For us, it was quite a step forward to recommend that the responsibility be transferred to Parliament. We have had discussions with all the players involved, and everyone seemed quite comfortable with that recommendation.
Senator Eggleton: Looking at the departmental responses in each of these sections, one word continually comes up, and that is the word ``agreed.'' Who would disagree with the Auditor General? Who wants to be on the wrong side of the Auditor General? I do not think many departments want to be in that position, so it is understandable that they would say they agree, but one must wonder about all of this. Are they getting religion late? What has been going on for the past period of time?
For example, on the aging information technology systems, you note that the Treasury Board has recognized this for more than 10 years, and now they are talking about writing a report to get it all together. One has to wonder why this is. Are these management failings, or do they just not have the resources and could not get the resources to do this job?
Can you comment further?
I am also concerned about the situation with the research programs in the Department of Agriculture. One of the priorities of the government is international competition, being able to do more in that regard and to increase productivity. Yet, here it seems that it has been sloppily done. They have not looked at the resources they need, they have updated equipment, et cetera. Is it just a lack of resources or are there management failings?
Second, tell us a little about the follow-up procedures to ensure they actually do it this time and not in another 10 years.
Ms. Fraser: Many of the issues we have identified come back to establishing priorities. Funding is certainly an issue for many of the recommendations that we make. Over the years, we have noted weaknesses in systems due to the lack of people to do the job. Permanent resources have not been dedicated to a certain initiative.
To me the IT issue was simply a question of lack of priority. There has been a Chief Information Officer in government for a long time, and one would expect that person to have a good idea of the state of IT across government.
There is information within most departments. There are improvements that must be made. We looked at five departments, and only three had plans and knew the cost of replacing these major systems. To me, this is basic management, and I would have expected the CIO branch to have that information.
As to the recommendations and agreements, departments do occasionally disagree with us. As soon as we have our initial findings, we try to work with the department to find a recommendation that will be doable and realistic for them, but sometimes we do disagree. Frankly, I would prefer they indicate they disagree rather than saying they agree and then do nothing.
Over the years, we have encouraged the Public Accounts Committee in the other house to request detailed action plans as to how they will address the recommendations, with specific timelines and resources dedicated to them. Departments are expected to table these in the house. We will use those action plans to determine when we go back to do a follow-up.
We have one report specifically dedicated to do a follow-up. We make a determination as to whether progress is satisfactory. In close to 75 per cent of our follow-up audits we have assessed progress as being satisfactory. So government does respond and does take action, and improvements are made.
Senator Eggleton: They file action plans in the other house.
Ms. Fraser: Yes.
Senator Eggleton: Can we get copies of them, too?
Ms. Fraser: I am sure you could.
Senator Eggleton: Do the departments file them?
Ms. Fraser: The departments file them with the committee.
Senator Eggleton: I want to ask you about one specific program you have audited, the CMHC, a Crown corporation. Maybe this came too late, but in 2009, the government asked CMHC to buy some $50 billion in mortgages held by Canada's big banks during the financial crisis so that they could make some room for further lending. Did you review that program? If so, what have you found?
Ms. Fraser: We did a special examination of CMHC in 2009. I believe the mortgage program came in after that, though. It was included and will be included as part of our financial audits. We will look at how they carried out those transactions; how they are reported; whether, if there is need for loan loss provisions, they are being taken appropriately; et cetera. That will all be considered in the financial audit.
Senator Neufeld: I have another question on CMHC. I have heard quite a few times about CMHC taking over, as Senator Eggleton said, $50 billion worth of mortgages. Did I understand you correctly to say that when you did the audit of CMHC you were pleased with how they run their business and that it may be another eight to 10 years before you go back to review them? If so, I take from that statement that you are comfortable with the operations of CMHC, and I think we should be happy about that. I am happy if you are comfortable enough to say that there is no need to do a special investigation because they have run their business well, and I assume they will run it well in the future.
Am I correct?
Ms. Fraser: Yes. I can tell you the elements we looked at in the special examination. We looked at governance practices; risk management; strategic planning and performance measurement; the mortgage insurance program, which did not include the one under the economic action plan; securitization; treasury and investment management; human resources; IT; relationships and business arrangements; and their housing programs. We did an extensive overview. We are joint auditors in this audit with Ernst & Young. We came up with a very favourable report, noting many good practices. We found some areas for improvement, but gave them a positive report, which essentially says that this is a well-managed corporation.
Senator Neufeld: Thank you. It is important to get that on the record. Fifty billion is a lot of cash and it brings up the political antenna. Are any of those 11 Crown corporations self-financing?
Ms. Fraser: Some of them are supposed to be, for example, Canada Post; BDC pays dividends back; the Canadian Development Investment Corporation, which holds an interest in Hibernia; and Marine Atlantic is supposed to be self- financing 65 per cent or 75 per cent, but is not able to reach that target. The museum and the National Gallery of Canada are not. I think the Canadian Commercial Corporation receives an appropriation. As well, the Standards Council of Canada receives an appropriation.
Senator Neufeld: In your notes, you mention that three of the corporations had significant deficiencies. My colleague asked some questions about Marine Atlantic. It says that the deficiencies involve capital investments and related funding. Out of those three, one of them happened to be Canada Post. You are not saying that Canada Post had trouble with capital financing if they are self financing, or do I not quite understand? Perhaps I did not ask the question properly.
Ms. Fraser: A major modernization initiative is going on at Canada Post. Much of the infrastructure is old. Many of the letter-sorting facilities are more than 40 years old and need to be updated. The project is estimated to cost slightly over $3 billion. With the recent economic recession, the corporation's revenues have decreased and they are unable to finance it out of their own revenues. At the time we completed the special examination, they had gone to government with proposals to increase revenues, to increase postage rates, and to increase their borrowing authority. Subsequent to the completion of the special examination, they obtained both of those authorities.
We have not seen the plan to verify if the authorities will be sufficient. Nor have we seen the timelines to conduct this initiative, because there is a question about how quickly they can do this in order to get the benefits. Major labour union negotiations are coming and they are critical to the timing of these initiatives. We have not seen the updates to the plans. At the time we completed our audit, they had not received that approval. They have judged this initiative to be critical to their future operations.
Senator Neufeld: I want to go on to a different issue, namely, the Northwest Territories. You said that in regions where land claims are still under negotiation INAC has not put in an adequate regulatory system to protect the environment.
To my knowledge, land claims have been going on for almost as long as I have been around, and probably will be for a long time yet. Am I to understand that Environment Canada has environmental regulations and legislation in place that takes cares of the Northwest Territories in the interim? That surprises me. Has it been left out there and now people are starting to think about putting in regulations to look after it? Could you expand on that? Take your time. The chair will probably let you go ahead, but he certainly will not let me. I am interested in the cumulative impacts, and so on, because I have some background in the Northwest Territories and some of the measures they have in place.
Ms. Fraser: Approximately 70 per cent of the land claims have been settled in the Northwest Territories. When agreements are made, provisions for co-management boards are established. In the remaining 30 per cent, where there are no co-management boards, consultation and involvement of First Nations comes in very late in the process. We note in the report of certain development projects that have been delayed quite significantly or even had to be cancelled because of legal challenges from First Nations. That is part of it.
INAC and Environment Canada have responsibility to do monitoring of environmental cumulative effects and that has not been done.
Mr. Campbell: As the Auditor General says, there is a regulatory framework in areas where land claims have been settled. That regulatory framework ensures that First Nations get involved early in the process. In the areas where there are no land claims, people can still go ahead and try to get developments and permits. We noted a couple of cases in the chapter where they went quite a long way down that road and First Nations then went to court or appealed in some other way and had the permits either rescinded or the developments sent back.
On the cumulative monitoring impacts, there was a discussion earlier about funding. You will see in the chapter that Environment Canada did have some models in place to help with the cumulative impact monitoring. They stopped doing some of those projects, they tell us because of a lack of funding. There was also a question about recommendations. They have agreed with them and presumably they are making efforts to get the funding going again.
The Chair: Thank you very much, Mr. Campbell, for that explanation.
Ms. Fraser, during one of your replies to Senator Neufeld, you spoke about a joint audit. Could you explain how that works?
Ms. Fraser: In certain of the Crown corporations, we conduct the audit jointly with firms from the private sector. We have about a dozen that we do; Canada Post is one example. We work with a firm and conduct the audit together, and we both sign the opinion on the financial statement.
The Chair: Is the private firm and your group both doing the same type of work or do you divide the work, one does the financial audit and the other does the value-for-money audit?
Ms. Fraser: It is only the financial audits and special examinations that we do jointly. When we do the financial audit, for example, we sit down and do the planning together. We will decide what sections the firm will do and what we will do and there is a rotation after a few years. All the decisions must be made jointly. The correspondence and opinions are done jointly. We work together as one unit conducting the audit.
The Chair: Parliament gave you the right to do audits of foundations a few years ago. Do you recall that?
Ms. Fraser: Those are performance audits.
The Chair: You only do the performance audit. They are already set up to have a financial audit done by an outside independent firm?
Ms. Fraser: That is correct.
The Chair: Doing a risk assessment, you would not do a joint audit in that instance; just the performance audit?
Ms. Fraser: Yes, just the performance audit. We take the position that we will do audits of foundations when we are doing the broader audits within government. When we looked, for example, at education programs, we included the Millennium Scholarship Foundation. When we were looking at programs for sustainable development, we included the Canada Foundation for Sustainable Development. It is unlikely that we would do a performance audit of a foundation just for itself. It must be part of a broader audit.
Senator Callbeck: I want to return to the audit on Crown corporations. You say the practice is to perform an audit every 10 years unless something of importance is brought to your attention. Is that right?
Ms. Fraser: There can be an audit done earlier than 10 years at the request of the board of the Crown, the minister, or the Auditor General.
Senator Callbeck: Regarding CMHC, this report covered October 2007 to June 2008. During that time, they were insuring mortgages without any down payment and all the borrower had to do was pay the interest. The government was critical of this practice, as was the Bank of Canada. However, I did not see any mention of this in the audit.
Ms. Fraser: The decision as to the types of products is really a question of policy. If they have received the proper authorities to issue these products, we would not question them. It was, I know, for quite a short period of time that this practice occurred.
Senator Callbeck: I do not know about the time, but I know this went on. I remember the bank and the government being critical.
I want to ask a question about the state of the Parliament Buildings, because you made quite a few comments on them. You said in your report that Public Works and Government Services agreed with your recommendation; however, they promised to work with other stakeholders to strengthen governance. To me, that is a little short of your recommendation, which is to put this in the hands of the House of Commons and the Senate.
Ms. Fraser: The difficulty in this is that our recommendation was addressed to the minister and the response is a response from the department. The department is obviously cautious in the wording that it uses, and there have to be negotiations with the Senate and the House of Commons as to how this will occur. However, I can tell you that in discussions there was no objection to that recommendation.
Senator Callbeck: Another question I have is with regard to the Public Service Modernization Act. Your report states that information and outcomes are critical to monitor the progress and support the upcoming legislative review. You found that many of the agencies did not have performance measurements to report progress, yet Treasury Board has responded by promising to improve its reporting to Parliament, with no specifics at all. How will they report on this if there are no performance measurements?
Ms. Fraser: That is an excellent question Senator Callbeck. I hope that they present detailed actions as to how they will actually do this. The difficulty is that the objectives were high level and rather general, and if you have not put the measurement systems in place to be able to do that from the very beginning, it will be difficult for them to get good information. There may be certain indicators from which they will be able to pull the information together.
Mr. Campbell: It is a good question and it was a question that was pertinent a number of years ago when we made similar recommendations and got certain commitments. What is particularly timely and important is that a legislative review is planned for within a year. We think it is vital that when parliamentarians review that legislation, that they do that in an informed way. They will need that type of information available to them in a short period of time, and it would be a missed opportunity if that legislative review occurred and there was not good information about the extent to which the legislation is achieving the objectives that were intended. I think there should be a fair amount of effort going on at Treasury Board to try to get that information, because that day is coming quickly.
Senator Callbeck: The evaluation of the IT system seems to be based on whether the system is liable to break down, not on whether the system as a whole is consistent with best practices worldwide. Getting good grades and risk management are not the same as actually having a cost-efficient IT system; is that right?
Ms. Fraser: I would agree for the most part with the senator. ``Aging'' includes a broader definition than simply the number of years that a piece of equipment has been in place. It also looks at how flexible the system is; whether it is easy to update; and if there are legislative changes, is this a huge effort to do that? In part, it would be that, but it certainly does not go into whether this is the most efficient way to deliver the service and whether there are other ways of delivering it. We certainly hope that as government replaces or renews these systems, that it would go through that exercise and not simply put a new mainframe in where a mainframe was before, because there may be much better ways of delivering the service.
Senator Callbeck: In your opinion, are there some systems that are more at risk than others?
Ms. Fraser: I will give you two examples where the government itself, the departments, have clearly indicated were at the point of failure, and that is the pay system and the pension system. They are working to replace both of those systems. I think everyone has heard the stories of people joining the public service and not being paid for six or eight months. They are working on that problem.
With regard to the other systems, I do not know that we can actually comment on the likelihood of failure, but we certainly note in the report that there are systems for which the programming language that is used is no longer taught. A limited number of people can actually do programming changes. There are major data centres that are in installations where the HVAC system, the air conditioning, is no longer supported by manufacturers, so if that were to fail, they would not be able to operate. The litany could go on and on. Many of these systems are very old, from the 1980s and even the 1970s, and they will have to be replaced.
The major issue that we are trying to raise is that no one seems to have an idea of the state of this across government or of what this will cost. In the three departments that did have costing information, they had a shortfall of funding in the order of $2 billion. We are talking about significant investments across government. What is the planning for this over the next five to 10 years?
Senator Banks: Ms. Fraser and colleagues I thank you for being with us. I am an interloper on this committee and not a regular member. The last time I served on this committee, it was under the chairmanship of Senator Murray. I knew rather a lot then, which I learned from him and which I have since forgotten, so I will ask you some questions that I may have asked you before.
You said in your opening remarks that you are the auditor of almost all Crown corporations. Can you remind me, please, of which Crown corporations you are not the auditor?
Ms. Fraser: We do not audit the Bank of Canada and the Canada Pension Plan Investment Board.
Senator Banks: There are various types of audits, including special examinations, which are quite another matter and are the most intrusive. If I remember correctly, there are some Crown corporations and other functions of government that are exempted, in section 10 of the FAA, from special examination. There is an exemption. Do they still exist?
Ms. Fraser: That was the case. That was changed in 2005. I am not sure that the Bank of Canada or the Canadian Pension Plan Investment Board needs to have a special examination. To my knowledge, every other Crown corporation much have a special examination.
Senator Banks: Must have or may have at their request? I am thinking of the Canada council, which used to invite such things.
Ms. Fraser: They have to now. Some used to do it voluntarily, like the National Arts Centre, but now it is a requirement.
Senator Banks: Even though I have read your act, because we are in the process of amending it, as you and I know, I have never had a good handle on the things that circumscribe the areas on which you may or may not feel that it is proper to comment. You said just a few minutes ago that if Crown corporations have the proper authority to do things, you do not question them.
Would it be out of order in those cases for you to question if you thought it was correct — whether it is proper or not — to comment on the propriety or the prudence of that authority having been given?
Ms. Fraser: We try to be cautious not to comment on what we view as policy decisions. There can be occasions when there may be certain practices we think are questionable.
Senator Banks: In their wisdom, not their propriety. That is my question.
Ms. Fraser: Even though we say we do not question policy, we might not directly question the policy, but we will find a way to raise the issue if we think something is really questionable. We will certainly look at whether the due diligence has been performed, whether there has been proper consultation and whether the various parties have been informed of the measures.
If necessary, we will raise it with the appropriate authorities, saying ``Are you sure this was the right thing?'' or ``We have a concern about this; we realize that it has gone through all of the proper channels, but at the end of the day, is it really the right thing?''
Senator Banks: That is sort of the nature of my question. You spoke about the borrowing authority, for example, which I presume must be obtained on an annual basis.
Ms. Fraser: Most of them would be on a permanent basis. Then they would have to raise the limit. It may be raised, in some cases, for a certain period of time while there is a major project occurring, but it would not be an annual approval.
Senator Banks: When it is permanent, it is circumscribed in some way; there is a ceiling or something is there not?
Ms. Fraser: Yes.
Senator Banks: The reason I asked the question — and I do not know whether you wish to comment or can comment on it — is that, while there are countries in which the governments of the countries have ongoing borrowing authorities, they are most often constrained some way, with a ceiling usually. In Canada, until two years ago, it was always the case that substantial borrowing authority had to be received by a government from Parliament on a per occasion basis, practically.
Parliament has subsequently given that away, I want to say, almost inadvertently; it escaped some of our attention. If I read it correctly, the government now has the unconstrained authority to borrow whatever, whenever, at whatever rate, from whomever, for whatever purpose.
I wonder whether that is a subject that you would regard strictly as a matter of policy or whether it is a matter of prudence.
Ms. Fraser: We would do that as a matter of policy, especially if it has been voted on by Parliament.
The Chair: You are quite right; we did not notice it.
Senator Dickson: I was taken with the detail in all your reports, but I particularly want to focus on the one concerning the electronic health records. I was really taken by page 10 onwards, where it said ``meeting the important challenges.''
Coincidentally, before I came here, I happened to look on the Internet. There is a report on the Internet from an organization in the United States entitled Smart Card Alliance. The date of the report is February 2007. When I read your report, I would almost say someone in your office must have been smart enough to go to the Internet because the outcomes of this report and challenges in the United States are the same.
Let us assume for a moment that someone is that smart. I must compliment you because there is a guesstimate here of total cost for provincial and federal authorities to put the system in place, and their estimate to you was around $10 billion.
Ms. Fraser: Yes.
Senator Dickson: In this document, it is anywhere from $100 billion to $300 billion, which is a lot of money. Do you really think it can be done in Canada?
In Canada, we have the provinces and legislation. In the United States, they are trying to do the national but they have the regional and compare the regional to the provinces. Do you really think it can be done for $10 billion?
Ms. Fraser: I will certainly not give any kind of assurance about that number.
Senator Dickson: I noticed in your report you used the good words: ``Maybe,'' ``perhaps,'' and ``expected.'' We will not sue you.
Ms. Fraser: That is the estimate that certain people have put out. However, as we note in the report and as the auditors general have noted, it is difficult to even get the estimate of what has actually been spent to date. It is also kind of unknown across the country.
As you say, accounting can be a bit of an art and it depends what you include and what you do not.
Senator Dickson: I agree.
Ms. Fraser: I certainly would not give any assurance about that number.
Senator Dickson: On page 3, the last sentence says that electronic health records are expected to reduce costs and improve quality of care.
We all recognize the spiralling and increasing costs of health care and the need for improved quality. In your review of the documents, in your conversations with the provincial auditors general, do you feel comfortable that electronic health records will effectively reduce costs or improve quality of care?
Ms. Fraser: They will eliminate many of the problems caused by paper records, things like adverse drug reactions because people do not know if someone has gone to two or three doctors and received different medications, or the pharmacy is not aware that they have the prescription somewhere else. There is also duplicate testing, every time you go to a doctor, they will order all the same tests. If it is all in one record, hopefully some of that will be eliminated.
There are significant challenges in putting this in place. The challenges are not to be underestimated. I would say that, because of Canada Health Infoway, which is the funding organization established by the federal government to help finance these projects in the provinces, the provinces have agreed to an overall blueprint, the technology that should be used, and have agreed to try to make these systems as compatible as possible across the country. The board of directors of Infoway is composed of representatives from the provincial health authorities.
There is a mechanism, but it is very important that legislatures and Parliament continue to track this because it is an expensive project with significant risks to its success.
Senator Dickson: I am from Nova Scotia, so I have a Nova Scotia health card. Do you know to what extent this performs or could be used as a smart card? It has a bank card on the back.
Ms. Fraser: I do not know. I am sure there would be issues about privacy and security that would have to be considered.
Senator Dickson: I have not checked this out thoroughly, but it seems that in the United States the information collected is that of the patient. That provides the driver for the patient to use the gathered information. In Canada, as I read your report, it seems not to be so much for the patient but for the provider.
Forgetting the legalese of this, do you think it is in the best interest of the system that the information be available to the patient in Canada, assuming it ever works?
Ms. Fraser: Yes, we note that as being one of the challenges. We call it the consumer health solutions, that these new information systems allow an individual to have direct access to his or her medical record. Whatever solution is brought in to do so must be compatible with the information systems that have been put in place. That is one of the challenges because the public will want to have access to their records, so this must be considered in the development of this project.
Senator Dickson: What concerns me from a user's point of view, as I use this from time to time and we are working more on an ad hoc basis with the provinces, is why the provinces have not moved quicker to adopt smart card practices insofar as the card is concerned.
Ms. Fraser: I cannot answer that right now.
Senator Dickson: Some 30-odd cents of every dollar in the United States is spent on administrative costs, and I imagine the numbers are pretty well the same in Canada.
Ms. Fraser: That is an excellent question.
Senator Murray: You perhaps know this, others may not, but with regard to the parliamentary precinct, a House of Commons committee in the mid-1980s, chaired by the Honourable James McGrath, looked into the role of backbenchers and the rules and standing orders in relation thereto. Someone this morning reminded me that they did address this issue of governance, and one thing they recommended was the creation of an office called the intendant or something like that. I have not had a chance to look it up, but you and others may wish to do so. You probably have.
Ms. Fraser: We have referred to this. I know the team has certainly looked at that report, and there were issues raised about governance therein.
Senator Murray: I am on the way out and so are you.
Ms. Fraser: That is right. Who is first?
Senator Murray: No one else may want to do this, but I will tackle you on an issue that emerges every now and then in the media, and this is your perennial desire to, as some would describe it, get your hands on the expense accounts of honourable senators and members of the House of Commons. I know what you are thinking about is something broader, but I want to try to put this in context and get you to do this same.
I cannot speak much about the House of Commons; I have never been a member, and I do not follow their administration that closely. I do know that the Senate has had outside auditors come in and look at our operations with a view to improving where improvements are needed and so forth.
I do know, as a member of the Senate all these years, that there are very detailed and specific policies on such matters as our office budgets and what we may and may not do. I am sure it would not be possible for us to buy whatever equipment we wanted and send the bill to the Senate, as seems to have happened in some jurisdictions, or to buy stuff that is of questionable necessity in a senator's office. There are rules and policies about that, and we are limited as to the number of phones, the number of faxes, the number of computers and the rest of it we can have. If we need a new piece of equipment, we go to the Senate and the Senate goes out and I presume they have some kind of process by which they invite bids or do whatever they do and we get the piece of equipment. I think we are covered in that way, and I think any auditor would find we were covered, although there may well be room for improvement; there always is.
I can only speak for myself, but my sense of senator's concerns is your high media profile. There have been other examples in other jurisdictions that if you were to do any kind of examination and find anything amiss — I am sure you would find some things that needed to be corrected or improved — that there would immediately be a so called scandal in the media. We are not in a position that the Deputy Minister of Transport or Public Works is as, I say with respect, no one knows who they are, or even a minister of the Crown who has his own or her own infrastructure around to help with this sort of thing. We are individuals, and we must go back to our communities and deal with this kind of thing.
That is the context I will put it to you in. I can only speak for myself on the matter, but I do so in order to invite you to put in context what the nature of your — ambition is perhaps too strong a word — desire is with regard to the two houses of our Parliament.
Ms. Fraser: I appreciate the opportunity to discuss this matter because there has been a lot of speculation and perhaps misinformation has been circulated.
We proposed an audit of the administration of the house and the Senate, which means looking at the existing systems and practices. It is not an audit of members' or senators' expenses per se. We proposed to look at areas such as human resource management, IT and obviously financial management, which would include whether there are policies and procedures in place around members' expenses, but it would be broader. There are a number of issues in the administration of the house and Senate.
With respect to the question of when we would look at financial management, I do not think it would be a credible audit if we said we looked at financial management and completely excluded those expenses. However, as I said, it would be to look at the existing systems and practices. We certainly have absolutely no worry about that. The two clerks have briefed me on the policies and procedures, so there is certainly nothing that causes us concern. There would be testing of samples of transactions, but I think in all the audits we do, if we find one or two things that are perhaps not absolutely perfect, we do not publicize that or make a big deal about it. If there is a complete lack of any kind of procedure, then it would obviously be more significant. It is to try to judge how significant any derogation from that may be.
There was an audit done some 20 years ago. I had proposed another because I thought after 20 years it was time an audit be done again. As you know, we have been in discussions for over a year, and we are awaiting a decision.
The Chair: Do you have any follow-up questions on that, Senator Murray?
Senator Murray: I do not, although other members of the committee may have.
The Chair: I am glad that you raised the subject. I think some honourable senators might be wondering about, on this point, the fact that you are an officer of Parliament and wanting to audit your master, in effect. You are independent. We have had this discussion other times you have been here. Parliament appropriates the funds for your office. Your earlier comment was that your budget is fixed, which will cause you some difficulty in managing it, like all the rest of us. Although that is a government initiative, the ultimate decision to implement that comes from the people sitting around this table as Finance Committee members who vote appropriations. Does it look right to have you performing an audit on the people who will determine how much money you have next year?
Ms. Fraser: In that case, no one would ever do an audit of the House of Commons or the Senate because, in fact, you would always have to engage an auditor. If it were someone from the private sector, you would have to pay that auditor. If we take that argument to the extreme, there would never be an audit of the House of Commons or the Senate.
The Chair: That is your answer?
Ms. Fraser: I think it is public funds. Taxpayers' dollars are used to run the administration. I would have thought that Parliament's auditor would be in the best position to be able to do these kinds of audits. Obviously, we have to be invited to conduct them. We will certainly respect any decision that is made by the two houses of Parliament.
The Chair: Have your informal inquiries of the two clerks and all the information they have provided given you some comfort or some concern?
Ms. Fraser: It has been extremely limited. We have had informal discussions and some information, but they have certainly taken the position that unless there is an invitation to audit, they will not share more detailed information, which I think is appropriate. Why would they give us more information if we were not to undertake an audit? Why would we go into it if we are not doing an audit?
We were all waiting for a decision one way or the other, and then we would get into more fulsome planning. We would have to get a sense of the operations and how things are managed in order to do the planning of the audit and what areas we would consider most important to look at. It has been very preliminary.
The Chair: Have you had an opportunity to see the outside independent audit?
Ms. Fraser: Yes, on the financial side.
The Chair: Would you like to do more of a value-for-money performance audit?
Ms. Fraser: Yes.
Senator Runciman: As a very junior senator, I will not touch that last issue, but I do have a few quick questions.
In terms of the rehabilitation of the precinct, I agree with Senator Gerstein. Perhaps this has been looked at, including the Opposition Leader's residence and Prime Minister's residence, as a bit of a hot potato. Given the respect that you and your office have across this country, you have made it a less difficult pill to swallow, I would suspect, because of your recommendations. Most Canadians, certainly those who value the importance of the precinct and the buildings that are contained therein, thank you for that. It is certainly something I am interested in.
As a board of internal economy member in Ontario, it was a much less complex process. The board, chaired by the speaker, was responsible for the precinct. The budget must be approved by the government of the day. I wonder if the fact that we have the Senate and the House of Commons is a complicating factor in how we deal with this type of issue.
Ms. Fraser: I am sure it is, because there is one more player, but I think it is really the fact that Public Works is the custodian. Almost double negotiations go on with them about priorities and projects, as I mentioned earlier, even the size of offices, and then they have to turn around and negotiate with government. It is never really clear who is making the decisions and who is accountable for those decisions.
Senator Runciman: You touched on IT in your report, and that is an area that is fraught with danger in my experience. In terms of the Estimates and moving ahead with this, we will be required to do this. I was involved in the Integrated Justice Project in Ontario, which was ultimately shut down because of the huge cost overruns. I always see this happen with updating IT and bringing in new programs. I hope that you will assist the various ministries and agencies in how to proceed in that area, as our history across this country on that issue is not good.
Related to that is your comments with respect to eHealth. I am curious about this, especially related to Ontario, given what happened with the eHealth so-called ``billion dollar boondoggle.'' That is probably not a fair description in terms of some of the advances that have been made, but that is how it was characterized. There is an indication in your report in terms of the transfer from the federal agency of $132 million. I am curious about these transfers. What is the tie-in in terms of performance? Given what has happened in Ontario and I cannot speak to other jurisdictions, you even comment about their lack of a comprehensive strategic plan. I am curious about the circumstances under which these significant funds flow, when we have seen such a colossal misuse of many tax dollars in Ontario.
Ms. Fraser: I will go back and refer to the audit that we did on Infoway, which came out in November of last year. We note in there that Infoway funds specific projects, so it would not have transferred a block amount of money, for example, to eHealth. If I recall, many of the projects in Ontario were actually for specific hospitals. Some went through eHealth, but it was minimal. Infoway actually had a good screening process. It had gating done, so it would establish the progress and it was quite rigorous in monitoring the projects. They would fund a certain percentage but up to a maximum, so any cost overruns were then the responsibility of the agency or the hospital or whoever was proposing these projects. They were quite rigorous, and we actually had what we would consider a very favourable report on how they were managing these funds. The issue there was the reporting and whether they would meet the established targets.
Senator Runciman: I am a rookie here, and I am sure you have been asked this question before. How is your office assessed in terms of performance? What is the process there?
Ms. Fraser: We prepare performance reports and reports on plans and priorities, as all departments and agencies do. We have a number of indicators we use to assess our performance, including the fairly standard ones, such as on time and on budget. We do surveys of all the entities we audit at the completion of an audit to assess whether the staff members have conducted themselves in a professional manner, whether we have communicated well with them and whether they think they had value from the audit. The major issue to us is, of course, the quality of the work we do, and we assess that by having peer reviews of the office. We had a peer review conducted by a national accounting firm in about the year 2000 of our financial audit practice, and then we had peers from international legislative offices do a review of our performance audit practice, which came out in 2004. We are almost at the end of a peer review on the whole office this time, all of our practice areas. The Australian National Audit Office is leading it. Several other countries are involved in this review, and we expect to get the report sometime in June. We will obviously be making that public. We can certainly provide a copy to this committee with our response.
Senator Ringuette: I want to go to the IT issue. You indicated that there are situations in regards to the public service pay and pension. Is that data backed up?
Ms. Fraser: We did not look at that issue in detail. We were only looking at how departments had assessed the risk and what the Department of Public Works had said in relation to the pay and pension plan. I believe they said it was at the point of failure. That is why they are in the process of replacing or modernizing those systems.
Senator Ringuette: Can you tell us about the IT system at Revenue Canada?
Senator Banks: That is the one we want to break down.
Senator Ringuette: I can imagine the importance of that data bank.
Ms. Fraser: We did an audit specifically on IT systems at the Canada Revenue Agency. That agency provoked the audit that we just tabled. In that audit, they performed an assessment of their systems and indicated that one third of what they judged as critical systems would be in need of serious repair within the next few years. They were not able to fund that.
When we saw that, I thought, maybe we need to ask a broader question about whether anyone in government knows about what is happening. We note in the report that — and I cannot get into too many details —the installations at one Revenue Canada data centre are very poor and there is significant risk to the electric supply to that particular data centre.
There are some significant issues at the CRA. Even though we might think it just collects income tax, it also gives many benefits to Canadians on which many Canadians depend. It is critical that those systems continue to operate.
Senator Ringuette: If there is one major data bank to protect, it is that one for the citizens.
Ms. Fraser: Absolutely.
Senator Ringuette: Concerning Parliament Hill and the issue of Public Works, I certainly concur with your conclusions. Because I am a smoker, I go outside, walk on Sparks Street and smoke, and get to talk to most of the merchants there who deal with Public Works, and they refer to Public Works as the king and queen of Sparks Street.
In your audit of Parliament, was Sparks Street included in the Parliament complex?
Ms. Fraser: No. It was just the Hill.
Senator Ringuette: I guess it will be in another a year or two before the king and queen will be audited.
Ms. Fraser: Potentially.
Senator Banks: When you were talking about where the Parliament Buildings ought to reside, and I am assuming you would have done some blue sky in that, there are a lot of buildings in this bailiwick that are looked after, maintained, cared for, operated by the National Capital Commission.
Was it ever a consideration that just in the interests of simplicity and efficiency — they are all public buildings; they are all used for public purposes — whether it be an appropriate thing that the National Capital Commission ought to become the proprietor of the Parliament Buildings?
Ms. Fraser: We did not consider that. I would worry that it would substitute the National Capital Commission for Public Works and Parliament would still then begin negotiating with them. It is to try to avoid at least one step in the negotiation. Parliament, through some mechanism that is to be established, will determine what its projects priorities are and the planning for them, in collaboration, obviously, with Public Works, who would be the ones doing the work, presumably, but that then Parliament would negotiate with the government for the funding rather than having this intermediary.
Senator Banks: Is it the government that has to negotiate with Parliament for funding?
Ms. Fraser: Excuse me; my apologies. I got it wrong.
Senator Callbeck: Is the same information collected in every province for this electronic health record?
Ms. Fraser: Presumably it would be. At this point, I doubt that is the case because many of the provinces have not completed these electronic health records, but they are supposed to have the same architecture and the same basic information would be collected, yes.
Senator Callbeck: Who is directing that operation? I have heard that different provinces have different types of information.
Ms. Fraser: That could be the case now. Infoway was established to help to bring a uniform blueprint to electronic health records, and that was done in collaboration with the various provinces and the various components that would be in that. There may be some particularities province by province, but the basic architecture should be the same. Certainly at this point the various provinces are not all provinces at the same stage, so Prince Edward Island, for example, does have an electronic health record but it is not completely compatible with the one established by Infoway and one of the questions is how will that become compatible.
Senator Callbeck: You noted in the report that the stated goal by 2010 is that 50 per cent of Canadians to have an EHR, but that has not happened. Have they set a new figure or target?
Ms. Fraser: They have indicated that instead of 2010 it is now 2011. They are expecting it to happen within the next year or so.
Senator Marshall: Ms. Fraser, were there any concerns raised regarding the privacy of the electronic health records? Is that something that your audit touched on at all?
Ms. Fraser: Yes and privacy is an obvious major concern. We ensured that Infoway and the provinces were respecting the privacy legislation, be it federal or provincial, that there had been consultation with the — I am not sure if it is a council — grouping of privacy experts in each one and that the norms of the various provinces were being respected. Infoway looked at that before giving funding to various projects.
Senator Marshall: Can I conclude that the provinces each have controls or systems in place to preserve the privacy of individuals and their records?
Ms. Fraser: There is privacy legislation in the provinces but it is not uniform, so there may be variations in the degree of control, if you will, or privacy that is given to information that varies. They have to ensure that they meet the provincial legislation requirements of each province.
Senator Murray: On that last point, Parliament passed, perhaps nine or 10 years ago, the Personal Information Protection and Electronic Documents Act, PIPEDA, in which there was quite a considerable section devoted to the whole health sector.
My recollection is that when we passed that bill, we did it under Parliament's commerce power. We took the position that for provinces that had legislation in place, or could put legislation in place within a definite time frame that was not just consistent but fully respectful of what we were doing, that would be fine. Otherwise, they would automatically come under our law. I have not looked at it since then but it is an interesting point.
Your mention, Auditor General, of the Canada Revenue Agency reminds me also that some years ago, the government of the day brought in and passed — over the strong objections of some of us — the creation of Parks Canada and the Canada Revenue Agency as quasi-autonomous, arms-length agencies outside of the normal departmental structure of government. One of the justifications for doing it was that they would be able to manage their affairs better, specifically matters like recruitment and human resource management and that sort of thing.
Your former colleague at the Auditor General's office, Maria Barrados, who is now the head of the Public Service Commission, was here the other day. She says that as far as Canada Revenue Agency is concerned, the results with regard to human resource recruitment, management or whatever were not those that were expected or counted upon or hoped for.
Have you looked at those two agencies since they were created as quasi-autonomous quangos or whatever they are in the context of what they were supposed to achieve?
Ms. Fraser: We looked at the Canada Revenue Agency two years ago, I think, to see if the reforms that were expected to produce results had actually done so. We found that many of the issues were positive, but there are difficulties with the staffing, training and competency profile. They started from the wrong way to do this; it became confusing for staff and they have not made as much progress as one would have expected.
They were trying to identify all the various competencies for each position. Then when they would do competitions, they would qualify people. However, it became a monstrous exercise and the way they went about it was not the right way.
Senator Murray: This is the CRA we are talking about. What about Parks Canada?
Ms. Fraser: We have not looked at Parks Canada.
Senator Murray: Will you?
Ms. Fraser: That is under consideration.
The Chair: Many of the items we talked about tonight, on Infoway and with respect to Canada Post, are very helpful for us because we were dealing with both of those subjects. Next week, we are meeting with the president of Canada Post.
It is an indication to you that the work you do lives on and helps us in our work throughout the year. That is the way it is supposed to work.
Ms. Fraser: Absolutely.
The Chair: We thank each of you, Ms. Cheng, Mr. Campbell, Mr. Ricard and Ms. Fraser. Thank you very much for being here. It has been more than a year since we have had a chance to meet because of things that were happening on Parliament Hill, but we always try to get together once a year. This has not been a disappointing evening.
Ms. Fraser: Thank you, senators. It is always a pleasure to appear before the committee, and we are always at your disposal should you require any assistance from us.
The Chair: Thank you, honourable senators. The meeting is now concluded.
(The committee adjourned.)