Proceedings of the Standing Senate Committee on
National Finance
Issue 27 - Evidence - October 31, 2012
OTTAWA, Wednesday, October 31, 2012
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2013.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Honourable senators, tonight we will continue our study of the Main Estimates for fiscal year ending March 31, 2013. We are pleased to welcome Mr. Michael Ferguson, Auditor General of Canada. He is accompanied by Mr. Ronnie Campbell, Ms. Wendy Loschiuk and Mr. Jerome Berthelette, who are Assistant Auditors General.
Welcome and thank you for being here.
Our focus tonight will be the 2012 fall report of the Office of the Auditor General of Canada.
Mr. Ferguson, I believe you have introductory remarks, after which we will have a discussion.
[Translation]
Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada: Mr. Chair, committee members, I am pleased to present my report, which was tabled in Parliament on October 23rd. The report includes the results of seven different audits. In the first, we looked at how Public Works and Government Services Canada, Health Canada and Human Resources and Skills Development Canada plan their use of professional service contractors.
We found that the departments plan their needs for employees and contractors separately. This hampers their ability to assess whether they have the best mix of employees and contractors to meet their objectives.
Departments need to consider the full range of options that will enable them to most effectively deliver programs and services to Canadians.
[English]
Moving to our report about grant and contribution program reforms, in May 2008, the government announced an action plan to reform the administration of grant and contribution programs and streamline the administrative and reporting burden on recipients. Our audit looked at whether the government has adequately implemented this action plan. We found that the government has focused its actions where they are most important. Treasury Board of Canada Secretariat has provided leadership and guidance to federal organizations to make the necessary changes. These organizations have acted on most of their obligations. The government has made good progress in implementing the 2008 action plan. Now, it needs to determine if the actions taken have made a difference for recipients.
Let us turn to our audit about what government is doing to help protect Canadian infrastructure against cyberthreats. Critical infrastructure includes the power grid, banking and telephone systems, and the government's information systems. The government has a leadership role to play in ensuring that information about threats is shared, and it has to improve the way it does this. This is important because officials are concerned that cyber threats are evolving faster than the government can keep pace.
In 2001, the government committed to building partnerships with the owners and operators of critical infrastructure systems to share information and provide technical support. We found that 11 years later, those arrangements are not fully operational. Similarly, the Canadian Cyber Incident Response Centre has only been operating eight hours a day, five days a week. It is not the 24/7 information hub it was designed to be in 2005. Furthermore, it is not being kept abreast of cybersecurity incidents in a timely manner.
Since 2010, the government has made some progress in protecting its own systems and building partnerships to secure Canada's infrastructure. The government must now ensure that the sector networks are in place and working with the Cyber Incident Response Centre.
We are also reporting on how National Defence and Veterans Affairs Canada manage selected programs, benefits and services to support eligible ill and injured Canadian Forces members and veterans in the transition to civilian life. There are many support programs, benefits and services in place to help ill and injured members of the military make the transition to civilian life. However, we found that understanding and accessing these supports is often complex, lengthy and challenging. The lack of clear information about programs and services, the complexity of eligibility criteria and the dependence on paper-based systems are some of the difficulties for both clients and departmental staff. We also found inconsistencies in how individual cases are managed, and problems sharing information between the two departments. As a result, forces members and veterans did not always receive services and benefits in a timely manner or at all.
National Defence and Veterans Affairs Canada recognize they need to work together on solutions. I am pleased that they have accepted our recommendations, including streamlining their processes to make programs more accessible for ill and injured forces members and veterans.
[Translation]
The next report also concerns National Defence — specifically, how the department is managing its real property at 21 main bases across Canada. The Canadian Forces rely on real property such as buildings, airfields and training facilities to carry out missions. These assets are valued at 22 billion dollars.
I am concerned that the department is not yet adequately maintaining and renewing its assets. We found several weaknesses in the department's management practices.
For example, the approval process for construction projects is cumbersome and slow. It takes an average of six years to approve projects over 5 million dollars.
We also found that National Defence is behind in its spending targets for maintenance and repair, and recapitalization. As such, weaknesses in National Defence's management of real property could jeopardize the Canadian Forces' ability to carry out its missions. National Defence recognizes it needs to improve and change its approach to managing real property.
We also looked at programs that provide repayable assistance to support industrial research and development in Canada's aerospace sector. Since 2007, Industry Canada has authorized almost $1.2 billion in assistance to 23 Canadian aerospace companies through the strategic aerospace and defence initiative and the Bombardier CSeries program.
Industry Canada has done a good job of managing most of the administrative aspects of the two transfer payment programs. However, we found that the department has been slow to measure progress against program objectives and report results publicly.
Repayable support to the aerospace sector represents a significant investment on behalf of Canadians. Industry Canada has a responsibility to ensure that funding contributes to meeting the government's objectives in this area.
[English]
Finally, in our audit focusing on long-term fiscal sustainability, we found that Finance Canada analyzes and considers the long-term financial impact of policy measures it recommends. However, at the time of the audit, the government had yet to make public its reports on long-term fiscal sustainability. Analysis that provides a long-term budgetary perspective would help parliamentarians and Canadians better understand the fiscal challenges facing the federal government.
The department has accepted our recommendations. Following the tabling of my report in Parliament, it issued its first long-term analysis for the federal government. We also recommended that the department publish, from time to time, an analysis for all governments combined — federal, provincial and territorial — to give a total Canadian perspective.
Honourable senators, that concludes my opening statement.
[Translation]
We will be happy to answer any questions you may have.
[English]
The Chair: Thank you, Mr. Ferguson. I will ask a couple of preliminary questions, if I may, just to set the stage.
In the Main Estimates for this year, the net amount, if I am reading this correctly, is $84,323,000, and that includes a revenue amount, which is a positive amount of $2,510,000. Can you tell us what the revenue stream would be for the Auditor General's department?
Mr. Ferguson: Yes. I do not have all the details on all of it, but most of it would be a recovery that we get because we are the auditors of the International Labour Organization, which is a UN organization. We are the auditors for that UN organization, but they pay our costs, so I believe that would be most of that amount.
The Chair: Could you tell us how many employees you have in total?
Mr. Ferguson: It is roughly 620. Most of them are in Ottawa, but we do have offices in Vancouver, Edmonton, Montreal and Halifax.
The Chair: Your total budget for this year is very close to what it was last year. Is the number of employees roughly the same as well?
Mr. Ferguson: We are going through a process of reducing employees over the next few years to meet our obligations under the budget reduction exercise, so the number of employees is probably down a few from last year, and we expect it to continue to go down over the next couple of years, probably until we reach somewhere around 580.
The Chair: Do you know what percentage of your budget you are hoping to be reduced to?
Mr. Ferguson: I believe it was roughly 8 per cent of our budget.
The Chair: You indicated in more than one area of your report, more than one chapter, that the particular department that you were auditing has accepted your recommendations. Can you explain the process? You go in and do the audit. Before you make it public, what happens to it so that you know that your recommendations are being accepted or rejected?
Mr. Ferguson: The process is very much an interactive one between our office and the departments. Obviously when we go in and do an audit, we start out by talking to the department and telling them the area we are going to do the audit. We tell the department what the objective of the audit will be, and we work with them, hopefully to get them to agree, but at least to get an understanding of what our objective is.
When we get to the point of having a first draft of the chapter, we will share that with the department so that they know the things that we have found and can provide us any comments or additional information that they might have. After we get that feedback from them, we provide them with a second version of the chapter, which is essentially the final version. There may still be a few minor modifications. At that point, we ask them to provide us with their response to any of the recommendations that we have in that chapter. We then put those in the final version that is used for publication.
The Chair: I notice that the Department of Finance indicated that they did not accept your recommendation from the point of view of the provinces because they are not responsible with respect to the provinces. Apart from that, it looked to me like all of the departments had accepted your recommendations. Is that correct?
Mr. Ferguson: I would certainly characterize it the way you just did, yes.
Senator Buth: Thank you for being here today and for your introductory remarks. I am interested in the grants and contribution program reforms, having been on the other side of it and having experienced some of the difficulties in administration of grants and contributions in my previous life. Your report concluded that the government adequately implemented the action plan and fulfilled most of its commitments. Can you comment on how you came to this conclusion?
Mr. Ferguson: Yes. A blue ribbon panel made recommendations about modifying the way grants and contributions are managed, and the government responded to that blue ribbon panel with an action plan of various reforms to put in place. We essentially used that as the basis of determining whether Treasury Board and the departments had taken the necessary actions that were outlined in that original action plan. We made that assessment and we found, for the most part, they did fulfill those items that were in the action plan. The one thing that concerned us was there still is not enough being done to determine whether the reforms that have been put in place are actually reducing the administrative burden on the applicants. Many good things have been done in some instances. In the chapter, we even identified that there were places where the number of application forms were reduced and that type of thing.
Therefore, when you look at that work, you would think it would have an impact on the applicants, but they have not actually gone back and assessed that. In the one case where they did do some assessment, it was not indicating that there had actually been much reduction in terms the administrative burden on the applicants.
Senator Buth: So the blue ribbon panel was set up by Treasury Board essentially to develop that action plan?
Mr. Ferguson: That is my understanding.
Senator Buth: How many departments did you look at?
Mr. Ferguson: Six.
Senator Buth: Your recommendations are back to Treasury Board in terms of measuring the impact, as Senator Day mentioned, so that has been accepted by Treasury Board of Canada Secretariat. There is a commitment then to go back and look at the impact, is there?
Mr. Ferguson: There is already in place a plan to do a review. I am not sure exactly what year it will be — 2015, I believe. There will be a review of whether the changes have been effective and what other changes need to be made to the policy.
We have recommended that they need to also address or measure whether there has actually been an impact on the recipients. They should do that piece of work, and that should then feed into their own assessment that will happen in a couple of years to determine whether other changes need to be made.
Senator Buth: Are there any examples that you found that were particularly innovative in the ways that the different departments proposed to improve the grant and contribution program activities?
Mr. Ferguson: We did identify some pilot projects in paragraph 19 of the chapter that some departments had put in place to restructure some grant and contribution agreements, so that multiple departments were putting together a single comprehensive agreement. We found, for example, that the number of reports required from the recipient community had been reduced from 126 to 26, and the number of upfront application and proposal forms was reduced from 14 to 2.
Therefore, again, we found some areas where it appeared that there were some significant changes and some reductions in the amount of forms and work that needed to be done. However, then there was no further step to go back and discover if the recipients agree that this has reduced their workload.
Senator Callbeck: Mr. Ferguson, first, I would like to question you on Chapter 4, entitled "Transition of Ill and Injured Military Personnel to Civilian Life." In that and in your opening remarks tonight, you have mentioned a lot of the problems. It seems that the government is falling short in many areas within Veterans Affairs Canada. On page 25 of Chapter 4, you mention that in 68 per cent of cases you reviewed, "the Department did not meet applicable service standards for making a decision on the complete rehabilitation application." Would you explain first what you mean by "meet applicable service standards"?
Mr. Ferguson: If I may, I will ask Mr. Berthelette to give you those details.
Jerome Berthelette, Assistant Auditor General, Office of the Auditor General of Canada: For various decision-making processes within Veterans Affairs Canada, there are service standards in terms of how long it will take to arrive at a decision. That is what we refer to when we mean "service standards."
Senator Callbeck: So it is really the time?
Mr. Berthelette: That is correct.
Senator Callbeck: That is all you are talking about here?
Mr. Berthelette: That is correct.
Senator Callbeck: Mr. Ferguson, given that 68 per cent and the other problems that you mentioned here tonight in your opening comments, do you think more resources should be allocated to Veterans Affairs Canada?
Mr. Ferguson: In the audit, we identified that there were a number of obstacles in the way of these folks getting the services they need and are entitled to. I think we would start by saying that there are places where they need to streamline how they are managing people to try and make it less complicated. We did not specifically address the resource question in the chapter.
However, we identified a lot of issues with how they are managing people. Again, the processes are complex; there is a lack of consistency; and individual case management just was not happening to the level that it needed to happen. I think that by making things less complex and ensuring that people are complying with what they are supposed to be doing, they can make the improvements. However, we did not specifically look at how many resources they would need.
Senator Callbeck: If the department continues to downsize or transform, what impact do you feel this will have on services to veterans?
Mr. Ferguson: We identified in the report that there are a number of issues with how these ill and injured members of the Canadian Forces and veterans are being dealt with, again, in terms of the complexity, lack of consistency and that sort of thing. The two departments need to determine what processes they should have, how they make it simpler, how they then ensure that people get the services they need to get, and then, once they have done that and structured it the right way, they need to determine what level of resources they need.
I cannot specifically comment on what a reduction would mean, because I think the first thing they have to do is make the whole process efficient before they can determine the number of resources they need.
Senator Callbeck: On page 22, Veterans Affairs Canada's response states they will strengthen their support to veterans with more complex needs by putting "processes and standards . . . in place to give all case-management veterans more access to their case manager."
In my Province of Prince Edward Island, Veterans Affairs is closing its regional office and the three case managers will be gone, if they are not already. I cannot understand how Veterans Affairs can state that they will strengthen their support. Are you concerned at all about their ability to meet this claim — what they say they will do — with these cuts that are taking place?
Mr. Ferguson: I think the chapter is quite clear that we were concerned about the way they are managing these cases right now and that they have to make improvements to that. I think that challenge is an even greater one when they also then have to deal with possible changes to their resourcing levels.
We have identified that these issues exist and they need to fix them, regardless of what their resourcing levels are.
Senator Callbeck: I would agree with you that they have a big challenge. I guess what strikes me is they come back and tell you they will strengthen their support to veterans and yet here we have the regional office in P.E.I. closing and the case managers are gone. I cannot see how the government is meeting what they say they will do.
I want to go to Chapter 7 regarding long-term fiscal sustainability. It states on page 8 that "the Department has the analytical capacity and tools for projecting the long-term fiscal sustainability of measures before policy decisions are made." However, the report finds they only do so when they deem it is relevant. In other words, it may be done and it may not be done. When you consider it relevant to the performance, they assess the long-term impact of individual measures on revenue and expenditures; they do not always assess the impact in the budgetary balance and public debt. How could that be? How can they do the long-term analysis on public expenditures but they do not assess the budgetary balance and public debt? I do not understand that.
Mr. Ferguson: We identified they do have the tools; they have the right methods; they can do the analysis. They then make an assessment on individual budgetary measures on how much analysis they need to do. We found, for the measures that we looked at, that we were satisfied that they had done enough of an analysis that was required. However, we were a bit concerned that it was not really formalized in terms of when they should be doing which pieces of the analysis, and we feel that they should make that a bit more formal in terms of understanding when they will do those bits of analysis. They can do it. We did find for the most part they are doing it appropriately, but there is nothing giving them firm guidance in terms of when they should do each piece of the analysis.
Senator Callbeck: However, they do not assess the impact and the budgetary balance on public debt.
Mr. Ferguson: My recollection is that was on one individual item; it was not on all of them.
Senator Callbeck: I have another question on that chapter. You state:
For a given budget, the Minister is not informed of the overall long-term fiscal impact until months after the budget measures had been approved.
To be clear on this, you are saying that they put forth a budget but with little or no knowledge of the long-term impact.
Mr. Ferguson: When they put together a budget, they have done the analysis on individual budget measures, which may include that long-term analysis. However, before the budget comes out, they do not bring it all together and say, "Before the budget, this is what the long-term fiscal position would have looked like. After the budget this is what we think it would look like and here is the difference." That does not happen until later on. They know the impact on the current budget year and the impact of individual measures, but there is not that bringing it all together and saying here is what has changed in terms of the long-term picture.
Senator L. Smith: In listening to your presentation, I have a question when you talk about the military. I looked at page 15. In terms of the feedback, an overarching governance framework has been established to coordinate, harmonize, communicate the various programs and benefits available to ill, often injured, forces member. It does not specify the authority, responsibility or accountability of joint steering committee, et cetera.
You made recommendations, as I understand correctly. Some of the issues seem to be tied to process management and how people do things. There is a recognition that the systems need to be improved, so there is acknowledgement. Are you folks tracking the improvements that they will do to ensure that they implement and effect the changes they say so that there will be more efficiencies? It is not just a case of cutting people. It is a case of reviewing your processes and ensuring your processes are effective, making sure you have the technology to support them so that you can deliver the deliverable.
Do you folks track what they say they will do so that you can get the feedback and say yes they have done this, they have done that, they have not done this, they have not done that so there is an efficiency verification process in addition to a financial process? How does that work?
Mr. Ferguson: We do the audit and make our recommendations and get their response to those. Then we inventory the responses so we know what they are. We then come along a few years later and choose which audits we will follow up on. We do not do a follow-up audit on everything, but we will choose which audit we will follow up on. We may come back three or four years later and say we want to go back and look at this particular issue and see whether they did what they said they would do.
There are other processes in place in terms of, I suppose, if there is a hearing in front of the Public Accounts Committee they may be asked to bring forward an action plan and then the Public Accounts Committee can also be part of that process, for example, of ensuring that the departments implement what they said they would implement. From our perspective, it is whether we choose to do a follow-up audit later; and if we do, we go in and determine if they have done what they said they would do.
Senator L. Smith: Would any of the improvements they said they would do be tied, say, to the Red Tape Reduction Commission where if there were 90 recommendations — I remember reading it and I may not have the exact number, but there were something like 80 or 90 recommendations — made by this commission in terms of various government departments and efficiencies and cutting the red tape to make access easier, would any of the types of things you saw within National Defence or Veterans Affairs fall into that red tape commission so that you could be tracking the success to see if there is a tie-in this particular group delivered? I am looking at results and deliverables and efficiencies and how you track that so when people say they will do something, they are actually delivering and you are able to act not only like an auditor but an internal consultant, if that is the role. I could be completely out on that one.
Mr. Ferguson: Certainly there is no direct tie into any other process, red tape or any other process like that.
One of the interesting things for me in terms of the audit we did on the ill and injured members returning is it was not just the members of the forces or the veterans that were telling us things were complex. The employees as well have to try and help them navigate and were also telling us that things were complex. That says to me that there are ways of making it more efficient. When you talk about red tape, it is not sort of a specific tie-in to the work that anyone else has done, but it indicates that there are inefficiencies in the way that these things are being managed when even the employees are saying this is hard to navigate.
Senator McInnis: Long-term fiscal sustainability is the area I wanted to touch on in particular. A hot issue and a major expense in the country is the Canada Health Transfer to the provinces. As you probably are aware, the national government committed 6 per cent annually to the year 2017 or 2016. It then will go to the nominal GDP or 3 per cent, whatever the greater is.
The provinces have called for the transfers to run free, greater than what the economy would grow. If, in fact, that were the case, could you speculate as to what that might mean for the long-term sustainability of the Government of Canada, as it is predicted?
Mr. Ferguson: I am really not in a position to try to speculate on something like that. The chapter was essentially saying that for those types of significant decisions it is important that the government release the information. That is why we recommended that, from time to time, they should also include the long-term fiscal position of the provinces.
You can have things where a change may make the long-term fiscal position of the federal government improve but could have a different impact or the opposite impact on the long-term fiscal situation of provinces.
For us, what is important is when there are significant policy changes made there should be, annually, the release of what the long-term fiscal situation of the federal government looks like and from a time to time — maybe every three years or something like that — that analysis should also bring in what the long-term fiscal situation of the provinces looks like. Then people can piece that together and understand at all levels of government — because, again, as we all know, there is only one taxpayer — what the long-term fiscal picture looks like.
Senator McInnis: In that regard, the provinces are responsible for their own finances and they are responsible to their own electors. You will help me here, if you would. Is it in your jurisdiction to ask about the fiscal sustainability of the respective provinces? If so, would you entertain writing to them and asking?
Mr. Ferguson: Certainly we do not have any authority to do any audit work on the provinces. That is why our recommendation was to the Department of Finance that they should collect that information periodically and publish it.
The Chair: Do you have another follow-up question?
Senator McInnis: It is on a different topic.
The Chair: That is okay.
Senator McInnis: It is amazing when one looks at the number of structures that the military have to maintain. It is actually mindboggling: 20,000 buildings, 13,000 works, and so on. There is also the multiplicity of the forces, the respective divisions, air force, navy, army and other departments.
You made 12 recommendations for National Defence to deal with real property management. Have you prioritized those at all as to how that could happen? You mentioned earlier something that I wrote down, which was also amazing, namely that for a project $5 million or over it takes it six years to see a contract awarded.
Is there any prioritization of those recommendations? In those recommendations, is there a better mechanism where there would be one department that would be responsible for such infrastructure projects?
Mr. Ferguson: I would not be able to give you a prioritized list numbered 1 to 12. In general, however, I would suggest that the most important is our recommendation in paragraph 95 where we say that they need to completely transform, essentially, their real property business model.
What we found was that they have set targets. They know work needs to be done on this infrastructure. They have set targets for the amount that needs to be spent on it, but the processes that they are using, the way they are doing things are just not efficient enough.
As you mentioned, we found that it would take six years to deliver a project of $5 million or more. I think the chapter also states that they did their own analysis that indicated that some projects were taking six years, whereas in the private sector a similar project would take three years. Again, that speaks to the fact that right now the way they are trying to manage these assets is not efficient.
We also found that only 2 of the 21 bases are actually able to manage their assets in a proactive manner. They are able to say, okay, we need to do these things to prevent things from going wrong. Many of the other bases are in a reactive position where they are spending their repair and maintenance money only when something goes wrong.
The other thing that was interesting was we found that in a number of cases the bases were not even being told the full amount that they would have to spend on repairs and maintenance until more than half the year had gone by. You then have to try to figure out how we get tenders out, award contracts, get people in and get the work done, and you are only talking about a short period of the year.
In general, again, they know what needs to be done, and they are trying to get it done. They have set targets, but they just do not yet have the ways that let them get that work done as quickly as it needs to be.
[Translation]
Senator Chaput: Mr. Ferguson, my questions will bear on chapter 1, Planning the use of Professional Service Contractors.
There is nothing new about the departmental tendency to hire more and more contractors rather than employees. I think the trend began several years ago, but it does seem to have persisted and increased.
When you audited the three departments, what reasons did you find to explain why these three departments are increasingly likely to hire contractors? Did they share those reasons with you?
[English]
Mr. Ferguson: In the audit we were looking at how they manage all of those resources, whether they be employees or contractors. What we found was that they are managing them in silos.
They are saying, if we had employees doing something before, we continue to have employees doing that thing. If we had contractors doing it before, we continue to have contractors doing it, rather than looking at all of the things the department is trying to do and then looking at what they need in terms of resources, whether they are employees or contractors, and then figuring out the best way to get those resources, either as employees or contractors.
It was not really a case of them having much explanation. It was just a matter of, "that is the way it is working." Although we found Public Works has started to manage as a pool, they were managing them in separate silos.
[Translation]
Senator Chaput: I read that one or two of the departments mentioned that contractors are mainly used for services.
Do those departments mean services rendered to the department itself or are these services being provided to the public? Were you able to determine that?
[English]
Mr. Ferguson: It would be the departments contracting with those contractors to provide services to the department.
Senator Chaput: To the department?
Mr. Ferguson: Yes.
Senator Chaput: Not to the public, in most cases?
Mr. Ferguson: In most cases, it would have been services to the department.
[Translation]
Senator Chaput: Do you have a sense of the percentage of employees and contractors across the total number of employees of any given department? Is the percentage of people hired as contractors fairly high?
[English]
Mr. Ferguson: I will ask Mr. Campbell to answer that question.
Ronnie Campbell, Assistant Auditor General, Office of the Auditor General of Canada: No, we do not have that information because the departments do not gather that information themselves. As I say, they do not tend to look at the contractors as a pool and from departmental wide. They do not gather that information from a departmental point of view.
[Translation]
Senator Chaput: Would it not be important to have that information? If a department is hiring more contractors, what happens to specialized knowledge and long-term departmental planning if there are more contractors than employees? It creates an imbalance, does it not? They are not in a position to provide that information and therefore you do not have it; is that right?
[English]
Mr. Campbell: That is correct. They do not have it. At Public Works, which is probably, of the three departments we looked at, the more advanced in what they are trying to do, some of their businesses are driven by services that they deliver to other government departments. With the reduction of spending across government, they have become very sensitive to the fact that the demand for their services, Public Works services, could very well reduce, but they are not quite sure where and to what level. For that reason, they are actively looking for a capacity to be flexible. I think this is driving quite a lot of analysis they are doing to ensure they have the flexibility so that when things out of their control change, they are able to react to that.
[Translation]
Senator Chaput: You recommended to those two departments that these two processes be integrated to improve planning. Who will follow up on that recommendation? And what will happen if that recommendation is not followed?
[English]
Mr. Campbell: As the Auditor General said earlier, we look at audits we have done a few years after the fact, and we try to do a risk assessment to see where our efforts would best have an impact by doing a follow-up.
The interesting thing about this report is we did the audit work in just three departments, so we cannot extrapolate to the rest of the departments, but in all probability, other departments are facing the same issues.
[Translation]
Senator Chaput: Given that you have audited those three departments, you will not be performing the same audit of those same three departments next year. Each department is audited every three or four years, right?
[English]
Mr. Ferguson: If we were going to do a follow-up on this chapter, we would — I was going to say we would probably follow up on the same three departments, but we may also decide to bring some different departments into that as well. We do not have any plan that says we did these departments, next year will do another three and the next year another three.
However, we would do a follow-up and determine whether those three departments did what they said they were going to, and then we might also include looking at another couple of departments to see what they are doing. We would have to determine that at the time we were setting the audit.
[Translation]
Senator Bellemare: I am pleased to be able to ask a few questions. I did have some questions about staffing, but I think that issue has been sufficiently discussed. I have a question about chapter 7, which has to do with long-term fiscal sustainability. Actually, I expect some comments from you on the subject.
On one hand, you state that Finance Canada has the tools and the means to perform the analysis of the long-term fiscal sustainability of budgetary measures. You are certain about that. What you are saying is that the department takes these analyses into account only if officials believe it is necessary at a given time. You also stated that the department analyzes Canada's long-term situation, but that it does not do so in time for budgetary choices, and that those analyses have not been published.
Furthermore, in your document, you refer to best practices across the world as defined by the OECD or the International Monetary Fund. You also say that the government, until 2015, will be measuring the impact of its decisions. Which brings to mind a famous quote by an economist.
[English]
In the long run, we are all dead.
[Translation]
Here is my next question: what does it mean to "make long-term projections"? How many years does that entail? 10 years? 15 years?
With regard to the impact of decisions based on demographic change, when one establishes forecasts over 20 years, as you said yourself, those are forecasts, they are not predictions. However, it remains that, from one year to the next, even when one considers Statistics Canada and its demographic analyses, its long-term forecasts of the Canadian population's turning points and such, there have been big changes during recent analyses.
My question is more of a reflection. How, as Auditor General, if you produced long-term forecasts, do you ensure that they are both relevant and reliable? Do you question hypotheses? Do you examine the number of years?
I know that the answer to my question may not be as clear as one might wish, but there are perhaps questions to be raised, particularly once this information is published. The public then accesses this information and can become worried and form opinions, incorrect ones, because in the end, over the long term, what was forecast will not happen because the appropriate measures will have been taken.
The Chair: Mr. Ferguson, could you attempt to answer that question?
Mr. Ferguson: Yes, perhaps the answer will be shorter than the question. I hope.
[English]
You are absolutely right that none of these are predictions, but it is still important to look out into the future, and usually these types of things are done 40 years into the future.
You are right, though, they are not predictions and they are not something of which you can determine what will happen. I think what is important, particularly, for example, if you look at the chart we included on page 24, page 27 in the French version, paragraph 56, to me what is important is not the numbers down the left-hand side; what is important is the difference between the two lines. The top line is what the forecast would have looked like before budget measures were taken; the bottom line is what it would look like after budget measures were taken. What it is doing is indicating that those budget measures, in the long term, have an impact that you can see as small in the first years but getting bigger in the out years.
It does not really matter — I mean, in some cases it would — what your starting point is. What this analysis is showing is that the budget changes have a significant impact on what that long-term fiscal picture looks like.
To me, that is what the important piece is. It is not the actual numbers; it is not about making predictions. It is how much it appears to have changed that picture.
Senator Bellemare: Do you look at the hypothesis behind the forecasts?
Mr. Ferguson: In this case, we looked at six or so different measures, and we determined whether they did the adequate analysis: Did they have the right models? Were they putting into it the right types of assumptions? Were they doing those things properly? We found that they were doing those things properly.
[Translation]
Senator Dallaire: I am not a member of this committee, but I am the vice-chair of the Standing Senate Committee on National Security and Defence and the chair of the Subcommittee on Veterans Affairs.
I'm interested in chapters 4 and 5. It says in chapter 5 that each base must have a long-term development plan approved by NDHQ, which includes projections, construction and maintenance plans, as well as the state of infrastructure and sewers.
Your statement gives me the impression that it is as though these development plans did not exist, and that the bases do what they can with the little bit of money that they have, and that they wait for a crisis before reacting.
Surely, there must be a process to analyze construction priorities, maintenance priorities and funding allocation. Did you find that this system was inept, non-existent, too weak or not credible?
[English]
Mr. Berthelette: I will respond to the senator's question in two parts.
For the first part, I will make reference to paragraph 5-15. We note there that 18 of 21 bases now have current master real property development plans in place. There has been good progress made in terms of getting, at the base level, master real property development plans, essentially sort of zoning type plans in place at the bases.
The second part of my answer refers to the maintenance and repair. When we did the survey, we were told that the bases have not been able to conduct preventive maintenance in the manner in which they would have liked since about the 1990s with the budget cuts. The department has recognized that and has dedicated funding for maintenance and repair. The problem that the bases are having is being able to spend that money. They are not able to because of the processes that they have to work through to be able to spend the money and meet the targets that have been set by the department for maintenance and repair.
Senator Hervieux-Payette: I do not understand what you said. Could you give us an explanation?
The Chair: That is a fair intervention. If you could be a little more precise and clear, that would be helpful.
Mr. Berthelette: The department has set a target of 1.4 per cent in terms of the spending or the amount it will allocate to maintenance and repair on the bases. As we see from the chapter, only one base has been able to achieve the target of 1.4 per cent, and that is at Exhibit 5.4 on page 24 in the English version of the chapter.
Even with the money that has been allocated, the bases are unable to meet the targets because they do not have the processes or the staff to be able to follow through and spend the money that has been allocated.
Senator Dallaire: That is O&M, and on the actual capital programs, there is new construction within capital projects. There is new construction because of new units and new organizations coming on line. There is replacement construction — not maintenance but actually replacement — and there are also a whole bunch of heritage buildings that are sitting there using up O&M money that should be replaced.
On the construction side, the budget allotted and the prioritization of construction, are you making the same assessment in that regard, that there is a funding allocation but the processes are so horrifically heavy — double checking and triple checking — and the matrix is so intertwined that they cannot get decisions out of there, before even getting a political decision, which in itself is an incredible zoo, so that in the internal processes of their matrix, they just cannot get decisions out of there fast enough?
Mr. Berthelette: That is correct. As the Auditor General mentioned earlier, it takes about six years to make a decision with respect to projects that cost more than $5 million. In the private sector, the department pointed out in their own study that it takes the private sector about three years. The process is set up in such a way that whenever there is a question or whenever there is an issue that has to be resolved, the process goes back on itself a number of steps and then has to come back forward. This can happen a number of times because the process is set up so that a number of different levels within National Defence have an opportunity to comment on the approvals for capital projects.
Senator Dallaire: Therefore, what they call the "matrix" is, in fact, continuously intertwining and throwing stuff back at them, and it is not just senior management or the new accountability processes that are doing that, but is it at a middle or lower level that they are doing this?
Mr. Berthelette: From what I understand from the audit team, it is at all levels throughout this process. They can double back at any number of steps in the process.
Senator Dallaire: Remember, it is six years to get it through approval and built, but it probably takes 20 years to get on the list to do that, so your building is way overdue.
Now, I do not see an argument here that is calling for the approval processes of infrastructure to be changed to the extent that you want to decentralize that to areas or commands, the construction part in particular. However, it seems to be continuously held up by that $1 million or $5 million level at departmental. Should that not be a recommendation, namely, to give them a higher figure to go after for lower level of approval?
Mr. Berthelette: I have a two-part answer to that question.
The first part is we noticed that for projects that cost less than $1 million, the department had told us that the $1 million cap makes it difficult for them to carry out projects. For instance, administrative buildings, three or four storeys on a base, can quickly cost more than $1 million, yet they are, and I think everyone would agree, fairly low risk. The department should take a look at its $1 million limit for low-risk projects at the base level.
For the second part of my response, I would refer to the response to our recommendation at paragraph 32 in the chapter. The department itself has said that it has initiated a comprehensive departmental review with the objective of reducing the project approval process time, and this is as part of their transformation initiative and infrastructure and environment business modernization program. They have recognized that there is a need to transform the way they do business, and they have stated in their recommendation that they have this transformation initiative — modernization initiative — in place.
Senator Dallaire: However, you have not seen any of it; is that right?
Mr. Berthelette: No, this is new.
Senator Dallaire: I would like to go to Chapter 4. Your assessment period is 1 April 2006 to 31 March 2012. Two things happened then. The New Veterans Charter came into action at nearly the same date, and also we were at war. You have two significant exercises going on for a department to realign itself. It has a whole new legislative framework, plus it has the grandfather old stuff, like the Pension Act. Then it is taking casualties and it is involved in significant operations with these casualties, which is making it difficult to conduct any assessment of what the requirement is.
I am not looking for mitigation to that, except that I do not see there — unless I have not read it correctly — that you actually looked at the New Veterans Charter and said, "It is meeting the requirement; it is just that it is not being implemented properly," or something of that nature. Have you looked at that?
Mr. Ferguson: Mr. Berthelette can help me out on this, but fundamentally the audit was not about the New Veterans Charter or how it was implemented. As I understand it, one the key components of the New Veterans Charter is case management, how you manage individual people. We very much focused on the case management piece. We did not look at all aspects of the New Veterans Charter, but we did zero in on how cases are managed. I do not know whether Mr. Berthelette might have anything else to add to that.
Mr. Berthelette: No.
Senator Dallaire: You indicate that the governance framework, which is a term I had not seen before, between VAC and DND at the ADM level started in 1999. It started in 1998, because I started it when I was ADM myself. That body was, in fact, the tool to build a bridge between VAC and DND so we would not have people falling into this gap of services and paperwork and trying to sort it out, having computers talk to each other, both medical and personnel and so on.
The way you have described it is that that has in fact been ineffective in providing that guidance to those two departments in sorting out all the administrative and we still have people falling through the cracks.
Did anyone raise the fact that there was a need for that deputy minister-level advisory board, multi-disciplinary advisory board, that they had just previous to this period under the Neary report?
Mr. Berthelette: No one raised that committee to us as we were doing the audit, to my recollection.
Senator Dallaire: Do you recommend that Veterans Canada merge with DND?
Mr. Ferguson: That certainly was not something that we were looking at. In this instance, I think what we were saying was where the two departments are working together, there are not clear roles and responsibilities, and it is not clear what the committees can do, what they have the authority to do on their own, so that needs to be improved; and then, again, just the overall, everything in the processes. There are lots of places where those need to be improved, but one is that this sort of area where the two departments are trying to work together needs to be clear what that group can do, what they have authority over.
Senator Gerstein: The question I am going to ask is not one that is found in the report that you just tabled but, rather, with regard to four words that you used in your earlier presentation: "We do the audit." I am trying to get my mind around what "we do the audit" means.
My question is the following: You have Crown corporations and departments you are dealing with. How do you sit down at the first stage and scope out what it is that you are looking to do? What is the AG actually doing by looking at an audit? Are you focused on financial controls? Is it an issue of fraud? Is it an issue of trying to find where there are more efficiencies? Is it a collaborative approach that you are taking? What are the deliverables you give to them? How do you compare it to a commercial audit? Maybe you could kick off with some thoughts on that.
Mr. Ferguson: I think probably the answer to your question is all of the above, but not necessarily all in the same audit. We have essentially three lines of business. Everyone knows us best for these types of reports that we are talking about today, but that is not our only line of business. We do financial statement audits, for example, of roughly 140 organizations, starting with the Government of Canada's own public accounts, then Crown corporations, and we do the financial statement audit of the three northern territories and their Crown corporations.
We do a lot of financial statement audit work, which is the same type of thing as you would normally find in the private sector, an audit of the financial statements of a company. We do a lot of that work. Unfortunately, unless we find that an organization is not keeping their books properly and we have to qualify the audit opinion, no one really knows very much about the financial statement work we do, and it is a big piece of our business.
We have another piece of business, special examinations, which probably focuses in most on the control aspect that you mentioned, looking at whether organizations have in place appropriate controls in various areas. It is a point-in- time checking of controls.
Then we do these types of audits, which are referred to as performance audits. In these audits, we start by looking at government as a whole. We do risk assessments on different aspects of government. We try to say that if a certain program was not operating the way it should, what would the impact of that be? In the places where there can be significant impact, we say those are high-risk areas. It may be that the departments have all the controls and procedures and everything in place to ensure that those risks are mitigated, but it still has the potential that if it is not operating properly, it will have a significant impact.
We try to look at the government as a whole. We spend a lot of time analyzing what the government does, trying to focus on those high-risk areas. Then we select which ones we want do audits on. Even once we have selected, we have to say: In this area, what is our objective?
For example, we have been talking quite a bit about ill and injured veterans. We decided that we wanted to see how the government is managing that transition. We could have said that we want to do an audit of the New Veterans Charter and we want to see how that is done, or we could have looked at something else.
Once we have zeroed in on an area, then we have to determine what exactly the objective is that we want to reach. Then you people see the end result of that work when we have these types of reports to talk about.
Senator Gerstein: Is the report you have just outlined different in any way from some of your illustrious predecessors from the AG's department? Is there something different about how the AG is approaching what you have just described from what took place before?
Mr. Ferguson: Believe me, I am not foolish enough to change all of that. The office does a wonderful job. It has wonderful processes in place for determining the audits that we do. My goal is to let them continue to do that and let the process continue, because what is important for us is that we have good processes in place, and processes that work, regardless of the individuals involved.
Senator Gerstein: Is that describing your view of it as a bit of a caretaker position that you are now in — in other words, you are continuing to allow the great processes that may exist to continue — or is there something that you are starting to see in your own mind as to how you might approach it differently, or add to it, or bring added value to it as an individual? What mark are you going to leave on the AG's position?
Mr. Ferguson: Certainly, risk assessments are always influenced by the individuals who are looking at the information and trying to determine the risks. Therefore I would never say that two individuals would look at the same set of circumstances and necessarily come up with the same evaluation of risks.
We have a number of people involved in that process, so we have lots of different input into how serious these risks are and then we make that decision as a group. As a group, though, we will also talk about what things we think are important right now.
It is not my intention to start going to the organization and saying, "I want to audit this, this, this and this," but it certainly is my intention to be part of the conversation and provide my input into where I think the most serious risks are. That will obviously have some impact on what we do.
Senator Gerstein: You have been in your position now for just over a year. Time goes quickly.
Mr. Ferguson: It is just under a year.
Senator Gerstein: What is your biggest surprise so far, sitting in the position you are in now?
Mr. Ferguson: I have been asked this question a couple of times and I want to break it into two pieces. My biggest surprise has been the depth and the rigour in the processes, which I am glad to see because, as you can see, when we come in here to talk about reports we are often talking about weaknesses in processes in departments. I have been very impressed with all of the machinery in the way we do audits.
The other thing that has not been so much of a surprise, but has been gratifying to see, is the skill of the people involved and their competence. I say "competence" but it is beyond competence. For me, it is a matter of ensuring that I pay attention to all of that great depth of knowledge and the amazing skill of all of those people. That has really been something that I am grateful for every day.
[Translation]
Senator Hervieux-Payette: Mr. Ferguson, I'm going to look at chapter 7 more specifically with you. Probably because I am a grandmother and long-term sustainability interests me more for my successors than for myself, and I believe that it is our role to oversee public finance.
At the end of your summary, in section 27, you say that you also recommended that the department produce, from time to time, an analysis of all levels of public administration: federal, provincial, and territorial, in order to give an overview of the entire country.
With the crisis in Europe, and taking into account that in my province, we pay more provincial tax than federal tax — therefore, there is a tax rate that people can accept — the economy must be able to support not only my province's debt, but municipal debts as well.
I looked at the end of your report and I didn't see a commitment to act systematically. In other words, it must be ensured that things can continue as they have been, be it health or education or all other areas, and still get a big picture. Do you see it as an annual overview of different provinces and territories? I would also add municipalities because they are present on financial markets and issue bonds. This section is of particular interest to me. But for your part, are you going to insist that there always be an accurate picture of Canada's financial situation?
[English]
Mr. Ferguson: We are not trying to influence policy in any way in this chapter. We are trying to determine that the government needs to make sure that it is making public the information about the federal government's long-term picture every year, every time it does a budget. From time to time the government needs — and for us that is every three years or something like that — to ensure that it is also including the long-term fiscal picture of the provinces. For us, the audit was very much about making sure that the government is doing that analysis and making that analysis public. We will not do that analysis every year. The audit ensures that they are making that information available.
[Translation]
Senator Hervieux-Payette: I am coming back to more concrete matters. In the French version, with regard to long-term sustainability of pension income splitting done by the government, it is indicated that $925 million were lost in 2011. Based on what I read, that is going to sort itself out because there will be more women working, and so this problem will no longer exist. Are you as unconcerned as the public servants who gave you this answer? I am concerned to see that a policy is being implemented and that people believe that this will be resolved quickly through chance and education. Are these kinds of comments accepted during an audit?
[English]
Mr. Ferguson: That was simply the explanation that we received from the department about why they did the level of work that they had done. They felt in this particular instance, because of changing demographics, the impact of that particular policy change would decline into the future years.
I would have to get someone else here to actually give us any more details, if I am allowed to do that.
The Chair: Do you want to bring someone up?
Please introduce yourself.
[Translation]
Richard Domingue, Principal, Office of the Auditor General of Canada: I was responsible for the audit.
Senator Hervieux-Payette: It's paragraph 724 of the French version.
Mr. Domingue: Indeed, what is in paragraph 724 is what the department said to us to justify the fact that they had not performed an analysis. It is for that reason that a little further on in the report, in paragraph 741, the department is criticized indirectly when it is told that it should have implemented a system to better document policies that required long-term analysis, and those that did not warrant one. But we did not question the justification offered to us by the department. However, what we did see is that this policy choice was not subjected to long-term analysis. They claimed that impact on opportunities to separate pension income would be more limited in the long term.
Senator Hervieux-Payette: In paragraph 725, I do not know who did the GST analysis, where it is indicated that the rate that we pay was reduced from seven to five per cent, and yet the tax credit was not reduced. It remained at seven per cent, and that led to $1.1 billion in additional expenses. These tax credits, if I understand correctly, involve sending a cheque to people. When they buy things, they pay five per cent GST, but they are reimbursed for seven per cent.
May I have the officials' explanation for this? How can there be a policy to reduce one and leave the other at the same level? There must have been some reasoning behind it, and they must have known, at the time, that there was a cost difference.
Mr. Domingue: Clearly, it was a policy decision. We did not question the decision to reduce the GST while maintaining the credit at a level of seven per cent, as though the tax were still seven per cent.
Senator Hervieux-Payette: Was the amount taken into consideration? Less was collected than sent out. Did they take into account that there was less money coming in and that expenses were higher?
Mr. Domingue: Historically, GST revenue increases and decreases with the size of the economy. The GDP ratio didn't fluctuate. That was how they justified not performing a long-term analysis. As for the GST credit, they applied the same logic, and as a result, they decided not to perform a long-term analysis of the measure's financial impact.
Senator Hervieux-Payette: My other concern is the TFSA, the tax-free savings accounts, which should have been at 50 million, but in the end, have reached 220 million. But I do not understand one amount more than the other, because in the end, as far as I know, a TFSA is money that I set aside, for which I have already paid taxes, and the investment income is not taxable. But when the interest rate is three per cent, I ask myself how we could have been so wrong. How were the evaluations done?
Each time an error is made, when a budget is tabled, we expect that things will cost what people tell us they will. In this case, it is another mistake and it is serious. In one case, it is 900 million, in this case it is 220 million instead of 50 million.
How do you explain these errors?
Mr. Domingue: I would not go so far as to say that the department was wrong. However, we did observe that their long-term sustainability analysis of TFSAs took into consideration the annual impact of the measure's cost — I do not remember the numbers — over several decades. The cost is going to be progressive, because the contributions are cumulative. Therefore, the cost will increase over time.
Senator Hervieux-Payette: Five thousand dollars is still the amount that is being set aside. I will have $15,000 in three years, and so on?
Mr. Domingue: It is the tax-free interest that will have an effect on revenue. You are right, the money put into a TFSA is after-tax income.
Senator Hervieux-Payette: Which belongs to us and which has already been taxed.
Mr. Domingue: Exactly, but when an individual has accumulated $20,000, $30,000 or $50,000, the interest on that will be tax-free, and that is a tax expenditure that will keep increasing for the government. That analysis has been done. That is what was observed.
Senator Hervieux-Payette: And that went, in 2009, 2010, and 2011, from 50 million to 220 million. In your opinion, is it going to increase this quickly over the next 10 years? Because the curve is rather pronounced.
Mr. Domingue: You would have to ask the Department of Finance about the projected size of the tax expenditure.
Senator Hervieux-Payette: Thank you.
[English]
The Chair: It has been a long evening, but I know the Auditor General would like you to put your questions on the record. Please try to be as succinct as possible. If the question is complicated and you would rather provide a written response, that would be okay as well.
Senator Buth: I would like to go back to some of the questions that Senator Gerstein asked. In one of your responses, you said that you take a look at high-risk areas. Could you describe "high-risk area" and how you do that assessment?
Mr. Ferguson: In general terms, it is a matter of looking at what the impact might be, which might be financial. For example, if a program is not well managed, what could the financial impact be? What would the impact be on people who are receiving a particular service if the particular area is not well managed and the services are not being delivered properly? What would the impact be on the people? It is a case of trying to understand which areas of government are critical to being delivered well to ensure that they have the right impact, whether financial or human.
Senator Buth: Do you look at areas of control and where control might be lacking?
Mr. Ferguson: That is sort of the second piece. First, we determine the riskiest areas. We might look at those and say that we have done some preliminary work and think that in certain areas there probably are good controls. In other areas, the controls are weaker. We have gone beyond the first assessment of how important it is and into the second assessment of how likely it is that there could be something wrong because those controls are not working. We may still pick somewhere we think the controls are working well because we think it is important for Canadians to know what area it is. For example, maybe it is a regulatory area where it is important that it functions properly; and it is important for Canadians to know it is functioning properly. We still might do some of those. In most cases, we would zero in on the places where we think the controls are not working properly and there may be some issues.
Senator Buth: Do you have on the go what you will audit next year?
Mr. Ferguson: Yes. We put that on our website. I am not sure how long out it is, but we tend to plan out three years. When I say that, in the third year it becomes a case of knowing we will audit human resources, for example, although it may not be the specific audit. Certainly, one year and two years it is pretty specific but in the third year it is less specific. Our planning cycle is three years.
Senator Buth: You do audits on specific issues and specific departments. Have you ever noticed that departments that are not audited may take particular notice of an audit that has been done and perhaps start changing systems?
Mr. Ferguson: We find that as soon as we tell the department we are coming in to do an audit in a particular area, we often find that all of a sudden there is a bit more activity in that area in trying to fix some of the issues quite quickly.
Senator Buth: Having been in an organization that was audited by the government, I understand that process.
You did an audit on planning the use of professional service contractors. You looked at three departments. Would you expect that other departments might take a look at how they are managing human resources, permanent staff and contracts as well?
Mr. Ferguson: That would certainly be our hope. As I said before, we might choose to do a follow-up audit in this area. We might include those three departments, but then we might choose a couple of other departments. The idea would be to see if those two departments would be at the same place that the original three were at. Now that it is four years later, we would be tougher on them than we might have been otherwise because they would have had the warning.
Senator Buth: How did you choose those three departments?
Mr. Campbell: We had a couple of considerations, one being that we wanted to collectively capture a significant amount of dollars. Between the three departments, it came to about 25 per cent. We also wanted to capture some departments that had different lines of business, and Public Works and Government Services Canada was good for both of those because of the size of it and because much of what they do is driven by what happens in other departments with the services they provide. That was quite insightful to their need for flexibility.
Senator Buth: What departments would have the largest number of employees and professional services contracts? Would these three be some of the highest in terms of the number of employees in departments?
Mr. Campbell: In terms of number of employees, National Defence would be a big one and Public Works as well. We did not go into National Defence, which we mention in the report, because we were trying to "spread the love" as much as we could. DND had looked at this issue after it came to their attention in an internal review; so we left them to it.
The Chair: We are glad the Auditor General's department in conscious of spreading the love.
Senator L. Smith: Earlier I asked some questions around process management. In reading some of the information you sited in Chapter 4, the complexity of the overall system is a potential barrier to assessing benefits from Veterans Affairs. In your report, you noted that a benefits browser should be fully implemented and would go a long way to clarify the system in terms of making it simpler. I read in the newspaper that, believe it or not, Veterans Affairs Canada launched the Benefits Browser, making it easier for the veterans to access benefits.
Were you aware of this? Was it a specific response to what you had suggested? In other words, I am acting as a sales rep for you in saying you have done a great job, made a recommendation and then Veterans Affairs launched the Benefits Browser. Are you aware of it? What type of benefits should they get out of it as that was obviously one of the things you identified as a weakness?
Mr. Ferguson: They were already using it in some places. Some of their employees were using it, but it was not widespread. It would be my belief that we helped move it along as something that should be put in place fairly quickly.
In fact, we found some employees trying to help veterans who were not using the browser. They had large binders of material and some of it was out of date. We found another employee who was using the browser and that employee's binder was a few pages because everything else was available. When you are using something like that, it is much easier. Everyone knows that what they are looking at is up to date because they are all looking at the same thing.
I would suggest they were leading down the path of implementing it, but we probably helped push it along a little quicker.
Senator L. Smith: That is a success story. Congratulations.
[Translation]
Senator Dallaire: I would like to congratulate you. I have a particular interest in two topics, and they are the transition of injured members, and the whole aspect of army infrastructure. These are two very timely topics.
[English]
The way I was educated is that auditing is not a Gestapo exercise; it is a tool to help management improve. I am looking at Chapter 5 and there seems to be a bit of a lack of specificity in the recommendations.
Do you have another level of audit that you provided within the department to give them more hard data and examples? For example, instead of them taking all their funds to build a building, they would go to a civilian firm. The civilian firm builds it and rents it for five years, and then buys it from them, and those types of things. Have you provided any of that to them?
Mr. Ferguson: No, we would not have gone down that other level of detail.
Again, we found some issues in the process, taking so long to deliver. When the bases do not even know their entire budget until halfway through the year, how can you deliver on the things that are important? We said look, you have these high-level things that need to be fixed and we did not get down into another level of detail.
Senator Dallaire: I appreciate you going macro in that regard, but on page 15 you said that you looked at 80 case files in DND. There are thousands of them. It demonstrated that the troops were not particularly happy that standards were not met. However, we are seeing that the troops prefer staying within DND, even with that, rather than being handed over to VAC.
Did any of that transitional atmosphere get related to you as a result of processes in both departments in taking care of them?
Mr. Berthelette: The CF members did not raise the point exactly as the senator has raised it. They mentioned that the processes take a long time. In one paragraph, we mentioned that some CF members have left the forces before the final decision about whether to release for medical purposes had been made, which has some consequences later when they go to VAC and try to access benefits. That point was raised, but we did not have anyone raise the point about actually wanting to stay in the CF longer than the time limits we had here.
Senator Dallaire: They ran through modernization exercise, had a year-long study in 2011 of looking at their processes, and now all this transformation. Surely some of that stuff is now on the table to be implemented. Has it been implemented or is it stalling there? The recent information about cutting red tape is not very big. They could cut red tape in a couple of areas, but nothing significant. Did you see the results of that stuff coming to the fore?
Mr. Berthelette: I am not sure we saw the results of that stuff. We saw processes that were complex and decisions taking longer than they should. I do not think what the senator is referring to was something that came up in this particular audit.
Senator Dallaire: Incredible. Thank you very much.
The Chair: On behalf of myself and all the members of our committee let me think the Auditor General of Canada and his team. The work you do is very important to us to help hold the government to account. We appreciate the work that you have done and that you continue to do. Thank you very much.
Mr. Ferguson: Thank you, Mr. Chair. We are very happy for the interest that the committee has shown in these reports.
The Chair: Thank you.
(The committee adjourned.)