THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, October 4, 2022
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] to study matters relating to federal estimates generally and other financial matters, as described in rule 12-7(5).
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: I welcome all the senators, as well as all the Canadians watching us on sencanada.ca.
[English]
My name is Percy Mockler, senator from New Brunswick and Chair of the Senate Committee of National Finance. Now, I would like to start on my left and ask each senator to introduce themselves.
Senator Forest: Éric Forest, Quebec.
Senator Pate: Kim Pate from here on the shores of the Kitchisippi, the unceded, unsurrendered territory of the Algonquin Anishinaabe.
Senator Omidvar: Ratna Omidvar, Ontario.
Senator Audette: [Indigenous language spoken] Michèle Audette, Quebec.
Senator Loffreda: Tony Loffreda, Quebec.
Senator Dagenais: Jean-Guy Dagenais, Quebec.
Senator Bovey: Patricia Bovey, Manitoba.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators.
[Translation]
Honourable senators, we are meeting today to hear from the Auditor General of Canada, Karen Hogan.
[English]
Ms. Hogan, thank you for taking the time to meet with us today. We are very much looking forward to discussing some of your reports and also asking questions about going forward. I also want to publicly thank you for the recent discussion I had with you on the phone regarding the work of our committee and the reports that may be, no doubt, of interest to us. It was a productive discussion, and I thank you very much for taking the time as we were coming to Ottawa.
[Translation]
Ms. Hogan is accompanied today by Andrew Hayes, Deputy Auditor General of Canada, Martin Dompierre, Assistant Auditor General, and Philippe Le Goff, Principal.
[English]
Thank you for joining the Auditor General this morning. Welcome to all of you. Thank you for accepting our invitation again. There is no doubt that, going forward, we will request your attendance as the programs develop.
We will now hear from the Auditor General, Ms. Hogan.
Karen Hogan, Auditor General of Canada, Office of the Auditor General of Canada: Mr. Chair, thank you for this opportunity to discuss some of our reports that were recently tabled in Parliament. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people.
This is my first appearance before this committee since being appointed Auditor General. One of my office's priorities is to build meaningful relationships with our key stakeholders. We recognize that our relevance is built on the value we bring to parliamentarians and committees such as yours. I will begin by giving you an overview of the audits that looked at the government's response to the COVID-19 pandemic, and I will then turn to some other recent reports that may be of interest to the committee.
Since March 2021, I have presented nine reports that deal with the government's response to the pandemic. These looked at a wide range of topics, including the government's initial preparedness and response, several financial support programs, securing personal protective equipment and medical devices, health resources for Indigenous communities and safeguarding Canada's food system.
There is no doubt that the COVID-19 pandemic was an all-hands-on-deck emergency the world over. Governments had to mobilize quickly to respond to the public health, social and economic effects of this pandemic. Canada was no exception. While we found that the government was not as ready as it could have been for a pandemic of this magnitude, for the most part the public service mobilized, prioritized the needs of Canadians and quickly delivered support and services.
While departments and agencies have shown that when faced with a crisis, they are able to act with agility and responsiveness, our audits have also shown that the government needs to take action to resolve long-standing and known problems, such as the lack of interdepartmental collaboration, outdated systems and practices, and issues in planning and managing equipment stockpiles. It must also never lose sight of its duty to protect the health and safety of vulnerable populations and of all Canadians in general.
My next audits related to the pandemic will be tabled later this fall, and they will look at COVID-19 vaccines and specific COVID-19 benefits as required by Bill C-2, An Act to provide further support in response to COVID-19.
I will now briefly discuss two other recent reports that may be of interest to the committee.
[Translation]
I will turn first to my report on the Investing in Canada Plan, which was tabled in March 2021. In this audit, we found that Infrastructure Canada was unable to present a full picture of results achieved and progress made under the plan. We found that the department’s reporting excluded almost half of the government’s investment because it did not capture more than $92 billion of funding that was committed before the plan’s creation in 2016. The absence of clear and complete reporting makes it difficult for parliamentarians and Canadians to know whether progress is being made against the plan’s intended objectives.
I will now turn to my audit of access to benefits for hard-to-reach populations, which was tabled in May of this year. We found that the Canada Revenue Agency and Employment and Social Development Canada lacked a clear and complete picture of the people who are not accessing benefits such as the Canada Child Benefit, the Canada workers benefit, the Guaranteed Income Supplement, and the Canada Learning Bond. The agency and the department also did not know whether most of their targeted outreach activities had helped increase the benefit take-up rates for hard-to-reach populations. They also lacked a comprehensive plan to connect people with benefits. As a result, they are failing to improve the lives of some individuals and families who may need these benefits the most.
The Commissioner of the Environment and Sustainable Development could not be with us today because he is presenting his annual report for tabling this morning. However, should the committee wish to invite the commissioner to appear for any of these reports, he would be happy to do so.
Finally, I would like to note that my office audits the consolidated financial statements of the federal government every year, the results of which are published in the Public Accounts of Canada. We also prepare a commentary that highlights the results of financial audits conducted by my office during the fiscal year. Our commentary on the 2021-22 financial audits will be tabled at the same time as the Public Accounts of Canada later this fall. In addition, we will present a report on the cybersecurity of personal information in the cloud this fall.
Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions the committee may have on these reports and any others that may be of interest. Thank you.
[English]
The Chair: Thank you, Ms. Hogan. Having you here before us today is certainly an honour, and it allows the committee to really zone in on our four main objectives as a committee: transparency, accountability, reliability and predictability.
I would like to tell each senator that you have a maximum of five minutes each for the first round of questions and a maximum of three minutes each for the second round. Therefore, please ask your questions directly. To the witnesses, please respond concisely. The clerk will inform me when the time is over by raising her hand.
Senator Marshall: Welcome, Ms. Hogan, to you and your officials.
You mentioned the public accounts in your opening remarks. We waited quite a while for the government to release the public accounts last year, which was problematic when we were reviewing requests for funding from the government. Has the audit of the 2022 public accounts been completed?
Ms. Hogan: Yes, the audit has been completed. We followed the traditional time frames, as we did even for the prior year. We signed off at the end of August, early September. They are then tabled usually in October in the House.
Senator Marshall: That was my next question. They were signed off in August?
Ms. Hogan: It was early September, to be more precise.
Senator Marshall: Thank you. Last year, we waited nine months for those statements. I know the deadline in the Financial Administration Act is December 31, but if that date were to be changed to September 30, would that pose a problem for your office?
Ms. Hogan: Completing an audit of the magnitude of the Public Accounts of Canada requires a good collaboration between my office, the central agencies, as well as so many departments and Crown corporations. As long as the government advanced its deadline so that we could all move in sync instead of just shortening time from the auditors, I don’t see why we couldn’t do that. But it is definitely something that needs to be done in collaboration because consolidating 101 departments and all the Crown corporations is a big task to get that.
Senator Marshall: If the legislation were changed and the government and the agencies cooperated, do you have the resources within your office to complete by a September 30 deadline?
Ms. Hogan: We do. As I mentioned, typically we sign off at some point in early September. We would be ready to advance that a few weeks, if needed, in order to meet all the publication deadlines.
Senator Marshall: That’s great. Thank you. I do have a couple of other questions on the public accounts. Last year I appreciated the information that was provided with regard to the $19-billion loss incurred by the Bank of Canada on the purchase of bonds, but there were a couple of articles that I was interested in knowing what the implications are for the government’s bottom line.
First, there was an article in the Financial Post that said the Bank of Canada is losing money if they post a deficit this year. On consolidation, does that deficit roll into the government’s bottom line dollar for dollar?
Ms. Hogan: The type of Crown or entity is a complicated matter, as you well know, being an accountant. Certain Crown corporations that are self-sustaining, that don’t rely on the government for money to meet their day-to-day operations, are consolidated in a different way than other Crowns. Some are picked up line by line, and others, it is just the bottom line. So they show as an investment, but then their deficit or surplus gets picked up. It would be picked up, but it wouldn’t be as detailed as some of the Crowns line by line. But, yes, the bank is consolidated into the Government of Canada.
Senator Marshall: The other article that was in the media — I have the same question as to how it affects the bottom line of the government’s deficit — was an article that with the Canada Emergency Business Account, or CEBA, loans to small businesses, there may be a write-off or allowance of $5 billion.
I did go back and look at Export Development Canada and the last year’s public accounts, but does that roll into the bottom line dollar for dollar? I’m just getting prepared for the release of the public accounts and what I am going to look for.
Ms. Hogan: The CEBA loans were loans given to businesses, as you may recall. If a business pays back the loan by December 31, 2023, a portion of it will be forgiven, and then the rest is paid off. If not, then there is interest that accrues on the balance, and the forgivable portion is no longer forgiven. The whole balance needs to be paid off.
While they are administered by Export Development Canada, they are still consolidated within the Government of Canada on a line-by-line basis. Whenever you have a loan, the government is required to assess collectibility and, here, to estimate the number of corporations that might take advantage of the forgiveness part of the loan. So part of the provision would be the part that will be forgiven because loans would be paid off, but some might also represent loans that would be uncollectible. Again, that would really only solidify after December of 2023, when payment is due.
Senator Marshall: That’s good to know. My next question is regarding the audit of Infrastructure Canada, which was very interesting because the Finance Committee had actually conducted a study of the infrastructure funding. We issued two reports back in 2017. Your conclusions were pretty well exactly the same as ours.
In your conclusion, you say that they couldn’t demonstrate that the plan was on track to meet its expected results and objectives. When would you be able to be more definitive? Right now you’re saying they couldn’t demonstrate. At what point will you be able to say they have or have not met their objectives?
Ms. Hogan: You are talking about the Investing in Canada Plan audit that we completed. The way the Investing in Canada Plan, or ICP, was structured, there are programs from the 2016 budget, the 2017 budget and then legacy programs that existed prior to then.
The legacy programs represent about half the funding in the Investing in Canada Plan. The way they were set up and originally designed was not to align with reporting under the objectives of the Investing in Canada Plan. When the Investing in Canada Plan was put together, they were then not given new instructions to report in a different way. Until the government figures out a better mechanism to report on the outcomes of those legacy programs, it will be unlikely that half of the plan will have meaningful reporting.
I don’t have any intention to go back and look at the Investing in Canada Plan. We gave some detailed recommendations to the government to fix, and it is really up to them to align all of that reporting to be able to demonstrate outcomes achieved.
[Translation]
Senator Forest: Thank you so much for being here with us to shed light on issues that concern us. I have spent 26 years in the municipal world. Clearly, I want to have a little more information on the infrastructure program. When I read your recommendations and look at the government’s response, my concern is that even more pressure is being put on the municipalities because these programs are one-third federal, one-third provincial and one-third municipal. A lot of pressure is being put on the organization that delivers the projects, which are the municipalities.
Here is my first question, and I’m referring to the past a little bit: when you look at the 2007-11 program, the first infrastructure program, beyond the analysis of the financial channel and financial accountability, do you analyze the impact of the program’s standards and rules?
In this program, which was to create water and sewer infrastructure, everything had to be completed by March 31, 2011. This created overheating, conditions involving corruption and very negative repercussions on public funds. Beyond the financial aspect, do you also analyze the impact of the rules and standards associated with the program?
Ms. Hogan: When we audited the Investing in Canada Plan, we didn’t go that far. We selected a sample of programs to see whether accountability was being done in a consistent way, but we did not look at the impact of that accountability on the government.
However, we found during the audit that funds were not spent as quickly as expected, and one explanation was that municipalities, third parties, had not yet requested reimbursement or had not moved their projects forward as quickly as they would have liked.
Senator Forest: There are a number of factors that can cause projects not to move forward as quickly. You were talking about the commissioner of the environment, but we can talk about environmental approvals in each of the territories and provinces, depending on the nature of the projects, which can have an impact on not being able to deliver the project on time. This can create difficult conditions for municipalities.
Ms. Hogan: I certainly agree that there are many reasons why projects may experience delays.
The pandemic is one reason. There are also environmental aspects, as you were saying. That said, we didn’t go that far. The audit was started because of a motion from the House that asked us to look at whether Infrastructure Canada was able to show that the plan was moving forward at the right pace and could meet the objectives. We did not look at specific projects during our audit.
Senator Forest: Do you have the autonomy in your mandate to say yes and possibly conduct an analysis? There are three partners, including the federal government, which defines standards in collaboration with the provinces. Do you have the autonomy to say, “Yes, we could go further and look at the impact of certain rules that can be modified”? In the CO2 example I gave you, the deadline was May 31, 2011. If it had been October 31, 2011, instead, would that have changed the environment that would have enabled this project to go forward? We agree that creating water and sewer infrastructure in February is very expensive. Do you have the autonomy to ask for expertise at that level?
Ms. Hogan: I have the discretion required to follow the money and look at whether funding agreements exist between the government and third parties. As for the conditions, I don’t think we would go to that level. We look more at management of the agreement and the use of funds to ensure that they are used for the right reasons, rather than to see if conditions are reasonable.
Senator Forest: Even among your employees, at one point, there were labour relations issues. Is the funding for your office adequate? Can the financial situation be improved? Does this allow you to fully carry out your mandate?
Ms. Hogan: Yes. As you mentioned, we received an increase in our permanent funding. Yes, this allows us to improve services provided to Parliament. We still get mandates assigned to us. The Commissioner of the Environment and Sustainable Development was given a new mandate. We got a new mandate for a Crown corporation without funding. That’s how we got into trouble several years ago. We keep a closer eye on new unfunded mandates to ensure that we do not find ourselves in the same situation, but at the moment, things are going well, thank you.
Senator Forest: Indeed, you are somewhat like municipalities: they get many new responsibilities with an unfunded mandate.
Ms. Hogan: I don’t know if we can compare ourselves to a municipality, but yes, from time to time we find a new unexpected mandate in legislation. That is why I will continue to ask for an independent funding mechanism. This is a little more flexible than following the general process for all departments. It is a longer-term project, but it is something I still have in mind and I plan to start the conversation.
Senator Forest: I might be able to support you in that.
The Chair: Senator Audette is replacing Senator Gignac.
Senator Audette: Thank you. I have a big pair of moccasins to fill to represent my colleague Senator Gignac. We work together, of course.
As you know, I come from a beautiful region, Nitassinan, the North Shore, where beautiful nations live together: the Innu people and the nation of Quebec. During the pandemic, we saw an approach that is nothing new for many Indigenous peoples; a holistic approach, an approach in which every environment, every place has expertise to which we can contribute. Whereas we see over time that governments at every level have instituted a culture of silos.
As you said in your presentation, the pandemic allowed us to see that agencies and departments will innovate, be creative and do things differently. Do you think that once the pandemic loosens its hold on us—I can’t wait!—we will be left with the legacy of this approach? The federal government, the province of Quebec, the municipalities of Nitassinan and Manicouagan and the Innu nation saved and supported lives during the pandemic, and showed that we can work together. I hope we see that legacy.
Do you think we could also say that we are not vulnerable, but rather that these situations are what makes us vulnerable, whether we live in downtown Montreal or in Pakuashipi on the North Shore?
That was both a comment and a question. How can your role ensure that we maintain the important gains in collaboration with us, with senators?
We will support you, if required, but it must be done.
My other questions will be more specific and focus on the projects and programs you mentioned in your reports.
Ms. Hogan: You’re right. During the pandemic, we saw the federal government really focus on the service rather than the process. The approach they took was a little different. However, that comes with a cost. We saw it in the financial support programs, where there was little prepayment control in favour of post-payment controls. It takes time and costs money to do those post-payment verifications, making it necessary to find the right balance between them. We can’t always focus on the process, but we always have to consider outcomes and service.
Yes, I also hope the government will remove processes without forgetting that public funds require accountability.
Senator Audette: Speaking of accountability, in many other respects, how do you see the federal government changing its delivery mechanisms to make benefits available to everyone, whether they are in a remote area or in a downtown area, whether they are Atikamekw or from Montreal, so that everyone is taken into account? How do you see it?
Ms. Hogan: We did a report on benefits for hard-to-reach populations to fully determine whether the government had changed its way of doing things and found a good way to reach them. We concluded that, first of all, the government had difficulty identifying people who were not accessing benefits and, secondly, in implementing a truly person-centred approach.
Every individual has a reason that makes it more difficult for them to access benefits. Sometimes it’s the language, their situation, a lack of internet. So many reasons explain why someone might not be able to access benefits. The starting point is getting to know them. The government should look at the data a little more. It needs information first to identify those who are most vulnerable, then change how things are done to better reach them. To do that, you need information, but that’s often what’s missing. That is what we find specifically in our audits.
Senator Audette: I have one last question. Would you agree that people or organizations in our region already have this wealth or this data, and the federal government’s responsibility is to work with those who live this experience or those who represent them?
Ms. Hogan: I agree with you entirely. There is Statistics Canada, but Indigenous communities could help too. Often, First Nations communities are a somewhat reluctant to interact with the government. Perhaps information sharing would be easier between communities. On the other hand, even within the federal government, departments don’t share information often enough to facilitate access to programs.
Senator Audette: Thank you.
[English]
Senator Smith: Good morning, folks. I apologize for being late. We just got back from Nunavut last night. We spent four days meeting government officials and business people, and it is quite an eye-opening experience for someone from the South, like myself. I’m very pleased to be with you this morning.
Ms. Hogan, I wanted to follow up on your point 7, I believe — it was brought up earlier — that talks about the collaboration issue or opportunity. You talk about the fact that government departments still struggle to collaborate effectively. Just recently, we dealt with the government’s first regulatory modernization bill. We found instances where certain changes to certain acts in the bill would supersede the work of the departments already under way. I am just wondering if you could expand a little on this issue and provide some examples to the committee of instances where government departments are failing, but also maybe some instances where you are seeing hope and the light starting to shine on positive examples.
Ms. Hogan: There is a lot in that question, actually. We saw both positive and not-so-positive examples, so maybe I’ll start with the fact that the government needs to act on long-standing known issues. The health crisis of the pandemic brought to light that many of the issues that the government was aware of after H1N1 and SARS in collaborating with provincial counterparts to deal with health measures had not been addressed.
Taking the time to address those things between crises or emergencies is the time to do it, and not in response to an emergency. That being said, that’s where we saw some positives, right? While there were no ironed-out agreements on what health information would be shared or how it would be shared, we definitely saw the federal and provincial governments doing their best throughout the pandemic and adjusting in order for that information to be made available to the federal government to inform the response to the pandemic. So there was a positive and a negative there. But I think the point to remember is that in between crises is the time to deal with all of those issues and not in the middle of a crisis.
Another example we saw was in the Emergency Wage Subsidy program. The Canada Revenue Agency had information where they could have done some sort of screening before giving out wage subsidies, just to vet the eligibility of businesses, and they didn’t use all the information available to them. They didn’t share information across divisions, which would have facilitated the heavy labour that is now needed during post-payment verification.
Philippe or Andrew, is there another example? Does somebody else wants to join in? Those are two examples I would raise right now.
Senator Smith: When you first began in your position, I asked you a similar question. Basically, now that you have had time and seen the lay of the land — I know there is lots more you want to do and will discover — what are the top three priorities that strike you as the most important elements that you need to address in your job at this particular point in time?
Ms. Hogan: My top three priorities at this point in time — as you may have noticed in some of my reports — are really about going after those who are often forgotten so that they don’t fall even further behind. Therefore, a lot of my reports will focus on aspects of equity, diversity and inclusion. I have asked every audit team to focus in on that because if we can mainstream that discussion, it will become second nature in policy design and program implementation. That is on top of still following up on sustainable development goals. I do believe that so many of them touch those aspects. Priority number one for me would be to ensure that a lot of equity, diversity and inclusion are included in government policy and in amendments going forward.
I think data is something that many of my predecessors have been talking about. It is long past due that the government gather data. But not just random data — disaggregated data. They should know what data they want, why they want it and what they want to do with it. They should analyze it but then actually use it to inform changes and not be afraid, once they have seen how the population is experiencing a program or policy, to adjust it for the good. So those would be my top two.
For the third priority, it would be remiss to not think about cyber. With the government going much more virtual with interactions with Canadians, cybersecurity is something that everyone needs to be more aware of.
Senator Smith: Thank you so much.
[Translation]
Senator Dagenais: Good morning, Ms. Hogan. I am going to talk to you about the most important infrastructure program for Canada. I believe there will be a follow-up between now and 2028. Please correct me if I’m wrong. We’re talking about a $33 billion program. In 2028, that seems like an aberration to me. Do you know who made the decision about this program? Do you know if there are delays or if costs exceed estimates? Was it a decision by departmental officials or a political decision?
Ms. Hogan: The senior director who worked on this mandate is not here with us today. I don’t have an answer for that question. However, we could get back to you with an answer.
Senator Dagenais: I would appreciate it. You can also send your submission or response in writing. In your report, you talk about how the disbursement for certain projects could be carried over into the next fiscal year. I find this worrying because we cannot say whether there is any concrete follow-up on the impact of these decisions. Could you tell us what impact this lack of follow-up could have on the review of public accounts? Wouldn’t this lack of information allow some politicians to make investment announcements with the same money, which was not necessarily disbursed?
Ms. Hogan: Yes, you mentioned delays. We have seen that about half of all spending is now being planned for the last five years of Investing in Canada. Several reasons explain this delay, which we touched on briefly. One reason is that third parties have not yet provided information. Funding is not disbursed until a third party demonstrates that it has actually spent the money. It could be a municipality or organizations carrying out infrastructure projects.
From the perspective of public accounts, only spent funding is included, which means deferring expenditures to future years. We were concerned that no one had tracked the overall impacts of the whole plan in terms of achieving its objectives, either by pushing it or spending it later. It then becomes difficult to demonstrate that those objectives were achieved. From a financial point of view, it is once the money is spent. When it comes to observing and analyzing expected outcomes, however, what’s needed is a more rigorous and regular analysis of the follow-up.
Senator Dagenais: I will now come back to a question raised by Senator Audette. You observed increased efficiency of services provided during the pandemic. However, when it comes to issuing passports or dealing with immigration issues, can we conclude that efficiency is lacking or that cost containment is lax?
Ms. Hogan: Could you repeat the question?
Senator Dagenais: There are services that must be provided that are not provided, such as issuing passports. Do you think that cost controls for those expenditures have loosened? Services and human resources have been added, but is there an element of cost control that comes into play?
Ms. Hogan: With respect to passports, that is not something I have studied in detail, so I can’t comment on passport cost management or the department responsible for it.
Senator Dagenais: Thank you very much, madam.
[English]
Senator Pate: Thank you, Ms. Hogan, and thank you to all the officials for the incredible work you do on a daily basis for all Canadians.
I would like to follow up on some of the questions of my colleagues around the demographics of who is not being served. I did hear you say that you’re looking for better disaggregated data, so I would like to know what you do know about who was not served, how you see it moving forward and what the response of the Canadian government has been to your recommendations for improving access to benefits going forward.
Ms. Hogan: When we looked at the hard-to-reach populations, as I mentioned earlier, we found that the government was, firstly, not able to identify who they weren’t reaching. They often turned to tax return information as the best source of evidence. They estimate that around 10% of the population does not file an income tax return, and the income tax return is usually the gateway to accessing so many of these benefits.
Some of our recommendations looked at finding a more holistic approach to reaching individuals because not everyone is comfortable or even required to file a tax return. Understanding the barriers first helps you address how you should design your outreach programs.
What we found is that they were mostly designed around encouraging people to file a tax return in order to access benefits. Without having all that data around why someone isn’t accessing a benefit, you just keep repeating the same outreach activity, so we encouraged them to think of more creative ways to reach individuals.
Senator Pate: I would be interested in what your views are in terms of the uptake there, but I also wanted to ask you about boil water advisories. In previous audits you have looked at safe drinking water in First Nations communities and have commented on the lack of progress in that area, despite government objectives indicating they were going to eliminate them.
I’m curious as to what you see as the biggest impediments beyond, obviously, policy issues. What are the biggest impediments to the government achieving the goals of no drinking water advisories?
Ms. Hogan: That report was actually a report that I was very proud of. I really hope that it will drive some meaningful change for First Nations communities.
I think of the few things that I would highlight as what we thought were the biggest concerns, one was a funding mechanism that was outdated. It had not been looked at in almost 30 years, and so it wasn’t updated for new technologies, even just the increasing costs of maintenance and operating.
It also contributed to, I think, what the second issue is, which is a lack of skilled operators in so many communities to work the water treatment plants. The percentages are escaping me, but many communities don’t have one skilled operator or even a backup operator. When you know that only two thirds of the water systems in First Nations communities are on these public systems, getting that knowledge into a community will benefit the community far more than just the public water system. They will be able to use that knowledge to help support the private water systems.
The funding is really a big element, but it’s really about empowering the communities to have the skills capable of having a more sustained response to water in First Nations communities.
Senator Pate: What is your prognosis in terms of where we’re headed? Are we likely to see those issues remedied, based on your experience with the government to date?
Ms. Hogan: I know they have been looking at the new funding formula. We haven’t gone back to look at the new funding formula.
I do think that the focus on just long-term drinking water advisories is a really narrow focus, because a long-term drinking water advisory means it has to have existed for more than a year. And there are many communities that we found during our audit that experienced short-term drinking water advisories but so many that it was 6, sometimes 10 years that they had been for a large portion of time on a drinking water advisory. Those aren’t getting the attention right now because they are not long-term. It is about finding a different solution. Just trying to focus in on one aspect isn’t going to be enough.
I think this is one of those cases where money just isn’t enough. It needs to be more holistic. What about infrastructure? What about training? There is a lot more to it than just funding.
Senator Pate: Thank you.
Senator Omidvar: Thank you, Ms. Hogan, for being with us.
I want to focus my questions on the Investing in Canada Plan and one of its themes, which is green infrastructure. It’s a timely thing, given the devastation that has been experienced by Canadians in the Maritimes. Scientists have said that this kind of devastation may, in fact, be visited more often because storms that would normally dissipate over the Atlantic Ocean will no longer do so, and we may see more of that.
Has climate mitigation featured in the Investing in Canada Plan, and if so, what did your audit disclose?
Ms. Hogan: So one of the objectives of the Investing in Canada Plan is to transition to a clean-growth economy, but what our audit found was that there is inconsistent reporting and measuring on the achievement of those objectives. So in one year, Infrastructure Canada would report on some metrics, but then in the next year, they would change those. It was really impossible to see whether there was progress being made against some of the objectives because of the inconsistent reporting over the years. We weren’t able to conclude on any of those projects that we looked at or if the department was even able to demonstrate that they were on track to meet the objectives that they set out to meet here.
Senator Omidvar: As far as you know, Ms. Hogan, did any of the projects that were on the books or invested in deal with climate mitigation specifically as opposed to green infrastructure?
Ms. Hogan: I am going to ask Andrew to join in here. Before he does that, I do want to mention that the Commissioner of the Environment and Sustainable Development actually put out a report on lessons learned from climate change, and one of them was about the lack of climate resistant projects.
I’ll see if Andrew wants to add a little bit more.
Andrew Hayes, Deputy Auditor General, Office of the Auditor General of Canada: Thank you, yes.
Phase 1 spending, Phase 1 components, did include mitigation. That funding was announced in Budget 2016. It involved $14.4 billion.
One of the findings that we had in the report was that there were delays in spending that money. I can’t break that down as to whether they were for mitigation projects or not, but it was included in Phase 1.
Senator Omidvar: Thank you.
Ms. Hogan, you appeared before the Senate Social Affairs Committee in our study on Gender-based Analysis Plus, or GBA Plus. You yourself said, very eloquently, I think, that you want to focus your work on going after those who are forgotten, who are not in the mainstream. I want to probe whether your office did a GBA Plus analysis in its audit of the Investing in Canada Plan. If so, what did you find?
Ms. Hogan: So my commitment to looking at GBA Plus in every audit started very soon after I had been appointed. The Investing in Canada Plan came from a motion before I was Auditor General. I just had the privilege of presenting the results. That audit was well under way and did not look at any GBA Plus angle, but it is a commitment that we have going forward; you are correct.
Senator Omidvar: Does that mean the next time you do an audit — and I don’t know when that will be on the ICP — a GBA Plus lens will be applied to it?
Ms. Hogan: Yes, our commitment is to have that lens in any and all of our performance audits and special examinations.
Senator Loffreda: Ms. Hogan, welcome to your first appearance in front of our Finance Committee. You’re doing great so far, so thank you for being here, and I can see your competence and thorough analysis. We’re lucky to have you.
You did mention, and your audits have shown, that the government needs to take action to resolve long-standing and known problems such as the lack of interdepartmental collaboration — we discussed that briefly — outdated systems and practices and issues in planning and managing equipment stockpiles.
You did mention your top priorities: equity, diversity and inclusion; hard-to-reach populations — I’m the sponsor in the Senate of Bill C-30, so I’ll get to that later as to what we discussed with the government officials — and you also mentioned data gathering was one of your top priorities, so that what we measure improves. We all know that. If we don’t measure it or can’t measure it, we can’t improve it. That’s extremely important.
One area that we did not discuss yet that I would like to touch on is cybersecurity. You mentioned that was one of your top three priorities. I go back to the outdated systems and practices. We touched on the water treatment. But how would you evaluate our cybersecurity and elaborate on the reports you put out on cybersecurity? Do we have outdated systems and practices with respect to cybersecurity? Can you reassure Canadians that that area is well covered and well taken care of at this point and time with respect to processes, systems and practices?
Ms. Hogan: The committee has challenged my memory going so far back in a lot of my work, but I’m happy that I’ve been able to answer all of your questions.
We actually have a report on the protection of personal information in the cloud coming out in a few weeks, so unfortunately I will save my comments on the cyber aspects until that is published. We have another report planned on cybercrime. We haven’t hit any of those reports yet, so I don’t have anything to tell you about that cyber angle just now.
What we have talked about in the last few years, however, has been on the aging infrastructure within the government, and the look at modernization of that. We did an audit on complex IT systems and the new approach to trying to modernize a lot of the IT systems that the government has. The government has, like our office, neglected investment in that front. As you know, with IT infrastructure, when you fall behind, it’s almost compounding and it takes a long time to resolve. What we are seeing in those audits is that there is a lot of attention on ensuring that the lights are maintained and that security is in place, but with cyberattacks, you can never sit back, right? They are very creative and constantly changing, and so the government can’t lose sight of keeping their eye on that. Hopefully, you’ll enjoy some of our reports that are coming in the next little while.
Senator Loffreda: I always know I will enjoy them. To continue on that, is there a timeline in correcting the IT investments? It’s such an important issue, and we recommend to all Canadians to update their IT investments, the business community, what have you. Why hasn’t the government done it? Is there a timeline now? It seems to me it’s pretty urgent, right?
Ms. Hogan: Well, the government is in the process of doing a whole modernization of the systems that provide benefits to Canadians, so there is going to be a lot of attention on that for sure going forward. I don’t think it’s a lack of investment. As we did, you invest in the smart places, and cyber was never one that was like, oh. One of the items that we mentioned in the financial commentary was that certain of the entities we audit on the financial side were attacked during the past years, and we saw a great response from the cyberplans that were in place by the government and how they went about responding. While there were delays, at times lost information, the government still had the mechanisms and the plans in place to respond in an adequate fashion. But as I mentioned, this is something that you can’t sort of sit back on your laurels on.
Senator Loffreda: You’re satisfied that the response factor is there and that we shouldn’t worry about cybersecurity, but getting back to the timeline, what is the timeline? I mean, given the geopolitical environment we are in, I think it’s extremely important. Have you made a recommendation with respect to the timeline of correcting those IT systems and investments that urgently need to be updated?
Ms. Hogan: I was satisfied with the responses in the entities that we looked at. I want to be clear. I’m not sure that my statements apply to the entire federal public service. They apply to the few entities we did see that responded to cyberattacks.
I have not yet made recommendations. As I say, my reports on cybersecurity are coming. I don’t know the timelines for them to rectify, but many of the timelines to update and modernize the IT systems across the government are long-term projects. We’re talking about systems likes the Old Age Security system and the Employment Insurance system. Those impact so many Canadians. It’s important to do it right and take the time to get it done right.
Senator Bovey: It’s a real treat to be here today as I replace my colleague Senator Gerba. Ms. Hogan, it’s lovely to see you again, having seen you a week or so ago at the Social Affairs Committee. I want to thank you and your staff for the work you do.
I want to pick up on a couple of things that have been said already, particularly Senator Omidvar’s question about projects in the investment plan for climate mitigation. You have talked about applying a wider analysis than just the dollars to your work. You have talked about crisis planning. You have talked about collaboration across government but with the third parties for the projects you have looked at.
I want to talk more about collaboration and cross-information. As I understand it, many of the investment projects were to be shovel-ready for the third parties to be eligible for those projects. I am also aware that not only many shovel-ready projects for which applications had been made didn’t get the investments but some of them haven’t even heard back. I wonder if your audit took a look at the need that was expressed by the third parties for this funding and the needs that have not been met or not been responded to.
Mr. Hayes: We did not go down to that degree. What I guess we could say about that is in commenting on the delay in funding, some of that is going to be bureaucratic. Some of that is going to be about the process and the information that is analyzed by the government.
As we mentioned, there is 20% of the funding intended to be spent in the early part of the Investing in Canada Plan that has been reallocated to future years. That puts at risk the achievement of those objectives in the longer term. We are concerned similarly about that.
Senator Bovey: Thank you. I think I’m the only person around this table from Western Canada and from a Prairie climate, so let’s look at transit and mitigating climate. The corner to get to where I live has to be one of the worst roads in Canada. I know the City of Winnipeg has real problems with its infrastructure and roads. When we’re looking at climate mitigation and hydrogen and transport and all, I would like to ask about buses and public transport in various parts of the country.
Have you looked at what is happening to try to change society’s patterns so that citizens are part of this mitigation and not just the potholes that are — I don’t know how many people I know had major issues with their cars for the last few years, and we’re falling behind. I wonder if for mitigation you have looked at those issues.
Mr. Hayes: I can add that we will be doing an audit — I think it’s going to be tabled in the spring — on accessible transportation, and part of that will increase hopefully the available transportation for Canadians.
To your question about mitigation, I think the flip side of that is adaptation. One of the environment commissioner’s big lessons on climate change that he presented in the fall was about making significant investments in climate adaptation to address the severe impacts. We have seen some of them in the East. We have seen it in the West as well, with both forest fires and flooding. So adaptation is an important element as well.
Senator Bovey: I look forward to that. Mr. Chair, this shows my ignorance of the work of this committee, just being a replacement for today, but you have mentioned some of your future audits.
Do you have any plans to look at border security? That follows up on passport issues, but I’m particularly interested in the training of border security staff and the contemporary societal issues that they need to be aware of. Have you taken a look in recent years, or do you have plans to take a look at border issues and training?
Ms. Hogan: We did look at border security and training during some of the border control measures of the pandemic. While that is unique, we did see some great adaptation and response to emerging issues when it came to managing the border during the pandemic.
We do have an upcoming audit looking at systemic racism within certain organizations, and Canada Border Services Agency is one of those entities included in that audit. I don’t know if it will look solely at border measures and border security, but I imagine it may be of interest and related to the topic that you raised.
I always appreciate hearing topics that are of concern to senators and members of Parliament, as it feeds into our audit selection.
Senator Bovey: This picks up on what Senator Loffreda brought up regarding cybersecurity. I am concerned that Canada’s reputation is one as a soft border for illicit trade and importation of stolen goods and fake works of art and that it is a gateway that feeds into the drug trade. I don’t see how border security people can deal with that unless they have the training to know what they’re looking for.
Senator Marshall: I want to talk more about your audit of the Investing in Canada Plan. What struck me when I read your report is how much it reflected what we had reported in 2017. I indicated the Finance Committee issued two reports. Your report was issued last year, so there was a four-year time frame. Because it was so similar to what we found, I felt that the department had not really made any progress with regard to making any positive changes.
What kind of leverage do you have to encourage departments to make changes? With regard to the audit of the public accounts, you can issue a qualified opinion. You do have some leverage. But for the program audits, what leverage do you have to encourage change by the departments?
Ms. Hogan: I admit that’s a challenge that we face with every audit that we have. We’ve been sitting down with departments and agencies as they provide responses to our recommendations. We challenge them when the response begins with “Agreed. We will continue to do what we are doing.” To me, that means they don’t see the need to adjust and adapt based on the findings of the audit report. We’ve been really pushing for better responses.
I am pleased to see that the Public Accounts Committee as well as the Environment Committee, where my reports and the commissioner’s reports usually get referred, are now requiring every department to provide a detailed action plan. That continued pressure from our office and the committees, and any committee who might invite them to ask them to update their action plan, will help drive change.
We have started a new product. It is only available on our website. It is a follow-up on results measures, so measures that we’ve found in previous audits. We will also start including follow-up on recommendations actions. It will be a searchable database to see the progress that departments are making.
We are slowly but surely adding to it. It is small right now, but hopefully it will continue to grow. We hope that will provide additional pressure.
We do not have the power to compel, so it really is about ensuring that the departments and agencies see value in our recommendations and actually want to action them to drive better change. So we are pushing for outcome focus and not about process but about progress.
Senator Marshall: We had officials from Infrastructure Canada testify at our committee in June. It was with a regard to supplementary estimates. Even though they had received these negative reports from your office and from the Finance Committee, there was still a substantial amount of money provided to the department to spend.
I found it very discouraging. Given that there were not adequate controls over the money they had spent so far — there was no accountability, very little reporting or poor reporting — I was surprised that they were given additional billions of dollars to spend given that they had not made any changes.
I had anticipated that because the Privy Council Office and Treasury Board are involved in these horizontal programs like the infrastructure program, the government had leverage; that they could say to the department, “You’re not getting any more money until you shape up and start putting in your proper controls.” Do you think that is a solution or that could be leverage? I would like your opinion on that.
Ms. Hogan: That’s a policy choice, so I will let policy-makers decide on how they would like to proceed in driving change. The comment I would make on horizontal initiatives is one that is very long-standing and that we have seen in a few of our programs.
When you designate one department as accountable for reporting on the progress of a horizontal initiative, that reporting and accountability can only be as good as the information they receive. What we often hear is that one deputy head cannot compel another deputy head to do anything, to report in such a way or to focus on a project. The lead organization can only report on what they have been told.
So sitting back before you launch a horizontal initiative and making sure of accountability and collective view on demonstrating achievement of the goal of a horizontal project should hopefully drive better change than just letting every department focus in on the management of smaller projects without keeping their eye on the broader outcome that’s expected from horizontal initiatives.
Senator Marshall: I find that there is need for better governance and accountability with the billion-dollar programs within the government. Right now, I’m focusing on the daycare program. It is a $30-billion program. They have an objective set for December of this year, an objective that they said they were going to achieve.
Is it in your department’s plans to conduct an audit of that program at any time? It’s a $30-billion program.
Ms. Hogan: That’s an excellent question, and I’ll gladly add it to the mix of topics that we consider. We have just completed some planning for the 2023-24 audits, but we always try to be nimble to adjust to emerging issues. Thank you for the suggestion.
Senator Marshall: It won’t be as challenging, I don’t think, as the infrastructure audit, but it would be a good audit. It is $30 billion, and it spans all provincial and territorial governments. Thank you.
[Translation]
Senator Forest: Thank you again for your answers, which enlighten us.
I would like to ask you a follow-up question. Ten percent of Canadians — that’s several million Canadians — do not file their tax returns. That’s huge. A government must be inclusive and supportive, especially because I presume that the vast majority of this 10% of Canadians includes economically fragile people who, in many cases, simply don’t know how to fill out the forms. Would it not be appropriate to specify in your recommendations that the government should initiate a vast operation with various departments or agencies to be able to identify them, try and support them and make them understand how important it is for them to fill out these tax forms?
Ms. Hogan: In our audit on how to connect with hard-to-reach populations, we mentioned that failing to file a tax return is a barrier for many people, because that is how they can access needed benefits.
It’s a policy issue; that’s the approach they need to look at. We also noticed many other factors, such as official languages. Many newcomers to Canada have difficulty understanding English or French and they need help filling out income tax forms.
You are right, it is a matter of supporting them. A number of third parties support the government in trying to reach these individuals. One of the barriers we’ve noticed, however, because it’s very difficult, is that you can get a social insurance number with one department, and that’s it. You have to contact another department to be able to file a tax return. An important point to consider is real end-to-end service for citizens. That’s why we recommended thinking a little more creatively about how to connect with people who are difficult to reach.
Senator Forest: Perhaps we should have a one-stop shop, because we were indeed creative during the pandemic. We are capable of doing so.
I will now move from the most marginalized to the most privileged, to talk about the luxury tax. When the government introduced this tax, we strongly challenged the government on whether it had assessed the costs and benefits. For instance, had it measured the impact of a luxury tax on workers? We have to ask ourselves if orders will be cancelled, if trade and exports will be impacted.
We’ve never been able to get an answer to our questions. I find it totally irresponsible to introduce this type of policy without having measured its impact. It seems to be all about political gain, rather than about doing something to improve government revenue. We couldn’t measure whether revenue would exceed our losses in terms of jobs and orders.
Ms. Hogan: We are not looking at the newly issued and implemented tax measures. I therefore don’t really have any comments on that. However, I agree with you that we need to be in a position to know the purpose of new legislation or a new tax measure, to be able to measure its rationale and impact. These are fundamental aspects when making tax changes.
Philippe Le Goff, Principal, Office of the Auditor General of Canada: What we can do is look at the rigour of the Department of Finance’s analysis and determine whether the benefits and costs you mentioned for the Canadian economy are properly included. Those are things we do regularly.
Senator Forest: You will have a hard time finding rigour in this case.
I have one last question. My colleague talked about computer security with you. The federal government has infrastructure and a number of properties. For example, I’m thinking of wharves where there is talk of erosion and environmental impact. Some of this infrastructure is simply abandoned and not updated. This has major impacts in many communities. I could name several, be they on the North Shore, in Eastern Canada or the West.
Will you look at Canada’s housing stock at some point? The government has a responsibility. I think that municipalities with limited means need to keep their infrastructure up to date. It seems that the federal government is allowing that infrastructure to deteriorate, particularly wharves or fishing harbours. Different types of infrastructure are affected in other cases.
Is there any government responsibility for it? They don’t even fully pay their taxes. They should at least keep their infrastructure up to par to keep them safe and prevent problems like erosion.
Ms. Hogan: I think we completed an audit in 2018.
Martin Dompierre, Assistant Auditor General, Office of the Auditor General of Canada: We did an audit on the conservation of federal heritage assets. We looked at the ways in which Canadian Heritage ensures that existing heritage is maintained and that planned investments are made.
We looked at some, but not necessarily all, of the infrastructure that was structurally obsolete or at risk.
Senator Forest: This is the Department of Fisheries and Oceans, particularly for fishing harbours and small wharves. This is a major problem in Canada. Less so in Winnipeg, but much more so for the coasts.
Mr. Dompierre: I can’t tell you if that was something that was in the report, but the 2018 report would give you that information.
Senator Audette: Thank you very much. This is my first experience. I’m celebrating my first year as a senator; I’m now on this side, but it was easier for me to be a witness on your side.
I notice that you bring up some great points about your arrival, your leadership and your team, as well as the place of women and men and the impact of all of that for government or democracy.
Have you thought about, or do you have any answers about, the following? We senators may not have the power to compel, but we may have another power; others will have other powers so that our children, who will one day take our place, can ensure that the government works and coordinates strategies and ways of doing things in a concerted manner so that everyone talks to each other.
Can a law bring this about? Could giving more powers to you and your colleagues, who are doing the same accountability exercise, compel the federal government to accept the responsibility of working collectively?
Ms. Hogan: I don’t think I’ve really looked at how to deal with this. I know that the Commissioner of the Environment and Sustainable Development mentioned it and that one of the lessons learned was about the intergenerational aspect of decisions and actions.
I think this is often forgotten and everyone has a responsibility to take this into account when making decisions.
Also, the political aspect means that often it is about short-term decisions or horizons because of the election cycle. It’s up to the government to think in the long term and not to forget that, but it’s very difficult, because there is sometimes a gap between the demands and the needs. It’s really up to the public service as well as the committees to make sure that we don’t forget to think long-term, because it’s the short-term decisions that don’t take into account the ripple effect of the decisions.
[English]
Senator Smith: I wanted to follow up on what Senator Pate asked earlier. When we were up North this past four or five days, we consistently heard from people in Nunavut that policies affecting the Inuit must be made in the North, by the North and for the North.
Listening to how Indigenous folks have been handled — I won’t say treated — it is clear that throwing money alone at problems facing the Indigenous communities is not sufficient. I’m trying to understand. How do we fix the issue to ensure this holistic approach? Is it an issue of metrics that departments use to measure success? I mean, how can we work in closer coordination with the various constituents? One of the constituents, of course, is our Indigenous folks whom we made commitments to in terms of verbal commitments. Will we be able to honour these commitments? Will we be able to get proof that the results are more than just results, but that they are tangible and lead to continuing economic and social advancement?
Ms. Hogan: This is one of the fundamental underlying aspects of reconciliation. There are so many actions out of the TRC, the Truth and Reconciliation Commission, that are just being talked about again recently, instead of being acted on when the report was originally issued.
I can give you an example. In our Access to Safe Drinking Water in First Nations Communities report, a policy was put in place, but many First Nation communities felt that they didn’t have meaningful engagement in setting out that policy. Now there is the need to go back and revisit it. As you say, First Nations have the right to govern themselves, and they should have a meaningful impact on setting those rules and regulations. They should have access to the same levels of enforcement and safety that any community in our country has, but that needs to be done in collaboration with them. I think it is about really sitting back and actually taking that approach, instead of just putting a policy out and hoping that it will be complied with.
Senator Smith: How do we get the relationship advanced to the point where government departments are doing more than just talking down and making announcements with Indigenous folks and communities? How do we advance it to that next step in terms of — I’m not talking about true reconciliation but maybe before that — creating the relationship that advances to true reconciliation? Yes, the Minister of Northern Affairs made an announcement yesterday. What was really interesting — because I always listen to people; I’m not a technician, but I think I understand people — he was very pleased. “I’m pleased to make an announcement that the government will invest $122 million over the next eight years . . . .”
My thought process was this: Are we talking to people at the same, equal level, or are we talking down to people? “Because we are the big government and we’re the ones who make the decisions, and even though you have rights . . . .” You know I’m being facetious, but I think there is a point there. How do we create that relationship? How do you see that your department can intervene on some of these key issues and supports?
Mr. Hayes: Over decades of audits, we’ve seen there is a need to build trust with First Nations communities and Indigenous organizations. I would say that something we would strongly encourage and we will look for in our audits is early engagement and meaningful consultation. Without building trust, there is no way that we will get to that collaborative engagement and relationship.
[Translation]
Senator Dagenais: I would like to follow up on the testimony of representatives from Indigenous Services Canada who appeared before the committee in June. They talked about the billions of dollars of funding that goes to Indigenous communities, and that’s absolutely correct. I was somewhat surprised when I found out that a trustee was going to administer this money, because I thought it was the department that had the responsibility. I asked the departmental representative if he could tell us the name of the trustee who will manage the funds. He could not give me an answer, as negotiations were ongoing. I asked him to come back to us with an answer as soon as the negotiations were over. It seems that the negotiations are still ongoing, as I have not yet received a name.
That said, do you follow up on contracts awarded to trustees administering public funds and the costs associated with them? The trustee has to invoice the department for the associated costs. So it’s always very surprising when it’s not the department that’s administering the money, but a trustee whose name we aren’t given because there are negotiations going on. We are talking about public funds. When you do your audits, do you have the names of these trustees and do you know the costs associated with them?
Ms. Hogan: When we audit a funding program, we have access to that information. My office has really broad access to privileged information. We can’t always mention it in our reports, but we can see this information. If we audit such an agreement, we could find out the costs paid to the trustee and make sure there is accountability to report to the government.
Senator Dagenais: If you know the name, I’d like you to give it to me, because I don’t think the department wants to give it to me. Thank you very much, madam.
[English]
Senator Pate: In your Report 9—Investing in Canada Plan, you talked about the lack of reporting on some of the legacy funding, and I note that many of the TRC Calls to Action, as well as the Calls for Justice of the National Inquiry into Missing and Murdered Indigenous Women and Girls, involve that reporting and the requirement for the government to account for its movement.
I am wondering whether your GBA Plus analysis will include an assessment or a series of assessments along the lines of how Canada is doing with respect to Calls to Action and Calls for Justice, respectively.
Ms. Hogan: We just completed an audit on GBA Plus. It did not go that far. We were really taking the initial steps to see if the government had acted on prior recommendations. Sadly, we saw that many have still not yet been acted on. In any audit, we can look at the GBA Plus angle. We will look at assessments that the departments do, but what we found in our audit on the topic was that everyone is in a different place. Some individuals are just doing the bare minimum and then don’t gather any data, don’t do anything, so it is very difficult for us to even come in and try to make the kind of assessment that you are talking about if there is no information available.
That’s part of our goal — to really push departments — as we ask in every single audit on every single topic about GBA Plus and the angle and the need to focus in on data, so that we will hopefully drive a change. Unfortunately, I can only work with the information that the government has on hand, so we do need to help push them along, and they need to join me in this journey of making it a priority.
Senator Pate: Along those lines, is your department looking at doing an analysis and an audit of the implementation of the TRC Calls to Action and the Calls for Justice from the Inquiry into Missing and Murdered Indigenous Women and Girls?
Ms. Hogan: We haven’t put one on our books to look at the whole Calls to Action. We will hopefully be targeting aspects of it or individual Calls to Action through some of our work.
Senator Pate: I just make that note because all of the mandate letters for all of the ministers include reconciliation. All of them also include reference to the calls.
I want to come back to the issue that Senator Marshall raised around the unaccounted-for funds or the legacy programs that represent about half of the $188 billion. By our count, that’s about $92.2 billion that has failed to be integrated into the three main objectives of creating jobs, combatting climate change and promoting social inclusion and accessibility for people with disabilities. For the sake of government transparency, I am curious as to how you will be able to account for that significant expenditure. How will you seek to have the government account for this significant expenditure? What do you recommend we look at in order to ensure that we understand where almost half of this budgeted commitment flows and whether it complies with the objectives set out by the government?
Ms. Hogan: This is one of the challenges that we identified in that audit in that the Investing in Canada Plan included very specific announcements in the 2016 budget and the 2017 budget. Those were pretty clear and easy to link back to the Investing in Canada Plan. But then there was a large group of legacy programs that were included. As I mentioned earlier, when they were first designed, they were not thought of to be reported in through the Investing in Canada Plan. So none of that is being gathered or even reported back, which is why we made a recommendation that the government needs to think of a way to incorporate those legacy plans in order to be able to demonstrate achievement of outcomes.
We did see that they created a list; they expanded the list and included those projects, so that’s a step in the right direction, but that’s about outputs, right, being able to measure how many programs are there. Now it’s about focusing on the actual intended outcomes that need to follow. It was a recommendation of ours, so I hope they will act on that.
Senator Omidvar: I neglected to mention I don’t normally occupy a chair on this committee. I’m subbing for my colleague Senator Pat Duncan, who is much more knowledgeable about these issues.
But even as I sit here, I notice the intersectionality between the works of our committee. We talk about intersectionality in data, but I think actually committees need to at some point meet together and figure out the intersectionality. I’ll continue to focus on GBA Plus.
This is a question to Mr. Hayes. You mentioned that one of your next audits will be on public transportation in the ICP. Can I assume that GBA Plus will be embedded in this audit? Public transportation either enables people to live a full life or prevents them from doing so. I would like to focus on the prevention.
Mr. Hayes: Absolutely, GBA Plus will be part of that audit, 100%.
Senator Omidvar: Again, since I’m not a member of this committee, I don’t have the institutional knowledge. I want to shift to the Canada Infrastructure Bank, which is also part of this infrastructure ecosystem that we have. Has the Office of the Auditor General done an audit on the Canada Infrastructure Bank? If not, are you planning to do one?
Ms. Hogan: Canada Infrastructure Bank is a Crown corporation. We were appointed the financial auditors and we have been doing the financial audits since the creation of the infrastructure bank.
I believe the last year audited, there were not many initiatives yet funded through the infrastructure bank, so from a financial aspect, there isn’t much going on. Because it is a parent Crown corporation, it will be subject to a special examination, which is the equivalent of a performance audit on the tools, the practices and processes around safeguarding the assets and delivering on the mandate once in 10 years. It’s really too early, I think, to go in and do that right now, when there really isn’t a lot of activity. But at some point we will get around to doing the special exam before that 10-year horizon.
Senator Omidvar: Have you ever done an audit on the governance of Crown corporations? Who are the governors; whether they have competencies; whether they represent the people of Canada, the regions, minorities, et cetera?
Ms. Hogan: I’m going to turn to Mr. Dompierre to add to this. But in every financial audit, we always look at the governance and the composition of the board of directors and so on. I’ll let Martin talk more about that.
Mr. Dompierre: I don’t have much to add to what Ms. Hogan just said in terms of that is one of the focal points of the audit we perform. We look at the governance, the composition of the board and how they are appointed, the cycles in terms of when they are being appointed and so on. This is definitely something we look at in every special examination report that we do.
Senator Omidvar: It’s siloed to every Crown corporation as opposed to a global audit on governance, which is what I’m trying to recommend to you. Thank you.
Ms. Hogan: If I may, Mr. Chair, it is siloed because we go into every Crown on an annual basis. We do have a summary of some of our special examinations coming out. They will summarize common themes over the last — I think there are a dozen or so special exams in there — and governance is coming through as an issue of concern, so I think that will be coming out in November.
Mr. Hayes: I don’t remember when the next one is, but the last one raised issues around risk management, risk identification, appointment of members, GIC appointments and general corporate governance issues that we found across them.
The Chair: Senator Omidvar, you are well versed for the Finance Committee.
Senator Loffreda: My question goes back to your top priority, which, you mentioned, was equity, diversity and inclusion and hard-to-reach Canadians. I’m surprised to learn that we have close to 10% of Canadians who don’t file a tax return and are difficult to reach. I’m surprised because during my recent briefing session with government officials, being the Senate sponsor of Bill C-30, we mentioned more like 5% to 6%. I thought that was a large number. I guess this accentuates the need to track this number, to measure it, if it is possible, especially with our strong immigration strategy.
Testing your memory once again, how long has this been going on? We didn’t cover that aspect. What is the trend? Is it a growing number? Is it a decreasing number?
In my corporate life, I always liked to compare departments and best practices. I would tell my team we can have the best strategy in the world; another bank will copy us within 15 minutes, 15 days or 15 months, its execution. So why haven’t we looked at other nations and their best practices? What are they doing? Is this a common problem in Canada because we’re such a large country, or do other countries have a similar problem? Is it possible to have a robust plan to reach all Canadians, or are we just dreaming in colours at this point, and it will always be around 10%, and there is nothing we can do about it?
I did listen carefully to what you said. It seems to me it’s a difficult problem to correct.
Ms. Hogan: I will ask Mr. Le Goff to join in on the response. The one thing I would say is it’s the Canada Revenue Agency’s estimate that 10% of Canadians do not file tax returns, not our estimate.
Senator Loffreda: So then 37% of Canadians don’t pay tax, and 10% don’t file a tax return; we’re close to half of the Canadian population here.
Ms. Hogan: I’m not sure I know all those statistics but I’ll believe you, honourable senator.
Senator Loffreda: You can check it. That’s the situation.
Ms. Hogan: I think by definition, hard-to-reach people are hard to reach, so it’s about really figuring out who they are. It is likely more than just the 10% who do not file tax returns. I don’t know, Philippe, if you would like to add to some of the senator’s comments.
Mr. Le Goff: There are various reasons people don’t file a return. In some cases it’s an education problem. In other cases, they are tax cheaters. It has been like this for many years.
Senator Loffreda: What’s the trend? Is that increasing? Is that a growing problem? You mentioned tax cheaters, right? That’s a huge issue that we can’t get into in a few minutes here. We should look into that more carefully.
What kind of plan could we put forward to track, especially with the immigration strategy we have going forward? We will welcome 1.3 million Canadians in the next three years. You mentioned communication is an issue. Is it something we can correct or something that is impossible to correct? It’s 10% of 38 million or 40 million people eventually, that is 4 million Canadians. It’s huge.
Ms. Hogan: There are many potential solutions. You might have some, Philippe. In one of our reports, the wage subsidy report, we did mention a personal identifier for individuals, over and above your social insurance number. So something that is a way for you to interact with your government that would allow for better sharing across departments, and it would then be seen as a mechanism to help with individuals who aren’t filing required tax forms or allowing individuals to access all the benefits that they are eligible for. So that unique electronic identifier by Canadians might be a solution to help with many of the issues raised.
Senator Loffreda: I was told by government officials during the briefing that it is close to 37% of Canadians who don’t pay tax — file a tax return but don’t pay any tax. You add on the 10%, and it’s huge. I think it’s an issue we have to resolve quickly, especially if within the 10%, there are Canadians who must pay tax. Good luck in doing that. Let us know if you need our help.
Senator Bovey: I enjoy and appreciate everything I’ve heard this morning. This is a very interesting committee. I’m glad I’ve had the opportunity to be with you today.
You talked about long-term impacts of programs, not just the short-term impacts. You said you were looking for things, not just the dollar returns or returns on dollars spent but wider than that.
In my prior life, I used to receive program grants. We replied to every project. We replied with all the numbers: the dollars, the number of people it reached, the number of programs delivered. We were very good at numbers. We were never asked about societal impacts.
To me, as I look back over the decades involved, the societal impacts were far greater than the numbers we had to report on, so I think that’s a challenge going forward. How are we going to get those longer views and real impacts of programs?
So that leads me to the special examinations. I did have the privilege of serving on three of them as an expert examiner some years ago. I found those exercises — the risk management and the definition of what the risks were if the organization didn’t reach their goals — I found those really worthwhile. I think at that point — I date myself now — the Crown corporations had those examinations every 5 years, and I now know it’s 10.
Going ahead, as you develop trust and early engagement, to use your words, how do you get those long-term societal impacts above and beyond the numbers, which I know are important? And dealing with risks — that comes back to government — how are you going to look at pulling that together in the future audits? I happen to think that’s really important.
Ms. Hogan: The challenge you raise is one we actually identified in the outreach to vulnerable people audit, where there was a good tracking of how many information sessions were held or how many Indigenous communities were visited. That’s tracking a metric, an output, absolutely. The government was then unable to demonstrate to us if those initiatives actually increased the uptake in the benefits for those that the benefits were most likely intended to reach.
So it is a challenge. Don’t get me wrong, I love numbers and I don’t want them to stop tracking some of the metrics, but it is about taking it to the next step, which is to figure out how to measure whether or not that outcome is actually happening.
Senator Bovey: The savings as a result of those metrics, if I can cite one example with one young woman who came up to me and was talking about a project we had run. The person that project was about had committed suicide. This young woman came to me and said she went to that exhibition every day and was upset to find out the artist had committed suicide. Then she showed me her wrists. In junior high, she had tried to commit suicide a number of times, but it was that particular project that made her realize she didn’t want to commit suicide. When I met her those years later, she had a master’s degree in social work, and the clients she was serving were teenagers who had attempted or were thinking of suicide.
When you think of the dollars — if you want to go back to numbers — saved by that one project, I couldn’t report on that because I had not had that impact; it was down the line. I don’t know how we capture that, but I think, as a society, we must. Thank you.
The Chair: Thank you, Senator Bovey. With the indulgence of all the senators, I have a question.
Your office — not you, Ms. Hogan, but the previous Auditor General — once said, when we were talking about Phoenix, that it was:
An incomprehensible failure.
That is how we described the Phoenix project in our audit report on building and implementing the Phoenix pay system.
Signed: the late Mr. Michael Ferguson.
The committee has, in the past, visited the pay system across Canada, and we tabled a report in July 2018. Just lately, as a matter of fact, when I did a round table in northwestern New Brunswick about a month and a half ago, the public servants who participated again asked me a question about Phoenix.
Now that we again have approximately 60,000 of our employees faced with Phoenix troubles, to put it succinctly, do you intend to revisit and provide us a report on what is happening with Phoenix? It falls in the same spirit of what Senator Loffreda raised when talking about the IT system and the modernization of it. What would be your comments on that for the committee, Ms. Hogan?
Ms. Hogan: We spend time every year looking at Phoenix and the impacts it has on payroll expenditures in the Government of Canada.
As I mentioned in my opening remarks, there is a financial commentary that my office issues when the public accounts are tabled. The 2022 version will be coming out this fall, when the public accounts are tabled, but the 2021 version is definitely out there.
In there, we follow up on how many pay action requests are outstanding, how many public servants are impacted and how many public servants still have errors in their pay at year-end. It was staying rather stable for a while. We are looking at that.
We are also turning our attention to the next generation, so what will be replacing the Phoenix pay system across the government. We are focusing a lot on the government making sure the data in the payroll system is accurate because any system that you use, if you have data that has errors in it, you will have errors in pay. The system isn’t going to solve the problem. We need to fix the data in the system.
The report you refer to talks about two reasons Phoenix happened. I’m not sure those two reasons have been addressed. I think one of the main ones would be the decision about prioritizing costs and timelines over thinking about the broader impact. There was a reduction in payroll advisers that led to so many issues in pay. A system can’t fix all of the issues that a payroll adviser is responsible for, but then also there is the culture of not speaking truth to power when something isn’t working so well. We do still see those concerns in other aspects, whether it be IT projects or other programs. I do still think that the commentary from Mr. Ferguson is quite relevant to any project or program we look at now.
The Chair: With respect to our public servants, who number about 300,000 people across Canada federally speaking, not counting provincial and territorial public employees, are you giving any thought to looking at how services were being provided across Canada prior to the pandemic? Today, we have experience with a lot more services that use hybrid systems and also at-home work. Do you intend to look into those matters to see what the benefits are, if any, compared to what was in place before COVID?
Ms. Hogan: I think it’s an issue that every organization, not just the federal public service, is grappling with. Someone recently described it to me as being in the phase of what we will call the “messy middle” as we transition from pre-COVID working to everyone staying home when they could, to isolate, to now. What will society look like as we emerge? What will the federal public service look like as we navigate through the messy middle to a new way of working?
I haven’t really turned my mind to what that will look like; if we should audit that. I think our organization is trying to figure it out, like every other organization. I hear the two sides to the coin in this situation. There are many individuals who flourished and worked very well from home for many reasons, such as a lack of commute or no longer being in a work environment where they felt they were receiving microaggressions, to many individuals who say working from home was really not good for them from a mental health perspective, from a social aspect. “My social environment was my workplace” for some individuals.
It is about finding that middle ground where everyone can flourish in the environment they are going to be in. I do think that the federal public service needs to land a little bit more on what that looks like before we can come in and help. I think it’s very unique to every organization based on the services that they provide to Canadians across the public service.
The Chair: There is no doubt that the document from the Clerk of the Privy Council and Secretary to the Cabinet entitled Twenty-Ninth Annual Report to the Prime Minister on the Public Service of Canada would certainly be of interest to your offices and your responsibilities.
Before we adjourn, Ms. Hogan, do you have any closing remarks?
Ms. Hogan: I would just like to thank all of the honourable senators for inviting us. It was a pleasure. The time flew by. I’m very happy to see your interest in our work. I encourage you to invite us back and to invite the Commissioner of the Environment and Sustainable Development back. Maybe focus on 1 report instead of 10 or 11, but the depth and breadth of what you would like to cover is entirely up to you. It is always our pleasure.
I think committee involvement and interest in our work add to that pressure of actually driving a meaningful change. So I thank you for the interest and I hope that you will invite us back.
The Chair: Thank you, Ms. Hogan and the staff, for what you have shared with us. It has been interesting, informative and enlightening.
Before we adjourn, I notice that Senator Dagenais had a question, and you agreed to send the response in writing. There was also the matter of Senator Loffreda, when he talked about IT, and Senator Forest, when he talked about the tax and whether there was a framework; the government had completed an analysis on the benefits and the challenges of it. Ms. Hogan, we would appreciate it if the written answer could be submitted to the clerk on Monday, October 17, before the end of the day. Do we agree on that?
Ms. Hogan: Yes.
The Chair: On this, thank you very much.
Honourable senators, we have completed our agenda, but before we adjourn the meeting, I have just been informed that leadership has made a decision, and we have just received the formal paperwork through the clerk and the committee that makes Senator Bovey a permanent member of the Finance Committee. Thank you very much and welcome to the team.
Senator Forest: A proud representative from the West, the first from the West. It is very important.
The Chair: We should also revisit having a senator from First Nations. Thank you.
(The committee adjourned.)