What we examined (see Focus of the audit)

Our audit objective was to determine whether Aboriginal Affairs and Northern Development Canada has managed the Nutrition North Canada program

• to meet its objective of making healthy foods more accessible and affordable to residents of isolated northern communities, and
• to obtain the information required to allow it to demonstrate that the full subsidy is being passed on to consumers.

What we found

Identifying eligibility

Overall, we found that although Aboriginal Affairs and Northern Development Canada has consulted with Health Canada to base food eligibility under the Nutrition North Canada (NNC) program on nutritional value, Aboriginal Affairs and Northern Development Canada has not identified eligible communities on the basis of need. This finding is important because it is essential that subsidized foods be healthy and that communities in need benefit from the subsidy.

• Aboriginal Affairs and Northern Development Canada consulted with Health Canada to base food eligibility on nutritional value (see paragraphs 6.13-6.16)

• The Department has not based community eligibility on need (see paragraphs 6.17-6.21)

  Recommendation. Aboriginal Affairs and Northern Development Canada should review its community eligibility criteria for the Nutrition North Canada program to base the criteria on need, and it should assess the eligibility of communities accordingly.

Passing on the subsidy to consumers

Overall, we found that Aboriginal Affairs and Northern Development Canada has not verified whether the northern retailers pass on the full subsidy to consumers. The Department has not required the information it needs to verify this in the contribution agreements it has signed with northern retailers. It also has not required that compliance reviews of northern retailers include analysis of profit margins in order to verify that the full subsidy is being passed on. This finding is important, because passing on the full subsidy to consumers is a program requirement, and is necessary to make nutritious food more accessible and affordable to Northerners.

• The Department has not verified whether northern retailers passed on the full subsidy to consumers (see paragraphs 6.23-6.37)

  Recommendation. Aboriginal Affairs and Northern Development Canada should review the obligations and requirements in contribution agreements under the Nutrition North Canada program to clarify that retailers must provide all the information on eligible items, including current profit margins and profit margins over time to determine whether the retailers are passing the full subsidy on to consumers.

  Recommendation. Aboriginal Affairs and Northern Development Canada should

  • clarify the requirements for conducting compliance reviews by specifying that the work to determine whether the full subsidy is being fully passed on to consumers must include an examination of current profit margins and profit margins over time;
  • assess the compliance reviews to determine that appropriate review work was completed and that the conclusions in the reports are clear and well supported; and
  • in cases where compliance reviews make recommendations to retailers, formally monitor the implementation of the recommendations.

Managing the Program

Overall, we found that Aboriginal Affairs and Northern Development Canada has not fully implemented a performance measurement strategy or followed its cost containment strategy to help manage the Nutrition North Canada (NNC) program. This finding is important because a performance measurement strategy provides the Department with the information it needs to manage the Program and monitor whether the Program’s objectives are being met. A cost containment strategy allows the Department to manage within its budget. Both strategies were specified in the Program design, and were required for program approval.

• The Department has not collected information needed to manage the Nutrition North Canada program or measure its success (see paragraphs 6.39-6.49)

  Recommendation. Aboriginal Affairs and Northern Development Canada should review and update its performance measurement strategy. The strategy should ensure that performance indicators allow the Department to manage the Nutrition North Canada program to meet its objective, collect data to report against the indicators, and clearly specify responsibilities for data analysis and reporting.

• The Department has not implemented the Program’s cost containment strategy (see paragraphs 6.50-6.55)

  Recommendation. Aboriginal Affairs and Northern Development Canada should consider all options in implementing its cost containment strategy.

Response

Aboriginal Affairs and Northern Development Canada agree with our recommendations, and has responded (see List of Recommendations).

Why we did this audit

Many communities across Canada’s three territories, as well as in the northern parts of several provinces, are accessible only by air for part or all of the year. The cost of living and of doing business in these isolated communities is higher than in more southern regions. Necessities such as perishable foods must be flown into these communities. Electricity, maintenance, and food storage costs are higher for stores and affect the prices of food on store shelves. The amount spent on food is considerably higher in Canada’s North. The higher prices make it more difficult for Northerners to afford a nutritious diet essential to good health.

In April 2011, Aboriginal Affairs and Northern Development Canada introduced the Nutrition North Canada (NNC) program. The objective of the Program is to make healthy foods more accessible and affordable to residents of isolated northern communities. The Program specifies that retailers are responsible for passing on the full subsidy to consumers by reducing their prices on eligible foods.

Details of the audit

Report of the	Auditor General of Canada
Type of product	Performance audit
Topics	Aboriginal Affairs Health Provinces and Territories
Audited entities	Aboriginal Affairs and Northern Development Canada
Completion date	19 August 2014
Tabling date	25 November 2014
Related audits	Chapter 11—Other Audit Observations: Indian and Northern Affairs Canada, 2002 December Report of the Auditor General of Canada

For more information

Ghislain Desjardins
Manager, Media Relations
Tel.: 613 952 0213, extension 6292
E-mail: infomedia@oag-bvg.gc.ca

Twitter: OAG_BVG