Auditor General’s Opening Statement—2018 Spring Reports Press Conference

2018 Spring Reports of the Auditor General of Canada to the Parliament of Canada Auditor General’s Opening Statement

Good morning. I am here to introduce our recent audit reports, which were tabled in the House of Commons this morning.

They include 7 performance audits of government programs or activities and 4 special examination reports of Crown corporations.

We also provided Parliament with a report that summarizes some common themes from the 13 Crown Corporation special examinations we have completed since March 2016.

Before I summarize each audit, I want to stress that I believe that right now is a critical moment when the federal government needs to reflect on what I call “incomprehensible failures”. It needs to reflect on how much government culture stands in the way of achieving truly successful results for people.

In our audit on building and implementing the Phoenix pay system, we concluded that that project was an incomprehensible failure of project management and project oversight.

We also presented 2 audits that examined programs for Indigenous people. When I put the findings of these 2 audits together with those of past audits, I have to also characterize as incomprehensible the failure of federal government programs to help improve the situation of Indigenous people in Canada.

I will now describe what we found in each of our audits separately, but the federal government needs to look more deeply into the common themes of our audits to identify how its culture contributes to incomprehensible failures.

Let’s start with the 2 audits that I mentioned, that deal with programs for Indigenous people.

The first assessed Indigenous Services Canada’s progress and reporting on closing socio-economic gaps between on-reserve First Nations people and other Canadians.

For years, governments have committed to closing these gaps. Nevertheless, Indigenous Services Canada did not have a clear picture of the size of the gaps, and it did not know whether progress was being made to close them.

We looked specifically at education, and we calculated that the gap between on-reserve First Nations people with at least a high school diploma and other Canadians widened between 2001 and 2016. We also found that the Department’s public reporting of results was inaccurate. For instance, it overstated First Nations high school graduation rates by up to 29%.

Indigenous Services Canada also made poor use of the education data it collected. For example, the Department spent $42 million over 4 years to prepare First Nations students to enter post-secondary education programs. However, we found that only 8% of those enrolled actually completed this preparatory program. Despite these poor results, the Department did not work with First Nations or education institutions to improve the success rate.

The second of our audits on Indigenous programs looked at Employment and Social Development Canada’s efforts to help Indigenous people build the skills they need to find jobs and stay employed.

Despite spending over $300 million a year, we found that Employment and Social Development Canada did not know to what extent its Aboriginal Skills and Employment Training Strategy and its Skills and Partnership Fund helped Indigenous people find and keep jobs. It did not know which services achieved the best results, or how it could adjust them to better serve the needs of Indigenous clients. For example, while 16% of Indigenous clients received 5 or more services, the Department could not tell whether these clients made progress in finding and maintaining employment.

Our next audit examined how Global Affairs Canada responded to requests for consular assistance from Canadians travelling or living abroad.

We found that Global Affairs Canada was able to quickly deploy staff to help Canadians during a crisis in a foreign country.

However, we found that the Department took too long to assess signs of mistreatment or torture of Canadians detained abroad.

In 2004, Justice Dennis O’Connor said that Global Affairs Canada needed to train its staff to identify signs of torture and mistreatment, and needed to quickly inform the Minister of those cases.

More than a decade later, we found that the Department’s approach to these cases was still not sufficient. It only gave consular staff general training on how to conduct prison visits and assess whether Canadians had been tortured or mistreated. We found that in one case, it took 7 months before the Department informed the Minister.

These gaps are critical for Canadians in distress. Global Affairs Canada must ensure its consular officers are properly prepared and supported to help Canadians arrested or detained abroad.

Our next performance audit examined whether the Canadian Armed Forces efficiently administered the military justice system. We concluded that this system was not efficient.

We found that the Canadian Armed Forces often took too long to resolve military justice cases, whether they were for minor discipline offences that led to summary trials, or for allegations that were tried before a court martial.

The Canadian Armed Forces had to drop 10 court martial cases because they failed to move them along as quickly as they should have. Delays run counter to the principle that an accused has the right to a speedy trial, and they also leave victims and their families waiting for answers.

The Canadian Armed Forces has known about these problems for at least a decade, but has failed to correct them.

Our next audit looked at how some federal organizations disposed of their surplus goods and equipment.

We found that in the year ended March 31st 2017, government organizations sold assets for $50 million. However, the estimated value of keeping and reusing those assets was $82 million.

In our view, the existing system encourages federal organizations to sell their surplus assets and collect the proceeds from the sales instead of reusing, refurbishing, or donating them.

The Canada Revenue Agency implemented a system to reuse its own assets. It saved $4.5 million over 3 years because of that practice. This shows that the government can save money through the prudent reuse of its assets.

Let’s turn now to our audit of the government’s project to replace the Champlain Bridge, in Montreal.

We found that the decision to replace the Champlain Bridge should have been made years earlier. Delays in making this decision cost taxpayers over half a billion dollars.

We found that Infrastructure Canada’s analysis of a public-private partnership approach to the project was done after the government had already announced that it would use that approach. We also found that the Department’s analysis of alternative procurement approaches was incomplete. A thorough analysis would have found that there was a high probability that a public-private partnership would be more expensive than a traditional procurement approach.

We also found that Infrastructure Canada requested changes to the project after construction began, which introduced major risks to an already complex project.

In our opinion, the new bridge will be more expensive than it would have been if the replacement decision had been made earlier, it will cost more than originally planned, and it’s uncertain whether it will be completed by the December 2018 deadline.

In our last performance audit, we continued our examination of the government’s Phoenix pay system. This time, we looked at whether the decision to implement the new pay system was reasonable.

We concluded that the Phoenix project was an incomprehensible failure of project management and project oversight, which led to the decision to implement a system which was not ready. The decision to launch Phoenix was wrong.

In order to meet budgets and timelines, Public Services and Procurement Canada decided to remove critical pay functions, curtail system tests, and forego a pilot implementation of the system.

Phoenix executives ignored obvious signs that the Miramichi pay centre was not ready to handle the volume of pay transactions; that departments and agencies were not ready to migrate to the new system; and that Phoenix itself was not ready to correctly pay federal government employees. When the Phoenix executives briefed the Deputy Minister of Public Services and Procurement Canada that Phoenix would launch, they did not mention significant problems that they knew about.

Finally, the decision to launch Phoenix was not documented.

In our view, based on the information available at the time, the decision to launch Phoenix was not reasonable.

Phoenix does not do what it was supposed to, it has cost hundreds of millions of dollars more than planned, and it has affected tens of thousands of federal government employees and their families.

Let’s turn now to the results of our audit work in Crown corporations. Since the fall, we completed audits of the Canadian Museum of Human Rights, the Great Lakes Pilotage Authority, Ridley Terminals incorporatedInc., and Export Development Canada. Each of these audit reports has already been made available to the public by the Crown Corporations, as they are required to do.

We found significant deficiencies in all of these corporations. In the case of Ridley Terminals Inc., the issues we noted were so widespread that it meant that the Corporation operated outside the prudent practices expected of a Crown Corporation. These issues were further compounded by Transport Canada’s ineffective oversight of the Corporation.

Our Commentary on the 2016–2018 Performance Audits of Crown Corporations explores important problems we found in the 4 audits I just mentioned and in 9 others that we’ve completed since 2016. These problems cover 5 broad areas. For example, we’re very concerned that 8 Crown corporations had a significant number of board members whose term had expired.

I also want to mention that you can find on our website a commentary and video on our 2016–2017 financial audits of government organizations. That commentary is intended to help Canadians better understand government financial information.

Before I close, I want to once again stress the need for the government and the public service to look at these audits differently, not just as a list of issues we found in different programs, but as symptoms of a much deeper culture issue.

Departments can implement our recommendations and deal with the symptoms we’ve raised, and that is important.

But the real question for the government to think about is why do we keep finding and reporting serious problems, and why do incomprehensible failures still happen?

I am now ready to answer your questions.