Assistant Auditor General’s Opening Statement—2018 Fall Reports Press Conference

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

Good morning. I am here to discuss the 7 performance audit reports of government programs or activities that we delivered to Parliament this morning. We also provided Parliament with copies of our reports on the audits of 3 Crown corporations that we’ve completed since the spring.

First, let’s look at our audit of the Canadian Armed Forces’ efforts to stop inappropriate sexual behavior in the military.

In August 2015, the Chief of the Defense Staff launched Operation HONOUR―a top-down, institution-wide military operation to eliminate this behaviour. He informed all members of the Canadian Armed Forces that he and senior leaders intended to change the culture in the Forces and stop inappropriate sexual behaviour.

We found that Operation HONOUR increased awareness of inappropriate sexual behaviour within the Forces. After its implementation, the number of reported complaints increased from about 40 in 2015 to about 300 in 2017. The Forces believed that the increase was a sign that members trusted that the organization would effectively respond to inappropriate sexual behavior.

However, we found that some members still did not feel safe and supported. For example, the duty to report all incidents of inappropriate sexual behaviour increased the number of cases reported by a third party, even if the victim was not ready to come forward at that time. Also, the Military Police had to conduct an initial investigation of all reported incidents, even if the victim would have preferred to resolve the issue informally. This discouraged some victims from coming forward.

According to information gathered by Statistics Canada in 2016, there were many unreported incidents of inappropriate sexual behavior in the Canadian Armed Forces. In mid-2018, the Forces acknowledged that inappropriate sexual behaviour remained a serious problem and that a significant focus on victim support and the use of external, independent advice were required.

Moving along now to another audit, which also focused on National Defence. It examined whether the Department managed risks to Canada’s fighter force so that it could meet Canada’s commitments to North American Aerospace Defense CommandNORAD and North Atlantic Treaty OrganizationNATO until a replacement fleet is operational.

In 2016, the Government of Canada directed National Defence to have enough fighter aircraft available every day to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. This meant that National Defence had to increase by 23% the number of fighter aircraft available for operations. This new requirement came at a time when the Canadian Air Force faced a growing shortage of trained and experienced pilots and technicians.

To meet the new requirement, the government focused its efforts on increasing the number of aircraft. It first planned to buy 18 new Super Hornets, even though National Defence’s analysis indicated that this would make the Air Force’s personnel shortage worse, and it would not help it meet the new requirement.

The government’s focus has remained on buying more aircraft. It is now planning to purchase used fighter jets from Australia as an interim solution to bridge the gap to 2032, which is the current target date for rolling out a replacement fleet. The Australian jets are about 30 years old and have the same operational limitations as Canada’s current fleet of CF-18s.

National Defence expects to spend almost $3 billion to extend the life of its current fleet and to buy, operate, and maintain the interim aircraft. However, without a plan to deal with its biggest obstacles―a shortage of experienced pilots and the CF-18’s declining combat capability―these spending decisions will not be enough to ensure that the Air Force will have available on a daily basis the number of aircraft needed to meet the highest NORAD alert level and Canada’s NATO commitment at the same time. Until National Defence knows how and when it will solve pilot shortages and get better combat capability, more aircraft won’t solve its problems.

Let’s turn now to the results of our audit of physical security at Canada’s missions abroad.

Overall, we found that Global Affairs Canada had not kept pace with evolving security threats at its missions abroad. The Department identified many significant security deficiencies in need of immediate attention in a large number of missions. The Department had known about several of them for years, yet it had not put in place all of the recommended measures to address them, such as improved video surveillance, alarms, and installing vehicle barriers at entrances.

We found that most of Global Affairs Canada’s capital projects to upgrade security were at least 3 years behind schedule, usually because of weaknesses in project management and oversight.

Because security assessments were missing or incomplete for some missions, Global Affairs Canada did not have the information it needed to prioritize investments on the basis of where they were most needed. Yet the Department is responsible for the safety of its staff working at missions abroad, and security upgrades to many missions are urgently needed.

The next audit I’m going to discuss also looked at physical assets that the government safeguards on behalf of Canadians—in this case, the country’s national historic sites and heritage buildings.

There are long-standing problems in the conservation of Canada’s federal heritage properties, and we saw few improvements since we last audited this area in 2003.

We found that Parks Canada, Fisheries and Oceans Canada, and National Defence either did not know how many heritage properties they had, or did not know what condition they were in. As a result, the information they provided to the public or to Parliament about these properties was either incorrect or incomplete.

We also found that conservation decisions were based on available resources and operational requirements, rather than heritage considerations. The money needed to maintain federal heritage properties was not always available.

Needs have outpaced efforts when it comes to the conservation of federal heritage properties, yet their number continues to grow. Because there has been no additional funding to conserve these properties, there is a risk that more may fall into disrepair and eventually be erased from the country’s history.

In another audit, we examined how Correctional Service Canada supervised offenders released into the community. The number of offenders released into community supervision increased by nearly 20% between 2013 and 2018, and the Correctional Service anticipates that this number will keep growing.

The Correctional Service has largely reached the limit of offenders it can house in community-based residential facilities. As a result, offenders ready for release in 2018 had to wait twice as long for a space in the community, compared to 4 years before. Despite the growing backlog, and despite research that shows that a gradual supervised release gives offenders a better chance of returning to society as law-abiding citizens, Correctional Service Canada did not have a long-term plan to respond to its housing pressures.

The audit also found that Correctional Service Canada did not properly support and supervise offenders once they were released into the community. For 19 of 50 offenders sampled, we found that parole officers did not meet with offenders as often as they should have. We also found that parole officers did not always receive the information they needed to effectively support offenders in the community, including health care information to prepare release plans.

In our view, Correctional Service Canada needs to do more to supervise and support offenders released under community supervision. Correctional Service Canada must also plan to ensure that it has the types of community housing offenders need, where they need it, and when they need it.

I want to turn now to our examination of the government’s efforts to ensure that all Canadians have access to reliable and high-quality Internet services. Many examinations of the state of broadband Internet in Canada have recommended that the federal government create a national broadband strategy, but the government only agreed to take that step a few weeks ago in late October, after we had concluded our audit.

In the absence of sufficient funding, Innovation, Science and Economic Development Canada has been reluctant to put in place a strategy to meet the connectivity needs of Canadians in rural and remote areas. This means that almost 3.7 million Canadians have less access to important online services, such as education, banking, and health care, and they don’t know when they can expect the situation to improve.

In 2016, the Department launched a 5 year, $500 million funding program that focused on bringing high-speed Internet to 300 rural and remote Canadian communities. However, as a result of a number of weaknesses in the design of the program, it did not ensure maximum broadband expansion for the public money spent.

The difficulty of improving Internet access for the 3.7 million Canadians in rural and remote areas has been further compounded by the way Innovation, Science and Economic Development Canada has managed the radio frequency spectrum. We found that small Internet service providers struggle to access the high-quality spectrum to support broadband deployment in rural and remote areas. For example, the Department auctioned spectrum licences for geographic areas that are too large for smaller service providers to bid on, and the secondary market for unused spectrum did not function well, partly because there is little incentive for license holders to make available for subordinate licensing the spectrum they are not using in rural and remote areas.

And that brings me to the last of the performance audits in this fall release. This audit focused on whether the Canada Revenue Agency consistently applied the Income Tax Act during its compliance activities.

We found that the Agency inconsistently applied tax rules when it audited or reviewed taxpayers’ files, even though the Taxpayer Bill of Rights requires the Agency to apply the rules in the same way to taxpayers in similar situations.

There were a number of reasons for these inconsistencies. They included the judgement of Agency staff conducting compliance activities; the region where the file was reassessed; and the type of taxpayer—for example, a small business or a large corporation. Taxpayers in one region waited an average of 7 months longer than those in another region for the Agency to complete an audit. In one region, it took the Agency more than 40 weeks to process taxpayers’ request for adjustments, while in another region, it took 12 weeks.

When it came to the financial impact of the Revenue Agency’s compliance activities, we found that Canada Revenue AgencyCRA did not know the full results of the work it undertakes to ensure that all taxpayers pay their fair share of taxes. The Agency’s calculation of the additional revenues resulting from its compliance activities, beyond the amount it initially assessed, was incomplete. The Agency’s number did not reflect the portion of taxes written off as unrecoverable from taxpayers. This means that the amount the Agency reported to Parliament as additional revenues resulting from the extra funding it received for compliance activities was an estimate, and the impact on the government’s fiscal results was significantly less than the Agency’s estimate.

The reports we released this morning also included copies of the audit work we’ve completed in Crown corporations since the spring. These reports have already been made available to the public by the Crown Corporations who received them.

We’ve audited the Canada Mortgage and Housing Corporation, the Canada Council for the Arts, and the Canada Development Investment Corporation. We found a significant deficiency related to Board appointments in both the Canada Mortgage and Housing Corporation and the Canada Development Investment Corporation.

We are now ready to answer your questions.