Speaking Notes for an Address by Sheila Fraser, FCA, Auditor General of Canada to the Canadian Club of Ottawa—Serving Parliament through a Decade of Change—Wednesday, 25 May 2011, Ottawa, ON

Speaking Notes for an Address by Sheila Fraser, FCA, Auditor General of Canada to the Canadian Club of Ottawa—Serving Parliament through a Decade of Change—Wednesday, 25 May 2011, Ottawa, ON


Good afternoon, everyone.

As you know, my mandate as Auditor General of Canada will end in a few days.

In this role, I’ve had the good fortune to meet Canadians in practically every corner of the country and from many walks of life. I’ve also had the pleasure of working in an Office full of highly qualified and competent employees.

Today, I’d like to reflect on my 10 years in the Office and some of the things I’ve learned.

I’ve come to appreciate how large and very complex the federal government really is and how fortunate we are with the quality of our public service.  Government does many things well, from delivering our mail, to issuing pension cheques and processing tax returns. I’m pleased to say that we are well served by our government and fortunate to have many dedicated public servants.

I know that the Office of the Auditor General is often associated with the more negative findings that you read about in the news. Yes, our audits are at times critical, but the government does respond to our recommendations. Our audits do lead to improvements and we like to report instances of good management.

Here are 3 examples, but there are many others:

I would also like to highlight one area where I feel there has been much progress over the last 10 years—that is financial management in government.

First, I’m glad to see that the government has strengthened its capacity in both financial management and internal audit.

Departments have made efforts to recruit and train financial officers and managers with the required qualifications and experience.

Internal audit has also been strengthened to make it more effective in order to provide senior management with assurance that the organization’s financial, administrative, and operational controls and management practices are effective, and suggest improvements. 

In addition, Deputy Heads of departments are devoting increasing attention to financial management. This may not have made the front page, but it represents an important step toward improved fiscal governance. In their new role as Accounting Officers of their departments, Deputies are clearly responsible for overall management, including finances.

Second, the largest departments in the government have created departmental audit committees that report directly to Deputy Heads. These committees are made up of distinguished people from outside the federal public service. They have an independent perspective, and their opinion carries weight with senior management.

I’m pleased to note these committees have attracted Canadians with impressive credentials, and that Deputy Heads are receiving valuable and objective advice that’s helping them manage their departments more effectively.

And finally, for each of my 10 years as Auditor General, I have provided a clean opinion on the government’s summary financial statements. “A clean opinion” means that we reported, without qualification, that the financial statements depict Canada’s financial position in a fair way. Few countries achieve this seal of approval, which makes Canada a world leader in financial reporting. I congratulate the government on this remarkable accomplishment.

Remaining Challenges

While there has been a lot of progress over the past 10 years on the government’s overall approach to financial management, some important challenges remain.

I would like to highlight two of them, beginning with the long-term fiscal pressures facing Canadians and ending with an issue that concerns me greatly: the living conditions on First Nations reserves.

Fiscal Pressures

There are three long-term fiscal pressures facing the government that stand out for me: an aging population, the impact of climate change, and aging infrastructure.

Aging population

We all know Canada’s population is getting older, but we are still grappling with its implications—fewer people in the labour force, less economic growth, and less tax revenue. At the same time, we can expect people will need more health care services, and will be drawing on public pensions. Obviously, balancing these fiscal pressures will be a major challenge.

Climate change

The cost of responding to climate change is another fiscal pressure. The most extreme impacts are readily apparent in Canada’s North. Melting permafrost is undermining roads, buildings, and pipelines. Warmer weather is also affecting wildlife migration patterns, which, in turn, affects biodiversity and traditional cultures. And climate change could also affect key economic sectors such as forestry, mining, fisheries, and agriculture.

Canada needs a national long-term climate change strategy—one that will allow us to mitigate and adapt to changes… to cover the costs… and to engage Canadians in adjusting both their attitudes and their activities.

Federal infrastructure

This brings me to the last fiscal pressure I’ll talk about today. While the melting permafrost is affecting all manner of infrastructure in the North, here, in southern Canada, federal infrastructure is suffering from another problem: age and obsolescence.

Over the past decade, many of our audits have shown that government will need to repair or replace a wide range of infrastructure—from mail handling facilities and equipment at Canada Post… to research facilities and equipment and the government’s IT systems… to bridges, ferries, and the Parliament buildings. The situation is likely similar at the other levels of government as well.

Dealing with these three pressures alone will be a challenge that raises certain questions:

How will governments choose priorities? Upon what financial information will they base their decisions? Will their choices be fiscally sound, or will they place an unfair burden on future generations?

To answer these questions, we need the right information. Unfortunately, unlike many other countries, and some Canadian provinces, Canada does not make available long-term fiscal projections. Without them, we cannot begin to understand the scale and complexity of our financial challenges and the implication of policy choices, especially those related to spending, taxation, or debt reduction.

Canadians need to know how these choices will affect the financial burden on present and future generations. And fiscal projections that only look a few years into the future won’t give them what they need.

So I encourage the government to make available long-term financial projections, and to involve Canadians in a national discussion about our fiscal priorities.

With our aging population, the far-reaching impact of climate change, and the need to replace much of our infrastructure, Canadians need to better understand the challenges ahead and how the public purse will be managed.

Conditions on First Nations reserves

As I mentioned earlier the other issue or challenge that concerns me greatly is the living conditions on First Nations reserves.

It’s no secret that their living conditions are worse than elsewhere in Canada. For example, only 41 percent of students on reserves graduate from high school, compared with 77 percent of students in the rest of the country. And more than half of the drinking water systems on reserves still pose a health threat.

What’s truly shocking, however, is the lack of improvement. Last year, Indian and Northern Affairs Canada reported that between 2001 and 2006 there was little or no progress in the well-being of First Nations communities. In a wealthy country like Canada, this gap is simply unacceptable.

Over the past 10 years, my Office has produced no fewer than 31 audit reports on aboriginal issues.

Yet despite these reports, and despite some federal action in response to our recommendations over the years, too many First Nations people still lack what most other Canadians take for granted.

On the surface, it seems that the government simply needs to work harder to resolve these difficulties. But I think we must look deeper than that. After 10 years, I have come to believe that more fundamental changes are required if we want to see meaningful progress in the well-being of First Nations.

We cannot simply continue to do the same things in the same way. There needs to be a serious review of programs and services to First Nations—we need to identify what services should be provided and by whom, as well as the funding required and the expected results.

More specifically, our audits have shown that there are a number of issues affecting programs and services that hamper progress, and negate the efforts of many dedicated public servants. Let’s take the education of children as an example.  There is no legislation that clearly sets out responsibilities for educating children on reserves.  Funding is insecure and often not timely because it is provided through short-term contribution agreements which are subject to the availability of funding—there are no statutory funding requirements or service standards. 

And there are no school boards or equivalent organizations monitoring and supporting First Nations schools.

Developing First Nations institutions and capacity will be critical to success. Real improvement will depend on the full participation of both First Nations and the federal government. They will have to work together to address many obstacles—and it will not be easy.

However, unless we rise to the challenge, I believe that living conditions on reserves will lag behind the rest of Canada for generations to come.


In conclusion, it has truly been a privilege to serve as Auditor General for the past 10 years. It has been a very interesting time with many changes. The Office has gone through a number of changes, more notably the Auditor General Act has been modified four times, which is quite extraordinary.

While we did not seek all these changes, the net result of them has been to broaden our mandate and increase our independence. I take these changes as an expression of Parliament’s confidence in our work.

If you are interested in reading more about how the Office has evolved, I have summarized my reflections in a special report called “Serving Parliament through a Decade of Change.” You can find copies at the back of the room.

I believe that Canadians have a strong and highly capable public service. In 10 years of serving as Auditor General, I have observed many things it does well—an important factor in why most Canadians enjoy an enviable standard of living.

I want to thank my colleagues at the Office of the Auditor General for their enthusiasm and their dedication, and their ability to deal with the challenges we faced together. I feel very privileged to have worked with people who are so competent and dedicated to serving Parliament and Canadians.

I want to acknowledge the excellent cooperation and assistance we received from government officials we dealt with in the course of our audits, sometimes under trying circumstances.

I’d also like to express appreciation for the parliamentarians who reviewed our reports in committee hearings.

With the combined efforts of all these groups, I am confident that our democratic institutions will remain strong.  

Thank you.