CONTENTS
Thursday 16 November 1995
Election of Chair
Election of Vice-Chair
Appointment of subcommittee
Briefing
STANDING COMMITTEE ON PUBLIC ACCOUNTS
*Chair / Président: McGuinty, Dalton (Ottawa South / -Sud L)
*Vice-Chair / Vice-Président: Colle, Mike (Oakwood L)
*Acting Chair / Président suppléant:
*Agostino, Dominic (Hamilton East / -Est L)
*Beaubien, Marcel (Lambton PC)
*Boushy, Dave (Sarnia PC)
*Carr, Gary (Oakville South / -Sud PC)
*Crozier, Bruce (Essex South / -Sud L)
*Fox, Gary (Prince Edward-Lennox-South Hastings / Prince Edward-Lennox-Hastings-Sud PC)
*Gilchrist, Steve (Scarborough East / -Est PC)
*Hastings, John (Etobicoke-Rexdale PC)
*Martel, Shelley (Sudbury East / -Est ND)
*Pouliot, Gilles (Lake Nipigon / Lac-Nipigon ND)
*Skarica, Toni (Wentworth North / -Nord PC)
*Vankoughnet, Bill (Frontenac-Addington PC)
*In attendance / présents
Also taking part / Autres participants et participantes: Peters, Erik, Provincial Auditor
Clerk / Greffier: Decker, Todd
Staff / Personnel: Campbell, Elaine, research officer, Legislative Research Service
The committee met at 1002 in committee room 2.
ELECTION OF CHAIR
Clerk of the Committee (Mr Todd Decker): Honourable members, it is my duty to call upon you to elect a Chairman. Are there any nominations for the position?
Mr Dominic Agostino (Hamilton East): I move Mr McGuinty.
Clerk of the Committee: Are there any further nominations? If not, I'll declare nominations closed and Mr McGuinty duly elected Chair of the committee.
ELECTION OF VICE-CHAIR
The Chair (Mr Dalton McGuinty): Good morning and welcome to all committee members. If only all elections were that straightforward, eh?
The first task I have is to call for nominations for Vice-Chair of our committee. Are there any nominations?
Mr Agostino: I nominate Mike Colle.
The Chair: Are there any further nominations? Seeing and hearing no further nominations, I declare Mike Colle to be Vice-Chair of our committee.
APPOINTMENT OF SUBCOMMITTEE
The Chair: The next item on our agenda is one which calls for the establishment of a subcommittee on committee business. It's my understanding that that subcommittee would consist of myself as the Chair, Mike Colle as the Vice-Chair, and we also require a representative from each of the other two parties, if I could have some names.
Ms Shelley Martel (Sudbury East): I'd like to nominate Gilles Pouliot, but I will stand if you would like, Mr Chair, if that would be easier.
The Chair: Very well. Shelley Martel will sit on behalf of the New Democratic Party.
Mr Marcel Beaubien (Lambton): I'll nominate Steve Gilchrist.
The Chair: Steve Gilchrist. Any further nomination from the Conservatives for that position? Seeing none, all right then. I'll need a motion, if someone could put one forward.
Mr Mike Colle (Oakwood): I move that a subcommittee be set up on committee business, as set out in agenda item 3, with the inclusion of Mr Gilchrist, Ms Martel and the Chair and Vice-Chair.
The Chair: All in favour of that motion? Motion carried.
At this time, we have no substantive business before us for consideration. But after some discussion with the parliamentary staff here, I thought it would be appropriate at this time that we learn a little about the role and function of the committee; also, our Provincial Auditor, Erik Peters, had a few things to say as well.
But preliminary to that, there are a number of new members here and a number of us don't know each other. I thought it might be appropriate that we begin with Gary Fox here, for instance, and just introduce yourself, tell us when you were first elected and a tidbit about your background so we can gain an understanding of who we all are.
Mr Gary Fox (Prince Edward-Lennox-South Hastings): I'm Gary Fox and I represent the riding of Prince Edward-Lennox-South Hastings. It's my first term. My background: I'm a land speculator and hobby farmer -- in simple words, a farmer.
Mr Steve Gilchrist (Scarborough East): Good morning. My name is Steve Gilchrist. I was just elected in this most recent provincial election. Before that, my last lifetime was 25 years with Canadian Tire running a variety of stores across Ontario, and involvement behind the scenes in the party as party president and a number of other positions.
Mr Toni Skarica (Wentworth North): Toni Skarica is my name. I'm from Wentworth North. This is my first term. Before I did this I was an assistant crown attorney, and I'm wondering what the heck I've gotten myself into.
The Chair: Aren't we all?
Mr Dave Boushy (Sarnia): I am David Boushy. I worked for Esso in Sarnia. It's my first term. I also spent 22 years as a member of Sarnia city council before I joined this body.
Mr Beaubien: I'm Marcel Beaubien, the riding of Lambton, first term. I was mayor of the town of Petrolia for nine years and councillor in the town for six. Previous profession: general insurance agent and property development.
Mr Bill Vankoughnet (Frontenac-Addington): My name is Bill Vankoughnet. I come from eastern Ontario; Napanee is my home town. I represent the riding of Frontenac-Addington. My previous incarnation was as a federal member of Parliament, and before that as a civil servant for the provincial government. I have some private investments that I don't make any money at, and I'm looking forward to representing the people here at Queen's Park.
Mr Gary Carr (Oakville South): My name is Gary Carr. My past history is that I was a beat-up old goaltender.
I can't believe we actually started on time. This is the first time in four and a half years that the committee's started on time. Mr Chairman, I think that's terrific, and I'm pleased to be here this morning.
Ms Martel: I'm Shelley Martel, the MPP for Sudbury East. I was first elected in 1987, and from 1987 to 1990 I sat on public accounts with my colleague Gilles Pouliot, although he's probably the veteran of this committee now. He was here in 1985.
Mr Agostino: Dominic Agostino, Hamilton East. I was elected in June. My professional background is in social work. I spent 15 years in municipal politics, seven as a school trustee and eight years as a councillor in Hamilton-Wentworth.
Mr Colle: Mike Colle, just elected, representing Oakwood. I was a high school teacher for 18 years at St Michael's College School here in Toronto. I went on to serve supposedly part-time in politics as a Metropolitan Toronto councillor, and I served there for six years, along with being on the TTC where I served as chair. And now I'm here.
Mr Bruce Crozier (Essex South): Bruce Crozier from Essex South. I was first elected in a by-election in 1993. Prior to that I was mayor of the town of Leamington. Professionally, I'm a certified general accountant, so I have a great empathy for our Provincial Auditor and his staff, and I'm also a registered insurance broker.
The Chair: I represent Ottawa South. I was first elected in 1990 and I was a practising lawyer.
I want to introduce at this stage, if I might, two people who will be of tremendous assistance to us throughout our work here: Todd Decker, our committee clerk, and Elaine Campbell, our researcher. I want to give them the opportunity at this time to say a few things, and then I'm going to turn it over to Erik.
Clerk of the Committee: Thank you, Mr Chairman. I'll be very brief. As clerk to the committee, I'm the principal administrative and procedural officer to the committee. I ensure that when meetings are arranged you have all the papers you need, that the witnesses you've asked for are in attendance, and all sorts of other administrative duties as directed by the committee. I also provide procedural advice to the Chair during the conduct of the meeting and to any members on request, drafting motions or just understanding parliamentary processes.
I've provided you with a one-page thumbnail sketch of what the committee's about, some of its recent activities. At your places I've given you a copy of the committee's most recent biennial report, which is the committee's own report on its own activities. That will give you a feel for what the committee has recently done.
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Also on the table, on this side, I've provided copies of some of the substantive reports the committee has recently tabled in the House, on special education, for instance, curriculum development. If you're interested to getting into a little bit more detail on the substantive issue that has arisen out of the auditor's annual report, those documents are there.
Ms Elaine Campbell: I don't know whether I'll be quite as brief as Todd. The support that the legislative research service provides to committees is fairly uniform, and I'm sure that many of you have heard presentation by fellow staff members in other committees. We respond to research questions and needs as they arise during hearings and meetings. We draft reports and we prepare summaries of recommendations for use during clause-by-clause consideration of bills.
Our relationship with the public accounts committee is unique in that it is much more active and adheres to procedures that have developed over quite a lengthy period of time. As Todd has already made reference to, one of the major activities of the public accounts is to examine the Provincial Auditor's report.
Once the committee members have chosen those sections of the report which they wish to examine, research staff members meet with the appropriate staff from the auditor's office in order to prepare background reports for use by the members during the hearings on that particular section of the report. Those reports usually summarize and provide context for the auditor's concerns, and often include suggestions for questions that members may wish to raise during the course of the hearings.
Past practice has also seen the research staff make in camera presentations to the members of the committee prior to the commencement of a set of hearings.
Reports are drafted according to the committee's direction as required, usually at the end of a series of hearings. Before drafts are sent to committee members, they are vetted by the auditor's staff to ensure that technical terminology is used correctly and in the proper context. That same procedure would apply to any of the background reports that we prepare as well.
But our involvement with the committee is not restricted to the auditor's report. We attend all committee and subcommittee meetings and respond to whatever research needs and requests arise during those sessions. If individual members do have questions they would like examined for their own use, we will certainly deal with those on an individual basis.
One final point: I will be the principal researcher attached to this committee, but one of my colleagues, Steve Poelking, who is sitting in our audience, will be providing assistance as needed.
The Chair: Thank you. Are there any questions or comments arising from that? Then why don't we proceed with you, Mr Peters, please.
BRIEFING
Mr Erik Peters: Thank you very much, Chair. I'll try to be as brief as I can, but these are pretty heady times and I think this committee will have a pretty exciting ride. There is some very exciting stuff coming, not already presented in my report of 1995, but there's also some exciting stuff happening at the end of this week which may involve this committee to some extent, and I'll touch upon this in a second.
Firstly, I'd like to congratulate all of you and each one of you on your appointment to this committee. In the short time I've been here, it has been a very exciting committee. They've got a lot of work done, improved a lot of operations. The committee really made a difference.
The main purpose of my presentation is to provide you with a brief overview of my role as Provincial Auditor of the province and how my office and this committee interact and to highlight matters which I believe deserve your consideration as a legislative committee.
Before I start on the role of the Provincial Auditor, a bit of historical perspective and background may be useful. The audit office and this committee have had more than 125 years of association. The last 25 years or so have been particularly close. Ontario has had a public accounts committee since 1868. The first auditor of the province was appointed in 1869. I won't start with Adam and Eve; I just wanted to give that perspective that it is a long-standing tradition.
The audit office was, through legislation, separated from the Treasury to provide for independent auditing of the public accounts of the province. Thus, perhaps the longevity of these two legislative institutions underscores the importance of improving financial management, of strengthening accountability of government operations, and actually, as you will have seen in the last few years, of strengthening government operations and administration itself.
Currently, the operations of my office are governed by the Audit Act, which was last revised in 1977. We have a number of handouts for you, which I would prefer be given out at the end; Todd has them all. They are essentially the Audit Act, which we thought you might be interested in, as well as the chapters in the 1995 report dealing with my office and the one dealing, more importantly, with the standing committee on public accounts.
The mission of my office is to provide objective information to the Legislative Assembly and recommendations resulting from our independent audit activities of government programs, its crown agencies and corporations. In doing so, my office assists the Legislature in holding the government and its administrators accountable for the quality of the administration's stewardship of public funds and for the achievement of value for money in government operations.
We achieve this through our audit of the financial statements in the annual public accounts. If I get off on that I can talk for about two hours; they're fairly complicated. The one thing about them is that they're relatively unknown. Very few people see the public accounts or take a close look at them. That's something we'd like to foster, because one of the things I pointed out in my highlights to the media was the fact that there was, for the last two years, an almost $3.7-billion difference between the deficit budgeted and the deficit actually shown in the public accounts, which was significantly higher.
According to the last two sets of public accounts, the deficit was around $21 billion, and budgeted at the same time was $17.3 billion; that arose through the use of a different view of financial reality and different views of accounting rules in the budget as compared to the public accounts. So gradually, what is happening now -- and this is why we're pretty well in for an exciting ride -- a lot of action has taken place and we're waiting, really, for the culmination of it.
In the 1995 budget plan, the government already went into providing a reconciliation between the budgeted deficit and what it would look like in the public accounts. On July 21, the new government took a further step by including in the budget a forecast of $8.7-billion deficit for the current year, by taking out what is called the loan-based financing. You can ask me questions about that after; I won't voluntarily explain it unless you want me to. But that was one of the major chunks of the difference, and that has been looked at.
Also, this issue has been included in the mandate of the Ontario Financial Review Commission. Their report, if my memory serves me right, is expected to come out tomorrow morning. That's one area where this committee may want to make a decision and may want to see whether it wants to get involved in those recommendations.
One of the mandate items was to look at the desirability of putting the methodology used in the budget to forecast the deficit -- the results, hopefully, eventually surpluses that reduce the debt -- on the same basis as is used in the public accounts.
Our office, incidentally, in addition to doing the public accounts, audits directly something like 60 agencies of the crown, and some of them are quite sizable. For example, the Ontario Lottery Corp has annual revenues getting close to $2 billion a year. The other major one is the Liquor Control Board of Ontario, with revenues of about $1.7 billion or $1.8 billion a year. There are quite a number of others, and we are quite active in that area.
Beyond that, we have the right -- a certain number of audits, about eight of them, are conducted under our direction, but we receive the auditor's report, the same as the other. The largest one of these is the Workers' Compensation Board of Ontario, which is done under our direction and where we have a special responsibility.
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Then there's another set of agency audits, but these are incidentally audited by private sector accounting firms. It's just under our direction and I can explain to you how we interpret the direction status on those, if you would like me to.
Then there's another set of agencies which are audited by private sector firms where we have a more remote interest, but on behalf of the committee or if we see anything of interest we can ask for the auditor's working papers and have access to all the records to look into the affairs of that organization that are of interest. The largest one of these is Ontario Hydro. They fall into that category as well. They fall into some sort of access category but not as direct as the others.
Further, the other highlight of our year is essentially the tabling of the annual report which deals only in a summary way with those financial audits because under the public accounts of Ontario I give a separate audit opinion which of course, as you can imagine, requires an awful lot of work in my office. But the content of that report, which I just tabled on Tuesday for 1995, is outlined in subsection 12(2) of the Audit Act. It has to deal with such things as whether moneys were spent prudently, whether there's due regard for economy and efficiency, whether, for example, the effectiveness of programs is appropriately measured and evaluated and reported.
That tabling, as one of your colleagues who's not here, Gilles Pouliot, mentioned this morning, is our 15 minutes in the spotlight, but in the last few years that spotlight has been a lot longer and the role of our office has become quite important and the work that you have done has been quite important to us.
We essentially work for the Legislature. In fact, the staff of my office are servants of the Legislative Assembly. We consider the Legislature as our client, with your committee acting on behalf of the Legislature. Ministries, agencies, boards and commissions and the books of the Legislative Assembly are subject to audit by my office on behalf of you, and the standing committee itself could be referred to as the audit committee of the Legislature.
Sections 16 and 17 of the current Audit Act are of particular importance to this committee from the point of view of permitting the committee, by resolution, to have my office perform special tasks, either special examinations or reviews on any matter that is of interest to the committee.
Being a legislative office, we try to respond to the needs of all 130 members of the assembly. At the same time, members should be aware that given the wording of the two provisions, I'm not permitted to perform audits. I can only do those audits if the provisions of sections 16 or 17 are applied, which means that essentially an individual member cannot ask me to do anything on their behalf. It's done in the United States. For example, the GAO, the general accounting office, the controller general of the United States acts on behalf of individual members, but my office can only act by resolution of this committee or if the Legislative Assembly as a whole asks us to do something or if a minister asks us to do something, but there are certain brakes put on to stop ministers from asking to do specific work. For example, we can decline those assignments if they are in conflict with the other duties of my office.
With respect to our attendance at meetings of the committee, the Audit Act provides that at the request of the committee the Provincial Auditor and any staff of my office shall attend all meetings of the committee to assist the committee. The practice has been that there's a standing request that I and appropriate members of my staff, depending on the issues being discussed, will always be present and sitting up at this table to act in an advisory capacity. Normally I also attend all subcommittee meetings to help in giving advice on decisions as to where you would like to go.
As the Provincial Auditor, I recommend corrective action. I do not have any enforcement powers. Of course, the effect of publicity that may come from the disclosure of our audit reports and the prospect of this committee making its recommendations to the Legislature will greatly influence the action taken on the recommendations made by my office. So your reaction is very, very important.
To prepare its reports, this committee calls deputy ministers, and in exceptional cases has called ministers, to appear before it to account for their ministry's management practices. To quote Patrick Reid, a long-serving past Chair of this committee, "Deputy ministers do not want to appear before this committee -- appearing before this committee is not looked upon as the highlight of either their day or their career -- nor by their ministers, who come in for either direct or indirect criticism if there is a screwup in the ministry."
The public accounts committee plays a key role to foster that action is taken on the recommendations in the annual audit report. The committee's interest and active involvement in the results of our work greatly enhance my office's service to the Legislative Assembly. By selecting sections from my annual report for review, the committee's work complements the work of my office, and in so doing, actually completes the accountability loop.
Although this committee does not have the powers of enforcement under the standing orders of the assembly, any committee under those orders has the ability to request the government to table a comprehensive response within 120 calendar days of the presentation of a committee report. So you have a certain amount of clout in that regard.
Again, we view our report as a catalyst for action to improve operations. It is designed to help the legislators to have better information and better tools to do what they consider the right things and to do those right things right.
I do not comment on government policies, but there are three things that are pointed out to the media and maybe they're worth repeating here. Mr Chair, do I have the time? Will you indulge me a little bit?
The Chair: Yes, by all means.
Mr Peters: We are really fostering at the moment good information to the Legislature and good accountability, and there are three areas that we're focusing on:
(1) When the budget is presented, the province needs to know where it actually stands financially to have a good debate on the budget. That's why I'm highlighting this difference between budgeted deficits and the actual deficits.
(2) To help the Legislature to identify and act on those government programs that have proven to be ineffective or inefficient in meeting their legislative goals.
(3) To identify and act on those government programs and services that are the drivers of the deficit, now and in future.
I identified for the media our chapter 3.09, which dealt with long-term care. In that chapter you'll find charts that show that our population will age significantly over the next few years. Standards have to be set as to how many beds per 1,000 or 100,000 of population we ought to have ready, how much it will cost us, how do we meet this need in the most cost-effective manner. So there are drivers out there that will drive the deficit.
We identify clearly that information and tools for decision-making should be better developed and used by legislators.
When you evaluate our reports, there may be some questions that you may want to particularly ask yourselves, and these questions are fairly specific. I'd like to leave those with you and then highlight just a few areas of concern.
Essentially, when the program comes before you, the fundamental questions really are: Can this government program continue as it is? Is it working fine? Is it doing its job? Can we leave it alone?
The second question is: Is there anything in this program that needs to be modified to make it work better and operate better?
The third question is really: Is it so bad or is it so ineffective in meeting the legislative objective that it should be discontinued and that your recommendation will be to discontinue the program? This is on existing programs.
For new programs, particularly in the financial condition that the province is in currently, with total debts now exceeding $100 billion, really the questions are: Do the benefits, tangible and intangible, outweigh the costs? Secondly: Is it affordable? Does the province have the fiscal flexibility to implement it? Is it sustainable?
I'd like to leave these questions with you and I'd like to highlight two particular areas that I spoke to in my media conference that may be of importance to you.
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One of the areas is that in 1987 we audited the legislative estimates review process, and at that time we found -- and I give you the nutshell view only -- that process to be maligned and ineffective. We did it again in 1995, and we now find, as I told the media, the process is merely ineffective. Why is it ineffective? It's ineffective because the estimates committee reviews the estimates only after about half the year is already gone and more than half the money is spent.
Secondly, it's ineffective because the members on the committee -- and this was not our view, but it was the view of three members from each party who served on that committee in the past; we didn't put that into the report, but to you I'd like to relate it -- there was a sense of frustration there. They had to spend up to 90 hours to discuss various segments of the estimates, and they knew they couldn't change anything, simply because it was too late in the year, and secondly because if they wanted to change anything, it effectively had to be done through a non-confidence motion in the government, and particularly if you have a majority government, what's the point to bring that forth? So as a result they found that very often the estimates review process ended up in parochial discussion and particularly strong partisanship of trying to score political points rather than making the estimates work better.
So things have to happen there, and our recommendation, based on our review, is two things. Firstly, move the timing of the legislative review process in such a way that the review can indeed make a difference. The second part is, improve the information that is available to the legislators at that time so that it actually can result in a productive review process. So that is really one area that I wanted to highlight for you.
The second area that I wanted to get into is an area where you will have to make a real decision, and that is, there have been three motions passed since I became the Provincial Auditor, which was on January 1, 1993. One motion asked me to pursue a legislated, workable accountability framework. We advocated this framework simply because about over half of government spending, over $28 billion in 1995 -- that was the principal reason; there were several others -- was turned over to separately governed organizations. Those are the municipalities, those are school boards, those are hospitals, all with a board of directors or even elected representatives on them.
We felt there was very little accountability back to the Legislature at all whether these bodies were actually spending the money for the intended legislative purpose and whether they were doing so cost-effectively; in other words, whether they were achieving value for money. So that was one of the mainstays, a main thrust of why we wanted to take a look and give legislators, not just the bureaucrats -- there are some tools that they have, but not very many, and they are very limited, but the Legislature has really virtually no tools, other than anecdotes and stuff like that, to have accountability for these significant sums that are being spent there.
The second area that we got into was that the committee had asked me to pursue better accounting. I think we're on the way there. Progress is being made, and I have high hopes that with the appointment of the Ontario Financial Review Commission -- which, incidentally, I fostered and promoted all along, not just with the current government but did also recommend to the previous government -- that steps will be taken there.
The third area, though, which is important is that there have been -- as I mentioned, the Audit Act that we're acting under was passed in 1977 -- attempts to amend the Audit Act. One of the areas of particular concern is that for these very organizations that I mentioned before which receive about half our money, my office can only conduct so-called inspection audits. Inspection audits, under the Audit Act, are defined as examinations of accounting records.
The accounting records of these organizations are, I would say, in virtually all cases already audited by accounting firms, so there is no value added by us looking at this. But there would be value added if my office could expand its mandate to take a look at whether value for money is obtained by these organizations. The main thrust of the amendments to the Audit Act was essentially to see, and for you to debate and decide, whether we should take a look at whether these organizations are obtaining value for money, particularly with a view to the $28 billion annually they spend.
There are 7,000 of these organizations. Certainly, we don't have the resources nor are we going to call for resources to do that, but it will of course greatly influence the work of my office. But that motion is before you, or was made by the predecessor committee that they wanted to hold hearings into this. One of the points that became of interest was whether you should have, for example, universities before you, school boards or municipalities, and hear their views of how they would view it if the Provincial Auditor had this right of access to other records. So it's not driving.
Maybe anecdotally, if I have the time, I will just tell you essentially how it reared its head before this committee. In 1993 we reported that the accountability framework for delivering special education for students with special needs at school boards was essentially so impaired that, although the government had under the Education Act the responsibility to ensure that special education was provided, there was no way to determine that school boards were actually using wisely the funds turned over to them. At that time, about $285 per student was given by the province to each school board to deal with students with special needs.
When this issue came before this committee, an immediate turnaround was to ask my office to conduct audits in school boards that they specified, to see whether they were doing a good job. I had to say to the committee, "Under my act, I can't do it, because I'm only allowed to look at accounting records, so there's no way I can really assess whether special education funds are spent for the legislatively intended purpose and whether they're spent cost-effectively." The upshot of, in a way, the frustration of the committee at that point that they couldn't get a further handle on it was that motion that maybe there should be an amendment to the Audit Act so this committee could effectively ask me to carry out those kinds of audits.
That's just a little of the background of where these three motions came from and some of the outstanding issues that I thought I'd bring before you. With that, Mr Chair, I'm ready to entertain any questions you may have.
The Chair: Thank you very much, Mr Peters. Are there any questions that arise from that?
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Mr John Hastings (Etobicoke-Rexdale): Mr Peters, do you have any idea of whether in this accountability framework there is any measuring mechanism for figuring out the cost-effectiveness of regulations? When a new statute is produced or an existing one amended and the regulations required to carry out the statute's authority is undertaken, is there anybody in any of these departments who actually looks at the cost-effectiveness of that particular -- I can't think of a good example immediately off the top of my head.
Mr Peters: Let me answer this in two ways. First, in my office there is one portfolio that deals with regulatory matters. Again in the 1995 report, for example, we reported on the Ministry of Consumer and Commercial Relations, which is a regulatory authority, and we took a look at how they measure these things. From the ministry point of view, we can look at it.
As to the direct impact of regulation on grant recipients, that would be an area we couldn't look at.
Mr Hastings: That would require an amendment by the government of the Audit Act.
Mr Peters: That would require an amendment to determine that.
Mr Hastings: On another matter, not connected, but in the whole area of cash management, I've noticed around here in my own global budget as an MPP that supply and services of the assembly is in some instances paying a bill, regardless of cost, before the 30 days. That's pretty well standard practice, I always thought, that you pay your bills within 30 days or you pay extra interest. In these instances, they're paying ahead of time, yet I've understood that often in other ministries they aren't paying suppliers of services or products for maybe up to 90 days.
Do you have any authority or do you make any comment as to the irregularity or the inconsistency in terms of this kind of practice of cash management, some paying way early and not getting advantage of the interest on the money, others paying long after it was due under standard payment practice?
Mr Peters: It's a very good point and a very interesting point, certainly one that we foster, sound cash management, in all our audits. Why it would not come forward to this committee most likely would be because matters of that nature are largely dealt with in management letters which we send to the management of the particular item.
The one area where I have some additional difficulty is where there are actually MPPs and expenditures, because in that regard, the members are in the driver's seat, not us.
Mr Hastings: How effective is your management letter to any given branch or ministry commenting on this issue? Years later, they're still doing it the same way as before you issued your management commentary letter.
Mr Peters: If I may separate it, if it happens in a ministry we will certainly comment, and if it isn't fixed it will percolate up into the annual report and will be public, and you will be able to deal with it if they don't do it right.
Mr Hastings: Do they ever get it right after that?
Mr Peters: Oh, they do, yes. We have a fairly good record that when we make recommendations they will be implemented.
Mr Skarica: I'm a little confused. Right now, if a million dollars goes to a program, are you able to look into whether there's value for money? What are your restrictions at present?
Mr Peters: If it is a ministry program, there are no restrictions. The only part where we are slightly restricted is this: We can look fully at all aspects of economy and efficiency, but as far as the effectiveness, the effect achieved, we can only determine and report on whether the ministry itself measures and reports and whether those measurements and that reporting is insufficient.
Mr Skarica: But when that million dollars goes to, say, a school board who then spends it, what are your limitations there? Can you go into the value-for-money audit or no?
Mr Peters: No, we can't. Whether the school board spends it with due regard for efficiency and economy or whether they're ineffective in the way they are spending, whether they have measures in place to see if they do it effectively, we can't look at.
Mr Skarica: So what controls are there, if any, on an agency we give money to?
Mr Peters: On the school board level? Is that your question?
Mr Skarica: Any agency, for that matter, say WCB.
Mr Peters: WCB, in its particular case, because the audit happens under our direction, we certainly foster that value-for-money audits are being conducted within that agency. But that's where we have to stop. They are responsible for carrying that out.
On the agencies generally, where the auditors are is that we normally assume that our responsibilities include conducting value-for-money audits.
Mr Gilles Pouliot (Lake Nipigon): I'm happy to be here on the committee. I've sat on this committee; in fact, I was the Vice-Chair. I know the people here, our friends, are concerned about money. I mean, they perspire, they breathe money. In view of that, because times are quite difficult, Mr Chair, I was to introduce a motion asking that you, sir, and the Vice-Chair waive their stipend. I didn't do it when I was Vice-Chair, because ideologically I'm not on the same binge or bender as those people there. I'm happy to be back, but since you're with the opposition I think we can dispense. We know you need some dineros to stay alive.
Value for money, to the Provincial Auditor, I have some difficulty articulating, and maybe I will need your help. Over the years, there has been a bit of a transition, in that the focus was at one time just as much, if not more, on financial audit, and then you moved to a value-for-money mandate. I understand that in terms of the financial audit there's been some contracting out, if you wish. Other people were left to do that.
What is our capacity as a committee? That's my question. What jurisdiction do we have to direct you to conduct a specific audit? For instance, if we hear that there's a swindler on the loose -- we don't know that, but we can see that there is a relation with a ministry and we become suspicious that a bandit might be operating. Do we have the capacity to say, "Oh, oh. I heard it said, and I'm going to go to public accounts and ask Mr Peters -- we're going to have enough votes, our friends, for we want to know the truth -- to go and conduct an audit"? How much capacity do we have to direct the Provincial Auditor to conduct an audit? Could you give us one or two examples?
Mr Peters: You have the right to ask that of my office under section 17 of the Audit Act. That has to happen by a resolution of this committee, by a motion and resolution of this committee, and then we do that. That is one way. That's for this committee to do, and that is specific to your question.
We are currently conducting, in fact, under section 17, as asked by this committee -- the latest one we did, I believe, was one on the central collection service. It was of concern to this committee whether the information turned over to the central collection service of the government was adequate for them to do their job and collect the moneys due to the government. That is one example.
Others are that recently we did the construction of the Workers' Compensation Board headquarters down on Simcoe Place. That was a committee resolution, incidentally, which the committee --
Mr Pouliot: I liked your first example, and it will suffice. Thank you very kindly.
Mr Agostino: Can we talk a bit more about the second one?
Mr Peters: Those are two of the major ones that come to my mind that we have conducted recently. We also under that section, incidentally, can take assignments, as I mentioned before, from ministers or from the assembly as a whole.
Mr Carr: Auditor, it's good to see you again.
I think it's a bit of an understatement to say there will be profound changes in this province over the next little while. I don't even think the members in this room, even some of us who agree and support the major change we call for, fully comprehend what's going to happen over the next few years. I think that's a good thing that's driven by the fiscal realities.
Knowing that, what role would you like to play? What twigged this for me is that you're talking about the audits of some of these organizations, which I can tell you a year from now probably won't be around, almost absolutely. We're preparing as a committee to look at some of these things, and the changes are happening so quickly that some of the things we're preparing to audit as institutions won't be around.
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What role do you see playing in the changes? If you could tell the government, "This is what I would like to do," using your full office and your expertise and, as an extension of that, us as this committee, what role do you see in these changes, if any? How do you see it structured so that when the changes come about you and through this committee as well can have some input in some of the most profound changes that I see, without being dramatic, that this province has ever seen in its history? How do you see your role in all this?
Mr Peters: In a nutshell, my role is really to act as a catalyst to this committee for improved government operations and to streamline things.
The decision as to how to reduce the deficit, which seems to be the order of the day, and eventually reduce it to such an extent that one actually could reduce the debt burden of the province, is really more in the hands of the politicians. It's a more political agenda which we are staying out of. But we are in the administrative area and how to do it. We certainly get into it.
Already in the 1995 report we have two straightforward examples we are pointing out, talking about these organizations that you're in, the very administratively cumbersome situation, for example -- and I don't want to go too long -- but we have a little chart in our report where we point out that previously, for example, one municipality had agreed with the provincial government to get a 50% subsidy on its drinking water plant and received a grant from municipal affairs in the amount.
Now, under the current setup -- this was in effect up to the end of the last fiscal year and into the current fiscal year -- it involved numerous loan agreements. It involved a loan agreement between the consolidated revenue fund with the Ontario Clean Water Agency, which in turn had to make a financial arrangement with the regional municipality that the municipality was in, which in turn had to make a financial arrangement with the municipality which actually operated the drinking water plant.
We had money flowing through loops and loops and loops before what previously was a straightforward grant and repayment, and it was never to be repaid. The agreement was that the government would give that kind of grant to it. Now, all of sudden, we have loan agreements, and when it had to be repaid what happened is that the government had to give the money to the municipality at the bottom and then they paid it back to the region and then they paid it back to OCWA. They didn't actually pay it back, but all the loan agreements and all the books had to be adjusted and everything.
I use that as an example. That's where we are the most help: to point out these situations and say, "Look, streamline it, do the right thing, operate it the best way possible."
Really, we think that through this committee, with the help of this committee, in the items that we are pointing out, we can help streamline operations, help identify situations where they are not economical, where they're not efficient, and really the most important point of all is -- and this is a major concern -- ministries do not know, and therefore you don't know, which programs operating right now are really effective; and which programs, in order to ensure their effectiveness, either can be left alone or they need to be modified or maybe they need to be cancelled altogether.
It's that sort of assessment that we want to ensure is brought before you, so that these far-reaching decisions that you are referring to can be made prudently with the best information available at the time so that the right things are reduced and resources are placed where they should be placed.
Mr Carr: I appreciate that. What I was getting at more is the structure. I think that what's going to happen is that restructuring is going to be taking place because the tap's going to get turned off in terms of revenue. That's going to force all the things that you've been doing for a few years and all the inefficiencies are going to happen because each of these groups, when the money gets cut, have to look at their own programs. That, in my mind, is going to be better than all the auditors in the world, with all due respect.
Having said that, what I'm thinking about is the process for you to make recommendations. I noticed in one of the clippings reports here when they talked about, just as an example, the super city in Toronto. It said that the auditor thought it was a good idea. Just in one clip.
Is that how you see your role as the government comes forward with an idea, you "through the media" do it? The reason I'm asking this is, the way I see it working -- and I understand that the political decisions have to be made by the politicians; that's what we get paid for and fired for four years later if we don't do a good job; but in terms of the structure, the management structure of the way this province should be managed is very, very complicated.
I've been around here four and half years. I kidded about being a goaltender; I also have a business background. To study and understand how we operate, if you put this province together again and did it this way with the unclear lines of authority and responsibility, it would be the worst thing. You'd go to the U of T and they'd say this is how not to do it.
So what I'm say, with all the dynamics that are happening, is it possible that you, in your good, objective office, which is non-partisan and objective, is there any way that you would like to formalize for the government the process and the structure you would like to see as we -- I hate to put it in simple terms. What we're doing is we're downsizing significantly. I appreciate what you're saying, that you're going to do these audits and say, "Here are the problems," and then we run around and try to fix them. But it's a broad system.
Is there anything you could present to the government, and it probably would be a major task, about this is the way some of the operations should take place, having done all the forensic analysis that you do, here is the way the province should be structured, as an independent advice to the government? At the end of the day the government and all of us will have to vote on different things and be elected on that. But do you see that as your role or do you see that as overstepping your role? Because I personally think it would be helpful.
I see, as I'm sitting here as a government member, fundamental changes happening very quickly. I'll say right at the outset I agree 100% we need major change. My big concern is that the players who are making those decisions are a small group of people, even excluding us in the Legislature. What I would like to see is this committee, through this committee -- I mean, I could run around and make my suggestions to individuals, but I think as an elected representative of this committee I may be able to help in the restructuring of what we're going to do. But I don't want to get down that road and do that if in fact you as the auditor said, "That isn't my role and we shouldn't be doing it."
So I'm throwing it out and I don't even know if you need to think of a decision today. Some of the other members can think about how they see the role over the next little while. But it may be helpful for you and your good office to take a look at the structure of the way we operate here in the province of Ontario and make some recommendations. But one quick point, and then I'll let you answer.
If you're going to do that, we have to do it very quickly, because the November economic statement is going to force a lot of these changes very, very quickly. Again, that is good. But you may want to think about what role you can play, if any, and we as the committee could participate in that. I'll throw it open to you now. It's sort of a difficult question and I don't know if I've been exactly really clear in what I'm proposing for you to do. But if you could just comment now and even in the future think about your role, because I think the good office of the auditor can be used and I think it would be a waste if it's used in replying, which is still valid, in the press that, yes, this is a good thing or a bad thing when we do some of the restructuring, like the municipalities. But I would like to formalize it a little bit better and I don't know if that could be done. But I would like to suggest that you and your good office and your people think about that and maybe at some point through the Chair let us know and see if it's something that the auditor would be interested in doing.
Mr Peters: There are two fundamental motions on the table which really go to the heart of the very matter you have raised and that we have recommended. One is really the establishment of a legislative accountability framework; and the second one is whether or not my office-currently, when you look at the public accounts, 70% of the province's money, $40 billion, is paid by way of transfer payments -- that's where the big bucks are -- and 9.3% is paid in salary and benefits to public servants; less than 10%, in other words. But the big bucks are definitely going out in transfer payments, and the next item on that is interest, of course, which is what the game plan is all about.
The overall recommendation that I continually have made and where I continually hope to be of help is really that the information on which these decisions are made be the best information you can get, and that the accountability of the people who have to implement them be proper and go actually to the Legislature; that it does not remain within the realm of the bureaucracy, but that through this committee, you have both the information and the tools to deal appropriately with what is happening out there. What is the effect? Are we cutting the right thing? Do we make that decision based on -- I don't know whether you were here when I raised the really fundamental questions. Do we know enough about this particular program or this particular spending pattern, whether or not we can carry it on, whether we need to change it or maybe we shouldn't spend any money in that area at all?
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What I continue to foster and I hope this committee will foster is that that information will come forward so that the decisions essentially come out as credible decisions, not just as -- I don't know whether to say that, but not to get into the realm of slashing and burning, but as opposed to getting into spending. Even if the budget is balanced, this province will spend around $45 billion a year and that balance has to be spent wisely and the Legislature has to know if that is done wisely.
Mr Carr: Good point. Just very quickly, and I'll sum up and let the others question because I don't want to dominate.
But I see this role working that way, and I say to all the members on the committee that this committee, I hope, will work in that way. We'll have our partisan fun in the House and I, as some of the members who have been here know, love to have that occasionally too, although I've been pretty good this term. I promised my wife I'd be good and I've kept to it. But this committee can really --
Interjection.
Mr Carr: That doesn't stop me being as radical as I've always been, unfortunately.
But what we can do, I think, is play a constructive role and work together. So just in conclusion, I hope we'll do that. We'll have a little bit of fun on this committee, but there are some very serious challenges.
I firmly believe this committee can participate in some way and I think if we do it as best we can, because we're all going to be partisan, but I think there are a lot of things that we'll find that we can agree on and work in the spirit of cooperation. There will be occasions when some of the things that we look at will need to be criticized. I've been around this place long enough to know that, but I think and I hope that this committee -- and that's one of the reasons when they asked, "What committee do you want to come on?" there are so many that are partisan and I've been quite frankly sick of it over the last four and a half years, running around doing it -- that this one may be one where we can play a constructive role.
So good luck to all of us and thank you very much. I know you've done hard work on behalf of the people of the province for many years and we wish you well in your endeavours.
The Chair: Thank you, Mr Carr. Maybe I'll just take the opportunity to let committee members know how I propose to deal with questions and comments, and that is in order, in rotation.
Just so you know, now I have on my list here -- Mr Gilchrist and Mr Beaubien intend to ask questions and so does Mr Agostino. Since we've just completed with a government question, I'm going to proceed now to the official opposition: Mr Agostino. Of course, if you wish to direct me otherwise, I'm quite open to that.
Mr Gilchrist: Mr Chairman, just on a point of order: It was my understanding that those procedural matters are normally dealt with at the subcommittee level, but for the purposes of this meeting I have no problem continuing on that.
The Chair: Thank you. Mr Agostino.
Mr Agostino: Mr Chair, just a brief point on what Mr Carr was saying. I think there is some merit to the type of advice we receive from the auditor. From my own experiences and you members who have been here for a period of time can probably attest to it better here, I think it's always very good advice and I generally find that the role of the auditor is to be of course independent of any government policy or government decisions and basically offer the Legislature the best advice possible on how to best spend money and how to streamline the processes it may be duplicating. But I guess there's a fine line, and I think that's maybe the question that Mr Peters is going to look at in his own mind as well, between giving that type of advice or directly commenting on government policy. I'm not sure if that was what Mr Carr was getting at. I think the auditor obviously has got all of the flexibility to say, "No, this process can be done better this way," or "You can run this program better this way," but I'm not sure if it's really the role of the auditor to say, "This program should be eliminated," because as legislators we have to look at that and we have to look at the impact, not necessarily just the dollars. There may be programs that financially may not make a lot of sense and that we all may say: "Look. They're important enough that we want to look at it or we want to keep because of whatever it is that that program is doing or is necessary in the community."
So I think that there is a line there and I think it would put the auditor in a very difficult situation if he is asked to comment on government policy or a government program that may be slashed or may be cut or may be changed and that sort of thing, and I guess that's the only caution I would throw out to you. I think the advice is valuable, but I don't think it's the auditor's role to basically give direction on government policy because of the impact that we as politicians are responsible for the decisions we make and ultimately I think his role is to be independent and to basically look at the overall picture.
Mr Peters: Fair enough. Let's be very clear. I do not comment on government policy. These questions that are raised with you are your questions to answer, not mine. I can make recommendations to you where things are not going right. You have the privilege of taking the action on it. In fact, it's one of the major additions this committee brings to it, because I cannot, do not and do not want to comment on policy, but this committee may decide to do so and that's within your purview, but not mine at all.
The Chair: Given the substance of his preliminary comments last time around, the Chair with some reluctance recognizes Mr Pouliot.
Mr Pouliot: Right, you do and you don't, sir. We were the government. I remember very vividly the two sets of books that were floated out there. I remember very vividly our Deputy Premier, the Minister of Finance -- and the situation parallels; we've had a change of government; so be it. Credibility was put in question because in a constitutional monarchy it's confrontational at times; so be it again.
People were waving credibility documents, "Who are we to believe, you the politician, or the pedestal, the Provincial Auditor, the sanctity of it?" I would expect the same thing if I were -- I know it's a difficult call because when you hint or proclaim -- go further than hinting -- that there are two sets of books, then it becomes the quality of character in the political arena. It's a blood sport we're in, and you have that glass house where people cannot throw things because you are not impacted. The serf, the pleb, can be disregarded. But in politics here it comes back to haunt people.
This should be -- should be -- by its mandate the least political of all committees, and we all mean that, that we have enough on our plate, that we all intend the same way. The thing is that it might be the least of all, but it still becomes political. That's the kind of criticism I would wish the committee to be shielded from. I don't see it as a political role in the least. Politicians will make it that way because they wait for that book and the lockup and they see, did somebody send five shirts to the dry-cleaner on a trip and forget to deduct it from his paycheque? Because we're like crows; if it shines we'll go at it.
The larger lines, the value for money, not the role of an inquisitor, saying: "What is going on? Oh, we got him this time. We got him big time." If he goes on a trip, and I hope we do travel, and two single malt scotches were brought to his room, then he put the bill in and he didn't pay from his own pocket, I don't wish that to happen. Are the taxpayers getting value for money? We can all tell you where to look but we can't do so with passion.
I had four ministries, sir. It's always not you, not me, but the fellow behind the tree. There are so many people in the communications department. What do they do, those people? "Oh, I work very hard." Well, I don't know what they do and I'm a poor judge of what they do, so I'll leave it at that. I say this by way of a parallel, the convenience of dumping on the civil service. Those people don't have a voice, but they're not numbers in a book or a face.
I want to see an advance agenda, all this to save doubt and if possible, that we can draft together what it is we are going to be looking at when we meet the next time and the next time and the next time, long term, short term, with the understanding that there will be some variance from time to time, that things will happen and we won't be able to stick to it. But I would like to have our very reduced staff, our constituency staff, look at it and say, "Okay, this is what you'll look at," and to be given the documents that we need to make the committee work.
Please, personally, I don't want this to turn into a political animal. I think you have been, and you're to be commended, able to avoid -- because especially the opposition, what an opportunity when you have value for money. Rejoice, for the last government, that's your last chance. People will go and look at it every step and it becomes political. I want to avoid that by mandate, by dossier, not to have you go and investigate a can of worms or bag of snakes that's about to explode, because we know there's a lot of political mileage for us to do that under the guise of value for money. I won't be attempting that. I will resist that. It's too good to be true. There's probably something in it that we shouldn't be looking at. Let's stick to the mandate.
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M. Peters : Je voudrais constater très clairement que mon bureau n'a jamais mentionné deux livres de comptabilité dans le gouvernement.
M. Pouliot : C'est la perception politique, Monsieur. C'est ça.
M. Peters : C'est exact. J'ai toujours mentionné que la province a seulement un «set» de livres, et c'est le livre dont je donne mon opinion. La difficulté qui existe maintenant, c'est qu'il y a une méthode pour comptabiliser le budget avec une vue des réalités financières qui est très différente des vues exprimées dans le livre de la province. Ça existe, mais à ce moment-là, et c'est un problème --
The Chair: Mr Peters, excuse me for one moment. Given that there's no translation service available today, I wonder if you might --
Mr Peters: What I have said is that we have always made it clear that there is only one set of books in the province and that is the one on which I give my audit opinion. The difficulty that arose, when the province adopted new accounting rules, was that these accounting rules were not adopted in the budget. Even in the 1995 accounts, you will find a schedule that will show in the public accounts a statement that says, "Deficit on the budgetary basis of accounting: $8 billion." But the real budget on the financial statements was $10.1 billion.
Mr Pouliot: Go to other provinces and see how it's done. I mean we've had treasury -- I don't want to get into this. It's kind of a contest, but the perception is out there, and we suffered greatly, but that's okay. We're on this side now.
Mr Peters: That's fair enough. But this was not done in isolation or this was not done with a sense of "gotcha." I've pleaded since the fall of 1993 with all the powers there are to get this situation fixed up. Anyway, that is the one thing. I stay out of politics but I have to deal with facts, and it is very uncomfortable for an auditor to have to give an audit opinion on a deficit that is vastly different, that is this year by $2.1 billion different than the one that was debated by the Legislature when the budget was presented. That is the difficulty. All provinces are moving towards this and they're moving with good speed.
We are definitely apolitical and we try our level best to help anybody in the Legislature. We are apolitical to ensure that they have the best information to make decisions and that the best accountability framework is in place that can be had, and that decisions are based on good information. That is the basic, firm rule of my office.
Mr Gilchrist: Certainly, as a new member of this committee, I'm grateful for your taking the time to give us the background review and your candour in outlining the terms of reference of your office and how you see operating, in concert with this committee, over the term of this government.
Two things come to mind from your comments and I'd be grateful for your feedback on both of them. First off, I'm grateful that we've heard from all three parties and from yourself a recognition that value for money should be the criterion that drives everything we do, and presumably the bulk of your recommendations in your oversight.
I'm curious to know to what stage any discussions about revisions to the Audit Act that would have allowed you to embrace all of our transfer partners had proceeded, and if it hadn't proceeded to the point where draft legislation had come before this committee or had been debated in the House, I'm wondering whether you have had the opportunity to consider yourself the sort of amendments that would be appropriate to allow you that facility. I doubt very much that anyone in this Legislature would disagree that we want to know how our dollars that we're taking the heat collecting are being spent by our transfer partners.
My first question to you is, how far along in stage has that gone? Obviously, not far enough. How do we take it to a conclusion, in your view?
Mr Peters: It went to the point of having a resolution passed by this committee to have hearings on the subject. In preparation for those hearings, we presented to the committee a proposed wording of a redefinition of "inspection audit" essentially. But that was only done by letter to this committee and had not advanced any further than that.
Mr Gilchrist: I wonder, if it's not inappropriate, if you could send copies of that letter to the committee members or such other background information as you think might assist us in putting our minds to how we could craft either a resolution or make suggestions directly to the relevant minister that legislation be brought forward. If you could get that background information, I'd be grateful.
The other thing I thought was a bit of an anomaly in your comments was discussion about the tardiness of the estimates process, yet I look at the bulk of your report -- and I mean it in the physical sense, the bulk -- and the fact that it comes out annually.
Given that the same rules would appear to apply if there are programs or ministries or specific individuals who are not giving us value for money, and given that your audits are ongoing throughout the year, I'm wondering whether it would be more appropriate, whether or not you come up with a conclusive document at the end of every year, to come out with more frequent submissions to this committee to allow us to digest eight or 10 or 12 crown corporations or ministry audits every quarter, and both allow us to stagger our workload and, most importantly, deal with issues far faster than if we wait for an annual report that comes out conceivably 12 or 13 months after you've actually done a specific audit.
Mr Peters: That's a very interesting point. It certainly could be built in, if it's the wish of the committee, to amend the Audit Act to do it. Presently I report -- under section 12, there's a stipulation. In fact, that's why I changed the audit year that we report on, which differs from the fiscal year. As you know, the fiscal year of the government is April 1 to March 31. The audit year runs, at the present time, from October 1 to September 30. This is done for the specific reason that the act states I shall not table my report before the public accounts are tabled, and traditionally they are tabled around September 30. This year that was October 2; it was when there was the next working day. So I should not table my report before the Legislature has the public accounts and I cannot table any later than December 31.
That is where it currently stands. If there are special issues, I can bring them to attention.
But certainly there have been different approaches taken by legislative auditors to the frequent reporting. The federal Auditor General had an amendment to the act made under which the federal Auditor General now reports more frequently during the year. If that is the wish of the committee, we would be quite willing to discuss this, as it's something that is of concern to us, and it's something we would certainly adapt to very readily. But it will require a further amendment to the Audit Act in that particular direction.
There are other small amendments that could be made, for example, that I can think of. Let me just very quickly point one out. Under the Audit Act itself, I'm supposed to audit and report annually, give my audit opinion, on the books as put together by the consolidated revenue fund. Currently we prepare what are called summary financial statements, and they include major other entities that have been created by the government that are under legislative control. We consolidate them.
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Theoretically, there's a minor amendment needed so that I can give my opinion now on this whole set of accounts. I do it already anyway. It's not that I'm breaking the law, necessarily, but it is just a better set of financial statements for the province that I'm reporting on. In fact, that creates some of the differences that Mr Pouliot was referring to in his comments, because under the Capital Investment Plan Act certain activities of the government were moved into some of these corporations. Their budget was therefore not included in the budget of the province but was included in the books of the province. That's where other differences arose.
There are a number of issues one may wish to add in, the key issue being the one you first referred to, which is whether or not I should have the right to do value-for-money audits on transfer payment recipients or grant recipients, where they are separately governed.
I do not want to audit the affairs of a medical office of a doctor who receives OHIP or of a welfare recipient under GWA or under the Family Benefits Acts, definitely. That's about $10 billion of the law, so that's why I'm coming down from 40 to 28. But the 28 are separately governed organizations with a separate board of directors or even elected officials. That's going to be another delicate issue, whether school board trustees, for example, will be willing to have the Provincial Auditor look over their shoulder although they are separately elected. That's why the idea of hearings, introduced by the committee, I don't consider a bad one.
Mr Agostino: I think it would be very good if there is a mechanism. I certainly think to have the reports come more often and maybe more timely would probably be useful in saving some money or introduce efficiencies, rather than wait till the next year and then implementation. If we can cut six months or nine months out of that process, I think it benefits everyone.
Along the same line, when you through your audit flag that there is a problem -- one example that comes to my mind is the issue of the allowance given to disabled individuals in group homes, those kinds of settings. One of the things that was pointed out is that staff has sometimes used that money for other things that are not necessarily for the clients' purpose. When your audit process notices that, or that an elevating device has not been inspected properly, those kinds of things, does anything happen with that information at that point? Does it get referred to the appropriate ministries or the appropriate staff to deal with? Or does it just wait until you do your audit report and then action is taken from that? What do you do with that information when you become aware of it? Say it's six months or eight months before a provincial audit report and you notice there's a particular problem in this type of program or area. Does anything happen with that?
Mr Peters: Oh, yes, it happens. Actually, what we do in all of these circumstances is that the ministry responsible is immediately made aware of our findings. To give you a timetable, the 1995 annual report is possibly a good example. Essentially, the ministries involved knew of all our findings by the late spring of 1995. What I'm driving at is that we want to fix the problem and not fix the blame, and there's nothing to be gained by playing a game of gotcha in front of this committee.
What I'm hoping for, even in the 1995 report, if you decide to deal with any chapters, is that the deputy who comes before you can actually say: "Yes, we were advised of this problem. We reacted to it. I am now able to report to the committee that I've fixed it. This is what I'm doing about it." It's a constructive process as opposed to be a fixing the blame.
The problem gets fixed pretty well right way. With the elevators, they're working as hard as they can to get this risk assessment system in to ensure the safety of the -- I wouldn't be surprised if it's in right now.
Mr Agostino: To follow up on the same point, would that not be put in the report? Say that nine months ago there was a particular problem identified in your report. Since that time, obviously, it's been pointed out to the ministry, they have gone ahead and put the mechanism in place and fixed the problem. Would that kind of information be reported as well in your report, along with the fact that this problem was identified, and then, "Since that time, steps have been taken to correct the problem. I'm satisfied it's working properly now"? Is that kind of information included in your reports as well when that happens?
Mr Peters: With every recommendation in this report, there's what we call a ministry response. That ministry response is essentially the ministry outlining either what action it has already taken to fix it or a commitment to fix the problem. I'm very pleased to report that in virtually 100% of the cases, that's what happens: either they have taken the action to fix it or they have made a commitment to fix it. That is indicated in every single one of the recommendations. That's the new style of reporting.
Mr Agostino: Often what you'll find is that we hear about the problem, but you rarely does the information come out in the media reports that steps have been taken to correct that thing, and the public gets the perception that it's still happening while in effect it may have been corrected and fixed already.
Mr Peters: Which we are indicating. The cornerstone of this report is that we said, "We are pleased to report that action has already been taken," or "They have committed to take action."
Take, for example, the elevators. If we come to this committee too early, this is a governance committee as opposed to a management committee. What we would like to do is to give management a chance to fix the problem before the legislators get involved in it. That is really the approach taken. If you as a committee identify a problem that you would like us to look into, that's a different kettle of fish, but on the ones we pick for audit, the hope is that everything is fixed or a commitment is made to fix it before it gets to our monitoring body.
Mr Skarica: I'm new to this game, and as a first-timer, one observation I've made that gets me down at times is the fact that everything becomes so partisan. When you go to the House, if the Conservatives say something is black, the NDP immediately say it's white and the Liberals say it's grey.
I had to read some committee reports on OTAB, because I'm involved in a review of it, and after a while it became totally obvious. You wouldn't even have to read the name of the person, you could just block it out, and you could tell from reading the speech the person made whether he was Liberal, PC or NDP. The whole thing became -- and I read hundreds of these pages -- a total waste of time, because people were going in there for partisan purposes and just to make speeches.
One thing I'm hopeful of, and I'm putting this to the other members, is that we all have an interest in value for money. I don't think that's a partisan thing at all. I'm hoping that we all will work together and not get into those partisanship type of speeches which virtually render the committee a waste of time eventually. That was the impression I got from reading these Hansard reports.
The Chair: Your comments are very well taken.
Mr Crozier: I have been a small business person for some 22 years; as I mentioned earlier, I am an accountant by profession. I echo those comments very strongly. When I joined this committee in early 1994, those same thoughts were on my mind. I agree with you. You could see where in many cases -- not all, but in many cases -- it turned into a partisan thing.
As you get further on in your mandate, part of the reason is that it's your government, your management team, and suddenly, like any person under normal circumstances, you go a bit on the defensive. Yet I don't think that's the real intent of this committee or of the Provincial Auditor. It is, as you have said, to spend our money, each of our dollars, more wisely.
Since we have a fresh start, since you are at the beginning of your mandate, I hope we can do that. I think this is one of the few committees that can operate in a very non-partisan way for the benefit of the whole province, and we have an independent person in the Provincial Auditor to provide us with that kind of direction.
I go on record as saying, may each of us remind the other when we get into that other position that we should back off and do it for the best of the province.
Mr Pouliot: I want to echo briefly what has been said. It seems that we have unanimity in terms of style. Mr Chair, I promise not to sin again, and hopefully nothing will happen that will force me to become a recidivist, to go back to my sinful ways. We're all clear in intent that we're going to try very, very hard, but sometimes there are human frailties, and your qualities are not legion and your faults are many, many, and what the heck, you can't resist. We'll try very hard.
Mr Hastings: I want to comment briefly on a point in Mr Peters's remarks to the media yesterday, and I hope he's doing something about this. On the last page, dealing with out-sourcing of the computer inventory program, you make a comment that it might be useful to out-source payroll. I'm wondering whether your office is considering developing some kind of standard contract for out-sourcing so that when this kind of approach is taken, the people carrying out the program have certain specific criteria as to what to look for more than just the ordinary tendering of such a proposal for such an activity.
I'm wondering whether it's your office's responsibility to develop a document of standards, or whatever you would call it, for out-sourcing activities, so we would have more policy compliance on avoiding this kind of situation, where they spent the money but there wasn't very much of value found in it, or they didn't follow through on what they wanted in the first place.
Mr Peters: Actually, the process you describe is more a management process. We can help outline the criteria that maybe should be in there. However, I should mention to you two things about that. First, it was somewhat atypical, and we agree on that. The second is that actually there are good guidelines in place, issued by the Management Board Secretariat, about how to do this and how to work with out-sourcing. Somehow, this one just hit the thing the wrong way. But they are there.
It would not be our role to give those guidelines. We certainly let ministries know what criteria we would audit against when we examine them.
Mr Hastings: Then if there is that document, why wasn't it followed?
Mr Peters: To be frank with you on that one, it is exactly the kind of question I hope this committee might ask if it wants to follow up on that situation and get a good answer to that question.
The Chair: If there are no further questions or comments at this time, it now falls to our committee to select the first piece of business we'll be dealing with. I'm proposing that our subcommittee meet to that end on Tuesday of next week, immediately after question period, together with Mr Peters, to give some consideration to that. I also want to draw to our committee's attention that this committee has not yet, to my understanding, addressed the contents of the equivalent 1994 report, so there is all kinds of material for us to work with.
Mr Crozier: I'd like to get my two cents in to the subcommittee. I hope we pick up where the last committee left off and look closely at the Audit Act itself. It's a big job and we should get at it as soon as we can.
The Chair: Again, I propose that the subcommittee meet on Tuesday, November 21, immediately after question period, in the opposition lobby library -- you'll be quite welcome there, Steve, don't worry -- together with Mr Peters. That's where they've met traditionally in the past and it seems to be very convenient.
That's agreeable to all members? Seeing no further business for the day, the committee stands adjourned until 10 am next Thursday.
The committee adjourned at 1135.