Canada can't account for $3.1B in anti-terror funding, AG finds

The federal government needs to do better at tracking and evaluating some of its program spending to ensure taxpayer dollars are being well-spent, Auditor General Michael Ferguson found in his spring report released today, and one of the most striking examples is that it can't account for $3.1 billion in anti-terrorism funding.

The lack of information on spending and on results achieved for money spent is a common theme throughout Ferguson's report, which includes 11 chapters in total.

In his audit of the Public Security and Anti-Terrorism (PSAT) Initiative, Ferguson suggested there should have been a government-wide review of spending by 35 departments and of the results for the program that was funded between 2001 and 2009.

He found that departments reported spending $9.8 billion of the $12.9 billion allocated for security and anti-terrorism measures under the program but he couldn't determine where the other $3.1 billion went. The Treasury Board had no clear answers for him.

Ferguson said he's not concerned the money is missing, it's the information about it that can't be nailed down.

"It's a matter of missing that last link in putting that information together," he said at a news conference in Ottawa Tuesday morning. If the money was reallocated from the anti-terrorism program to another program, there should have been approval for that, he added.

"We don’t have enough information to say whether that happened," he said.

The NDP jumped on the accounting gap as a sign the Conservatives can't manage the public purse.

"It is really scandalous that [the government] can't account for the $3.1 billion," NDP MP Malcolm Allen said. NDP Leader Tom Mulcair called the unaccounted for money a "$3-billion boondoggle."

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Prime Minister Stephen Harper said the issue raised by Ferguson has nothing to do with the improper use of money, but rather with the categorization of spending by different departments over the years.

"There's some lack of clarity, the auditor general's made some suggestions on how we can be more clear in our tracking in the future. We will do that," Harper said in question period. "Unlike the NDP, we remain fully committed to legislation and to expenditures to protect Canadians from terrorism."

Treasury Board president Tony Clement said there are no allegations of misspent or misallocated money and that Parliament was "in the loop" on how money was spent.

"All government spending, every nickel and dime is reported to Parliament and accounted for each and every year in the public accounts," he told reporters.

Clement said he accepts the auditor general's recommendation for his department to provide a clear picture of spending and results for government-wide programs.

Some of the other main findings in the report include:

• Some departments, including National Defence, aren't always doing proper security clearances for people and companies hired on contract.
• The Truth and Reconciliation Commission and the government are not acting in a spirit of reconciliation to create a complete historical record of the residential school system, and there is no plan on how to resolve their disputes.
• The Public Health Agency of Canada is doing a poor job of managing the Canadian Diabetes Strategy and the impact of the program is unknown.
• The Canada Revenue Agency is doing better at collecting unpaid taxes, but needs to do more given there are arrears of $29 billion.
• Better reporting on how development aid money is spent and what results are being achieved is needed.
• There are concerns over the sustainability of search and rescue activities because of aging equipment and personnel shortages.
• Human Resources and Skills Development Canada (HRSDC) is doing better at cutting down employment insurance overpayments, but still losing millions a year.

Ferguson's report on anti-terrorism spending comes at a time when the subject is dominating public debate and Parliament Hill. Anti-terrorism measures were debated in the House of Commons last week, on the same day that arrests were announced by the RCMP. A man from Toronto and another man from Montreal are accused of plotting a terrorist attack on a Via passenger train.

Search and rescue management questioned

Safety and security were also raised in other chapters of Ferguson's report. He found that some departments, including National Defence, are not following proper procedures for security clearances when outside people or companies are hired on contract. In some cases people were awarded contracts who did not have appropriate security clearances.

Defence Minister Peter MacKay's department is also singled out in the spring report for its management of search and rescue (SAR) activities. Ferguson said he has concerns about the sustainability of SAR activities because of aging equipment and personnel shortages.

The government has been trying to acquire new SAR aircraft since 2002, but the replacement project has been plagued with problems and controversy. A contract to replace the Hercules and Buffalo planes won't be signed until next year at the earliest and in the meantime, money has to be spent on upgrading and maintaining the older aircraft.

Ferguson also has concerns about the information management system used to manage SAR cases, saying it is "nearing its breaking point." A replacement system isn't expected until 2015-16.

MacKay acknowledged there have been ongoing delays with the procurement process and said he accepts the report's recommendations.

"The reality is that while the process is underway it has not delivered the aircraft that we need," he told reporters. He also said he is acting on the security clearance concerns identified in the report.

Ferguson's office also looked at how some departments are doing at implementing Treasury Board requirements to evaluate their programs.

"Overall, we found many areas where the government should improve on the results that it achieves with taxpayers' dollars," Ferguson said.

'Significant weaknesses' in evaluating programs

Ferguson found that at Agriculture and Agri-Food Canada, Fisheries and Oceans Canada, HRSDC and Treasury Board, there are "significant weaknesses" when it comes to using program evaluations in decision-making.

"As a result, decisions have been made about programs and related expenditures with incomplete information on their effectiveness," said Ferguson. HRSDC and Agriculture and Agri-Food Canada did not evaluate their ongoing grant and contribution programs over a five-year period, the audit also found.

There is also limited information on the results of spending on international development assistance, Ferguson's report said. He said the annual report to Parliament on how the money given to multilateral organizations is spent "lacks clarity, and we identified some inaccuracies."

According to the legislation governing official development assistance, programs are supposed to have a focus on poverty reduction, take into account the perspectives of the poor and meet international human rights standards. Ferguson's audit raised concerns about those last two provisions.

"Decision makers do not have all the information they would need to determine that the conditions in the act are respected," he wrote.

About $5.2 billion was spent on development aid in 2010-11.

Ferguson also looked at how the Public Health Agency of Canada (PHAC), Health Canada and the Canadian Institutes of Health Research have implemented the Canadian Diabetes Strategy. What he found is a poorly managed program that hasn’t defined a strategy, priorities, performance measures, timelines or expected results.

PHAC gets $18 million per year for the pan-Canadian diabetes strategy, but according to Ferguson, it's not keeping tabs on whether its activities are helping to prevent and treat diabetes. The government also funded $44 million in research in 2011-12.

Ongoing disputes over residential schools records

Another chapter in the spring audit report focuses on whether the Truth and Reconciliation Commission, created as part of the settlement over the Indian residential schools system, is getting what it needs from the federal government.

"The Truth and Reconciliation Commission and Aboriginal Affairs and Northern Development Canada have been unable to co-operate, in the spirit of reconciliation, to create as complete as possible a historical record of the Indian residential school system and its legacy," he said.

The commission has a $60-million budget and five-year mandate that ends in July 2014, and is responsible for collecting records and setting up a national research centre. The problems that have plagued the commission so far don't show signs of being resolved, according to the audit, which found no detailed plan to resolve the issues.

The spring report said the CRA is making satisfactory progress on tax collection, but "given tax arrears of $29 billion, the agency needs to continue to work to refine and improve its tools."

Human Resources Minister Diane Finley's department is also doing better at reducing EI overpayments, but is "missing opportunities" to minimize costs to the program, the audit found. Close to $10 million per year isn't being recovered because cases are being processed too slowly, he noted.