AG says that feds hand out big bucks with no control

Canada's auditor general says Ottawa has no way of tracking what happens to billions of dollars it hands over to the provinces and a separate audit suggests a lack of government monitoring may be risking a serious health hazard.

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CTV.ca News

Date: Thursday Feb. 5, 2009 4:55 PM ET

Ottawa has little control over billions of dollars in federal finances which are regularly transferred to the provinces for specialized programs like housing and transportation, Canada's auditor general said.

Sheila Fraser's latest report to Parliament, released Thursday, states that Ottawa uses trusts to funnel money to the provinces, but once the money is sent, the provinces are free to spend it as they see fit.

Fraser's report also found that the federal government has no legal power to ensure that the funds are spent on the intended initiatives.

Though Ottawa's trust transfers include "operating principles," which are supposed to act as spending guidelines, they lack teeth and can't be enforced, said Fraser.

"However, because these operating principles are not part of the trust agreements, they are not legally binding," said Fraser's report.

Read the auditor general's report by clicking on the link that appears to the right

Over the past 10 years, the federal government has transferred $27 billion to the provinces through different trust agreements, states the report.

Other key findings in the auditor general's report pointed to problems in the way that Public Works hands out some professional services contracts and in the general operations of smaller government agencies.

Those include bodies like the CRTC, the Canadian Human Rights Commission and the Copyright Board, which Fraser said aren't given a fair shake from their parent organizations.

Fraser said that the Canada Revenue Agency mismanages IT spending and that Health Canada's recent public reports on wait times and quality of care are ineffectual.

The release of Fraser's document, which was delayed for weeks after Prime Minister Stephen Harper prorogued Parliament in December, coincided with a report from Canada's environment commissioner.

The environment report slammed the efficacy of the government's green initiatives, which have cost Ottawa billions of dollars in recent years.

With files from The Canadian Press

Comments are now closed for this story

But they will take care of the crisis now!
said

Your government at work for you! and now they tell us trust us we will fix that cricis by investing $40 to $50 billions!

Good luck!

PoorNbroke
said

Where can I get an application form
for one of these
projects?

Auditor
said

I thik the Auditor General may be trying to make a name for herself through controversy.

I am a municipal auditor and I can tell you that there is usually control and a reporting function to grants that municipalities get. Now I realize she is speaking of Federal money that flows to the Province, but the Province usually then flows the money to the municipalities.

She may be speaking to the fact that the reporting function is rarely used. There is usually a provision in a grant that stipulates that the spending can be audited, but it rarely is. However, that does not mean the funds are not spent properly. A grant will stipulate what program it is for and if it is not spent on that it is setup as deferred revenue until it is spent on the proper expenditures. It is my job to make sure that happens.

In my years of municipal auditing, I have never seen a grant or any other type of funding this is not spent on approved expenditures as dictated by the funding agent.

Gerald from Belleville
said

Interesting that Fraser cites housing as an example.

Always the push-pull phenomenon between federal and provincial jurisdiction. The Constitution and even BNA set out clear powers, for example: federal responsible for defense and international relations, and provincial for social welfare programs.

Then comes encroachment from one side to the next. Québec provincial government sending "ambassadors" on its own behalf to other countries is stepping on a federal area of responsibility. On the other hand, the federal government getting involved in housing program and daycare is a clear encroachment on provincial areas of jurisdiction.

If the federal government has to give money to provinces for housing, then there is a problem. The federal government has no legal basis for doing so. When they give out monies for such programs, they are essentially blackmailing the provinces: do as we tell you or we don't give you the money. In all fairness, that the federal government has that money to hand out is not right: it should have stayed in provincial hands to begin with!

The federal government has NO legal or traditional power to regulate how provinces deal with certain issues. This push towards centralization actually goes against how Canada was founded and how it is supposed to run. It's also one of the main contentions of Québec separatists, and even some other "provincialists", like in Alberta, BC, and the Maritimes. The more power Ottawa holds, the less provinces can look after their own interests. They look at what happened for years: Ontario made huge amounts of cash off Alberta because it was favored by Ottawa.

531111
said

Why does this not surprise me in the least.You go to the Government with a viable project with green inititves and large numbers for employment and it takes 5 yrs to go thru the process and then they just say no,,,sorry. In the meantime, they just spent twice what you needed for the project to get a no answer. How's that for waste. Bet it happens every day.

Darren
said

Thanks David Miller!!

Hannah
said

It really hurts to see this sort of mismanaging happen, to mention the executives who give themselves raises with bailout money, while my family teeters on the brink of bankruptcy and both working adults are unable to find a job despite being educated professionals with decades of experience.

Phineas from the Okanagan
said

Wow. Just more proof that you don't need a grade seven education to be in government.
It is sort of a no-brained from the beginning that something like this is a must.
I seem to think that people go to law-school to get into politics, only to learn the loop-holes to try and cover your butts and your spending trails, and to make friends that also can help you do that.
Lets hope they fix that quick like.

To: Mr Auditor nice try! Look again!
said

Nice try body but the fact is that everything done by government personnel cost 3 times the price of what it cost in the private sector.

We beleave you did not see anything but this does not mean everything is fine.

They are wasting money because they have no clue of what managing mean!

The first task of an elected member, the most important to him is what to do to get re-elected.

In case he does not makes in the second election, he takes full advantage of the system to reward his friends, family and business associates.

And the Auditors can do little but to report a few points he can put his hands on because he does not see most of what is going on anyway.

PCJ
said

'Fraser's report also found that the federal government has no legal power to ensure that the funds are spent on the intended initiatives.' - enough said? Lower levels of government are, of course, anxiously awaiting such laws...

Cambob
said

Graft happens.

Even in small office petty cash, there will always be a bit of change missing. Due to poor calculations, missing receipts or common thievery. If there is a billion dollar project and a million goes 'missing', it may be unreasonable to say the project is mismanaged.

So, some schmuck skims cash out of the pool. Yes, that is distastful and probably illegal, but it doesn't mean the money is "lost". The person who takes the money will spend it.

My point is, try not to panic and freak out when reports like this come out. It is unfortunate that accountability is lacking, but if the function of the grant/loan/payment is achieved, that is the primary point.

This is also why inexcusable graft, such as the grossly mismanaged and misfunded gun registry must be investigated. Not only did the budgeting of this disaster blow wildly out of proportion, but the end result of the program achieved virtually no sustainable effect.

Pompa
said

Who do we believe? Sheila Fraser says ther is no control over how the money is actually spent, and "Auditor" says he has never seen a grant given without guidelines as to how the money is to be spent-and it may be audited. I would like to believe Sheila Fraser, but having worked in a government office, I tend to believe "Auditor". They really have it down really good what happens with the money. I would be nice to see Sheila and "Autitor" come face to face to discuss this more thoroughly.

Layton B in Moncton NB
said

Art in PEI
said

It seems to me that the federal government should cut the taxes collected for these transfers and let the provincial governments tax to cover their own jurisdictions. Ideally the only transfers to the provinces should be equalization.

M. Cameron
said

Liberals lost power because they lost a bunch of money. Conservatives lose a bunch of money... it's about to come full circle.

Doug BC
said

I usually have confidence in what Sheila Fraser has to say.I also think governments take notice.Though finding pragmatic and affordable ways to implement changes that let things get done without undue delay at a price we can afford is rarely easy or quick.
I seriously doubt that most provinces want the federal government micro managing their economies,so I guess there is a fine line to walk here.One that has some level of accountability and still allows for some provincial autonomy,or some independence in their own institutions.
rock---FEDS---hard place
If the micro manage they are dictators,if they don't they are irresponsible.I guess that proves it's hard to find good help these days.

Brad from Pitt
said

Her report only stated the fact. Whether it is right or wrong Canadians would decide on that. The Government also has the discretion to act or not act upon her observations. So for those who comdemned Fraser please open your eyes. Without a balance of power and without an independent watchdog, power will corrupt. Look at what Chretien did in the ad scandal. If multi-million dollars went undetected by him, it does not say too much about the him as a Prime Minister. He might have been cleared by the court but not by me. Its BS that his closest allies did all that without his knowledge or consent.

So Fraser has a definite role to play and must not be underestimated.

Gerald from Belleville
said

In response to comments which refer to the provincial level of government as being a "lower level of government".

Wrong. Provincial and federal governments are NOT in a over / under relationship but in a side by side one...in theory at least.

The comments say that the "Lower levels of government are, of course, anxiously awaiting such laws". Again...politics 101. These laws already exist, as stated in the 1867 Constitution and the "new" Constitution. The areas of responsibility are clearly distributed between the federal and provincial levels, and shared in some cases (municipalities get their powers from the province).

Examples. Federal: Defense, international relations, criminal law. Provincial: civil law. Shared: Transportation.

Furthermore, in Canada, any "power" which isn't mentioned specifically, or is ambiguous, is by default attributed to the provincial level of government UNLESS there is an agreement otherwise or the federal government can make an overwhelming case that it should, by virtue of necessity rather than desire, be responsible for said "power".

Alberta Believer
said

Yes but ....

There is no way that this minority government headed by Prime Minister Stephen Harper, thought of by many as a cold economist would ever survive with three opposition parties to their left if they (the government) didn't spend the cash, especially now during a downturn.

The Conservatives would have never agreed to a "bailout package" or Trudeau era deficit spending if they weren't under threat of the opposition bringing down the government.

Shiela Fraser could talk but the Tories have three guns put to their head demanding that they spend loads of cash.

Phil in Markham
said

well boo hoo
reminds me of the $1,000's of dollars in child support I pay, I have absolutely no control over the spending of it, I just hand it over ... by law. Will the Auditor General help me?

Warren Buffet
said

Well, if they want to funnel some of those funds to us poor taxpayers without any control, then my bank account will me more then happy to take the money.

But in all seriousness, aren't these the same people who lambasted the Liberals poor control over money and spending?

hollinm
said

This is not new and not surprising. A lot of the money sent is really for programs that fall under provincial jurisdiction i.e. education and healthcare etc. The feds are really a collection agency which in turn sends the money to the provinces. So we should get off our high horses and let the provinces collect their own taxes and spend the money as they see fit if we want real accountablility. That way they will be accountable to their taxpayers.

eddy
said

ya look what happened with gun control and the sponsership scandle.The funny thing is that no one is ever held responsible for handing out the money look at what happend to Pirrer Turdeau he build marbel airport and cost tax payers about 18billon and now they are not useing it any more.

Nick in Gatineau
said

It is money that belongs to the provinces. So they can spend it however they see fit.

If your employer gave you a paycheck and told you that you can only cash it if you allocate the funds where HE says they should go; you would tell him to take a hike.

These monies are how the federal government forces provinces into line. These monies are provincial income taxes that are ammassed by filing your federal income tax forms.

In Quebec, we fill out 2 forms and pay to 2 different entities even though our federal taxes include a Provincial portion. If Quebec did not do this, it would be a wasteland.

As for the AG making a name for herself...

She did it with the Sponsorship Scandal even though the amounts stated were drastically overinflated and the financial links to the actual MPs were never truly answered.

The lawyers got more than what was supposedly stolen.

In fact the Hydro-One credit card debacle was more than the Sponsorship Scandal but no-one said anything about that.

HILNELSON
said

The Feds process the money to the Province and then the Province spends with no need to show how the money was spent. The next thing you know the provinces are back with their hands out asking for more money from the Feds. What the taxpayers need from both the Feds and the Province is the accountablity of where and how this money is spent.

GM
said

Well how much money have the Feds kept from gas taxes that was supposed to be given back to the provinces for road maintance, it goes both ways, And just because they don't know where it's being spent doesn't mean it's not possible to find out, just ask for copies of the provinces budgets and see for yourself.

Ray in AB
said

It sounds as though this=ngs have been running to smoothly for too long so the auditor general had to make something up to justify the billions they spend figuring out how millions are spent. Do away with the auditor general. once the payments have been given to the provinces, its up to those provinces to act in the best interest of there people. we do not need more levels of reporting. it cost too much.

Auditor
said

To the "Look agin" guy,

You're not even talking about the same thing. Your talking about spending in relation to elections, this article is talking about the Feds controlling the spending of the Provinces.

How much do you think it would cost for the Feds to dictate how each Province spends its money?

Be realistic. The Province sets its budget and then spends accordingly. The Fed money comes in and gets distributed based on the budget spending or based on the funding's purpose. If the funding is for transporation, of course it gets allocated to transportation, that doesn't mean the Feds dictate what road should be worked on.

Can I ask what makes you an expert? You seem to think elected officials are putting the money in their pockets and I don't believe that is happening.

Gail (Hamilton)
said

We get news. We get reports. We, the people, are the employer who gets to vote on ethics, accountability, and leadership, and are doing a terrible job. We need to stop focussing on popularity, divisive topics, and more on our needs, rather than wants. Stop government growth! Smaller is easier to manage, and this is one situation where bigger isn't better. I'd like to know what the percentage is of people working for the government vs. the private sector.

robert
said

A vetted Auditor General report? Just fills me to the brim with confidence in the Harper government.

the old lady
said

The A.G. is still doing her job in a honest and stright forward manner. Good on Her. She is a true Canadian.

g
said

Either Sheila Fraser is a genius or the government is just drunk with power and does what it tootin well wants.

I just have no clue when I see this.

But i have such respect for the woman!

Linda in Vancouver
said

I totally agree with the post by "Art in PEI".Bang on my friend.
Let's face it.One province goes to the federal government asking for money for something specific,like housing,or whatever.Then Ottawa has to give equal amounts to every province in the country.Whether or not they need money for that specific reason.If they do,we get waste.If they don't we get accusations of favouritism.
Make the jurisdictions who want to spend the money raise the money.Voters can then decide who to reward,or who to punish when election day rolls around.
The classic argument was McGuinty whining about the GST cut.DUH!! Hello Dalton.If that cut offended you you had the authority to neutralize it by offsetting it with your own PST. Why would you want to impose your wants on every other province??
One province manages it's affairs poorly,and it goes to Ottawa for more money.The other province manages more prudently,and it's efforts are used to pay the one who squanders.
Let's get some concensus between all provinces as to how to divide equalization monies fairly,and who has jurisdiction over what.Then we can all set our own priorities,and deal with our issues closer to home.
If BC want to spend it's "transit money" on social housing,so be it.It costs the same,and we get what we really need.Not what Ottawa thinks we need.

Tyler from Kamloops
said

Is this really news???
How do you put a leash on the provinces, and micro-manage every single funding initiative? Would the auditor general rather we hire a thousand more bureaucrats to track how the Provinces are spending the money???

Richard L. Provencher
said

I had the privilege of working in Municipal and Provincial governments and from my experience the funds are used for programs intended. Unless there is a massive snow season of course and money has to pay for the super-extra costs. There is also such a thing as trust and partnership in managing the Canadian economy.

Brian J
said

As a taxpayer I hand over big bucks to the Feds with no control.

The difference would be ....

Michelle
said

But Ms. Fraser they don't want to take responsibility for how the money gets spent because then they could be held accountable. Government is all about avoiding accountability. Don't I know it as a parent of a child with autism. Try and get a little help for special needs kids and you quickly find out that although money is being spent on special needs services, nobody but nobody, is actually responsible for how that money gets spent. It is unbelievable. Unbelievably frustrating.

Alex (Toronto)
said

Is the Auditor General suggesting that the provinces provide reports to the federal government on specifically how the transfer payments are spent. Or perhaps the provinces would have to get approval from the federal government for spending? Is that what is being suggested?

More logically, the Auditor General or other federal government authority could recommend a standard reporting method where the provinces could report to their own citizens how they are spending money in categories where federal financing is provided. The federal government could read the reports and make whatever policy decisions are appropriate.

Because different provinces have different levels of wealth, this can't be solved simply by downloading tax authority to the provinces; that would just make poor provinces less competitive. Federal programs like health care are intended to ensure a standard minimum level of service across the whole country.

Auditor
said

(This is my last post)

GM,

In Ontario, the provinces have been receiving gas tax funds for three years now. In fact, the auditors of the municipalities have to complete a special audit on the spending of the gas tax money to ensure it is spent according to the agreement.

I'm sure it's the same in the other provinces.

Ron
said

This whole issue of blaming the politicians for everything that goes wrong does nothing but allow those responsible a free pass. There isn't a Minister around, Liberal, Conservative or NDP who has the necessary skills, time and expert knowledge to manage every single project in the government; to supervise every single civil servant; to micromanage every single programme or handout. That is why we hire millions of public servants. It is their job to ensure money under their care is spent wisely; to ensure programme spending they are in charge of is use properly. When mistakes are made and money misspent, we need to start blaming the person who was being paid to ensure those mistakes or activities didn't happen. If there is no policy or legislation in place, then we can blame the politican. If it was an incompetant or lazy civil servant then that is where the blame belongs and that person should be held to account.

York McFarlen
said

York in Powell River, BC

The Federal Government also distributes money to the provinces to be used for health care to give some uniformity to a national health care plan. BC doesn't spend the money on health care but distributes it to other programs. So in BC everyone has to pay for their own BC Medical Plan. We are the only province in Canada where we don't have access to a national health care plan. I agree, the money should be spent on the program for which it was intended.

John in Calgary
said

Regarding Auditor Comments:

Ok that's fine at the level you are talking about, but you're not saying that the money that goes to municipalities was intended for that purpose on the federal level.

If the Feds said that the money was to go to Housing and the province sends it down the ranks to be spent on Roads that isn't something you would know would you?

The only thing you know is that the province said to spend it on Roads, so it's spent on roads.

Where's the opposition supporters on this one? What happened to Harper's wasteful spending comments?