Auditor General's Report: No Way To Measure Impact Of Government Jobs Fund

Auditor General Economic Action Plan

First Posted: 11/22/11 10:16 AM ET Updated: 11/22/11 10:50 PM ET

OTTAWA - The federal auditor general says he's been given no way to measure the employment impact of a billion-dollar fund designed to maintain or create jobs during the last recession.

The Community Adjustment Fund was one of three programs under the Conservative government's self-styled Economic Action Plan that were examined by interim auditor John Wiersema.

The heavily promoted plan was a two-year, $47-billion stimulus spending exercise launched in January 2009 in the midst of a global recession.

Wiersema told a news conference Tuesday that his "overall message" is that the government should follow through on its commitment to Parliament to report on the impact of the full $47-billion action plan, "both in stimulating the economy and creating employment."

"Whether or not we can rely on what the government does in reporting on the Economic Action Plan, well, we haven't seen the government's report yet," said Wiersema, whose permanent replacement, Michael Ferguson, was appointed earlier this month by Prime Minister Stephen Harper.

"I haven't audited the models that it will use."

But opposition critics said Wiersema's limited audit covering $7 billion of the full program gives them little reason for optimism that any government report will be verifiable.

"I don't have confidence that the government is going to come clean on what the full results of the Economic Action Plan were, because they haven't monitored it, so they don't know," NDP critic Peter Julian told a news conference.

"That's my conclusion of reading the auditor general's report."

Finance Minister Jim Flaherty said there is clear proof the Economic Action Plan created jobs.

"The positive impact of the economic action plan which the official opposition voted against can be seen in the almost 600,000 net new jobs for Canadians since the end of the recession," Flaherty said during question period.

"It was a good plan. It worked. It is regrettable that the NDP chose to vote against it."

Despite the Harper government's massive promotion of the action plan, Wiersema found a common theme among the three specific programs and $7 billion in spending he examined: All are hobbled by a failure to coherently say whether results met expectations for the dollars that were spent.

The auditor general's criticism was particularly pointed for the $1-billion Community Adjustment Fund, which was created with the express purpose of creating and maintaining jobs in smaller communities hard-hit by the recession.

"Given that objective, we think they should have had a mechanism in place to actually measure how it did," Wiersema told reporters.

Wiersema, who replaced retired auditor Sheila Fraser on an interim basis last spring, also looked at the $4-billion Infrastructure Stimulus Fund and the $2-billion Knowledge Infrastructure Program.

The programs were part of a whole-of-government advertising and promotion scheme in which tens of millions of dollars were spent on advertising.

A slick website, criticized by many observers for its partisan overtones, directed readers to community-funding announcements by MPs and cabinet ministers, complete with a map showing project locations. More than 8,000 project signs were erected across the country, tracked by public servants on a weekly basis with reports going all the way up to Prime Minister Stephen Harper himself.

Yet the auditor found that on the most critical performance appraisals of the actual stimulus programs he examined, Canadians remain in the dark.

"In our view, the fragmented presentation made it difficult for parliamentarians and Canadians to obtain an overall picture of results achieved against the planned performance expectations and public resources spent," said the audit.

It noted the results of the three programs audited cannot be extrapolated to the entire $47-billion action plan.

Part of the audit problem, said the report, is that the examination took place during a period when the stimulus spending deadlines were extended to Oct. 31, 2011.

Only about 70 per cent of the projects examined met the initial March 31, 2011, government deadline, Wiersema noted, although the prime minister had stated last Dec. 2 that nearly 90 per cent of projects "will be done" by the deadline.

Even those projects that were completed by the end of March had another 90 to 180 days to submit final reports, meaning the auditor general's office did not have these reports in time for the audit.

Projects that were extended to Oct. 31 have another 90 days to submit final reports.

The auditor also noted that, after it became apparent there would be unspent stimulus funds for a variety of reasons, 42 additional projects were approved by Infrastructure Canada last December.

Those 42 projects were approved "on the condition that they be completed by Mar. 31, 2011," stated the audit report. Instead, it found that 34 of those projects opted to take the extension to October.

In a previous audit of the Economic Action Plan conducted last fall, former auditor Sheila Fraser gave the Conservative government "high marks" for its management of the initial spending roll-out. Civil servants got the money flowing quickly without abandoning government controls or oversight, said the October 2010 report.

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OTTAWA - The federal auditor general says he's been given no way to measure the employment impact of a billion-dollar fund designed to maintain or create jobs during the last recession.The Community A...
OTTAWA - The federal auditor general says he's been given no way to measure the employment impact of a billion-dollar fund designed to maintain or create jobs during the last recession.The Community A...
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HUFFPOST SUPER USER
Kristopher Leang
training to take down the elite
12:56 PM on 11/22/2011
you wont find anything because they didnt do anything... the infrastructure plan simply temporarily brought tens of thousands of white middle age men jobs so they would vote con..

as for the community adjustment pla.. my town a sprawling down with a macdonalds, and walmart and 2 timmies, had the highest youth depression (in Ontaio at least) caused by unemployment. we didn't see a freaking cent during the deep winters of the recession. during the recession this gov failed every single vulnerable person except those middle class white men i mentioned earlier. students can't get those jobs we are studying, nor are the elderly able 2. and how many women work in construction vs men in those roadside crews??? sometimes ill see 1 or 2 in the groups of 15 occasionally.

it should have been called the buy middle class white mens stimulus while those that need help most get poorer. university tuition went up about 2700 a year since the recession and thanks to the 40 000 jobs losses last month im pretty sure we are now below pre-2008 recession employment numbers.

yay for oour wise leaders!! truly looking out and improving average canadains lives
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Russg
12:21 PM on 11/22/2011
There is no reliable way to measure whether or not stimulus works as we don't know how things would have gone without it. That's one of the big problems with this philosophy.
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Kristopher Leang
training to take down the elite
01:01 PM on 11/22/2011
its not a problm with his philosophy. the idea is still sumhow to get a clear picture, all this goes back to properly devising a test with a control group and treatment group. but yess as you said how do we have a control group (ie have a segment of canadian population not exposed to the stimulus plan in general and compare this to the treatment group (those exposed)..

maybe a comparison of whom it was implemented (ie middle class white men recieved the majority of its help through infrastructure spending) but not so much students , women or the elderly. (but agian in my classi guess you could use precession matching (instead of random assignment) since we would want to test form groups particularly exposed to the variable.

im no auditor general however..
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HUFFPOST SUPER USER
Russg
11:46 PM on 11/22/2011
The philosophical problem is that there is no way of affirming whether or not their belief is correct. Typing that, I thought of religion. I don't think we should have the same faith in economics that we have in God...

The control group isn't a bad idea, except you have to remember that there could never be a true control group. There are far too many variables that it would be impossible to account for them.

In the end, there's no way to ever be certain whether or not stimulus is effective. There are continuous attempts to quantify the affects of stimulus. The people who try to math it out are known among economists as 'econometricians'. It is a pseudo-pseudo-science that is looked down upon by most economists because of the sheer number of assumptions that have to be made in the process. Those assumptions draw bias into the calculation, resulting in partisan figures that serve the interests of whoever solicited the study and nobody else.
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Warren Yuill
Jesus Built My Hot-Rod
07:47 PM on 11/22/2011
Our trusted auditor general Sheila Fraser said the government did a great job getting the funds out into communities in a quick but controled fashion. Now it seems the fill-in is trying to stir up some controversy by claiming there are no metrics by which to measure the success of this program. I think you nailed it. What would have happened if we did nothing?
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Russg
11:56 PM on 11/22/2011
If you really want a 100% certain answer to the question "what if we did nothing?", you will never get one. It cannot be said with absolute certainty (well, unless you invent a time machine, go back, cancel the stimulus, and compare the results. If you do this, let me know. I'm curious!). Popular economic theory of the past century assumes that stimulus always has a net positive affect on the economy. Since it's impossible to disprove, and it's always popular with the people to get free money from the government, the idea has stuck around!

I am convinced, however, that stimulus is not a productive use of money. I believe it has a net negative affect on the economy in the long run, and even in the medium run. Ever hear the old colloquialism, 'hair of the dog'? You have somebody who is a regular abuser of a drug, such as alcohol, who is coming down from their high and suffering for it (ie: hung over). If you give them another drink, they're going to feel better for awhile. Have you cured their problem? No. You have only put a stay on the negative reaction, which is inevitable if withdrawal is allowed to set in and continue. In the long run, it's certainly not good for them to continue abusing the substance (whether that substance be alcohol, in the case of the alcoholic, or money printed out of thin air, in the case of our economy).
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CanadaStan
Cogito ergo spud, I think, therefore I yam
11:57 AM on 11/22/2011
Time to quit interfering in the economy.
Most of these programs are just stupid.
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Jason Bullock
11:29 AM on 11/22/2011
Well, it looks like Wiersema won't have work next week. Not allowed to be critical of Harper these days, and keep a federal job.