Auditor General Fall Report 2016: Michael Ferguson Says It's 'Deja Vu All Over Again'

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OTTAWA — Tax disputes are taking too long to resolve, there's no way to evaluate efforts to streamline cross-border traffic and trade and Canada is "squandering" the potential of its Aboriginal Peoples, the federal auditor general says in his annual fall report.

Michael Ferguson is marking the midpoint of his 10-year mandate by acknowledging some recurring themes, lamenting the fact that despite five years of pointing out flaws in the bureaucracy, many still show up in his reports year after year.

"In just five years, with some 100 performance audits and special examinations behind me since I began my mandate, the results of some audits seem to be — in the immortal words of Yogi Berra — 'deja vu all over again,'" Ferguson writes.

michael ferguson
Auditor General of Canada Michael Ferguson speaks in Ottawa on May 3, 2016. (Photo: Sean Kilpatrick/CP)

Those reports say the ongoing Beyond the Border initiative, designed to ease the flow of goods and people between Canada and the U.S. while improving national security, is unable to adequately demonstrate its overall effectiveness to ordinary Canadians.

They also note that individuals and companies who object to income tax assessments made by the Canada Revenue Agency are being made to wait unacceptably long for their complaints to be acknowledged, let alone resolved.

And Ferguson says indigenous offenders are not getting the help they need to reintegrate into society once released from prison, while changes to federal land claims — meant to expedite matters — are having the opposite effect.

"I can only describe the situation as it exists now as beyond unacceptable," he writes, citing more than a decade of reports that pointed out flaws in the federal government's treatment of indigenous Canadians.

'Beyond unacceptable'

"Until a problem-solving mindset is brought to these issues to develop solutions built around people instead of defaulting to litigation, arguments about money, and process roadblocks, this country will continue to squander the potential and lives of much of its indigenous population."

Few aboriginal offenders were released on parole in 2015-16 — more than two-thirds were instead released as a result of having reached their statutory release dates, the audit found. Three-quarters of those were released directly into the community from maximum or medium-security institutions, rather than through a graduated program to facilitate reintegration.

Ferguson also found fault with the federal government's efforts to streamline indigenous land claims — resulting in funding cuts, less shared information and barriers that have hindered First Nations' access to the claims process and the resolution of claims.

And he cited the Department of National Defence, another frequent target of federal auditors, for its ongoing failure to properly account for and rein in the cost of maintaining its equipment and deal with dwindling recruitment numbers.

Ongoing problems at National Defence

He cited the example of the navy's Victoria-class submarines, the in-depth maintenance of which was originally supposed to cost $35 million per vessel but has most recently clocked in at a whopping $321 million.

"One of the first audit reports that I presented for tabling in 2012 ... found that National Defence likely underestimated the full life-cycle costs of the F-35 (fighter jet)," Ferguson wrote.

"In our reports just presented to Parliament, the same theme appears in the maintenance of military equipment. Again, National Defence did not estimate the total maintenance cost of equipment over its entire lifetime."

And anyone who wants to take issue with how their taxes are being treated by the Canada Revenue Agency is likely in for a long and potentially costly wait, Ferguson said.

CRA disputes taking too long

"In an age of instant communications, Canadians expect quick results, while governments are often stuck using old, slow approaches that fail to meet expectations," he writes.

"The slow speed of government is an issue that we have reported on often, and we are reporting on it again in these fall 2016 audits."

More than 170,000 objections from individual and corporate tax filers are awaiting action, Ferguson said — a process that can take a few months to several years to be resolved, with little or no information provided to the taxpayer about progress, deadlines or when a resolution might be at hand.

Some 79,000 cases worth nearly $4 billion took five or more years to be resolved, he added.

"Unreasonable delays matter because while taxpayers wait for the Canada Revenue Agency to make a decision on their objection, the money in dispute is not used as productively as it could be, and this has an economic cost."

Ferguson's key findings:

— The Canada Revenue Agency takes too long to respond to objections to its income tax decisions — an average of 263 days for individual income tax objections registered between 2011 and 2016 — and uses incomplete and inaccurate methods to evaluate how well objections are handled.

— Some 65 per cent of the objections reviewed by the auditor were eventually resolved either fully or partially in favour of the taxpayer, suggesting more can be done ahead of time to resolve issues prior to objections being filed.

— The CRA also fails to adequately analyze or review decisions on objections and appeals, nor does it adequately share results throughout the agency.

— Transport Canada has no way of assessing the potential security improvements resulting from a $133-million baggage screening technology initiative meant to save time and money for airlines and passengers at eight Canadian airports.

— There is no evidence that $91 million worth of federal efforts to share biographical and biometric information between the U.S. and police and immigration authorities in Canada have improved immigration and border decision-making.

— Shiprider, a $60-million RCMP initiative aimed at improving border security on Canadian waterways, lacks performance indicators to show it has resulted in any improvements in law enforcement, such as more seizures or arrests.

— National Defence officials consistently underestimate the cost of maintaining military equipment; Ferguson cites the example of Canada's Victoria-class submarines, where in-depth maintenance was supposed to cost $35 million per vessel but ended up at $321 million.

— The federal government's efforts to streamline indigenous land claims have resulted in funding cuts, less shared information and barriers that have hindered First Nations' access to the claims process and the resolution of claims.

— Very few aboriginal offenders were released on parole in 2015-16 — more than two-thirds had reached their statutory release dates — and three-quarters of those were released directly into the community from maximum or medium-security instititions, rather than through a graduated program to facilitate reintegration.

— Transport Canada lacks an up-to-date regulatory framework for passenger vehicle safety, often taking too long — sometimes more than 10 years — to implement new safety standards or make changes to existing ones. The agency also fails to systematically consult with stakeholders, such as parts and equipment suppliers, insurance companies and police.

— Transport Canada's national database of collision information lacks complete Canadian data and other relevant information, such as insurance industry statistics.

— The ranks of the Canadian Armed Forces are declining, with just 66,400 regular force members at the end of the 2015-16 fiscal year, well below the stated target of 68,000 members. In addition, the military is 4,300 soldiers short of its target of 60,500 fully ``trained and effective'' members — a gap that has nearly doubled since 2011-12.

— Despite a stated goal of eventually having women represent one-quarter of its ranks, the actual number of women in the Canadian Armed Forces remains unchanged at 14 per cent of regular force members, with no special employment equity measures having been put in place.