Back to top
29 juin 2005
Comités permanents
Comptes publics
Sujet(s) à aborder: 

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, June 29, 2005

COMMITTEE ROOM 1

June 2005 Report of the Auditor General

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

Mr. Graham Steele (Chairman)

Mr. James DeWolfe (Vice-Chairman)

Mr. Mark Parent

Mr. Gary Hines

Ms. Maureen MacDonald

Mr. David Wilson (Sackville-Cobequid)

Mr. Daniel Graham

Mr. David Wilson (Glace Bay)

Mr. Michel Samson

In Attendance:

Ms. Mora Stevens

Legislative Committee Coordinator

WITNESSES

Office of the Auditor General

Mr. Roy Salmon

Auditor General

Mr. Claude Carter

Deputy Auditor General

Ms. Elaine Morash

Assistant Auditor General

Mr. Alan Horgan

Assistant Auditor General

[Page 1]

HALIFAX, WEDNESDAY, JUNE 29, 2005

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIRMAN

Mr. Graham Steele

VICE-CHAIRMAN

Mr. James DeWolfe

MR. CHAIRMAN: I'd like to call to order this meeting of the Public Accounts Committee. We are pleased today to welcome the Auditor General and his senior staff to present their biannual report to the committee. The proceedings this morning will go slightly differently than normal. I've asked the Auditor General and his staff to take up to the first hour to present the highlights of the report, the second hour will be taken up with members' questions. We won't do it by caucus, simply if a member has a question, just indicate to me and I will recognize you. That will be the second hour. The Progressive Conservative members of the committee have indicated that they need to leave for another engagement at 10:00 a.m.

I'd also like to bring to the members' attention a proposed motion that I would like the committee to consider, having to do with the Freedom of Information and Protection of Privacy Review Officer. I did mean to circulate it to the committee before today, and since I haven't and the members are only seeing it for the first time today, I'd just ask the members to consider it over the Summer. We'll defer consideration of the motion until our first session in the Fall.

Without further ado, I would like to welcome the Auditor General. Mr. Salmon, you have the floor.

1

[Page 2]

MR. ROY SALMON: Thank you very much, Mr. Chairman and members of the committee. We're pleased to be here this morning to discuss with you our June report. This is the second year that we've followed this practice of issuing a biannual report. I have just walked across the street from the Speaker's office, where I have tabled the report with the Speaker. We have made copies of the report available in Province House for the media, so they can obtain a copy and read it at their leisure. So, we consider this to be an open meeting, not an in camera meeting.

Let me start off by just giving you an overview of the contents of the report. First of all, there's an introductory message from myself that is essentially what I'm dealing with in these opening comments. Then there are six chapters, two of which are government-wide issues, dealing with government financial reporting and government systems and controls. Claude Carter will deal with those in detail. That's followed by what we would consider to be four department audits. One is in the Department of Education and deals with the Special Education Program, and Elaine Morash will deal with that one.

The second one is in Finance, dealing with the pension administration system, commonly known as Penfax. Third is in the Department of Health. There are two chapters there, the Nova Scotia Hospital Information System, known as NShIS, the project to develop that system. Then, a commentary on the work we've done now for the last two years on the published report on performance indicators issued by the Department of Health. This is the result of a joint effort with other Departments of Health across the country. The audit has also been done on a reasonably consistent basis by the other provinces. Finally, an audit that deals with fleet management in two departments, and raises issues around practices of fleet management in Natural Resources and Transportation and Public Works, both of which have substantial fleets of vehicles and other hardware.

The report includes 42 recommendations. We've summarized those in the highlights booklet. They also appear in each of the applicable chapters. As has been our practice, we will be following up in three years and reporting on the results of actions taken with regard to those recommendations. Finally, we received responses to three chapters and those are included at the end of the related chapters.

Finally, Mr. Chairman, before I turn it over to Claude to start off, the departmental chapters, particularly the chapters on Special Education, the Nova Scotia Hospital Information System and Fleet Management, we believe start us off in dealing with the priority we established in our business plan and performance report this last Spring to deal with issues at a lower level, more of a micro-level, and to focus on specific issues of compliance, value for money and the use of public funds, and be very specific rather than be at a higher level and deal with overall performance of a department. We'd be very much interested in your reaction to that approach and the way we have raised those issues, because I think you will find, certainly from my perspective, that there are some very substantive,

[Page 3]

specific matters that warrant your attention. With those opening comments, Claude will start by dealing with financial reporting.

MR. CLAUDE CARTER: Thank you, Roy. Mr. Chairman, members of the committee, I'm going to deal with Chapter 2 on Government Financial Reporting, Chapter 3 on Government Systems and Controls, and then skip to Chapter 5 dealing with the Pension Administration System. Those are my three chapters in the report, and then I'll turn it over to Elaine, who will deal with her three, and then on to Alan for Fleet Management.

With respect to Government Financial Reporting, Chapter 2, the first item dealt with in that chapter deals with our review of the 2005-06 revenue estimates, and that was released along with the budget in April. We qualified our opinion on the revenue estimates because those estimates were not presented on the same consolidated basis as the province's financial statements. That qualification has existed ever since we started doing the revenue estimates. The government has continued to present its annual revenue estimates on an unconsolidated basis. So we've taken exception to that every year that we've reported on that. In some other years, not this year but in other years, we have had other qualifications as well as this standing one, if you like.

In May we issued a detailed management letter to the Department of Finance, copying the Executive Council members, dealing with more detailed findings and results of our review. The major points are summarized in Paragraph 2.15 of Chapter 2. Government did make amendments to the 2005-06 budget documents to deal with the GAAP financial reporting issue that we had raised with the forecast update released in December 2004. So, we acknowledge the fact that they've made that adjustment so that the surplus is being presented on a GAAP-compliant basis, but I think what we want to say is that we're glad to see that they've finally done the right thing, where it relates to that financial reporting.

Moving on to the next part of Chapter 2, dealing with the audit of the 2004-05 financial statements, just some planning information is included in the chapter in terms of our independence, our objectivity, identification of accounting policy matters that may have to be dealt with as part of this year's financial reporting by government and during our audit. We are currently in the process of doing that audit. We're scheduled to complete and report on that audit in late September. Right now we're targeting for September 22nd, which would allow sufficient time for government to have its Public Accounts released by the statutory deadline of September 30th.

I think I just want to state that both Finance and our staff are facing some short-term staffing challenges as it relates to this particular year's year-end accounting and audit, but at this time we're very optimistic that we will be able to successfully deal with those and meet the reporting deadline.

[Page 4]

The other matter dealt with in Chapter 2 deals with the additional appropriations. As you are aware, the Auditor General Act requires that the Auditor General identify instances where appropriations are overspent, so we've made it a practice to highlight those in Chapter 2, in the last few reports. We note that in December 2004, there was an additional appropriation approved by Order in Council for $99 million, relating to the 2003-04 fiscal period.

Further we note that based on the forecast information included in the 2005-06 budget documents, there is the likelihood of additional appropriations for 2004-05 currently estimated at approximately $222 million.

MR. SALMON: Could I just interject on that one. This has been an issue with me since I arrived in Nova Scotia. I am firmly of the belief that no government should be permitted to spend funds unless the Legislature has approved the spending of those funds, which in the normal course occurs through the review and approval of the estimates and the appropriations. When it comes to additional appropriations they are approved after the fact.

The standard practice in Ottawa at the federal government level is that if you're going to have additional appropriations, referred to as supplementary estimates, at the federal level, they are introduced into the House, to the extent possible, prior to March 31st and approved by the Legislature.

In this case - and this has occurred every year to my knowledge - funds were spent in the year ended March 31, 2004, by departments, on behalf of government, and not approved until December 2004. I mean it's a rubber stamp after the fact in terms of that approval.

Here we have a situation in 2004-05, where the forecast that was included in the budget documents, the government had already recognized that they were going to spend an additional $222 million, but they didn't bring it forward for approval. Yes, the budget for 2005-06 was approved but there's no approval process for those additional appropriations. Again, we're into a situation where an argument can be made that without approval by the Legislature, the expenditure of those funds might be deemed to be illegal. I'm not saying they are, but I'm saying they might be deemed to be illegal. I just wanted to raise that for your consideration, in terms of the process. Claude, back to you.

MR. CARTER: To add to that, the way that the Act is presently written, to make those spendings legal, the Governor in Council has to issue an Order in Council within 90 days of the release of the Public Accounts for the year that the overspending relates to. From our point of view - and we've made this point many times in the past - after-the-fact approval of additional spending authority doesn't represent effective control by the House in Nova Scotia, and that's the primary issue, whether the House has the ability to debate and have an influence on spending authority limits and so forth.

[Page 5]

Anyway, continuing, that additional spending is offset by a positive variance of $265 million on the revenue side, including new dollars from the federal government, through equalization and CHT/CST transfers, as well as $55 million forecast for forfeiture penalties from offshore licences that expired.

The last item in Chapter 2 deals with the province's responsibility to maintain a current filing record with the Securities and Exchange Commission in the United States so that it can borrow on those markets, and that filing called Form 18K was last updated in December 2003. The 2004 one we've done some work on and it, frankly, was pushed back on both government's and our burner, as a result of the revenue estimates work and the budget work that was necessary in March and April 2005. What we're recommending is that they take steps to ensure that those filing documents are prepared in the Fall and filed by the December 31st deadline, as required by the SEC.

[9:15 a.m.]

Moving on to Chapter 3, Government Systems and Controls. We believe, as we all recognize, there are a number of government-wide and entity departmental-level systems and control processes required and in place across government. In addition to that there is a large number of system and control initiatives currently in process or at various stages of planning, development and implementation in government, and we want to acknowledge the significance of those systems and controls as it relates to the adequate use and control of public funds and property. We believe the decision with respect to those systems and controls need to be based on an analysis of the costs and risks and the goal is not more control but cost-effective optimization of controls.

With respect to the initiatives I referred to, there is a list in Chapter 2 that inventories some of the ones just as examples. There are others that I could add to that, like the Treasury Management System and process concerns that are being dealt with by the Department of Finance; the revitalization of the corporate internal audit function within government could be added to that list, as well.

We have concerns about the capacity of the resources available to meet the volume and complexity of some of these initiatives at the current time and our concern is not just with respect to the quantity of the resources, but also the fact that many of them have to deal with these new initiatives, while also dealing with their ongoing operational demands. We want to raise that as a concern and it's certainly, I would suspect, shared by various people within the departments and across government as well.

With respect to more specific system and control considerations, we note the results of the first service auditor's report on the government's SAP Competency Centre, and this is the central function that is providing computer SAP support and processing for school boards, government, municipalities, regional housing authorities and, ultimately, will do so

[Page 6]

for the district health authorities. That first independent service auditor's report was released in March and it identified eight control procedures not operating effectively, as of November 2004, and that audit will be done on an annual basis - it has already started - and reported some time in March or April 2006.

We are suggesting that government take the steps necessary to ensure that all of the control objectives are met and they receive an unqualified report on that control environment.

Anything other than a clean auditor's report in that regard is problematic for the entities that use that service centre, and it's also problematic for the auditors of those entities.

With respect to the provincial data centre, the EDS Data Centre, there is an annual independent auditor's review of the controls in that area and again this year, the report was unqualified. It has been clean for a number of years and we just highlight that.

With respect to some other matters, we do make recommendations in Chapter 3 that the government improve the reporting to the House on the Industrial Expansion Fund. This is a matter that has been raised by this committee in the past and the Office of Economic Development has provided a response on Page 30 of the report that indicates their understanding of the history of where the reporting on the Industrial Expansion Fund sort of fell off the rails and they have undertaken to improve the information that comes to the House in terms of the planning for that fund and the accountability reporting on that fund.

We did some work on the Business Climate Index, which, again, is a vehicle used by the Office of Economic Development to monitor the Business Climate Index in terms of their activities for economic development. We wanted to determine whether or not the information in that index was verifiable and supportable back to the source, primarily, Statistics Canada, and we found no problems with the items that we selected for testing.

We did a bit of testing on Tangible Capital Assets and had a few test items where the

information on the SAP Tangible Capital Asset inventory hadn't been maintained properly and had made some suggestions that they clean that up or take steps to ensure that it is kept more current.

Moving to Chapter 5, dealing with the pension administration system, Penfax, we've reported on this Penfax system implementation project in the last couple of reports. Just as a background, it is a project that started in 1998 and you could say it's completed or finished, stopped, at this point in time. It took seven years, three or four more than it should have. Its final costs are about $4.5 million versus an originally budgeted $1.2 million and not all the functionality has been received at this point in time.

What we have done in this chapter is, we have not only updated our comments on the project, itself, to implement the system, but we have also looked at the controls over the system that is currently in place. What is now there is functioning. It's functioning in a

[Page 7]

controlled manner but there are some improvements that we've identified for management to consider to tighten up controls.

I think our more important issue is that we believe that there are some significant lessons that not only Finance and Public Pension Services Group, but also government, can learn from the Penfax system. We believe that those lessons need to be appropriately documented and made available on a continuing basis to the full system within government so that future systems projects can benefit from the problems that they encountered and avoid them, hopefully.

MR. CHAIRMAN: Point of clarification, Claude. Which pensions, specifically, does this system cover?

MR. CARTER: Public Service and Teachers' Pension.

MR. CHAIRMAN: Thank you.

MR. CARTER: With respect to the controls, themselves, over the pension administration system, where our review and our testing indicate that the general computer environment controls over the system that's in place are generally adequate, we have identified some areas for improvement, like disaster recovery, business continuity and tidying up the super-user access privileges.

With respect to the actual processing of transactions, in terms of completeness, accuracy and authorization, we found that those were generally adequate. Again, there are some areas where we made suggestions for improvement. One of the examples is, there was a staff member who was processing hypothetical adjustments to live data in order to sort of do "what if" calculations and that was, from a control point of view, very dangerous because if he makes a change and then doesn't back out, it's there as live data on a continuing basis.

I think we want to just add quickly that while we are able to conclude fairly positively, as it relates to the controls over the system that is now in place, nobody should take from this conclusion that the Penfax system implementation is a success. In fact, it's far from it. I think that that is evident by the fact that it was three to four years late, three to four times the original budgeted cost, and the other problems that had been identified by the audits done by KPMG in 2004 and a study done by the final project manager, in terms of why they were where they were in that project and how they were going to get it completed.

The last component of the Penfax implementation was called the Penfax Completion Project. New management - I must add that - took steps to address the results of the March, 2004 independent auditor's report and hired an external project manager. He came in and analyzed the situation, developed a plan to finalize the project to the best of their ability,

[Page 8]

eliminating some of the functionality and went forward. That completion, sort of wrap-up, cost $378,000.

The last point that we want to make on Penfax is, again, something that we have mentioned in the past as well but we wanted to reiterate, is that one of the change orders made to the Penfax systems project called Penweb resulted in an additional $1 million being spent to try to implement a Penweb component of the system. That change order was made at a time when the project, itself, was in serious trouble. It cost $1 million and, as far as we can tell, little or no value has been received for that $1 million.

One of our concerns on that - we stated this in a prior report - is, we are concerned one of the lessons should be taken from that to avoid that type of circumstance in the past, but the other is that that $1 million, as part of the over-spending on the Penfax system is being paid by the plans. It's not public money, it's plan money. We believe that if you were in a true service contract arrangement, you would be likely to leave some of those costs with the contractor as opposed to having the plan actually cover them.

Anyway, with that, that's the end and I will turn it over to Elaine.

MR. CHAIRMAN: Thank you. Elaine.

MS. ELAINE MORASH: Thank you, Claude. The first audit that I want to speak of is Special Education. Just a couple of caveats, I guess, with respect to this audit. It's a relatively new program, special education in the form that it's offered now in the school system only began about 10 years ago. The obligation to meet the needs of all students is enshrined in the Charter of Rights and Freedoms.

There are statistics that say that about 20 per cent of the total school population will participate in special education programs of some description at some point in their school careers. That would include resource and any program that can get good students, as well as what we traditionally think of as special education programs.

The demand for the program is high. The program costs are increasing and there are daily challenges regarding prioritization of needs. There are only so many resources to go around and making sure that the students who need these resources the most get them is a real challenge. Of course, decisions on that require good information. So this is kind of an introduction in terms of the mindset that we were going in with.

The next thing I want to talk about is what we could not do with respect to special education because we don't have the expertise in our office, because we don't have unlimited resources. I mean, we had to carve out a niche in terms of what we could accomplish. I just wanted to make it really clear in terms of what we didn't look at.

[Page 9]

We didn't try to assess the appropriateness of the funding that was provided by the department to the school boards. That's policy matter and outside of our mandate. We didn't attempt to assess the adequacy of staffing in the special education area, whether there were enough special education teachers, that kind of thing. We didn't attempt to assess whether students' educational needs were being met, although we did look at the reporting that the boards had with respect to that. For any students on the wait lists, we didn't try to assess whether they were being negatively impacted by being on a wait list. Again, we don't have the capacity to do that.

One last thing that we didn't do was, we had to rely on the system that says, when a teacher says she is spending her time, or he's spending his time on special education, that that is actually what he is doing with his time. It's possible - you know, if you don't have a time system, which teachers don't, that they could be saying that they're spending time on special education and actually doing it on something else, that they're spending it on something else and, obviously, we couldn't audit that. So just in terms of what we could not do.

Findings on information systems. What we found was that the department is attempting to collect information. Primarily, it's by written survey. So periodically, the Department of Education sends written surveys to the schools and the school boards, the schools fill out the detail and then the detail is rolled up at the regional school board level and submitted to the Department of Education.

There are no formal systems in place to generate this information. The information is not verified and it's sometimes incomplete. It couldn't be recreated for us. For example, the kind of situation I'm talking about is, if a school is asked how many students are on the waiting list for the program for severely learning-disabled, they indicate the number of students but there's no way to go back and verify what that number was at a certain point in time. They don't submit the names of the students with the count. So if they say there are 10 students on the waiting list, that's all we've got for information, is 10 students. Nobody verifies it. We come in after the fact. The names of the 10 students are not associated with the list so we can't go back and verify it. So there are some voids in terms of the information that's available for decision-making.

Improvements are required, including a province-wide student information system. If you look in the Department of Education's business plan, they talk about this student-wide information system as being important in terms of the information that is available for decision making. Improvements are required, including a province-wide student information system. If you look in the Department of Education's business plan, they talk about this student-wide information system as being important and I guess we would concur with that, that yes the student-wide information system is important, that there are some voids in terms of the information that is available to the decision makers.

[Page 10]

[9:30 a.m.]

In terms of accountability, the roles and responsibilities with respect to special education program delivery, both at the school boards and at the department, are clear and well-documented. I should make the point that we actually visited only two school boards. Staff spent some time at the Annapolis Valley Regional School Board and at Chignecto-Central as well as at the Department of Education.

The Department of Education has very few staff in the special education area. We were quite surprised. They have a director and they have three consultants. You often hear about the vast numbers of staff that are in the departments, administering programs that are offered by the school boards but in this case the staff in the program area is really small and I think that has to be considered when you are looking at the findings and the improvements that have to be made or should be made.

With respect to annual reports, the Department of Education requires regional school boards to prepare comprehensive reports on two programs - the Severe Learning Disabilities Program and the Reading Recovery Program. Our point here is that there are many other programs that are being offered for other special education populations and that there are not reports being issued on all of them. What they do on these particular programs is really good. They are useful reports. They include results of standardized testing at the beginning of the period and at the end of the period. They do satisfaction surveys of students and parents and that kind of thing but it only covers a small proportion of the population that is taking special education. What we are recommending is that the reporting be extended to all the major special education programs.

Peer reviews. In the past, the Department of Education and the school boards had a system for peer review where staff from the department and from other school boards would go in and review the offering of the program in a particular school board. That program, the Peer Review Program, has been discontinued, it was last done in 1999 at the Annapolis Valley Regional School Board. The reason that it was discontinued was because of scarce resources. The school boards that we talked to feel that this would be extremely beneficial to them, that there is some of this silo kind of mentality where each school board offers their special education programs in their own way and there isn't this sharing that there should be and that's one of the things that can be accomplished with the Peer Review Program. It would be sort of twofold in terms of its objectives to make sure that the policies are complied with but also to enable the sharing of information among the school boards so we recommended that these peer reviews be re-established.

One issue that was brought to our attention is the performance of medical procedures by teacher assistants. There are many different kinds of medical procedures, things like catheterization, there might be dressing changes, injections, all kinds of things that need to be done during the school day. Because of the organization of the Department of Health and

[Page 11]

the delegation of some of this responsibility to the district health authorities, the Department of Education has provided guidance to the school boards that says you have to negotiate a protocol with the district health authority in your area in terms of who is allowed to perform these medical procedures. Does it have to be an RN or can a teacher assistant do it? So those protocols are to be negotiated and set out. They are important because there is some liability associated with the performance of medical procedures if you don't have the right kind of provider performing the medical procedure.

To date, only one regional school board in DHA has negotiated such a protocol and so what we are saying is that there is an important issue at stake here and that all of the school boards and the district health authorities have to make sure that those formal protocols are negotiated and in place to make sure that the right provider is providing the medical service.

The funding and accounting for special education, the funding is very complicated. It's allocated on a per-student basis in terms of the total number of students at a school board, not the number of special education students. So they take the total student population for a given school board and allocate the dollars on the basis of that so there is no consideration of whether each school board has more or less of a proportion of special education students than the others. It's funded by the restricted grant for special education but those students, of course, are in the student count that gets general formula funding so it is also funded by general formula funding.

The department's accounting guidance for regional school boards on special education costs is not clear and complete. The financial statements are not comparable and what we found was that the costs of special education are likely understated on the regional school board financial statements because there are certain costs, for example, costs associated with the performance of medical procedures and special education transportation that are not identified as special education costs.

So moving on now to the Nova Scotia Hospital Information System project. To start off, I just want to make the point that this was a review, what we call a moderate assurance engagement as opposed to an audit, which would be high assurance. The reason that we call it a review as opposed to an audit is the difference in the extent of the work that we performed. We didn't go in and actually do testing of controls and transactions. What we did is talk to management at the district health authorities, at the Department of Health. We reviewed documents but we didn't do any detailed testing, so I just wanted to say that in terms of an overview of the kind of work that we did.

Background on the project. It's a very complex undertaking, it has been discussed at this committee before. What it involves is implementation of a system in 34 hospitals which are governed by eight district health authorities; 6,000 staff will be using the system. There are 18 different modules, modules like pharmacy, lab, things like that. The cost estimate is

[Page 12]

$55.7 million. We've reported before that there was a figure that was lower than that when the project was initiated, but the cost estimate has stood at $55.7 million for the last couple of years anyway and there is no indication that that figure will be exceeded.

The thing to realize about this project is that it covers acute care only. There has been discussion of a broader provincial Electronic Health Record and this will be a part of that and a foundation for it. But right now it just covers the acute care sector, it just covers the hospitals, it doesn't cover services that are provided in long-term care facilities, for example, in physicians' offices, et cetera. So it just covers the acute care sector. The time frame, the project started in March 2001 when the funds were appropriated and the scheduled completion is March 31, 2006, with some exceptions, which we'll talk about a little bit later.

The district health authority management that we spoke to and the users expressed satisfaction with the system and its benefits. With the first implementation at DHA 7, there were some concerns by the users, by the nurses in particular. Those concerns were raised at the Public Accounts Committee. Those concerns were dealt with by the project team and changes were made for subsequent implementations so now even at DHA 7, the concerns that we heard a couple of years ago at this committee are not there. The system has been implemented and those concerns have been addressed.

For this project, a private sector project manager was used. This makes it different than many other government projects. We looked at the methodology that the private sector project manager used and found it to be reasonably consistent with best practices for project management. At the implementation of the project, there were some concerns raised about the hardware and software not being tendered. Again, those concerns were brought forward to this committee. They were significant expenditures and they were not tendered.

However, the system was selected by the regional health boards in 1999 after a request for proposals project. Regional health boards, at that point, wanted a comprehensive hospital information system and they had implemented a request for proposals, got some proposals but didn't get the funding at that point and they had chosen this Meditech system - that's the name of the program - as their preferred program. The Department of Health wanted a system that the DHAs would support and so that's why they chose that system in terms of software.

There was another factor that came into play. In March 2001, the Department of Health was informed that the funds had become available, that there was $30 million available for this project, but the funds had to be spent by the end of March. So they were given less than a month to go out and organize this so that the funds would actually be spent by the end of March. The system had to be purchased by the end of the month, and that was accomplished, and one of the ways that they could accomplish it was to go back and take that system that had been selected by the regional health boards.

[Page 13]

In terms of what's actually being implemented at the end of the day, there are some scope reductions due to issues that were not anticipated in the planning phase. The biggest one of those is this patient care system module. This was the module that was the problem in GASHA, DHA 7, when it was first implemented. This is the charting part of it, where the nurse or other care providers take vital signs, for example, and have to enter that into a patient chart. Well, that system, the nurses say, for it to work needs wireless laptops. They have to have the technology available at the bedside. The costs of the wireless technology were not included in the $55.7 million, in the project costs.

The decision has been reached that that cost will have to be incurred in order to get that functionality. That functionality is only one of 18 modules, it's not the whole project, but in order for that to happen, it's going to need more funding. Right now the patient care system has been implemented in six of 34 sites. For example, the Cape Breton District Health Authority funded the wireless laptops itself for a couple of sites. That's where the funding for those came from.

There is a proposal now, from the Department of Health, to try to get the funding for that. The funding is not all that significant. I think it runs about $2 million, or less than $2 million. In order for the entire functionality to be gained, that investment has to be made, because the nurses and other care providers don't like the system without those wireless laptops.

The issue of remote access from the physicians' offices has not yet been resolved. This is a security concern. The system is supposed to be accessible from physicians' offices off-site. Right now that functionality hasn't been enabled yet, because they're trying to sort through, with the physicians, how the security over that will be configured. So the costs have been incurred, there's no more cost associated with that, it's just a security concern in terms of how exactly that will be accomplished.

There's another issue with respect to interface with CDHA and IWK. The CDHA and IWK use different systems than the NSIS; that was always the plan, that they would continue on with their own systems, and this system would be for the other DHAs, but they have to speak to each other, those interfaces have to be built. Partial implementation is planned for later in 2005, and now it has been carved off as another project and it's broader than just the interface between NSIS and CDHA and IWK. There are some other health systems that also have to be built into it.

Controls over protection of data have been addressed. We got some management representations on this, spoke to people and reviewed some documents. It looks like they did due diligence in terms of the protection of data. There are plans for system backup and recovery in the event of a disaster, but those plans haven't been tested. We recommend that they be tested.

[Page 14]

The third chapter is the one on the Health Performance Indicators, just a very short chapter. Under the federal-provincial health accords, the province is committed to report health system performance information. There have been two reports issued by all of the Departments of Health across the country so far. One was in 2002, and the second one was November 30, 2004. It was called A Measure of Our Health and Health System. It was just a little brochure, about four pages. We were engaged by the Department of Health to audit the performance indicators that are included in that brochure. We gave an unqualified opinion on those indicators, and we're encouraged by the department's work in trying to get these public reports, in terms of performance, out there, and in asking us to audit them.

At the same time, the Department of Health also requested that we audit three additional indicators not included in the November 30th report. These were not indicators that were agreed to by the conference of deputy ministers across the country. They had nothing, really, to do with the accord. The momentum is there for additional reporting, in terms of health performance information. Health just wanted us to come in and look at the systems for three indicators to see what we would find.

[9:45 a.m.]

The three indicators were the number of home care admissions; the wait times for cardiac bypass surgery; and the wait times for radiation therapy. For the first two, home care and the wait times for cardiac bypass surgery, we found that there were problems with the information systems. We were unable to give an unqualified opinion on those systems. There are problems that need to be resolved, and the Department of Health is working with its partners in trying to make the necessary improvements. For the third system, the wait times for radiation therapy, we found that the system was adequate to produce data which is complete and accurate.

What we're finding is that the systems that produce outcome data are less well developed than they are for financial data. They need strengthening in some areas, particularly in wait times. The department has made some commitments under those federal-provincial accords to report wait times in the future. So they know that they have to do some work in terms of getting better wait time information, more reliable wait time information available. At this point I'm going to turn the presentation over to Alan, on Fleet Management.

MR. ALAN HORGAN: Thank you, Elaine. Mr. Chairman, I'm going to present a summary of the results of our audit of the Departments of Natural Resources, and Transportation and Public Works, an audit of their fleet management practices. We chose those two departments primarily because they collectively manage over 2,200 fleet assets between them, and we estimate that to be about 86 per cent of all the fleet assets operated by the provincial government. If you want a little more detail on what comprises all these assets, we have a table on Page 131 that breaks down these numbers.

[Page 15]

As part of this audit, we looked at information systems relating to fleet assets; matters relating to acquisition and disposal of fleet assets; safeguarding of fleet assets; fleet maintenance and operation issues with regard to value for money; and we also looked at fuel supplies, some value for money and environmental issues relating to that. In total we had six recommendations for improvements.

Now, to the findings of the audit. We noted that the fleet management operations are not coordinated across government, across the provincial fleet, at all. Each department is responsible for its own assets. In addition, there is no detailed information on the entire fleet of the province. We were able to get some information from insurance records, but there's no one database of fleet assets.

So we identified some significant opportunities for better coordination. Particularly, since we were focusing on Natural Resources, and Transportation and Public Works, we noticed that there are opportunities for those two departments to coordinate their fleet operations, because there are many similarities. We noted room for co-operating in policy development, common information systems, shared acquisition and disposal processes, and shared fleet maintenance processes.

We looked at the information systems used to record and manage fleet assets. We concluded that the systems used by Transportation and Public Works are adequate. We were unable to provide an opinion on the systems used by Natural Resources, mainly because the systems that they use, they themselves do not have a great understanding of the systems. They use just part of the system. They were not able to explain the complete functionality of the systems. And when we asked for system manuals, to see if we could delve into it a little more in-depth, no one could find any manuals for the systems. These systems, by the way, are quite old, they've been around for a while.

So we couldn't conclude exactly how well they do the job for them, but one thing we did note is that in both departments the systems they use could be used to do more things than they are now are. They could be used to provide reports that would probably be quite useful, but at the moment these reports aren't being prepared.

We looked at fleet acquisitions and fleet disposals from a compliance point of view. We noted that acquisitions by both departments of fleet assets comply with existing legislation and policies. There's a slight exception with regard to policies, and that's spelled out in the report, but it's not a major one.

With regard to due regard for economy and efficiency in buying and disposing of fleet assets, we were unable to obtain sufficient appropriate evidence to conclude on this. Neither department has a lot of documentation or analysis supporting what they do when they're buying or selling assets. They do certain things and we're not saying they're necessarily not

[Page 16]

managing with due regard, but the documentation isn't there to show us that the decisions they're making are the best decisions.

We looked at the practices for maintaining and operating fleet assets and, again, in a similar situation we were unable to conclude, on due regard for economy and efficiency, with regard to the maintenance and operation of fleet assets, and it comes down to documentation. They have practices but a lot of it is based on the spur decision making, and it's not necessarily supported by analysis. We asked to see the records that are kept to show the usage of fleet assets and show when and how they should be maintained and whether they are maintained according to how they should be. When we did we found incomplete logbooks in vehicles, inadequate maintenance schedules and records, incomplete information on distances driven by vehicles, we even found some vehicles in which established maintenance routines just weren't being followed.

We also uncovered an accounting glitch. In the Department of Natural Resources, we noticed they had recorded a few transactions totalling about $45,000 that had absolutely nothing to do with fleet management, it had to do with other operations in the department. When we asked why are these amounts being recorded under fleet management, they indicated that fleet management still had some budget available. The other areas which these expenditures more applied to had already spent all of their budget, so they were kind of recording them where budget money was available. We explained to them that that was inappropriate, that you do not account for expenditures based on budget, you account for expenditures based on their nature, what they represent and what divisions they apply to.

We also noticed some instances of non-compliance with some provincial policies relating to procurement and fuel storage regulations; both of these applied to fuel. With regard to the procurement policy we noticed that aviation fuel was bought in bulk and it is sole-sourced. We asked to see the approval documentation and the forms that should be prepared when something is sole-sourced, in accordance with provincial policy, and those forms and those approvals weren't there.

With regard to fuel storage regulations, the province has a couple of sets of regulations on how anyone who stores fuel in Nova Scotia is to control that storage and things they should do to prevent spills and the such, and we found a few shortcomings in both departments' compliance with those regulations.

In talking to Transportation and Public Works about their fuel sites, they indicated that using their own environmental management branch that they had assessed two-thirds of their estimated 80 locations in which fuel is stored. They have identified some contamination on almost all, different degrees of contamination, so we asked them, of course, what is your plan for cleaning these up? They could not provide us with a comprehensive action plan, they could not provide us with the total cost of cleaning up each of the situations that they found. They did indicate that 10 of those sites have been cleaned up to date, six are in progress, and

[Page 17]

they planned on doing three more this year, 2005-06. They estimate the cost in this fiscal year to be about $500,000 for that, so we're asking, what about the others?

Then we asked the Department of Natural Resources, have you had anyone inspect your fuel sites? They indicated, no. We mentioned to the Department of Natural Resources that Transportation and Public Works had indicated to us that they would do inspections for other departments if asked and the Department of Natural Resources indicated they didn't know that. So we made a recommendation that Natural Resources do something, whether it's through Transportation and Public Works or through private consultants, or other sources of expertise, to have someone review all the fuel sites managed by Natural Resources.

Then, a final slide, we reviewed the practices used by both departments to see how they control the use of fuel in government fleet assets. We concluded that these practices are generally inadequate. Some divisions in each department analyze and monitor fuel usage; others don't watch it at all. We believe that these controls are not as tight as they can be.

There is a risk of two things occurring: one, fuel may be used in unauthorized ways that, perhaps, some fuel may be used in private vehicles as opposed to government vehicles; and secondly, if you're not monitoring fuel usage, you may not be able to determine when some assets - automobiles, trucks, whatever - are so in need of repair or maintenance that they're just eating through the gas. If you're not monitoring it you may miss opportunities for repairing vehicles and improving their mileage.

So, Mr. Chairman, that concludes my discussion on fleet management.

MR. CHAIRMAN: Thank you very much. I would like to turn the floor over to members for the questions now. We will start with Mr. DeWolfe.

MR. JAMES DEWOLFE: Thank you very much for your report. One area of concern is, of course, the appropriations and expenditures prior to legislative approval, the point raised by our Auditor General that it is not necessarily legal, it might not be legal. I think that that was addressed by Mr. Carter in his remarks when he clarified that there is a mechanism in place whereby Order in Council can make expenditures of additional appropriations that are totally legal. The question of clarification, I think, would be helpful to all members here if Mr. Carter could, perhaps, expand on that.

I think, Mr. Carter, you did point out that the Order in Council can approve this and that it's legal using an Order in Council approval. I know you flagged the issue. There has probably not been a government in Nova Scotia that hasn't overspent and handled additional appropriations in such a manner without legislative approval. I know it's a long-standing issue with you, Roy.

MR. SALMON: Yes.

[Page 18]

MR. DEWOLFE: I know it has affected previous administrations in the past - I'm being nice because it's Summer and perhaps we don't do things exactly the way they do it in Ottawa but, nevertheless, it's the way we've done things in Nova Scotia. It keeps the way government has worked here, which has certainly improved with regard to accountability - and you've said that yourself - over the years. Is it ultimately legal? I guess that's my question to you, Mr. Carter. Perhaps you could expand on that a little bit because I feel there was a flag that went up there that maybe wasn't totally necessary.

MR. CARTER: Mr. Chairman, I'm not a lawyer so I'm not going to address the issue of whether what's being done is legal or not, I will just deal with the facts. The facts are that the Provincial Finance Act currently allows additional spending by governments against appropriations to be approved by Order in Council within 90 days after the release of the Public Accounts.

[10:00 a.m.]

Our reason for raising that issue today is, it's our mandate to report instances where we see appropriations have been exceeded and our issue has been, historically, after-the-fact approval of additional spending by government is not effective control by the House. We believe that if governments believe that their appropriations are not sufficient to meet the requirements for our fiscal period, then they should come back to the House, not to Cabinet. However, that is a legislative matter that is the House's responsibility. The House put in the system that is currently in place.

Yes, as Mr. DeWolfe said, there isn't a government in Nova Scotia's history, as far as I know, that has not exceeded its appropriations limits and put in Orders in Council after the monies were spent.

MR. CHAIRMAN: I just want to clarify this, Roy. You're not saying it's a violation of provincial law, you're saying it may be a violation. Your focus was on legislative approval, not Executive Council approval which is given, but whether there is a question that legislative approval is, at some point, required. Is that a fair summary?

MR. SALMON: Well, I think we have to look at the stages. The Provincial Finance Act says Orders in Council within 90 days of the tabling of the Public Accounts. In many cases, that is not being achieved. So there's a technical issue there but the fundamental issue, from my point of view, is effective legislative control. If it's after-the-fact approval, even by Order in Council, I don't believe that that is effective legislative control. It's a rubber stamp, pure and simple.

MR. CARTER: Could I speak to it?

MR. CHAIRMAN: Yes, Claude.

[Page 19]

MR. CARTER: Outside of the legal issue, the big issue right now is the statutory environment that's in place right now places no limits on a government. It's $222 million this year. It could have been $500 million, $600 million. There is no limit to what a government in Nova Scotia, theoretically, could go to overspend its appropriations and then come out with an Order in Council 90 days after the Public Accounts release, which is now 90 days after the year-end and that would be it. The House would not get to debate those expenditures.

MR. CHAIRMAN: I do have a speakers' list but I am aware of the fact that the Progressive Conservative members need to leave, so I'm going to depart from the list a little bit so that we can deal with and finish this topic. I will go back to Mr. DeWolfe.

MR. DEWOLFE: Well, Mr. Carter, normally appropriations are not that large, but I think I would say it's based on a good-news story. We had more funding come in this year than was expected and much more revenue than expected, so it's something that we probably won't expect to see in future years. I think normal appropriations, as I recall, are in the vicinity of 1 per cent of the budget and this is probably more of an unusual case than the norm. Again, I know additional appropriations is not a new issue and it goes back considerably but I just wanted to make that point. Would you agree that that is normally the case, that it's around 1 per cent, Mr. Carter?

MR. CARTER: That number vaguely rings a bell. I mean, there have been variations from year to year and over the decades, but 1 per cent or 2 per cent, yes.

MR. SALMON: Let me just interject on that. Here we are talking $222 million and the government is making a decision that because there are additional revenues available, the government can afford to spend an additional $222 million. But it is government making the choices as to where to spend that money without any debate in the Legislature about spending it on health care as opposed to education, spending it on cleaning up the management of the fleet as opposed to education, spending it on cleaning up the management of the fleet as opposed to health care. That range of choices that, in my view, in terms of achieving effective legislative control, requires debate in the House, and it's not happening. That's my point.

MR. CHAIRMAN: I'm sorry, I missed the word you used, it's not, what?

MR. SALMON: It's not effective, from a legislative point of view.

MR. CHAIRMAN: Thank you, I just didn't hear the word you used. We'll go back to our speakers' list now, which is Michel, David Wilson (Sackville Cobequid), and David Wilson (Glace Bay). Michel, you have the floor.

[Page 20]

MR. MICHEL SAMSON: Mr. Salmon, I'm curious, we continue to hear the government talking about GAAP and compliance with that, and that Nova Scotians can have confidence that what's being presented to them are accurate figures and that there's nothing untoward here. For a budget to have been presented only to find out later that an additional $222 million was being appropriated, I don't believe is an accurate reflection to Nova Scotians of what the government's intentions were. So, I'm curious, you've mentioned about the legislation allowing this, but how does this relate to the whole system of GAAP and showing clear transparency to Nova Scotia taxpayers?

MR. SALMON: I don't believe it's an issue of GAAP, it's an issue around the ability of any government to forecast what's going to happen, financially, in a coming year. The most difficult area is forecasting revenues. We attempt to do a review when the estimates are being prepared as to the reasonableness of the amount of revenue that's being forecast. My opinion says very clearly, we give an unqualified opinion that we've determined that these assumptions are reasonable, but there's a sentence in there that says they'll never be right, in effect. That's the issue, Mr. Samson, that it's virtually impossible to nail it down to less than 1 per cent.

MR. MICHEL SAMSON: I'm curious, outside of the Cabinet itself, does anyone in government, your office, have any control over where that proposed $222 million will be spent?

MR. SALMON: No, it's an Executive Council decision.

MR. MICHEL SAMSON: So, they can use that as a slush fund, do whatever they want with it. We have absolutely no control outside of the Cabinet table as to where that money's going to be spent.

MR. SALMON: That's within the legislation as it currently exists. Claude, do you want to comment?

MR. CARTER: It's important - this is not new. Most of this money was included in the December 2004 forecast update. That's where they first reported publicly that they were going to overspend the appropriations, and then they updated that in the 2005-06 budget documents with their 2004-05 forecast information. We're currently auditing that, and there will be further adjustments to that. This is not new information. This was out there publicly. Our point is that it's just purely with respect to our mandate to identify where appropriations have been exceeded. Then we've got this historical issue about whether or not the structure and the process in Nova Scotia results in effective control by the House of public spending.

MR. MICHEL SAMSON: I guess if I can take it one step further, we had $99 million last year, we're looking at $222 million. At this rate, if I was government, would I not intentionally try to lowball my revenue projections with the hope that I'll be in the situation

[Page 21]

at the end where Cabinet and not the Legislature gets to decide on the expenditure of, in this case, over $200 million, wherever they want to spend it?

MR. SALMON: Mr. Samson, I believe that it was for that very reason that the Liberal Government, in 1993, introduced the amendment to the Auditor General Act, requiring the Auditor General to give an opinion as to whether those revenue estimates were reasonable; the only jurisdiction in the country that mandates an Auditor General to do that. So, that's supposed to be the protection against the actions that you're suggesting could be taken.

MR. MICHEL SAMSON: I'm just curious, as a final question on that, is it your suggestion, through the Auditor General's Office, that the legislation should be amended so that these types of additional appropriations would require approval of the Legislature prior to being expended?

MR. SALMON: That's on my wish list, way up here.

MR. CHAIRMAN: I would just note that the legislation used to say that, the provision was annually violated and then it was removed from the legislation. We'll move over to David Wilson.

MR. DAVID WILSON (Sackville-Cobequid): Mr. Chairman, just to continue on with this topic, you've used some strong language to say it might be deemed illegal when it comes to this kind of spending by government. To say it's only 1 per cent or a small amount of money, as the member for Richmond said, this year $222 million, last year $99 million, if you go back to 1999-2000, it was $170-some million spent. So, over the years it's been quite a bit of money.

You had made a comment earlier, do any other provinces spend the money like we see here in Nova Scotia? Are you aware of any other provinces that spend it to the degree we see here in Nova Scotia?

MR. CARTER: I don't have any specific information on that.

MR. DAVID WILSON (Sackville-Cobequid): Auditor General, you've mentioned that on the federal side . . .

MR. SALMON: It's much more specific, more control.

MR. DAVID WILSON (Sackville-Cobequid): More specific, so you probably wouldn't see this amount of money being spent after the budget passed through the Legislature.

[Page 22]

MR. SALMON: Well, you could see those amounts of money being spent, but the control, the effective legislative control, is much more in place.

MR. DAVID WILSON (Sackville-Cobequid): Has government ever acknowledged an awareness of your concerns, or given comment on your concerns, when it comes to this situation or the spending of this money in this manner?

MR. CARTER: Historically, before the change in the Provincial Finance Act that put it so that it has to be in place 90 days after the release of the Public Accounts, the government's view was that we were interpreting the Provincial Finance Act too harshly. The words were said that you can't spend money unless the appropriation is there. They interpreted that as long as the appropriation was put in place at some point, then it was okay.

We've had differences of views for years with Finance on the old legislation, and so the solution was, well, we'll just open it up so what the House did when they amended the Provincial Finance Act was legitimize putting in place the additional spending authority six months after the year-end. Again, from our point of view, that was a solution to an administrative problem that government had but, frankly, further eroded the ability of there being effective control by the House of public spending.

MR. DAVID WILSON (Sackville-Cobequid): So as a Public Accounts Committee, I would think that you would suggest that we should look at sending a strong message, or even sending a request from our committee, to amend the Provincial Finance Act to put more controls in. Is that something that we could hear from your office?

MR. SALMON: If you accept my very strong opinion on this, and I admit that I have a very strong opinion on this, but if you accept that, yes, it would be within the mandate of the members of the Public Accounts Committee to promote a debate in the Legislature with regard to forcing consideration of an amendment to the Provincial Finance Act.

MR. CHAIRMAN: We'll move over to David Wilson (Glace Bay).

MR. DAVID WILSON (Glace Bay): Mr. Chairman, I just wanted to ask a few questions about the Nova Scotia Hospital Information System. Off the top, I'm curious as to why there was not a full audit done?

MS. ELAINE MORASH: Resource limitations, and because the system is still being implemented at this point. There's a chart at the back that shows the implementation schedule, but we were coming in sort of partway through the project. It's not scheduled to be finished until March 31, 2006.

MR. DAVID WILSON (Glace Bay): There's no testing done?

[Page 23]

MS. ELAINE MORASH: We tested some expenditures, but we didn't test any controls over the system. It would have been a massive task to go in and check, for example, security controls and that kind of thing over the system. So we did do some testing of expenditures, we know that the expenditures that have been charged against it are in fact . . .

MR. DAVID WILSON (Glace Bay): In terms of how the system is working, your conclusion is based on how the people who installed the system told you it was working?

[10:15 a.m.]

MS. ELAINE MORASH: And the users. Our staff visited GASHA, DHA 7, and they also visited DHA 8, Cape Breton, and talked to both management and some staff members, for example, the Cape Breton Regional.

MR. DAVID WILSON (Glace Bay): But it was at the Guysborough Antigonish Strait Health Authority where they were having most of the problems, as I understand it, with the system. They had identified, especially nurses, that the system was not working properly. So those bugs have been ironed out. Is that what you are telling me?

MS. ELAINE MORASH: That's right. Our staff visited GASHA and spoke to nursing management. I don't know that they spoke to any nurses on the floor but they certainly spoke to nursing management, and we were told that those concerns have been ironed out primarily because they got the wireless laptop units. One of the issues had to do with just changed management. It meant that they had to change how they were doing everything with respect to documentation of patient care. I guess over time those bugs worked out. They got used to the new system and it's okay now.

MR. DAVID WILSON (Glace Bay): But you've identified a problem that you have to allow for more money for laptops, which you have estimated to be about $2 million.

MS. ELAINE MORASH: Yes, I think the proposal is about $1.5 million or something like that, something under $2 million.

MR. DAVID WILSON (Glace Bay): So a project that is now at $57 million did not allow for this. When you are putting in this technology that takes so long now, I'm wondering, I guess, if they haven't allowed for laptops, which I would think would have been one of the things they should have allowed for, considering the portability of the whole system itself, is this going to be outdated by the time it's implemented?

MS. ELAINE MORASH: No. This patient care module is just one of the 18 modules. It's a small part. They have the computers . . .

[Page 24]

MR. DAVID WILSON (Glace Bay): But it's one of the most important parts of the system.

MS. ELAINE MORASH: It depends on who you are.

MR. DAVID WILSON (Glace Bay): Well, if I'm a nurse and I'm attending to you at your bedside and I have to enter the information which, as I understand, is where most of the problems occurred.

MS. ELAINE MORASH: That's right. The initial plan was that those computers, for that particular module, would be at a ward station. That you would have a group of nurses using the computer equipment at a ward desk and that was the issue that when they started to use it in the field, they said this isn't working, we have to spend too much time coming back and forth. Then they decided that the units actually had to be by the patient's bedside. So it was a decision that was made after the fact and then the money wasn't there; you're right that it hadn't been included for that number of units. What had been included for hardware included the hardware that was required, for example, in the labs for the lab module, in the pharmacies for the pharmacy module and in the wards at a nursing station, but not in the individual patient rooms.

MR. DAVID WILSON (Glace Bay): So that patient care system, according to your report is only going to be implemented in 6 of 34 hospitals at the end of this whole project, is it?

MS. ELAINE MORASH: No. Right now it is implemented in 6 of 34. The decision hasn't been made in terms of how many it will be implemented in at the end of the day because it depends on the availability of funding.

MR. DAVID WILSON (Glace Bay): And there will be additional funding that will be required.

MS. ELAINE MORASH: That's correct.

MR. DAVID WILSON (Glace Bay): I guess I'm looking for your opinion. You have a system here that has gone into major cost overruns. It costs a tremendous amount of money to implement. At the end of it, you still will not have everything that's required. You don't have a system that is compatible with the IWK or the Capital Health District. Is this the best that there was to offer? Could we have done better?

MS. ELAINE MORASH: My understanding is that the system would not have met the more sophisticated needs of the Capital District Health Authority and the IWK so that's why the decision was made to keep it separate, that those facilities are that much more complicated. So at the end of the day, the plan is there to make them talk to each other but

[Page 25]

to implement it in the Capital District Health Authority, we spoke to people at the Capital District Health Authority who are responsible for systems and they said that the system would not have met their needs. However, to have the other district health authorities talk to it will meet its needs at the end of the day. So there is a plan in there to do that.

I guess our conclusions are fairly positive at the end of the day with respect to the implementation of the system. Yes, the initial budget was about $30 million and that was overspent but once it was budgeted in detail, that figure of $55.7 million has stayed constant for the last two or three years and it appears that it will come in under that budget. It's normal that when you first start with a project, before you have your detailed cost estimates in place, that the total cost that you estimate at that point is not the same as once all your information comes in and final estimates.

MR. DAVID WILSON (Glace Bay): That's fine, Mr. Chairman.

MR. CHAIRMAN: We will move on to Danny, followed by me.

MR. DANIEL GRAHAM: Thank you for providing a comprehensive report, Mr. Salmon, and to each of the people who are on your staff, not just the people who are here today. I would like to touch on the issue of special education, Ms. Morash. I would acknowledge at the outset that you've indicated there are clear lines of accountability with respect to reporting on this item. I also note the limitations that you had because of resources and other issues and mandate with respect to determining the adequacy and appropriateness of special education funding in Nova Scotia. That's acknowledged. I think it's important, however, to note that many advocates for people in the special education program suggest that Nova Scotia is historically on the very low side of the national standards for special education, but some of that bleeds into some of the questions that you've raised in your audit with respect to whether or not we are properly tracking it.

There are two or three general areas that I would like to touch on. First, from what you said earlier and from the reports you have provided us, it would appear that we don't know how many people are on the waiting list for the various elements of a special education program, so I would suggest that as a result we don't have a handle on what the demand is for special education in our province. That strikes me as a significant flaw in our determining whether or not we are providing this service in a meaningful and effective way for the Nova Scotia population. If you don't know how big your waiting list is as a starting point, then you don't know whether or not you are meeting the needs of the people.

I would ask you to comment on that because it's connected to a second point on this and that is that you are suggesting we aren't doing a very good job of tracking the costs associated with special education. You cited two examples in your oral presentation earlier with respect to transportation and medical procedures. I expect that there are several others because there are many informal processes that are involved with respect to special education

[Page 26]

and I would add that one of them includes the attendance of parents and volunteers in the classroom who provide a service that is of some value to ensure that special education is provided in the way that it is.

So I'm just wondering, in the first part of my questions around special education, whether or not you have a concern about a system that doesn't seem to know how great its demand is and doesn't seem to know how great its expenditures are.

MS. ELAINE MORASH: Those are both good points. With respect to the wait list for services, it's fairly complicated because some of the individuals who are waiting for services haven't been assessed by professionals yet. For example, they would need to be assessed by school psychologists so you have to take the waiting list and sort of divide it up - if there was such a waiting list - between those who are waiting for assessments and those who have been assessed as requiring services, and then there are so many different kinds of services included within the umbrella of special education. You have services resource, you have students who might need services of a resource teacher a half an hour a week and then you have students who require full-time teacher assistants. There is a wide range of student needs and program offerings.

That being said, the Department of Education believes that it has a fairly good handle on wait lists because of these surveys that it issues out to the schools and the school boards. Our problem is coming in after the fact that we can't verify that information, that at the point we come in we see there are 10 students on the wait list for such and such a service, nobody knows what the names of those students are and we can't go in and track whether the students are getting the service, whether they are not.

A lot of the deficiency we see has to do with the lack of a management or an audit trail. We believe that there's certainly a need for improved information systems, but the school boards themselves will tell you that they have a good handle in terms of how many students at each school are waiting for services and what their needs are, and that kind of thing. I guess they just can't prove it to us, is our conclusion at the end of the day.

With respect to the costs of special education, I did give a couple of examples in my oral presentation. There are some other examples. For example, the time that a classroom teacher spends with special education students is not costed to special education. So you have a regular classroom teacher, and she's got two students with special needs, let's say, and the rest of the class is in the regular program. How much of her time or his time goes towards those special needs students is not charged to special education. So there are additional costs, we know, that are not charged to special education, and that's why our conclusion is that the costs are in fact understated.

[Page 27]

With respect to the funding of special education, the funding is quite convoluted in Nova Scotia, and because it's so intermingled with general formula funding, my conclusion would be that we don't really know in Nova Scotia how much we spend on special education at the end of the day.

MR. GRAHAM: That is certainly the sense that I've had for some time. It's interesting that you're able to confirm that. There are a number of different elements to this, a) it's convoluted, b) we don't do a good tracking job, and c) even if you manage to track what they say they spend, according to what you've said at Page 43 of your report, we have on the one hand rigid formulae that are supposed to be applied, but then great flexibility around that, which raises questions about how we ended up putting the money into the pots that we did around this particular issue. Am I correct in that? Is that a fair assessment of what you've said, particularly at Page 43?

MS. ELAINE MORASH: I'd have to look at Page 43.

MR. GRAHAM: This is 4.52, and you're doing the comparison between the lesser of the per student funding and the actual special education costs. Then you draw out the comparisons with AVRSB and CCRSB.

MS. ELAINE MORASH: Yes, that's correct. There was a problem with respect to the regulations not being updated for this restricted grant. The restricted grant is supposed to be calculated in a certain way, and that they were actually being provided funding in excess of that because the amounts hadn't been updated.

MR. GRAHAM: The troubling part for taxpayers might be - well, the troubling part I would have with the original formula is that it's too rigid and it needs to have a subjective element to account for some school boards that would have a greater demand than others. They seem to have accounted for that - they seem to have accommodated for that, but there's no accountability in the flexibility that they seem to have built into the system. In other words, they've moved away from the rigid formula, it would appear, but there's no assurance that that money is being spent responsibly or most effectively.

MS. ELAINE MORASH: They've moved away from what's in the regulations, but they've moved away in the same way for each of the school boards. So there isn't the flexibility there in terms of one board getting more than the other, it's just that the base has been changed, because it has moved up over time.

MR. GRAHAM: Okay, I understand. One final element that I'd just ask for your comments on, it relates to the comprehensive reports, they provide them in two areas, two perhaps obvious ones, but you're indicating that it would be helpful to have reporting in all major special education programs. I'm just wondering if you could draw out the implications for those. You mentioned earlier in your comments the range of activities that happen around

[Page 28]

special education, it's not just one narrow band of activities, but there are several. Can you please indicate to the committee what's the extended value that comes from us having a more comprehensive understanding of special education beyond severe learning disabilities and reading recovery?

MS. ELAINE MORASH: At the end of the day, what we want from these programs, what everybody wants, I think, is to see that they're effective, that the students have in fact progressed during the year. That's what you get from these reports on the Severe Learning Disabilities and the Reading Recovery Programs. Those are very formalized programs, and I guess that's why they are treated in that way. The history on the Severe Learning Disabilities Program goes back a number of years to when many of those students attended private institutions, and when they were moved back under the responsibility of the school boards, there were some reporting provisions that were brought into effect.

[10:30 a.m.]

So those are great reports, because they do measure the student, they measure the student at the beginning of the period and at the end of the period, and they report that in terms of what the progress has been. We just don't see that in the other programs, there's no reporting at all. One example, for gifted students, all of the boards will tell you that they do very little in terms of that program, and it is under the umbrella of special education. There's no reason for that to be treated differently in terms of reporting, and many other programs for different kinds of disabilities are not reported on at all.

MR. GRAHAM: Thank you.

MR. CHAIRMAN: I'll ask some questions myself now. Before I get into this very interesting area of fleet management, Alan, I want to go back to the question of additional appropriations. I think it's clear that overspending is not the issue. The government forecasts at the beginning of a fiscal year how much they're going to spend. It's impossible for them to be exactly right, and typically they will spend a bit more than they project.

The issue is legislative approval. There are three levels here: what the government could have done, what they should have done, and what they're required by law to do. What I want to clarify from you, Roy, is the last of those. You've pointed out that the government knew by its quarterly update in December that it was going to overspend. So they could have sought the Legislature's approval in the Spring sitting, this is for additional spending in 2004-05. I don't think anybody's going to argue with that, they could have.

Then you get to the second level, which is they should have. My understanding from you is you have a fairly strong opinion on this, that if we're going to take legislative government seriously, we have to accept that the Legislature will approve the government's

[Page 29]

spending plans. So I think I'm right in saying it's your position that they should have brought that to the Legislature in its Spring sitting, correct?

MR. SALMON: Not just this government, every government.

MR. CHAIRMAN: And that, of course, is particularly important in a minority government, where the government has no prior assurance that their spending plans are going to be approved by the House. In a majority government, we kind of skate over these kinds of things, but in a minority government, it's a lot more fundamentally important.

But what I want to focus on now is the third level, which is what the government is required by law to do. In your opening remarks, you made some statements which were fairly strong. If I understood you correctly, you said that there may be a violation of the law in not seeking prior approval, and that any of that spending that was done without legislative approval may have been illegal spending.

MR. SALMON: As I understand it, and Claude can clarify this, the Order in Council should be passed and made public within 90 days of tabling the Public Accounts. We see no indication that that always happens. There have been situations where that Order in Council has been significantly delayed beyond the statutory deadline.

MR. CHAIRMAN: Now I'm not talking about the Executive Council approval, which no doubt will come eventually, I'm talking about legislative approval.

MR. SALMON: That never happens.

MR. CHAIRMAN: Do you believe that there is an arguable case that it is actually illegal for the government to spend money without the Legislature's approval?

MR. SALMON: No, I could not say that it is illegal, because the Legislature has passed a provision that gives the government authority to overspend through Order in Council. That is legal because the Legislature has passed it.

MR. CHAIRMAN: You'll recall that the legislation, the Provincial Finance Act used to require the prior approval of the Legislature for additional spending. That provision was interpreted out of existence. It essentially was never followed. The government just didn't do it. But there was no sanction for not following the law. So I'm sitting here thinking, yes, we could amend the Provincial Finance Act so that it says what it said before, but as the Auditor General, what are you telling us in the Legislature? What can we do, what's open to us if we do amend the legislation to say that and the government simply doesn't do it, like they did before?

MR. SALMON: Then I would report that it was illegal.

[Page 30]

MR. CHAIRMAN: You would report it was illegal, and then we'd all move on. Okay, I think you've answered that question.

I want to move on to the fleet management thing, which of all the things that I've heard today, that's the one that strikes me as being the area that is most problematic. Auditors always speak in such polite language, but when I translate this in layperson's terms, I see a lot of problems here.

So let me start by asking you this, Alan, if I asked you to tell me how many vehicles those two departments have and where they are and what state of repair they're in, could you tell me?

MR. HORGAN: I think the question is, could they tell you. They could tell you each of the assets that they own and where they are, of course. They could not necessarily tell you what their state of repair is, because we've noticed that some of their maintenance logs aren't kept up to date as well as possible. I raised the issue that from a government-wide perspective, there is no government-wide coordination. So you have to go to every individual department to ask, how many vehicles do you have and where are they?

MR. SALMON: Alan, tell him about the process for licensing these vehicles, and what that could cost in round terms.

MR. HORGAN: Mr. Chairman, it was an interesting finding in that a few years ago government changed the way that they license vehicles that they own themselves. Of course vehicles are licensed through the Registry of Motor Vehicles. A while ago, at least for government vehicles, it was just a one-time fee for the licence and registration, there wasn't an annual process. So they decided to change that, so that even vehicles that belong to the government would now require an annual or biannual registration, just as your or my car would. However, it has to be done on an individual basis.

So in each of these departments - and in these two departments, not all 2,200 of those assets I mentioned are vehicles but a good chunk of them are - they have to create a separate form with separate cheques, and deliver these forms to Access Nova Scotia sites and register these vehicles, just as you or I would, as opposed to listing them all on one list, making up one cheque and sending that to the Registry of Motor Vehicles. We thought that was a real step backwards, and of course it does cost the department more to do it.

MR. CHAIRMAN: Not to mention it's the government paying itself.

MR. HORGAN: Yes, and it is the government paying itself. So it didn't change the revenues of the province, but it certainly increased its workload.

[Page 31]

MR. SALMON: And we did identify that the Department of National Defence submits a list.

MR. CHAIRMAN: On acquisitions and disposals, buying and selling these vehicles, you've said what for auditors is fairly strong language, you were unable to obtain sufficient appropriate evidence to conclude that there is due regard for economy and efficiency. You're not saying there is, you're not saying there isn't, it's just the information isn't there.

MR. HORGAN: That's right.

MR. CHAIRMAN: What are the risks that we're running by having inadequate information over the buying and selling of these vehicles?

MR. HORGAN: I might be able to illustrate that by giving just a detail with respect to lack of information. We asked both departments, how do you decide when to buy a vehicle? What's your decision process for buying a vehicle? In each of the cases, the answer was when one we have now cannot function any longer, either it's broken down or its annual maintenance costs are too high. So, basically, their way of buying vehicles is to replace other vehicles in the system.

So we asked, well, how do you know if the vehicle that broke down was really needed? How do you know vehicles in one area where you're replacing may not be needed, whereas in another area of the department they need a whole bunch more vehicles than they have right now? We were advocating some system-wide planning, saying you buy vehicles based on need, not based on replacing what you have.

They didn't have that kind of planning. Each of the departments indicated that it is a good idea, and they want to do that relatively soon, basically assess their requirements, and yes, we need so many vehicles and so many trucks here, and so many vehicles and so many trucks here. Then, as we buy them, that's what we're going to do, as opposed to just replacing the ones that get broken down.

MR. CHAIRMAN: One of the other issues you've raised is fuel. I want to quote something, this is from your overheads, "Departments cannot ensure that all fuel expenses are for government-related activities." What are you telling us?

MR. HORGAN: What I'm saying is that the information that the departments are collecting in some of their divisions does not enable them to tell whether the fuel that is purchased, necessarily, is going into a government vehicle. There is a possibility, but we did not see this because our tests would not be able to determine if it's actually happening. We're looking for systems that government uses, the information it collects, to determine whether, potentially, canisters are being filled or even a non-government vehicle is driven to a gas station and a government purchase card is used.

[Page 32]

What we kind of expect is that the government would be gathering information on how much fuel was spent on individual vehicles, the distance driven by individual vehicles, and that perhaps through computer analysis the two can be matched. Then, all of a sudden, if it appears that a vehicle's mileage is halved, then they can start asking the question, is the gas actually going into that vehicle.

MR. CHAIRMAN: You're not saying fuel is being stolen, you're not saying it's not being stolen, you're saying that the information systems are inadequate for you to say one way or the other.

MR. HORGAN: That is correct.

MR. CHAIRMAN: One of the most common complaints you get from citizens about government fleets of vehicles are vehicles being used for personal purposes and/or government vehicles being driven in a way that violates the rules of the road. What information can you give to us about those two things? Are people driving provincial vehicles driving respectfully? And does the government gather any information, for example, on speeding tickets? And, second of all, what controls are in place to prevent the use of provincial vehicles for personal use?

MR. HORGAN: Mr. Chairman, I can't help you on the latter item. We did not look at the obeying of the rules of the road, with regard to government . . .

MR. CHAIRMAN: Does government keep track of things like speeding tickets?

MR. HORGAN: It would be kept track of at the Registry of Motor Vehicles, but I think the question is, and probably what you're leading to, is it watched at the departmental level where the use of the vehicle is controlled. I'm not aware that it is, but I can't speak with great authority on that.

The other question, personal use. The government has reviewed that issue, and they've set up a system where they authorize - and I think this is primarily in Transportation and Public Works - certain personal use of their vehicles. Under a system where, as long as it's pre-approved by the department and the person who is using a government vehicle, say, to drive home and then drive back to work each day, makes a payment based on mileage to the government. So if you're going to use a government vehicle, you pay government for that usage.

But what we found was that the payment being used was at a rate that we don't think covers the full cost of their use of that vehicle. What we did is we compared it to the fact that if we use our own vehicle for government work, so in our office if one of our auditors is travelling, using their own vehicle, they can claim, from the province, something like 32 cents a kilometre. However, for the people in Transportation and Public Works who are

[Page 33]

using government vehicles, they just pay 20-something cents - I believe the figure is in the chapter - a reduced rate. We asked why, and they said, basically, that was the rate that was calculated on a government-wide basis for such a policy. We didn't think it really covered the full cost. So, yes, there is personal use. It's authorized, but I don't think they get as much money back for that as perhaps they should.

MR. CHAIRMAN: The last question on fleet, before I turn it over to other members, is on auto insurance. My understanding is the government fleet is self-insured which means, essentially, there is no insurance, that if there is a claim against the government, the government treats itself as its own insurance company. Is that correct?

MR. HORGAN: Not entirely. They have a relatively complex insurance arrangement. There are elements of self-insurance. There are certain levels of liability that are covered internally, certain levels that are handled through an external policy. That is one thing that is managed centrally for government. So all fleet assets are handled by the Risk Management section of Transportation and Public Works, and, yes, they do have a purchase policy where some of the risk is borne by the insurance provider and some is borne by the province.

[10:45 a.m.]

MR. CHAIRMAN: Did your audit look at that aspect of fleet management?

MR. HORGAN: It did look at that. We came away with a relatively good feeling as to the quality of the management of insurance.

MR. CHAIRMAN: Thank you. Michel.

MR. MICHEL SAMSON: Alan, one of the issues I wanted to touch on, again in fleet management, you've talked about the maintenance of those vehicles and incomplete logbooks, does that apply just to DNR or to Transportation and Public Works, as well?

MR. HORGAN: That applied to both departments.

MR. MICHEL SAMSON: Now, Transportation and Public Works, you'll recall a few years ago that the government started closing down some of the more rural garages and making more central maintenance garages. For example, in Richmond County, the two garages we had, plus the central one in Port Hawkesbury, were closed, and then most of the equipment was moved, for maintenance, to Antigonish. What happened in the past, when you had the local maintenance, most of these guys had names for the trucks, they knew them inside out, and if there was a chip in the paint, they could tell you when that chip must have occurred.

[Page 34]

As part of your auditing, have you been able to look at whether efficiencies were in fact achieved by moving to these garages, and not only efficiencies but in regard to the logbooks, the scheduled maintenance and the potential replacement schedule for this equipment?

MR. HORGAN: We were hard pressed to determine the exact reasons for why there are some deficiencies with regard to the maintenance schedules, with respect to the logs not being kept, and, of course, the issue you're talking about, consolidation of efforts. We asked at Natural Resources whether they've done a staff analysis, actually we asked this at both departments, do you have enough maintenance staff, and if you can say yes or no, show us the analysis.

At Natural Resources, they have done a little bit of analysis and concluded that they do have shortcomings in the number of staff that they have for maintaining these vehicles. Now I can't attribute that necessarily to consolidation of maintenance sites or not. Transportation and Public Works said they have yet to look at their staffing. They couldn't answer the question, do you have enough people to maintain your fleet? They said, well, we have to do something to determine that.

MR. MICHEL SAMSON: So right now, after the consolidation, after the reassurances that were given to us that by closing the Port Hawkesbury garage, for example, there would not be a reduction in service, that there would be enough mobile mechanics, mechanics at the bay, they could not tell you that they have a sufficient number of mechanics and repair workers on staff right now?

MR. HORGAN: That's correct.

MR. MICHEL SAMSON: It makes you wonder why plows are off the road for three and four days in the middle of snowstorms. One of the other policies that was put in a couple of years ago, I believe Gordon Balser was the Minister of Transportation and Public Works, no expenditure over $1,000 was to be done without approval of the minister. It was quite a strange policy, considering a department that requires such expensive equipment would have that low an amount. Have you looked at that aspect in the review that you did to confirm that no expenditures over $1,000 were done without ministerial approval, as per the policy that was adopted?

MR. HORGAN: Now the policy that you're referring to, is that all expenditures, or is that particularly pertaining to vehicles or maintenance? I remember there were some policies in expenditure control initiatives by government, where they wanted ministerial approval for just about any kind of expenditure, and I thought it was like $5,000, and that doesn't exist any longer.

MR. MICHEL SAMSON: It doesn't exist any longer.

[Page 35]

MR. HORGAN: That one I was referring to under expenditure control initiatives. With respect to ministerial approval of expenditures, with respect to fleet management, no, there's nothing like that. I think we would have noticed.

MR. MICHEL SAMSON: I remember when this was brought in, we thought the figure of $1,000 was quite low, because replacing a plow or even some of the tires on some of these larger pieces of equipment was over $1,000. So we didn't think it was a sufficient amount of money. I guess the question becomes, now, who makes the decision to purchase new equipment, and who's watching what expenditures are taking place in that regard?

MR. HORGAN: The decisions are made by the management of the different fleet operations in the different departments, which is not an unusual circumstance for any kind of government program. Managers are responsible for their own budgets. How is it controlled? It's controlled through budgetary measures. Each manager will have a budget, they'll have a budget for operating their fleet, but they also receive a budget for capital acquisitions. So they have a certain pot of money that they cannot exceed in the purchase of these. At the senior ranks of a department, senior management, and in the accounting division, they will be watching actual expenditures in comparison to these budgets. So that's a form of control.

MR. MICHEL SAMSON: To your knowledge, that program that had been put in when Gordon Balser was there no longer exists, the minister having to sign off on any sort of significant expenditures prior to their approval?

MR. HORGAN: Not to the extent that you just described. We didn't see anything for expenditures of $1,000 or something like that. Requirements come forward to the senior levels of a government department that says these are all the capital assets we want to acquire in one year, millions and millions of dollars of tangible capital assets, and by the way this is what we want to buy for it. I would think not only is that reviewed at senior management levels in the department, that would be reviewed at senior management levels at Treasury and Policy Board.

With respect to whether any of that goes before the minister, I couldn't say. But with respect to small purchases of $1,000 and that, we didn't see anything to suggest that. There is one other issue, it's similar but not quite. There is a government-wide policy with respect to fleet assets that says no fleet asset in government should exceed $25,000, not including HST. The policy is not very specific as to what kind of fleet asset that should apply to. It makes some sense with respect to passenger vehicles, it makes absolutely no sense with respect to a snowplow. There is no snowplow you'll acquire for under $25,000.

So we asked both the departments, here is a limit, and what do you do with respect to it? They said, well, there's nothing we can do. If we have to buy a heavy-duty truck, the $25,000 isn't going to do it. If we need to buy a snowplow, $25,000 isn't going to do it. In

[Page 36]

the end result, what we're recommending is that government reassess this. They've looked at this policy of late, just last year, and they've reaffirmed the amount, but I don't think what they've done is try to define what that policy applies to with respect to fleet assets, because it certainly appears it's meant to be passenger vehicles and it's not meant to address other types of assets.

MR. MICHEL SAMSON: Just a final question, you indicated the Department of Natural Resources, I believe you said it was fuel for the helicopters that was sole-sourced, who is that sole-sourced to?

MR. HORGAN: That would be in the file and it doesn't come directly to mind.

MR. MICHEL SAMSON: Were you given any reason why it was sole-sourced, considering the volatility of fuel prices right now and how they've been moving and the competition that's out there? Why would they have been continuing to go to one company?

MR. HORGAN: We did ask the question, and I recollect that the sole-sourcing was reasonable from the perspective of it's a very particular product, of course, aviation fuel, especially when you buy it in bulk, drum aviation fuel. There's not a lot of local suppliers for it. Our concern, after looking at it, was the fact that they didn't go through the necessary approvals. The government has set out processes that say you may sole-source in certain circumstances, but this is what you do, you get approvals, you fill out forms, and that wasn't done in this case.

MR. MICHEL SAMSON: Just one final one, you made mention about Transportation and Public Works and DNR having contaminated sites, who's supervising these sites? Is it left to them to determine whether they have a contaminated site? Is the Department of Environment and Labour not monitoring them, like they monitor every other Nova Scotian business and homeowner that might have an environmental issue? How are they working between departments to monitor such things? In other words, is Environment going in on a regular basis and monitoring government sites for contamination, or was it just that Transportation and Public Works and Natural Resources decided on their own to have a review of their own sites on their own? How is that working?

MR. HORGAN: Excellent question. We asked the exact same questions. The answer is the departments do handle it on their own. Transportation and Public Works has looked at their own properties and they've done their own environmental site inspection and determined that they do have some contaminated sites. At Natural Resources, they don't know because they haven't done the inspections.

So the question is, where does the Department of Environment and Labour fit into all this? We asked, is there any reporting requirement that when you do find that you have a contaminated site at a provincial department, are you required to inform the Department

[Page 37]

of Environment and Labour? We talked to people at Environment and Labour about that question. The answer is no, it's not in the legislation. They see that as a shortcoming, and they indicated that probably the next round of changes to the Environment Act is going to address that, indicating that any emergency spills or existing contamination, even if it's at a government site must be reported to Environment and Labour, and quickly. But as it stands right now, the requirement is not there.

MR. CHAIRMAN: In the few minutes we have left, David Wilson (Sackville-Cobequid), and if he leaves any time for me, I have a couple of short snappers.

MR. DAVID WILSON (Sackville-Cobequid): A couple of quick questions on the same topic. In your report you said that there was no detailed information on the entire fleet. Do you feel government could save money if they did keep detailed information in the area of bulk purchasing or even maintenance or warehousing of government vehicles, especially in these departments?

MR. HORGAN: We feel that there likely are some savings to be had. In the absence of information, we couldn't suggest how much it is. But when you think that there are completely different information systems being used, at least in these two departments, that the two departments do their own buying and their maintenance operations are completely separate, even though they might have maintenance depots that are relatively close to each other, however they're separate operations, I think that would suggest there are savings, but I couldn't say how much.

MR. DAVID WILSON (Sackville-Cobequid): The one thing that concerns me is in your audit you said there's incomplete log books, inadequate maintenance schedules and records, and information on distance driven on vehicles. Do you think government employees are at risk with inadequate vehicles per se, if there's not these records being kept appropriately?

MR. HORGAN: As with any control system, if it's not there, there are risks. What we're saying here is that the departments could not show us records that indicate that they know that each and every vehicle is being maintained at least to a minimum safety standard. I think they'd be quick to tell you that just because there aren't things written down, that doesn't mean they don't know their assets. The vehicles are being maintained at certain depots. The ultimate responsibility, actually, for a lot of maintenance, is with the vehicle operator. The vehicle operator is actually responsible for making sure that they bring the vehicle in on schedule, they're to make sure that the logbooks are completed and such. Being conscientious people, hopefully they are bringing them in, and when they get into the depots, they know their assets and they're watching. But the systems aren't there to show us that this is happening.

[Page 38]

MR. DAVID WILSON (Sackville-Cobequid): One last thing, the government calls upon the public sector to provide services for the government. There's a lot of contracts, and I take the example of EHS and their contract with EMC to provide the ambulance service in this province. Coming from that profession, I'm aware of the strict maintenance records that need to be kept for them, I know that they have a performance-based contract with that company, not only for the quality of care but the quality of the maintenance of the fleet. Do you feel government should hold themselves as accountable when it comes to our departments, as they do the public sector to provide service to the government?

MR. SALMON: It's public money on both sides of the fence.

MR. CHAIRMAN: Due to the time, I think I'll have to save my questions for another time, for further sessions in the Fall. On behalf of the committee, I think I can safely say that we thank you very much for your comments. We do favour this practice of the biannual report, which you're doing for the second year. It allows this committee to deal with the audits in a more timely way, and we thank you for that. Mr. Salmon, any concluding words?

MR. SALMON: At some point perhaps some feedback on the level of detail in accordance with the priorities we established in our business plan.

MR. CHAIRMAN: Thank you very much. The subcommittee will be convened in September, and I expect this committee to resume its hearings in late September or October. I wish everybody a safe and happy and warm Summer.

[The committee adjourned at 11:00 a.m.]