Thank you, Mr. Speaker. Mr. Speaker, your Standing Committee on Government Operations is pleased to provide its report on the review of the 2016 report of the Auditor General of Canada on Support to Communities for Municipal Services in the Northwest Territories, municipal and community affairs, and commends it to the House.
Introduction
The Standing Committee on Government Operations (“the Standing Committee”) is pleased to report on its review of the 2016 Report of the Auditor General of Canada on Support to Communities for Municipal Services in the Northwest Territories.
Public Review
The 2016 Report of the Auditor General of Canada on Support to Communities for Municipal Services in the Northwest Territories was tabled in the Legislative Assembly on October 25, 2016. The Standing Committee on Government Operations held its public review of this performance audit report on January 17, 2017.
Members thank Auditor General Mr. Michael Ferguson, Assistant Auditor General Mr. Jerome Berthelette, Principal Mr. Glenn Wheeler, and Lead Auditor Ms. Erin Jellinek for preparing the report and assisting the committee during the public review.
The committee also thanks the Deputy Minister of Municipal and Community Affairs, Ms. Eleanor Young, and officials from the Department of Municipal and Community Affairs (MACA) for their appearances before the Committee.
The standing committee received an unsolicited submission on the Auditor General’s report from Mr. Bradley W. Enge. The standing committee does not, as a matter of practice, seek submissions from members of the public when it holds a public review on a report by a statutory officer such as the Auditor General. Nonetheless, the committee thanks Mr. Enge for taking time to write to the committee.
The Role of the Auditor General of Canada
The Auditor General of Canada is the Auditor of record for the Government of the Northwest Territories, and reports to the Legislative Assembly of the Northwest Territories in accordance with Section 41 of the federal Northwest Territories Act.
The Office of the Auditor General of Canada (OAG) conducts financial and performance audits in all three northern territories. Financial audits tell the Legislative Assembly and the public whether the government is keeping proper records and presenting its financial information fairly and in accordance with public sector accounting standards.
Performance audits, on the other hand, consider whether programs are being run according to the department’s own legislation, regulations, directives and policies, and with due regard for economy, efficiency, effectiveness, and environmental impacts. In the last decade, the Auditor General has completed 10 performance audits in the Northwest Territories, including one status report evaluating progress on the recommendations of previous audits, one special audit, and the most recent audit on support to communities to municipal services, which is the subject of this report.
The Legislative Assembly’s Standing Committee on Government Operations is mandated to review the reports of the Auditor General and make recommendations to the Government of the Northwest Territories on the basis of those reports. Members look for efficiencies, best practices, and gaps, with the intent of improving services to residents. The Auditor General’s reports play a crucial role in Members’ scrutiny of government spending and performance.
Communities in the Northwest Territories
Each of the 33 community governments in the Northwest Territories is responsible for providing a range of programs and services to its residents, including essential services, which are: drinking water; waste management; fire protection; and emergency preparedness. The audit focuses specifically on the provision of these essential services because the failure of a community government to adequately provide these services may result in significant risks to public health and safety.
Of the 33 communities, 24 are established as municipalities under one of four acts that outline the responsibilities of the community government, including the powers and duties of the council and municipal employees, procedural requirements, and the circumstances under which MACA can intervene in community government operations. These acts are: the Cities, Towns and Villages Act; the Hamlets Act; the Charter Communities Act; and the Tlicho Community Government Act.
The remaining nine communities, referred to as designated authorities, are First Nations communities within the jurisdiction of the federal government’s Indian Act and, as such, are not subject to territorial legislation governing municipalities.
The audit notes that on-going as lands, resources and self-government agreements are settled in the Northwest Territories, the legislative basis for the Government of the Northwest Territories, including the Department of Municipal and Community Affairs, to be involved with community governments in their delivery of essential services is diminished.
The Role of the Department of Municipal and Community Affairs
Under the Minister, the Department of Municipal and Community Affairs is responsible for developing and maintaining community governments that are responsible and responsive to their residents. This includes providing funding to community governments for essential services, helping ensure that they have the necessary governance structures and financial management capabilities to fulfill their responsibilities, and supporting them to provide their residents with the programs and services essential to good community life. The department’s mandate includes delivering training through its School of Community Government.
In the 2015-16 fiscal year, the department had 100 employees and a budget of just under $104 million. The Legislative Assembly allocates funding to MACA that is used by community governments for the programs and services they are responsible to provide under territorial legislation, regulations and policies. The department transfers over 80 percent of its budget annually to community governments through contribution agreements for the provision of essential services. Through contribution agreements, the department also administers federal funding from the Gas Tax Fund and the Building Canada Fund, which is used by community governments to improve public infrastructure.
If a community government is unable to properly administer its operations and services, the department may appoint an administrator to supervise or conduct operations on behalf of the community government. This, however, is not the case for designated authorities. Because these communities are not governed under territorial legislation, MACA can only intervene at the request of the designated authority and under mutually approved conditions.
The audit makes note of the 2007 New Deal for Community Governments, which fundamentally changed the relationship between the department and the community governments it supports. The ‘New Deal’ moved the department away from a prescriptive role, in which the department essentially dictated what community governments must do, to one in which the department facilitates program delivery by community governments, allowing them the flexibility and autonomy to establish their own priorities.
About the Audit
The Auditor General’s performance audit covered the Department of Municipal and Community Affairs’ activities in the period from April 1, 2013, to June 30, 2016. Work related to the NWT Community Government Accountability Framework covered the period from January 1, 2010, to June 30, 2016.
It may be of interest to note that the work done by the Office of the Auditor General on behalf of the residents of the Northwest Territories is not paid for or reimbursed by the Legislative Assembly or the Government of the Northwest Territories. This gives the Office of the Auditor General the ability to independently select the subject of a performance audit and provide objective assessment and recommendations based on the information that is evaluated during the audit and the findings contained within.
The Office of the Auditor General works closely with the department during the audit process and obtains confirmation from the department’s senior management that the findings in the Auditor General’s report are factually based. Additionally, it should be noted that the department’s formal response to each of the Auditor General’s recommendations is included within the report itself.
The audit examined whether the Department of Municipal and Community Affairs adequately supported community governments’ delivery of essential services that it funded, namely drinking water, waste management, fire protection, and emergency preparedness. To assess this, the audit examined whether the department monitored the provision of these essential services in order to know if they were being adequately delivered in communities across the Northwest Territories. The audit also examined whether the department assisted communities in delivering essential services, including helping to mitigate risks in those areas where services were inadequate. In addition, the audit examined the department’s efforts to build community government capacity through its School of Community Government.
The committee points out that the audit does not compare the work of the department against similar work done in other jurisdictions. Similarly, the audit does not examine whether the budget allocated to the department by the Legislative Assembly is sufficient, nor does it consider whether the legislation, regulations and policies governing the department's work are adequate or appropriate. The audit simply accepts these things a given and looks only at whether or not the department is meeting its obligations that exist under the current legislative and policy framework.
The Office of the Auditor General works with the department to define the scope of the audit. Only those parameters that fall within the scope of the audit are examined. It is important to note that, in this case, the scope of the audit did not include an examination of other key municipal services such as road maintenance, community planning or sport and recreation programming. The community governments themselves, along with other territorial government departments and Indigenous and Northern Affairs Canada, were also excluded from the scope of the audit.
Additionally, the standing committee wishes to point out that an estimated 6,000 hours of work by the Office of the Auditor General went into the audit. This does not include the hours put in by the department in responding to the information needs of the auditors. The committee mentions it here, to provide the audience with a sense of the amount of time and effort involved in conducting a compliance audit.
The standing committee would like to acknowledge the positive comments made by the Office of the Auditor General about the responsiveness of the department during the audit process. The committee is pleased to hear from the Office of the Auditor General that MACA took the audit work seriously and provided the OAG with good cooperation and assistance to complete the work. The committee commends the department for its work in this regard.
Mr. Speaker, the honourable Member for Hay River North will continue reading from this point on.