OTTAWA - The federal government hands billions of dollars to the provinces and territories for various programs, but lacks any way to ensure the money is actually spent on those programs, the auditor general reported Thursday.
In one of her regular reports to Parliament, Sheila Fraser said Ottawa often uses trusts to earmark money for things such as housing or transit. However once that money is handed over to the provinces and territories, she said Ottawa has no say in where or how it's spent.
Recent trust announcements by Ottawa include "operating principles" detailing the purpose of the money.
"However, because these operating principles are not part of the trust agreements, they are not legally binding," said the audit report.
Even if the provinces say they'll spend the money in some specific area, there's no legal obligation to stick to their word.
The federal government has to hope that provincial legislatures hold their governments to account, because Ottawa can't, Fraser said.
In the last decade, the federal government has handed out $27 billion through various trusts.
Fraser's latest report is actually dated December 2008, but its release was delayed because Prime Minister Stephen Harper prorogued Parliament.
The main audit report was accompanied by a damning audit from environment commissioner Scott Vaughan, who found little evidence that billions in federal spending on environmental programs is actually working.
Fraser's audit included problems in the way Public Works awards some contracts for professional services, in the way the small agencies operate and in how the Canada Revenue Agency manages its information technology spending.
She said Health Canada's health indicators report on wait times, quality of care and general wellness isn't of much use to people. And she found Corrections Canada could save money with more centralized purchasing policies
On the rosy side, Fraser reported that the revenue agency has improved its people management policies and adds that the vast majority of Public Works contracts are handed out in an open and fair process.
Her auditors looked at contracts for professional services and found that many fell short of meeting all the rules after they were awarded. Requirements were changed dramatically in some cases, in others the department didn't enforce the conditions.
There were three instances where companies who won contracts were involved in setting the requirements - a clear conflict of interest.
Public Works said it is addressing these concerns.
Fraser also looked at small government agencies - bodies such as the CRTC, the Copyright Board and the Canadian Human Rights Commission - and found they aren't treated fairly by their parent departments.
She said these little guys don't always get the guidance they need. Some try to share administrative costs with other small bodies, but it's an ad hoc thing.
They also face a huge paperwork burden. They have to produce as many as 100 different reports a year - the same as a huge department - with few of the resources their big brothers have.
She said the large agencies have done little to help.
"It is time for concrete action."
Fraser said the government has a committee working to reduce the web of paperwork and improve management.
Health Canada was chided for producing a report on national health indicators which doesn't really tell people much.
The reports - issued every two years - were commissioned after a series of ballyhooed first ministers' meetings on health care. They cover things such as hospital wait times, quality of care and wellness statistics.
But the reports don't have enough information to help people figure out what they really mean.
"There is no discussion of what the indicators say about progress in health renewal," the report said. "Without interpretation, their ability to inform Canadians is limited."