National Defence gave up $300 million in desperately needed funding last year because of bureaucratic foot-dragging, the auditor general said today in her latest report on federal financial gaffes.
Defence officials were unable to get enough accurate information to senior managers in time for them to decide how to spend surplus money within the department’s budget, Sheila Fraser noted.
The cash is now “permanently unavailable to the department to meet its ongoing requirements,” said Fraser’s examination of defence spending, one of seven reports tabled in Parliament.
“This is a serious consequence for a department that stated a need for additional funds to fulfil its mandate.”
Fraser took a swipe at officials, saying “senior management at National Defence needs to be more involved in financial management.”
Her examination found very little discussion of financial matters at the most senior levels of the department.
“We would have expected to see that in a department that manages some $19 billion of appropriations each year,” Fraser told a news conference.
The criticism comes at a time when the Defence Department is scrambling to pay the continuing cost of the Afghan war.
Federal law mandates that departments spend the money apportioned to them each year and that surplus cash be sent back to the treasury.
There is some wiggle room for departments, especially when it comes to spending projects that stretch out over many years as they often do when National Defence buys new equipment.
Departments are allowed to hold onto a small percentage of their budget surpluses, but anything over a certain threshold must be “re-profiled” to future years.
“We found that National Defence’s in-year management and monitoring activities may not serve as sufficient oversight for effective resource management,” Fraser concluded.
As a consequence of the information gap, $300 million in cash earmarked for the military was returned to the federal treasury in the 2007-08 budget year.
Fraser said it’s happened at least one other time in the last four years and recommended the department produce more timely and accurate financial data.
The overall budget for National Defence rests at about $19 billion per year.
Fraser’s report also cited a raft of other spending gaffes:
— Corporations have been depositing unnecessary cash with the Canada Revenue Agency to profit from the agency’s generous interest rates — a corporate benefit that costs taxpayers $30 million a year.
— A consultant for Natural Resources designed funding programs, then worked for groups that successfully applied for the money — a clear conflict of interest that the department ignored.
— The Crown corporation that manages federal bridges is so short of cash that key bridges in the Montreal area could become safety risks.
The Conservative government has ordered billions of dollars of new equipment and programs for the military since 2006.
But many initiatives, including the purchase of additional battlefield helicopters, fixed-wing search and rescue planes and navy supply ships, remain stuck in the bureaucracy and years away from delivery, even though money has been set aside for them.
Part of the problem is that the military is chronically short of project management staff.
Fraser also raised concerns there is no overall financial plan to marry the aims and equipment needs set out in the government’s Canada First Defence Strategy with the department’s business plan.
The strategy sets out a list of ships, planes and armoured vehicles that need to be purchased over the next 20 years.
But Fraser said National Defence has a “collection of plans, not an integrated corporate business plan” to carry out the new defence policy.