CONTENTS
Standing Committee on Public Accounts
Modernizing Government
Budgeting and Reporting
THIRTIETH
LEGISLATURE
of
the
Legislative Assembly of
Saskatchewan
STANDING
COMMITTEE ON
Hansard
Verbatim Report
No.
6 — Tuesday, February 25, 2025
[The committee met at 09:01.]
Chair
Wotherspoon: —
Okay. Good morning, everyone. We’ll convene the Standing Committee on Public
Accounts. My name is Trent
Wotherspoon. I’m the Chair of the Public Accounts
Committee. I serve as the MLA [Member of the Legislative Assembly] for Regina
Mount Royal. I’ll introduce the members of the committee: Deputy Chair Wilson,
MLA Chan, MLA Crassweller, MLA Pratchler,
and MLA Gordon. And MLA Patterson is substituting for MLA Harrison.
I’d
like to introduce our officials with the Provincial Comptroller’s office and
thank them for being here today as well: Jane Borland, assistant provincial
comptroller; and Jenn Clark, director of financial management.
I’d
like to welcome and introduce our Provincial Auditor, Tara Clemett,
and her officials that have joined her here today. I know she’ll introduce them
as we embark on scrutiny on the respective chapters.
We
have the following documents to table: PAC 24‑30, Provincial Auditor of
Saskatchewan: Third quarter financial forecast for the nine months ending
December 31st, 2025; PAC 25‑30, Ministry of Government Relations:
Response to question raised at the January 21st, 2025 meeting; PAC 26‑30,
Ministry of Finance: Report of public losses, October 1st, 2024 to December
31st, 2024; PAC 27‑30, Ministry of Health: Report of public losses,
October 1st, 2024 to December 31st, 2024; PAC 28‑30,
Ministry of Education: Report of public losses, September 1st, 2024 to November
30th, 2024; PAC 29‑30, Ministry of Agriculture: Responses to questions
raised at the January 21st, 2025 meeting; PAC 30‑30, Saskatchewan Health
Authority: Responses to questions raised at the January 22nd, 2025 meeting; PAC
31‑30, Saskatchewan Cancer Agency: Responses to questions raised at the
January 23rd, 2025 meeting.
Saskatchewan Arts Board
Chair
Wotherspoon: — Now
the first focus here today will be on the Saskatchewan Arts Board. It’s a
pleasure to welcome CEO [chief executive officer] Lisa Bird-Wilson to the
committee along with other senior officials with Parks, Culture and Sport. I’ll
ask Ms. Bird-Wilson to briefly introduce the officials that have joined her
here today. Refrain from getting into the respective chapters at this point; we
would then turn it over to the auditor and come back to you.
Lisa
Bird-Wilson: —
Okay. Well tânisi, good morning. I will introduce
Greg Gettle, deputy minister of Parks, Culture and
Sport to my right; and Dan French, assistant deputy minister, Parks, Culture
and Sport to my left.
Chair
Wotherspoon: — Okay, thank you. I’ll turn it
over to the Provincial Auditor to make a presentation with respect to the
chapters being discussed. After the Provincial Auditor’s comments are finished,
we’ll turn it back to the officials, to Ms. Bird-Wilson and officials for
comment, and then open it up for questions.
Tara
Clemett: — So thank you, Mr. Chair,
Deputy Chair, committee members, and officials. With me today is Mr. Jason
Shaw, and he is the deputy provincial auditor that is responsible for the
Saskatchewan Arts Board. Behind me as well is Ms. Michelle Lindenbach, and she is
our liaison with this committee.
So today Jason’s going to
present the two chapters that are on the agenda around the Saskatchewan Arts
Board in one presentation. The committee previously did consider and agree to
the recommendations in these chapters in 2020. We are pleased to report that
the Saskatchewan Arts Board has fully addressed all the recommendations by
April 2024. I do want to thank the CEO and her staff for the co-operation that
was extended to us during the course of our work. With that, I’ll turn it over
to Jason.
Jason Shaw:
— Thank you. The Saskatchewan Arts Board provides funding and support to the
arts by awarding grants to professional artists, arts organizations, and art
communities. For the year ended March 31st, 2024 the Arts Board approved almost
$6.8 million in grants.
Chapter 31 in our 2021 report
volume 2, starting on page 229, and chapter 24 in our 2024 report volume 2,
starting on page 233, reports the results of the progress made on the
recommendations we initially made in our 2018 audit of the Saskatchewan Arts Board’s
processes to award grants impartially and transparently.
We originally made six
recommendations. By May 2021 the Arts Board implemented five recommendations.
By April 2024 the Arts Board implemented the final remaining recommendation. In
our 2021 report, for recommendation 1, the Arts Board established timing for
six program reviews for its major grant programs, expected to start these
formal program reviews in 2023 with each grant program following a different
review cycle. Having established program review cycles fosters grant program
effectiveness.
For recommendation 2, the
Arts Board set in writing its processes to select and use independent assessors
when awarding grants. Arts Board staff make recommendations to the CEO for
approval of independent assessors. Documenting selection and use of independent
assessors enhances transparency of the Arts Board’s processes to award grants.
For our third recommendation,
for those evaluating grant applications, including independent assessors, the
Arts Board began confirming receipt of signed agreements prior to releasing
grant application packages to them. This minimizes the risk of grant application
evaluators potentially disclosing confidential information or not promptly
declaring potential conflicts of interest.
We also found the Arts Board
appropriately documented its handling of declared conflicts of interest by
evaluators during its grant application review meetings, addressing our fourth
recommendation. This included reasonably recording the details for the four
instances of declared conflict of interest we assessed. Recording that the
declared conflicts of interest are handled appropriately shows impartial
discussions and decisions occurred.
For recommendation 6, we
found the Arts Board began appropriately tracking receipt and resolution of
complaints and appeals received about its grant programs. We found it followed
its appeals procedure for the two appeals it received from 2018 to May 2021 and
resolved one complaint received. Following a formal process to track and
resolve complaints and appeals helps ensure potential issues are resolved
timely, and to take appropriate action as necessary.
Finally, in our 2024 report,
for recommendation 5 we found the Arts Board provided grant application
evaluators with consistent evaluation criteria and scoring guidelines to use
while adjudicating grant applications. We tested 10 application review meetings
and found Arts Board staff appropriately provided grant application evaluators
with the appropriate scoring tool and scoring guideline. We found evaluators
properly used the scoring system to score grant applications.
We also found the Arts
Board’s scoring guidance was available to grant applicants on its website,
which promotes transparency. Well-documented, consistent evaluation criteria
and well-designed scoring tools are crucial for assessing grant applications impartially
and ensuring a fair evaluation process.
Thank you. This concludes my
presentation.
Chair
Wotherspoon: —
Thank you very much for the presentation, the focus of the work, and the
follow-up. We’ve already considered these recommendations as a committee and
concurred in them, and you’ve reported out your progress and the implementation
that’s occurred.
I just want to table at this
time your status update, which would be PAC 32‑30, Saskatchewan Arts
Board: Status update, dated February 25th, 2025. Thanks for providing that, and
to those that have been involved in the work to implement those
recommendations.
I’ll open it up now to the
table for questions. MLA Pratchler.
Joan
Pratchler: — Thank you. Good morning.
Just a couple of questions about the grant program review cycle and process and
that. What would have been your indicators when you were coming up with that
review, that it would be good and thorough and complete? What were some of your
indicators of success, of a good formal review?
Lisa Bird-Wilson:
— For the review panel, they are provided with a scoring tool. Research was
done on the scoring tool. And so the scoring tool has sort of a five-point
system to it, and it allows the reviewers to have a scoring tool that doesn’t
have too many words on it. Because the concept is, if it had too much
information on it, a lot of reviewers won’t use it or, you know, it’s just sort
of overwhelming for reviewers.
So it’s a fairly
straightforward system. It’s a one-page sort of a template. It allows reviewers
to indicate if the criteria is being met. And if the criteria is being met,
they sort of move on to the next criteria for evaluation. If it’s not being
met, then it prompts the reviewer to make a comment as to why it’s not being
met, in their opinion. And if it’s being exceeded, it also prompts them to make
a comment on why they think it’s being exceeded. So that’s sort of the process
that the review panel goes through for every application that they review and
for all of the criteria within that application.
Joan
Pratchler: — And we know that there’s
large arts organizations and smaller ones. What might be available to provide —
or maybe you have that already — capacity for the smaller organizations to do a
good review for themselves? Is that available as well?
Lisa Bird-Wilson:
— So under the granting programs of the Arts Board, we have six, we call them
program consultants. And they work in the field and they work directly with
applicants for grants. So it’s very clear on the website who the program
consultant would be for the type of grant that someone would be applying for.
And it’s encouraged that grant applicants would make contact with those program
consultants, who can then answer questions, provide any sort of guidance around
the application process.
Joan
Pratchler: — Do you find much uptake for
that?
Lisa Bird-Wilson:
— Yeah, there is.
Joan
Pratchler: — I see that it says here the
Arts Board will set out in writing a process to select independent assessors.
How are organizations made aware of who those independent assessors are?
Lisa Bird-Wilson:
— So when arts organizations or artists are applying for grants, they will not
know who the assessors are for that grant cycle. However at the end of the
fiscal year when we report on our annual report, all of the assessors are then
listed in the annual report. So eventually it’s public and transparent who
those assessors are, but prior to the grant panel review it’s not known who
those assessors are.
Joan
Pratchler: — And so if I understand
right, after they’ve been successful or after that’s happened, they will
receive a list of who those assessors are.
Lisa Bird-Wilson:
— You know, they’re not emailed a list individually. It’s made into public
information.
Joan
Pratchler: — Is there a way for them to,
you know, reflect back or give, you know, information back to the Arts Board if
they have some issues with any of those people on that list post-approval?
Lisa Bird-Wilson:
— Absolutely, yes. There are processes around appeal that are very
straightforward and laid out. And you know, we’re always open of course to
feedback we receive. We receive emails and feedback, you know, regularly.
Joan
Pratchler: — Thank you. Could you provide
an update on the status of developing consistent single-point evaluation
criteria, tell me a little bit more about that?
[09:15]
Lisa Bird-Wilson:
— I can tell you. So the single-point criteria . . . Sorry, I’m just
looking for a piece of paper here. That is sort of the process that I was
talking about earlier with the five kind of levels of rating. It has five
possible points. So the single-point rubric breaks down the component score
into different criteria. So rather than defining the components that constitute
every score within the rubric, this format only describes the standards that
are required in order to meet the individual criterion.
When the item being assessed
— in this case the application — does not meet that definition, the reviewer is
required to give details regarding where improvement is necessary or how that
criterion has been exceeded.
Joan
Pratchler: — And what would be the
criteria then? Those five?
Lisa Bird-Wilson:
— Quality, impact, and achievability are the broad criteria that all applicants
are trying to meet. And those criteria are laid out in a guidelines document
that is accessible when they’re applying for a grant, so that they are able to
gear their application toward the criteria that they will be judged on.
Joan
Pratchler: — And I understand that that
was implemented in September of 2022, correct?
Lisa Bird-Wilson:
— So it was implemented in a couple of phases. So in the fall of 2019 and the
spring of 2020 the new scoring tools were begun to be implemented, providing
evaluators with the updated scoring guidance and other relevant information. So
that happened in three programs in the fall of 2019 and the spring of 2020.
Then in the spring of 2021,
we continued implementing the scoring tools in three more programs. And in the
spring of 2022, the scoring tools were implemented in the final outstanding
programs. So by April of 2022, that final recommendation was fully implemented
and we were six for six on our recommendations.
Joan
Pratchler: — Is there any plan for them
to be expanded?
Lisa Bird-Wilson:
— Sorry, for what to be expanded?
Joan
Pratchler: — Is there any plan for the
criteria to be expanded or fleshed out more? Is it still going to be that same
format that you have now?
Lisa Bird-Wilson:
— There’s a couple of things. There’s a review cycle that happens for all of
the grant programs, so under that review cycle there’s opportunity always to
review, revise, etc. Also annually there’s sort of a very detailed policy
document that is, you know, sort of tweaked and revised and kept up to date
annually as well. And there’s constant feedback from those program consultants
in terms of what’s working, what’s not working, what could change and be
better.
So it is an iterative
process, sort of that formative evaluation, always going on from our part. But
then there’s the formal evaluation part as well that happens on a regular cycle
for all of the grant programs.
Joan
Pratchler: — Well and keeping the arts
alive and vibrant is very important on so many levels for the province, isn’t
it. Thank you.
Chair
Wotherspoon: — I’m
looking to committee members that may have other questions with respect to
these two chapters. Not seeing any. Thanks again for the actions that have been
taken to implement these recommendations and to all of you for your service,
and to all those that have been connected as well to this important work and
the important work of the Saskatchewan Arts Board.
At this time I’d welcome a
motion to conclude consideration of chapter 31 and chapter 24, respectively.
Mover, MLA Chan. All agreed? That’s carried.
Okay. At this time I want to
thank Ms. Bird-Wilson
and officials that have joined us here today for their time this morning. Ms.
Bird-Wilson, any final word our way before we shift our attention to the Water
Security Agency?
Lisa
Bird-Wilson: —
Just thank you very much for your time and attention and the assistance to make
SK Arts better.
Chair Wotherspoon: — Thank you, thank you very much.
Okay, members, we’ll have a very brief recess, just a couple minutes. And
hopefully we’ve got the Water Security Agency on deck, and we’d invite them
. . . If they’re in the hallway right now, come on in, you know.
[The committee recessed for a period of
time.]
Water Security Agency
Chair
Wotherspoon: —
Okay, folks, we’ll keep our morning moving along. I want to welcome the
officials that have joined us now with the Water Security Agency, President and
CEO Jaques and his lead officials that have joined
him here today. I would ask him at this time to introduce briefly his officials
that have joined him. Refrain from getting into the chapters just now because
we’ll kick it over to the auditor and then come back your way.
Shawn Jaques:
— Yeah. Thank you, Mr. Chair, and thank you for the opportunity to be here
today for us to provide an update on the chapters and the work under way at WSA [Water Security Agency]. My name is Shawn Jaques. I’m the president and CEO of the Water Security
Agency and today I’m joined by . . . Jordan Huber is my
vice-president of finance, Krystal Tendler is the
executive director of ag water management, and Jeff Paterson is the executive
director of standards and approvals at WSA.
Chair
Wotherspoon: —
Great. Thanks so much. Thanks to you all for joining us and I’ll turn it over
to the Provincial Auditor. I know there’s two chapters we’re looking at here
this morning and we’re going to deal with them independently.
Tara
Clemett: — So thank you, Mr. Chair,
Deputy Chair, committee members, and officials. With me today is Mr. Jason
Shaw, and he is the deputy provincial auditor that is responsible for the Water
Security Agency. Behind me is Ms. Nicole Dressler, and she’s a principal in our
office and would have been involved in leading some of the work that will be
discussed on the agenda today. Beside her, Ms. Michelle Lindenbach, the liaison
with our committee.
So Jason’s going to present
the two chapters noted on the agenda — as the Chair indicated, separately — to
provide an update on the progress that the Water Security Agency has made on
the recommendations around regulating water use and regulating drainage. He
will pause after each presentation to allow for the committee’s consideration
and discussion.
I do want to thank the
president and CEO of the Water Security Agency and his staff for the
co-operation that was extended to us during the course of our work. With that,
I’ll turn it over to Jason.
Jason Shaw:
— Thank you. The Water Security Agency is responsible for monitoring water
allocation and usage to ensure a sustainable water supply in Saskatchewan by
issuing water-use licences. Irrigation and municipal water comprise the largest
two uses of water, accounting for almost 80 per cent of the surface water
currently allocated in the province.
In 2022 the agency granted
approval for approximately 16,900 long-term and 1,800 temporary water-use
licences. A safe and secure water supply is essential to the province’s
continued economic development and high standard of living.
Chapter 26 of our 2023 report
volume 1, starting on page 231, reports the results of the progress made on the
seven recommendations we initially made in our 2020 audit of the Water Security
Agency’s processes to regulate water use to support a sustainable water supply.
The Public Accounts Committee agreed with our recommendations in October 2022.
This is our first follow-up since the original audit.
By March 2023 the Water
Security Agency implemented two recommendations and made progress on one other
recommendation. The agency did not make significant progress on the four other
recommendations.
First I’ll touch on the two
recommendations the agency implemented. In section 3.1, we found the agency set
its key actions relating to regulating water use in its strategic plan and
included completion date targets. The agency replaced its 25-year Saskatchewan
water security plan with a four-year strategic plan in 2022. It outlined goals
for the next four years while considering which of those it wanted to
prioritize for the upcoming 12 months in its annual business plan. We found the
agency’s 2022-23 business plan included key actions related to regulating water
supply, such as expanding new irrigation opportunities with completion date
targets. Having key actions outlined with completion target dates helps the
agency to achieve its goal of ensuring the sustainability of surface and
groundwater supplies.
In section 3.3 we found the
agency clearly documented key components considered when predicting water
availability of a proposed surface water source. The agency created a template
for staff to use when creating water availability studies for surface water.
This template includes the minimum content requirements, such as location and
type of water supply evaluation, needed as part of the key components
considered in its studies.
We tested a sample of eight
water availability studies the agency completed since the implementation date
of this template. All eight studies included the key components and judgments
essential in assessing water availability of a proposed water source before
approving the related surface water-use licence.
I will now outline where the
agency still needed to do more work to address our recommendations. In section
3.2 on page 233, we found the agency had not yet developed written procedures
for processing and approving applications for water use. In June 2022 the
agency established a standards unit to develop these procedures; however in
March 2023 it did not yet have draft procedures.
The agency had developed an
electronic decision record that approves documentation for water-use
application files. We tested 15 water-use application files to assess whether
staff properly completed the decision record. We found three files where staff did
not fill out the record correctly. Not having written procedures for staff to
follow when assessing water-use licence applications increases the risk of
staff not obtaining and maintaining sufficient information to support the
agency’s decisions.
In section 3.4 on page 235,
we found the agency had not implemented written procedures about estimating and
recording licensed water use. We found the agency finalized the procedures
guide in October 2022 for collecting and processing water-use data and estimating
water usage. The guide included adequate guidance for staff on collecting
actual water-use data but did not provide enough detail for staff to consider
and document when creating water-use estimations.
[09:30]
We found the steps staff took
to estimate water use for 2021 did not match the processes guide, and staff did
not clearly document their considerations in estimating water use for each
licensee. Agency staff estimate water use for any licensees who do not submit
actual usage by the end of March each year. Also the agency staff did not have
processes to verify the completeness and the accuracy of the actual use, water
data recorded in its IT [information technology] system.
Inconsistent estimates and
records about water use reduces the ability to know the actual impact of use on
a water source or on an individual licensee basis. Having robust processes to
record actual reported water use and to make and record estimates in its IT
system will help the agency keep accurate records on water use.
Not actively monitoring
water-use licensees’ compliance with conditions may result in licensees using
more water than allocated and can result in a number of risks, including the
agency making inappropriate decisions on water allocation, water not being available
for other licensed water users, and ultimately potentially jeopardizing
waterbody sustainability.
Section 2.6, also on page
236, we continued to recommend the agency develop written enforcement
procedures for staff to follow when the agency identifies licensed water users
not complying with water-use licences, which was not implemented. We found the agency
had not developed written enforcement procedures for staff to follow for
non-compliant licensed water users.
The agency created draft
principles for regulation and compliance in 2022. The agency indicated these
overarching principles will help the agency develop procedures for staff to
follow when it identifies non-compliance. By not having effective written processes
to enforce water-use licence conditions or consequences for significant
non-compliance, the agency increases the risk that licensees continue to
violate licence conditions without consequences.
The agency partially
implemented the recommendation on page 237, where we recommended the agency
periodically give senior management written reports on non-compliance with key
water-use licence conditions and related enforcement strategies and actions.
We found the agency developed
a template for quarterly reporting to senior management that includes
non-compliance information. As of March 2023, the agency had not provided
written reports yet to senior management using this template. By not reporting
this information the agency’s senior management may not have the necessary
information to verify that staff take sufficient and appropriate action to
address non-compliance.
Thank you. And this concludes
my presentation for this chapter.
Chair
Wotherspoon: —
Thank you very much for the chapter and the focus and the follow-up on this
front. At this time I’d also like to thank the Water Security Agency for
providing their status update and the actions they’ve taken with respect to
implementation on these respective recommendations. And I’ll table PAC 33‑30,
Water Security Agency: Status update, dated February 25th, 2025.
I’ll kick it over to CEO Jaques for a brief remark, and then we’ll open it up for
questions.
Shawn
Jaques: —
Thank you, Mr. Chair. First of all I’d like to thank Ms. Clemett
and her team for their efforts and for working with the agency. We value the
recommendations provided by the Provincial Auditor’s office and the vital role
in helping the agency improve our operations. And we appreciate the ongoing
support and collaboration that we’ve received.
Today we’re here to provide
an update on two separate audits. And I’m going to speak about the regulating
of water licences first. At the time of the audit, of the seven auditor
recommendations two were implemented, one partially implemented, and four were
not implemented. And as of today we consider three implemented and four
partially implemented.
WSA
is in the process of developing an outcome-based compliance framework to
improve service excellence and address the remaining recommendations. This
outcome-based compliance model shows different compliance activities required
to achieve the desired outcomes and generally illustrates WSA’s
approach to compliance programming. By empowering clients with knowledge and
support, we build trust and collaboration to achieve those desired outcomes.
Compliance promotion efforts
will be prioritized based on the risk certain activities pose, and this will
improve resource efficiency for the agency and clients while continuing to
ensure clean, safe, reliable water for the province. We are using outcome-based
compliance to effectively deliver compliance programming that is focused on
outcomes and supports WSA’s strategic goals, and this
framework will improve the agency’s ability to manage water in a way that will
continue to support a growing province.
By shifting how we deliver
compliance programming towards a clear understanding of priority and the
pathways project owners can use, we strengthen our ability to manage water and
address the auditor’s recommendations. And overall this will improve oversight
and improve client service to the province and the people that we serve.
WSA
aims to build public trust, and thus improve regulatory compliance, using a
collaborative, transparent, and proportionate approach. And we are moving
forward with this approach and are preparing the next steps towards an
outcome-based compliance by finalizing the outcome-based compliance framework
guidance document; developing a stakeholder engagement plan; continuing regular
internal working-group meetings to maintain progress in developing the
program’s specific guides; rolling out an internal communications plan to
improve collaboration within WSA and ultimately
across Government of Saskatchewan ministries; following up with the Ministry of
Environment and Corrections and Policing and Public Safety to solidify those
partnerships; and preparing for the implementation of April 1st, 2026.
The outcome-based compliance
policy will establish the objectives and strategic direction of outcome-based
compliance. The general framework includes guiding principles, the structure,
and systemized approach for achieving compliance. Program guides offer detailed
directions on how to apply the framework for specific programs, and protocols
will provide precise procedures for implementing compliance actions, ensuring
consistency and clarity in operations. And this builds a systemic approach to
outcome-based compliance, from broad principles to detailed execution.
So with that, I open up to
questions.
Chair
Wotherspoon: —
Okay, thank you. Thanks for the report and thanks for many of the actions that
have been taken. I’ll look to committee members now that may have questions
with respect to chapter 26, with participating member MLA Ritchie at the table.
Go ahead.
Erika
Ritchie: —
Okay, thank you, Mr. Chair, for the opportunity to ask some questions based on
this follow-up audit report and response from the president.
So you’ve outlined your
approach towards addressing some of these outstanding, partially implemented
audit findings and recommendations. And I’d like to sort of delve into that a
little bit in terms of, first of all, you mention that this is a proportionate
response. And I wonder if you can maybe elaborate a little bit more for me in
terms of what you mean by that.
Shawn Jaques:
— Thanks for the question. I’m going to turn it over to Jeff Paterson.
Jeffrey Paterson:
— Thanks, Shawn. So the proportionate response, how I can explain it is, if we
have an activity that goes ahead without a permit, but that activity, they did
everything they needed to do or were supposed to do but didn’t have the permit,
it’s quite different than if they did something completely wrong with that
permit.
So we’re looking at what
activities did they not comply with, and what were those outcomes of not
complying with that activity because you will have totally different outcomes.
So just not getting a permit or not sending in a document is a completely different
outcome than, say, having an environmental impact. So that’s what we’re looking
at proportionate, what is that risk and what is that outcome.
Erika
Ritchie: —
I see. So then what would be the effect then if you had a situation, using this
example, where someone had failed to receive the proper permit? I mean what
signal are you sending or what sort of a culture are you creating when there’s
essentially, it would appear, very little consequence to a user just going
ahead and using the water without upfront first receiving the necessary
approvals?
Jeffrey Paterson:
— So on the water use, maybe I’ll backtrack a bit.
So the outcome-based
compliance framework is actually capturing seven of our different regulated
activities. Water use is one piece of that. So the compliance on the water use,
right now if somebody is using more water than they’re supposed to, we would
look at, okay, what area is that being in? What is the risk?
Some areas have a lot more
water than others. We have different requirements for those areas as well on
reporting, monitoring, that type of thing. So we would be looking at that risk
as well. If it’s an area that has a lot of water and there’s overuse, is it the
same risk and outcome as an area that maybe has less water? What is the risk in
use?
And so that’s what this
outcome-based compliance framework is going to develop, is what are those steps
and what are those tools in the tool box that we can use for enforcement and
compliance?
Erika
Ritchie: —
Yeah, because I think that certainly, you know, compliance I assume is part of
your guiding principles that you want to ensure fairness and equity in terms of
access to water. And certainly as I’m talking to stakeholders, you know, I hear
concerns about access, about who has that right of first use.
Shawn Jaques:
— If I can just make a couple comments and then, Jeff, please jump in here. But
I think, you know, at the end of the day we want everybody to be in compliance.
And I think with the proportionate approach, what we’re trying to do is we want
to work with, you know, whoever’s using that water or accessing it. And like
Jeff said, if somebody maybe just failed to fill out a piece of paper on time,
we want to make them aware. We want to make sure that we’re educating people
what they have to do, but sometimes maybe people miss steps.
And so we want to bring them
into compliance. If there are no other issues with, you know, the development
or the project that they’re doing, really the only piece that was missed
. . . And you’re right; it’s about, you know, complying with the
rules that we have. But it’s making sure, say, a piece of paper was filled out
on time. We want to make sure they’re brought into compliance, make sure that
everything’s done. And if everything else is all right, it’s not the same risk
as if somebody went ahead and did a whole bunch of work developing something
that maybe has an environmental impact. Those are the ones that we want to
focus on and make sure that, you know, we’re applying compliance fairly across.
And we want to make sure that
everybody has access to the water. And you know, that’s what we do is, you
know, we ensure that we’re evaluating water volumes and what’s available and
allocating it accordingly.
I don’t know if there’s
anything else you want to add, Jeff.
Jeffrey Paterson:
— No, that was good, Shawn.
Erika
Ritchie: —
Yeah, I can appreciate, you know, those inadvertent missed steps, certainly
that’s not something that . . . You know, you want to make sure
you’ve got a proportionate response.
So can you tell me, how are
you tracking and reporting on that full spectrum of non-compliance? You know, I
mean how many of these cases and what is the severity of instances where you
have sort of these minor discretions versus incidents where you have that
overuse of water that was found in the audit sampling or a wilful disregard and
a culture of non-compliance?
[09:45]
Like you know, I guess I
really want to understand, you know, how many of these would be on one end
versus the other end of the spectrum? And how are you managing, how are you
assessing, and how are you reporting on that?
Jeffrey Paterson:
— So part of the licence procedures of water rights is to provide that
monitoring information. So we will send out reminders to everyone that has a
permit that their monitoring is due. It depends on the area and the basin that
we’re in on how often they have to do that. Sometimes it’s every two weeks;
sometimes it’s a month; sometimes it’s yearly.
So when we get that data,
that data comes into our data management group. They input that data into our
system and then they look at that data to ensure that the amount of water
reported is not exceeding their allocation or what their permit says they’re
allowed to use. If it does, then we have conversations with those people to
see, was the reporting mechanism correct? Because we have many different ways
of monitoring water: we have meters; we have pump cycles; we have just the
amount of time a gate’s open. So it can be very variable on how that water’s
measured. So the data management group looks at that.
If it’s over the amount that
they’ve been allocated, then it goes to our approvals group that issues those
permits, and then they have conversations with the clients to try and figure
out why and what we can do in the future to ensure that that doesn’t happen.
Erika
Ritchie: —
Thank you. Mr. Chair, in the interest of time I’ll conclude my questions.
Chair
Wotherspoon: —
Thanks, and just as a quick follow-up, would you have just a little
. . . I think the question was more specifically just around
characterizing where there’s been sort of breaches of water use. And then, sort
of, if you can profile how many of those would be at that maybe highest risk or
greater risk, and how many of those others might be sort of in that, kind of,
the ones that were described that, you know, maybe didn’t have some aspect of
paperwork filled out, but may not be of significant risk.
So of course you’re dealing
with those; you want compliance everywhere. But I think the question was more
specific around when you have a water user that’s in breach of their
obligations, how many of . . . You know, what’s that profile look like
by way of the highest risk to the watershed as opposed to those lower risk
ones?
Shawn Jaques:
— Mr. Chair, I don’t have any of that,
like, the detailed information on kind of the numbers or the profile. But what
I can share is in the past we’ve had, you know, identified through the
reporting that Jeff talked about, you know, the usage, and it was more than
what they were allocated. And you know, we’ve asked them to stop using water
throughout the year if they were using more than they allocated. So that’s kind
of on the extreme end.
And
again it really does depend where we are in the province because some parts of
the province there’s maybe a limited number of users on the waterbody, and so
it doesn’t have the same risk as maybe a basin that, you know, has less water
available where we have to be more stringent.
So
that’s maybe on the extreme end where we’ve told people they can’t use any
more. Other times we’ve had just conversations saying, you know look, you’re
getting close to what you’ve used or what you’ve . . . But I don’t
have the exact breakdown with me here.
Chair Wotherspoon: — Are you able to provide a bit of a breakdown as
to the profile on this front in subsequent days to this committee?
Shawn Jaques:
— Yeah, we can get that.
Chair
Wotherspoon: —
Thanks so much. Maybe within a month’s time. And that can be supplied through
the Clerk of the committee. Thank you very much.
Looking to committee members
to see if there’s any other questions with respect to chapter 26 before us. Of
course this is a follow-up audit. Not seeing any, thanks to Water Security as
well for the commitments that you’ve made to implement the recommendations on
this front. And of course for those that are watching at home, there’s a full
follow-up process that happens with the auditor and this committee on that
front as well.
I’d welcome a motion to
conclude consideration of chapter 26. Moved by Deputy Chair Wilson. All agreed?
That’s carried. We’ll move it along now to chapter 24, and I’ll turn it back
over to the Provincial Auditor.
Jason Shaw:
— Thank you. The Water Security Agency is responsible for managing and
protecting water, watersheds, and related resources in the province.
Saskatchewan has the greatest area of watersheds with no natural outlets in
Canada. This means agricultural drainage often moves water into local lakes,
sloughs, or wetlands instead of a river system. Leaving unapproved drainage
works in high-risk areas increases the risk of flooding neighbouring farm land
and the receiving waterbody, as well as increases the risk of water quality
issues in the receiving waterbody and the loss of wetlands.
Chapter 24 of our 2024 report
volume 1, starting on page 237, reports the results of the progress made on the
nine recommendations we initially made in our 2018 audit of the Water Security
Agency’s processes to regulate the drainage of water on agricultural lands in
the geographic areas assigned to the Yorkton and Weyburn regional offices.
The Public Accounts Committee
agreed with our recommendations in September 2019. By April of 2024, the agency
implemented four recommendations and partially implemented the remaining five
recommendations.
We found the agency approved
its final policies relating to its regulation of water drainage on agricultural
land. Providing consistent and clear direction allows agency staff to take
similar actions to enforce compliance on regulating drainage of water on
agricultural land.
The agency also published on
its website how long it expects to take to resolve requests for assistance or
complaints from the public about unapproved drainage works. For example, on
simple requests, it expects to provide a decision to the landowner and the
complainant within six months. It expects to provide a decision within 12
months for complex requests. We found these time frames reasonable and
followed.
We found the agency also
communicated the appropriate information and actions to landowners to have
unapproved drainage works come into compliance in the requests we tested. In
2023 we found the agency began appropriately reporting to senior management twice
a year on actions taken to address non-compliance of unapproved drainage works.
Now I will outline the work
the agency still needed to do to address the remaining recommendations. Section
3.2 of the chapter reports that we found three related recommendations were
partially implemented.
The agency still needed to
develop policies on water quality and wetland requirements to use when
assessing risk of drainage works, consistently follow established processes to
document risk assessments when reviewing applications for drainage works, and
require documentation of all aspects of watershed risk before approving
applications for drainage works.
We found at April 2024 the
agency was drafting a policy on water quality and wetland retention
requirements. They referred to it as its agricultural water stewardship policy.
Without such a policy that includes all aspects of watershed risks, staff could
not effectively use it when reviewing or approving applications for drainage
works.
At March 2024 the agency was
piloting certain aspects of its draft policy with individual landowners as part
of its policy development. The agency must consider all aspects of risk from
both a local and entire watershed perspective and document those considerations
before approving proposed drainage works. Not having policies on water quality
and wetland retention increases the risk that agency staff may not adequately
consider these aspects and approve drainage works that may negatively impact
water quality or reduce wetlands.
In section 3.4 we found the
agency partially implemented the recommendation around developing a
prioritization plan to identify and bring unapproved high-risk drainage works
into compliance.
In 2015 when the agency began
working to get landowners to comply with its drainage requirements, it
estimated 1.6 million to 2.4 million acres of agricultural land had
unapproved drainage works.
At April 2024 the agency was
still working to estimate the amount of unapproved drainage works using its
wetland inventory. The agency developed its wetland inventory using imaging
data. Using this information it identified wetlands, including existing and
drained wetlands, and approved and unapproved drainage works. As of April 2024
the agency had not yet used its wetland inventory to identify unapproved
drainage works . . . and use its policy to assess the risks of these
drainage works in informing its actions, such as contacting landowners to
request they submit a drainage application for agency approval.
The agency continued to rely
on other sources for staff to identify unapproved drainage works such as from
public complaints, voluntary submission of drainage applications from
landowners, and agency staff finding unapproved drainage while working on site.
Leaving unapproved drainage works in high-risk areas increases the risk of
affecting farm lands and wetlands and water quality.
In section 3.5 we found the
agency had yet to fully address a recommendation around reporting to the public
on its regulation of the drainage of water on agricultural lands. We found the
agency reports some information to the public; however reporting did not
include sufficient information about key activities to regulate the drainage of
water on agricultural lands.
Thank
you. And this concludes my presentation.
Chair Wotherspoon: — Thank you very much for
the follow-up on this front. Of course this recommendation or these chapters
originally were presented in 2018, and we’ve concurred in them as a committee.
And this is follow-up at this point, and there’s been some of the actions that
have been detailed here.
I’ll
kick it over to CEO Jaques for a brief remark and
then we’ll open it up to committee members for questions.
Shawn
Jaques: — So at the time of the
audit four were implemented, five were partially implemented. And as of today
we consider eight implemented and one partially implemented. Effective January
30th, 2025 WSA implemented an agriculture water
stewardship policy, and this policy establishes a limit on how much land can be
developed through drainage for agricultural production and how many wetlands
should be retained. And it addresses all but one of the auditor’s outstanding
recommendations.
WSA worked with producers and
partner agencies in the province to develop a policy that is effective,
practical, and works for Saskatchewan producers. WSA
invested over a million dollars in research and demonstration projects which
informed the final policy. And one of these projects involved completing the
most thorough inventory of Saskatchewan wetlands ever completed in the
province. And this inventory shows that 86 per cent of wetlands in our province
are undrained, telling us that Saskatchewan producers are great stewards of the
land and that there is room for development in a regional and sustainable way.
To
ensure the policy reflects the diverse perspectives of Saskatchewan people,
over nearly two years the Water Security Agency engaged with more than 80
stakeholder organizations, Indigenous communities throughout the policy
development process. The ag water stewardship policy was built for Saskatchewan
people by Saskatchewan people and strikes a balance between landscape
resiliency and economic development.
The
Water Security Agency supports both drainage and wetlands, and the stewardship
policy reflects that. It would allow for continued responsible drainage,
enabling farmers to manage water on their land while establishing new tools to
address risks downstream, water quality, and flooding. It will also ensure
wetlands continue to provide important habitat in all areas of the province.
WSA completed a series of pilot
projects to test the policy and found it both to be practical and effective.
And we are committing to get this right and will be doing ongoing research and
monitoring, committing a million dollars over three years to support research
and monitoring and reporting on 10 different indicators to understand and to
learn.
Water
Security Agency is also committed to using a risk-based approach to drainage
compliance. Immediate threats to public safety or severe threats to water
quality or habitat are considered high risks and receive priority. Procedures
are in place to respond to incidents and non-compliance, and voluntary
compliance is encouraged through approvals that include conditions to manage
the impacts.
WSA has developed an audit
process to ensure that all conditions on drainage approvals are being met. We
have also established a drainage extension unit to further encourage compliance
with regulations and adoption of responsible drainage practices, and we will
continue to advance our ag water management program to support managing water
resources of our province that drives economic growth and is sustainable,
adaptable, and reliable. Thank you.
[10:00]
Chair Wotherspoon: — Okay, thanks for the
report. I’ll open it up now to committee members that may have questions.
Participating member Ritchie.
Erika Ritchie: — Thank you, Mr. Chair. So I
guess starting with the policy that was implemented here most recently in
January, you talked about a number of features and aspects of the policy. And
I’m just wondering, in terms of the risk-based approach that you speak of, how
you strike that balance between what you called a landscape — I didn’t quite
catch the word — sort of the landscape and the economy, and that sort of maybe
the justification around the balance that you’ve struck there.
Krystal Tendler: — Thanks for the question. So
in development of the stewardship policy, it was over the last about five years
now that we’ve been working on it and it all was about finding the balance. And
you’re right. It’s about balancing between landscape resiliency and economic
outcomes and the profitability of our agriculture sector, which is the backbone
of our economy.
And
so we completed a research project that’s called a threshold analysis, and it
allowed us to understand at which threshold would we start to see impacts to
water quality, water quantity, and habitat from drainage. And also we did
supplementary research that looked at the economic benefits. And so we’re able
to actually then start to balance these various different factors together and
see where different levels of drainage could have different impacts. And so we
needed to find a level of drainage to put a bumper pad in place that would kind
of put the top limit on how much drainage could happen to manage those various
different factors.
One
thing we also need to consider is that this stewardship policy was just one
lever that we had. There’s many other things that go into a producer’s decision
to retain wetlands. It’s not just what government tells them to do. They
actually are often choosing to retain wetlands because it makes sense for their
operation and because they care about the land that they operate on. And so it
wasn’t just that government needed to find the fix and we alone were the only
solution to this. It was a combination of factors that are going to come into
effect to help to create that outcome of maintaining the wetlands and the
landscape over the long run.
But
ultimately we needed to select a level to have that policy in place for, and
that level that we selected was 40 per cent in most of the province and 60 per
cent for those areas where there’s a higher importance of the waterbodies. And
so that allowed us to kind of have that regional approach that’s specific to
the area’s needs and be more responsive to the particular risks in that area.
Erika Ritchie: — Certainly as you’re well
aware, there’s been many concerned citizens, stakeholders, scientific experts,
people who’ve come forward expressing concern about the analysis and the work
that’s been done to sort of arrive at the policy you mentioned, the floor of 40
and 60 per cent and the regional approach. Can you tell us how you’ve addressed
some of those concerns, and also whether and to what degree the policy has been
subjected to external scientific scrutiny?
Krystal
Tendler: — Sure. Thank you. So Shawn
spoke a bit to the engagement that we did through development of the policy.
And so we engaged with 80 stakeholder organizations and Indigenous communities
to gather a variety of inputs and perspectives on the policy. We also have a
team of experts within WSA that — I might be biased —
is quite, quite incredible for the competency that we have in-house, and we’re
able to leverage those skills in providing feedback to the development of the
policy.
And
so, yeah, we do continue to receive feedback and questions, and unfortunately
there’s still a lot of misinformation out there about the data source and about
the policy itself, and so we need to do more to share information. And in
particular one spot where that’s evident is around our inventorying of
wetlands. We’ve conducted an inventory of Saskatchewan wetlands over the last
number of years that has created a data set that has just never been available
before. And so previous data on wetland loss and drainage works was just on a
really small sample size in the province, and it created this narrative about
the status of wetlands in Saskatchewan that just doesn’t match the realities of
what the data is showing.
And
so this new wetland inventory maps wetlands over the majority of the province
and tells us that 86 per cent remain undrained. It does not include lakes. It
only talks about pothole wetlands. And it really tells a story that
Saskatchewan’s in a pretty good spot but we need to, you know, be proactive and
put our policies in place proactively to make sure that continues to be the
case.
Erika Ritchie: — I want to turn to the
partially implemented recommendation. It’s been noted that there is 1.6 to
2.4 million acres of unapproved drainage in the province. And you’ve
indicated that, as capacity allows, Water Security Agency will develop work
plans for proactive compliance. And I’m wondering, given the scale and the
scope of non-compliance that’s been identified by this audit, why a more
concerted effort is not being taken at this time and, as the auditor has
recommended, you know, in terms of some of the actions you might take, why
you’re not proceeding along that basis.
Krystal
Tendler: — Thanks for the question.
We are absolutely committed to achieving full compliance with the drainage
regulations. We just think the approach can be a little bit different. Our
approach is about bringing works into approval rather than using our enforcement
mechanisms to shut down drainage and require closures. And so our resources are
largely dedicated to supporting clients to achieve that approval. And that is
often through an education approach. We need to work with clients to help them understand
what responsible drainage is, how best management practices can be adopted, and
then support them through that process of getting the approval in place to
validate that their works are being done responsibly.
So
all of our resources within our water management team . . . We have
36 FTEs [full-time equivalent] who are all dedicated to supporting clients to
achieve compliance. We have some that are working specifically on more of those
complex, almost enforcement-type files where we have to take a different path.
But for the majority of cases, education is the best approach, and supporting
them to achieve that approval.
And
our results are showing that that is true. We’ve seen significant increases in
the amount of approvals that we’re able to work with our clients to achieve.
Erika Ritchie: — I know certainly when I’ve
been engaging with stakeholders that are on the downstream end of some of these
unapproved drainage channels, you know, I think they take kind of cold comfort
in that sort of an approach. That while of course we always look towards, you
know, reaching consensus-based decisions and co-operative approaches, but at
some point, you know, how is the agency dealing with those instances where
you’re seeing those high-risk areas as you mentioned them? You’re seeing effects,
significant effects on the downstream landowners and ecosystems, and you know,
the water quality of waterbodies has been detrimentally affected.
I
think the public is looking for greater assurance that, in these high-risk
situations, that the agency is moving forward in a very concerted manner to
expedite and address and resolve these issues and less of a soft-glove
approach. So maybe you could tell me kind of what the current state is on those
types of situations and what the plan is going forward. And then finally
. . . Okay, I’ll hold my final question.
Krystal
Tendler: — I better start writing
. . .
Erika Ritchie: — Yeah.
Krystal
Tendler: — No, it’s good. Yeah, for
sure. So I think, similar to Jeff and Shawn’s comments on water use, we try to
take a proportionate response. And so as the risk of the incident of
non-compliance increases, the proportion of a response also increases. And so
there are situations where the request for assistance kind of indicates that
there’s impacts to downstream landowners somewhere between the drainage works
and the outlet for those works. And so that then escalates through our process,
that we put more resources toward solving those.
And
over the last year we’ve actually implemented new request for assistance
procedures, which I think was highlighted in the audit findings, that puts
prescribed timelines into resolving those higher risk concerns. And so now
those have milestones every three months where we need to see progress being
made to resolution, and they need to come into full compliance between 12 and
18 months, depending on the file.
Erika Ritchie: — So on the topic of the
requests for assistance, or RFAs as they’re known, at this point I understand
that there isn’t full transparency on that process and sort of the progress
that’s being made on them. Certainly that has been quite a contentious subject,
especially since you’ve implemented a fee for RFAs to be submitted.
A
lot of people were quite aghast at, you know, if you’re relying on sort of a
complaints-based system and then you slap on a fee, you know, it’s seen as less
than encouraging of those legitimate issues where people are experiencing them.
And so I mean the approach of using complaints-based monitoring and the fee,
the status of the reporting, you know, I don’t know if it instills
full confidence from the public that these issues are being adequately
addressed.
When
do you intend to . . .
Chair Wotherspoon: — Can I just interject for a
second, Member? I think you’re asking important questions and valid questions,
but they are trending here I think just into a bit more of the policy debate —
which would be very appropriate for the policy field discussions and for you as
a member to make recommendations or to have alternate views and to bring that
to a policy field committee.
Within
this committee here where we’re sort of measuring, you know, the actions of
government and we don’t debate the policy, if you will, here, I think you’ve
asked some good questions around how they’ve rationalized or which evidence
supports the choices that they’ve made. I would just urge the member to, you
know, caution. There’s ample spaces publicly and also in other policy field
committees and in the legislature to bring in the policy debate or alternative
approaches to go at the issues. And this one here, it’s sort of a review of the
commitments that have been made, the auditor’s report itself, and the processes
that are there.
So
I would just caution the member. You’ve made some, I think, some points that
are important points. But maybe just watching going down, too far down the
policy field debate.
Erika Ritchie: — Thank you, Mr. Chair. I’ll
just ask a final question. When and in what form do you intend to begin
reporting on the RFA process?
Krystal
Tendler: — Yeah, so we’ve just
released our indicator framework specific to the stewardship policy. We’re now
building that out to develop the rest of our program level indicators, of which
the reporting on the RFAs will be included. Those should be finalized here
shortly, and we should be able to start publishing them in 2026.
I
do have data right here available, and I know you just asked the question, so I
think just to the note on the fee and the number of RFAs. In 2023 we received
51 requests for assistance. That number dropped to 17 last year, so a 67 per
cent decrease in one year, which would be largely attributed to the fee.
[10:15]
And
really what that speaks to is that our concern was often that that request for
assistance was being used for concerns that were unrelated to drainage. They
might have been water-related; they might not have been. But it was a kind of a
catch-all process at WSA for a bunch of different
concerns. So by adding the fee, it added a bit of scrutiny to ensure that we’re
only collecting, you know, the drainage-related concerns that we had the
legislative authority to solve. And so that kind of shows, that 67 per cent
decrease, we’re now able to focus our resources to solving those in a timely
matter and providing better outcomes for the clients.
And
so those are the numbers for this year. We are committed to publicly reporting
them going forward, but I expect that trend will continue.
Erika Ritchie: — Thank you.
Chair Wotherspoon: — Looking to other
committee members to see if there’s any further questions with respect to
chapter 24, this important follow-up chapter. MLA Crassweller.
Brad Crassweller: — Yeah. Not a question, just
want to say great work on the water stewardship policy and, specifically,
engaging 80 stakeholders and Indigenous organizations — that’s awesome — and
being the first jurisdiction in Canada. So thank you for leading the way. And
please pass on our thanks to your teams that have done that. That’s awesome.
Thank you.
Chair Wotherspoon: — Any further questions or
comments at this point? Not seeing any.
I’d
welcome a motion to conclude consideration of chapter 24. Moved by MLA Crassweller. All agreed? That’s carried.
Okay,
well, listen, I think that gets us to the end of our considerations of the
Water Security Agency this morning. Thanks to CEO Jaques
and your officials. Any final word our way? You don’t need to, but any final
word before we kick you all out of here?
Shawn
Jaques: — No. Thank you very much.
Thank you.
Chair Wotherspoon: — Great. Okay, thanks for
that. And committee members, I guess I would welcome a motion. Both of these
have outstanding recommendations, and they were follow-up, so I’d welcome a
motion to conclude consideration of chapter 24. Oh, moved by Mr. . . .
We already did this. Sorry. We’ve dealt with that. We’ve concluded our
consideration. Thank you very much.
And
we’ll take a very brief recess and turn our attention to Energy and Resources.
[The committee recessed for a
period of time.]
Energy
and Resources
Chair Wotherspoon: — Okay folks, good morning.
We’ll move our committee along, reconvene the Standing Committee on Public
Accounts, turn our attention to the Ministry of Energy and Resources and the
couple of chapters pertaining to this ministry this morning. I’ll introduce and
like to welcome Deputy Minister Wagar to the table
along with his officials. I’d ask him to briefly introduce the officials that
are with him here today, refrain from getting into the chapters at this point.
We’ll come back to you after the auditor has presented.
Blair
Wagar: — Thanks,
Mr. Chair, and good morning, everyone. With me this morning is Jane McLeod,
executive director of our field services branch within the ministry, and Brad
Wagner, our director of liability assurance in our liability management branch.
Chair Wotherspoon: — Okay, thank you
very much. We will turn our attention and turn it over to the Provincial
Auditor to present on chapter 26, which is a chapter that was presented in 2024
here and has new recommendations within it.
Tara Clemett: — So thank you, Mr. Chair, Deputy Chair,
committee members and officials. With me today is Mr. Jason Shaw, and he is the
deputy provincial auditor that is responsible for the audits at the Ministry of
Energy and Resources. Behind us is Mr. Dane Reimer; he is a principal in our
office and would have been involved in the work that is before the committee
today. And beside him is Ms. Michelle Lindenbach, and she is the liaison with
this committee.
Today Jason’s going to
present the two chapters noted on the agenda in separate presentations. He will
pause after each of the presentations for the committee’s consideration and
deliberation.
The first presentation is a
new performance audit we did at the ministry related to licensing and
inspecting active oil and gas wells and facilities. It contains six new
recommendations for this committee’s consideration. The second presentation is
a follow-up audit that will provide an update on progress made by the ministry
on recommendations that we previously made and this committee did agree to with
regards to the future cleanup of oil and gas wells. The committee agreed with
these recommendations in December 2013. I do want to thank the deputy minister
and his staff for the co-operation that was extended to us during the course of
our work.
With
that, I’ll turn it over to Jason.
Jason
Shaw:
— Thank you. The Ministry of Energy and Resources is responsible for licensing
and inspecting oil and gas wells and facilities in Saskatchewan for The Oil
and Gas Conservation Act. A primary purpose of the Act is to protect the
environment, property, and public safety with respect to operations of the oil
and gas industry.
Saskatchewan’s
oil and gas industry contributed over $1.1 billion to provincial revenues
in 2022‑23 with about 54,000 active oil and gas wells and over 8,000
licensed, active facilities in operation at November 2023. In ’22‑23 the
ministry spent 24.8 million on its oil and gas regulatory activities.
Assessing whether operators meet all licensing requirements and inspecting
wells and facilities helps the ministry to ensure safe operations. The ministry
uses its IT system, called IRIS [integrated resource information system], to
support its regulatory activities.
Chapter
2 of our 2024 report volume 1, starting on page 25, concluded that for the 12‑month
period ending December 31st, 2023 the Ministry of Energy and Resources had
effective processes, except in the following areas to license and inspect
active oil and gas wells and facilities. We made six recommendations.
In
our first recommendation on page 33, we recommended the Ministry of Energy and
Resources justify approving applications for new oil and gas wells or
facilities where the operator owes money to the Government of Saskatchewan. One
of the eligibility requirements to obtain a licence for a well or facility is
not to owe money to the Government of Saskatchewan. Companies owing money
require the ministry’s approval to obtain a licence. We found the ministry did
not have a formal process to identify applicants owing money and making
decisions around approving applications for new licences when applicants did
owe money.
Our
second recommendation, on page 35 we recommended the Ministry of Environment
document the key judgments about environmental risks when reviewing and
approving oil and gas wells and facility applications.
The
Ministry of Environment completes assessments of and approves applications for
oil and gas wells and facilities when it needs to consider environmental
factors before the Ministry of Energy and Resources approves applications. For
example the Ministry of Environment’s lands branch reviews applications for
potential impacts on the environment such as oil and gas wells proposed on
sensitive areas such as grasslands and wetlands.
We
found the Ministry of Environment did not have a checklist or other formal
guidance for staff to use when reviewing environmental information and to
document their assessments. We found the Ministry of Environment also
maintained no documentation of its assessments, only documenting its licence
approval in IRIS.
[10:30]
In
our sample of 51 applications tested, 11 applications required the Ministry of
Environment’s approval. We found it was unable to provide any evidence as to
whether the operator’s proposed plans were appropriate or if further mitigation
steps were required. Without documenting key judgments in assessing areas of
high risk or complexity there is risk the Ministry of Environment staff do not
appropriately consider key risks when approving licence applications that could
lead to significant adverse effects on the environment.
We
made our third recommendation on page 38, where we recommended the Ministry of
Energy and Resources implement a risk-informed plan for inspecting oil and gas
wells and facilities.
Ministry
staff inspect wells and facilities to monitor operators’ compliance with key
operating requirements. From December 1st, 2022 to November 30th, 2023, the
ministry inspected about 25 per cent of all active and inactive wells, which
was about 21,700 out of 84,000 wells.
In
2021 the ministry began a five-year project to focus its regulatory oversight
on wells it had not inspected since at least 2015. By December 2023 the
ministry had inspected 88 per cent of the 18,500 wells it identified as high
risk. However the ministry did not have a plan for when to inspect lower risk
wells or when to re-inspect wells it had already inspected. Also its five-year
project did not include when to inspect facilities or new wells created since
2021.
The
ministry did not have an ongoing plan for how it would determine risk rating
for wells and facilities or how it would use those ratings to plan inspection
frequency of oil and gas wells and facilities going forward. Having a
risk-based inspection plan stating the required inspection frequency of wells
and facilities will help reduce the risk of unnoticed non-compliance and
subsequent consequences.
In
our fourth recommendation, on page 39 we recommended the Ministry of Energy and
Resources develop standard expectations to guide staff when completing oil and
gas well and facility inspections and escalating enforcement actions. We found
the ministry did not have guidance establishing central expectations for staff
to follow for inspection or enforcement actions. Instead it expects staff to
use their knowledge and experience to make these decisions.
We
found the ministry did not have central written guidance on things such as
which inspections to prioritize, timelines for completing inspection
activities, complete and consistent inspection checklists to guide staff on
what to inspect during inspections, or documentation requirements for completed
inspections.
Not
having established guidance for consistent inspections increases the risk staff
may not check the most significant risk areas when completing inspections.
Additionally the ministry may not identify significant deficiencies or risks at
well sites or facilities that could impact public health and the environment.
Also we found no central guidance for ministry staff to use when escalating
enforcement actions such as when to use financial penalties or when to suspend
a licence.
In
our fifth recommendation, on page 42 we recommended the Ministry of Energy and
Resources review oil and gas waste disposal facility reports timely to monitor
whether environmental risks are identified, requiring further action. Waste
disposal sites are a type of facility that collect waste from oil and gas
operations such as contaminated soil or other chemicals. The Ministry of
Environment considers these types of facilities to have a higher risk of having
environmental impact due to the nature of their operations.
The
Ministry of Energy and Resources requires operators of waste disposal
facilities to submit an annual report that summarizes operational details the
ministry uses to assess if additional action is required, such as request field
staff to complete an on-site inspection. These reports, for example, include
the results of groundwater testing surrounding these sites. If these facilities
are not operating appropriately, there is risk of contaminated fluids escaping
the sites and polluting groundwater.
We
tested 3 of 29 waste disposal facilities’ reports for the year ended March
31st, 2023 and found the ministry did not maintain evidence it reviewed these
annual reports within one year of receiving them. Management indicated it did
not review these reports due to other staff priorities. We found none of the
annual reports we tested identified significant issues. However not reviewing
key reports increases the risk the ministry may not identify concerns at
facilities that can significantly impact the environment and make sure
operators take appropriate action timely.
Our
sixth and final recommendation, on page 43 we recommended the Ministry of
Energy and Resources enhance written reports given periodically to senior
management by including analysis on regulatory activities — for example,
inspections, complaints, and non-compliance — related to oil and gas wells and
facilities.
The
ministry periodically provides some information about its key regulatory
processes to senior management, highlighting key regulatory activities or
updates to current projects. For example reports outlined a number of
inspections completed. However we found the ministry completes minimal
inspection result trend analysis or detailed analysis, for example the
percentage of compliant and non-compliant inspections. It could use further
trend analysis to inform how it prioritizes future inspection activities.
Also during 2023, the
ministry was developing a formal process to identify trends and issues with the
licensing process, such as which parts of the process operators often complete
incorrectly. Having a robust process to analyze
trends in its key regulatory activities would provide senior management with
more meaningful information to inform key regulatory activities.
Thank you, and I will pause
for the committee’s consideration.
Chair
Wotherspoon: — Thank you very much. I’d
like to thank the officials as well for putting together the status update, and
then for those that have been involved in the actions reflected in that status
update. And I’ll table it now, PAC 34‑30, Ministry of Energy and
Resources: Status update dated February 25th, 2025.
I’ll turn it over now to DM
[deputy minister] Wagar for comments with respect to
chapter 2, and then we’ll open it up for questions.
Blair Wagar: — Great. Thank you, Mr.
Chair and committee members. I’d just like to begin by thanking Ms. Clemett and her team for the work they’ve done with the
ministry. We certainly appreciate all of that work that the Provincial
Auditor’s office has done, helped to improve our operations and manage risk in
our business as well.
So thanks for the opportunity
to speak to you today about our response to the Provincial Auditor
recommendations relating to licensing and inspecting active oil and gas wells
and facilities. As indicated the ministry licenses and inspects wells and facilities
as part of its regulation of the oil and gas activities in Saskatchewan. The
audit concluded the ministry had effective processes in place, but outlined a
few areas for improvement. I’ll briefly go through each of the recommendations
and provide a brief update on progress to date.
Recommendation no. 1
that deals with the ministry process regarding the checking of debts owed to
ministry prior to issuing a new licence for wells and facilities. The ministry
currently has a process to check outstanding ministry debt for licence transfers
and currently is developing a process to assess debt owed prior to the issuance
of a licence. So that is considered by us as partially implemented.
Recommendation
2 falls within the Ministry of Environment’s responsibility, so I’m not going
to speak to that one today.
Recommendation
no. 3 focused on the implementation of a risk-informed plan for inspecting
oil and gas well facilities. The audit did note that the ministry began a
five-year project in 2021 to focus on wells it had not inspected since 2015 but
did not have an ongoing plan post‑2015. Today I can report that the
ministry has commenced a review of wells and facility data with the goal of
having an annual risk assessment process that will identify inspection targets
on an annual basis. The planned implementation of this process will occur at
the end of the current five-year program, so in 2026. So that again we consider
partially implemented.
Recommendation
no. 4 asked for the ministry to develop standard expectations to guide
staff when completing oil and gas well and facility inspections and escalating
enforcement actions. I’m happy to report that the ministry is compiling current
practice and policy information from each of the field offices — the four field
offices that we have across the province — and the development of a
standardized inspection document is under way. A compliance framework is in
place, including an enforcement escalation policy, to guide inspection
compliance activities, so again partially implemented.
Recommendation
no. 5 deals with the timely review of oil and gas waste disposal facility
reports submitted to the ministry. The ministry has developed a database to
document waste processing facility reports received and reviewed. In addition a
system enhancement was made in our IRIS, our integrated resource information
system, and was released in December of 2024 to support online submissions. So
a review policy has been documented, and we will undergo regular assessment
with an eye for continuous improvement to determine if changes are needed. So
we are looking at that one as fully implemented.
And
lastly recommendation no. 6 focused on enhancing the written reports given
to senior management by including analysis on regulatory activities. And the
ministry has partially implemented the recommendation by leveraging existing
tools to improve senior management reporting, so more work to be done there.
I
just want to conclude by saying that ER, Energy and Resources, is committed to
addressing the audit findings and is targeting full implementation of
recommendations by April of 2026. We’ll of course wait for further follow-up
from the auditor’s office and the final determination that all those
recommendations actually have been fully implemented.
So
happy to answer any questions the committee may have.
Chair Wotherspoon: — Okay, thanks so much.
Thanks for some of those actions that have been taken and the commitments that
have been made as well. And I’ll open it up now to committee members for
questions on this chapter. MLA Pratchler.
Joan Pratchler: — Thank you, and good morning.
I see in recommendation 1 that there’s an action to explore how to define
“debts owing.” I have a question as to what would be the challenge about
finding a definition about “debts owing”? And what type of definition are you
looking for?
Jane
McLeod:
— Yeah, so it’s very broad in the regulation. It says “debts owing to the
Crown,” so there’s sort of a need to define what that means. Is it debts owing
related to oil and gas operations? Is it debts owing to SaskPower? So it’s sort
of that term of what that definition is. Do we look at royalties? Do we look at
administrative penalties? Just the administrative levy? Do we just look at
those things or is it broader? So that’s the need to define what it means.
Joan Pratchler: — Yeah, I would think when
they owe money, it would be any kind of money that they’d owe and should be
paid to the Crown. Or what am I missing?
Blair
Wagar: — I think the expectation is that if
an oil and gas company owes debts to anyone, that the expectation that those
are paid. Tying that to a company getting a licence to drill a well for the
purposes of being able to generate revenue and pay those debts is what I think
we’re trying to balance against. So how much do we put into the basket? In
terms of considering for them to get a licence to drill, how much
administration do we build into that in terms of tying it to paying debts? So
the expectation is that they pay them all.
Joan Pratchler: — Yes. Is that a new thing,
that they haven’t been paying for a long time or that we’ve got such high debts
owing, or is that just this year?
Blair
Wagar: — No, I mean we don’t really have a
situation where there’s high debts owing. For the most part oil and gas
companies are paying their bills. I’d say it’s more on the exception side than
it is on the norm.
Joan Pratchler: — Okay. So the auditor defined
11 operators where the ministry approved new licences, 35 well licences where
operators owed money to the ministry, with one owing about 2 million in
outstanding royalty payments dating as far back as 2017. This is a little
alarming. Could you provide some explanation as to how the ministry justified
not collecting those monies from that far back?
Blair Wagar:
— So I think again it’s not where we aren’t looking to collect those monies,
it’s at what point . . . If you aren’t allowing any licensing to
occur, that’s one of the ways in which the company is able to generate revenue
to pay their debts. So this balance between if we shut them off from generating
any kind of revenue opportunity, you kind of put yourself in a position where
you are almost guaranteeing that you’re not going to be able to collect debt.
Joan
Pratchler: — True. And there comes a
point when you go, like, when do you just stop?
Blair Wagar:
— Absolutely. And that is, you know, both the art and science of finding that
right balance. And that’s exactly some of the work that we need to be doing.
Joan
Pratchler: — So are you just starting
that kind of work now, or has that been since 2017? And that’s — what? — a
little while ago.
Blair Wagar:
— Yeah. I’d say that the work has been under way. It’s how well we’ve been
documenting those processes and putting a lot more standardization and
potentially, kind of, documentation in place.
[10:45]
But balancing this out has
been conversations between our energy regulation division and our energy
resource division. The resource side is where we’re looking to develop and
enable development of our oil and gas sector, and the energy regulation division
is the one that manages the licensing and regulates the actual activity on the
ground. And it’s bringing those two parts of the organization together to share
a lot more information about when there’s debts owing on one side of the
business, that we’re taking that in consideration on the other side of the
business.
So that’s the most recent
pieces of work that’s been happening.
Joan
Pratchler: — And so what would be some of
the things on that continuum? You’ve got somebody that can’t pay their debt for
whatever reason, to just got to start a new well and we’ll be good. This seems
pretty black and white. This seems pretty black and white, but there’s a pretty
big . . . What kind of processes are in place there? And do you have
a plan or a policy of when you shut it down because this is just good money
after bad, not happening anymore? We want to support these; let’s give them
some more oxygen so they can actually do this.
So are there policies in
place, and what do those look like?
Blair Wagar:
— I would say that we have a lot of operating practices. It’s the documentation
of some of those criteria; that’s the work that’s happening now within these
recommendations.
Joan
Pratchler: — Okay.
Chair
Wotherspoon: — MLA
Gordon.
Hugh
Gordon: —
It’s a really important question because we see our neighbours next to us in
Alberta watching these liabilities grow on a daily basis. A lot of oil
companies are just abandoning those obligations.
And so I think that it’s
really important to try to — the work that you’re going to be doing in your
agency, your department — to catch these liabilities at the licensing process
so that maybe we could mitigate, sort of, them growing. I think we would all
agree, I’m sure you would agree we don’t want to become somebody’s creditor
through the licensing process by giving them a blank cheque essentially to
continue to generate revenue without paying attention to their obligations to
the province.
On that point I had a
question. If you could tell me the total amount, if you know, owing to the
ministry for new licences by operators currently. Those that do have liability
or debt obligations to the province, do you know how many of them are currently
licensed?
Blair Wagar:
— Yeah, I’m not sure if I have that information with me specifically in terms
of, if I understood the question, the number of licensees that we have
currently in place right now and what they would be owing the Crown.
Hugh
Gordon: —
What they would be owing. So how many people are actively . . . got
licences, got wells in operation that are generating revenue, that currently
have . . .
Blair Wagar:
— Debt owing.
Hugh
Gordon: —
What is the current total owing to the Crown amongst those currently licensed
operators?
Blair Wagar:
— So I don’t have the specific number, the dollar amount, but probably be about
less than around 20 licensees that would have current debts owing to the
ministry, whether it’s through the orphan levy, whether it’s our administrative
levy, or whether it’s on the royalty side.
Hugh
Gordon: —
And do I understand correctly there’s about 2 million total owing amongst
those companies? Like I’m just looking . . .
Chair
Wotherspoon: — The
auditor just needs to make a clarification.
Tara
Clemett: — So that $2 million was
one specific operator that we outlined.
Hugh
Gordon: —
Oh, one. Sorry, sorry. Thank you. Sorry, my bad.
Blair Wagar:
— Yeah, that’s what I say. The number probably would be higher than that when
you added up all those different pieces, about 20 companies that would have
debts owing. But the range of debts owing would be a lot, from $2 million
to the one example, to much less than that.
Hugh
Gordon: —
Would you be able to report back to committee that number in a month’s time and
provide that to the Clerk?
Blair Wagar:
— Yeah, absolutely.
Hugh
Gordon: —
That would be great. Just an attachment to that as part of, I guess, on some of
these other recommendations you’re trying to implement, what work are you doing
with other ministries — whether maybe it’s Environment, maybe it’s Finance —
some of these other areas where these debts are owed? Perhaps not necessarily
. . . Like royalties would include, I suppose, your ministry, but
what work are you doing with other ministries to try to resolve these issues
when they do come to you for a licence and you do see that they have an amount
owing?
Blair Wagar:
— Yeah, I think most of the work that we’ve been focused on and where we’ve
been asked to work closely with Government Relations, a lot of it’s debts owing to RMs [rural
municipality] for taxes purposes. That’s where we have the most work going on.
Hugh
Gordon: —
Okay, thank you for that.
Chair
Wotherspoon: — MLA Pratchler, go ahead.
Joan
Pratchler: — On recommendation
no. 3, just dipping back into the risk-informed plans, I see that that
recommendation is partially implemented, that the ministry is exploring options
to address debt checks prior to issuing a licence check. But following the report,
are the ministry staff checking the debts owed prior to this issuing of a
licence currently?
Blair Wagar: — So
that’s something that we’re developing right now. And if we’re aware of those
things in advance we will do that. We don’t have a formal process in place or
documented policy in place on how we deal with that. And generally speaking the
risk that we have around companies coming in that are financially solvent, if
they’re coming in with a licence they’ve often been able to raise money in the
marketplace to be able to come in and actually drill. Otherwise they wouldn’t
be coming in looking for a licence.
So the risk profile that we
have around looking at our industry isn’t necessarily around liquidity and
insolvency, isn’t necessarily around when they’re coming in for a licence.
That’s often when they’re in the best financial shape. It’s when a licence transfers.
So when a company is looking to move their wells to another one, often that’s
where the risk is much higher.
And where we spend a lot of
our valuable resources is looking at and evaluating do we want to see this
company that has maybe been operating for a while, has run into some problems
and looking to transfer those wells somewhere else, making sure that the risk
associated with that — the financial health and well-being of that transfer —
is not going to put a new company in really difficult shape or that there isn’t
some abandoning of a financial liability there. So that’s why we focus in on
the transfer and all of the debts owing around a transfer, as opposed to at the
front end when they’re first coming and looking for a licence.
Joan
Pratchler: — So this new risk-informed
plan is going to be much more responsive earlier, sooner, quicker to some of
these things?
Blair
Wagar: — We’re going to spend more time evaluating the risk at
the front end to make sure that we aren’t letting someone in necessarily that’s
carrying a large debt right off the very start. We do see the risk lower there
though. That’s been our experience.
Joan
Pratchler: — And would you wager to say that those risks are
increasing over time, like you’re seeing more of that inability to be very
solvent in order to continue?
Blair
Wagar: — I think that that’s probably more at the licence
transfer area where we see risks increasing there as companies are going, not
necessarily at the front end. You’re seeing probably less companies that are
coming in, and the companies that are there are much larger. They tend to be
probably better financially positioned coming in now than maybe they were
before.
It’s
not easy to get into the oil and gas business maybe as it was once. It’s a lot
more competitive pricing, a lot more when we’re facing a situation now where
there’s lots of uncertainty in the industry. So the ability to raise capital,
come in as a company is a lot more challenged now than it has been for sure.
Joan
Pratchler: — So at that transfer stage, what do you
think the root cause is for that kind of tenuous situation where people are not
being able to be successful?
Brad Wagner:
— Yeah, I mean we process thousands of well transfers a year. And you know, it
depends on the group of wells that a company is purchasing from another
company. You know, in a lot of cases that’s how a company gets into the oil and
gas business. Rather than drilling their own well, they’ll purchase wells that
presumably have some economic value left. But that’s always questionable
because they’ve been produced for a while. And you know, so sometimes you get
companies that will buy wells that are nearing the end of their economic life
in hopes of producing what they can out of it.
But you know, certainly
that’s why we as the regulator have a program in place to measure the asset
value of the wells that they’re purchasing, and we measure their future cost to
clean that up. And if the future cost outweighs the expected revenue from the
wells, then we make them post security before they get the licences and the
wells.
Blair Wagar:
— Maybe just to add a little bit more to that is that the different companies
that are in the oil and gas sector have different business models, for lack of
a better word, and some of them have certain rates of return. So when they
drill a well they expect a certain recovery rate from that well. And as soon as
that well starts to drop below that recovery rate they look to move away. And
then other companies, their business models allow them to operate with lower
recovery rates.
So sometimes these wells move
through and change hands to be able to best fit the business model of that
particular company. Its overhead, its size, whether they’re working in
multi-jurisdictions — all of that kind of plays in.
But as Brad said, what we’re
watching for is making sure that those wells don’t end up in the hands of
someone that don’t have the ability to actually manage the liability when they
are close to end of life.
Joan
Pratchler: — So are you sensing that the
precariousness of this debt that’s floating out there are putting our
financials at risk?
Blair Wagar:
— I wouldn’t say that it’s a debt problem. It’s more of an asset that needs to
get cleaned up at the end of its life. And do they have the money, the company
have the money to be able to clean up that asset for when it becomes inactive.
So it’s not so much debts
owing to the Crown in this case; it’s more the liability that the company has
with those infrastructure assets and do they have the financial capacity on
their balance sheet to be able to clean up that well once it becomes inactive.
Joan
Pratchler: — And let’s say they don’t.
Then who’s on the hook for that, right? It won’t be . . .
Blair Wagar:
— The rest of the industry is then, whether it’s through our orphan well
program — if they go insolvent, all those wells move into our orphan well
program and that well program then levies the rest of the industry that is
solvent — and that’s how we get money from the industry to clean that up. And
it’s some of those debts that companies aren’t paying that we’re looking to
collect as well.
Joan
Pratchler: — Thank you.
Chair
Wotherspoon: — MLA
Gordon.
Hugh
Gordon: —
Sorry, just in response to some of your responses that were talking about this
debt management. So we’re hopeful that on the front end, the work that you’re
currently undertaking is going to catch this before a licence is an issue. But
admittedly, there are a number of licensees currently that are operating
managing debts owed as we speak.
So my question is, all the
recommendations that you’re undertaking, what efforts touch upon I guess
mitigating that, I don’t know, debt collection if we can call it that? But what
efforts are being done essentially to catch these companies if they decide to
exit the market and transfer a well or a licence to another party with debts
owing? What efforts is your department doing to mitigate those potential
losses?
Blair Wagar:
— So I want to be clear about, you know, monies owing and debt collection.
Whether it’s the orphan well program or the payment of the levy, it’s actually
the industry pays the regulatory fees associated. Like for us to run our
regulatory programs, we levy them and recover those dollars from industry. Or
whether its royalties, that’s where there’s debts owing to the Crown that we
are focused on. And we’re always looking at how we’re collecting those, whether
through the normal outreach, through letters, through engagement with them, and
finding ways, repayment programs. Like anyone that’s looking to collect debts
that are owed, those things are in place. And looking to figure out how to
enhance that.
What we’re tying here now is the ability to get a licence to that debt
owed, and that’s where we’ll make some improvements in terms of tying those two
things together around the initial licensing or additional licences. We can, if
someone isn’t paying, have the ability to actually suspend their well. But as
you move down that path, you want to be very careful that you don’t tip them
over into bankruptcy because then you aren’t able to collect your debts owed.
And when we tip them over into bankruptcy then that moves all of those assets
into our orphan program, which then the burden is on the rest of the industry
to pay that.
You know, generally speaking,
we don’t have . . . We still see the higher risk is around the
transfer of wells as opposed to kind of the front-end licensing — that tends to
be one of the most solvent, as I was saying earlier — but looking to figure out
how to improve that, to make sure that we aren’t issuing licences to companies
that have debt owing. And if we can use that as, I’ll use the word “leverage,”
for them to make sure that they pay their debts before we issue more licensing,
that’s what we’re looking to do.
Chair
Wotherspoon: — MLA Pratchler.
Joan
Pratchler: — On recommendation no. 4
regarding inspection of compliance, can you tell the committee a little bit
more about the compliance framework for inspection and also for enforcement?
What exactly is the process and what does enforcement look like? You might have
touched on it, but maybe there’s more holistic . . . that you might
want to address as well.
[11:00]
Jane McLeod:
— Sure, yeah. So we leverage the IRIS system, the system that we have. So when
inspections are completed and items are found that need to be addressed,
they’re logged in that system. And the system will send a notification to the
company letting them know they have an obligation that needs to be addressed.
And the system will kind of run through . . . They kind of get three
cracks through the system to address any non-compliances that were identified.
And we get about 80, almost 90 per cent compliance just through that automated
system notification and companies addressing it.
And then beyond that, it
would leverage into a direct communication from . . . A field officer
typically would contact the company and say, you know, you haven’t addressed
this issue; it’s been this long; you’ve gotten these many notifications. And it
would move to a manual process there. And then if those direct communications
and their actions didn’t address the issue, then we have sort of a suite of
escalations we can look at. We can go to looking at shutting in production on a
well. We could look at leveraging a fine against the well.
But typically so far in our
experience with our compliance, we will get compliance through having a
meeting, setting set deadlines, and providing a letter saying we will shut in
production if these things don’t occur by this date. So that’s been my experience
in the last couple years. We’ve gotten compliance through direct engagement on
the items where they weren’t corrected through the system.
Joan
Pratchler: — Thank you.
Chair
Wotherspoon: —
Looking to committee members to see if there’s any further questions with
respect to chapter 2. Thanks for the substantive questions and responses as
well.
This is a new chapter for
those that are watching at home. Sometimes we’re doing follow-up on chapters
that might have been presented and brought to us a few years back. This one was
presented in 2024 so this is, you know, I think a real timely consideration,
first consideration at this table. So thanks as well for the commitments to get
information back to the committee where we’re committed to, and to follow
through with the work towards implementation on all recommendations.
At this point in time I’d
welcome motions with respect to recommendations 1, 3, and 4, that we would
concur and note progress. Moved by MLA Patterson. All agreed? That’s carried.
I’d welcome a motion that we
concur with recommendation 2. MLA Patterson moves. All agreed? That’s carried.
With respect to
recommendations 5 and 6, I’d welcome a motion that we conclude and note
compliance. Moved by Deputy Chair Wilson. All agreed? That’s carried.
Okay. We’ll now turn our
attention to chapter 24, which is a follow-up chapter. And I’ll kick it over to
the Provincial Auditor and her office.
Jason Shaw:
— Thank you. The Ministry of Energy and Resources is responsible for regulating
future cleanup of oil and gas wells. Effectively managing the future cleanup of
oil and gas wells helps keep industry responsible for settling its obligations
to clean up wells that are no longer productive in a timely manner and reduce
environmental risk.
Our 2012 report volume 2,
chapter 31, concluded for the October 1st, 2011 to September 30th, 2012, the
ministry did not have effective processes to manage the financial and
environmental risks related to the future cleanup of oil and gas wells and
related facilities. We made seven recommendations. This committee agreed with
those recommendations in 2013. By February 2018 the ministry implemented five
recommendations.
Chapter 10 of our 2023 report
volume 1 on pages 139 to 143 concluded that by February 2023 the Ministry of
Energy and Resources implemented the final two recommendations. On page 140 we
report we found the recommendation related to the ministry’s assessment of
financial and environmental risks related to legacy well sites is implemented.
Legacy wells are sites that
oil companies cleaned up prior to 2007, and at that time these sites did not
require an independent review by an environmental specialist. Saskatchewan has
about 20,000 legacy well sites, of which about 9,000 were producing. A well
that was previously producing oil and gas presents a higher environmental risk.
In 2018 the ministry
determined the proportion of legacy well sites needing to be inspected in order
to assess the environmental risks of legacy well sites. The ministry
appropriately focused its inspection efforts on formerly producing wells.
Between 2015 and February 2023 the ministry inspected 179 legacy well sites. Of
the 179 sites inspected, the ministry identified five sites with issues. We
assessed one of these five well sites. We found the ministry identified
environmental issues — for example, crop growing poorly on the remediated area
— and it took appropriate action. The ministry planned to continue to review
additional legacy well sites beyond the 179 completed, potentially using
drones.
Sufficient inspection of
legacy well sites helps the ministry identify environmental issues that may
exist at legacy well sites. This allows the ministry to hold oil and gas
companies responsible for any issues found.
On page 141 we found the
recommendation related to the ministry’s assessment of financial and
environmental risks related to the timely cleanup of inactive wells and
facilities is implemented. Inactive wells and facilities are wells and
facilities without any reported production or other activity for 12 consecutive
months. At December 2022 there were about 35,400 inactive wells in
Saskatchewan.
Effective January 1st, 2023
the ministry implemented The Financial Security and Site Closure Regulations.
One aspect of these new regulations is the new inactive liability reduction
program, which requires oil and gas companies to continually clean up inactive
wells over time. The inactive liability reduction program requires companies to
spend an amount determined by the ministry each year on cleaning up inactive
wells. For 2023 each oil and gas company was required to spend 5 per cent of
its estimated total well and facility cleanup cost using the formula set in the
regulations.
Also the regulations state
the spend percentage will increase by 1 per cent per year after 2023. We found
the design of the program to be reasonable. We also found the ministry’s
process to set the 2023 spend percentage of 5 per cent to be reasonable. In
addition we found the ministry appropriately communicated to the companies the
requirements under this program. The ministry expected over 200 oil and gas
companies to spend about $105 million cleaning up inactive wells in 2023.
Effectively managing the
inactive well population helps keep the industry sustainable while preventing
an increase in inactive wells, and it also helps to hold the industry
responsible for settling its obligations to clean up wells that are no longer
productive in a timely manner.
Thank you. And that concludes
my presentation.
Chair
Wotherspoon: —
Thank you for the follow-up. Of course this report goes back quite some time,
back to 2012. Good to see implementation being reported. We’ve considered this
at this table a couple times in the past. I’d open it up to DM Wagar for some brief remarks. Then we’ll open it up for
questions.
Blair
Wagar: — Thank you. And I’m pleased
to speak about the two remaining recommendations related to our process for
managing future oil and gas well cleanup. I’d like to again thank and express
appreciation for the co-operation and collaboration with the Provincial Auditor’s
office. As you mentioned it’s been a long relationship, but we’ve got to I
think a really, really great place. And we’re certainly pleased with the
report, which indicates the ministry has fully implemented the final two
recommendations.
The Provincial Auditor’s
report indicates that the ministry has sufficiently focused its efforts on
inspecting formerly producing wells and that the environmental risk of legacy
well sites is low, which we fully agree. Furthermore the report confirms that
the ministry takes the necessary action to require companies to complete
further site cleanup when risks appear.
With the implementation of The
Financial Security and Site Closure Regulations on January 1st, 2023 the
oil and gas companies are now required to spend a predetermined amount each
year cleaning up their inactive wells. With these regulations in place, the
final recommendation by the auditor is complete. So the liability management
regulatory framework is vital to ensuring that the costs associated with oil
and gas industries’ end-of-life decommissioning and site-closure obligations do
not get passed on to taxpayers in Saskatchewan.
So I’m happy to now take any
questions.
Chair
Wotherspoon: —
Thank you very much. I’ll open it up to committee members at this point that
may have questions. MLA Pratchler.
Joan
Pratchler: — Thank you. So it’s been
implemented. It’s been a long time, as you mentioned. I’m just wondering, it
took that long because there must have been challenges. So what would be some
of the challenges in that financial picture, challenges? What are some of the
environmental risks or assessing those? What were . . . Give me maybe
the top three in both of those to go. What were the challenges? Because it
didn’t take that long for no reason.
Blair
Wagar: — Yeah. I can start the . . . [inaudible]
. . . invite you in because you lived I think through most of this.
I
think we’ve probably touched on some of this at the end of the day, but it is
that balance between companies that are in . . . and you have every
time you drill a well, that well has a certain recovery rate, and that recovery
rate goes down. And different wells have different decline rates. And a lot of
the times the focus is on the next well and drilling, and that’s where your
revenue comes from and that’s where your profit comes from. And it’s easy to
not think about the end of life and the assets that are out there and focus on
kind of cleaning those up.
And
there was a decision that had come down. A Supreme Court decision came down
around how to value that asset and how it
shows up on the books. And that was a big part of what changed I think the
mindset of the industry, and seeing the benefit associated with well cleanup
from a financial perspective, to improve their books on top of some of the
regulatory obligations, to make sure that we didn’t see companies not dealing
with their inactive infrastructure that was at the end of life.
And then moving
. . . if the company didn’t deal with it then the industry had to. So
there was a bit of peer pressure, frankly, in terms of companies looking to
make sure that there was a level playing field and rules in place where
companies were dealing with their own liability assets that were end of life.
Some of the challenges though
. . . Sorry, that not necessarily went down a path that didn’t answer
your question more directly, but it gives you a bit of the . . . kind
of the journey in terms of the mindset I think of the industry and some of the
conditions that changed along with some of this work that was occurring.
I think it does boil down to,
you know, the priority and balance between how much money, capital, do we put
in to building our future versus dealing with the end of life. And it’s finding
that right balance to make sure that they maintain financial sustainability and
stability so they can continue to do business and, you know, pay wages, pay
royalties, and develop our natural resource.
So we want those companies
here. It’s definitely a partnership, but it is finding that right balance,
which I think we’ve gotten to a fairly good place. It’ll always have to be
checked, but gotten to a relatively good place with the industry.
Joan
Pratchler: — The second part of that is
the environmental challenges. Can you talk a little bit about what came over
that period of time that might have been in that realm?
Blair
Wagar: — Yeah. I might get Brad to maybe touch on some of those
things for sure.
Brad
Wagner: —
Yeah. Like your question I guess is, were there environmental challenges that
we faced that slowed us down in terms of meeting the recommendations?
Joan
Pratchler: — And were they addressed?
Brad
Wagner: —
Yeah, you know, not necessarily. Certainly on those legacy sites too, you know,
the ones that we inspected, less than 3 per cent had any environmental
concerns. And the ones that did were minor concerns — thin topsoil, or you
know, bare patches here and there. So it’s, you know, things that needed to be
rectified nonetheless.
But you know,
there were not like oil impacts or anything like that that we found. Yeah, I
mean one of the things that Blair pointed out is, you know . . . I
mean we’re all aware that the government at any given point in time has
priorities. And I mean this is a program that in terms of, you know, reviewing
the legacy sites, it was certainly something
that was important for us.
But we had, you know, fairly
minor resourcing to get it done. So our plan became, let’s do what we can each
year. And we calculated the statistics so that we knew what the end goal was
going to look like, how many sites we needed to inspect. And then we went about
the business of carrying out a certain number of inspections each year.
So it took a while for us to
gain enough sites to have a statistically significant sample size. Nonetheless,
even though the auditors have concluded that we’ve met the recommendation,
we’re still carrying on those inspections every year to improve the sample size
and to give the public even greater assurance about those sites.
[11:15]
Joan
Pratchler: — So what have we learned over
that, and what now can we take forward that we’re in a better place than we
were 10, 15 years ago?
Brad Wagner:
— Certainly the new program that we have is much more robust from the
standpoint that, you know, we have companies take soil and groundwater samples
and take them to labs and ensure that there’s no impacts.
Previously, you know, before
we brought in this program, there weren’t those checks and balances in place.
But what we did learn, interestingly enough, is that the oil and gas industry
had been doing a very good job of reclaiming their sites — i.e. when we went
out to investigate these legacy sites, we found very little issues or concerns,
very little environmental impact. So it tells us that the industry was doing a
good job of reclaiming sites.
Joan
Pratchler: — Thank you. And then there’s
one other one. It says, “Legacy well sites were cleaned up without an
independent report by an environmental specialist.” I just have a question mark
around that. Wouldn’t you want a report to ensure that they were cleaned up, or
am I reading this in a different way here?
Blair Wagar:
— Brad, you can jump in but I think that was pre-changes. So now, since the
changes that have been put in place a while ago, there is an independent
assessment and a lot more robust due diligence process to verify that the sites
are safe. Pre some of these changes, that’s where there wasn’t kind of a third
party assessment that was done.
Joan
Pratchler: — Question mark changed to
check.
Chair
Wotherspoon: — MLA
Gordon.
Hugh
Gordon: —
I noticed that in part of the recommendation on page 141 you mention the
inactive liability reduction program. I’m just wondering if you could take a
little bit of time to explain that program to us.
Brad Wagner:
— Sure, yeah. So this is a new program that is written into The Financial
Security and Site Closure Regulations, and we began administering the
program in 2023. And so this program is aimed at ensuring . . .
obligating oil and gas companies to conduct closure work on a percentage of
their inactive liabilities each year.
And so, you know, essentially
how that works is that in consultation with industry we will establish a per
cent reduction for each year, and then we multiply that percentage by the
company’s calculated inactive liabilities. And then that becomes their annual
obligation that they must meet in order to be compliant with the program. And
so far we’ve seen really, really great results in terms of compliance from the
industry.
Hugh
Gordon: —
And so like on that point, I notice in the auditor’s report that for 2003 oil
and gas companies were going to spend $105 million cleaning up inactive
wells. So that’s how that program is helping you to monitor that the money that
is there to spend is being . . . the actions are being done with that
money on those inactive wells, correct?
Brad Wagner:
— That’s correct. Yeah, and I mean as a part of the program each licensee is
obligated to report to us on an essentially line-by-line, licence-by-licence
basis on what work they did conduct and attach a price tag to each item as
well.
Hugh
Gordon: —
And I’m just curious, and I don’t know if you have the number today but I was
just wondering if you know what the total estimated cost to clean up inactive
wells are currently in Saskatchewan whether they be legacy or not.
Brad Wagner:
— Yeah. Yeah, in terms of all of the inactive — and not even just wells;
inactive infrastructure would include facilities as well and contaminated sites
for that matter — but yeah, the number in Saskatchewan is approximately
$2 billion. Yeah.
Hugh
Gordon: —
Thank you.
Chair Wotherspoon: — Any further questions for officials
here today with respect to chapter 10? Not seeing any, I’d like to thank
officials and their teams and all those that have been involved in the work
reflected in the discussion here today and the implementation that’s occurred.
I’d
welcome a motion to conclude consideration of chapter 10 at this time.
Moved by MLA Patterson. All agreed? That’s carried.
Okay, thanks again DM Wagar and your officials for joining us here today, and all
those that have been involved in this work. Any final words for us before we
shift gears and turn our attention to the Ministry of Finance?
Blair Wagar:
— No, just other than to say thank you for the opportunity to talk about our
programming. And obviously we’re proud of the industry and the ministry and its
mandate. And just to thank you for the insightful questions, and appreciate
your time.
Chair
Wotherspoon: —
Right on. Thank you very much. Committee members, we’ll recess for about one
minute because I know Finance is waiting in the hallway and ready to go.
[The
committee recessed for a period of time.]
Finance
Chair
Wotherspoon: —
Okay, folks. Good morning. We’ll reconvene the Standing Committee on Public
Accounts. Thanks to the Finance officials for being patient. Our last
considerations took just a little bit longer, I think, than we thought they
may. We look forward to the chapters and the considerations before us.
I’d like to welcome and
introduce Deputy Minister Max Hendricks, and I’d invite him at this point to
briefly introduce his officials that are with him here today. We can refrain
from getting into comments on the chapters at this point. We’ll then come back
to the auditor and come back to you.
Max Hendricks:
— Okay. Thank you, Mr. Chair. So the members of my leadership team that are
here with me today are Aaron Hamilton, who is the acting assistant deputy
minister of the revenue division; Karen Lautsch, who
is the assistant deputy minister of corporate services and performance
management; Cullen Stewart, behind me on my left, is the assistant deputy
minister of fiscal policy division; and then of course Jane Borland, who’s
filling in for Chris Bayda today. And I will ask any other officials that come
to the mike to introduce themselves.
Chair
Wotherspoon: —
Okay. Thanks so much for that. I’ll turn it over to the Provincial Auditor to
focus on chapter 9 and the new recommendations that come with it.
Tara
Clemett: — So thank you, Mr. Chair.
With me today . . . Sorry, Deputy Chair, committee members, and
officials too. I went a little fast there, didn’t I? With me today is Mr.
Trevor St. John and he is the deputy provincial auditor that is responsible for
the audits at the Ministry of Finance. Behind me is Ms. Melanie Heebner, and she’s a principal in our office who would have
been involved in the audits that we will be discussing with the committee
today. And beside her is Ms. Michelle Lindenbach who is also a principal and
the liaison with this committee.
So this morning Trevor is
going to present the three chapters noted on the agenda in two separate
presentations. He will pause after the first presentation for the committee’s
discussion and consideration. The first presentation is a performance audit where
we looked at the ministry’s processes for enforcing provincial sales tax
legislation. It contains six new recommendations for this committee’s
consideration.
The second presentation will
outline the results of our second and third follow-up audits we did on the
progress that the ministry made on the recommendations we previously made with
regards to monitoring the fuel tax exemption program. The committee considered
and agreed to those recommendations in September 2017, and we are pleased to
see that the ministry has fully addressed our recommendations by August 2024.
[11:30]
I do want to thank the deputy
minister and his staff for the co-operation that was extended to us during the
course of our work. And with that I’ll turn it over to Trevor.
Trevor St. John:
— Thanks. Provincial sales tax represents almost 3 billion in revenue to
the province. It’s the second-largest source of revenue. These taxes collected
help pay for critical services in Saskatchewan. The Ministry of Finance is
responsible for assessing and collecting PST [provincial sales tax]. The
ministry uses enforcement strategies such as audits, taxpayer education and
outreach, and collection activities to promote compliance with PST legislation
and to collect taxes timely. Delays in the ministry taking enforcement action
increases the risk of taxpayers not complying and lost PST revenues.
Chapter 9 of our 2022 report
volume 2, starting on page 75, reports the results of our audit of whether the
Ministry of Finance had effective processes to enforce compliance with PST
legislation.
We concluded for the period
ended December 31st, 2021, the Ministry of Finance had effective processes to
enforce compliance with PST legislation, except in the areas of our six
recommendations. I will now go over each of those recommendations.
On page 85 we recommend the
Ministry of Finance annually analyze key trends of
non-compliance — example, tax gaps or taxes collected but not reported — with
provincial sales tax legislation, so non-compliance with provincial sales tax
legislation, to help it select and prioritize its enforcement activities.
Although the ministry’s
annual action plans included plans to complete analysis in certain areas, we
found this analysis was neither completed nor documented. Having robust
analysis of non-compliance trends over time could help the ministry inform its
selection and prioritization of its enforcement activities.
On page 88 is our second
recommendation. We recommend the Ministry of Finance set out expected time
frames for supervisory review and approval of provincial sales tax audits and
education and outreach activities, and communicating provincial sales tax audit
and education and outreach activity results to taxpayers.
We found the ministry’s key
policies and procedures provide comprehensive guidance to staff for conducting
PST enforcement activities. The policies and procedures generally cover key
enforcement areas such as registration, education and outreach, audit, and
collections, and they reflected good practice. However the ministry had not set
out in its policies and procedures what it considers timely supervisory review
of audits and education and outreach activities.
We also found that the
policies and procedures do not set out the expected time frame for
communicating audit and education and outreach activity results to the
taxpayer, for example within 30 days. The risk of delays or problems in
completion of these enforcement activities could then result in delays in
pursuit of taxes owing and payments of amounts owing.
For our third recommendation,
on page 91 we recommend the Ministry of Finance clearly document its key
judgments when selecting taxpayers for provincial sales tax audits. We found
the ministry uses a risk-based audit selection model to select individual taxpayers
for audit. The ministry used the ministry’s revenue IT system to identify a
list of potential taxpayers to audit based on risk areas and criteria. Once
this list is created, supervisors complete further analysis and select
taxpayers for audit. However the ministry had no documentation of the initial
listing generated from the IT system or the further analysis completed to
determine the final selection.
Because there was no standard
process for documenting file selection and key judgments, we were unable to
determine why Finance selected taxpayers for audit over selecting other
taxpayers that may present similar or higher risk. Also solely relying on the
experience of supervisors to select taxpayers for audit may result in important
knowledge loss when there is staff turnover.
On page 92 we recommended the
Ministry of Finance track key information in its revenue IT system regarding
communication of provincial sales tax audit results, such as when billing
letters are actually sent and by who. We found ministry staff performed appropriate
audit procedures and sent billing notices to taxpayers setting out the actions
people need to take and by when to address non-compliance.
However we found the ministry
does not document sufficient information in its IT system about when staff send
billing letters and support to taxpayers. Without tracking key information on
communication of audit results, the ministry is unable to demonstrate whether
it communicates with taxpayers timely. This also limits senior management’s
ability to monitor the timeliness of communications. Timely communication can
help promote improved compliance by taxpayers and early payment of amounts
owing.
On page 94 is our fifth
recommendation, and we recommend the Ministry of Finance clearly document
support for the level of risk assigned to provincial sales tax collection
cases.
The ministry has a sufficient
process to follow up with taxpayers who have not filed their PST returns or
paid amounts owing when due within a reasonable time. The ministry’s guidance
also sets reasonable collection activities based on taxpayer risk; however it
lacks sufficient support for the level of risk assessed and determined for each
taxpayer. Without clearly documenting or supporting the level of risk assigned,
there is a risk staff may not be taking the appropriate actions at the right
time in pursuing collection of tax owing, which may result in the ministry
collecting less tax. Management indicated that an upcoming project would fully
implement the collection ranking functionality in the revenue IT system.
For our final recommendation,
on page 97 we recommend that the Ministry of Finance explain differences
between planned and actual provincial sales tax enforcement results and future
actions needed in its reports to senior management.
The ministry monitors results
of PST enforcement activities including monitoring some performance measures
and targets for key actions. However there is limited documented analysis of
results. We found that there was limited evidence of the ministry completing
analysis when it did not achieve expected enforcement results, for example if
results were not achieved, why not, and what the plan going forward was to
achieve results. We also found no guidance exists requiring staff to perform
and document such analysis. Without adequate analysis of results it is
difficult for the ministry to determine why it did not achieve expected
results, whether it’s focusing its resources on the right areas, and how it
should adapt enforcement strategies.
That concludes my
presentation, and I’ll pause for the committee’s consideration.
Chair
Wotherspoon: —
Thanks. Thanks very much. Again a new chapter before us here today. I’ll turn
it to Deputy Minister Hendricks for remark, and then we’ll open it up for
questions.
Max
Hendricks: —
Thank you, Mr. Chair. With respect to recommendation no. 1 on analyzing trends of non-compliance, the ministry considers
this recommendation partially implemented. A compliance governance framework
has been established to support the development and implementation of targeted
compliance actions based on trend analysis. The framework drives division
planning and decision making related to tax compliance in a manner that
balances operational risk, management, and reporting processes.
A comprehensive review of the
effectiveness of all compliance activities and workload selection was
completed. Findings from this review were used to enhance several existing
initiatives as well as to create new initiatives and inform major enhancements to
The Revenue and Financial Services Act.
A new business intelligence
and selection team was created to systematically conduct analyses to address
key risks, trends, related to non-compliance. This team uses 17 scoring factors
to analyze risks. As well a multidisciplinary
non-compliance response team was created to address the highest risk and most
egregious cases of tax non-compliance.
A revenue enforcement
strategy was implemented to focus on improving compliance with tax legislation
through targeted inspections and investigations on high-risk businesses and
individuals, focusing on those who willingly do not comply with the PST legislation
or are involved in distributing contraband tobacco.
With respect to
recommendation no. 2 around the expectations for timely review and
communications of results being needed, the ministry considers this
recommendation implemented. Both audit and education outreach activities have
integrated timelines for supervisory review and communication to taxpayers and
to standard processes. These processes are tracked through case management and
approvals.
Recommendation no. 3,
selecting taxpayers for audit, the ministry also considers this recommendation
to be implemented. The new business intelligence and selection team uses a
risk-based approach for audit selection and key judgments are well documented.
Recommendation no. 4
around conducting audits, the ministry considers this recommendation to be
completed as well. Elements of an audit case are tracked and reported within
the enterprise revenue IT system, including some taxpayer communications, audit
worksheets and reports, backup information, and case approvals.
Recommendation no. 5
around the process to follow up and collect unpaid tax, the ministry considers
this recommendation to be implemented. A scoring process was implemented within
the tax administration system in October 2024 which assigns a level of risk to
each collection case.
And lastly, on recommendation
no. 6 around reasonable performance measures and targets, we consider this
to be partially implemented; however we have made significant progress on this
recommendation. Where planned and actual PST enforcement results differ,
changes to processes have been initiated. A new business intelligence and
selection team is currently building infrastructure and processes to
systematically assess compliance outcomes for selected tax clients in order to
determine the efficacy of current selection scoring and inform any needed
adjustments.
A non-compliance response
team was created and is working to find new ways to gain compliance with the
most egregious non-compliant taxpayers. And lastly, division plans are reviewed
regularly and updates are being completed at mid-year and year-end to report
the results.
That concludes my comments,
and I’d be happy to take questions.
Chair
Wotherspoon: —
Thank you very much. Thanks as well for providing the status update and to all
those that were involved in the work reflected in that status update. I’ll
table it at this time, PAC 35‑30, Ministry of Finance: Status update,
dated February 25th, 2025.
I’ll open it up now to
committee members that may have questions. MLA Gordon.
Hugh
Gordon: —
Hi, there. Welcome to the committee, and thank you for taking the time here to
give us these updates. And I have a few questions here with respect to the
first recommendation, which you’ve got as partially implemented, and that’s
with respect to analyzing key trends of
non-compliance and gaps, tax collected but not reported.
You mentioned you’ve got a
new business intelligence and selection team that was created to systematically
conduct analysis to address key risks and trends. I’m just wondering where this
team is currently in the process and if you had any preliminary findings of any
of those activities that they’ve engaged in.
Aaron Hamilton:
— Hi. Aaron Hamilton, the executive director of intelligence, collections, and
investigations branch with the revenue division, Ministry of Finance, currently
acting assistant deputy minister, revenue division as well.
Hugh
Gordon: —
And with respect to the non-compliance response team or the revenue enforcement
strategy, where is that in terms of its progress? And do you have any
preliminary findings or reports for those two initiatives?
Aaron Hamilton:
— The non-compliance response team is a brand new unit that was stood up, and
the staff members in that unit are hybrid auditors-collectors. And we began not
that long ago — I’d say November or December in terms of actively implementing
that team — you know, so it’s early days but we are seeing significant, I
think, response and returns from the actions of that team. So no formal
reporting yet, but we are seeing positive results.
[11:45]
In terms of the enforcement
strategy, that’s a longer term thing that’s been under way. Initially a lot of
the focus was on internal policy development, procedure development, getting
sort of everything in order internally. And now we’re essentially fully staffed
up and taking more of an external focus in terms of implementing some of the
new tools that the ministry has gained, as well as working with the selection
and the non-compliance response team. So a little more integrated.
Hugh
Gordon: —
How is that revenue enforcement strategy going to be implemented? Is it these
teams that we’re discussing that are going to use that strategy going forward
for enforcement or compliance?
Aaron Hamilton:
— So when we say the enforcement strategy, internally we’re really talking
about our field investigators, which were renamed as part of our Act change.
Used to be field enforcement, now it’s investigations. So it’s really on the
field side of things. And in terms of implementation, it’s . . .
Sorry, I’ve forgotten your question.
Hugh
Gordon: —
Well I’m just trying to piece these initiatives together. You know, you’ve got
your business intelligence section which helps you to analyze
key risks and trends, your non-compliance team to address high-risk and
egregious cases of tax non-compliance, and then we’ve got this revenue
enforcement strategy. And is that the umbrella under which these other two
teams work?
Aaron Hamilton:
— No. So the revenue enforcement strategy is specific to our revenue
investigations team. The overall sort of framework sits under our compliance
governance structure that we’ve recently created. So that’s kind of the
overarching organizational tool there. The non-compliance response team is a
separate unit that’s on its own administratively. Same with our investigations
or enforcement team. It’s a separate unit. The business intelligence and
selection team feeds, you know, our audit branch as well as our other
compliance activities. And so they work in tandem and, kind of, in an
integrated fashion.
Hugh
Gordon: —
Okay. With respect to recommendation 3 about selecting taxpayers for provincial
sales tax audits, I’m wondering if you could just speak to what some of the new
criteria is used now to select individuals and businesses for audits. If you
could just touch on some of that criteria.
Aaron
Hamilton: —
Absolutely. So we mentioned that there’s 17 criteria that are used in the new
selection process. So I’ll just run through them if that’s okay.
So
the first is what we call the NAICS [North American Industry Classification
System] code. That’s an industry code, so what industry they’re in. Then we use
previous audit history, both revenue per hour and total assessment results for
those audits. We have what we call asset additions, basically the assets that
we are aware of that an entity may have. We look at Canada Border Services
Agency import data that’s provided to us. Tax yield variance, which is taxable
sales versus non-taxable sales. Delinquent returns is the seventh criteria.
And
we have a number of different lead sources that we use. So one is tax
collected, not reported leads. The second is equipment, then contracts, and
sort of an “other” category of leads. We have SGI [Saskatchewan Government
Insurance] permits, new business registrations. Then in terms of oil well
activity, we have active, drilled, and abandoned wells. And also the final and
17th is pipeline construction.
Hugh
Gordon: —
Thank you for that. My last question is with respect to recommendation number
6, where I’ll direct your attention to page 92 of the auditor’s report, where
we’ve got this discrepancy between revenue planned to be collected through
collection and then the actual amount that was collected.
Just
looking at the last year reported, ’21‑22, we have a difference of, if my
math is correct, some $32 million, almost $33 million. I was
wondering if you could just explain that discrepancy between what you, I guess,
believed you would collect versus what you actually collected, and what
accounted for that significant difference.
Max
Hendricks: —
I can start, and then maybe Aaron can add. So obviously when we determine that
there is an amount owing to be collected, sometimes when we go to collect that
money from the business, the business has entered bankruptcy, the business is
non-compliant, that sort of thing, and cases we’d move on to other steps.
But
a lot of times . . . You know, I’ll give you an example. Like in
the home construction industry, an out-of-province one, it’s very difficult for
us to enforce that once they’ve returned to their home province and such. So
it’s probably the difference between planned and realized, right, due to some
of those challenges in recovery.
Hugh
Gordon: —
I guess what I’m wondering is . . . You collected more than you
anticipated. Do I understand that correctly?
Aaron Hamilton:
— Yes. So I mean our collections team is high performing, and I think we’ve
beaten targets for years. So we’ve recently updated our target and also refined
the query that we use to determine how much has been collected, so yeah, it’s
higher.
Hugh
Gordon: —
So your estimations may come more in line with what actual collections will be
in the future.
Aaron Hamilton:
— I think so, yes.
Hugh
Gordon: —
Thank you. That’s all.
Chair
Wotherspoon: — Any
further questions from committee members with respect to the chapter before us,
chapter 9 and the new recommendations? Not seeing any at this time, I’d welcome
a motion to concur and note progress with respect to recommendations 1 and 6.
MLA Crassweller moves. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: —
That’s carried. And I’d welcome a motion with respect to recommendations 2, 3,
4, and 5 that we concur and note compliance. Moved by MLA Patterson. All
agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: —
That’s carried as well. Okay, I’ll turn it back over to the Provincial Auditor
to turn our attention to chapter 17.
Trevor St. John:
— Thank you. Chapters 17 and 18 report the results of our second and third
follow-up of the Ministry of Finance’s actions on recommendations we initially
made in 2016 about the monitoring of the fuel tax exemption program.
Tax expenditures or
exemptions result in lower revenues for the government, and legislators need to
clearly understand what the tax expenditure programs are expected to achieve.
The fuel tax exemption program allows permit holders, like qualified farmers,
to purchase fuel tax free for specified activities such as operating machinery
used in farming operations.
As described in our second
follow-up in chapter 17 of our 2022 report volume 2, by August of 2022 the
ministry had implemented one of the four remaining recommendations from our
original audit. The annual provincial budget now sufficiently describes the key
assumptions used to estimate tax expenditures to enable legislators and the
public to easily identify which assumptions are applicable to each of the key
tax expenditure programs.
For example the 2023
government budget describes that certain tax expenditure estimates, like fuel
tax, were based on historical tax collection along with assumptions regarding
the expected changes in population, retail sales, and investment intentions.
By August of 2024 the
ministry implemented the three remaining recommendations as described in our
2024 report volume 2, chapter 18. We found the ministry sufficiently documented
the results of its review of tax expenditure programs and periodically published
the achievements of key tax expenditure programs.
For example the ministry
reviewed the Saskatchewan technology start-up incentive and publicly reported
the impact of the incentive. Sufficient review documentation about new or
changed tax expenditure programs allows for informed decisions. Also, providing
public information on tax expenditure program achievements promotes government
accountability for results achieved by those programs.
Finally, the ministry had set
out how it plans to measure the success of its fuel tax exemption program. It
measures the success of the program by publicly reporting in the government
budget how much farmers save annually through the program.
In 2024 the ministry had
114 million in forgone revenue as a result of the fuel tax exemption
program, which has been relatively consistent over the past four years.
Publicly reporting this information gives legislator insight into how much
farmers have saved and how much revenue the government has forgone each year.
So that concludes my overview
of those two chapters.
Chair
Wotherspoon: —
Okay. Thanks so much for the follow-up on this front. Of course we’ve
considered these recommendations in the past and concurred with them, and we
see in the status update that implementation has occurred by way of the actions
taken by the Ministry of Finance. Any quick remarks on this before we get into
a few questions?
Max
Hendricks: — No. I would just like to
thank the auditor for working with us on this file. And as they have noted,
we’re fully implemented on the three outstanding recommendations, and so
anything I probably say would be repetitive.
Chair
Wotherspoon: —
Okay. I’ll open it up now to committee members that may have questions. MLA Pratchler.
Joan
Pratchler: — Thank you. Hello. I see that
the Ministry of Finance reports the total forgone revenue from the fuel tax
exemption program. Could you provide the amount saved from the exemption of
heating fuel specifically?
Max
Hendricks: — So in 2024 the exemption
for heating fuels was $25.6 million.
Joan
Pratchler: — Thank you. The auditor’s
report notes that the 2024 estimated 116.7 million forgone revenue due to
fuel tax exemption. Can you confirm if this estimating was accurate, or do you
have a confirmed value at this point?
Cullen Stewart:
— Thank you for the question. Each year in the budget, there’s a tax
expenditure report that’s published. So in the ’24‑25 budget for the fuel
tax exemptions, the exemption for farm activity was estimated for the year to
be 89.7 million, the exemption for heating fuels was estimated to be
25.6 million, and the exemption for primary producers was estimated to be 1.4 million.
You’ll see also in the tax
expenditure report previous years. So we’ll update where we’ve revised those
numbers and where we have actuals for previous fiscal years as well.
Joan
Pratchler: — Thank you. That’s all my
questions.
Chair
Wotherspoon: — MLA
Gordon.
Hugh
Gordon: —
Just to bring your attention to page 195 of chapter 17 of the 2022 report. The
auditor noted that the ministry still has yet to determine measurable program
objectives for the fuel tax program. Just was wondering if you could describe
to us now what those objectives are.
Cullen Stewart:
— Thank you for the question. In the tax expenditure report, there is notation
for each tax expenditure, whether it’s PST, fuel tax, personal income tax, or
corporate income tax, what the primary objective is, or measurable if you will.
With respect to many of our
tax expenditures, it’s primarily related to interjurisdictional
competitiveness. So with respect to farm diesel as an example, every province
east of Saskatchewan, including Manitoba, applies a zero-cents-per-litre
charge. Saskatchewan applies a 3‑cent charge, Alberta a 4‑cent
charge per litre, and BC [British Columbia] a 3‑cent charge.
So with respect to farm fuel,
basically we have close to 24,000 farmers that are eligible for the program.
The difference between the regular rate on diesel, which is 15 cents a litre,
to 3 cents a litre for farmers is quite significant, so we think that there’s
almost universal uptake in terms of farmers using the program. Farm fuels like
diesel are also exempt from the federal carbon tax, so there’s quite a broad
spread there in terms of the charge on regular diesel versus farm diesel. And
when we look at interjurisdictional competitiveness, you know, we’re in line
with most other provinces or even a bit higher than Manitoba.
Hugh
Gordon: —
Just one last follow-up. So when you’re referring to interjurisdictional
competitiveness, is there any real way for you to measure that? Do you have any
statistics, data, what have you, that gives you reason to believe that that
objective of the fuel tax exemption is working in that regard?
Cullen Stewart:
— So the measure is really tax competitiveness. What rates are we applying
compared to other jurisdictions? Obviously diesel is an essential input for
farmers. They don’t have an option to use an alternative fuel.
[12:00]
Our farming sector, you know,
the Ministry of Agriculture would say, is highly competitive in terms of our
position in international markets. But we are price-takers in world markets, so
for canola, wheat, peas, lentils, you know, we are not able to set the price in
Saskatchewan. Our farmers are price-takers in that respect, so we look to be
competitive with our tax rates — whether it’s PST or farm fuel with competing
jurisdictions — so our sector can remain tax competitive.
But there are other factors
that impact competitiveness — everything obviously from weather to freight
rates and availability of, you know, locomotives and cars — so it’s a broad
spectrum of things that can impact the competitiveness of the agricultural sector.
So what we focus on is tax competitiveness.
Hugh
Gordon: —
Okay, thank you.
Chair
Wotherspoon: — Not
seeing any further questions, thanks again to the Finance officials for their
work on this front. I would welcome a motion to conclude consideration of
chapter 17. Moved by MLA Chan. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: —
That’s carried. Okay, I’ll turn it back over to the Provincial Auditor.
Tara
Clemett: — We just need to switch some
people around.
Chair
Wotherspoon: — Oh,
sorry. Right. I’ll also seek a motion on the follow-up chapter there with
respect to 18, so both 17 and 18. We’ve had a motion on 17, but I’d welcome a
motion to conclude consideration of chapter 18. Moved by MLA Crassweller. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: —
That’s carried.
Modernizing Government
Budgeting and Reporting
Chair
Wotherspoon: —
Turning our attention now to the final piece on our agenda here, that’s the
chapter on modernizing government budgeting and reporting.
Tara
Clemett: — So thank you, Mr. Chair,
Deputy Chair, community members, and officials. With me today is Ms. Charlene Drotar. She’s a senior principal in our office and was
involved in the audit work that we’re going to discuss today. Behind me is
still Mr. Trevor St. John, and just so you are aware, he is responsible for
leading the audit of the government’s summary financial statements. And again,
beside him is Ms. Michelle Lindenbach. She’s the liaison with this committee.
So chapter 9 of our 2022
report volume 1, starting on page 143, reports the results of our third
follow-up assessing the progress made on three outstanding recommendations we
initially made in 2013, related to modernizing the government’s budgeting and financial
reporting. This committee previously agreed with all three recommendations.
By March 2022, the government
implemented one of the three recommendations by formally requiring and
publishing quarterly financial reports on the same basis as the summary budget.
Doing so allows the public to have appropriate and timely information to monitor
the government’s financial decisions.
However we continue to find
that the government has not embedded appropriate summary budgeting and
financial reporting in law. Rather the Saskatchewan government’s requirements
for a summary budget and for using Canadian public sector accounting standards
are outlined in treasury board policies.
This is significant because
policies are used to guide decision making in governance and lack legal force,
whereas laws are legally binding rules. They are mandatory and enforceable,
often including consequences which deter people from breaking them. A policy
can be just a document of what is intended to be done in the future, not
necessarily what will be. Changing laws typically requires a formal legislative
process involving debates and voting. Policies are more flexible, allowing for
quicker adjustments but less scrutiny. Therefore it is imperative that the
government embed the requirements for appropriate summary budgeting and
financial reporting in law to protect the public interest.
Governments use budgets to
communicate the expected costs of their plans for the upcoming year and to show
how they plan to use public resources. Appropriate government budgeting and
financial reporting is important reporting to the public and the legislators as
it provides transparency and it increases accountability of government.
The Saskatchewan government
currently follows Canadian public sector accounting standards when preparing
the government’s summary financial statements. It is important that the
government continues to follow these standards to support the credibility, the
quality, and the comparability of the government’s financial information.
The Government of
Saskatchewan has not updated the law to require a summary budget that reports
the planned financial activities of the whole government, unlike the majority
of its provincial counterparts. Six of nine other Canadian provincial
governments require this practice by law as of March 2022. Embedding key
budgeting practices in law would demonstrate the government’s commitment to
sustain the current appropriate summary budget reporting practices.
The Government of
Saskatchewan also has not updated the law to require the use of Canadian public
sector accounting standards to prepare the summary financial statements. Public
sector accounting standards exist to protect the public interest and promote
public confidence and provide high-quality financial information. The public is
entitled to be confident that the data in the government’s financial statements
are free of inconsistencies or bias, and that the government will not vary its
accounting methods from those that are generally accepted standards.
Legal requirements to follow
established accounting standards have become commonplace. Legal requirements
are already in place on Saskatchewan municipalities by provincial laws, and on
publicly traded companies by Canadian securities regulators. One would expect
that the provincial government would hold itself to the same legal requirements
expected of the private sector and of other levels of government.
Enshrining in law the
requirement to use Canadian public sector accounting standards to prepare the
summary financial statements would help the legislators and the public continue
to receive quality financial statements. Overall having the appropriate summary
budgeting and reporting practices embedded in legislation would show that the
provincial government clearly intends to uphold the expectation of providing
quality financial information and governs with the public interest in mind.
This concludes my
presentation, and we’ll now pause for the committee’s consideration.
Chair
Wotherspoon: —
Okay. Thanks so much for the presentation, the follow-up on these
recommendations that go back to two different reports in the past.
And you know, the one
recommendation which has been noted that implementation has occurred is in
2019, in that volume 1 report. And then the other two recommendations come from
the special report of the auditor back from 2013. And you know, I think that this
is where there’s probably some concern, I would suspect, around the table with
actions that haven’t been taken on this front. But I’ll turn it over to Deputy
Minister Hendricks for a brief remark, and then we’ll open it up for questions.
Max Hendricks:
— Thank you. So as for the remaining two recommendations, it is our view that
the intent of the recommendations has been implemented. However at this point
there really is no intention of pursuing embedding these recommendations into
legislation.
Treasury board approved and
implemented policies requiring the preparation of a summary budget and
financial statements in accordance with Canadian public sector accounting
standards in 2019. A summary budget has been presented to the Legislative
Assembly every year since 2014‑2015. A multi-year forecast has been
prepared since 2015‑2016. And the summary financial statements have
received a clean audit opinion since their first publication in 1992.
So we believe we have the
correct mechanisms in place to ensure that transparent and accurate results are
reported to the public on a summary basis, and don’t believe that we need
legislation.
Chair
Wotherspoon: — I
would open up to committee members for questions.
I’d maybe suggest as well in
the future, just when we’re looking at a status update here, that it be
clarified very clearly that it’s the perspective of the auditee that they feel
that the spirit and intent is implemented. Because certainly the recommendations
haven’t been implemented, and these are recommendations that of course this
committee has supported and concurred in.
And I’ll open it up now to
committee members.
Joan
Pratchler: — I see in the updates for
recommendation 2 that it says:
We
recommend the Government of Saskatchewan seek changes to legislation that would
require it to provide the Legislative Assembly with a Summary Budget
(. . . a budget reflecting the activities of the entire Government)
and consider providing a multi-year Summary Budget.
Embedding summary budget
reporting practices into law would ensure legislators and the public continue
to receive a Provincial Budget with a summary focus. In addition, embedding key
practices into law would demonstrate to legislators and the public a commitment
to sustain the current summary budget reporting practices.
What is the reason for
choosing not to make a legislative amendment for this? Because surely
governments would want to be transparent and accountable to the public
regarding the public purse. And turning from a policy to legislation, would it
be that hard?
Max Hendricks:
— Well certainly it would be possible. I think there are a few concerns.
First of all, Mr. Chair, I’d
like to apologize. That was incorrectly denoted, I think, in the materials that
you received as “implemented.” It would be “implemented in spirit” or something
like that.
But with respect to your
question, there may be times when we question Public Sector Accounting Board
rules, right? So this is a group of accountants who get together and develop
best practices for our public sector entities. And so the government is loath
to put something that is a piece of legislation in that is controlled by an
outside group.
Similarly you know, I guess
legislation can be repealed at the will of the government. So you know, our
view is that the intent is being met, as I said, that we have not wavered from
the commitment to report annually on a summary basis in line with Canadian
Public Sector Accounting Board principles. And so we don’t feel that there’s a
need to legislate this.
Chair
Wotherspoon: —
Further questions? MLA Gordon.
Hugh
Gordon: —
Well this is really important — setting the ground rules for how you report,
how you do your work, how you are to be transparent, and the Provincial
Auditor’s recommendation that it be enshrined into law, that it would be
consistent with six out of other nine provinces — otherwise I would take it as
you said, legislation can be changed but, conversely, so can policy and much
more easily.
So whether it’s with respect
to, you know, a law with respect to a summary budget or a law with respect to
providing financial statements that follow Canadian generally accepted
accounting principles, you know, I appreciate that you’re following policies
and you feel that you have implemented them in spirit.
But I could ask the question
in another way. Conversely, if you already are, then what’s the big deal? Let’s
just put it into law, and we all know what laws we’re going to abide by. We
know what rules we’re going to abide by. The Provincial Auditor will know
essentially what the expectations are for you and for her, and everyone’s
following the same rule book.
I fear a situation where the
Provincial Auditor goes to do her work and finds out a policy has changed and
now has to look at the work that you have done and the reports and the budgets
that you have summarized and put forward, and now she has to apply a different
lens to it going forward or make exceptions or try to encapsulate what you have
done and looking at it from a more 30,000‑foot view from generally
accepted accounting practices.
So I’ll ask the question
again. I mean if you’re already following a policy that is implementing this in
spirit, then what the heck? Let’s just put it into law, shall we?
Max
Hendricks: —
Okay, well first and foremost there’s a political dimension to this issue. And
so I think the reality is, is that we have tabled summary financial statements
that have received clean audit opinions.
[12:15]
I don’t think there’s a
question that we’re reporting according to Canadian accounting board standards.
And so, you know, I think that there’s a feeling that this doesn’t need to be
embedded in legislation. You have an opportunity as a member of this legislature
to question government if they waver or stray from that when the budget is
tabled or when the public accounts are tabled. So you have the opportunity to
ask those questions in the legislature if you feel that there has been
non-compliance, same as you would if there was legislation.
Hugh
Gordon: —
And I’m not suggesting you wouldn’t comply and you wouldn’t be doing your job
professionally at all. I just think, as we’ve noted here, it’s trying to square
this implementing with, the spirit of implementing it versus what we would hope
would be legally obligated to do, that’s all.
Chair
Wotherspoon: — I
mean I’ve been around this table, and this has been an issue that’s been well
canvassed over the years. Certainly it was a very serious breach that
necessitated . . . or that was reflected in the special report of
2013. And I think the auditor’s recommendations, as have been supported by this
committee certainly stand.
And it’s about enshrining
this in law and about ensuring that the province is willing to live up to its
obligations on this front and ensure, enshrine that commitment to the quality
statements that the people of this province deserve.
The deputy minister
identified a political dimension to this. It’s unfortunate that that’s the
case. It shouldn’t be. This should be straightforward. There should be, this
simply should be acted upon. But I respect that the senior officials before us
are sharing the position of the current government.
And I guess on my end, you
know, we chair the Public Accounts. We stand by concurring with this
recommendation and the expectation that they be implemented, something that
hasn’t happened. Certainly that expectation is there for businesses across the
province to comply with accounting standards, certainly for publicly traded
companies and for entities and municipalities and other levels of government
across the province. And it shouldn’t be up to the province of Saskatchewan to
choose not to comply with these two recommendations.
But we’ve been clear in the
past with the senior level of officials like those before us here today, and we
respect those officials. But very clearly, you know, to the Minister of Finance
and to the Premier, as we’ve said in the past, it’s not acceptable and it’s not
good enough. And certainly we can and we will continue to follow up directly
with those that don’t have the political will to enshrine and act on these
recommendations.
So I think at this point I
don’t know if there’s further questions on this chapter. I do appreciate
officials coming before us and for all their work and for laying out as well
the policies that they adhere to.
The clear recommendations are
to have that legislated, and that enshrines those policies or those
expectations into law. And that’s something that hasn’t happened. So we
respectively, as the deputy minister has reminded members, have the ability to
pursue that directly with the Minister of Finance and the Premier who, you
know, have not shown the commitment that’s needed on this front.
Any further questions on this
chapter? Not seeing any at this time, I would welcome a motion to conclude
consideration of the chapter here: “Modernizing Government Budgeting and
Reporting.” Moved by Deputy Chair Wilson. All agreed? All agreed? Okay, that’s
carried.
Okay. It looks like we’ve
come to the end of our time with the Ministry of Finance. I want to thank
Deputy Minister Hendricks and his officials for joining us here today, and for
all those that are involved in the work that we’ve discussed here today and the
work of Finance each and every day. Any final words, Deputy Minister Hendricks,
before we conclude our . . .
Max Hendricks:
— No, I’d just like to thank the committee for the questions today as well, and
in particular thank the Provincial Auditor. We have an excellent working
relationship with the Provincial Auditor, and our staffs work very effectively
together. So it’s one we value and I’m sure will continue forward.
Chair
Wotherspoon: —
Thank you very much. And that concludes our formal agenda here today as a
committee.
So at this point in time, I’d
welcome a motion of adjournment. Moved by MLA Patterson. All agreed? That’s
carried.
This committee stands
adjourned until the call of the Chair.
[The committee adjourned at
12:20.]
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