Re-printed from Toronto Star Tuesday May 01, 2007
© 2007 Toronto Star
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Farm income program too complex: audit

May 01, 2007

Bruce Cheadle
Canadian Press

OTTAWA - A billion-dollar farm income program that's been excoriated by farmers and slated for replacement by the federal Conservative government is getting a rough ride from the federal auditor general.

Sheila Fraser's latest report, delivered today, says the Canadian Agricultural Income Stabilization program known as CAIS is overly complex, lacks transparency, had clear conflicts of interest among some employees and focuses too much on collecting overpayments while largely neglecting underpayments to farmers.

"The way the (Agriculture) Department calculates benefits is complex and not transparent," said the report, which likely sounds another death knell for the beleaguered CAIS program.

Federal-provincial discussions aimed at replacing CAIS are underway, and the Conservative government has provided $600 million to kick start a farm savings account program after promising in the last election to axe the existing income stabilization system.

In 2005-06, the CAIS program spent $1.1 billion in total, about 60 per cent of it handled by Ottawa and the remainder through delivery by provincial governments in Alberta, Ontario, Quebec and P.E.I.

About 80 per cent of all applications are prepared by accountants or other paid specialists.

The audit found that some of the 400 federal employees who help farmers process the 55,000 applications annually actually moonlighted as paid consultants - a clear breach of the federal conflict-of-interest code.

At least five employees were ordered to stop preparing CAIS applications for their clients, according to the audit.

"There is clearly a potential for a conflict of interest," Fraser said at a news conference.

"A lot of employees would have access, for example, to (fraud) tolerance levels (on application forms) ... They shouldn't be doing this kind of work."

Even with the help of professionals, the audit said farm applicants have little idea of whether they'll qualify for a return, or how much they are eligible to receive.

Not only is the process complicated, it changes on the fly with little notice to farmers.

In one case discovered by the auditor, a change in the program's processing procedure resulted in an extra $90,000 going to the producer. By the time this change took place, 20 per cent of the 2004 applications had already been processed, yet the department did not notify farmers that they may be eligible for more financial help.

In 2004, the Agriculture Department estimated overpayments to producers were $28 million, while underpayments amounted to $15 million.

In fact, "zero payments" and payments that are below the specified amount are not reviewed by the department, and account for about 70 per cent of all applications each year.

That means that more than two-thirds of all applications - the two-thirds in which underpayment is the only possible error - are never reviewed by the government.

"There is a risk that the department's estimate that only 35 per cent of the errors are underpayments is inaccurate," said the audit report.