The federal government is ill-prepared to deal with national emergencies, the auditor general says, just as the country is gripped by an H1N1 flu pandemic.

In her fall report to Parliament, Sheila Fraser says Public Safety Canada, the agency tasked with co-ordinating the government's response to emergencies, has yet to establish a formal plan for dealing with pandemics, floods, blackouts or terror attacks.

Fraser said the agency's goal should be to facilitate communication between various federal departments to ensure an effective approach to any crisis.

"The aim is to eliminate the potential for confusion when responding in a crisis and provide a federal point for co-ordination," Fraser says in the report.

"Until it is clearly established how Public Safety Canada will work with other departments, it will be difficult for it to truly co-ordinate the federal response to emergency situations."

While much of her work on the report was done before the H1N1 crisis broke out, Fraser did say a flu outbreak falls under the framework her audit covered.

"H1N1 would certainly fall into the category of events for which Public Safety should play a role," Fraser told CTV News Channel's Power Play Tuesday evening. "We are aware there is a pandemic plan but that is really a plan that has been developed by Health Canada and the overall federal coordination would be the responsibility of Public Safety."

However, Public Safety has yet to establish itself as the main agency tasked with leading the way in emergency situations.

She also says the department, which she found to have a number of staff vacancies, has more work to do on cybersecurity and setting up protections for important sites such as pipelines and power plants.

"We found that Public Safety Canada has not exercised the leadership necessary to co-ordinate emergency management activities, including protection of critical infrastructure," Fraser said.

Public Safety Minister Peter Van Loan told Power Play that the government is still using its existing Health Canada pandemic plan for H1N1, and this does not fall under the Federal Emergency Response Program.

"Under that pandemic plan, things are working very well," he said.

Under-spending an issue?

According to the report, the agency had a $17.1 million budget to conduct emergency exercises over the last three years. However, only half that money has been spent.

In addition to emergency preparedness, the auditor general also recommended updates to streamline the Income Tax Act.

She criticized non-compete agreements, in which a company's sale price is related to the seller's agreeing not to compete with the company's new owner.

These payments are supposed to be subject to tax, but court cases in the early 2000s found that not to be the case. In 2003, the Department of Finance said it would make the tax regulations more clear. However, that has not yet happened, Fraser said.

In total, the Finance Department has 400 changes to tax legislation in the works that it has failed to get approved.

Other problems the report outlines include:

• Health Canada is powerless to enforce recalls of children's toys found to contain lead.
• Canada's temporary foreign worker program is open to abuse due to lack of government oversight.
• The Canadian International Development Agency's process for approving foreign aid takes too long, and the agency has yet to follow through on its goal of reducing the number of countries it provides aid to in order to make that aid more effective.

The auditor general also investigated how the Department of National Defence fast-tracked the approval of military equipment for the mission in Afghanistan, "basically saying that National Defence broke all its own rules to get the equipment there," CTV's Roger Smith told News Channel on Tuesday afternoon.

"But in the end, she says, the end justifies the means, they needed that equipment. Most of it's working. She just wants National Defence to come up with a better plan for making sure there is an approval process when they need equipment quickly."

Fraser also said the non-profit organization created to implement a national electronic health record system, Canada Health Infoway, is "very well-run," Smith said.

Overall, Fraser criticized the government for failing to properly plan out new programs and policies, without first looking at the risks, and resources needed including money and time.

"Having a complete picture of what needs to be done, by whom, how other programs will be affected and what risks are involved can make the difference between a program that delivers results for Canadians and one that does not," Fraser said.