Proceedings of the Standing Senate Committee on
National Finance
Issue 30 - Evidence - November 16, 2005
OTTAWA, Wednesday, November 16, 2005
The Standing Senate Committee on National Finance met this day at 6:37 p.m. to examine the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2006.
Senator Donald H. Oliver (Chairman) in the chair.
[English]
The Chairman: Honourable senators, I would like to call the forty-sixth meeting of the Standing Senate Committee on National Finance to order. I would like to remind honourable senators that this committee's field of interest is government spending, either directly through the estimates or indirectly through bills that provide borrowing authority or bear upon the spending proposals that are identified in the estimates.
[Translation]
On November 1, 2005, our committee received an order of reference to examine and report on Supplementary Estimates (A) for the fiscal year ending March 31, 2006. This is the committee's second meeting devoted to the study of the supplementary estimates.
[English]
Joining us this evening to discuss the Supplementary Estimates (A) is the President of the Treasury Board, the Honourable Reg Alcock. This is his fourth appearance before our committee this session.
Mr. Alcock holds a master's of public administration from Harvard University. He entered political life in 1988, serving as a member of the Manitoba Legislative Assembly. In 1993, Mr. Alcock was first elected to the House of Commons as the member of Parliament for Winnipeg South, and re-elected in 1997, 2000 and 2004. He was appointed President of the Treasury Board in December 2003 and was reappointed in July 2004.
I would also like to welcome back once again two officials from the Treasury Board Secretariat Expenditure Management Sector, Mr. David Moloney, the Assistant Secretary and Ms. Laura Danagher, the Executive Director, expenditure operations and estimates directorate.
Minister, you now have the floor. Following your presentation, I know that honourable senators will have a few questions they would like to put to you. We look forward to your remarks.
The Honourable Reg Alcock, P.C., M.P., President of the Treasury Board: Thank you, Senator Oliver. I appreciate the lavish introduction; there should have been a drum roll there. I have never been introduced like that at a committee before.
I am pleased to be here. As I have said in the past, I have enjoyed our discussions when I appear before this committee and I look forward to today's dialogue.
You mentioned Mr. Moloney, who is new to Treasury Board since our last appearance here, and we are delighted to have Mr. Moloney join us. Ms. Danagher has been here before with Mr. Newell, who has now gone to Queen's University to opine on all of this stuff. No doubt, he will be writing notes to you in the future.
I would like to start by thanking all members of this committee. Your work is important and your insights and recommendations have been valuable in ensuring that we continue to make improvements in how we manage the public sector.
We recently responded to two reports from this committee. In our response to your eleventh report, concerning foundations, we indicated that the government will continue to pursue active steps to strengthen overall accountability and transparency relating to transfer payments to foundations, and do so in a manner that respects the independence of these organizations.
In regards to your twelfth report concerning officers of Parliament, we agreed with the committee's recommendation, and are in the process of implementing a pilot project for a new funding and oversight mechanism for the 2006-07 and 2007-08 estimates process for agents of Parliament.
Your diligence in reviewing the supplementary and Main Estimates is appreciated. You will remember that last March I tabled a proposed package of reforms with regard to TB Vote 5 with this committee. Many of those changes have already been adopted such as changes to the introduction of the Main Estimates. As Mr. Moloney indicated yesterday, the final step is to adopt the changes being proposed to TB Vote 5 wording as well as to get the TB approval for the revised set of criteria. We intend to include the new Vote wording in the upcoming 2006-07 Main Estimates.
In addition, we have improved the information relating to the allocation of TB Vote 5 in these supplementary estimates by providing more context as to why the allocation was approved. For example, before we would have indicated the department and the amount allocated from Vote 5, we are now providing an overview of the rationale behind the recommendation.
I am also pleased to hear that are you in favour of the changes we continue to introduce into the estimates documents themselves. In particular this year we have tried to increase the transparency around the transfer of money previously approved by Parliament between various departments. This remains an ongoing process and there will be more improvement in the future.
Mr. Moloney also provided an excellent overview of the contents of the supplementary estimates that I tabled in the house on October 27. He and Ms. Danagher also explained the process that ensures the functioning of government during an election. I want to assure the committee that we will be back to you on the undertakings that were made yesterday. Of course, I look forward to answering any additional questions you may have for me this evening.
I want to talk about the plans to improve the public sector management as set out in a paper submitted for discussion entitled: Management in the Government of Canada: A Commitment to Continuous Improvement that I tabled October 25. This plan brings together all of the initiatives that are underway to make government more accountable, responsive and innovative. It puts in place a system of checks and balances to strengthen public sector management. It also provides a solid foundation for the future to meet Canadians' high expectations of service excellence. It provides our talented public service managers and employees with the flexibility, training and tools they need to continue to serve Canadians through innovative and responsive policies, programs and services. At the same time, it ensures that we have the right oversight, transparency and accountability mechanism to demonstrate to Canadians that we are managing their tax dollars well.
The measures we are taking to enhance Parliament's ability to hold the government to account by providing better and timelier information to parliamentarians are a key priority in our management improvement agenda. The government will table before Parliament each year an overall strategic plan to help with the assessment of spending proposals. It will also report annually on the state of management including human resource management.
Expenditure management will also be results-driven which means better information management. The approaches we are developing for expenditure management will help us better set priorities, plan budgets and allocate funds to ensure long-term stability.
As Mr. Moloney explained yesterday, more accurate performance information will be captured and used by our newly developed expenditure management information system to inform new investments and reallocations as well as generate the Main Estimates tabled in Parliament.
Over the past few years we have been building on our commitment to improve government's reporting to parliamentarians and Canadians by introducing a number of changes in the form and content of supplementary estimates and in this way provide clearer information on the relationship between the spending of taxpayers' money and government priorities.
We have had some interesting discussions about how to revise the estimates so Parliament can more easily oversee government spending. These supplementary estimates continue to build on improvements that were presented in the last document as well as introducing some new elements. In particular, a table has been added to each organization's page to reflect all the transfers between votes, both within and across organizations including a full description of the specific initiative for which money has been realigned.
This new presentation format is helpful in reconciling the impact of these transfers on the total resources available to departments. It provides more visibility on the reallocation of funding between organizations.
I believe my officials mentioned these improvements in detail when they met with you yesterday. I want to stress the importance with which the government views the need for more transparency and accountability to Parliament and to Canadians. This commitment will continue to make us strive to find new ways to improve on the government's reporting process.
Accountability of ministers and senior officials has been a topic of great interest to both the government and parliamentarians for some time. Your committee has given considerable scrutiny to these issues lately and some of your members recently participated in a fact-finding mission about the role of accounting officers in the United Kingdom. In the course of developing our proposals, we certainly took the U.K. model into account. Our approach is outlined in our paper entitled: Management in the Government of Canada: A Commitment to Continuous Improvement, which I will summarize for you now.
A range of measures will support ministers in providing leadership on the direction and overall management of their organizations. They will receive detailed assurances that management control systems are in place, and regular accountability sessions with their deputy ministers take place on key management challenges.
To give greater effect to their accountability to Parliament, ministers will attend more parliamentary committee meetings to explain and account for management performance. Likewise to bolster oversight of management matters, Treasury Board will call upon ministers and their deputy ministers more frequently to report on strategic management and spending plans, performance, and key management challenges in their departments. To reinforce the management responsibilities of deputy ministers, the Financial Administration Act will be amended to give them more explicit statutory authority for day-to-day management matters under the minister, including signing the accounts of the organization.
We will be streamlining and refocusing the Treasury Board suite of management policies to bring increased clarity to the responsibilities of deputy ministers. A management accountability framework will be used as a comprehensive means of assessing management capacity within departments and across government. The driver of management improvement is not more rules — it is the right rules backed up by better information about management performance.
This very robust process will make clear who is responsible for what and mark a significant advance on current practices.
I am very interested in hearing suggestions from this committee on how the government might clarify and reinforce the accountability of ministers and senior officials. I am also happy to answer any of your questions on the government's plan in this regard and of course on the supplementary estimates.
I would be interested in some of the reaction and discussion about the management plan but if that interferes with the desire to deal with the estimates I would certainly be willing to come back on a separate occasion.
The Chairman: We will deal with the Supplementary Estimates (A) tonight, but normally the questions of honourable senators sometimes depart from the topic.
Senator Segal: I want to talk specifically about your perception of the progress of accrual accounting and the extent to which that progress will allow senior public servants and public servants generally, to operate in a more pragmatic fashion. I am interested in the funds that are not expended because of good administration, being carried over to be used in that same department's activities for the following year. Often, we see this with the compassionate leave program, which has become problematic. The take up of a program is not in the first year when people had hoped it might be. In the compassionate leave example, it takes some time to build up a balance between the requirements, the invitation to apply the actual take up and the appropriate expenditure of funds so your administrative overhang looks very much out of proportion in the first year.
There is little incentive to move in quickly and stop those administrative overhang expenditures because you can bank that to use it appropriately against the actual public policy goal that was intended in the subsequent year as might be the case in a private sector or not-for-profit organization.
Please share your view on that subject and the extent to which the existing rules might be moved in that respect.
My second question relates to the issue of public transparency. I was at the comprehensive audit foundation meeting where you talked about some of the changes that you have been making. I think everybody in the room was impressed with both the direction and the substance of your talk.
The one question that remains is why government cannot work to a normative quarterly departmental, full disclosure of expenditures in and out, with the same level of discussion of materiality that we see in the private sector and aspects of the not-for-profit sector. Perhaps it is for no other reason than to avoid the build up of a problem over a fiscal year that becomes difficult to manage in the last quarter and often produces fodder for the Auditor General to offer a series of unsolicited opinions about value for money, which might be constructive depending on the circumstance. Obviously, quarterly financial disclosure will take time because it cannot be done overnight.
Yesterday, your officials were kind enough to explain the series of rules and various financing structures that are in place that differ, although there has been some rationalization under your leadership, to be fair.
To what extent do you think we could move to that?
I sense that public confidence in the system would be sustained if we knew that after a certain date, quarterly disclosure of all departmental expenditures, to the extent that there was variation from the plan and to the extent that issues had produced other pressures, would be a normative part of the system.
Mr. Alcock: Those are two huge questions, although there is an obvious direct relationship between them. I will state my current thinking on the matter, not the policy at this time. My thinking on a matter does not always have the habit of translating into policy.
Part of the issue is that we are grappling with Treasury Board because it has undergone some pretty massive changes over the last year and one half. It has been dealing with many issues and has done exceptionally well. Making these changes is akin to trying to change tires on a moving car. The organization has many responsibilities at the centre of government and continuing those functions and trying to do its usual business under a big change management agenda.
On the issue of accrual accounting, we have a foot in each camp, which I think is untenable. We have to take the full step but there is significant concern about doing so. I put that on the back burner until we released this other paper. I signalled to Mr. Moloney and Ms. Danagher that we need to sit down in a group for a more fulsome conversation about it.
The Chairman: What are your concerns?
Mr. Alcock: Until I have had that conversation, senator, it would be unfair of me to characterize my concerns. I can give you only a rough fix on it. Apparently, in Australia, where they have done this, there has been some difficulty in the transition. There was a conflict between Parliament's capacity and tradition of approving a year's appropriation as a finite piece as opposed to the management of an ongoing stream of funds. The concerns are resolvable but it is a larger exercise than simply deciding one day to reformat the books. I am not saying that we should not do this because I think we should do it.
To your second question, we have committed to producing audited financial statements for each department by department, rather than the one chartered accounts. The work of bringing a department to the point of doing an attest audit is considerable. We are not accustomed to the practice and we do not have the systems in place to perform an audit on that basis. There is a great deal of re-organizing of the existing system to be done in order to do it. We do not have the underlying financial systems on a consistent basis across the government that would allow us to do it easily. The comptroller general is on a five-year time frame to put in place the financial management systems and the audit and accounting systems that will allow us to perform those kinds of audits.
The policy decision to do quarterly reporting would not be an issue. There would be benefits in the way that you describe, senator, although I have one suggestion. To get the accounts into the place where we could actually begin to do it in a competent way with the level of quality that you would expect will take some time.
I would be more than willing to come back and have the discussion on accrual accounting once I have had a more fulsome discussion with officials. In fairness to the folks who have to carry this out, I should do that first. We have had only one pass at this.
As far as priorities, I put it on the back burner until I finished other things. I recognize that we are half-way there because we have created a need to go back and reconcile our books regularly.
I would suggest that if the committee or a subcommittee of the committee were interested, I would encourage you to arrange either a formal hearing or a private meeting. I would facilitate a private meeting with the reporting-to- Parliament group at Treasury Board. There are many little ``skunk works'' inside Treasury Board that I am discovering. One small group has been pondering how we can improve reporting to Parliament by a process akin to what Senator Segal was suggesting. Currently, we put down a document before Parliament and that is it. As senators are aware, any kind of document in an organization is a living document and it changes. In government, expenditure patterns and management information change over time. They have a number of models by which we could make the information ``evergreen'' so you could tap into it to see how things are moving.
Certainly, on a transitional basis, there would be some difference between un-audited versus hard-audited information. To give you a sense of where things are going, the group has a number of ideas. Many of them are electronic-based to make information readily available. In that way, you could have access to the supplementary estimates either electronic format or hard copy.
There are numerous things on the information management side to take us forward so that Parliament could have a more frequent look into government's progress.
Finally, the ability to budget over multiple years and flow money more seamlessly is not only an issue for government but also for all organizations that receive money from government.
We create huge problems for recipient organizations that often have to cash manage by borrowing money to fund their operations and then we do not pay their interest charges. We spiral them into all kinds of ugly places, particularly in the not-for-profit sector, that would be facilitated by having a more continuous relationship with them.
Senator Segal: I assure you this is outside any partisan context. Would you have any discomfort about new management, accountability and accounting policies if the Auditor General had said the sponsorship scandal was not about inadequacy of rules but rather about people who did not follow the rules?
Not necessarily in response to that issue but in response to a general desire to improve things it produces a rules culture that actually destroys creativity. We want public servants to take honourable risks in good faith for the right reasons in support of public policy goals.
Is there a point at which the balance becomes so constricted that paralysis, suffocation and hardening of the auditors becomes more fundamental than the kind of productivity that our citizens want?
Mr. Alcock: If I could move your argument further, some articles have been written that would describe these changes in that fashion. Someone said that it might ``gum up the works.'' I would argue it this way, but I will first remove sponsorship from the equation. If there were no sponsorship scandal, I would still want to do this. I have been driving at this regardless. The sponsorship scandal came along after I had already started down this road.
Senator Segal: You have been doing this for 15 years.
Mr. Alcock: Yes, it has been 15 years.
Senator Segal: That is another issue.
Mr. Alcock: Suddenly, there is an image of government working flawlessly and all is well but that this will gum up the works. I would argue that the works are pretty gummed up now. This is not about taking away the rule but rather about taking away numerous rules and replacing them with an active oversight system rather than a passive system. The problem is that in order to provide a level of control, we detail all activity. Our policy sets are huge, and then we wonder why it is difficult at the operational level, for example trying to apply the same rule set on the East Coast that you would apply in downtown Toronto or out on the West Coast. We know that there are differences across the country. Yet, the poor public servants are caught without much ability to tailor those rule sets, and they are held to account if they deviate from the rule sets.
If you want to have a more innovative culture, you have to provide a level of delegation to people to allow them to exercise their creativity, while maintaining a management system that catches the problems. In an organization as large as ours, unfortunately, there will always be some people who will not follow the rules.
It is unfortunate and I have contributed to some of this. I became so caught up in the ministerial accountability discussion, which was extremely complex, that I assumed everyone understood the value proposition. We are reviewing all the policy sets to redo them. However, this is a change; a replacement of what I believe is a very constricted rules- based system with one that more mirrors what you see in large, modern organizations that are trying to deal with the speed of change that the world is operating in now.
Senator Downe: Minister, in your opening statement this evening, you talked about responding to report number 11 on foundations. Can you elaborate on what the government is doing to increase accountability and transparency?
Mr. Alcock: I do not want to simplify this too much, but it strikes me that at the heart of the discussion has been generated by the decision to set up the Canadian Foundation for Innovation. I have spoken to the Auditor General about this on several occasions and her concern is if the organization spends funds on something other than the function it was allocated for the spending authority of the government is put beyond the control of Parliament. If the funds are spent fulfilling the intended function there is not a problem. It is a problem when the government gives the money to the organization and the organization makes a decision about the spending of that money. That is the Auditor General's argument. That is her fundamental argument.
There is a significant policy disagreement about that. Right from the outset with the Canadian Foundation for Innovation, it is not as if the money is put out some place where it is put into the pockets of individuals who run around and do with it as they will. There is a formal corporate structure. There is appropriate audit and oversight and public reporting and transparency and all of those things. It is just separated from government in a more formal way.
Part of that separation was performed in order to fund these things out of surplus money that would have been simply gone into general revenue. An accounting problem led to the creation of this separation. We have had significant discussions with the auditor and we have changed the reporting requirements for the foundations and the ability for the auditor to ask for levels of accountability and information from them. There is a mechanism on any new money they get through their additional requirements around reporting on that.
I have not spoken to her recently, but I know that with the last round of changes on this specific issue the comptroller general had extensive discussions and negotiations with her around the transparency changes brought in with this last bill. Those changes which were an attempt to bring some of the accountability relationships for new money going to these foundations closer into the more standard government oversight.
Before I became minister, when this issue first arose and I was chair of the government operations committee, I called all of those foundations. When this issue came up I said if there is a concern about oversight to Parliament, why not just call them all before Parliament and see what they say. They all came right away. They all sat down. They all were quite forthcoming. I do not think there has ever been a substantive concern about their operational side. It has always been more the broad policy concern about putting money beyond the reach of government.
I still argue and I still debate with the auditor. I have other opinions about the CFI that are perhaps not as flattering, but it has nothing to do with their financial probity, it has to do with their focus on four large universities. However, I believe most people would say that that money has been well managed and it has served Canada well.
Senator Downe: I note there is funding here to promote a positive environment but disclosing wrongdoing. As you may be aware, Bill C-11 is coming to this committee in a few weeks.
Mr. Alcock: Is it coming to this committee? I am apparently coming here to testify. I would be prepared to pass it in one day, if you want.
Senator Downe: What is the funding for in the Treasury Board submission? What does ``positive environment for disclosing wrongdoing mean?'' If you do not know, you can have your officials send it to us.
Mr. Alcock: I can tell you one thing, Senator Downe. On the details of any of the questions that senators have asked in the past I have had officials get you the details. I am assuming this is the advance support for the public service integrity officer. Remember, we do have our former administrative system for disclosure of wrongdoing, the public service integrity officer. It still functions, and we have just extended his appointment so that we have seamless transition into this new agency.
Senator Downe: I will wait for that information and we can chat about it when you are before us on Bill C-11.
The Chairman: Minister, you have always been interested in Government-On-Line. In this year's supplementary estimates, on page 11, it says that ``funding for all Government-On-Line initiatives will sunset at the end of the year 2005-06.'' Why will the funding sunset? Why should departments be expected to carry on an important initiative like this out of their own funds? What is the policy reasoning behind the sunset?
Mr. Alcock: It is appropriate particularly in the development of new technologies and new methodologies and the high-cost transitional phase for the centre to provide some funding. Secure Channel would be another example; however, once the technology is proved out, if we believe the model, once it is demonstrating value to the organization and, in many cases, offsetting other costs that the organization would have, it is incumbent upon the department to pay for it.
The Chairman: Is that the evidence you have now, that it is self-funding?
Mr. Alcock: That is what we have been doing. Government-on-line is at a later stage in its development. The departments have become quite adept at the management of the sites. We still provide an oversight but the departments that operate their own websites handle the funding and operation.
We have just done that with Secure Channel. I insisted that Treasury Board fund Secure Channel. We provide funding in the first few years but if the business case is that by using Secure Channel department X is going to save millions of dollars in certain kinds of filings and they can demonstrate that, then they should pay for it. It is one of those transitional technologies.
The Chairman: That is demonstrated now and it is the reason for the sunset?
Mr. Alcock: Yes, absolutely. I am insisting on those business cases at the outset because it just becomes — this is a personal opinion — too convenient for departments to have the centre paying for all this stuff.
There is an old saying that you value what you pay for. If it is producing value for you then you should be investing in it and take ownership of it. It is the classic tragedy of the House of Commons. You tend to use free goods in a way that is not as respectful and you do not drive them as rigorously as you might things that you are paying for.
The Chairman: Senator Ringuette.
Mr. Alcock: It is done, it is announced, we are about to proclaim the legislation.
Senator Ringuette: Not enough. Not enough.
I must admit, you have done quite a lot in the last two years in comparison to the 30 last years in regard to HR in the federal government.
I must thank Mr. Moloney tonight because he has brought answers to most of the questions I asked yesterday. I appreciate that. However, there are still a lot of questions looming in regard to the modernization of the public service.
Two years ago, we approved $48 million to implement Bill C-25. Today, there is roughly 10 per cent of Bill C-25 that has been implemented and yet the estimates that you are bringing to us are requesting another $58.4 million.
If the $48 million implement 10 per cent is the $58 million, you are asking for going to add another 15 per cent. Next year we will be asked for $65 million to implement another 25 per cent. What we are looking at is a desperately needed HR plan for the federal government, but it is going to cost a lot of money and it is going to take a lot of time. Only 23 per cent of the departments have a human resource plan in place, which is incredible for an organization of that size.
Mr. Alcock: I am not sure where you draw the 10 per cent figure from in this sense. The logical sequence that you are following may be based on misinformation.
There was a two-year implementation time frame for Bill C-25 and we have proclaimed different sections as they have been put in place. The final piece will be proclaimed shortly.
In the major departments that are taking on the HR function, they have to have their HR systems and the training approved, if that is the part you are talking about. There will be another request coming that will complete that process. The school is working hard with the training of the HR community in each of the departments.
In a sense, we are building capacity inside these departments that they have never had before because they are taking on this responsibility. That is the rationale for it.
There are capacity issues we are struggling with right now. There is a debate going on about the next stage of the HR reform because the legislation allows us to move in more creative ways on the labour management side and allows us to do a greater degree of delegation to the management of the departments' own HR.
The dilemma, and I have to differentiate between other people's opinions and my own, but it is my opinion that we have not yet figured out the full re-engineering of the HR system. What we are doing is transferring an old HR model to a new system. We need to rebuild it more than we are.
In terms of the Bill C-25 plan, we are right on target.
Senator Ringuette: Are we doing more work on the standardizing of job classification? You understand where I am going with this. It is going to be needed if we want to have efficient HR planning.
Mr. Alcock: There is a massive piece of work underway at INAC. Mr. Jim Lahey has been working on the compensation review. All the research is completed. He is working on the final chapters. I have had one briefing on it. I hope it will be coming forward soon.
The whole concept of a universal classification system has been a challenge for the government. As you know, there was a huge attempt to do this a while ago and it collapsed under its own weight. We will be having a look at Mr. Lahey's report to try to determine our next move.
The issue of classification is a big problem. I think we have significant HR challenges in the management of that envelope. It is somewhat out of control right now and we have to rein it in.
Senator Ringuette: I will agree with you that quality is better than quantity.
I am looking at the Public Service Commission of Canada press release, and you did a follow-up on that. It says, ``Change in policy,'' and the word ``policy'' is difficult to define because it is not official. We know that policies have a way of getting distorted. The release says that there will be a gradual increase in the level of officer-only positions in the National Capital Region. Subject to the results of an impact assessment, the goal is to establish a national area of selection for all external advertisement appointment processes for all positions across Canada by December 2007.
That is a step in the right direction; however, it does not go far enough. The human resource planning and the accessibility to all job openings to all Canadians go hand in hand; I have no doubt about that.
There is a policy for the jobs in the national capital region and there is a possible next step following an impact assessment for officer jobs only for the rest of the country.
As you well know, I have a bill before the Senate to remove all geographic barriers for hiring by the Federal Public Service. You have my position on this.
When can we do better than this because is not only a question of fairness and equity for all Canadians. The Charter says that Canadians can move across the country to gain their livelihood. I think that should be a priority.
Mr. Alcock: The reason for the time frame is simply in fairness to Madame Barrados, the commissioner. The organization as we have been implementing Bill C-25 has had a lot of changes. Staff complements have been moving in and out. They have been redoing their own infrastructure.
A number of the capabilities that she needed to have in order to do this were contained in the proclamation of that new legislation. That is part of the reason for the time frame.
In fairness to her organization, you were talking about a fairly significant change not in the intention of making jobs available, just in the sheer workload. I am not sure that you and I agree on the full model.
One of the classic problems with public management as opposed to private management, you do not put out an ad, the first ten people apply, interview five of them, hire them and walk away. If 25,000 apply, they are all Canadian citizens and they are all entitled to a response. They are entitled to first order of consideration.
One of the reasons for the constraining of these things geographically was to limit the number of applications to save cost. There has been significant concern, particularly with the changes taking place with the public service overall where more and more of the senior positions have moved into the capital region. There has been a concern about freezing people in other parts of the country out of the advancement positions. That is why the selection of the officer positions was one of the first lines to move out right away, to broaden the accessibility to those positions.
I would argue that Madame Barrados has been working diligently to expand those boundaries in keeping with her resource base.
You make the mobility arguments, and I do not dispute them. When you start to define them, does that mean that everyone who applies for a job in the National Capital Region is entitled to be flown to Ottawa for the competition?
Senator Ringuette: Give me a break.
Mr. Alcock: That is a serious issue when you look at the 30,000 people they hire in a year. The costs build up considerably.
Senator Ringuette: The reality, minister, is that last year, the government hired 34,000 public servants, 9,000 permanent, and only 6,000 of them were from public advertising. You have 6,000 a year across 30 some departments.
If you look at all our Crown corporations, and I have done so, 98 per cent of them advertise every job on a national scale. Therefore, in regards to capacity and workload, I do not buy the argument.
Mr. Alcock: Madame Barrados from the Public Service Commission is an officer of Parliament. I suggest you bring her before this committee and talk to her about it. One of the dilemmas I have with this particular file is that I do not manage her shop either. She has a foot in both camps. She is, in part, an instrument of the executive, but she specifically has a legislated mandate that keeps her at arm's length. In a sense, she is as accountable to you as she is to the government, and one could argue more so. If you have concerns about that, I would suggest that you bring her before the committee.
I can only repeat to you the arguments that are made to me and some of the cost models that are presented to me. Usually, the arguments are compelling. Another argument that has come up is that we have had a request from the people from the Ottawa region, does this mean that all the jobs in other parts of the country are open to them.
Senator Ringuette: Absolutely.
Mr. Alcock: With that assurance, they are quite supportive of this.
Senator Ringuette: We need to be inclusive of all Canadians, wherever they live and wherever the job may be, if they have the competence to do the job.
The Chairman: Who pays the way?
Senator Ringuette: There is nothing in the policy of the Public Service Act that says that in order to be interviewed or short-listed, that you have to pay for a person to be interviewed in Ottawa or Calgary or Halifax. Canadians from New Brunswick are interested in having well-paid jobs, and they would provide good public service. As to travelling costs, whether you are looking at a federal job or a public service job, if you are interested in having a job, you will manage to be at the interview. That should not be a detriment to ensuring that all regions are well represented in the public service of Canada.
Mr. Alcock: I think she would absolutely agree with that statement.
Senator Downe: I support my colleague and think she is absolutely right, but she highlights a bigger problem as well. I have been banging the drum on decentralization for some time now. I will not repeat the arguments because people have heard them over and over again. Look at the tremendous benefits of relocation 29 years ago of the national headquarters of Veterans Affairs to Charlottetown. It is the only national headquarters located outside the National Capital Region. The GST centre is in Summerside, so Prince Edward Island has done very well. I wish the same success to other regions.
The problem in the Government of Canada, and the minister may be aware of this, is that over 70 per cent of the executive positions are located in the greater Ottawa area. The government should be doing more decentralization so people in the regions can not only apply for the job but can work in the region they want to live in as well. That is a free-time political message.
Mr. Alcock: As a resident of and a minister who is responsible for a small struggling province to the west, I certainly understand Senator Downe's position. As the one who actually did the underlying work on the tremendous centralization of the public service in Ottawa during in the early 1990s, I understand the math. Other than that, I will take the fifth.
Senator Downe: Just as an aside, I happen to have a chart in front of me that came from the Treasury Board website a year and a half ago indicating, under program review, the number of jobs lost in the regions. Manitoba, as the minister I am sure is well aware, had a major loss as well. The National Capital Region has regained all those positions and the regions have not.
Senator Ringuette: The announcement made by the commission in July to close down nine of their offices located in the regions certainly did not help the matter at all in regards to ensuring there was proper recruitment and interview processes in the regions for our young people to work for the federal government.
Senator Mitchell: I have two unrelated questions.
Could you give the committee some insights into how the Comptroller General works and, more specifically, how the comptrollers that are operating under that position will work? Will there be one per department? When it is said they will review all new expenditures, is that a new program, or is that this year's budget increment? What constitutes ``new,'' and how many comptrollers are there?
Mr. Alcock: We are at the stage of finalizing the rewrite of the senior financial officer's policy. Some of the details will have to await those discussions.
There had been a concern about the attestation of spending in part in terms of determining who was responsible for what. At the time of the change on December 12, 2003, in addition to the instruction to re-establish the position of the Comptroller General, I was also given the instruction that the senior financial officer, whether you call them a department comptroller or, as they are traditionally known, a senior financial officer, would be required to sign off and attest to the veracity and accuracy of the accounts as documents were put forward, either cabinet memorandum with figures in them or to the Treasury Board.
With the arrival of the comptroller, we have done several things. In a sense, it is not that different from what is happening with the head of internal audit. We have given both positions a level of independence, not absolute independence because they are part of the management team and report to the deputy minister and are accountable to the deputy minister for the day-to-day management of their unit within the department. They have a functional relationship for the comptroller general and some reporting responsibilities and some accountability relationships to the comptroller general. It is, in part, to harden up in the overall management system. It is giving people sufficient independence to encourage and support telling truth to power, in effect.
An article in the paper the other day said we were bringing this into 200 departments. There are only 121 units in the government, and only 22 spend 94 per cent of the total government spending. Those are the ones we are focussing on. The smaller departments and agencies will be handled in a more centralized way. In the big ones, you have 30,000 employees, or more, in the organization there are levels of financial management that go right down into the operational levels of the department.
Much of the work done on this comptrollership and financial officer model was informed by the examination we did first on the Crown corporations. We looked at the modernization of accounting and control in large publicly traded companies. Part of this is done to attest to share value. It comes out of the Enron example, and there are levels of attestation and oversight that we felt were too detailed and unnecessary for what we do. However, there is a principle of taking the attestation down to a lower level in the organization so that the person who generates the number is personally accountable for it, and that accountability remains up the line. That is in active discussion right now with the deputies and the Comptroller General.
The Chairman: Are they personally accountable?
Mr. Alcock: They are identified and personally accountable for their work.
Senator Segal: A point of clarification: there is no attestation to share value. There is attestation from all of the officials from middle management up as to the basis upon which their accounts were achieved, and they certify that the information they are passing on is, to the very best of their knowledge, precise.
Mr. Alcock: That is correct.
Senator Segal: Others make value judgments about share value once they see the numbers in the public marketplace.
Mr. Alcock: There is a cascading form of certification. It is very robust. We are looking at that, but I have to say that the decision is not final. I have asked them to walk through that with the deputies as to how that would work functionally and operationally. There is some resistance. The challenge I always have is to try to determine how much of the resistance is the resistance of large organizations to new methods, and how much of it is substantive because it will create operational problems within the organization. That is a judgment call. That sense of taking attestation lower down in the organization is a powerful tool.
Senator Mitchell: In the supplementary estimates, $119.5 million is allocated to promote peace and stability in failed and fragile states such as Afghanistan, Haiti and Sudan. There is the concern that if there is a premature election much of this will fall off the table. If that $119 million is not allocated to the Armed Forces, will it raise questions of safety for our troops in Afghanistan, for example? Will they not get the equipment that they need?
Mr. Alcock: I believe that some of this debate took place on a different set of issues with officials yesterday and certainly has been part of the active political debate. Technically, all of the spending that has been contained in the supplementary estimates that is not statutory spending, if the House does not approve it, then we have no authority to spend it, right?
Senator Mitchell: Yes.
Mr. Alcock: We would have to come back later or the subsequent government would have to come back later and make a decision about whether to restore that estimate.
With the TB Vote 5 and the warrant system, once the House prorogues, I have an ability to address a situation. We would never leave people at risk. One wants to say that that would be very clear in terms of our both authority and our ability to exhaust TB Vote 5. You would have to make that call about urgent public need or the urgency of the need. With a number of issues, they would simply fail and wait until a subsequent government came back.
There is an issue about the department's cash management decisions. That is a worthy issue, frankly. I have clamped down on it in some of the departments. It used to be that if the department got the authority to put an item into supplementary estimates, once Treasury Board gave it the authority to include the estimate in the sups, they started spending it. They cash managed it because they just believed it would pass. Perhaps in the days of a majority government that was a safe bet. It is less of a safe bet now, and, frankly, it is bad practice. I was a little surprised to hear that was being done with the pay raises in the military. I could understand it given the low level of pay, particularly for entry-level military personnel and the difficult task they perform. Nonetheless, there is an issue there that is worthy of examination. You might want to find a different way.
Part of the issue is that we only address the salaries of the military on an annual basis. We do not have multi-year contracts that get moved with everybody else. I just have, for the first time, negotiated a multi-year contract with the RCMP that I am very proud of and will be announced shortly, and you can all dance and celebrate.
Senator Ringuette: Is that included in the $60 million?
Mr. Alcock: It is within the budget. It is long overdue. We have many people who work for us in tough conditions and they deserve some consideration, particularly on issues like that. We should not mess around with people's pay. Leaving aside the political niceties of what is happening — and I am not making that political statement — we should figure out a way to hold this separate. We should not put people's paycheques at risk just because we cannot make a decision.
Senator Murray: I hate to do this to you.
Mr. Alcock: You are going to congratulate me again?
Senator Murray: No, I would be quite happy to do that, but this is the last chance we may have for awhile to talk to a minister from one of the financial portfolios, and I do have a couple of general questions about the economic update of your colleague, the minister of finance.
I believe that your fiscal policy is running counter to the policy of the Bank of Canada. There is the governor of the Bank of Canada expressing concern about inflation. He has raised interest rates. He has signalled that he is going to raise them perhaps a couple of times in the next couple of months, which, of course, will increase the cost of doing business, including the cost of doing business for the government. It is interest on the debt; meanwhile the government is following a fiscal policy that is two-thirds stimulus. I wonder how you can explain or defend that policy.
My second point is that I am quite incredulous at this growing practice of the minister of finance telling us about the tax reductions he will bring in six years from now. Quite apart from the obvious political point that he may not be minister of finance and perhaps not even his party will be in office five or six years from now I do not know — nobody knows what the circumstances will be five or six years. Irrespective of what he may promise us in five or six years, a responsible minister of finance will do what a responsible minister of finance has to do. It is all smoke and mirrors in all this talk about tax reductions five and six years from now.
Those are the two things I wanted to get off my chest. If you can reassure us and the Canadian people on those points, I would be very happy.
Mr. Alcock: Let me first qualify my reassurance in this way. I am not the minister of finance and I do not want to opine too strongly on such an august body that obviously deals in a world that requires greater skills and capacity than I have.
It is quite astounding that the Department of Finance Canada, under the leadership of the last number of finance ministers, has been able to get the finances under control, keep them there, and manage a growth curve. It is not just the finance department that is responsible for the robust, healthy economy, but also the Bank of Canada and all of the various actors in the Canadian economy. All of those players maintained a growth curve that has been strong for a very long time. When was the last time we had a continuous cycle of growth like the one we have right now? If not privately, we can all say that this has to come down at some point. We saw a bit of a dipping in the surplus levels and we thought we were beginning to see some of that contraction. I think you, others, and I have worried sometimes aloud about the continued capacity of the U.S. to run these large operating deficits as well as their trade deficits and what the impact will be on Canada as they begin to contract that capacity.
Senator Murray: That is what the governor of the bank is worrying about, too.
Mr. Alcock: This is not a new conversation. Yet, each year we set our targets and each year, we exceed our targets. In a time of tightening, you talk about stimulus but tax cuts are not an unimportant part of stimulus.
Senator Murray: At $5.3 billion this year plus spending, that is stimulus by any measurement.
Mr. Alcock: Absolutely, but it also constrains the growth pattern of the government. It does count on both sides.
Senator Segal: Government is spending at three times the rate of inflation. How is that constructive?
Mr. Alcock: That deals with another reality and that is not one that we have had to face for some time in Canada. We must go back a long way to see a comparable period of spending. We have to go back to the 1960s to see a continuously comparable period. We do have a minority government; that is the reality. Some of the comfort we have had going back to 1980 is gone. The reality is that, like it or not, the decision-making must be consensual in some form. Like it or not, that is what tends to happen in minority governments. The only minority government that did not survive was the one that decided — and I think the quote was — ``We are going to govern like we are a majority.''
Senator Segal: That is before my time at the Senate.
Senator Murray: Yes, and bring in a responsible budget.
Mr. Alcock: Strangely enough, it did not last past Christmas.
I do not mean to be flippant about that, either. However, it is a reality of the fiscal management right now. This finance minister is very diligent and concerned about this matter. If you look within the numbers, you will see the prudence factors have gone up inside the spending. He is providing himself with a cushion because we keep worrying about the volatility although we are the only country in the G8 that does not have a deficit. Our debt-to-GDP ratio continues to drop steadily.
There is a concern about whether we are getting too tight now and whether the cycle will run into problems. I think he is well aware of that. I think he believes that these tax cuts are a necessary factor in making sure this curve does not stop a year, two or three out. That would be my sense of what he is attempting to do here. If you wanted to get into more detail than that, you might want to ask him.
The Chairman: Senator Murray, did you have a second question?
Senator Murray: No, that will do. I asked for it.
The Chairman: In your opening remarks, you talked about the report you tabled on October 25, Management of the Government of Canada: A Commitment to Continuous Improvement. You also mentioned audit committees and boards, and so on. In your papers, you talk about looking at a model from the U.K. where they have people from senior business executives serving on some of these boards.
One of the things that this committee has frequently asked about is the whole concept of parliamentary accountability and accountability to a parliamentary committee such as this one. I found that subject lacking in your discussion paper.
A number of professors who appeared before this committee in the last few months have said one of the best ways to bolster parliamentary accountability is to strengthen the role of committees. You did not make that recommendation in your paper.
Could you comment on what steps and what types of things could be done to strengthen the committees that look at the public accounts of the Government of Canada?
Mr. Alcock: On the issue of strengthening committees and the capacity of committees to provide oversight and hold government to account, you would have no disagreement with me. I have said that in the other committees in the other House. There is a bit of a boundary issue here. It is not for the executive to instruct committees or the House or the Senate how to do their work. However, it is pointed out to me by Bob Marleau, and others, that unless the government is to be active on that these changes tend not to occur. I have served notice on the other committee that I am more than willing to entertain a discussion with a committee like this around additional resources in the research bureaus for the research capacity to allow people to get into the estimates, and all that.
I do not believe this committee has produced a paper on the accounting officer, but you explored that concept. I know you went to England looking at that. An element of that has deputy ministers accountable to House or Senate committees. I rejected that. That is a clear disagreement.
Regarding the concept of strengthening the committees, building a more direct accountability relationship with the minister, giving you independent resources and authority, I will work with you on strengthening that.
I would be delighted if a committee would engage with me. It is the same for the reporting to Parliament. I literally sat there in front of the government office committee saying, ``I have money. I am prepared to invest in your research capacity because it will make government better the more rigorous you are in your oversight capacity.''
Mr. Marleau makes the point that 50 per cent of the constitutional responsibility of the House of Commons is oversight of spending. It is shameful. In fairness, they do not have the resources to do it. However, they are not even asking for it. I appreciate the fact that you are asking.
The Chairman: A number of professors have told us that we should ask and that the committee should be strengthened so that the role that parliamentary committees can play in accountability could be strengthened.
Mr. Alcock: Absolutely.
The Chairman: I am very happy to hear you say that.
Senator Segal: I want to be clear that I understand the minister. What you are saying is that if a request went for a parliamentary budget office to support both a Senate committee and the House of Commons committee, the government members on the boards of internal economy in both places, if they sought your advice, would be encouraged to support that proposition.
Mr. Alcock: Absolutely. If we were to engage in that conversation, I would like to make it a formal conversation. I would like to bring official in and I would like to be involved in it.
This is not a new conversation for me. I made this when I was chairing the other committee. I believe government suffers because of the poor quality of oversight provided by the House of Commons. That is why when I come here, I do talk about the value of coming to this committee. I have told you that each time I have come here. What I get out of this committee, and what the officials get out of this committee, is far more valuable than what we get from any other committee because you take the time to challenge us on these things. I do not mind the challenge. What I dislike is this dropping into trivia. This is important stuff. These issues on HR are critically important. You can play a huge role in improving the HR management of the government for people to become engaged.
The problem, Senator Segal, is that you need not only enhanced research capacity but also some capacity for the research bureau to cycle in public servants at a time. Do we have some fresh capacity to bring people in from outside government to make it a more dynamic process? I think there are lots of models we could look at. To the extent to which you are prepared to generate budget requests, I am prepared to respond to them.
I intend to be the longest serving President of the Treasury Board in the history of government, you know.
Senator Downe: Which is how long?
Mr. Alcock: It was 15 years three and a half months, under Prime Minister Laurier.
The Chairman: Minister, when we were away — and you referred to part of the committee being away recently — one of the committees that we looked at and met with was the Public Accounts Committee of the House of Commons in England. There they are very much an arm of what we would call in Canada the Auditor General's office.
Mr. Alcock: Exactly.
The Chairman: Their discussions indicated that they felt that they did not have much independence at all, given that very strong relationship.
Senator Day: That might have been our observation.
Mr. Alcock: This is where I had a disagreement on this concept of the accounting officer. We have attempted to build the principles of accountability contained with the accounting officer and the British model into our model. We just constitute it differently. I disagree with Professor Franks on the idea of the deputies being directly accountable to committees.
I know that not everyone agrees with me; there is a fair debate on that. I think you need to keep my feet to the fire. As soon as you take my deputy separately from me, you create a set of destructive dynamics to the overall system of accountability.
Senator Murray: I think Professor Franks goes too far when he suggests that committees ought not or may not question ministers about matters under the direct purview of the deputy minister. I would not agree with that at all.
Mr. Alcock: Senator Murray, if you and I got together we could rewrite some legislation around here that would clean up all of that. Part of the problem is our distaste about — let us be clear — some of the less than honourable activities of certain political actors over time. Our way to solve that has been to push them further and further away from public decisions. All we have done is transfer the responsibility for decisions to people who are unaccountable. We have reduced accountability rather than strengthened it, instead of forcing the political actors to take account. That is what we are trying to do in this model. Those independent audit committees are about putting ministers in a position where they can never again say, ``I did not know.''
The Chairman: In fairness to Professor Franks, what I heard him say was that there are certain statutes that have clauses that say that the sole and exclusive responsibility for this particular item in this statute shall not rest with the minister but with the deputy minister.
Mr. Alcock: He is absolutely right.
The Chairman: In that case, he felt that the deputy minister should account, because he or she had a statutory obligation to account.
Mr. Alcock: I believe we should rewrite those statutes.
Senator Murray: I do not know whether we had the discussion at this table or another, but quite recently, we were on this subject. I may have mentioned the case of the Official Languages Act. I know a little about that because 25 years ago Senator Corbin and I were the co-chairs of that joint committee. We paraded deputy ministers before us to answer how they were implementing the act.
I would not want to be precluded from having their ministers in to discuss the political and policy climate in which those deputy ministers were working. I think that is very important. I do not mind the accounting officer principle up to a point, but I do not want to lose the ability to have the minister in.
Mr. Alcock: Could I push that a little further, Senator Murray? One of the things that I have no accountability for and the deputy is accountable for is the relationship with the Public Service Commission. Hiring authority is delegated to the deputy, not the minister. I do not disagree with that. We want to maintain a professional, non-partisan public service. I absolutely agree with that boundary; however, I should be as accountable for maintaining that boundary as the deputy. I am removed from it and I do not have the responsibility to maintain it. We have created a free actor, instead of saying that it is as much a part of my accountability that I respect that boundary as it is on the other side.
We need to reframe our thinking around that.
Senator Murray: I was trying to incite Senator Ringuette to make her standard speech about bureaucratic patronage, but I implored her then not to do it because it is too late.
Senator Ringuette: I am saving it for the next time you are here.
Senator Day: I would like to comment on two or three points and then go to the main reason that we are here this evening, and that is with respect to the supplementary estimates, because we would like to be ready when they arrive from the House of Commons to handle them expeditiously in the Senate.
First, I would like to comment on the introductory words in your speaking notes where you refer to accountability of ministers. Your statement is:
To give greater effect to their accountability to Parliament, ministers will attend more parliamentary committee meetings to explain and account for management performance.
We find it difficult to get ministers to come before us now; they are so busy. I agree with you that it is important that this happen, but we will have to find some way to clone these ministers or have them work 24 hour as day, which they are almost doing now. I think ministers are overworked at the present time. Although this sounds like a good idea, I am not certain that it will work.
Mr. Alcock: That is an important observation, Senator Day. If I have my wish and this committee and committees of the House take on greater responsibilities for oversight of the estimates, members will not have the time. We will have to think through how we resource and support everyone in that capacity.
Having said that, if I were a minister in the provincial government, I could sit days before a committee to defend my estimates. I would not be allowed to leave. The thought that someone else would defend my estimates is just outrageous. In part, that is a prioritization of the time of the minister. It is even more important than that. If Parliament is important, then you spend the time there. If it is not important, then what? I would argue that if Parliament is not important, we all have a problem.
There are two parts to that statement. If you keep reading, you will see the word ``management'' throughout. Ministers are never called on their management responsibilities. They are absolved of the responsibility on spending because we do not bother to call. I was appalled when I came here in 1994. I used to do estimates in the provincial house. I would have the poor fellow in front of me for weeks and go through every line. The minister came in, made an opening statement and left in an hour. That was it. That was the estimates review. I could not believe it.
You do not want to make it foolish, but if that is the important relationship, that is the relationship on which they must spend time. Right now ministers do not spend time on the management of anything. If you wonder why we do not make the investments in management systems or we do not make the investment in solving management problems internally, it is because the people who make decisions about investments offload it to the deputies and everyone else. There is a reframing here that is incredibly important.
Senator Day: That would be a good subject for another day. The committees' resources are a very important part of that. We must also thing about the source of that funding.
Mr. Alcock: It is three times the rate of inflation spending.
Senator Day: You have already talked about the Government On-Line initiative when our chairman was asking you about the sunset provision. I would like to talk to you a little bit about your explanation. The explanation in the supplementary estimates is very good; it is much better than five or six years ago. We used to have your officials come in and they would have a book like this and they would read these to us. We are asking for more and more of that, and we appreciate having it.
In your explanation, you make the point that over the last several years Government On-Line spending has been financed in large part through sups. We have seen other programs financed largely through supplementary estimates as opposed to being part of the main budget, and it is a matter of great concern to us.
You did comment that you were asking departments to provide an upfront business plan for this and that kind of check. You must have something in the system that triggers this kind of repetitive funding that is coming through supplementary estimates as opposed to the main budget planning.
Mr. Alcock: No. I will offer several comments on that matter. If Ms. Danagher grimaces too much, you will know she will want to make a correction. There are two things: The sun never sets on the British Empire or on federal government programs. The sun just does not set. We have sunsetting programs that we bump along; it is incredible. It would be an interesting study at some time to expose more and more of that. I am looking for an instrument to report on that because we have to learn how to shut down things.
Government On-Line is a good example. We provided central funding to develop it, because it was a brand new thing; we knew how to do it. As it gets built out, as it becomes more of a utility and more of a commodity, the department should operate it. They should operate it not because it is something they have been handed but because it is something they see as adding value to the work that they do. It is better placed with them because the owner of the business will care about it more, rather than having it run centrally. Some of this was a vehicle for just moving money out of a central fund to them.
With regard to the issue of funding out of the supplementary estimates, it is not so much funding out of the sups; it is the timing of when money is approved. To move money from one vote to another vote must have the approval of the House. If we have money sitting in a vote that is in a central fund at Treasury Board and I want to move some of that to department ``X'' to support its Government On-line work, I have to come back to the House and ask for authority to move it from vote ``X'' to vote ``Y.''
Senator Day: That is a one-dollar item, is it not?
Mr. Alcock: No, that can be the notional allocation that we have made.
Senator Day: Has it not already been voted? You had money sitting there so it has been already been approved by Parliament.
Mr. Alcock: Yes, but it is in my vote. I cannot move money between votes without approval.
Senator Day: That is right, but that is a one-dollar item because the money has already been approved.
Mr. Alcock: No, the one-dollar item may be the establishment of a new fund; but the transfer of money between votes requires the approval of the House. The House approves it for expenditure within a particular vote. If I want to move it somewhere else, I need the approval of the House.
One of the reasons why so much appears in supplementary estimates is another discussion. If you want to talk about accountability and oversight, we need to work on the cycle.
We are doing a lot of work right now on the reports on plans and priorities. If you want to have some fun, look at the one for Treasury Board because Treasury Board is going to be the model.
The report on plans and priorities is supposed to be the departments' strategic plan. It says, this is what the department is going to achieve; some of it is short term in that we are going to achieve it this year and some of it may take three or four years. It will be with enough detail that you can understand and measure the output.
The departmental performance report is supposed to be the report card on whether we made it or not. A written crosswalk says this is the outcome on the input. That responsibility is tied into the performance pay of the person who has responsibility for delivering on that. That is the third piece that is happening now at Treasury Board.
The problem is that with the way the estimate cycle works, Main Estimates come out so close to the budget that many of the new spending initiatives never make it into the Main Estimates. Therefore, what you always see is an under-representation of actual spending. You have to go through a Supplementary Estimates process to put into pay decisions that were made back in the budget.
If we can shift the timing, we think we can put the Main Estimates out to reflect more of the actual spending program and then your supplementary estimates will decrease. We are in active discussions on that right now.
I would love the ability to move money between votes without coming back to the House. If you were prepared to offer me that, I would take you up on that in a heartbeat. We may want to think through some vehicles for some of this. It would be an interesting discussion with a House committee.
Some of it on the developmental side is simply moving money. For example, it has already been decided that Treasury Board is going to hold a fund for so much; and it is specifically targeted to support the development of services in all these departments. We might want to do that in a way so that we notionally allocate that at the time of the first vote and not have to come back for a second vote. There are some solutions that would make the management of it a bit easier. We would still report on the transparency.
The Chairman: It might make the management easier but not the accountability.
Mr. Alcock: I am sure we would never want to reduce the accountability. We would report to you vigorously on what we did.
Senator Day: In reference to page 267, can you give me a little bit of a flavour for what is happening in these Supplementary Estimates? There is an item under the Ministry of Transport concerning payments to Marine Atlantic Inc. The previous estimate, which we already voted on, was $24 million and then the supplementary estimates are at $45.7 million. That is almost double. Could you give us an explanation as to why the supplementary estimates would be double the main budget?
Mr. Alcock: Without knowing the details— and I can get officials to supply a detailed answer to you through the chair — I believe there were some ongoing deficits. It states:
Additional funding of $45.7 million was approved for Marine Atlantic as a temporary measure to offset their projected operating deficit.
I believe they wanted to increase their fees in order to eliminate the deficit and the government did not allow them to do that, so they began to run the deficit. It is the principle that Senator Murray was talking about; if you are going to instruct a Crown corporation to do something that causes it to incur a liability, you are responsible for picking it up.
Senator Day: My recollection is that this same line item was questioned last year; and we had the same situation — that Marine Atlantic in the Supplementary Estimates (A) was greater than the budgeted expenditure that was voted on. If this is recurring on a regular basis, is there not some red flag? That is the kind of thing we are looking for, and our colleagues are looking for. When they start to see that the supplementary estimates are a disproportionate amount of the funding for that line item, then there is something wrong. It can happen once, we understand that; maybe it can happen twice, but as a constant recurrence, something is wrong.
Senator Murray: The minister is suggesting that the management of Marine Atlantic thought that they could cover their projected deficit by increasing their fares, and the government told them not to do that, so Ottawa had to pony up the money.
Senator Day: I was trying to make a general comment by using this as an example.
Mr. Alcock: You are right, and you actually highlight a different point. Senator Murray is right in terms of what explains it once. Multiple times highlights a different problem, which is a management problem that I have been discussing with Transport Canada.
Transport Canada is a good example because it has many little organizations. For example, it has a corporation that owns just one bridge. In the overall scheme of things, to address this, there is an argument that Marine Atlantic has to do a formal review of its operations and go back to cabinet for either new authority or an adjustment to its operating framework. However, cabinet is also very busy, so small organizations tend to get bumped. We have a number of these in Transport Canada that have been bumped for several years.
Senator Murray: Can you chalk that up to minority government, too?
Mr. Alcock: No. Just hang on there. Here is the problem with the measure of transparency argument. If I am going to talk about real problems of government, then we have to talk about real problems and not dissolve into taking advantage of my unusual transparency.
This is a real problem. The problem is simply one of many small organizations who need time and attention and who are bumped aside because government has is too busy. The cabinet agenda is crowded, so they do not get the attention they need.
Senator Segal: Does that not raise with you the general question as to whether government is in too many activities? If the bureaucratic and political structure of the government of the day has insufficient time to manage pieces of its own operation, does not that suggest that the operation is too large?
Mr. Alcock: It may suggest that the management structure is out of date. It may be one of many things.
To go to your point, take my sunsetting example. We have all sorts of instruments and organizations and quasi- judicial things embedded within departments that may have served a purpose once but do not today, yet they still exist.
The list of reports produced by the Government of Canada for Parliament runs to 100 pages — just the list of reports. I will guarantee you that on those 100 pages, there are a few reports produced some time ago that probably do not serve an active purpose today. Parliament has never said to stop producing them, so public servants diligently — because they have a legislative mandate and are required to do so — go ahead and put time and energy into producing reports that nobody reads. We need a parliamentary committee to undertake to sit down and go through this and help us make some decisions about which ones we are going to kill.
I would argue, on sunsetting programs, a diligent parliamentary committee could really help us kill some of those programs. There are some tough political decisions, such as the one on Marine Atlantic. We can say it is a political decision, but it is a real one. Raising the fees of Marine Atlantic has a detrimental effect on the economy of Newfoundland, it is argued, so we should examine that. The problem is that we do not make the decision because it is easier to bump it along.
Senator Murray: That ferry service is part of the terms of Union of 1949 and I am not sure you should be charging fares at all. The Trans-Canada Highway is toll-free.
Mr. Alcock: Spoken like a true Atlantic Canadian.
Senator Day, was there a Senate here talking about spending at three times the rate of inflation?
Senator Day: How quickly they forget. I am at page 127 in the Supplementary Estimates; it is a summary of one- dollar items. Under National Defence, I am prompted to ask why we are forgiving $15 million owed Parc Downsview Park in Toronto to the government. Is there a story behind that?
Two items down under Office of Infrastructure, you will see we are establishing borrowing authority of $100 million for the same park. What is happening there?
Mr. Alcock: There are a lot of stories around this that I think are useful. The Auditor General has a report coming next Tuesday in which she will be commenting on Parc Downsview Park for the second time. I can tell you, thanks to diligent efforts by staff at the Treasury Board and the board itself, this issue has been resolved.
There was a decision made at the time. I do not know if it was driven by a program review decision or by a notice that there was surplus military land in Toronto that could be made into a park. There government made a decision to divest itself of Downsview military base for purposes of creating an urban park in Toronto.
In 1995 that decision was made, the military was not supportive of it and they contested the decision. Ten years later, that decision had not been made. It was incurring debt and the auditor reported that the base was within Canada lands but did not fit. It was an ugly situation. I will come back to that story.
In 1997, the military came forward and said we want to divest ourselves of Kapyong Barracks in Winnipeg. It was felt that this was probably a good thing for Winnipeg as well as the military. You had the military that wanted to divest itself of it and a community that was willing to support that. By 2005 it still has not happened. Why is the other scenario not happening? They both happened because I got involved and I went to the minister of defence and we got it transferred.
I went to the Public Service Commission and asked why it happened and they said it was because I was involved. If it takes political leadership or pressure to make things happen, why do we want to build a system that takes political leadership out of the system?
In fairness to the public servants doing the management, they need someone to drive these decisions. Leadership is important in these organizations, and we have restructured the organizations to make that leadership more difficult.
Senator Downe: I asked this question on Tuesday when the fishes were here and could not get answers. I am interested in this. I do not know the file, but the policy of the Government of Canada has been that surplus lands are turned over to Canada lands where they get maximum value for taxpayers.
Did we get maximum value for taxpayers, in this case, or was it turned over to the municipalities or the province?
Mr. Alcock: You are right. This one was different in one regard. The military did not declare the land surplus. It was declared as such by the government who wished to have it created as a park. I was not privy to the discussions that took place in 1995. The government was not supportive of the divestiture of the whole park. There was resistance from the beginning. The decision was not made to transfer to Canada Lands Company specifically. They created an entity that was associated with Canada Lands to be the operator. They transferred the land not at a commercial value but at a vastly reduced value so the Parc Downsview Park Corporation could develop or sell some of the land to pay for the ongoing operation of the park.
Senator Downe: My understanding is when the Government of Canada has surplus land, it is turned over to Canada Lands and then they have a number of steps they offer. The process is that they offer the land to the province and the municipalities to see if there is any interest. They try to work out a combination of commercial value and lands set aside for green space and development. The community benefits and so do Canadian taxpayers.
I am intrigued as to why DND did not want the land declared surplus. What you say is the Government of Canada took it from them and instead of Canada Lands getting the land, created an ad hoc sub-committee to skirt the intent of Canada Lands so the land could go at no cost to whom, the municipalities?
Mr. Alcock: No, it would go to Parc Downsview Parks Corporation.
Senator Downe: Is that a sub-committee of Canada Lands or a Crown corporation?
Mr. Alcock: It is a wholly owned subsidiary Crown corporation owned by Canada Lands Corporation.
Senator Downe: The taxpayers of Canada did not receive fair value for this land.
Mr. Alcock: That is correct.
Senator Downe: It was given, in effect.
Mr. Alcock: The Auditor General reported on this and was critical about the way it was set up. The divestiture in Winnipeg is following exactly the same system. The land, first being declared as surplus, is checked for contamination and then it is formally transferred from the department to Canada Lands that sets in place a process to develop the land. What they do is they pay a price for it.
In this particular case, the goal was to transfer the land at a nominal value in order to leave the large value. I do not know if that is the $100 million, but there was considerable value. It is a not-for-profit park corporation. It allows them to manage the assets, sell portions of it, develop portions and capture that income in order to create an endowment to run the park in perpetuity.
Senator Downe: I think it is a wonderful program, but I am struck by the inconsistency across the country. Either Canada land is maximizing it for taxpayers or it is turning it over to communities. I know in Charlottetown there is an experimental farm in the downtown that the community would like to turn into a park. They do not seem to have the same deal. I will pursue it with other people.
Mr. Alcock: This was a decision that began in 1995 and one of the reasons it would not go ahead is because the Treasury Board would not support it because it did not follow the policy.
We worked it through and there have been negotiations with DND on portions of the land and allowed them to work it through. That is why there was a payment to them; it is to clear the accrued debt.
Senator Downe: That is very good news, and I look forward to following up on it.
Senator Day: Mr. Chairman, I did not realize my colleague Senator Downe had questioned on that yesterday. I am glad he followed up. We are going to get more information from the staff, I believe, on this issue. I wonder if you could follow up on the second part of my question. We are forgiving $15 million but authorizing $100 million borrowing authority. I would be interested in putting that package together.
My final question deals with an item on page 221, under the National Research Council of Canada. I am sure you can help me with this but I will give you the background. Under voted appropriations, in paragraph two, it concerns funding to strengthen Atlantic Canada's capacity to innovate and compete in the knowledge-based economy (Atlantic Canada Technology Cluster Initiatives). In New Brunswick, there were three clusters, one in Fredericton, one in Moncton and one in St. John. Recently, departmental officials announced that the cluster in St. John, which was forming the catalyst for e-health and the plan for a new medical school for New Brunswick in St. John, was part of this package. The National Research Council has announced that it is moving out of St. John because of insufficient funding.
Does this supplementary estimate include the money that the NRC requires to stay in St. John?
Mr. Alcock: Senator Day, I do not have the answer on the unit in St. John. The funding is for the NRC cluster strategy. I would assume that this money is for that but, in fairness, it does not specify.
Senator Day: The minister has not announced the closing but departmental officials have made that announcement. If we are going for supplementary estimates for $20 million and they need an extra $500,000 to keep things going in St. John, is that included? If it is not included, why is it not included?
Mr. Alcock: In the note I have on this particular question, funding is planned for NRC's future years' reference levels. This funding is being put into the development of the Atlantic Canada clusters. However, it also says:
The NRC is moving forward on the basis of February 2005's federal budget announcement to build on the assessments of its cluster programs in Atlantic Canada and to develop plans within the prescribed funding and the government's stated imperative. Consequently, implementation plans include restructuring and redirection of related laboratory operation and research program.
While this is encouraging in that additional money is being put into the research clusters program, it indicates there might be restructuring and redirection. How that affects St. John is not indicated in this note, but we will obtain that information for you, senator.
Senator Day: You might come back and tell me that it was not an issue of funding but rather one of wanting to move for restructuring purposes.
Mr. Alcock: I think that is clear because a sizable amount of money is being put into this for those clusters.
Senator Day: I understand that it was the only e-health cluster. There was e-learning in Fredericton and e-health in St. John. The NRC has been able to achieve a number of other features with these clusters in the last five years. It pleased me to hear about five more years of funding for this Atlantic Canada initiative, but I was not so pleased to hear that St. John was to be closed.
Mr. Alcock: I would suggest you speak to them and we can obtain the background information to facilitate that meeting.
Senator Day: It may well be that the money is there, and then I would be pleased to urge my colleagues to vote on this.
Mr. Alcock: It could be that the decision to relocate was the right decision.
Senator Day: There has been no public statement as to a management issue. The public statement has spoken to funding.
Mr. Alcock: I do not want to pick at this because I do not know the details. Funding solves many problems that it probably should not solve. If there is an objective reason to restructure, we should be open to listening to the reason. You should have access to that information and that conversation.
Senator Segal: My question relates not to the quantum of the supplementary estimate for the Canada School of the Public Service but rather to its curriculum.
To become an executive officer on one of Her Majesty's Canadian ships you not only must have various levels of certification but you also will have cycled through a series of other activities to make you completely au courant with every aspect of that ship's operation so you can perform the job properly. The position of executive officer is akin to being an assistant deputy minister.
In many parts of our public service, the only required certification for programs relates to language ability, which is important. The notion that there would be no other certification required as our public servants move through the ranks should be addressed. For example, it is well and good to bring in 300 auditors and more financial staff but on the issue of who is in charge or in control, how do you stop things from getting out of hand? That troubles taxpayers, generically, without regard to politics. The critical question lies in this core issue of certification as our public servants achieve higher levels of authority.
It is not my sense that CCMD in its old configuration and the new school have addressed any kind of requisite certification process. It has not been requirements for someone to move from branch manager to regional director and on up through the ranks.
Do you see any hope of making changes in a way that would assure the taxpayer that we want someone in control and we want that capacity to be real?
Mr. Alcock: Senator Segal, I have always seen you as an intelligent and caring person. I cannot tell you how delighted I am to answer that question. Training, education and support for the employees of any organization are important.
We have done poorly by under-investing in those areas. CCMD was established as the management development school and was given a funding model that made it difficult to meet its core mission.
We have put together three organizations: the learning network, the original CCMD and the language-training program. In fairness, I take responsibility for the school languishing for one year because I was busy with other issues, which had to do some internal reorganization to put together the three administrations. They were left orphaned for a time.
As we put the management and operational models in place, we put money into the school to begin exactly what you are talking about, senator. I encourage the committee to invite the new principal of the school, Ms. Ruth Dantzer, to appear before the committee and walk you through the model.
I am struggling with how to structure the school so that it will be more and more difficult for us to cut the funding each time there is an economic downturn. The first time we have a slow-down in our expenditure, the first place we make cuts is in the areas that support the training of staff. That can be a huge problem because you might want to build an ethical organization. We travelled and talked to some of the best in the world. General Electric is considered to be one of the high watermarks in this area. Every new employee at GE enters an organization-wide orientation program within the first month of employment.
In that way they are introduced to the organization, the culture, they are given a lot of orientation on the history of the organization and all so on. They are brought into the family. Then throughout the organization, at virtually all levels, this rhetoric, this mantra of ethical behaviour and activity is built in. It is the old language of the public service in terms of service. It is no different, it is the same thing, but it is built into the culture of the organization.
One of the things that we are doing is bringing each new public servant to Ottawa for an orientation to feel part of the larger organization. The orientation teaches the new member what it means to be a member of the Canadian public service.
In the areas of specialty, you will have to receive certification, whether it is HR, procurement or audit. Where there are professional certifications outside of the public service, we will not create any level of certification or training that exists elsewhere. The school will act as the certifier, organizer, curriculum manager, but the teaching will be taught right across the country by the appropriate instructor.
When you move into management, if are you a manager of a larger unit you do not have to have the expertise in HR, but you have to know enough about HR policy in order to be a manager. Before becoming a manager, an employee must reach a certain level of knowledge acquisition.
The other thing we have done is we have never made it a hard requirement for certain kinds of promotion. That is all inside the policy now.
There are three distinct levels. There is the orientation and then there are the basics of the individual skill building for preparation for specialty provisions. There is management skill building. Then there is a piece that is reminiscent of the old CCMD, which is really that high end kind of strategic management, organizational, cultural kinds of development, which is where that place started off, but what it did not have was the fundamentals.
I believe they have done a stellar piece of work. It is actually quite exciting when you look at where they are going. However, they will need our constant support and involvement so that the next time the government gets a little worried about its expenditure it does not go take all of the money away, which is what we have done historically.
Senator Segal: In a way, this sort of thing goes on in large corporate training organizations outside government. The way you avoid that funding dip is by making training in career professional development and certification mandatory.
Mr. Alcock: That is correct.
Senator Segal: Therefore, no HR, no branch manager can have a budget for the operation of his or her area that does not have a fixed amount associated with that training. That is how you cycle through the funds so that the education establishment in the context gets the job done. Otherwise, the risk that you laid out a moment ago is precisely the one that will imperil progress at usually the worst of all times. When times get tough and people have to have those skills and actually need the support is precisely when the system tends to cut it.
Mr. Alcock: That is an interesting comment because we are looking right now at the funding model. A portion of it is funded on a cost-recovery basis in the way you describe, but the policy structure for it is not as clearly defined as you have defined it. That is an interesting consideration for us.
The school, interestingly enough, has always had a board, but the board was allowed to kind of languish. I have just put forward a bunch of names for the board that I have had drawn by a panel of experts. I have not made the selections; I have just approved the names going forward to put on the board. There is a combination of senior deputies from inside the federal government, experts in HR, finance, and others from right across the country, and experts in HR and education from right across the country.
We have signed an agreement with P.E.I. were there will be joint training. The Canada school will train public servants in P.E.I. They are negotiating agreements like that in two other provinces. There is a huge networking and capacity building here.
One of my arguments about having the board is it also gives the school an independent voice. I cannot say this publicly, but we are putting one of the labour heads on the board because it is time that we got our labour leaders more collaboratively involved with the organizations.
Senator Segal: Are you building a civil service staff college?
Mr. Alcock: I am building a civil service staff college, and I am very proud of it and I believe you would be well served by bringing Ruth Dantzer and the senior executives here and having them walk through their plan. I am sure you would find it interesting.
There is attractiveness to the idea of building the funding into managers' budgets. We do that right now in a sense through the cost recovery model, but I do not think our cost recovery model is rigorous enough. I do not think our requirement for certification is strong enough. It would be an interesting challenge to offer.
Senator Segal: There was a college called National Defence College, which was closed in 1994.
Mr. Alcock: There is lots of training that goes on outside the school. The current Canada school only deals with a small portion. We have a problem just mapping what we do. You have heard me tell my story about the Aboriginal stuff. It takes us so long just to build a map of what we actually manage. It sounds outrageous but it is incredible. I could not even try to answer the question of how many training units we have right now. It would take a bunch of hard-working public servants weeks to do that because we do not have good instruments to bring that all together.
The Chairman: Mr. Minister, once again, your evidence has been interesting and stimulating.
We have reached the conclusion of this meeting. Honourable senators, that concludes all of our meetings on the supplementary estimates. Our research staff will begin drafting a report for our consideration very shortly, and perhaps to be considered at the next meeting of this committee scheduled for next Tuesday, November 22.
Mr. Alcock, you said earlier that you would be prepared to come back and engage us in a discussion on your paper insofar as it relates to parliamentary scrutiny of accounts and the role of parliamentary committees and so on. Our committee would like to hear more on this vitally important subject.
Mr. Alcock: I would like to make one other quick request. This is more in the nature of a plea. We all read the papers and have a sense of the political debate that is going on right now. It is quite likely, given the announcement made today, that the government will cease to have confidence a week Monday. If that happens, Bill C-11 dies. If there were any way that this committee could see its way through to accelerating its work, I would give you 100 per cent of the support of my time and my staff's time to do it. I realize there are other considerations, but I think it would be a tragedy if we lost that bill.
Finally, thank you so much. I love coming here. I really find this debate fascinating and I find it very helpful.
The Chairman: Honourable senators, this meeting is now adjourned.
The committee adjourned.