TABLE OF CONTENTS

INTRODUCTION

HEARINGS ON THE 2009-2010 ESTIMATES. PAGEREF _Toc232331524 \h 1

1. Canadian Food Inspection Agency (CFIA) PAGEREF _Toc232331525 \h 1

2. The Expenditure Restraint Act and Public Service Renewal PAGEREF _Toc232331526 \h 5

3. Canada Mortgage and Housing Corporation. PAGEREF _Toc232331527 \h 6

4. Public Sector Integrity Canada. PAGEREF _Toc232331528 \h 7

5. Atomic Energy of Canada Limited. PAGEREF _Toc232331529 \h 9

6. The Public Service Commission. PAGEREF _Toc232331530 \h 10

CONCLUDING COMMENTS. PAGEREF _Toc232331531 \h 14

 

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SECOND INTERIM REPORT ON THE 2009-2010 ESTIMATES

INTRODUCTION

As is customary with this committee, several meeting dates were set aside for the review of the 2009-2010 Estimates. The initial examination began on March 4, 2009. Appearing from the Treasury Board Secretariat was Mr. Alister Smith, Assistant Secretary, Expenditure Management Sector. He was accompanied by Mr. Gregory Smith, Senior Director, Expenditure Operations and Estimates Division, Expenditure Management Sector. In addition to their presentation, which outlined and explained the main features of the 2009-2010 Estimates, the officials responded to the committee’s initial enquiries about the government’s planned spending for the new fiscal year and also provided written responses at a later date.  The details of the Interim Supply Bill were made available for the committee’s consideration before the end of March 2009 and an interim report (the committee’s fourth) was presented in the Senate in March 2009.  Since that date, the committee has continued its examination of the 2009-2010 Estimates.

The Main Estimates 2009-2010 of $236.1 billion present information on both budgetary and non-budgetary spending authorities. Budgetary expenditures include the cost of servicing the public debt; operating and capital expenditures; transfer payments to other levels of government, organizations or individuals; and payments to Crown corporations. In these Main Estimates budgetary expenditures amount to $235.8 billion. These budgetary expenditures are further divided between Statutory Expenditures of $150.2 billion and Voted Appropriations of $85.6 billion. Non-budgetary expenditures (loans, investments and advances) are transactions that represent changes in the composition of the financial assets of the Government of Canada. In these Main Estimates they total $0.35 billion and are composed of $0.086 billion of voted appropriations and $0.15 billion of statutory expenditures. As in previous years statutory expenditures make up the largest component (63.7%) of planned spending.

HEARINGS ON THE 2009-2010 ESTIMATES

While much of the committee’s time this spring was taken up by the study of two pieces of legislation: Bill C-10, the Budget Implementation Act, 2009, which implemented the economic stimulus measures and other budget matters, and Bill C-18 An Act to amend the Royal Canadian Mounted Police Superannuation Act, senators were still able to examine several aspects of the government’s spending plans. The committee would like to highlight these areas in this report.

1. Canadian Food Inspection Agency (CFIA)

On Tuesday, March, 24, 2009, Mr. Cameron Prince, Vice-President, Operations, Canadian Food Inspection Agency appeared on behalf of the CFIA and explained several aspects of the operations of the agency.  He began by providing a broad background on the agency and its role.

The CFIA is a science-based regulatory agency that is dedicated to safeguarding food, animals and plants, with the aim of enhancing the health and well-being of Canada's people, environment and economy. Its policies and activities originate from 13 acts and associated regulations.  The CFIA is led by a president who reports to the Minister of Agriculture and Agri-Food.  The Agency employees close to 7,000 people in over 600 offices and laboratories across the country.  In terms of resources, the CFIA has an annual budget of $663 million. These funds include a parliamentary-approved budget, supplementary estimates, carry-forward and collective bargaining funds.

Provincial and territorial governments have a shared jurisdiction for many of the areas of CFIA responsibility. In addition, it considers industry and consumers as important partners and stakeholders in all aspects of its work.  Mr. Prince explained that the CFIA's work is conducted within the context of a well-established international policy framework, and features frequent contact with regulators from around the world. He emphasized that in Canada, food safety is an area of shared jurisdiction and responsibility.

Mr. Prince listed food recall as one of the agency’s priority activities.  The CFIA oversees recalls of food when an unsafe product is determined to have left the control of the manufacturer or importer. The agency's activities in this area include food safety investigations, posting recall notices on the internet and on the newswire service, and recall effectiveness checks.  The steps that lead to a food recall vary according to how a particular hazard is first detected. Hazards may be identified through consumer complaints, by industry, by public health officials, by food safety officials in other countries or through CFIA staff during inspections of a manufacturing or processing plant or a shipment of imported food.  If a company is unable or unwilling to recall a hazardous product, the Minister of Agriculture and Agri-Food has the legislative authority to order the recall. However, mandatory recall orders are exceedingly rare, because a company will typically — of its own accord — swiftly recall a potentially hazardous product. CFIA oversees this process.

Mr. Prince emphasized that within the system, “industry is responsible for the safety of their food products.” They do this by identifying and managing key risks and by complying with regulations. The CFIA's role is to verify that industry is complying with government regulations. Government responsibility lies in setting stringent standards for industry to follow. It also includes the management of risks and threats, the inspections and enforcement activities to verify that industry is following these standards.

Some senators mentioned that a report of the Auditor General in the fall of 2008 noted that the plant production programs are not adequately supported with information management technology. While the report acknowledged that the agency agreed with her recommendations, senators wanted to know if something was being done about these recommendations of the Auditor General.

Mr. Paul Mayers, Acting Associate Vice-President, Programs, of the agency explained that the Auditor General's report noted the limitations of the information management system as it related to the tracking of the plant health incidents and that the agency certainly agreed in that regard.  He stated that in the CFIA’s consideration of changes to its operations is a focused improvement on what they call their plant health tracking system.  These changes are intended to improve the agency’s ability to track such incidents. The agency is committed to responding to that recommendation with improvements in the information technology system that supports its investigation of events in the plants that threaten the health of Canadians.  As part of the agency’s drive to improve its ability to deal with health threats, Mr. Prince noted that since 2006, the agency has hired 200 additional inspection personnel. The additional personnel would be located across the country.  He said that:

The focus was to get more on the front line to look at food safety issues, food recalls. They would be in the major cities primarily — Toronto and Vancouver in particular, along with Montreal, and I believe some in Winnipeg — but they have been distributed across the country to the 18 regional offices that we have.

Some senators were interested in the Listeriosis outbreak of 2008.  They had heard that, during those problems, inspectors on the floor had been cut back, and that these inspectors were reduced to simply reviewing paper, reviewing the reports that they received from companies.

Mr. Prince responded that the changes had nothing to do with financial limitations and did not limit the inspectors from going onto the plant floor to verify health concerns. He said:

In fact, the compliance verification system simply provides individual tasks for inspectors. It is a rigorous system in the sense that it lays out very clearly what an inspector must do in the plant.

He went on to explain that part of what an inspector must do is look at the records that the plant keeps — for microbiological testing, sanitation, training of employees, et cetera. He added:

All those aspects are important in getting an overall evaluation of what is happening in the plant or if any food safety hazards or risks exist. The new system does not prevent inspectors from doing their job.

He emphasized that “the new approach encourages inspectors, under some of these tasks, to go and look at specific elements of the food safety regime within the plants.”

Some senators were interested in the changes arising out of the agency’s experience with the Listeriosis outbreak. Mr. Mayers explained that during the recent events the agency availed itself of the opportunity to look at the control requirements in place.  For instance, when investigation pointed to the harbourage of organic material in slicing equipment, it immediately issued a new directive that required the dismantling of additional sanitation equipment in all plants operating under the federal registration. In February 2009, the CFIA announced a new series of directives for the control of Listeriosis, including additional requirements for environmental testing in the plant environment of food contact surface for the presence of the bacteria; additional requirements for end-product testing; and additional requirements for environmental testing undertaken by the Canadian Food Inspection Agency.

Another concern of some senators was that there is a possible duplication of inspection by the federal government and the provincial inspectors.  In addition, there was concern that the federal regulations prohibited provincially inspected food processors from selling their products outside of their provinces.

Mr. Mayers explained that under the federal Meat Inspection Act and its supporting regulations, federal registration is required in order for a plant to be eligible to ship product internationally or interprovincially:

In the context of that federal registration, there are specific requirements. When a facility makes the choice — and it is their choice — to seek federal registration, then they must meet the requirements under the federal system.  Many plants operate their market within one province only and, therefore, do not elect to seek federal registration but operate instead under the respective provincial regulations. Their fundamental basis remains the same — an interest in producing safe product for consumers. However, the system within which they operate and the inspection oversight to which they are subjected is different. Under the federal system, the Canadian Food Inspection Agency provides the inspection oversight, whereas within a province under provincial registration, they would be subject to the oversight of that province only.

He added that while the two levels of government inspectors work closely together, the constraints of the legislation and regulatory system would preclude any plant lacking federal registration from shipping product interprovincially or internationally.  He added that the two levels of government inspectors have had discussions over several years around greater consistency in meat inspection regulation in Canada. He noted that at the most recent meeting of federal, provincial and territorial ministers of agriculture a request was made to officials that a plan be developed for additional work on food safety, including an interest expressed in common work around a single meat hygiene standard. He added that officials are in the process of developing a plan for ministers' consideration that would further the joint efforts of inspectors in that regard.

Some senators were also interested about controlling food sold in Canada. They noted that there is a perception that the Canadian government relies increasingly on the industry to control food safety.  Mr. Prince acknowledged that this perception had arisen over the past year in the media.  He explained that the industry is responsible, first and foremost, for ensuring the food they produce is safe.   As for the CFIA, it approaches its role as regulators and enforcers in this domain by moving to modernize inspection methods to get the most value for the resources that are available.  For instance in meat and fish, and on a voluntary basis in other foods, it has implemented an internationally recognized quality-management system called the Hazard Analysis Critical Control Point system.   This system requires companies to have their own quality system. They have to identify the hazards of their products and take interventions and mitigating measures at critical points in the production of the food.  The role of the CFIA is to verify that the company’s system is working. The agency audits the system, checks it and takes samples to verify that the food is meeting all of those requirements. The CFIA firmly believes that this is a much better approach to food safety regulation.

As is often the case, the CFIA provided a number of written responses to committee questions.  This information includes both data and documents in support of their answers.

2. The Expenditure Restraint Act and Public Service Renewal

During its deliberations on the Expenditure Restraint Act (ERA), on May 6, 2009, the committee heard testimony from Marco Mendicino, acting President of the Association of Justice Counsel, and Nick Devlin, a member of the Association’s board of directors. The Association represents the professional interests of more than 2,500 lawyers employed by the federal government. The Association opposes the ERA because the Act prevents the closing of the gap between salaries paid to lawyers working for the Canadian government, and the salaries of those working for provincial governments or private firms. In particular, Mr. Mendicino indicated that the federal government’s lawyers were paid less than those of six Canadian provinces. As a result, the government has serious difficulty in attracting and retaining the best lawyers available.  Consequently, there is a real danger of a drop in the quality of the work performed, both in litigation and in the design of legislation.

The effect of the gap is revealed in Mr. Mendicino’s own Toronto market where, between the years 2006 and 2007, they have lost more than 15 per cent of their total complement of lawyers. He added that many of those who left were senior lawyers who took with them over 100 years of irreplaceable legal experience. Most of them went across the street to work for the province of Ontario.

Nevertheless, some senators reminded the witness that similar arguments were made in recent years in the provincial workplaces about the then higher federal wages and that wage gaps are not the consequence of the ERA.  While Mr. Mendicino agreed with the senators that the situation was not due to the ERA, the new legislation did have the effect of reducing the speed with which the salary gaps could be closed.

Some senators inquired if the recruitment and retention problems to which Mr. Mendicino alluded were being addressed by the use of contract employees rather than by full-time public servants. In this connection, Mr. Poirier, President of the Canadian Association of Professional Employees, told the committee that for translators, interpreters and terminologists, in some sectors, nearly 70% of the work went to freelancers. For his part, Mr. Mendicino stated that while he had no specific numbers, he had the impression that the amount of work contracted out had increased over the last three years. Some senators expressed concern about the impact of this upward trend in contracting out on the quality of the service the federal government provides to its citizens.

Mr. Mendicino and his organization provided additional information through written responses to questions raised by senators.

3. Canada Mortgage and Housing Corporation

Two key measures in the Extraordinary Financing Framework (EFF) announced in the 2009 budget concern the Canada Mortgage and Housing Corporation (CMHC).  The first is the Insured Mortgage Purchase Program (IMPP), in the amount of $125 billion.  The second is the low-cost loans program for municipalities, in the amount of $2 billion.  These two measures, like all the EFF measures, are intended to facilitate access to capital for Canadian businesses and households, in order to stimulate demand for goods and services produced in Canada.  To discuss these measures, and CMHC generally, the committee heard from its President and CEO, Karen Kinsley, on March 24, 2009.  She was accompanied by Michel Tremblay, its Chief Financial Officer.

Under the Insured Mortgage Purchase Program, CMHC purchases mortgages insured against default that are sold to it by financial institutions.  In return it is hoped that the financial institutions will use the proceeds of the sale to make new mortgage loans to Canadians.  During the discussion, Ms. Kinsley told the committee that the purchased mortgages can be insured against default either by CMHC itself or by one of its two competitors active in this market, Genworth Financial Canada and AIG United Guaranty of Canada.  The mention of AIG surprised some of the senators, given this American company’s precarious financial situation, but Ms. Kinsley explained that AIG’s Canadian subsidiary is strongly capitalized.  In addition, she told the senators that CMHC would not have to cover the losses in the event of a private insurer’s bankruptcy, and that the insurance sold by AIG Canada to mortgage lenders is in any case already guaranteed by the Government of Canada up to 90%.

With respect to the IMPP, Ms. Kinsley told the committee that as of March 24, 2009 CMHC had bought some $53.4 billion worth of insured mortgages.  She noted that while financial institutions had taken full advantage of the program in its early days, they seemed less interested now.  She could therefore not assert in complete confidence that the whole $125 billion allocated to the Program would be spent.  This seemed to indicate, she agreed, that financial institutions are in better shape than was anticipated when the financial crisis erupted in the fourth quarter of 2008.

With respect to the program of low-cost loans for municipalities, the committee wanted to know how it would work:  the eligibility criteria, the types of infrastructure covered, the applicable interest rates and the repayment terms, as well as the program’s start-up date.  At the time Ms. Kinsley testified, the details as to rates and terms had not yet been finalized.  She was however able to state that the program would begin in April 2009 and that the loans would have to be used to build or improve housing-related infrastructures.  Social infrastructures, such as sports complexes, are excluded as projects for which loans will be authorized.  Lastly, with regard to eligibility criteria, Ms. Kinsley said:

We will require a municipality to come forward and indicate that they have all the appropriate approvals needed for whatever project they propose.  This includes [an] environmental assessment, which would be required because we are the lender on this project.  It is incumbent on the municipality to do all the things required to ensure approval, including compliance with the environmental processes.

Two other topics were raised during the committee’s proceedings on CMHC.  First, with respect to the 90% guarantee the federal government makes available to private insurers, the committee wondered about CMHC’s total mortgage exposure and the proportion of mortgages in arrears in Canada.  Ms. Kinsley told the committee that at the end of 2007 the total amount of mortgage insurance backed by CMHC was $334 billion.  With respect to loans in arrears, she said that CMHC tracks the figures published by the Canadian Bankers Association and that these currently indicate a rate of just under one third of 1%.  This rate is lower than that observed in Canada during the recession of 1990-1992, and far below the current 10% rate in the United States.  The committee asked about the role the Minister responsible for CMHC plays in its operations.  Ms. Kinsley replied that operational matters, such as new insurance products or the extension of amortization periods, do not require the Minister’s approval.  In the case of government initiatives put forward with CMHC’s assistance, like the IMPP, ministerial approval and a ministerial announcement are required.

4. Public Sector Integrity Canada

The committee heard evidence from Christiane Ouimet, the Public Sector Integrity Commissioner.  She was accompanied by Deputy Commissioner Henry Molot and General Counsel Joe Friday.  The Office of the Commissioner was created by the Public Servants Disclosure Protection Act, which came into force on April 15, 2007.  Because the Office is a relatively recent creation, the discussions served largely to extend the committee’s knowledge of the Office’s role, achievements and operating methods.

In her overview of the Office of the Public Sector Integrity Commissioner, Ms. Ouimet said that its principal goal is:

[translation] to enhance public confidence in our public institutions and in the integrity of public servants.  In fact, the preamble to our Act expressly recognizes that the federal public administration is part of the essential framework of Canadian parliamentary democracy.  It is in the public interest to maintain and enhance confidence in the integrity of public servants through a disclosure and reprisal protection regime..

The Office provides a means and a mechanism for public servants to make disclosures about potential wrongdoing in the workplace and be protected from any reprisals.  It has jurisdiction over the whole public sector, including separate agencies and Crown corporations, with the exception of the Canadian Security Intelligence Service, the Communications Security Establishment and the Canadian Forces:  these are required to establish their own internal procedures for disclosure of wrongdoing and protection against reprisals.  The Commissioner’s mandate thus covers about 400,000 federal employees.  The Act stipulates that members of the public may also disclose possible wrongdoing and therefore the number of people concerned is actually much larger.  Three guiding principles constitute the pillars of the Office’s mandate:  inform, protect, prevent.

During the proceedings, Ms. Ouimet returned several times to the need for informing the general public about the specific role of Public Sector Integrity Canada:

[translation] It is a challenge to ensure that all public servants know about the legislation and the role of my office.  We are very active in reaching out to people throughout our constituency, but much remains to be done.  And we rely on the support of colleagues in the public sector, the media, and members of this committee to help us ensure that people are aware of our existence, informed about our mandate and confident in our ability to carry out that mandate.

The need to inform the public is clear from the statistics put before the committee.  Ms. Ouimet told the committee that during 2008-09 the Office opened 76 disclosure files and 23 reprisal files.  Of the 76 disclosure files, 23 were closed because there was a valid reason for not dealing with the subject-matter of the disclosure, 22 were closed because they could more appropriately be dealt with under a procedure provided for in some other Act of Parliament, and nine were closed because they exceeded the Commissioner’s jurisdiction.  Of the 99 cases reported to the Office, four were serious enough for special attention and none was the subject of legal proceedings.

The smallness of this number clearly troubled some of the senators, because of the perception it could create that the Office is not really capable of acting to protect the public and public servants, and because of the cost incurred for each complaint in relation to the benefits generated by resolving it.  Ms. Ouimet agreed readily that these concerns were valid, saying in passing that there is still a very real fear among federal public servants of disclosing wrongdoing.  For example, some whistleblowers have voluntarily chosen to withdraw from the process, preferring to get on with something else.  In the course of its investigations, the Office has also found that what most employees who disclose wrongdoing want is simply for it to be stopped, quickly and informally.  There is a real fear of long-drawn-out proceedings and formal inquiries.

Some senators also expressed concern that the very fact the Office had been created might give the impression that there is a serious problem of wrongdoing in the federal Public Service and that this might create a sort of paralysis among public servants, whereas in fact the ethical level in the Public Service is impressively high.  On this point, Ms. Ouimet told the committee that she considers the Canadian public sector to be one of the best in the world.  She added:

I put that very question to a union leader, and his response was that there is a perception of significant problems in the public sector.  However, he went on to say that in his view [our] public sector is one of the best in the world.

Ms. Ouimet took advantage of her appearance before the committee to tell the senators that her Office has identified small agencies, councils and commissions as particularly vulnerable to serious mistakes, essentially because of lack of internal capacity.  She suggested that urgent action is needed.  In addition, since the Office currently does not have jurisdiction over the subsidiaries of Crown corporations, she recommended that its mandate be expanded to include them.

5. Atomic Energy of Canada Limited

On Tuesday, May 26, 2009, the committee heard from Michael F. Robins, Senior Vice-President and Chief Financial Officer at Atomic Energy of Canada Limited (AECL), with a view to discussing recent developments there.  By happenstance, the meeting took place just a couple of weeks after AECL had been obliged to shut down its Chalk River NRU reactor temporarily following the discovery of a small leak of heavy water; the shutdown threatened the world supply of medical isotopes.

Mr. Robins began by telling the committee that it was important to remember that AECL has been given a dual mandate by Parliament:  operating a commercial enterprise responsible for promoting Canadian nuclear technology (the CANDU reactor) and operating a national research laboratory for applied nuclear science.  This laboratory is located in Chalk River, Ontario.  In addition to facilitating research on nuclear safety, the development of new reactors and nuclear waste management, the research laboratory is also responsible for producing medical and industrial isotopes.  Normally the NRU reactor provides about 33% of the world’s isotope production.  The rest comes from four other research reactors.

While AECL’s commercial wing is financially self-supporting, its research wing receives public funding from the Government of Canada.  A portion of this funding is used to pursue development of the advanced CANDU reactor, the ACR 1000, which might be described as the third-generation CANDU reactor.  Mr. Robins told the committee that in AECL’s opinion the development of the ACR 1000 is integral to AECL’s future as a financially self-sustaining entity.  The implications for the Canadian economy are significant:  the commercial wing of AECL employs 2,000 people, while the research wing employs 3,000 people.  From a broader perspective, the CANDU sector, which includes some 150 Canadian companies, employs about 30,000 highly skilled workers.

Given the recent shutdown of the NRU research reactor, the focus of the committee’s proceedings turned rapidly to the issue of securing the supply of medical isotopes.  In particular, the committee wondered how long the NRU reactor would be shut down.  Mr. Robins said that it was impossible for him to give a precise answer, given that AECL was at that time conducting a thorough review of the reactor.  He also told the committee that a major problem faced by AECL is the difficulty of coordinating routine temporary shutdowns with other isotope producers, in order to inspect and maintain reactors without interrupting the supply of isotopes.  In Mr. Robins’s opinion, this is not a funding issue but an operational one.  Some senators asked about the options considered by AECL to mitigate drops in the production of isotopes.  It is considering several possible solutions but these do not include a new production site in Canada.  AECL worked for several years on the design of the MAPLE reactors, which would have been dedicated to isotope production, but the project was cancelled in May 2008 for both technical and financial reasons.

Some committee members raised concerns about the way Canadian taxpayers are constantly having to inject funds into AECL even though it is a commercial Crown corporation.  They wondered at what point it would become financially self-supporting.  Mr. Robins explained that AECL as a commercial enterprise is in an unusual situation because it also has a government mandate to run a research laboratory.  Because of this, AECL will always have to receive parliamentary appropriations to operate the research aspect of the enterprise.  He said that this is the same situation as with its competitors such as AREVA in France or General Electric in the United States.  Mr. Robins estimated that AECL’s need for government funding for its research operations would be on the order of $150-200 million a year in the future.

Senators recalled, however, that AECL had recently requested $100 million in supplementary parliamentary appropriations to extend the life of the CANDU reactors at Bruce Power in Ontario and Point Lepreau in New Brunswick, even though these projects come under AECL’s commercial wing.  In addition, AECL is planning some 20 similar life-extension projects in the years to come.  There is thus a danger of escalating costs for the Canadian taxpayer.  Mr. Robins sought to reassure the members of the committee by pointing out that these life-extension projects are commercial contracts for which the client must bear all costs.  As in any commercial contract, the amount of the contract is based on an estimate of the costs.  The Bruce Power and Point Lepreau projects are the first of their kind for AECL, and it underestimated the difficulty of certain operations, which resulted in its seriously underestimating the costs as well.  In future contracts for life-extension projects, these additional costs will be included in the contract and thus will be borne by the client.

Mr. Robins took advantage of the discussion of parliamentary appropriations for AECL to point out to the committee that, unlike other Crown corporations such as the EDC, the BDC and CMHC, AECL is not authorized by the federal government to borrow money on the financial markets.  The result is that as soon as there are unexpected adverse fluctuations in its cash flow, it is obliged to turn to the government to meet even temporary shortfalls.  So when the committee asked Mr. Robins whether AECL would like borrowing authority, his response was:

I think it would make us a much more viable commercial entity and help us grow, and I think it would be beneficial to Atomic Energy of Canada Limited, yes.

6. The Public Service Commission

The Public Service Commission of Canada (PSC) is an independent agency responsible for safeguarding the values of a professional Public Service: competence, non-partisanship and representativeness.  It is dedicated to building a public service that strives for excellence. It protects merit, non-partisanship, representativeness and the use of both official languages.  It safeguards the integrity of staffing in the public service and the political impartiality of public servants. The Commission develops policies and guidance for public service managers and holds them accountable for their staffing decisions. As part of this role, the Commission conducts audits and investigations to confirm the effectiveness of the staffing system and to make improvements. As an independent agency, it reports its results to Parliament.

In 2008, the government launched a strategic Horizontal Review of Human Resources. The PSC was one of six organizations that participated in the review. Some questions arose about the appropriateness of the PSC's oversight activities. This led the PSC to appoint an Independent Review Committee, led by Larry Murray, to determine the appropriateness of our approach to oversight and to identify areas for improvement. Both Ms. Barrados, the President of the PSC and Mr. Murray answered questions about the findings of the Independent Review Committee.

The Review Committee found that both Houses of Parliament strongly support the role of the PSC and the need for effective oversight. Every parliamentarian they spoke to focused on key issues such as national area of selection, the concern for all Canadians to have access to government competitions and the concern over the high percentage of terms and casuals turning into permanent employees.

However, deputy heads of departments and central agencies essentially indicated there is too much oversight or duplication of oversight. This was primarily part of an overwhelming sense from all the oversight issues coming at them or the web of rules of which the PSC was part. There was also confusion among departmental heads about the role of the PSC and how accountability will work under the recent Accountability Act.

In examining the Public Service Employment Act, the Review Committee felt that the scope of the oversight of the PSC must be as broad as is the range of delegated authorities. That is to say, the oversight must encompass the effectiveness of the staffing system and cannot be limited to non-partisanship or any other single component. In this regard, the Review Committee felt that while some calibration is needed in the quality and amount of monitoring and that there is a need for the development of additional capacity in the form of more human resources, the level of effort planned for PSC oversight was appropriate.  In its view, the Review Committee felt that it was reasonable for departments and agencies to expect one PSC audit of their human resource management activities over a five-year to seven-year audit cycle.

They also found a consensus that full implementation of the Public Service Employment Act, which came into force in December 2005, has not happened.  They felt that more effort needs to be taken to achieve this objective:

There were various views about the progress, but it had not yet been fully implemented. We concluded that much good is happening around HR renewal, which is essential from our perspective. Full implementation of Public Service Employment Act is a fundamental building block of public service renewal. Enhancing and doing whatever with PSC oversight in isolation will not be enough to achieve full implementation. There needs to be a concerted team effort by everyone involved to move this forward.

Altogether, the report makes eighteen recommendations,  with four on communications and collaboration; two on avoiding duplication with the other two major audit organizations; and two on policy and Staffing Management Accountability Framework, which is about getting expectations right; four each on monitoring and audit; and two on performance monitoring and reporting.

Some senators were concerned to learn that there was a possibility that the increasing use of a non-advertised appointment process might be undermining the “national area of selection policy” which attempts to open up job opportunities to all Canadians.  The committee was informed that this arises because of the way departments use the pool approach to staffing positions.  There is a need to clarify the understanding of the use of advertized and non-advertized in such situations. For example, one staffing option that departments are using is to run pools for various levels to maximize effectiveness and then draw appointments from the pools. There is confusion in the system. The reality is that if the pool were advertised, then it qualifies as advertised as opposed to non-advertised. The point is that the definition of advertised and non-advertised is not well understood across the system.

There was also concern about what type of follow-up measures are taken after an audit to ensure that departments address the observations to the PSC.  Ms. Barrados explained that the objective of the audit is to determine the health of the staffing system. If the PSC determines that there has to be a form of remedial action, it can range from more active monitoring, to placing someone to work with people, to conditioning authorities to taking away authority. The Commission continues to monitor and perform a follow-up audit, usually after two years. They time the audit to coincide with when the Commission thinks people are ready with a view to deciding what to do about those conditions on the delegation of authority.

In the second part of the meeting, Ms. Barrados reviewed the findings contained in her annual report to Parliament.  She noted that overall, the performance of the staffing system was assessed during this reporting period of 2007-2008 as acceptable, with a few examples of management excellence and some areas that require greater attention. 

Generally the report found that the core values of merit and non-partisanship are being respected, but ongoing vigilance is required:

There is room for improvement in making the system fairer, and more accessible, transparent and representative.

Some of the issues that are raised in the report are of particular concern to some senators. It found a high rate of mobility in the public service, an overall increase from 30 per cent in 2004-05 to 42 per cent in 2007-08. It noted very high levels of movement in the Human Resource (HR) community as well as a significant decline in the number of years spent at one level before promotion to the next. The HR specialists belong to the personnel administration, where the level of mobility reached 74 per cent in 2007-08. This was the highest rate of movement observed over an 11-year study period. The executive group, the EXs — including directors, directors general and assistant deputy ministers — also had one of the higher rates of mobility in 2007-08, at 55 per cent.

 

 

According to Ms. Barrados:

High mobility can have a negative impact on operational efficiency and effectiveness. It reinforces the need for HR planning to take into account the nature and scope of employee movement. It also underlines the importance of developing recruitment, retention and succession strategies for certain occupational groups and functional communities.

The Commission also reported on the implementation of the national area of selection policy. In December 2008, the Public Service Commission extended the national area of selection to almost all externally advertised non-officer-level jobs, including clerical and secretarial jobs. They have found that there is a high interest in public service jobs. Applications for advertised jobs from outside of any particular region vary from 90 per cent in the North to 25 per cent in Quebec, and 38 per cent of applications for the National Capital Region jobs came from other regions. Based on available data, the PSC found that 12 per cent of the appointments in the National Capital Region over the past two years were from residents living outside the region.

On the issue of special group representativeness, the 2007-2008 report did not include statistics on the appointment of visible minorities because the PSC was concerned about the validity of the available data. Ms. Barrados explained that new information concluded that the recruitment rate for advertised processes for visible minorities was significantly higher than previously reported:

Those numbers, which are found in our second hand-out, show that the recruitment rate was 15.6 per cent in 2006-2007 and 17.3 per cent in 2007-2008. We have much greater confidence in these statistics, which represent very significant increases over earlier calculations.

She explained that the analysis and data are for only the advertised hiring processes, which accounts for 72 per cent of all appointments to the public service. These new data were provided by the Public Service Resourcing System, PSRS, which is a web-based recruitment and screening tool used for externally advertised hiring processes. In 2005, the system was expanded across Canada. The PSC will continue to enhance the system as the PSRS plays a vital role in supporting staffing modernization and the implementation of the national area of selection. Since its launch in 2001 to date, it is estimated that the system represents a total expenditure of $52 million.

Some senators were interested in the availability of cost recovery measures for the PSC.  In her opening remarks, Ms. Barrados spoke about the annual budget being reduced by $3.1 million, and then about cost recovery going up $1 million. The senators asked her to explain the relationship between the two sets of figures.  Ms. Barrados explained that the Commission accepted a cut on the appropriations on the belief that they can recoup the funds through cost recovery measures on the services that it provides to departments and agencies.  She acknowledged that it is a risk that the PSC runs by having gone to a service that is optional for departments, not unlike any other kind of enterprise outside of the government.

Mr. Gerry Thom, Vice-President, Staffing and Assessment Service Branch, Public Service Commission of Canada, expressed some confidence in their ability to generate through cost recovery measures the funding that is required:

We can do cost recovery for up to $14 million now, and this year we finished with $11 million. It is really like running a business, but it is fenced in because there is little flexibility.

As an example, the Personnel Psychology Centre has been on cost recovery for quite a few years. We have a history as far as how much business it brings in. For that part of the $11 million, it brought in roughly $8 million. The rest is the new services that we are providing, which are optional.

Some senators remained concerned that the PSC will have less money, than was available in the previous fiscal year.  Ms. Barrados acknowledged that they have less in appropriations, but they now have the authority to get money from other departments. She believes that the PSC’s expenditures are staying fairly constant, with the big variant being the IT project for the public service recruitment system.

CONCLUDING COMMENTS

These and other matters were discussed during the committee’s examination of the 2009-2010 Main Estimates to June 2009.  In the coming months the committee intends to continue its review of the Estimates in order to more fully examine the government’s spending plans for the 2009-2010 fiscal year and to report on this work at a future date.

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