Standing Senate Committee on National Finance
 

THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE

EVIDENCE


OTTAWA, Wednesday, June 20, 2018

The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study such issues as may arise from time to time relating to federal estimates generally, including the public accounts, reports of the Auditor General and government finance; and, in camera, for consideration of a draft report .

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Welcome to this meeting of the Standing Senate Committee on National Finance.

My name is Percy Mockler, senator from New Brunswick and chair of the committee. I welcome all who are with us in the room and viewers across this country who are watching on television or online.

Now, honourable senators, I would ask you to introduce yourselves.

Senator Eaton: Nicky Eaton from Ontario.

Senator Marshall: Senator Elizabeth Marshall, Newfoundland and Labrador.

Senator M. Deacon: Marty Deacon, Ontario.

Senator Jaffer: Senator Jaffer from British Columbia.

[Translation]

Senator Pratte: André Pratte, from Quebec.

Senator Moncion: Lucie Moncion, from Ontario.

The Chair: I would also like to introduce the clerk of the committee, Ms. Gaëtane Lemay, as well as our two analysts from the Library of Parliament, Mr. Alex Smith and Mr. Sylvain Fleury, who team up to support the work of this committee.

[English]

Today we welcome the Clerk of the Privy Council and Secretary to the Cabinet, Michael Wernick. Thank you very much for accepting our invitation so that we can pose our questions. There is no doubt that your opinion and your vision will be appreciated.

[Translation]

Honourable Senators, he is accompanied by Mr. Peter Wallace, Secretary to the Treasury Board. Thank you for being here with us today.

[English]

With that, colleagues, your steering committee, for the record, agreed with one member’s suggestion to invite Mr. Wernick to come before the committee. We think he is well positioned to answer some of our recurrent questions, for example, about Phoenix, the performance indicators and the availability of financial information, and to include studies on such issues that arose from the Finance Committee, including public accounts, reports of the Auditor General and government finance.

At this moment, I have been informed that Mr. Wernick does not have opening remarks.

Michael Wernick, Clerk of the Privy Council and Secretary to the Cabinet, Privy Council Office: Briefly, sir.

Thank you, honourable senators. I am aware that I was nearly stampeded by members of the other place and senators headed for the airport as both chambers rose for the summer. I thought, given how late we are in the session and how we are a bit tired, that I would dispense with any opening statement. And if you will indulge me with one or two long answers, we will get to a dialogue and exchange. I would be happy with that.

Senator Marshall: I will start off with the opening comments by our chair.

We have officials coming in from departments and agencies. Quite often, we are looking for financial information or performance indicators. Sometimes it is a challenge to get financial information, and sometimes we request the information several times and we still don’t get it. Performance indicators quite often don’t make sense or are not available. They just don’t seem to be good performance indicators. They might be qualitative when it looks like they could be quantitative.

Could both of you tell us, what is the relationship with the deputy ministers? I know the deputies don’t report to you, but there must be some sort of relationship there. For example, I know that the Treasury Board of Canada Secretariat controls the money, so there is some sort of control there if there is not a reporting.

What is your connection with the deputy ministers? Perhaps Mr. Wernick could start and then Mr. Wallace.

Mr. Wernick: There are a lot of topics in there, so I will try to be brief. If I haven’t answered your question, you can ask it again.

You are right, I have no executive authority over deputy ministers. I am not like the Chief of the Defence Staff or the head of the RCMP. Each deputy head of a department is their own accounting officer for the resources in their department, and they support ministers. My role is I am the deputy minister to the Prime Minister.

Senator Marshall: Yes. I am aware of that.

Mr. Wernick: I have a role in recommending appointments of deputy ministers — promotions, movement and terminations — so that senior personnel role gives me some influence over my colleagues. And I act as sort of a chair of the community. I chair several committees of deputy ministers, and we have a gathering every week. I try to ensure some coherence of the community. Probably half of my job is related to senior personnel in terms of moving the community around and developing it. So I am happy to talk about how deputies are chosen and moved and measured.

On the performance measurement — and Peter will correct me if I stray — it basically flows from the power of the purse and the money, the executive branch asking the legislature for money. In order to do that, every dollar has to be appropriated by Parliament or through statute. Every department, every agency — and there are more than 300 of them — provides you with a report in the spring, which is its plans — which have been restyled and renamed over the years — with an attempt to say these are the things we are trying to achieve and these are the dollars we will use for them.

Over the decades there have been different attempts to develop performance indicators for the use of the money. In the fall, you will get a departmental performance report, which usually is reporting on the previous cycle and so on.

Senator Marshall: As the Clerk of the Privy Council, do you look at that information and say to the respective deputies that those are good performance indicators? Do you ever get to the point where you say to a deputy that those are poor performance indicators and they need to step it up a notch?

Mr. Wernick: Yes, that happens all the time in the senior personnel role.

Again, at the risk of straying into Peter’s lane here, the Treasury Board is the government’s management board. It sets the policies that govern all the entities in the federal sphere one way or another. It has developed various tools over the years to measure the effectiveness of departments and agencies.

The one we use now is called the Management Accountability Framework, and you are probably familiar with it. It breaks down certain things and tries to measure them. Those reports are posted every year on the Internet, and you can see the department going up or down on various indicators. The feedback from that Management Accountability Framework not only is relayed directly by Peter and his officials to the department or agency, but it counts very heavily in our performance management scheme for deputies.

What I try to look for is the value add of the deputy. Are they making headway? Are they trying to do the right things? They may have inherited a department in bad shape. The question for the deputy is what are they doing to make it better?

Senator Marshall: You would keep track of it?

Mr. Wernick: That is hugely important.

Senator Marshall: As Clerk of the Privy Council, what is your involvement in big projects, like Kinder Morgan and Trans Mountain? I know you are not involved at a low level in the departments, but the big projects that are at high risk, like Kinder Morgan, Trans Mountain and even the Phoenix issue now, do you oversee the big issues and keep your finger on it?

Mr. Wernick: That is a good question. Because I am the deputy to the Prime Minister and I am the Secretary to the Cabinet, essentially I am another clerk. I sit in the corner at cabinet meetings and am responsible for the inputs and outputs from cabinet and the flow of decisions that come from those 30 men and women who make the decisions.

Basically, the difference is I work mostly in the policy space, whether to buy a pipeline or not, and then the actual execution and implementation tend to flow to the management board.

Senator Marshall: Your advice would go a long way, because a lot of the proposals or policy decisions would have to go to cabinet. If you are the clerk and you are the Prime Minister’s deputy minister, then you would have influence? I am trying to get a handle on it.

Mr. Wernick: The position carries influence; I am not denying that. But basically cabinet is a group of ministers. I think the role of deputies and clerks is a bit exaggerated. Ministers are the ones who take the big decisions.

Senator Marshall: I have one last question for Mr. Wallace.

When we were talking about Phoenix with Mr. Brian Pagan, he indicated you were doing some assessment or tabulation of the costs of Phoenix, including the costs that were being incurred out in the departments. We were told that you would have that available by May. Is that finished? Could you give us an update on the status of that?

Peter Wallace, Secretary to the Treasury Board, Treasury Board of Canada Secretariat: It is not actually finished. We are still working on it. I believe it is close to being finished. We have the basic calculations and are making sure we have the latest input from Public Services and Procurement Canada.

Senator Marshall: Would that be all the departments that are affected by Phoenix?

Mr. Wallace: Yes. That information flows in through Public Services and Procurement Canada.

Senator Marshall: Would we be able to get a copy of that when it is finished?

Mr. Wallace: Absolutely. Yes.

Senator Marshall: Thank you.

Senator Pratte: Mr. Wernick, with regard to Phoenix, you disagreed strongly with the Auditor General, what you called his opinion piece, on the public service culture, which he seemed to describe as a generalized culture. He did not describe it precisely, but he seemed to indicate it was a generalized problem.

What strikes me with the Phoenix situation is the fact that there seemed to be many opportunities for different people at different moments to signal how catastrophic the situation was, and apparently no one seized the opportunity to raise their hand and say, “Wait a minute. Something is really going on.”

There were different meetings where many deputy ministers were apparently made aware that something was going on, and Treasury Board was made aware of the Gartner report and so on. Apparently many people knew, but, somehow, the three executives kept part of the information to themselves, and we know what eventually happened.

Maybe the culture described by the Auditor General is not a generalized culture, but obviously it was not a problem that was limited to only a few people because there were many opportunities to stop this and no one apparently raised his or her hand to stop it. What is it that is widespread enough that no one raised his or her hand to stop it?

Mr. Wernick: That is an important question, senator.

There is no question that the work of the Auditor General’s team on the pay system has been helpful. There were two separate reports, one in the fall and one in the spring. For all I know, they may want to dig deeper into other issues when they are working in the methodology of an audit, which is a very defined methodology, and when based on evidence. There was specific advice from the Auditor General about what could be done with respect to the pay system. That is an important contribution to Parliament and Canadians.

What I took issue with is the commentary piece, the opinion piece — whatever you want to call it — the chapter zero because it generalizes from that to use phrases like “a broken culture” and gives Canadians an impression of the public service which is completely incorrect and contradicted by the facts. They have one of the best public services in the world, and I can give you a lot of evidence as to why that is true.

I do think the Auditor General’s commentary piece, and I didn’t mean that as a pejorative term —

Senator Pratte: I wrote opinions for 30 years, so I hope you think it is a noble profession.

[Translation]

Mr. Wernick: I read several of these comments with interest. Comments have a role to play.

[English]

I think the Auditor General function — and I know I will get in trouble for saying this — was created to make sure the financial books are clean. We have audited, clean financial books. They have played an important role in financial controls and financial management in ensuring we have one of the best financial management systems of any government in the world and why we score so highly.

It has kind of drifted into value for money, which is often right up against a policy decision as to whether you should or shouldn’t do this. The decision as to whether to charge tolls on the bridges is a policy decision that cabinets and legislatures are entitled to make.

However, the opinion pieces stray into general advice like a management consultant or a governance expert, and I just don’t think the Office of the Auditor General is the right place to do that.

Senator Pratte: I don’t disagree with you, but I am concerned that, between the opinion piece and generalized, unfair opinion on the whole public service and the very narrow look at what three officials did, which would be the basis of the whole problem, maybe there is something in the middle.

Mr. Wernick: Absolutely. I would love to have a dialogue with Canadians about how to improve their public service, which is a good public service and can be even better. I am on the record in my reports to Parliament and in over 40 speeches on my website with no sense of complacency about the public service, its performance or its culture. I have said on the record that we need to be more nimble, creative, agile, less concerned with process and more concerned with results. You can look up my statements on that.

We have work to do on the organizational culture. My problem with the commentary piece is that it generalizes across 300 different organizations in a way that I don’t think is a fair characterization. There are parts of the public service that are creative and nimble. I can give you many examples of that. And there are places that are not. There are workplaces that are very healthy and workplaces that are not. The art for people like Peter and me is to know which is which.

Mr. Wallace: If I can just dig in ever so briefly, the Auditor General does raise those issues, and I think they are important. The report and some of his commentary after the report do reveal and discuss something. It is within the audit realm, which is supremely important, and that is that we did have a large number of controls in place. Those controls were not implemented and may have actually even been stepped around. They were applied in form but not in substance.

Part of our challenge and what we are driving to on a go-forward basis is to ensure not only that we embed in the public service the need to look at these controls as checks, but that we also embed the process and substance and, in fact, drive that change in the body of the organization so that we are never in a position where executives can make decisions on the projects that they control, so that information is more broadly shared and the accountability is more broadly spread.

Senator Pratte: Thank you. One last point. At the Public Accounts Committee in the other place, Mr. Wernick, you were asked if in your view there were enough consequences for poor performance in the public service and what could be done about it, and you answered, “No, there are not.” I was wondering if that answer applies to the people in charge of the Phoenix pay system.

Mr. Wernick: I don’t think I am in a position to comment on the specific individuals involved in the pay chapter. That is a topic worth pursuing. My comment was about the overall public service.

I draw the distinction that deputy ministers and most other Governor-in-Council appointees have no job security, no employment contracts and no severance provisions. Peter and I have no job security, but the rest of the public service is governed by the Public Service Employment Act. I know I will get in trouble for saying this, but it is extremely difficult to fire someone in the public service. I don’t think we would need to do it very often, but I think parliamentarians in both chambers might want to take a look at that and see if that is creating the right incentives and disincentives for a high-performing organization. That is a big project that would be very messy and controversial, but I do think it is something that Canadians should probably engage in.

Senator Pratte: Thank you.

Senator Eaton: Mr. Wernick and Mr. Wallace, perhaps after you have heard us today, you might give us some advice or pass along some of our comments to the deputy people who come before us.

We find it extremely frustrating. We are all sophisticated enough politically to know that we get talking points a lot of the time to reasonable questions. I will give you one example.

CMHC came before us with the Main Estimates, and when I asked one of the witnesses about a line item for $119.6 million, she said, “Thank you for your question, senator. It’s a good one. I can’t exactly answer what $119 million is made up of specifically. I’ll get back to you on that question.” Well, she didn’t.

Then there was another one for $4 million, which was to knock down discrimination in terms of public housing, barriers to housing. I said, “That’s very interesting. Have you done some research on racism in public housing?” She said, “No, it’s anecdotal.” “Well, how will you account for that $4 million?” I asked. “I don’t know.” So you can see from our point of view that it is extremely frustrating.

I think two of the most frustrating departments are the Department of National Defence and the Department of Indigenous and Northern Affairs.

I was speaking to one senior Canadian military person at a National Defence conference I was at last week with Senator Marshall. We were speaking quietly. We had the Department of National Defence officials the week before when we were talking about supply ships. He said, “Well, you know, to cover both coasts, we should have six.” And I said, “Oh, that’s interesting because right now I think in what the Department of National Defence is telling us is that they are trying to get three. One is working and the other two are still up there. Why didn’t you say that? Why are they telling me three when you really need six to cover both coasts?” He said, “Well, we don’t, senator. We only ask for what we think we might get.”

I would like your thoughts on this, both of you. He said, “When witnesses appear before the American Congress, they are under oath.” When witnesses appear before the Senate Finance Committee and you are trying to find out if something is accountable or follow where the money has gone and whether or not a program has worked, would it help free the witnesses if they were under oath and they weren’t only thinking of what is political?

Mr. Wernick: No. I don’t think that kind of inquisitorial, lawyered-up, legalized kind of congressional hearing is in the spirit of the Canadian Westminster democracy. There are distinct roles for ministers and deputy heads and heads of agencies. They are all set out in “Open and Accountable Government”.

You give me the opportunity to make it very clear that there is no way for officials to ask for more resources. Every dollar is requested by ministers to the Treasury Board through submissions that they sign.

Senator Eaton: But what about accountability? Fine, we can’t afford six supply ships, but what about simple accountability from those people who appeared from CMHC? What about knowing where the $119 million is going? What about, before you come to the committee, knowing how the $4 million will be spent?

Mr. Wernick: Well, having appeared at this committee as a deputy minister several times, it is very challenging to know every potential question about every line item that you could know. Sometimes you do have to get back to people. It is a serious question you are asking.

I think what we have tried to do over time is to be far more transparent over successive governments, so I commend to you GC InfoBase, which is a database of where the money goes and what it’s used for.

Senator Eaton: Mr. Wernick, when a department comes before us, there are often the deputy minister and the assistant deputy ministers. There are usually 10 people sitting up in the gallery from that department. I have to think that if they are coming to represent their sliver of the budget, which is two pages, they could tell you what they are spending $119 million on. Perhaps $119 million is nothing, but to most Canadians, $119 million means something.

Mr. Wernick: So I commend to you GC InfoBase, which is an attempt to tell Canadians where every dollar goes, for what purpose and what the performance indicators are.

Senator Eaton: And I am finished. As Senator Marshall said, the last time we had Treasury Board, performance targets were unavailable for department after department, year after year.

Mr. Wernick: But there is a website that has performance indicators that account for every single dollar.

Senator Eaton: Why aren’t they in the book?

Mr. Wernick: They’re on the InfoBase. There are pages and pages of performance indicators for all the line items. It’s very difficult to get the exact breakdown the way that people ask the question because questions come in from different angles.

Improving reporting to Parliament and Canadians has been an ongoing project. Better is possible, more could be done, and I’m sure feedback from parliamentarians would be very useful.

One of the things we did this year with the government, and you’ll recognize this, is to align the budget and the estimates.

Senator Eaton: Yes, I think Mr. Brison is doing a great job.

Mr. Wernick: We were going to parliamentary committees with Main Estimates documents that did not reflect budget measures. I’m sure that was a source of frustration for you. Now you get estimates that reflect most of the budget measures.

Senator Marshall: I would like to make a comment on the performance indicators, and this is why I was asking what your role is in the performance indicators. Just as an example, Environment came in and I asked about performance indicators. They listed off eight different places to get the performance indicators. I said, “Can’t you put them all in one place on the government website?” It is still a challenge to go through. Even with InfoBase it is still a challenge to get financial information and performance indicators. This is why I was asking you what your role was.

Mr. Wernick: Every time someone comes to the Treasury Board ministers to ask for money for this and get it appropriated in the department, they usually have to do, first of all, some sort of business case for the money, but they always have to identify a risk framework around it, and they have to have a performance measurement framework around it. Those are the things you have to do in order to get money out of the Treasury Board.

The InfoBase is probably an imperfect tool, but it’s an attempt to make sure that all Canadians can go to the Internet at any time and query a database about the dollars and the performance measures. Of course, it can be improved.

Senator Jaffer: Thank you very much, both of you, for being here. We’re studying what has happened with Phoenix. We can look at the past and keep talking about it, but in the time we have available, I’m very much interested in hearing about, especially from you, Mr. Wallace, what the next steps are in this. One of my concerns is that we hear people say, “Get rid of Phoenix; get another one.” I’m thinking that it’s not perfect, but I want to hear where we go from here. What are our next steps?

Mr. Wernick: I will just cut him off for one second to say this specific advice from the Auditor General in the fall report was not to scrap the system but to try to stabilize it and make it work.

Senator Jaffer: Is that your opinion too?

Mr. Wallace: It is. Ministers Brison and Qualtrough have written to the Public Accounts Committee with a detailed response to the Auditor General’s recommendations, detailing in a very appropriate way, and I commend the communication to you, reviewing step-by-step all of the actions being undertaken by the Government of Canada, centrally by Public Services and Procurement Canada, by Treasury Board and particularly by departments to bring stabilization to an unacceptable situation and to continue to move forward.

It is very important to note that we are learning fundamental lessons from Phoenix, and the Auditor General’s technical report does lay out some of those lessons. We are making sure that we have put in place a wide number of additional steps in terms of improved management of information technology. We’ve changed the policies in terms of the major central projects. We’ve put in place an enterprise architecture review board that actually offers a separate level of governance and ensures that major projects are dealt with in a way that is not only under the supervision of a narrow number of officials.

We’ve improved the engagement of Treasury Board Secretariat itself.

We put a tremendous amount of resources into project management strategy and any number of other training and other aspects.

But I do want to emphasize that these are not meaningful unless we actually live the values, so we are continuing to have the dialogue, and this is to Senator Pratte’s observation as well. We are continuing to live the dialogue so that these are not just check boxes but are actually controls that are effective, are lived, that have the direct impact and make the required shift.

Senator Jaffer: Who has the oversight?

Mr. Wallace: Treasury Board. But, frankly, we cannot rely on Treasury Board as oversight. This needs to be embedded in the organization, and we are working to embed that into the organization. That is what we are doing on a daily basis: improving the policies, improving the knowledge of the policies, improving the application of the policies and, from time to time, frankly, celebrating the successes when we get things right. As the clerk mentioned, we are getting a number of things right in a number of critical instances.

Going forward, job one is absolutely to stabilize Phoenix, and we as Treasury Board of Canada Secretariat and the entire Government of Canada are working to support our groups in Public Services and Procurement Canada in that fundamental foundational effort.

We do understand that the budget is clear that we will need to work on a strategy for an exit for Phoenix. We are working through that systematically and rigorously on a variety of channels, and, frankly, one of the things we are doing is making sure that we have learned the lessons of Phoenix. That means project management, better channels and better reviews through our architectural review board and all of the other elements. We are working our way systematically through the creation of a new pay system.

Senator Jaffer: When Minister Qualtrough was here, she said, and I hope I’m not quoting her wrong, that the best she could do was to stabilize it. I think I heard you say that. Are you saying that once you stabilize it—I just want to understand—you’re going to look at another system? Or are you going to work with this system?

Mr. Wallace: I think we fundamentally understand that we need to be able to pay our employees accurately and on time. That is absolutely the objective. We also want to make sure that the tools that do that are consistent with modern governance and consistent with modern information technology, communicate effectively with other systems, support our pension system and all of those other requirements.

Phoenix has not, up to this point, been adept at that, so we will, of course, look for other tools that will allow us that complete range of functionality. One of the things that are well documented in the Auditor General’s report is that the functionality of Phoenix is inadequate. So we are moving towards stabilization, regularization of pay, meeting the basic requirements of a pay function, but we also want to make sure that we are economically efficient, work in a modern environment and are actually safeguarding all of the privacy, financial and other information in an appropriate way.

Senator Jaffer: That was going to be my next question on functionality. I understand that—maybe it’s been fixed now—for example, if you’re doing shift work and you’re putting in different hours, those were the people who had difficulty. Or if it was retroactive pay, then there were challenges in that you couldn’t do retroactivity. There are some functions that are not being able to be produced by Phoenix. Has that been fixed? Is it possible to fix it? How is that going to work?

Mr. Wallace: As I understand it, the functionality that’s absent from Phoenix cannot be retroactively engineered into it, although that is a question that my counterparts at Public Services and Procurement Canada will have better knowledge of. For example, the pay pods being introduced are exactly a mechanism to make sure that the pay and compensation of individuals are accurate and on time, regardless of the mechanisms for which it is generated, whether the information is timely or whether it involves shifts or other things, that there is actually an opportunity to pay employees accurately and on time.

Senator Jaffer: Mr. Wallace, when Minister Qualtrough was here, I think she impressed us all with her transparency, honesty and accountability. We really understood that she was trying to deal with it. I feel the same way with the two of you.

What I and, I think, my colleagues struggle with is how long can the employees not be paid properly. What is the timeline? When do we catch up?

Mr. Wallace: I think the timeline will depend quite frankly on the level of experience and how our colleagues at Public Services and Procurement Canada track this information. They make it available on a regular basis with a tremendous amount of accountability and directness.

The reality is that the situation is still unacceptable. We are making progress. The pay queues are stabilized in that they are not getting worse, but there are still significant backlogs, and there are still unacceptable individual issues. This is a function of the absence of functionality and the queue that developed early on in the process.

There is a very considerable cross-government effort to address those, and I think we do recognize the seriousness of that. We are working with our bargaining agent colleagues across the government to bring some stability and energy to addressing those challenges.

We say that not defensively, frankly, but in recognition of the seriousness of the challenge and the recognition of the fact that this does need to be addressed.

Senator Jaffer: Is there an advance system? If my paycheque is not coming through, is there an advance system to help the employee? I can’t imagine how tough that must be.

Mr. Wallace: Absolutely. I don’t want to spend a lot of time going through the long list of the things we have done, but we have put in place a wide variety of systems in call centres and other elements that allow for pay advances, flexibility and all of those things you would reasonably expect an employer to do to accommodate the difficult situation in which employees find themselves through absolutely no fault of their own.

We work systematically through that. That is, to a considerable extent, a Treasury Board function as well, and we very much try to do the very best we can in terms of responsiveness and dealing with the challenges faced by our employees.

Mr. Wernick: This goes to Senator Marshall’s question about whether I have any influence on the deputy ministers. One thing I can do is ask them to let us know what they’re doing. On a couple of occasions, I asked all of the deputy ministers to write to me with what they are doing for their employees in terms of training, emergency advances and anything you can do within your power to do this. All of those letters came in and are on the Internet as lessons learned for other people to pursue.

I don’t want to leave without making it very clear that no one is more pained by what our public servants have gone through in the last few years than the senior leadership of the public service. Those men and women come in and do extraordinary things for Canadians. Their stories are often not heard because there is a focus on the things that didn’t go well. I try to use my annual report to showcase their achievements, and we have to do right by them and pay them accurately and on time.

I would commend to you the fall report of the Auditor General, which has some very clear advice that if you take the same complex HR rules — an incredibly complicated HR system — and send it out to the same vendors with the same procurement process, you’re unlikely to get a different result.

The Chair: Thank you.

[Translation]

Senator Moncion: I'd like to add something, without, however, talking about Phoenix for the rest of the meeting. In 2009, IBM was the only bidder that met all of the criteria set out in the call for tenders. And so the government did not have much choice.

You said that you are putting in place a host complementary tools to support Phoenix and the pay system. I like that idea very much. It leads me to suggest that the components that don't work in the Phoenix system should be removed from it. Those components should be examined on an individual basis. The parts of the Phoenix system that work could remain. One day you may be able to stabilize the Phoenix system. You will then have complementary tools and perhaps other pay systems that may allow you to solve some of the problems certain groups are experiencing. I assume that you are examining these aspects in the course of your work.

Mr. Wernick: Yes. Our reflection and our conversations began as soon as the system was launched, and as soon as the first problems arose.

I should let my colleagues from Public Services and Procurement Canada explain this in more detail. However, I can say that we examined all possibilities, and went back to the obligations of the department when needed to add modules do the software, remove certain components and group the departments. We explored every potential solution that opened up. We hired other consultants to find solutions. As the Auditor General said in his report last fall, we can stabilize the system and pay our employees, but it will never be an excellent system.

Senator Moncion: Pay systems always need to be verified, even when they are automated.

Mr. Wernick: Yes.

Senator Moncion: My question is about Bill C-74. It concerns clause 199, which mentions a chief information officer, a person who will be responsible for information technology and will report to the Secretariat of Treasury Board. Could you explain to us the powers and functions of that person, and the type of project management he will perform in his new role with regard to information technology?

Mr. Wernick: One of the roles of the clerk is to recommend changes in terms of governance to the Prime Minister with regard to who does what within our system. The result of one of these discussions is in the budget implementation bill, and it involves the creation of the position of chief information officer. The objective was to give as much weight to information technology issues as was given in the past to financial issues. There is a comptroller general who works for Mr. Wallace. A deputy minister is responsible for all of the financial management. For information technology, there was an assistant deputy minister, but we want to increase that profile and the authority and impact of that position.

[English]

Mr. Wallace: I’ll just observe that that is why we actually welcome this very positive dialogue, because there are many lessons to be learned, one of which is that we actually do need better authorities and better capacity. Our relentless focus on some aspects of public administration, along with other governments, has perhaps led us to not fully understand and invest in the absolutely critical role that information and information management play in a modern enterprise.

One thing that is coming forward, as we’re talking about right now, is the creation of a Chief Information Officer. The Chief Information Officer is a way — and I want to connect the answers we provided earlier — that actually allows us to live the values. So we are now establishing new and core elements of governance that will govern major cross-cutting projects in a different way and that establish new authorities.

For example, the enterprise architecture board I spoke of earlier will be working with the Chief Information Officer and that function to actually build in place capacity to look at critical projects from an enterprise basis.

We’ve always looked at critical projects from a financial basis because they are financed out of the CRF. We are bringing that same authority and that same lens to a technology and digital application basis.

This is precisely what the private sector does, so we are catching up with them and are, I think, in a government sense, at the leading edge of recognizing the absolutely critical foundational role of information, information technology and delivering services. This is different than the prior focus on IT infrastructure. This is now the approach where we actually use our information as a strategic asset and use our projects from a corporate governance standpoint to make sure they are sensible and go through appropriate gates.

That is the core function of the Chief Information Officer, and that is analogous to the CIO functions that exist in most major private sector enterprises. To the clerk’s point, these are very strong cross-cutting governance mechanisms or horizontal authorities.

[Translation]

Senator Moncion: As a matter of clarification, you are saying that for that person it will not be the machine that is important, but the information and what he will do with it to make it even more strategic.

Mr. Wallace: It will be both.

[English]

Generally, in the past, we have emphasized IT infrastructure, the machines themselves. We are now seeing a fundamental transformation in the cloud, the availability of software as a service, a variety of other things. You are seeing that in the corporate world they are using an integrating information strategy as a core element of their business strategy. We are creating the CIOB so that we can continue to work with our colleagues in other ministries around improving the use of the infrastructure, making it more efficient, safeguarding taxpayer dollars, all of those things you would expect us to do. But information, and that information function, is a core strategic aspect of delivering services to Canadians and making sure that we manage our projects on an appropriate horizontal basis and that they are not siloed with individual departments.

That means, for example, that in the past if we wanted databases, we tended to make databases individually, and they would not talk to each other. There would be no interoperability. We are now creating standards that will allow for cloud-based, interoperable data. What that does is actually make agile and flexible procurement much more possible because we have a common standard across the Government of Canada.

Senator Moncion: Okay. Thank you.

Senator M. Deacon: Thank you for being here. It is an important two-way conversation.

I want to follow up quickly with something that Senator Jaffer referred to. Mr. Wallace, you talked about learning or next steps in things that we talk about, in doing things right, getting better. You listed a number of things. Part of it was around project management, I think authority, autonomy, culture. There were a number of things you mentioned. You just touched on the vertical and horizontal cross-functional collaboration, quite frankly.

What I’m trying to understand is that sort of scope and reach out beyond this project. This is an area that the country seems to know a whole lot about, they think. It’s getting paid, and it’s something that makes the news, and you find out pretty quickly that things aren’t working.

I’m just trying to think about what you’ve said — there were a number of things — how this learning prevents or helps the growth in other parts of the organization, the organizational work. How do we help everybody to get better?

Mr. Wallace: Let me answer the question first. Part of it is fundamental governance. We understand the lessons of fundamental governance. That does mean the authorities, the accountabilities, and making sure that the governance is not limited to those people who have a direct insight or oversight over the projects and may be subject to optimism bias or may ignore, for whatever reason, important critical information. We expand the slope of input and accountabilities and structure.

We put in place a number of key gating mechanisms. We put in place gating mechanisms that will actually be effective, and we build that into the culture of the organization.

We are putting in place common standards. This is actually a great shortcut to these because, if we can put in place, through the Chief Information Officer function, a series of common standards that essentially force project management, on a coherent, common basis — and those common standards can be a common methodology for project management and a common methodology for data access, storage and all of the other tools — we’ve actually accomplished a great deal in terms of forcing integration so that, frankly, we will not find ourselves, or find ourselves less often, in the situation referenced earlier, where we find ourselves with only a single compliant bidder. We will have substantially broadened the market of potential partners.

There is one other thing that is very important through this that we have not mentioned that I should mention, in the lessons learned, which is that we did not engage in adequate testing and did not engage in adequate work with our employees or their representatives. That is a foundational lesson, going forward, to actually understand the role of testing, not letting go of what you have before you take the leap to something else, making sure that testing is embedded, documented, a critical part of the project charter, and that that actually involves those affected — the employees — on a reasonable and rigorous basis.

Mr. Wernick: The best example of that is the fact that you are not moving next week, that you’re waiting until December, because testing, training, testing, training of the new Senate facilities is a lesson learned from this project. The same department delivered the Parliamentary Precinct project — 20 projects — on time, on budget and fully functional, as you will find when you move.

Mr. Wallace: One of the things we do need to make sure of is that public servants do not fall into the tyranny of meeting a set of expectations at all costs, that we actually do manage and are agile enough, are direct and actually adjust, to maximize the art of the possible.

Mr. Wernick: Just very quickly — and I won’t give you my long list unless you give me another question — it is important to learn not just from the failures but also from the successes. There are many government IT projects that are successful and very functional and helping Canadians. I can go through a long list of them, and they’re in my annual report. You can learn lessons from those as well.

Senator M. Deacon: There’s a disruption that maybe wasn’t planned or intended to be. Hopes and failures are okay, but that culture of readiness, that culture of trust, that culture of being able to take a risk, fail in the right environment and really understand what it means to move forward, I really hope that we can see those fingers and tentacles and celebrate, absolutely, the successful projects because those are probably on the side of everybody’s radar right now, and they should still be front and centre.

Senator Jaffer: You were talking about the pilot project. There was supposed to be a pilot project with Phoenix, right, and it didn’t happen. Is that a lesson learned, to always have a pilot project?

Mr. Wallace: There are absolutely lessons learned on many aspects of that, but the lessons learned have to not just be written down on paper. They have to be embedded in the values of the enterprise.

Mr. Wernick: The Goss Gilroy report gives you six very simple things, whether it is a pilot project or some other form of testing. It’s a very good blueprint for how to do projects better.

Senator Marshall: Thank you very much.

Mr. Wallace, I’d like your views on the issue of the financial information and the performance indicators.

Who maintains GC InfoBase? Is that Treasury Board?

Mr. Wallace: It is Treasury Board. I appreciate your focus on the performance measurements. This is always an evolving area of public sector governance.

You absolutely have a right, as parliamentarians, as do your colleagues in the House of Commons, to direct and best information. It is always appropriate to expect that from anybody who comes to your tables.

The performance indicators are evolving over time. That is one of the reasons why. One of the things that is, I think, incredibly important — because we have to be very careful, frankly, about the incentives — if we are not comfortable with having incomplete data, it’s easy. I think we want to avoid a situation where we only have measures that are perfect because we will narrow the scope of that, and people will end up with overly narrow, easily satisfied criteria.

Frankly, I think that one of the benefits we have is the robustness of a vast system, policy on results, all the way down through very detailed performance measurements, backed up by the accountabilities associated with the Management Accountability Framework built into the deputy cadre. I don’t actually look so much for the perfection of each individual result or the measurement as at the reality that these things are tremendously important to the way we manage, and it is an evolving system. I, frankly, think it’s getting better over time.

Senator Marshall: If you look at a department’s performance indicators, does Treasury Board say to the deputies, “You need to beef that one up?” Do you give feedback? Is it something that you have a role in?

Mr. Wallace: It is. Not every conversation on performance indicators is a fun conversation. Remember that this is a really critically important work —

Senator Marshall: I understand that.

Mr. Wallace: And we care about it deeply. That is a foundational responsibility of Treasury Board, and it’s a foundational responsibility that we take seriously and that our deputy colleagues take extremely seriously as well.

We do have that dialogue. We want the measures to be statistically robust and meaningful and to be moved, that the effort of the department will actually move the indicator.

The reality is that for not every program will you actually find indicators that meet that gold standard, so you end up with indicators that are important but nevertheless answer only a part of that question. I think the alternative is not perfection but the absence of those indicators. In many respects, I am comfortable, in many cases, with indicators that are not perfect because the alternative would be to limit the number of indicators.

Frankly, I am comfortable in a general policy sense with more indicators, with high-level indicators being the main focal points where we insist on the gold standard of statistical certainty under the control of the department and will move with the effort of the department over time.

Senator Marshall: Who decides on the information on GC InfoBase? Is that something you are continually updating? Treasury Board maintains that, right?

Mr. Wallace: We bring it in from departments.

Senator Marshall: Do you also have influence on what is being reported and how it is being reported? Is this something that is continually improving?

Mr. Wallace: Influence but not control.

Senator Marshall: Thank you.

Senator Jaffer: I want to go to something completely different.

Senator Marshall and I belong to the Senate Diversity Committee and I am speaking for both of us. I am sure you are doing interesting work, especially with the new census and workforce availability. I would like input from both of you as to where we are. What is the vision and where are we going?

Mr. Wernick: In what context, senator?

Senator Jaffer: With the federal service, the four groups: women, Aboriginal, visible minority and disabled.

Mr. Wernick: That is a big topic that I know you have thought about deeply.

Senator Jaffer: I don’t want to put you on the spot.

Mr. Wernick: No. I am happy to engage. I will refer you to my report, which talks about inclusion. I have stopped using the word “diversity.” Diversity of Canada is a fact. Inclusion is an act of will to bring people in. That is a phrase I use a lot. I may have got it from you.

We have a legislative structure that Parliament gave us of the employment equity categories, but we work on other aspects of diversity: age, generational, trying to manage baby boomers like me and millennials like my son all in the same environment. Certainly LGBTQ has been a focus over the last few years. I was proud to deliver the apology for past treatment in the public service. There are what people call intersectionality issues all the time.

I worry about it in terms of the overall public service, and what you can do is who you recruit, who you groom, who you promote will make a difference. We need to be reflective of the country we serve. I am happy to talk about that for hours.

I take personal responsibility for the deputy minister community. Those men and women I recommend to the Prime Minister. To be clear, I treat it as a portfolio. It is about 70 or 80 people. The numbers go up and down as departments are created or merged or whatever. Every appointment and every promotion is a chance to nudge the composition of the community.

I have had the opportunity and the responsibility to do that. So we are very close to gender parity. We have much higher representation of francophones.

[Translation]

There is a decrease in the number of francophones among deputy ministers.

[English]

We have work to do on what used to be called visible minority, and we have work to do on Indigenous, but the solutions there are working hard on the feedstock of middle managers and on the school and learning systems and equipping people with the competencies to be eligible for promotion. It is a portfolio approach. We are firmly committed to inclusion.

Frankly, we have so much work to do, you cannot leave any voice or talent out of this.

Senator Jaffer: I used to chair the Human Rights Committee. All the time I was pushing for the deputy ministers’ salaries to be based on how they were dealing with workforce availability and inclusion.

This is not fair because there may be another question, but I will leave that thought with you.

Another thought that really bugs me and that I would like both of you to think about is that the French training doesn’t happen in B.C. as it happens here. The people who work for you in B.C. always tell me they don’t have an equal opportunity to compete here because they don’t get the same training.

I will leave these two things for you gentlemen to think about because coming from B.C., I get this all the time.

Mr. Wernick: I acknowledge that, which is why the school has tried to put as much online as possible; the GC Campus tool, the language learning software is free and available. We are actually going to make it free to the public and any Canadian. We try to use video conferencing and other techniques so that you don’t have to fly to Asticou in Ottawa-Gatineau to get language training. We try to get to people much earlier so that they can be eligible for promotion because we expect our executives who supervise other public servants to have capacity in both languages.

There is always much to be done, but there is a real commitment. About 60 per cent of the public service is not in the National Capital Region. Those are talents that also have to be included and developed.

The Chair: Honourable senators, with the indulgence of senators, I have two questions. If you want to follow it up in writing, I would appreciate that also.

Many departments have provided the committee with the multi-billion-dollar infrastructure plan of the government. We were surprised to find that 2,658 projects are labelled confidential. I want to bring to your attention that 100 per cent of the projects coming from Indigenous and Northern Affairs were confidential, for a total sum of money of $800 million.

Can you explain to the Canadian public why that would be confidential? That represents approximately $1.6 billion from coast to coast to coast.

Mr. Wernick: I’m not familiar with the situation. I’m happy to pursue that with the department.

The Chair: We can bring that to your attention. Thank you.

What are the next steps for Phoenix? Can you provide us, for example, in the short term what do you see, in the mid term what do you see, for example, in two or three years, and in the long term, where are we going?

Mr. Wernick: My colleague referenced a letter which the two ministers sent today to the Public Accounts Committee in the other place. We can re-submit it to the clerk or you can have it right away. It is a matter of public record, I believe. That is hot off the press today, a clear statement from the two ministers about the next steps.

The Chair: Please provide that to the clerk so that we can share it with all the senators.

With that, we said we would keep you for approximately one hour. We are at one hour and two minutes. Before we say thank you, do you have any closing remarks?

Mr. Wernick: I’m happy to stay here until midnight, if you want, but I’m respectful of your time.

I have three jobs, as I described: I’m deputy to the Prime Minister and Secretary to the Cabinet. As head of the public service I feel an obligation to communicate the stories of other public servants, so I would commend to you my annual report and my website. Everything I say is on the public record and is there verbatim. I am very happy to have a dialogue with the legislative branch of government. I have been Clerk of the Privy Council for more than two years, and it’s only this week I have been invited to committees to talk about the public service. I would rather have more dialogue and more opportunity because we live in a country which still, in a rather troubled world, has a free press, independent courts, a lively legislature supported by officers of Parliament and a very strong, non-partisan public service. Having a dialogue between those of us who work in the executive branch and those of you who work in the legislative branch can only be good for the country.

The Chair: Mr. Wallace?

Mr. Wallace: Nothing.

The Chair: With that, to our two top bureaucrats, we want to thank you very much for what you have shared with us. If there is any additional information after you go back and look at the transcript and you want to add, please do not hesitate to do that through our clerk.

With that, honourable senators, thank you very much. You have shown a professional approach because I know when I was in another life Canadians are well respected in all parts of the world. With that, I say thank you.

(The committee continued in camera.)