Proceedings of the Standing Senate Committee on
National Finance
Issue 3 - Evidence, March 10, 2004
OTTAWA, Wednesday, March 10, 2004
The Standing Senate Committee on National Finance met this day at 6:20 p.m. to examine the expenditures set out in the Estimates for the fiscal year ending March 31, 2005.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: We have had referred to us the Main Estimates for fiscal year 2004-05. Our witness tonight is the Honourable Reg Alcock. Two people who need no introduction — Mr. Joyce and Ms. Danagher — accompany him.
Minister, welcome.
The Honourable Reg Alcock, President of the Treasury Board: Honourable senators, there are also a number of others here from the Treasury Board. Given that you had a technical briefing last night and an opportunity to talk to officials about the details, I was not certain how much detail you wanted to get into on the Estimates themselves versus how much you might want to talk about Treasury Board, some of the changes that are taking place there and the Expenditure Review Committee, et cetera.
I will start off in that area and then if you wish to get into the numbers, I certainly have officials here who can assist with that.
As you know from my last visit here, I am not terribly good at reading these things, but I will speak from it broadly. If there are specific pieces of it that you want me to detail, I will do so.
The most interesting aspects of what is happening now relate to the changing nature of Treasury Board. There have been concerns expressed for some time that Treasury Board had somewhat lost its way. There had been concerns that it had taken on the role of developing and delivering certain services in addition to being the oversight and challenge agency within government. There was some confusion in the role of Treasury Board as things were evolving.
On December 12, 2003, the decision was made to strip out of Treasury Board most of those items that were program related, including some of the government on-line and delivery services in that area — the official languages branch, the office of values and ethics, the public service integrity office and the human resources management office. They were transferred largely to the Privy Council Office under the leadership of Minister Coderre. He now heads the agency that will be set up under Bill C-25.
My mandate includes re-establishing a comptroller general and a system of comptrollership in Canada. I have been asked to work on firming up some of the oversight functions that Treasury Board might fulfil.
In addition, another committee of cabinet called the Expenditure Review Committee was established. It has a relationship to Treasury Board, and I chair it. Its mandate is to review all expenditure and operations of government, seeking opportunities to streamline, reduce, combine and find greater efficiency and effectiveness in the overall operations of government. I will talk about that later.
In addition, Senator Murray raised the matter of some confusion on the labour management function. The bargaining-employee relations function has remained at Treasury Board. There was an indication that it may move to the Department of Public Works and Government Services in the announcements made on December 12. That function has remained at Treasury Board.
The agreement was that there would be discussions with the unions before it moved. There were objections raised by the unions. The decision was made that we will continue to do the bargaining during this contract cycle. I suspect that the Prime Minister may wish to have further discussions with the unions about the future of that particular function.
Other significant things in this reorganization are the result of the release of the Auditor General's report. I had been asked to undertake three studies over and above the work of the Expenditure Review Committee.
One of them is in the area of Crown governance. There were concerns raised in the Auditor General's report about some of the oversight and policy structures of the Crown, given that they had missed some of their responsibilities under the Financial Administration Act. We have agreed to undertake that, and we have a reporting deadline of September 30.
There is a review of the Financial Administration Act, specifically looking at issues of accountability and discipline, which was mentioned in the Auditor General's report.
I would be interested in talking about a third one with this committee. I would be interested in the opinions of this committee on the first two items I just mentioned, but there is an area that is much less substantial, if you like. It is less substantial in the sense that it is difficult to harden it up in terms of rules and actions.
The auditor began to write a chapter on ethics. She found it very difficult. She was trying to describe the combination of ministerial accountability and the appropriate relationship between the political side and the public service side. She said to me quite candidly in several meetings that she just found it enormously difficult to do. It is a complex subject.
You can prescribe rules for ethical behaviour. You can say that you cannot accept gifts or cannot do a certain thing. You can set some prohibitions. How you encourage ethical behaviour is another question.
There is a problem that you see played out every day in the private sector and in government. There is a lack of trust in large institutions.
We have pulled together some people, including Donald Savoie, who has written about the relationship between public servants and the political side and has agreed to join the department for almost a year. He has taken the Simon Reisman Fellowship. He will work with us on this and other topics. This is the one to which we have asked him to pay particular attention.
We will want to begin a discussion with senators and members of the House from all parties, as well as people from outside of government, to try to better define the nature of accountability. In a modern economy and government, what is the nature of ministerial accountability? How does it play out? How do you hold people to account in these systems in a functional way? What is the relationship with public servants, given all of the difficulties? However, many of the difficulties that we have seen in high-profile events like sponsorship have involved the political side.
I step back to the Expenditure Review Committee. You may have noticed that the Prime Minister, in assigning responsibility to the various parliamentary secretaries in addition to assigning them to ministers, also gave them specific files to carry. In my case, my parliamentary secretary also has responsibility for smart regulation.
The other big change that took place is that the activities formally assigned to the special committee of cabinet for regulation and Governor in Council have now been transferred to Treasury Board. We have a role both in regulation and in spending, which I regard as a full basket of tools to invent change. We must start to think about certain areas and how to move down the track toward making responsible forays into changing the way in which public business is done.
Under expenditure review, some of the announcements made reflected very much the processes that were used in program review, such as vertical reviews of departments against a set of criteria. The first set of criteria was drawn very much from the former exercise. There was a second set added that looked at the sustainability of certain changes.
As we got into that, we found a couple of other areas. I am sure senators are familiar with the discussion on horizontality — whatever that means. It is the services delivered to certain client groups from many departments.
When you have dispersed or diffused responsibility, who is accountable? How does that system work and how do you derive value from it when you may have as many as 20 departments providing services to the same client group? There has been a desire to try to capture that. From Treasury Board's perspective, we are not a policy department, but there has been a desire to at least describe some of that activity to enable the policy departments and the appropriate cabinet committees to have a better discussion about it.
The third area, then, concerns a lot of horizontal activities that are specifically not programs but are operational, namely, procurement, asset management, contracting services and legal services. There is a range of these. We have been setting up reviews on each of them. I have been instructed to report on this in the late fall, which one would define as late November, early December. I hate to waste time, and although I am not saying that it is not useful, I think we could be more effective if we thought of these processes not as, ``We will study this and report on the fix in November,'' but as, ``We will start a change process and we will report activity and problems along the way.'' From our perspective, our November report will be the agenda for the 2005 legislative session on the administrative side. We are setting those things in process.
Walt Lastewka is the parliamentary secretary to Steven Owen at Public Works and Government Services Canada. He also has a background in supply chain management. We have partnered him with some senior people in that department, with Treasury Board involvement because we hold a policy on that. They are working away at examining procurement with a mandate to rework our system and make it more efficient and more effective, et cetera. We are intending to do the same thing in each area.
I believe that one of the problems we have in public management is that there has not been enough political attention brought to bear on it. It is not an area on which politicians normally spend a lot of time. Without political attention, the public service can manage most things by itself. Frankly, they do quite a good job on their own. However, I think we have hit a point where certain changes will not come about unless the leadership is engaged. The ``leadership'' here would be the people in this room as well as in the House, and the executive.
I have been trying to build a structure that engages the leadership in every way possible, so that when it comes to making some of these changes, we have already built a level of awareness and understanding of where we might want to go.
I will stop there and take questions. We can go pretty much wherever you want to go.
The Chairman: I have some questions but I will hold them. They are on those issues, notably, the new areas of responsibilities relating to the public service, the comptrollership process and the Expenditure Review Committee. We will see if members of the committee are able to extract the information from you without my having to ask questions.
Mr. Alcock: I am ready for extraction.
Senator Lynch-Staunton: I would like to go to the Estimates themselves. I am intrigued by the way the government is using their timing for other than parliamentary purposes.
For instance, the inside cover of the Blue Book points out that the Supplementary Estimates are usually tabled in early November and March. Last year, we got them in September. Actually, instructions went out to departments during the summer to the effect, ``If you have anything, hurry up.'' That was done not in a sudden burst of efficiency, but to satisfy a timetable that led to prorogation in November.
We now have Main Estimates, which, as far as I am concerned, are more of academic interest than of parliamentary interest. What I also deplore is that we only found out from a press release that these Main Estimates will be replaced by a revised set later this fiscal year. That information is not in the Estimates book itself. All of this is being done — and I hope you can contradict me, but this is my conclusion — because something may happen in early April and the government is in a rush to get funds approved between now and then so that they do not have to resort to Governor General warrants, which have been much more difficult to get in the last few years than they used to be.
I am not throwing up my hands, but I am unhappy, particularly if my assessment is correct, that the timing of these books and, in particular, the content, namely, the incomplete Main Estimates before us, are as a result of political considerations rather than what they should be or what they used to be: valid, important and significant information to Parliament that should be as complete and as timely as possible. That is not a question. It is an observation in the form of questioning the government's approach to all of this.
Mr. Alcock: I have an answer for your observation, if you would like to hear it. I cannot speak to the issue of the Supplementary Estimates for last September — I did not have this responsibility then — although I do have a number of observations to make about the Supplementary Estimates themselves, if you would like to talk about that in a structural sense.
You asked two questions. First, you asked what are these things that we have tabled, now that there is talk of another set that might be tabled? Second, you asked if there was any political motivation in that.
I will take responsibility for what has gone on here. There was no political motivation in it at all. In part, it may reflect my inexperience with certain protocols around here. It was done for a simple reason: There is a House order that says the Estimates must be tabled by a certain date. They must be tabled by the end of February. We could have put down the Estimates as they are, because those are the estimates. However, it is a reality that we are in the midst of a rather substantial change. I am told that this has happened not infrequently so close to a budget. We have a number of departments in transition. We have split HRDC into two departments and we have people moving into the security agency, which is quite large. The legislation to reflect those changes will not be passed by the House for some time to come.
These are estimates, that is, they are the departments' best guess about the splits of staff, the new resources and all that. I am told that in the past, we might have simply tabled this set of the Estimates so you would get them according to the House rules. In Supplementary Estimates, we would then describe the changes and movements. That would have been the more normal process.
I thought about it in two ways. First, given a desire to engage the House and House committees more completely, I felt that as these processes completed themselves and we got to a point where we could get down to more definitive statements, why not retable the whole package? We also have the other, not unprecedented but unusual, circumstance of having the Estimates come down before the budget decisions. Frankly, they would not make it into the Main Estimates anyway because normally they come together. For reasons of budget secrecy, they would not be in there but would come out later in the Supplementary Estimates. Given the magnitude of this change, I thought it would be useful to put before the House an accurate reflection of all the details after the legislation had passed, et cetera. There was probably an absence of strategy.
Senator Stratton: I doubt that.
Senator Lynch-Staunton: I assume that the figures will be the same in the second book as the first one, but their allocation will change completely.
Mr. Alcock: That is right.
Senator Lynch-Staunton: The government has been engaged since December in a massive reorganization. I do not think people are aware of the shifting of titles, the changing around, the shifting of one agency to another. It is practically endless. You have to read it over and over again. I am not questioning the validity of these changes, but I am questioning their being done without the resources to be allocated to each new sector or reorganized sector being determined beforehand. I do not see what the urgency was to engage in this reorganization without first costing it out, so you would not need a revised version of the Estimates. I do not think it can make the departments very happy. I am glad I am not in one of them.
I do not see why you had to rush into this and be caught by a standing order that forces you to put down the Main Estimates, and then alert us only through a press release. It was not in your statement to the House, and not even in Senator Rompkey's statement, when he tabled the Estimates in our house, did he say there would be another book coming out fairly soon. It is not even in the Estimates book itself; it is only in a press release. I will leave it at that. I just think you have done things upside down.
Mr. Alcock: I would find it difficult to completely refute that claim, given this is the first time I have approached this particular exercise. Also, this exercise, for some of the reasons you mentioned, is somewhat unprecedented, given the magnitude of the change. As far as the reason driving that much change that quickly, you would have to go to an individual above my pay grade to get the complete answer.
On the question of the statement, it troubles me somewhat that there is a sense of duplicitousness about this.
Senator Lynch-Staunton: I did not use the word ``duplicity.''
Mr. Alcock: You did not.
Senator Lynch-Staunton: I endorse it, if you suggest it.
Mr. Alcock: Let us put it that in another place where there is perhaps less rigour with language and a more free association.
I was simply informed I could not make a statement. That was why there was no statement. I got a formal set of instructions: stand, read this, put it down on the table, stand, read that, put it down on the table and walk away. I am not sure I would not make a statement at any time, but it was my understanding there was not the opportunity.
You are somewhat caught, in a sense. After the issue was raised in the House of Commons, I asked one of the procedural people, who said this is not the way we would normally have done it. We would have put down the Mains. Those are the Estimates. On your question about whether they will change substantially, in terms of the information that is there, it will stay the same. The ordering of it will shift somewhat as we get more detail on the new structures.
However, added to this base will be the budget decisions that will appear in the Supplementary Estimates. That would be the only significant change. These Estimates reflect the fall economic update. It is argued that these are more complete and a more accurate reflection of the government's current financial position now than the previous ones.
The Chairman: If the numbers will not change substantially in the revised Estimates over the Mains, and if what we are talking about is reflecting the change in responsibilities and so on, why have you not brought in volume 3, plans and priorities? What will change between now and June in terms of plans and priorities? The idea of plans and priorities is to explain the rationale for the money being spent.
Mr. Alcock: I believe it is for much the same reason, namely, that a significant number of them will change.
The Chairman: What will change?
Mr. Alcock: It is because of the changes in the departments. For example, Treasury Board's plans and priorities are being rewritten right now, in part because the fundamental structure of Treasury Board is changing and those negotiations are still going on.
As I mentioned in my opening statement, on December 12, bargaining was going to Public Works. It is now not at Public Works, it is back with us. What did we reflect in the plans and priorities?
Let me be careful here; I should probably seek an opinion on whether I am too far off-track. Am I? No, I am not. See, I get briefed pretty well, but I do not remember everything because I am getting older.
Mr. Mike Joyce, Assistant Secretary, Expenditure Management and Strategics Sector, Treasury Board of Canada: That is essentially the reason. If I can repeat, for some of the honourable senators who were not here when I made the point the last time, the reports on plans and priorities do contain significantly more detail than is in the Main Estimates. Therefore, for the departments that have been restructured, these documents actually do reflect their strategic plans. There is work that needs to be done, particularly in the departments that have been most affected, to reflect the strategies — not just the resource splits between the old organizations and the new organizations, but how they are apportioning those resources within their organizations, the new structures within the organizations and the new activities. That does take quite some time to work out.
As I mentioned yesterday, the intent is not to rush this, but to put in front of Parliament reports on plans and priorities that are a complete and accurate reflection of the three-year strategies of these new and restructured organizations.
Mr. Alcock: If I may, I should point out that Mr. Joyce has been terrific. I have been here 70-some days, and spent most of it closeted getting instructions — I mean briefings, although it is hard to distinguish at times which it is.
He did raise this problem with me, saying we could put them down by this date, which is the date we normally try to achieve, but they simply will not be as accurate as they should be for proper oversight purposes. I said that I thought members would prefer to have a document that accurately reflects the end point of these decisions rather than deal with something that is in transition.
It was more, perhaps, an error on the side of trying to be true to the sense of democratic reform and true engagement rather than trying to reach some other objective.
Senator Ringuette: You should be aware of my first priority, and that is the effect of Bill C-25 on the public service and, more specifically, the issue of national hiring as opposed to geographic limitation in hiring.
We were told a few months ago that monies would be available to enact the Bill C-25 provisions, including the removal of geographic limitation in our hiring policy.
I have been privileged to meet with Ms. Barrados, who to me is quite a change and a dynamo in regard to the Public Service Commission. I know that she is well aware of our Senate committee's concerns in regard to geographic limitation. She is ready with a plan to act fast to deal with this concern.
My question is: Is Treasury Board ready to put the money into this issue?
Mr. Alcock: I am always tempted to answer the question, which is, I realize, a mistake. In the first place, it is the Public Service Commission that has responsibility for recruitment right now. The implementation of Bill C-25 is really Minister Coderre's responsibility, not mine. It would be somewhat inappropriate for me to respond on the details of Bill C-25 and the impact that will have on this.
I have had some involvement in the issue of area of selection. This subject came up recently and I was the one designated to answer the questions. At the end of the day, the problem has been largely driven by simple cost- effectiveness, given the amount of hiring that is being done. The Public Service Commission does have a demonstration project in place and is looking at some recruitment tools. The problem is that anytime you draw a boundary, you leave somebody on the wrong side of it.
The motivation for it — and it is a policy that has been in place for a long time — has simply been that because we are the government and dealing with citizens, you cannot, like a private business, say you want to hire 5 people so you will take the first 15 on the list and interview those and just ignore the rest. If a citizen writes in to apply, you have to write back; you have to respond, and treat them and their request with respect. The sheer cost, when you get thousands and thousands of applications country-wide for what may be a small number of positions, is the reason why the first level of divisions was made.
As the public service explained it to me — and we got into this heavily in the committee a year ago or so — the motivation for it was simply that we were trying to squeeze down the very high volumes for mostly entry positions. It was driven by nothing more than that. With some of the electronic recruitment means, and using Web sites across the country, they can begin to broaden that. For the details, however, you really should go to Minister Coderre.
As for whether Treasury Board is ready to fund it, there is a budget coming, so I could hide behind that. I can tell you that Treasury Board is not keen on things that cost a lot of money.
We really are trying to demand from departments more rigour in the use of their funds and more reallocation of existing resources.
Senator Ringuette: I am sorry, Mr. Minister, but that is not good enough. Every citizen of this country, from coast to coast to coast, deserves the opportunity to serve Canadians wherever the job might be, and the current situation is not acceptable. It is not acceptable to Atlantic Canadians, nor is it acceptable to any other region of this country. When setting up your plans and priorities, this should be a priority, because in the next five years, we need to become active recruiters of the best brains from across the country, not just of the best brains from the centre of the country.
If there is a priority there — we know the attrition that will occur in the next five years and the mass hiring that will be needed — then it is one that should stand out in order to create equity and fairness for every Canadian who wants to serve as a public servant. That is my comment on the issue and I will maintain that.
In order to be efficient in dealing with what we call the ``customer,'' the citizens, I understand the need to review the structure and the hiring of Donald Savoie, who is a great expert in the field. I have read all his books. He will be working with Bob Marleau, who, it was recently announced, would join this team. In looking at the relationships among Parliament, ministers, public service, PMO, PCO, et cetera, I am concerned about all this restructuring, the studies of relationships, expenditure review and the major shuffling of responsibilities that occurred on December 12. I have also read about chaos theory, and sometimes there is a need to create a chaotic situation in order to realign all the different issues. However, I am a little concerned that right now we are looking at too many structural changes at the same time as we are looking at key elements in serving the Canadian population, and that is expenditure review. That is one comment.
You have said that you will be engaging Parliament in expenditure review. Two questions need to be answered. How will parliamentarians be engaged? When will we be engaged in this process?
Mr. Alcock: I will start down this road because it opens some important issues. I disagree with you on area of selection. The problem we have — and I will give you my opinion — is at the end of the day, the House will decide, the government will decide, but I will not pretend that I agree if I do not. Part of governing is making decisions about costs and the allocation of resources. While it sounds wonderful to say that every Canadian should have access to every job, the reality is that there are certain practical limitations.
The rules of area of selection work in reverse too. It means that people from Toronto cannot compete for jobs in Halifax. It limits the pool of selection in Halifax, for example, but that is not to exclude people, it is facing the reality that if you get 25,000 applications for 10 jobs, the sheer cost of dealing with that is huge. It could be said, and the House might well say, that is a cost we want to incur, but is that at the expense of other things? Therefore, from my perspective, we should put those actual costs on the table and make a decision. If that is where you want to allocate public resources, fine, then we will do it that way, but the decision until now has been that we can meet our recruitment needs in a responsible and fair way at a reasonable cost. The problem is that government always bears a higher burden, for the reasons outlined earlier, so we need to think about that.
As far as chaos theory goes, I actually looked for the book because I wanted to get sworn in on it. I thought it would be useful to have when I got sworn in, and Craig Oliver and I had some discussion on this one, but I could not find a copy in time. However, it is an important introduction to this.
Canada is actually a pretty good country in which to live. We have things to be annoyed about, but by and large, Canada has been quite successful as a country for all sorts of reasons, but one would be the quality of the federal public service and the kind of support we have had over the years. I would also argue that we are at a difficult transition point that we have been headed towards since the Second World War. It is a product of the tremendous changes that have taken place in the economy, in all our lives, with the speed of globalization and the new information systems. This has created huge tensions in the private sector. Consider all the massive reorganizations that businesses went through in the late 1980s early 1990s. That train is coming toward government. The demands on government to be smarter, faster and more responsive are huge, and I would argue the public service is having trouble meeting those, in part because the people in this room — actually less so the people in this room because this committee has always had a decent level of engagement — and certainly in what I will call, from this vantage point, ``the other place,'' have not been terribly engaged in these questions. I do not think the public service can make these changes alone.
That is my personal belief, and I have studied this all over the world. There is not a democratically elected government in the world that has solved this problem. They are all struggling with it, that is, how do you take what are largely responsive, reflective organizations, slow moving and incremental, and help them to adapt to a community, a society, that is demanding responses like this? We do not have time to sit around and think, and our responses up to now, I would argue, have been to remove responsibility from Parliament, so Parliament, the other place, ignores the issue.
I would say that you have not been stellar either in some things, but there has been a giving up of responsibility that I believe has not been helpful. It has not been helpful to the public service or to our role as government, and it is time we confronted some of these change issues. It is ridiculous that we have four ways of connecting businesses to business opportunities. Why, in a world like this, do we need four? Why not one? Why do we need 300 libraries? Why do we need all these artifacts of an old way of doing things? Can we not rethink how we deliver government services and derive more efficiency from it? Why do we have a procurement system that the pre-government policy guys tell me — they called me ``Reg'' then because it was before I became minister. Now they call me ``the Honourable Reg'' — started in 1843? There was the first written statement of the policy on how government procures things in the colonial offices. That policy was brought into government over the years, over the decades, in response to all sorts of things. Someone bought a sheep from his brother or hired his uncle and we patched on policy fixes, until the procurement system go so heavy and huge and awkward that the cost of procuring things is often worth more than the goods. We do all sorts of stupid things in how we buy. Bring the deputy minister of the Department of Supply and Services, or Public Works, in here and have him tell you some of these stories.
We write 15,000 contracts for the same Microsoft software every year and we get a discount. We are the largest purchaser of Microsoft software in the country and we save 8 per cent. Wow, that is great, right? Large organizations in Canada told Microsoft a long time ago that they would buy this many million dollars worth, they wanted it downloaded from one site and they wanted the best price, and they save 40 to 45 per cent. Because of our antiquated procurement system, because we want to dot all the i's and cross all the t's, we impose huge costs — money that could be better used by citizens, either by giving it back to them in the form of tax cuts or giving them better services.
We can derive huge savings from the operational costs of government and not touch a dollar of the program money. That is a personal belief, and that is what underlies our reviews.
Senator Ringuette: The savings will be going to nationalizing the hiring process?
Mr. Alcock: The savings will be going to choices that representatives in Parliament will make. I do not mean to sound too glib, but we are at a point where we should confront these issues and have honest conversations about them, and frankly, given my experience, the people on this committee can make a huge contribution because this committee has a reputation for being thoughtful and bringing a fair amount of brain power to bear on these issues. Sometimes, it helps not to have the immediate political imperative driving you.
Senator Ringuette: Let us say you are not off the hook with the national hiring issue.
Yesterday, I got two different reports in my office, one from the Government of Canada in regard to the public service report and one from National Defence. In the my last 10 years on Parliament Hill, one department has constantly argued that it was underfunded, and that is National Defence, which has sent us a very nice, full-page glossy report. Look at this. Now, I can imagine the price of this publication versus the price of the other one. The information is equally important to us. However, given the glossiness and the cost of the National Defence publication, especially coming from a department that is constantly hammering into Parliamentarians that they are underfunded, I wonder how they have the money to do this.
National Defence does not go through the Public Works procurement process for most of its purchases. Perhaps there should be a standard in regards to this, and then National Defence could maybe have more money to feed its employees.
Mr. Alcock: When you make the comment that National Defence is always concerned that it is underfunded, I am trying to figure out which departments are concerned that they are overfunded.
Senator Ringuette: They are the loudest.
Mr. Alcock: It is always hard to pick apart what is real need and what is driven by the industry that supplies the given department, but I think there are some legitimate concerns in National Defence about the protection of our people we put in harm's way. Those are very legitimate concerns and ones to which we need to respond.
However, the kind of issues that are driving my thinking on this now are less department specific and more in the nature of how we do government business. I want to be careful when I say this. The ``we'' I am talking about here is the political class and the executive. The public service has its own skeletons to deal with, but frankly, if I may share one of my biases with you, I would like to claw back some of the savings to put into enhancements of the public service side. We have cut them off in terms of training and development and some of those issues, and we pay a price for that. We need to make investments in our public service along the way, too. However, they need our engagement because some decisions are very tough ones and they cannot make them, so we have to. We have to figure out how we make tough decisions, because every single thing that government does is attached to people and money. Every dollar we spend is attached to someone, so these decisions will produce concerns.
Senator Stratton: I enjoy your frankness. A predecessor in your department, Richard Neville, supplied us with clear answers to questions that we appreciated very much. How is your blood pressure, by the way?
Mr. Alcock: I am not sure. I should get it checked.
Senator Stratton: Regarding this policy review — and it is always fascinating to hear this — how long has it been going on? When are you completing this review, and have you put a dollar value on it?
Mr. Alcock: That is a good question. This is actually at the heart of a debate we are having now. When I first got this job, I was confronted with two other issues. First, I was asked to see if I could make some financial room at year-end, whether we could undertake some actions that might provide a little more comfort in the budget at that time. In the fiscal update in the fall, they were predicting a $2.3-billion surplus, and they wanted to transfer $2 billion to the provinces, which would have left us with only $300 million for a prudence fund, which was considered to be too small. We had to take that on.
We also had the commitment in the last budget of a $1-billion A-base cut, and that had been notionally delivered in 2003-04, but I wanted to get it done before we entered 2004-05 so I did not have that monkey on my back for a whole year. I wanted to get it off the table so we could concentrate on these reviews. I cannot share the details of that at this point, but they will be announced in the budget. My goal is to have it ready for the budget, and you will see that when the budget comes down. One had to deal with those things off the top.
Some of the reviews are underway in the sense that John McCallum is going to be working on internal governance. Some of them have the terms of reference written, but we have not put the teams together to announce them yet. I hope to have them all mandated and announced within the next week or two. I am asking them to report in June and September and then do a final report in November. The reports are less like the standard report around here, the big glossy book that says, ``Here are all the answers to fixing this problem.'' The reports are more like this: ``We got it down this way and we made a few changes along the way.''
Now, with respect to your question on targets, I have proposed to some of them, where I think it is possible to set targets, that they begin to report out targets for the next three months, so we constantly keep a rolling target before them.
I want to be a little careful about that because in some of these areas, such as procurement and asset management, they talk pretty boldly about some big numbers. I would prefer that they made those predictions having taken the three months to study the issue and be more definitive about it. I am asking them to start setting targets with their June report, where appropriate.
For the September report, I am asking them to frame questions for you, and Senator Ringuette was talking about how we engage you. One way, as we get into the fall session, is to lay the findings before the House and committees that are interested in this, and some of the tougher questions they will want your advice on as we get into the final report.
I fully expect some of these reviews will not work. That is the other thing I want to put on the table up front. One of the mistakes we make in government is to try to be error free. Wisdom is based on knowledge; knowledge comes from good decisions; good decisions come from bad decisions. You fail to learn, and we deprive ourselves sometimes of the chance to learn by trying to pretend everything we do is absolutely right. The fact is that it is not, and we will try some things that may not work as well as we might hope. I still think it is worth trying.
Senator Stratton: Do you have any idea of the overall cost of such an animal?
Mr. Alcock: I have to be careful. I believe there will be a broad description of this in a document that will be released shortly. Since I am not the final author of the documents, I should not pre-empt him.
Senator Stratton: I accept that.
Mr. Alcock: It may be a career-limiting move.
Senator Stratton: I understand.
Part of this policy review that you are carrying out is, of course, to look at situations that have transpired particularly over the last three to five years, starting with our wonderful gun registration and going on to the current problems that you are having with controls, because essentially, it is management and controls that we are dealing with here and I know you are knowledgeable on this.
The Canadian public will be interested in how, in the end, this review will prevent the gun registry fiasco and others such as that. Can you tell us, in a brief time now, what the Canadian public can expect as a result of this?
Mr. Alcock: The real question is can I tell you anything in a brief time?
There are two kinds of questions here that would be worth framing. One is the issue of comptrollership, but I will deal with the gun registry first. There are all sorts of problems. One is simply that there is a profound ideological disagreement in certain sectors. We will never square that circle completely, but we also added to that with, shall we say, less than stellar implementation, and that was predictable. I have been with the group that studies this since 1987. I can give you chapter and verse on hundreds of projects that have gone exactly the same way. People not familiar with building databases in a rigorous way see the magic of the database and want to capture all the information in the world instead of just meeting the first level. If you want an interesting view of this, there is a wonderful case that is taught at Harvard Business School about how the U.S. army built their recruitment system. They claim they could never do it today because they would have to give out all the specifications, but they started building a little thing that got bigger and better as they worked their way through it. We tried to build a Cadillac and it collapsed under its own weight. We have done that in several areas. Government on-line is another one.
In the dot-com boom we got caught up in the excitement of what the technology could do without understanding it. I want to be really clear about this. I can show you exactly the same thing in virtually every state in the U.S., the U.S. federal government, Australia, Britain and Europe. Democracies have a problem with this technology because the instruments of democracy continue to refrain from seeking transparency. An area that you will be somewhat familiar with, Senator Stratton, takes me to my other topic, the problem with comptrollership. When I was a public servant, Treasury Board was always a choke point. It was always the place that said no, and you could not get anything done. I think some of the moves undertaken in the name of modern public management were the right ones. The credo was let managers manage, the same thing you saw in the developments in the private sector. The idea was that you get better public service if you give more latitude to the public servant delivering services in local communities to respond to local need. This is not a bad principle. The problem was that large private-sector companies built the information systems necessary to monitor what was going on all the time, so if someone began to go a little off the rails, they could pick it up faster.
The traditional answer to that on the government side was to have comptrollership. We removed comptrollership because it was too inhibiting but we never built the system because of all the problems that exist in building electronic financial-management systems in government. The reason they are the problem is because as soon as you collect things digitally, transparency goes way up and this threatens the system. That is the bar we have to cross, to help the public service cross, to adjust to transparency. Transparency sounds good, but if Mike is too transparent and I am not ready for it, we will not be a happy couple, so I have to be more transparent to help Mike become more transparent. Frankly, these people are far more willing to do this than the political side is. We need to figure that out, to make that cultural change.
Now, we are going to put in a new form of comptrollership. As for the present models — look at what is happening to Mr. Michael Eisner at Disney; talk about the death of deference. When Mickey Mouse is not trustworthy we have a problem. It is not just government. This lack of trust is based on, I would argue, greater openness in the world. If you read recently the material on the Canadian Imperial Bank of Commerce, CIBC, about their new ethics package and their concerns, it is exactly the same problem. Citizens do not trust large institutions very much so we have to raise the bar in government and in society.
There was an article in the National Post last Monday about the CIBC solutions. They were saying some of the practices that they were being killed for by customers were things that they winked at 10 years ago. Well, public standards have gone up and we have to respond to that.
How do we do that? I pose this not just as a rhetorical question leading into another question because I am struggling with the answer. How do we impose a form of comptrollership that gives us what you are asking for and Canadians are asking for, which is a greater level of control so we can identify some of these problems and respond to them earlier? How can we do this without taking managerial authority away from the deputies, who at the end of the day have to run their departments? As soon as we put that responsibility somewhere else, we destroy an important principle of management — accountability. How do we do that in a way that does not prevent the very thing we want, which is a better, higher-quality more responsive public service? We have two problems here. My thinking about this — and it is the debate we are having at Treasury Board now — is to use these positions to drive the final stage of building these systems. We put smart, credentialed people in each department who have some knowledge of this and they become a focal point for driving the human resources and financial and asset management systems, the same systems as are in any other large organization. We build them in an enterprise-wide way so we can begin to treat government like an enterprise, as opposed to a series of independent, randomly acting groups.
This is the largest business in Canada. We are four times larger than any other organization in Canada, with seven times more revenue than the wealthiest company in Canada. This is a hugely complex business with great disparity across the range. This is not easy. Now, another factor of comptrollership is internal audit, so we are looking at both of those, but always with this idea of how to get the control that we want without destroying the ability to deliver services or choking it off so much that we dumb down the responses. It is a question on which I would love to see some response from this committee, because I see people around this table who understand these questions and would offer some real help on this.
Senator Stratton: You have given what I think is a very interesting explanation but it means that the answer is not really there yet. You are still moving through that, and the Canadian public is saying to you, ``We keep seeing this happening; it is still happening. When will you get a handle on this so that we do not have to go through this any more?'' I suppose there is pressure on you to deliver, but it is a little worrisome when we are still having what you would call an esoteric discussion. I think it is needed, but how fast can you deliver an answer to those folks out there that they can feel comfortable with?
Mr. Alcock: My experience is the Canadian public is a lot smarter than we give them credit for. They also want a good answer. If we do something that is representative of an answer as opposed to a real answer, they will smoke that out quickly. The reality of failure is that I think we have to say to the Canadian public that this is a difficult problem; this is not easy. I would argue that the problem with public management today is that most of the debate takes place in the 30-second character assassination that is Question Period. That is where public attention is focused and it has nothing to do with quality of management. We are doing something. We are putting comptrollers in place in all the departments and you will hear more about this in detail. Treasury Board has done a lot of work, particularly this new secretariat that has done much work on a management framework, and there are financial policies and such in place.
From my perspective, what is missing is the building of these systems. There is an ongoing debate about how to do it. Are we focused on doing it and on solving this problem? Absolutely.
The Chairman: The essential thing about this comptroller function, as I understand it, is that the comptroller situated in a given department or agency will not answer to the deputy minister or deputy head, but rather to a comptroller general. He will answer in respect of government-wide standards, government-wide discipline. In that context, I do not see how the problem of deputy ministerial authority or responsibility should arise.
I hope you are not telling us that this idea that the comptroller in the particular department or agency answers to a different master is being resisted in the system; and, if it is, that it has any chance of being derailed by that resistance.
Mr. Alcock: Is that a question, Mr. Chairman?
The Chairman: Yes.
Mr. Alcock: This is an incredibly intelligent committee that should engage on these questions.
The Chairman: We will.
Senator Day: Minister, my questions follow along the same lines. We spent a lot of time over the last several months on Bill C-25, the public service reorganization bill. I believe most of us bought into the idea of letting managers manage according to a plan that was set up. Their outcomes would be tested based on that. Their advancement and their remuneration should be based on how well they perform.
Like the chairman and Senator Stratton, I am concerned. It seems to me that these managers will now have the comptroller general's representative looking over their shoulders. They have their own departmental auditors so nobody will find anything before they find it themselves. You have the Expenditure Review Committee, which is a cabinet committee, talking about various activities. We talked about the Public Service Commission being more of an oversight body and doing less of the other things they had been doing in the past.
Are we creating employment opportunities for accountants here? Will the manager actually be able to manage under this scheme that seems to be developing? Are we overreacting to an unfortunate situation that has occurred?
Mr. Alcock: Let me walk you back through that because you ask a lot of important questions.
You ask if we are overreacting. I do not think we are overreacting, in the sense that we are reacting to that situation and a host of others. The sponsorship scandal, such as it is, is a particularly difficult one because there is some evidence that it involves the political class. There are a lot of others that do not and which are just malfeasance. However, the problem is the same. It is a lack of an early warning system, an ability to catch this early.
We must be careful to choose the right instrument and that we do not create a solution that just dumps things down to the next problem.
The question that Senator Murray asks is critical. When I talk about this being a smart committee, frankly, I would be interested in this committee's thoughtful opinion on this question.
One of the problems — and I always want to say this up front — is that the public service is not a private business. It cannot be a private business. It never will be a private business. People who try to make it a private business are kidding themselves. It is a far more complex management environment than the most complex private business.
As well, the average deputy minister in a big department here is running a company that is bigger than some of the biggest companies in Canada. These are not trivial operations.
There are two models of comptrollership that seem to be developing. The response to Sarbanes-Oxley in the U.S., and all the work that has been done since Enron-Anderson, is to tighten up comptrollership and internal audit and to defuse accountability. Well, it is not actually to defuse accountability. One of the arguments is that if the comptroller in your department has a secondary reporting relationship to someone other than you, then is that comptroller better able to tell you the hard things? That is one model. In fact, if you look at some of the literature on modern comptrollership in companies like GE, BCE and others, companies which, by the way, win awards as some of the best in terms of ethical management, this dual reporting relationship — and often, as Senator Murray says, completely independent reporting relationship — is very much a part of that model.
Senator Day: Is the danger of that not that the manager feels that this person is there as a spy, looking over his shoulder all the time?
Mr. Alcock: Or the manager can say, ``I no longer need to worry about that because somebody else will.'' It is part of the defused responsibility-accountability models. For example, does Treasury Board want to take over the management of departments? No. Managers should manage their departments; but we want to have the mechanisms that will allow us to enforce accountability and to get into situations early when there are problems.
It is not a simple model. With regard to internal audit, do you want to have the manager truly engaged in internal audit? In an ideal world, in a well-managed department, a senior manager is getting ahead of these things before anyone else gets onto them, which is what you want. You do not want things floating upward.
It is strange. The public service is at its best when we never hear about it because it just does the business of the day and we get on with life.
You must be careful that you do not take too much of that authority away from the person at the head because then it is too easy to say, ``It is not my job, it is theirs.'' It is a difficult circle to square.
A requirement of Sarbanes-Oxley with regard to publicly traded companies is that the internal auditor reports not to the divisional manager, not to the CEO, but to an audit committee of the board, by law.
The Chairman: There is a lot to be said for that, knowing what we know.
Mr. Alcock: Exactly.
The Chairman: There is a lot to be said for it in government, too, in my opinion.
Mr. Alcock: What I framed for you there is exactly the debate that I am struggling with as I sit here. We will make decisions about this now, right? It is not a trivial argument on either side. It would be useful to have you engaged in this. There are others to whom I am speaking about this.
Let me move a step further. I have a mandate on the governance of Crowns. We have some big-enterprise Crowns that operate in commercial space and are not fundamentally different from EDC or BDC. Should we be designing a kind of variant on current governance whereby we have at-risk people on the boards? Not ``at risk'' — is not that awful? I mean ``at pleasure.'' There is a difference. There may not be a big difference right now. That is a Freudian slip of some size.
The Chairman: Perhaps there is a more existential question you should be asking yourselves about some of those organizations.
Mr. Alcock: You are off somewhere I cannot go. It is not that I am not willing to go there. I understood what you said.
The Chairman: They exist.
Mr. Alcock: Senator Oliver just asked: Should we privatize them? Your question is not a bad one.
One of the discussions that have been brought to my table is: Is it time to be looking to the reporting regimes of publicly traded companies as the model for our enterprise Crowns? Perhaps that is the way to go. They would have all the aspects of a private company. The transparency requirements for a publicly traded company are much greater than for a Crown right now. Is that the evolution we want?
These are the questions that I will be framing.
The Chairman: You should have those fellows who would like to appear before a parliamentary committee representing the shareholders every so often. They do not like it, is the short answer, in my experience.
Mr. Alcock: That may not be a bad idea. Again, give me a list of people who like oversight.
The Chairman: Senators.
Senator Day: May I ask a few short questions? I think we are running out of time.
Mr. Alcock: I have lots of time.
Senator Day: Am I correct that the Public Service Commission is still hiring?
Mr. Alcock: Yes.
Senator Day: Did you indicate that might be changing?
Mr. Alcock: I need to be somewhat circumspect here, in that I do not manage that bill. I have some involvement with it because I chaired the committee when it went through the committee. I think they did a lousy job of it. This committee did a better job, frankly, than the House committee.
I note the testimony of one witness in particular, who said that when we started down the road of Bill C-25, the Clerk was the head of the public service, the Treasury Board was the employer and the Public Service Commission was the employing authority. After 32 years, we went through all this change and two years of study and work. At the end of the day, the Public Service Commission is the employing authority, the Clerk is the head of the public service and Treasury Board is the employer.
I should probably stop talking now because I will get myself into trouble.
Senator Day: You indicated that Minister Coderre is implementing Bill C-25. We may contemplate talking to him some time in the future. There have been so many changes with respect to government organization that I think go even beyond what was contemplated in Bill C-25. Do you contemplate the necessity for some further legislation to confirm some of these changes that are ongoing or that might be forthcoming?
Mr. Alcock: Do you see all these people behind me? They send them down here with me to tell me to shut up on certain things. I may be a little too glib about this. I do not know how appropriate it is for me to offer a personal opinion on someone else's work. I think the point you make is an exceptionally valid one. We will change everything else about how the business works, if we are successful, and will have an impact on what is probably our most priceless resource, which is our human resource.
The question you raise is one that should be thought through. I do not know how to deal with a question like that. I have huge respect for Minister Coderre and the work he is doing, and the work being done in trying to get the agency up and running. However, even if we change the other parameters, what is more important in a business than the people who work for it?
One thing that frustrates me about how we treat the public service is that I cannot think of a large private-service entity that is successful by beating up its staff all the time. We need to reframe these relationships pretty quickly. We change comptrollership. We change our information systems and get an information system in place. Then, if you want to delegate responsibility to people, you have all the tools to capture it so you could go further with that delegation.
The Public Service Commission is a huge resource. It started a very long time ago to basically ensure independence in hiring. Whether Senator Ringuette likes it or not, if you have a better way to audit that, you may not need quite so many resources involved in it. I do not know.
Senator Oliver:I have had a longstanding interest in issues concerning the public service, as you probably know, and I was an adviser to the Treasury Board in the 1980s.
You have partly answered both of my questions, but I still would like to put them. The first deals with new policies for Crown governance and oversight. The Banking Committee has looked at some changes for Crowns, including such things as putting in audit committees, insisting that people who sit on audit committees of Crowns be financially literate and that kind of thing, splitting the CEO and president's positions and trying to bring in some Sarbanes-Oxley- type corporate governance principles. That has started to happen.
You have told us that your deadline for this report is September 30. Many Crowns are involved with many different departments — Transport, Finance and so on. I am interested in the methodology that you will employ to try to bring in a meaningful study. You may have to look at commercialization. You may have to look at privatization. You may have to look at having an internal committee of DMs or ADMs. Then you will need some kind of external committee and so on. What methodology will you use to come up with something that is appropriate for a modern governance system for these Crowns?
Mr. Alcock: The hesitation you will hear in my voice on this is that I am in negotiations right now with a couple of people I want to bring in to help steer this process, people who I think have something to say about governance at large. I hope to frame the very questions that you are raising and put them. My September 30 deadline is a useful one because it is the start of the fall session, and I would hope to put the questions before this committee, the Banking Committee and others who have an interest in these Crowns. You can make one big division between the enterprise Crowns, which tend to operate in commercial space, and the other ones that tend to have a more specific focus. It would be a useful discussion on a couple of bases.
This is where I am perhaps not very good at being the President of the Treasury Board, because I do not have an answer to that. As soon as I start to speculate, everybody assumes that I am speaking in code and do have an answer. Is privatization a solution? I do not know. It may be. There is some reason why we have not gone that far in the past, and I would like to understand what that is. Is moving more in the direction of using the public reporting systems of private companies a way to bridge the question of transparency of government? Do we want to be specific? Sarbanes-Oxley requirements for internal audit are embedded, because even large Canadian companies come under Sarbanes-Oxley as soon as they trade south of the border. These are questions. I would like to frame the questions with the help of a couple of minds who have some expertise in governance at large and put them before the House and you, and let us make a collective decision that is in the best interests of the work we are trying to do with these Crowns. The instrument of choice needs to be that which best meets the service requirement of the organization.
Senator Oliver: My second question deals with the PCO. The numbers I will give you are small. However, I am wondering whether what we are seeing is the beginning of a trend in terms of the concentration power in the Prime Minister. In the Estimates, the budget for the PCO, which is basically the Prime Minister's department, went up some $21 million, from $49 million to $70 million, with a $13-million increase under two new Aboriginal initiatives. There is a department that deals with Aboriginals, so here we find business from another department coming under the PCO, which is the Prime Minister's department. There is other department's work coming in under that. Even though the numbers are small and the increase is only 18 per cent, in this reshuffling, will we see the Prime Minister taking more control and getting more of a sense of being able to take more accountability for the public service by bringing many more initiatives under the PCO wing? Is this just the beginning of a series of transfers to PCO?
Mr. Alcock: One piece of advice I got from the Prime Minister was, ``Do not speculate.'' I will now ignore that advice at my peril.
Let me respond this way: There has been concern about the concentration of authority in the PCO, PMO, for a long time. Donald Savoie wrote a book about it, Governing from the Centre. Exactly the same trend is occurring in all provincial governments. I argue that one of the reasons for the concentration is that in a world that is moving faster and faster, you need a point of decision. The world cannot wait for government to be reflective.
I was the director of child welfare in Manitoba, driving a change in legislation in 1984, and I asked the drafter to write a whole bunch of enabling clauses for regulation, not because I wanted to take power away from the house but because as a manager, if Saskatchewan made a change, I had to reflect it, and I could not wait a year or two for it to be done legislatively. Some of this was more of a consequence of the world in which we lived.
Now I will move to the more political side. The question you raise is in regard to the actions of my leader.
Senator Oliver: And where managerial accountability will stop.
Mr. Alcock: I will give you what may sound like a commercial, but frankly it is what I believe about this Prime Minister. I think you are seeing a concentration of interest. It is in a very specific area. It is in three files. I ask you to search history for examples of leaders who have come into a position where they had absolute control and who voluntarily gave it up. All this discussion about democratic reform is not a campaign slogan for him. It is an absolute conviction. I share it. One of the problems in public management has been the failure of the House of Commons to live up to its responsibilities in oversight. I can track why that happened in my own theoretical way, but nonetheless, that is the problem.
Power is a zero sum game; it has to come from somewhere. We have a leader who wants to take it back. I fully expect to lose votes but I believe we will have better governance in the end. This is a foreign concept to this government. At the same time, he has done something else. He has said that there are certain things in which he has a personal interest. You can debate whether that is a good or bad thing for the leader. He has chosen. If you saw him in the town hall after the Speech from the Throne, he was asked, ``For what do you want to be remembered?''
Senator Oliver: I remember that.
Mr. Alcock: Look at what he has picked. He picked reducing Western alienation, a problem since 1870.
Senator Oliver: And the Aboriginals.
Mr. Alcock: This is a very difficult file. Remember David Crombie came to office saying, ``I am going to be the last Minister of Indian Affairs.'' These are huge, difficult files and the Prime Minister is engaged in them, so it requires increased secretariats.
Senator Oliver: He is engaged in a Canada-U.S. file as well.
Mr. Alcock: That is true, and cities.
Senator Oliver: Therefore, there is more of that concentration coming to him.
Mr. Alcock: I guess we will have to see what the outcome is. He is doing both. I am the manager of Treasury Board. He expects me to manage and he does not mess around with my files. He does not do that with most ministers. He has an up-front interest in these things because he thinks they are the most difficult. The Minister of Indian Affairs appreciates that because he knows how complex it is. If it were easy it would have been solved years ago. The fact that the Prime Minister is engaged in these difficult files is to his credit.
You see these two actions. He is pulling certain things in because he will help drive them, but he is also pushing a lot of —
Senator Oliver: At the base of my question is whether, after the massive restructuring that you are doing, we will ultimately see much more power flow back into PCO, so that PCO, being the Department of the Prime Minister himself, will really be where accountability will stop. Is that what we are really seeing?
Mr. Alcock: I do not think so, senator. From my personal experience with this Prime Minister, and being a big supporter and fan of his for a long time, he is deadly serious about what he talks about as ``democratic reform.'' When he first said it a few years ago, at Osgoode Hall, everybody thought it was a campaign tactic. However, if you read his speeches, going back to at Assumption University two years earlier than that, you see the same theme, how the public space where citizens come together to debate and make decisions has been devalued, and it cannot be.
I gave a speech in Toronto last week. I said the problem is that democracy cannot be a spectator sport. People cannot sit out there and throw bombs at it. It is their problem, too. We have to solve the problem. We cannot have citizens disengaging from our democratic instruments. It is too dangerous. Here we have a Prime Minister who is saying, ``I understand that the concentration of power and authority in my office is a bad thing and I take it back.''
I think it is hugely exciting and hugely difficult. That goes back to Senator Ringuette's comment about the chaos theory. This is what Craig Oliver was driving at with me. This will be chaotic, but maybe it is good chaos.
Senator Lawson: I have a more basic question.
Mr. Alcock: Good.
Senator Lawson: Ahead of this entire problem with the sponsorship, about five or six months ago — it had a short lifespan in the newspaper — the Auditor General discovered, I do not know which department of government, was obviously sending grants overseas to Africa and so on. It appeared to be more than one. There were a number of them that had sent grants in excess of the government guidelines. When the auditor asked these employees why they did it, they said, ``Because we knew best what should be done.'' That was the quote. This did not have a long lifespan, but it seem to me, and I am an old labour man, that this is a warning sign that there is no management, that they decided on their own that they would violate government policy and do what they pleased. The reaction of the people who brought it to my attention was that they should have been fired forthwith, or the manager should have been fired or somebody should have been held accountable.
How can you have people saying there are guidelines in effect but some can say that they have decided that they know best? I am curious to know how that happened. It had a short lifespan in the paper. Was anything done about it? Were these people disciplined? Are these people still doing what they think best? What if they think it should not be sent there, but over here? Maybe we have more serious problems. It seems to be a warning sign. Someone should be saying, ``Enough of this. If you cannot respect the government guidelines that were imposed on you, or if it bothers you or you do not think they are appropriate, then you go to your manager, deputy or minister and say you think there should be some changes. If you will not respect them, you will be replaced with somebody who will.''
Mr. Alcock: Senator, you and I share a certain commonality here, but I suppose to you, I am a central Canadian.
Senator Lawson: I am an all-Canadian. I can fit you in.
Mr. Alcock: You are far enough west that the sense of a public service that at times is non-responsive or believes more in its own value set than the value set at these tables is not an uncommon one. It is certainly one we see in the regions. I do not know which region you represent specifically, but I do not think it is uncommon to have that sense.
It must be very difficult for public servants to come before certain committees. Again, the Senate always gets high praise from public servants because you tend to take their issues seriously. You often hear public servants say the best examination they got was from a Senate committee. It must be hard for people who are by definition intelligent and who take their work seriously to sit in front of some of the debate that goes on around here in the name of public policy.
I can give you chapter and verse of experiences I have had around here in which a lot of smart people working on tough problems were subjected to trivial assault. Have they become somewhat disdainful at times? I do not think they really have. I think most public servants are not that keen to come before the House because they see it as an irrational system, but they also do not get a lot of guidance on it. The onus is on both sides. I speak more of the House of Commons here, but there is a real onus on our committee system to start to work on giving the kind of leadership that you are talking about.
The second part of the problem you pose, though, is this question of accountability. That is what we are trying to sort out with this FAA review. We are trying to set something down on both of them, so that the ethics, modelling and structural pieces can be hardened up with some of the accountability pieces in the FAA. It is difficult.
That angers me all the time. As a Western Canadian, I feel that Ottawa does not understand where we are. They think the west is west of Sudbury.
Senator Lawson: You are right. Accountability is the keyword. You are on the right track in seeking greater accountability and I support what you are trying to do.
Mr. Alcock: Senator, given your background and the kind of work you have done throughout your life on the labour side of these questions, your voice will be incredibly important. How do you square those circles? We want to make sure our public service has the best direction, guidance and support that we can give them. Their work is vitally important to the quality of our lives. We also want responsiveness to the demands of citizens. How we articulate those demands is important and I do not think we are doing a good job right now.
Senator Lawson: The other side of that, and it is amazing to watch it happen, is that in the previous administration in British Columbia, in the provincial government, we had contracts that talked about management rights. The management surrendered all their rights to the unions. Of course, that is not healthy. It was wrong to do that. They are trying to correct that situation, which is a difficult task.
Mr. Alcock: Power and authority should be kept balanced.
The Chairman: Honourable senators, we have run out of time, but we will go into overtime because I did undertake to give Senator Lynch-Staunton and Senator Ringuette an opportunity on the second round.
Senator Mahovlich: You mentioned oversight in the House of Commons. I am wondering if you see any oversight in the Senate?
Mr. Alcock: Senator Mahovlich, I am new in this job and this is my third time before a Senate committee. I actually came here as a member.
Senator Mahovlich: You would never know it.
Senator Oliver: He seems quite at home.
Mr. Alcock: To your credit, the urban mythology about going before committees, as I have found when I talked to senior public servants, is that, almost universally, they feel that they get a better hearing and more rigorous questions from the Senate committees. This occurs largely because there tends to be more experience in history, labour, business and related topics around these tables that is somewhat separate from the exigencies of the political debate that takes place in Question Period.
I hear that all the time from public servants. I think the answer to your question would be yes, there is better oversight at the Senate now.
Senator Mahovlich: The former Conservative Senator Bolduc, a very passionate man, was a member of this committee. Two years ago, when the Auditor General appeared before this committee, Senator Bolduc brought to her attention that the checks and balances were not what they should be. He often recommended other countries as examples of better systems in this respect. What country would you look to as an example of better checks and balances?
Mr. Alcock: I have been engaged in that work since 1987. We look at all countries and we tend to draw a circle around the industrialized world because that is where you see the greatest use of information technologies. Canada is as far ahead as anyone else is and that is why I keep saying that this is a transformative change. There is no model on the other side and we are all struggling with it. Part of it has to do with forcing our instruments of democracy to act like them. Think of the Auditor General for a minute. It is a shame that Senator Bolduc is not here now. Senator Murray was talking about him before and I will have to hunt him down on this issue.
We made some changes. As the pace of life sped up, the House made decisions to give up authority. In 1969 we stopped examining Estimates functionally and we allowed them to be deemed passed whether we even saw them or not. We gave up 50 per cent of our responsibilities. Today, we spend less than 5 per cent of our time on Estimates review. Mr. Robert Marleau will tell you that 50 per cent of the House's responsibility is to review Estimates. In 1977 we turned to the auditor — and I partly blame television for this — to take on the values questions.
I like the current Auditor General and I liked Mr. Denis Desautels as well when he was the Auditor General. I am hoping to convince him to work with us on some of these questions. If I were designing the next new service, I would not ask my accountant what the value should be. It strikes me that the House of Commons, if properly functioning, is the one place where people from all parts of the country come together empowered by citizens to wrestle with the values questions. If they are to do it right, that is what they should be doing. That is why it is important that the House represent the country — that it contain 52 per cent women and that all levels of income be represented. That is why those things are so important and that is where we should debate those questions. To hand the values questions over to anyone, no matter how good, is wrong; and we suffer from that. I do not know how we return to the better way, but we have to set that as a goal. I hear that when Prime Minister Martin talks about democratic reform. We have to challenge the House of Commons to be what it is supposed to be. We will have a better government for the effort.
Senator Banks: I may ask a question that will require only a short answer.
Mr. Alcock: Unlikely.
Senator Banks: I was reminded of this by the question Senator Lawson asked, and I remember that event. Yesterday, before this committee, according to the minutes that I read, Mr. Mike Joyce explained what looked like an extraordinary expenditure of $500 million, an increase in the Department of Justice. For the previous 20 years, the department had not had the proper parliamentary authority to spend money that they were collecting. One can only assume they had the authority to collect it, but they had been spending more money than their parliamentary appropriation, than they were authorized to spend. This increase was to merely normalize the accounting for that.
I did not know, and it never occurred to me, and it obviously did not occur to anyone in the Department of Justice, which, one assumes, would have a grazing acquaintance with the law —
Mr. Alcock: I think the jury is out on that.
Senator Banks: — that it might be inappropriate to spend $500 million more than the department actually had authority to spend. It was not improperly spent, I am sure.
Did the Department of Justice always charge for providing its services to other departments and spend the money? Do other departments charge fees such that money actually changes hands?
Mr. Alcock: Mr. Joyce, are these external charges?
Mr. Joyce: No, they are internal charges.
Mr. Alcock: It is interesting. I do not know, although I have asked for a paper on this issue, not specific to the justice department. I assume when I receive the paper I will know. Some time ago, perhaps Senator Murray would know when, the government decided that in order to move to a full-cost accounting model, we would create an internal market. PWGSC would own the property, we would lease it to other departments and they would pay us for it. This would give greater awareness of the true cost of the service. If you think about it in terms of market dynamics, it might put some downward pressure on prices. My personal sense is that it is a fiction. There is no open market. You cannot buy a lawyer from someone else so there is no competitive market — you have to buy from Justice. Thus, there is no pressure on the market price. The total tag is between $3.6 billion and $3.8 billion per year circulating internally.
We cannot generate a list of the sponsorship contracts that we gave because we have no system. It is remarkable that in the year 2004 we cannot go to a computer and come up with that information. We are that far behind the times.
Senator Oliver: Banks are the same way. They have to manually look up many of those things because they do not have the information on-line.
Mr. Alcock: They have much more than we have and some are able to actually balance their books daily. They do not have to wait until six months after the event. There is a little gap between daily and six months after.
I am posing a real question. If I am right, this is just an artifact of a hope at one time to provide better cost- accounting and downward pressure on prices. If it is not doing that, given we cannot do it electronically, then there has to be a large number of people filling in the billing forms, because $3.8 billion does not circulate in one cheque.
Senator Banks: One would hope.
Mr. Alcock: I am pretty convinced. There is a great deal of manpower devoted to doing something that, my suspicion is, does not create an ounce of value. That is worth looking at. If my assumption is true, then perhaps we could free those people up to work on things that are more directly involved in the lives of citizens and give up the fiction that we have an internal market. I might be wrong about this.
Senator Banks: If it is notional money, then it is a big Rube Goldberg machine that takes up time and costs money.
Mr. Alcock: You have to crank it hard to get it to sing.
Senator Lynch-Staunton: Minister, you have been generous with your time.
Mr. Alcock: Senator, I always work these things out at 7:30 in the morning when the cafeteria opens. I could sit here all night.
Senator Lynch-Staunton: It has been very informative and some of your comments make me think that you would be happier sitting on this side rather than acting as a witness.
Mr. Alcock: I am quite comfortable right here, thank you.
Senator Lynch-Staunton: After listening to your exchange with Senator Oliver on Crown corporations, I hope that you can widen your net to include foundations. There are some $8 billion to $10 billion allocated to them without any public scrutiny whatsoever.
I have one comment on the reorganization. Obviously, the government has authority to do that under the Financial Administration Act and other legislation with which I am less familiar. I deplore the fact that Parliament was not involved in this massive reorganization. There was not even an announcement to Parliament. It was done immediately after the swearing in and Parliament learned of it through the same press releases that CPAC received. Perhaps extensive consultation would not take us far, but certainly some form of acceptance of the fact that Parliament also participates in government activities could have been met. Mr. Martin could have demonstrated his grave concerns about what he calls the ``democratic deficit'' by informing Parliament of the massive reorganization that the government had mind and asking it to look at it for about a month and report.
I did not see any urgency in this, but this was not done. Senator Murray will not like this comment, as I always look to the United States for improvements to our system. When President Bush decided to set up a Department of Homeland Security, he had to get Congressional approval. It took a long time, but at least it was a direct participation by the legislature in the creation of a new government department, whereas here, Parliament is just informed, and we will wait to see how it works.
I got that out of my system, but I do hope that even though the legislation does not require it, when the Governor in Council takes important decisions, Parliament is at least given the courtesy of a heads-up. In this case, it was done in December without any warning and was just a fait accompli.
I have three specific questions. I will make them short.
Mr. Alcock: That is as opposed to those two non-specific questions.
Senator Lynch-Staunton: Those are comments and part of my longstanding rant. I have been ranting about this Parliament-executive relationship for a long time. I am not alone.
As you know, the Senate of Canada has been actively involved in whistle-blowing, particularly through Senator Kinsella's bill, of which I know you have a copy. I would like to know what the government's intentions are as far as legislation goes.
We looked for a long time here at Vote 5 and showed a great deal of concern about the interpretation given to what Vote 5 allows. I recall that Mr. Neville did come before the committee. I could not attend that meeting, but there was a meeting with this committee to discuss a preliminary report that I think he had. Someone was to report on Vote 5 soon after. I have not heard anything since. I know you cannot isolate Vote 5, but it is something that preoccupies us.
Finally, any time someone is caught with his or her hand in the cookie jar, whether it is the former privacy commissioner or an executive assistant to a minister who charged for two dinners on New Year's Eve, the excuse is always given of Treasury Board guidelines. I would like to know if you could tell us what these Treasury Board guidelines are that are given as an argument in support of these excessive expenditures, which even parliamentarians are not allowed. If we ever engaged in them, we would be thrown out on our ear. Yet we see these excessive expenditures signed off on by a minister, covering or not a minister's expenses — we will not get into that — and yet every time questions are asked, we hear, ``Oh well, we followed Treasury Board guidelines.''
That is the end of my presentation. I appreciate your patience.
Mr. Alcock: I will try to be quick. I will just change the order a little because I want to end with the private foundations issue in response to your questions.
As far as looking to the United States goes, the group I work with is at the John F. Kennedy School of Government in the U.S, so most of the things we look at are U.S. models. I do not think they are any further ahead at all. In fact, I would argue that in some ways, they are not as far ahead. There is some strength to our model of government. Theirs is different.
It is true, though, that they do move with greater consensus than we do. Our governments are able to move ahead, and you can argue whether that is good or bad. The evidence to date is that the Canadian model works pretty well. We could debate this at some length, but there is strength and weakness in both systems. I am not particularly dissatisfied.
Machinery of government is the prerogative of the Prime Minister. This Prime Minister came in, in his work at becoming leader, talking about the need for changes. The changes he ordered, as the Prime Minister has the right to do, at Treasury Board are very positive. I am not enough of a student of some of the others to know, but there are always concerns about HRDC being too big and unwieldy, so he made it smaller.
Could he have done it a different way? I suspect if it was not the start of a new administration he might have used a different methodology, but I think we can debate the merits of it. You will have the opportunity to do so as the bills come through putting these things into order. Legislation will need to come forward on this.
On whistle-blowing and Senator Kinsella's bill, it is certainly public knowledge that we will have a whistle-blowing bill. I will leave it to Minister Coderre, who is in charge of that, to make those timing announcements, but you know that after Bill C-25, the committee I chaired put a report out saying ``We think we were wrong, in our review of Bill C- 25, that our experience with the Privacy Commissioner told us that the administrative model did not work.'' My predecessor, Ms. Robillard, got some expert opinion, looked at what is happening around the world and came back with a report. I think you will see the results of that very shortly. It will start a more focused discussion on whistle- blowing, which will be good.
The Chairman: Dr. Keyserlingk said you need legislation.
Mr. Alcock: That is all I should say. You will have a chance to talk to Minister Coderre about that.
As far as Vote 5 goes, I should not say I understand it thoroughly. Mr. Joyce has been trying to educate me on this. I would be interested in coming back here for a discussion on that. Later on, I also would be interested in coming back here for a discussion on Supplementary Estimates. It is an interesting question, which I keep dealing with at the Treasury Board, as to when a department has authority to spend. What is the point in time? It is not as simple a question as it seems. I will not take your time now, but I would like to hear what you have to say about that. Like the comptrollership one, these are pretty fundamental questions on how we do business right now, and if we can improve it, let us have that conversation.
As for the question of the hand in the cookie jar and the Treasury Board guidelines, in fact the former privacy commissioner was not following Treasury Board guidelines. That is why he is no longer the Privacy Commissioner. I am not sure what you are referring to specifically. I am not quite certain whether you are saying that there is an absence of guidelines. I think there is not only not an absence, I would argue that in some cases, we have too many rules that create confusion and confuse accountability.
I want to differentiate between two things. When we started the work on the former privacy commissioner, two things happened. I was possessed of whistle-blowing information about two months before that issue became public. However, the problem with whistle-blowing information is how to know if it is accurate. If people come forward with a complaint, is it because they were passed over for promotion and are angry? How do you validate it? We struggled to validate the information. One it was validated, the issue was that we are in a highly political environment. How do I have a Liberal, whom this part of the country has been beating up all the time, collaborating with people on the other side of the House who do not have the same political interest? That was a real problem. There were moments that made me so proud of what parliamentarians from all sides can do: the lawyer from the Bloc collaborating with the lawyer from the Liberals; the two accountants working together — it was a marvellous time for Parliament and for the House.
At the end of that, there was a rigorous process. We went through it in great detail before we made any charges. We got the auditor involved. However, that then touched off the sort of drive-by shootings of public servants. Any time a public servant put down an expense report, good, bad or indifferent, there was never any judgment. ``Oh, my God, they spent money; let's kill them.'' The person who did the library over here, was his expenditure good or bad? No one ever evaluated it. If this person was functioning within Treasury Board guidelines, I think his level of expenditure would be perfectly acceptable. I have to tell you that Treasury Board guidelines are not very robust in terms of the amount of money you can spend. You know that, because I believe you are held to them, as are we. The amount of money we get each day to spend on these things is defined. If they are meeting those guidelines, there is no problem.
I also do not think that public servants should wear a hair shirt all the time. My experience with the team I am working with is that they are working day and night. They are in on the weekends. If we buy them lunch every now and again — or Subway wraps right now, because we are pretty high end at the Treasury Board — I do not think that is wrong. If people are saying they met the Treasury Board guidelines, as far as I am concerned, those things are responsible. We should not just shoot people without investigating.
Senator Lynch-Staunton: I am not doing that.
Mr. Alcock: I am not saying that you are, but that is what got going there. That poor kid who worked for Ms. Copps held the card. Do you think I picked up the bill?
I have not seen money since December 12. I have these young guys who run around. I go out to lunch, lunch appears and someone pays for it. This guy gets a bunch of bills because the minister had a lunch meeting with 12 people. He picks up the bills. Is that a bad thing, if the meal came within Treasury Board guidelines? There were a lot of things there that I thought were really irresponsible.
Senator Lynch-Staunton: No doubt. I am glad you are clarifying things and not reading into my remarks a scatter- gun approach.
Mr. Alcock: I see what you eat for breakfast every morning, senator. I am never worried.
I have a final comment on one important issue raised in the senator's remarks about private foundations. We started to look at private foundations before I left the chair. The choice of instrument in how we deliver public service is an interesting one. I would be interested in the Senate's views on some of these instruments.
To me, there is a larger question there, that is, the way we assassinate ourselves. Why do we have instruments like that? We want a level of expert opinion to be brought to bear on complex problems. Will you and I make decisions about molecular science? You may be qualified for that, but I am probably not up to your standard. We want expert opinion brought to bear on such things, but too often, our system of management has been to devalue each other, particularly in the House of Commons, where the total debate is a 30-second character assassination that takes place at 2 o'clock most days.
Whenever we have an important public decision to make, we park it with someone else. We want advice on something; we bring in the wise men or the blue ribbon panel. At times, that is important to do because there is expertise that we do not have in the House. We do it so often, though, that we send a message to the public that we are too stupid to answer those questions. We hand over important public decisions to entirely non-elected people with no accountability because we are ``too venal and corrupt,'' and if we believe that about ourselves, we will never change things.
If we do not value who we are, regardless of our political affiliation, how can we ever expect the public to value us? That is a message we must change. I fight this all the time with my colleagues. We must stop. I do not know how to do that, but we have to do it. It is no wonder the public is not voting for us or is backing away or is treating the House with such disdain. We tell them all the time, by our actions, that we are stupid, corrupt or untrustworthy. We have to reframe that.
The Chairman: On Vote 5, our understanding was that Treasury Board was certainly considering changing both the wording of the vote and the guidelines that govern it. We had half a dozen meetings on this. During the last one we had with the officials, they sought our opinion on the draft guidelines and took that back. I will leave it at that. We do want to have another meeting to be reassured that changes are being made. We had four or five meetings on the issue of foundations, too. Our concern is basically the accountability of these organizations to Parliament.
I note, by the way, that no new ones have been created. I hope you will not create any more, at least not until we get a handle on their relationship with Parliament.
Senator Ringuette: We were talking earlier about value. For more than a decade, the mantra of comptrollers and auditors has been ``value for money.'' I have read the latest Auditor General's report. That was great, but I will give you an example of a statement in there that made me say, ``Wow. How can accountants say that this is not value for money?'' Establishing value for money requires standards, comparisons and so forth. One example is the state of our heritage buildings. I thought, ``By golly, not only are these people good accountants, but they are also architects and engineers. They must be in order to be able to make that value-for-money judgment.''
You have mentioned that we will now have comptrollers in all departments. I think that is a great idea. Will we maintain this mantra of ``value for money''? Who will ascertain the value for the spending in regards to related comparisons and standards? Are we still on that mantra, or is that a dépassé spin?
Mr. Alcock: There may be two parts to that question that need to be separated. Do we want value for money? Of course we do. It is one of those self-evident questions, in a way, except that determining value is not easy. Is it of value to spend huge amounts of money sending letters of rejection to thousands of people who never had a chance to compete for a job in the first place? Or is that money better spent in some other area? That is a values question. I do not mean to tease you with that, but it is a values question.
Senator Ringuette: I can tease you back.
Mr. Alcock: The House should be the place where those questions are answered. Part of the problem is in determining value too mechanically. If you write too many rules, it eats up huge amounts of resources without giving you a lot of value. One example that one senator mentioned is the $1 billion spent by HRDC. The amount of money that was never actually recovered is around $65,000. It cost us $4 million to answer that question.
It is costing us millions of dollars every year to ensure that we never lose $65,000 again. Is that value for money? I argue that systems would solve some of that. If we had decent systems, the marginal cost would be quite small, but that is a real example. We are spending millions of dollars to ensure we do not lose $65,000 again.
The public servants have no choice because we are not engaged. This committee can say, on some of these practices, that we mandate these changes.
I think the previous auditor was terrific. I think this auditor is terrific. She is doing the job we have given her, but we must challenge ourselves to wrestle with these values questions. We spend a lot of money on the artifacts of value and not a lot on real value.
Senator Ringuette: Can I tease you right back?
Mr. Alcock: Sure.
Senator Ringuette: I think we also need to look at the amount of money that we invest in training — I am not against training; I am all for it — in comparison to hiring the right people at the right moment, already trained, for the right positions.
Mr. Alcock: It is a combination of both. I strongly believe that if we are to go through a process of declaring certain services redundant or collapsing two services into one, we have an obligation to re-train and re-use those people. We do not throw people away. We have to treat our employees with respect.
Senator Banks: I have a comment further to Senator Ringuette's. I do not mean to suggest that all accountants are Philistines because they are not.
Mr. Alcock: Some of my best friends are accountants.
Senator Banks: In respect of the problems of quantifying the things we are discussing and getting value for the dollar, some of the foundations and institutions that are not now entirely subject to an intense investigation by the Auditor General — for example, section 5 of the FAA — deal with things that cannot easily be quantified. They deal with situations where people must have the right to fail.
They deal with things where their failure along the line to success is built in and where offence along the line is sometimes built in. When we are putting in the value-for-money measurements, I hope that we will remember that the things that are most easily counted are not always the things that count the most.
The Chairman: Nice turn of phrase.
Senator Banks: Not my own.
Mr. Alcock: Actually, that is a very good place to end. That is the problem of public management. Who makes that decision? I think it should be the people who represent citizens around these tables. There is no quantifiable, exact answer to those questions.
The Chairman: We have had a very good two hours, for which we thank you and your officials very much, minister.
Mr. Alcock: I will be here any time you wish to invite me.
The Chairman: Did you hear that, staff? See to it.
Until Monday, March 22, at 3 p.m., subject to approval, the committee stands adjourned.
The committee adjourned.