INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 29, 1999

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I would like to call the meeting to order, pursuant to Standing Order 108(2), consideration of chapter 22, federal science and technology strategy, of the December 1998 Report of the Auditor General of Canada.

We're very pleased to welcome here today, from the Office of the Auditor General of Canada, Mr. Richard Flageole, the assistant auditor general, and Mr. Peter Simeoni, principal, audit operations branch.

I understand that we have a very detailed opening statement by Mr. Flageole.

Mr. Richard Flageole (Assistant Auditor General, Office of the Auditor General of Canada): Thank you.

Madam Chair, thank you for this opportunity to present the results of our review of progress made by the government in implementing the federal science and technology strategy.

I understand that the committee is undertaking a study on basic research in Canada and the national innovation system, and we hope this presentation will be of use to you in your work. I am accompanied by Peter Simeoni, the principal responsible for the industry, science, and technology portfolio in our office.

I will divide my remarks this morning into two parts. First, I will give you an overview of the main findings of chapter 22. Second, I will outline what we believe the government needs to do to finish implementing its strategy. I will also talk briefly about our chapter on managing scientific personnel, which was tabled just last week.

The federal government's investment in science and technology is and will continue to be, for the foreseeable future, the cornerstone of our national and regional systems of innovation. By innovation systems, I mean the sets of national and regional institutions and institutional linkages that generate, diffuse, and apply knowledge, for all sorts of purposes.

The federal government spends almost $5.5 billion a year on science and technology, in addition to more than $1 billion in tax incentives to encourage research and development in the private sector. It accounts and is accountable for about one quarter of the country's total investment in research and development, and it is difficult to think of examples of science and technology issues in which the government is not somehow involved.

The importance of the federal investment, however, comes from more than its size in absolute and relative terms. It also comes from the possibility that this large piece of the national innovation system can be managed in a coherent and collaborative way.

In its 1996 strategy, Science and Technology for the New Century, the government explicitly recognized and even embraced the notion of coherence. The strategy had two essential messages.

First, the national innovation system supports the government's science and technology goals of sustainable job creation and economic growth, improved quality of life, and advancement of knowledge. Second, to be a more effective partner in the country's innovation system, the government needed, and I quote, “to get its own house in order”. To effect this housecleaning, the strategy stated broad national goals, set out the federal government's core activities, outlined a new government system, and established operating principles to guide departments and agencies in performing and investing in science and technology.

This is an impressive list. When we add up all the strategy set out to do, it was considerably more ambitious than it seemed at first. In retrospect, it was less a plan for tidying up individual departments and more a blueprint for renovating the entire federal house. At the very least, it represented the possibility of significant and enduring improvements in the federal science and technology system.

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Most importantly of all from our point of view, the strategy explicitly recognized that all federal S and T can and should be better managed.

[Translation]

Our Office strongly supported the Strategy in our September 1996 Report to the House of Commons. We went so far as to state that both the Strategy and the associated framework for managing scientific personnel probably represented the best attempt yet at resolving outstanding issues in the management of science and technology. We were particularly encouraged by the Strategy's emphasis on mission-driven-results-based science and technology, and the requirement that departments measure their science and technology performance against clear objectives.

Despite our generally encouraging message, we observed that delivering on commitments was going to be a much bigger challenge than conceiving them. We reminded Parliament that there had been many similar efforts by the government over the past 30 years - few of which have had many lasting effects. There was a clear risk that this Strategy would fade away just like its predecessors. All in all, the Strategy seemed like a reasonable plan for setting up new governance and management systems that could, in turn, develop and carry out a federal science policy.

This past December, we reported to Parliament our assessment of the government's progress to that time in meeting the Strategy's commitments. Our findings fell into three groups.

First, we looked at the government's efforts to set up new institutions for governing and mechanisms for managing its science and technology investment and were forced to conclude that progress could best be described as slow. Some commitments had been partially addressed, while others had been nominally completed - for example, various elements of the new management system are in place although it is not yet clear whether or how they will work together. Other commitments were still being worked on - in particular, the results of the government's review of science and technology priorities have not yet been reported to Parliament. Overall, we believed that the new system was not yet doing what it was intended to do, that is, ensuring that science and technology priorities are clear, that activities are coordinated, and that performance is reported on fully.

We also looked at how four departments have responded to the government's direction in their day-to-day operations. We found that progress varied considerably, although all four were more or less moving in the right direction. We recommended that the departments take stock and set out what remains to be done.

The third area we looked at was whether the government was putting the Strategy into practice in the management of its climate change science activities. We were forced to conclude that, as of last fall, this area did not yet reflect the intent or methods of the Strategy. Although we observed increased co-operation in doing climate change science, departments were still operating according to their individual priorities rather than collaboratively working toward common goals. Having said that, we noted that a new interdepartmental management framework was in the works and we thought that this was a promising development. I understand that work has progressed further since we finished our report.

Nevertheless, when we weighed the evidence, we concluded that progress was mixed at best, that implementation of the Strategy was quickly losing momentum, and that the system was still not doing what it was supposed to do. Without renewed attention, there was a growing danger that the Strategy would fail, as had similar efforts in the past. And nothing has happened since then that suggests this danger has diminished.

We believe that the results of our reports to Parliament on federal science and technology management are directly relevant to the study that this committee is carrying out on sustaining Canada as an innovative society. To the extent that the federal government is not as effective a partner in national and regional innovation systems as it could be, the country's innovation performance suffers accordingly. Being a good partner in innovation is more than simply bringing money to the table. It means knowing how the overall system and the related sub-systems work, and what their strengths and weaknesses are, and it means making decisions on where and how to act for best effect. If the federal house is not yet in order, then it follows that it is probably not doing these things very well.

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[English]

Madam Chair, the whole point of the strategy is to promote well-directed, collaborative action in science and technology. It is also meant to reduce duplication of effort and maximize the value for money achieved through an investment of $7 billion.

However, despite the quality of the original blueprint, after three years the renovations are not yet complete. It is clearly time for the government to take stock and set out what remains to be done to finish the job, to set out a forward-looking agenda, as it did in 1996.

But that, by itself, won't be enough. We believe that departments need to be much clearer about what they're trying to achieve when they invest in science and technology, either individually or in partnership with other departments. Mission-driven, results-based science and technology has been the major theme of our work since 1993 and was picked up by the government in the strategy. While I think it is fair to say that there are encouraging signs, this idea has not yet taken hold everywhere.

Clear, individual, and shared goals, however, are necessary but not sufficient conditions for success. Collaboration on common issues is just as important. In our view, collaboration, in this context, means collective action, that is, working together, partnering, and sharing.

We know this can be done. As I mentioned, just last week we reported the results of our work on the management of scientific personnel within the federal government. In chapter 9 of the April report, we expressed satisfaction with the efforts of the federal science and technology community in addressing our past concerns and previous recommendations.

Although the members of that community face considerable challenges—and concrete results are yet to be achieved—what they've done so far should position them to act on key human resource issues such as renewing and rejuvenating scientific personnel and improving management capabilities.

The reasons for this progress are what you would expect: collaboration among departmental science managers and personnel, the Treasury Board secretariat and the unions; well-defined action plans with priorities, timetables, expected results, and performance measures; and a management structure that sets out responsibilities and accountabilities.

My final comment is one that you should expect from our office. Parliamentary oversight is the key to ensuring that things work the way they're supposed to. As it stands now, without clarity in what departments are trying to achieve and without good measures of how well they're doing, meaningful oversight is difficult.

Let me therefore suggest that the committee, as it considers the important issue of the effectiveness of the national innovation system, seek answers to the following questions from the government.

First, what is the government's role in helping to build national and regional systems of innovation, and where and how will it act for best effect? Second, what measures will the government carry out to make sure that it finishes implementing its science and technology strategy, including the framework for the management of scientific personnel? Third, how will it assure Parliament that its new governance and management systems for science and technology, once they are working, achieve what they're supposed to achieve?

Madam Chair, this concludes our opening statement. We would be pleased to answer your committee's questions.

The Chair: Thank you very much, Mr. Flageole.

I'm now going to turn to Mr. Dubé.

[Translation]

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Your report is fairly clear. Yesterday, the committee heard from Statistics Canada representatives who focused on a different aspect. Your report does not sound a very optimistic note. You identify a number of important issues.

I've read the April 1999 report and have found a link between it and the Strategy that we're reviewing today. In Chapter 9, you report a 25 per cent decrease in the number of researchers. Are you concerned about this trend?

Mr. Richard Flageole: Yes, very much so. There is a very close link between government S&T activities and scientific personnel who are crucial to the whole process.

As we noted in Chapter 9, in the wake of the program review process and the spending cuts that have been ongoing since 1994, overall personnel levels are down by about 5,000. However, it should be noted that 1,300 positions were transferred to the new Food Inspection Agency. But the fact remains that some of these vacancies must be filled.

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Furthermore, according to departmental estimates, 3,000 more employees are slated to leave over the next five years. Therefore, new staff will need to be hired and recruitment steps taken to this end.

Mr. Antoine Dubé: You point to the need to better define the Strategy's priorities, but you do not say how to go about it? Who needs to take action? The department?

Mr. Richard Flageole: In its Strategy, the government made a fairly clear commitment to reviewing government priorities thoroughly, as noted in Chapter 22. A number of decisions have been made in recent years. For instance, the Canada Foundation for Innovation was created and new initiatives were launched. However, we didn't have a great deal of information about the existing budget.

One question that arises is how the government should proceed to make people aware of its priorities. Nothing concrete has been presented to Parliament. I think it's up to the government to decide the best approach to take to convey the results of this priority review process.

Mr. Antoine Dubé: Your field of expertise is auditing and you're quite adept with figures. We often hear say that the government lacks the financial resources to be more aggressive in this sector. In your view, how much more should the government be allocating to S&T research?

Mr. Richard Flageole: I don't believe our Office's job is to comment on the resources that should be allocated to various government programs.

However, following the priority review process, the government in general and each department in particular have a responsibility to determine, on the basis of established priorities, resource requirements, including human resource needs which are substantial in a number of areas.

Mr. Antoine Dubé: I may have more questions later. I'll let the others have their turn.

[English]

The Chair: Thank you very much, Mr. Dubé.

[Translation]

Go ahead, Mr. Bellemare.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Thank you, Madam Chair.

[English]

During the committee's study of the Y2K problem, we had fruitful meetings with the current program-wide chief information officer and a predecessor. But when it comes to federal science and technology, we do not have a similar chief scientist to meet with on overall government science policy and practice. Do you think we need a chief scientist?

Mr. Richard Flageole: Madam Chair, if we again refer to the strategy in 1996, I think the government looked at different options in terms of organizing itself and putting in place a structure to manage and co-ordinate science and technology policy and advice. Those choices have been made, so I don't think it would be up to our office to comment on what that structure should be.

I think the important thing is that the advice needs to be available, and we're aware of a subcommittee that is actually looking at provision of advice on scientific issues to various departments and agencies. There are different ways in which it can be done, and that would be an option.

Mr. Eugène Bellemare: Do you think that the question of developing guidelines for the use of scientific advice in government, which was given to the CSTA, is wide enough to allow it to recommend establishing a chief scientist, albeit what you've just answered?

Mr. Richard Flageole: I'll ask Mr. Simeoni to answer that question.

Mr. Peter Simeoni (Principal Director, Audit Operations Branch, Office of the Auditor General of Canada): I don't think any limit is placed on what either of the two main advisory committees that the government has established can get into. If they felt that such a measure was necessary, I'm sure that they wouldn't hesitate to advise the government of that.

The whole point of establishing the committees, from the government's perspective—from what we gather—is to go outside and get the best possible advice. I can't imagine a situation where you'd put some kind of constraints on the nature of the advice they would give you.

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Mr. Eugène Bellemare: My next question is, what oversight role could the industry committee play? As you know, we have three large science and technology operations in this portfolio: the NRC, the Canadian Space Agency, and the Communications Research Centre. Should we be meeting with them together each year to review progress? What are the key questions we should be asking them?

Industry Canada also staffs the secretariat that services a number of the advisory bodies chaired by Mr. Manley and Mr. Duhamel. Should we be keeping an eye on these bodies and on how well the co-ordination is being carried out? How could we do this?

Mr. Peter Simeoni: I guess there are two important vehicles for the committee to use in order to exercise good oversight in this area. The first would be—and the government set it up to be—the annual performance report on its S and T activities, of which we've only received one so far since 1996. That was for the year 1997. We're still waiting for 1998.

If there were a such a report—as they promised they'd do—this committee would then have the material it would need to ask any question it wanted about science performance and would also have the opportunity to comment on the quality of the report itself. For example, if it was somewhat short on clear results and expected performance, the committee could urge the government to do better in that regard.

The other vehicle would be to actually question the individual organizations that are part of the industry portfolio about their plans in promoting the main objectives of the strategy, which are economic growth, health, and knowledge creation, all of which are being done inside the industry portfolio. They should be able to respond in detail about how their activities contribute to that and about what results they are achieving that make that happen.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you very much, Mr. Bellemare.

Mr. Peric.

Mr. Janko Peric (Cambridge, Lib.): On page 22-10 in your chapter 22 report, you have a sketch of a regime, and on the opposite page you make this statement:

Overall, we found slow progress in establishing the new management system, and some commitments have not been addressed adequately.

Now, I don't see the private sector being involved here. In your opinion, do you feel that the private sector should have anything to say—to sit on either committee and to report to the minister or this council?

Mr. Peter Simeoni: The Advisory Council on Science and Technology does have private sector members. In this chart, that would be the chief way in which the outside advice, business advice, is being received. The strategy has a number of commitments beyond establishing the structure, and they have to do with reaching out to anyone who can help the federal government do what it needs to do and to anyone who can help people or organizations that need help from the federal government to do what they're supposed to be doing or what they want to do.

That's an area that I think the government has been particularly slow in moving on. That relates directly to the idea of innovation systems, which are all about institutions and how those institutions relate to one another. If you have the largest institution not really doing all it can to relate to the rest of the institutions in the country—business, universities, provinces—then the system can't work well. It can't work well at all.

That's just not our view. That's what the government said in 1996 when it wrote the strategy. It said it needed to get its house together. For the whole system to work, the federal house has to be well run. By its own standards, it's not yet doing that.

But getting back to your question specifically, about reaching out to the place where innovation happens, when we're talking about wealth creation, we have to reach out to the private sector. The government can assist that, but it has set for itself the role of helper, not doer, not the one who will set direction. It should be well plugged into the private sector and that has not yet happened.

Mr. Janko Peric: Are you saying that this structure as it is set up can't function adequately?

Mr. Peter Simeoni: Well, it's—

Mr. Janko Peric: What would you recommend? Would you recommend the current structure here?

Mr. Peter Simeoni: Questions of organization are simply something that the office can't comment on. I don't think there's any reason why this structure cannot work, but it takes initiative, it takes attention, and it takes probably ministerial involvement, because it's a large system. It involves a lot of people and there are all sorts of different interests represented here.

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Mr. Janko Peric: How many people are we talking about?

Mr. Peter Simeoni: It would very difficult to count them. You have the entire science community within the federal government, which is many thousands of people. There are science managers within that and then there are all of their partners. That's a question that I don't think anybody could answer. It's a very large number and there are a lot of different interests involved.

If we want to focus our resources on specific objectives and priorities, we think—getting back to an answer that Richard has already provided—that the government should be clear about what it wants to do when it does science. Otherwise, it does everything—and not necessarily anything particularly well.

Mr. Janko Peric: Thank you.

The Chair: Thank you.

Mr. Murray.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks very much.

I found the last comment interesting: we're trying to do everything—and not anything particularly well.

Science is a big-ticket item at $5.5 billion. One would think that would be a sufficient amount to energize somebody within the government to try to do a better job. Obviously, on the political side at least, an attempt is being made with the strategy.

But do you have a sense that interdepartmental turf wars may be part of the problem? Do you have senior bureaucrats who are much more focused on their own departmental priorities rather than on being able to even find the time to devote to what is really a major public policy issue, this whole question of science? Did you get a sense that they're just maybe bogged down in the amount of work they have to do just to maintain their own departmental priorities outside of science?

Mr. Richard Flageole: I think it is a basic fact of the present structure of government, but I think we've seen very encouraging signs towards better collaboration between departments and agencies. I have been fairly involved with the audit that we did in 1994. If I look at it, five years later I think good progress is being made, and we're encouraged by the way that departments are collaborating a lot more than before. There is still room for improvement, for sure, but I think there are very encouraging signs that this is getting better.

Mr. Ian Murray: The whole question of personnel is another important issue. We went through program review. We had an awful lot of federal government scientists who saw their careers ending as parties were changed and there was some privatization. There was quite a bit of concern within that community as to what their personal futures would be. Now we're looking at the problem of trying to recruit new people to replenish the scientific ranks within government, but it strikes me that until we have a very clear focus on what it is we're trying to achieve, talented scientists are not going to want to be part of this operation.

I guess we always respond to public pressure, whether we're politicians or bureaucrats. It often drives the agenda. Obviously this question of science has peaks and valleys; there are some years when there's a tremendous amount of focus on it and then it kind of disappears for awhile. I think a lot of scientists would agree that they have a hard time getting science on the public agenda... at least, they feel they do. They're always saying how they're perhaps not communicating well enough in regard to the importance of science to Canada.

If we were to look at this problem of recruitment, do you have any suggestions as to how the government might make it widely known that we are serious about science and that we want these people? Is it a question of the amount we're able to offer in terms of salaries and benefits or is it just perhaps that the excitement and the focus are lacking?

Mr. Richard Flageole: Madam Chair, I think that in the present world it will be key for the government to create a very challenging environment for those people in order to make sure they would be interested in coming here. Compensation is going to be a very important factor too. For example, if we look at the developments in the private sector, I think the competition is going to be tough with regard to attracting new people here.

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One of the things that we had concerns about is that there's a fair number of the most experienced people who left the government in the last five years, which might be a negative factor in attracting new people. For those new people, it's very important to make sure that they will have the opportunity to work with experienced scientists who will act as mentors, who will teach them how to progress in their careers. I think the government has a very important selling job to do to attract those people and to make sure that they will stay within the federal science and technology community.

There are various means of doing that. In chapter 9 of the April report, I think, we mentioned some initiatives. For example, co-op programs are one way of attracting new people from universities. I think the government will have to be quite innovative in its ways and means in order to recruit such a significant number of new people within the next couple of years.

Mr. Ian Murray: Thank you.

The Chair: Thank you, Mr. Murray.

Mr. Keyes.

Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Madam Chair. I have just a quick point for clarification.

Gentlemen, you spoke of the involvement of the private sector, and in your presentation to us today you addressed human resource issues and the need for more personnel. Now, through government initiatives of commercialization, privatization, and divestiture, etc., I would imagine that many of these jobs went with some of these changes in strategy. Then there was of course the business of government not so much hiring individuals directly to a department, but rather hiring on contract from the outside, etc.

When you do your calculations, do you do a comparative in that way? You're calling for further human resources. Is that a call for human resources to be hired by government to work in a government office building or does that also fold in a department hiring on contract someone from outside the department? How do you break that down?

Mr. Richard Flageole: The estimates we have in the chapter are the estimates from the departments themselves. We didn't come up with those figures. Again, there are different types of situations, but if we look again... We talked about the 5,000 people, and there's another 3,000 that they expect will retire between now and 2002.

Mr. Stan Keyes: Where do they work? Inside the government?

Mr. Richard Flageole: They mainly work in different federal—

Mr. Stan Keyes: Inside the government.

Mr. Richard Flageole: Yes. In federal labs of—

Mr. Stan Keyes: The reason I'm asking is that you're the auditor, so you would have to determine if there are individuals being replaced. For example, yes, there are 3,000 to 5,000 missing at Transport Canada, which went from 18,500 to the 5,400 that they have now. Yes, those people are missing, but now much of that work either is not there or is being farmed out, and there's not a warm body sitting in a government office structure here. You're the auditor. Did you do the comparative? Did you ensure that when they speak of needing more human resources... are those human resources in fact there but not necessarily sitting in a department or within a government office building?

Mr. Peter Simeoni: The question of capacity is what I think we're talking about. Do you have enough resources to do the job? But it is preceded, I think, by a more fundamental question: what are you trying to do? What are you trying to achieve in the first place?

Now, one would expect that before you started engaging in an aggressive downsizing exercise you would have some notion of just what you wanted to do, of how many people you needed to do it, and of what their skill sets should be, as well as having a notion of other resources like equipment, because we're talking about laboratories—they're doing science.

The strategy should have provided that. The strategy was partly about asking departments to be clearer about results, about what their performance expectations would be, what their priorities would be, and what their lines of business would be. Then you could derive from that some clear ideas about the scientific capacity you'd need to have to do that job well in the future. That hasn't happened in relation to the strategy.

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So what worries us—and I suppose it's a question we can't really answer, but we can express a concern to this committee—is that if they haven't done that and they're downsizing and are about to experience a mass retirement, if you like, a potential retirement in the next few years of up to 3,300 scientists, they really do need to figure out what they need, who they need, and how much they need. If they keep trying to do all of what they did before, with fewer and fewer people, it seems like a situation that's untenable over time. We don't know what the magic number is, but we think they ought to.

Mr. Stan Keyes: I was hoping you were going to be leading to something there, but maybe I'm not getting my point across very well. You come to the point in your explanation that they have to figure out how many people they have and how many people they need, but how are they going to be acquired by government or by a department? That is what I'm talking about.

You're looking at the raw numbers. I want to know if you've looked at the comparative between those who are hired directly to work as a government and those who are contracted, who don't sit here, who aren't directly related in any way to the government or even to the department; they're related only by the contract they've signed to carry out the mission.

Did you do an evaluation of how many people are out there? Yes, we have 3,000 to 5,000 fewer people here, but has that department made up for them with specific, focused, individual contracts to carry out certain missions within a department?

Mr. Richard Flageole: Madam Chair, we haven't done such a detailed review of the needs of any specific departments as part of the follow-up. I'm not sure that it would be our role to do that. My understanding is that the figure of 3,000 comes from the analysis that the departments themselves have made. My understanding is that this is what they would need in the near future to carry on their activities. Some of those employees are indeterminate employees and some of them are term employees. There are different mixes that can be applied, but again, we haven't looked at it in that level of detail.

Mr. Stan Keyes: Thank you, Madam Chair.

The Chair: Madam Jennings.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Madam Chair.

Thank you very much for your presentations. I have a series of questions, but I'm just going to finish up on the issue that Mr. Keyes was addressing. You've said that the number of 3,000 is a result of the department's own review and is their own conclusion as to what kind of personnel, numerically, they will need in order to complete their mandate in an efficient and complete way.

But on the other hand, you've said that the departments really haven't done what they should have done in order to be able to arrive at a figure that's trustworthy in the sense of determining what it is that they actually will be doing over the short, medium, and long terms, where they will put their priorities, and then determining both how many personnel they need to actually do that and the skill sets that are needed in order to complete that mandate.

So in regard to that figure of 3,000 that the departments have given out, I find it suspect—if in fact your analysis and audit of what they've done is accurate. You've said they haven't done the “pre-work” in order to determine really how many they need. Is that correct?

Mr. Richard Flageole: Actually, I think you're making a very good analysis of the issue.

For sure, any review, any change in priorities in the way of doing business, will have an impact on the number and type of human resources that they need. That's—

Ms. Marlene Jennings: Thank you, because that assists me in knowing, when we do have the departments before us, what kinds of questions I need to ask in order to find out how they determine that figure and whether or not that figure is in fact reliable—that's the word I was looking for, not “trustworthy”.

Now, this may not directly impact on the issue that you dealt with in your audit, but I think that it has a corollary effect. I attended a breakfast meeting this week with representatives from the biotechnology industry and the pharmaceutical industry. They were discussing the issue of close to $1 billion worth of research or investment being done internationally for clinical research, for what they call “phase one testing”, and how very little of that comes to Canada.

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Very little of that comes here, not because we don't have the internationally renowned scientific community that's capable of doing the test, not because we don't have the hospitals where those tests are usually done and which are internationally renowned and have the personnel, etc., and not because the environment is not here. It doesn't come here because of the regulatory system.

Because here in Canada, under Health Canada, under what's called the therapeutic products program, in order to get authorization to begin conducting clinical phase one testing, it takes anywhere from... the regulatory delay is 60 days, but in actual fact it can take up to 100 days. In other of our major competitors, whether it's Great Britain, Australia, United States, France or Germany, as examples, it takes less than 24 hours.

There has been an ongoing discussion with the authorities within Health Canada to change that, because there has been an official acknowledgement that it needs to be changed. However, there was a consensus last spring. The department said that they would change it for September 1998. The two industries went out and publicized that in the hopes of preparing investors to invest here. It didn't happen in September. It didn't happen in October, and not in November, not in December, not in January... we're now going into the month of May 1999, and it's still not happening. In the meantime, we are losing the potential of doing all of that testing.

One of the points that they made was that if you are in, if you are seen as the marketplace for the phase one clinical testing, that then builds and the phase two and the phase three will remain in the country. We're not getting that.

Secondly, the industry has been embarrassed internationally because they were able to prepare a whole investment community, which was ready to put the money here, and it hasn't been done, so they've had to go back, saying, no, it has been delayed, no, sorry, it has been delayed again, no, sorry, it has been delayed yet again.

Finally, our own government, through industry, has put an emphasis on biotechnology and on pharmaceuticals. That's one of the reasons why the patent, for instance, was extended to 20 years: to make it conform with what our main international competitors had and to provide a competitive environment here for that particular industry. We were told that in regard to our biotechnology industry, in regard to most of those companies, their molecules that they've developed are not here. They're in Great Britain. They're in Germany. They're in France. They're in the United States. They're in Australia. Why? Because the clinical phase one testing gets done over there, not here.

When I hear what you're saying about the strategy, that puts a big fear into me. We already have this problem over at the health department, and you haven't touched health under this strategy. You've touched four other departments.

We're going into the third millennium. Our government has announced that we want to make this a knowledge-based economy. Part of a knowledge-based economy is the whole issue of research, and it's not just research into hard industry equipment and that kind of thing, it's also biotechnology research and pharmaceutical research, and we're not doing it here, not where it really counts, because the regulatory framework is in the middle ages.

Is what I've just described also a bit symptomatic of what we're seeing in the other departments?

Mr. Peter Simeoni: Yes.

Ms. Marlene Jennings: Okay...

Mr. Peter Simeoni: Let me elaborate.

First of all, as you mentioned, Health Canada falls outside—

Ms. Marlene Jennings: Yes.

Mr. Peter Simeoni: —the work that we're here talking about today. What I can say to you is that one of the commitments the government made under the strategy—and I'd like to quote it—was that:

Federal departments and agencies will aggressively seek opportunities to improve the regulatory systems in which their clients operate in order to reduce regulatory burden and enforcement costs without compromising standards of quality, public safety, and sustainable development.

I can't give you a report card on how all the departments are doing on that particular subject, but I think it would be probably fair to sum up progress as mixed, at best, which is one of the themes of our report, I guess. It's a wonderful illustration, I think, of how government needing to do what government does—protect the public interest—can collide with business doing what business feels it needs to do. In the end, those two sides need to find an accommodation that's efficient and effective. It doesn't sound like one has been reached there.

• 0850

Ms. Marlene Jennings: You've said that the results have been mixed, at best. I'm going to presume that—and you tell me if my presumption is right—there are some areas within some departments where it's very good, where work has been very good and the process has been put into place to actually meet the government's objectives, strategies, and mission, which you've just quoted. In other departments, it has been dismal.

What I would like you to do, because your report doesn't give me that information, is to specify those departments or those sections that you would consider models of excellence—or close to models of excellence—in terms of implementing the strategy and the government's objectives. We can then find out what they have been doing that's right, and we can possibly question those other sections and departments that aren't doing it and then assist them, possibly through our questioning, to take that as a model to follow.

Because if we don't have that, if you can't tell me that Johnny is doing X, Y, and Z, and the result is that 90% of the objectives of the government are achieved, but Marlene is only achieving 10%... if you can't tell me that, Marlene isn't going to know what she needs to change. That would also, I believe, create better synergism and better collaboration, because Marlene is going to start talking to Johnny—if she has any intelligence—to try to capitalize on and profit from Johnny's intelligence and experience.

As a result of your audit, can you give me some precise examples that you consider were good in terms of meeting the government's objectives as reasonably as possible and could be a model for other departments, other sections, to meet?

Mr. Peter Simeoni: Well—

Ms. Marlene Jennings: You might make a few enemies, but I'm sure you've had them before.

Mr. Peter Simeoni: It goes with the job.

Ms. Marlene Jennings: It goes with the job.

Mr. Peter Simeoni: I want to be sure—

Ms. Marlene Jennings: You don't have to give it to me right here. You can reflect on it and then file it with the clerk.

Mr. Peter Simeoni: I should tell you what we already say in the chapter. I can certainly say that much, but before I do I would like to preface that with a discussion of the scope of our work, which was really only four departments—

Ms. Marlene Jennings: Yes.

Mr. Peter Simeoni: —and one particular subject, climate change science, and the umbrella of governance structure and management systems that was supposed to be put in place.

Given the four departments that we looked at, what we do suggest in the chapter is that one is out in front of the others in responding to the government's directions, and that would be the natural resources department. That's a somewhat subjective comment and we were very careful in our language in the chapter.

It's very hard to rate progress on 24 separate commitments, some of which are critical to good management of science and others that aren't as important. You can't add them all up and say, well, they've done well on 12 and not so well... that wouldn't be right either. Our impression was that the natural resources department could serve as a model of good progress to date for the other departments. There may well be other departments or organizations out there that are even farther down the road than the natural resources department.

Ms. Marlene Jennings: But you're not aware of them because they weren't part of your audit.

Mr. Peter Simeoni: Exactly, and we would expect the science management community in government to know that and to be seeking them out and learning from them. It shouldn't be the office that's prodding them to do what would be common sense, I would think.

Ms. Marlene Jennings: Thank you very much.

Mr. Peter Simeoni: You're welcome.

The Chair: Thanks.

Mr. Dubé.

[Translation]

Mr. Antoine Dubé: Following up on Ms. Jennings' comments, I note that you reviewed four departments. Was that your Office's choice, or was this the mandate assigned to you by the government?

Mr. Richard Flageole: We acted on our own initiative. Obviously, in terms of S&T activities, these departments are major players.

Mr. Antoine Dubé: In paragraph 22 of your presentation, you mention parliamentary oversight. I'm curious about this, since I'm a parliamentarian, albeit an opposition member.

• 0855

The voters often feel left in the dark when it comes to what the government is doing. They rely on the parliamentarians who represent them to keep them informed. Considering that the Industry Committee focuses its attention on a broad range of issues, it isn't everyday a subject like this comes up for discussion and we look to the AG's Office to monitor the situation. Your Office reports periodically to the committee and that's the way it should be. When you audit departmental operations, you question officials and gain access to documents. In this particular instance, did you receive the kind of cooperation you were expecting?

Mr. Richard Flageole: Yes, we received excellent cooperation throughout this entire process. We've been working on this for the past five years and in all cases, people have cooperated fully with us.

Mr. Antoine Dubé: I'd like to understand the nature of your work a little better. When you audit the activities of a particular department or agency, do you talk only to senior officials, or do you meet with the researchers themselves?

Mr. Richard Flageole: It's very important that we understand what organizations and people do and how they think. As part of the audit process, we visited several federal laboratories and talked with scientists working in virtually every field imaginable. This helped us to gain a very clear understanding of important issues in this field.

Mr. Antoine Dubé: Of course, when they talk to you, they do so guardedly, because they know you're going to write a report. However, surely they must discuss morale with you. Do you feel that, generally speaking, morale is good in this sector, or rather is it somewhat low?

Mr. Richard Flageole: You say that people are somewhat cautious when they speak to us. That's not always the case. It depends on the individual. Some are quite frank with us. We've met with people who deeply believe in their work. They are motivated and keen on making things better for Canadians. These committed individuals voluntarily shared their concerns with us.

They feel that the efforts made over the past five years constitute sound progress toward resolving these issues and they believe that what we're doing is important. We have developed close ties with the S&T community within the federal government and this had made our job easier and helped us to grasp the major issues facing this sector.

Mr. Antoine Dubé: Judging from my past experience, which goes back a number of years, I know that the prime consideration or main motivator for people doing general research is not necessarily money. They're more concerned about the recognition they get from their employer or from the organization that hired them. Some may have left voluntarily, but we can't forget the downsizing process. Do you think compensation is a problem for federal researchers?

Mr. Richard Flageole: We didn't specifically examine this issue. Given the nature of the work, job satisfaction, the challenge of working with experts in different fields and having the right equipment to do the job are all very important considerations for scientists. However, neither compensation nor job incentives should be overlooked.

• 0900

Considering the situation in the private sector, in the academic community in other countries, we're dealing with a highly competitive market. Some countries have no difficulty selling their services. We'll have to take into consideration everything that's important to this community, including compensation.

Mr. Antoine Dubé: Did they mention this point when you met with them?

Mr. Richard Flageole: We didn't specifically discuss this issue or examine it in detail. However, toward the end of the chapter in our April report, we did mention the importance of ensuring that scientific personnel had access to a full range of incentives, and mention was made of remuneration levels.

Mr. Antoine Dubé: Earlier, one of my colleagues touched on a subject that in my view is a rather delicate one for government workers, particularly those in the scientific field. He mentioned contracting out. Did the people you talked to feel threatened or are they concerned about the government doing even more contracting out, and about the increased risk of losing their job? Did they mention this to you?

Mr. Richard Flageole: Some did, and we discuss this in a chapter in our April 1999 report. Considering all of the budget cuts and the program review, the past five years have certainly not been easy ones. Much instability has prevailed. Some were left wondering if they would still be employed the following year. Job security is very important to members of this community. Talk of substantial job cuts has left them worried. I think we present the situation quite clearly in this chapter.

Mr. Antoine Dubé: This week, we were in touch via a special communications link with individuals involved in basic research in the United States. Judging from the discussion we had, it's my sense that compared to other sectors, this one wants as much autonomy as possible. It's more difficult to pigeonhole this field. The Strategy was designed to ensure more control over and better coordination of activities within this field.

I don't know whether you'll agree with me or not, but this may be one of the most complex sectors to deal with, because one researcher may be ahead of others in his field. He's then asked to make some adjustments and to concentrate on other areas. Is that a valid observation? Is it difficult for the government to devise a framework for dealing with this complex field?

Mr. Richard Flageole: That's a good question, one that reflects the actual experiences of the S&T community. After many years, no one has been able to come up with an answer. There are different schools of thought. Some feel that scientists should be free to do just about anything they want, whereas others argue that their activities should be more closely monitored. It also depends on the nature of the research being carried out. They could be involved in basic research, or in applied research involving new product development, as in done in private sector companies like Nortel.

We discussed this at length in our 1994 report. The important thing is to strike a balance of sorts. All in all, it's important for the organization to have a good idea of what it wants to accomplish and to adopt several control mechanisms, while allowing researchers sufficient flexibility to do their work. It's really a matter of striking a balance between allowing some freedom of action and providing some direction.

Mr. Antoine Dubé: People who are concerned about output in the area of science and technology maintain that we should reward people who make discoveries, not only those conducting research. However, this could be risky, because we need to give people doing basic research considerable leeway, otherwise they could make mistakes in their rush for immediate results. In other words, we mustn't be too short-sighted when it comes to S&T activity. Thank you.

• 0905

[English]

The Chair: Thank you, Mr. Dubé.

I have just a couple of questions. In your opening statement—and this goes back to the comment you made just now about the difference between basic and applied research—you talk about “mission-driven, results-based science and technology”. How do you measure results in basic research?

Mr. Peter Simeoni: The mission-driven, results-based theme is one that we started talking about in 1993 and with which we found some success with the government. They seemed receptive to that in the 1996 strategy. A good deal of what they proposed to do would institute that kind of thinking if it were acted on.

I guess the idea itself comes from the fact that when we're talking about government departments, we're talking about institutions with mandates given to them by Parliament and appropriations to carry out those mandates. We're very rarely talking about the kind of research you'd find in a university environment where, on a peer review system, they select the most interesting basic research to do, just something to do with solving how the universe works. Very little federal research is, in fact, that. Most of it has something to do with the job of the department in particular and with the job of the minister. That's the mission element. The result element comes from the idea that if you're not clear about what you need to achieve to carry out your mission, you probably never will.

The government, in the strategy, adopted both of those ideas. Departments have specific jobs, and it's not like the physics department at a university or a chemistry department, where the researchers, the professors, would be freer to do the research that their peers think needs to be done. Rather, there is what I was just mentioning, that is, a kind of a healthy tension between a top-down approach, where the management knows what it needs from science in order to do its job, and a bottom-up input from the researchers, because they're the experts.

What we're seeing now is a situation, I think, more so in the past... but still, I think, it's fair to say that it's more the bottom-up approach and that there's not much top-down. The framework and the strategy were about the top-down approach.

Now, as for measurement, as part of a report on good management practices in government science, which we'll be presenting to Parliament in December, we spent some time in the United States. What we've noted there is that the Government Performance and Results Act—the GPRA—which came into effect two and a half or three years ago, I believe, has forced their science agencies to come up with very specific performance expectations and results measures. Congress seems to be aggressively pushing the GPRA and has forced reluctant organizations like NASA and the Department of Energy, very large research organizations, to actually come up with performance measures. They haven't perfected it, and I'm not mentioning them in the context of them having figured it all out, but they're farther ahead than we are, and they're proving that something can be done. Not everything can be measured, but a lot can.

Given that the job is relatively specific and not open-ended like a university researcher's job, and given that other countries are farther ahead on measuring science results, we think it can be done. That's perfectly consistent with what the government expected to have happen in 1996.

The Chair: I'm not sure I quite agree with you when you say it's specific. Having visited a number of government research facilities in Canada and looked and studied and watched and learned about the work that they do, I wouldn't say it's specific, by any means. I would say it's highly experimental in a lot of cases and is very much what we would refer to as basic research, very similar to labs I've visited in universities. Having visited the different sites and different structures, I don't see a huge difference at all, not the way you're describing it.

In fact, I think that sometimes you can't predict, nor can you have this mission-driven, results-based science that you want. If that's the case, the Auditor General's office should be commending the research in Canada over the last 50 years and giving it a huge surplus in dollars—take the canola industry as an example—and I don't see the Auditor General's office doing that.

I think that sometimes when you talk about results you have to be very careful about what you're driving at, because if your science is all based on precise results or on expected results, you're not doing that basic research that is necessary.

• 0910

You refer to the United States. The United States Congress just came out with a report last fall. They very clearly talked about the need for basic research in publicly funded basic research, not in partnerships. In fact, with regard to partnerships, a big concern of theirs, and a concern of some of the members of this committee, is this: who owns the results? Are the results driven by the industry and not necessarily by what society may want to know or learn? In the United States, one of the examples they cited in their report was the fact that public research, public dollars, funded the basic research that was behind the DNA discovery back in the fifties. If that hadn't been done, who knows where we'd be today?

I can't believe that you would think that's not similar to what goes on in the university. I have a hard time reconciling your comments on that.

Mr. Peter Simeoni: I guess my comments are rooted in what the government set out for itself in 1996. The office happens to agree with that and had been talking about it before 1996, but it really is what they set out for themselves.

Having said that, though, I don't disagree with anything you've said. I wouldn't want us to be interpreted as implying that everything needs to be very specific and that everything needs to be measured. What we're arguing for is a world in which there is some measurement, and right now what we see in the federal departments is very little measurement. It's more of the balance.

There will always be experimental research, but that has to be done within the bounds of what Parliament has asked the department to do and can't be based exclusively on the whims or the legitimate interests of researchers. That's the mission-driven part of this.

I'll get back to a comment I made earlier: they have a job to do. We do science for specific reasons, but we won't know if we're doing it well if we're not clear about what we're trying to achieve with it—as much as possible.

The Chair: You made another comment earlier that I want to follow up on, Mr. Simeoni. It had to do with partnerships and innovation and how that's where we should be. I don't agree with that. I think the Congress report that came out in the United States is a good example of why you need to have research that is separate and apart from the partnerships. I know that there is a struggle going on right now as to who owns the results of those partnerships as well as who directs it, how far it goes, when it starts, and when it finishes. A lot of the time, dollars are withdrawn before it's finished because the results aren't what the other partner wanted. I don't agree with you at all when you say that's where we should be going as a government.

Mr. Peter Simeoni: Let me be clear about partnerships. What the strategy talks about is the idea that once you've figured out what your job as a science organization is going to be, you should be looking around for opportunities to leverage your resources by working with the resources and the people in other institutions, and the government calls that partnering and partnerships. It's about recognizing the fact that no one department can do everything on its own in order to carry out its job. It's, to our mind, a reasonable management strategy, and it breaks down some of the silos that one of the members asked about earlier. It's making the most of the resources that we have.

The Chair: I don't want to belabour the point, but I do think there are other avenues. If I were the Auditor General's office I would have looked at some of the things the government did, at where and how we supposedly saved dollars in research and where we haven't. I don't necessarily agree with some of your comments.

Mr. Keyes, do you have a question?

Mr. Stan Keyes: Given your remarks, Madam Chair, and given what we're hearing from the Auditor General's department, I go back to the report, to point 22.11, the five bullet points, and in particular to the last three, which are: effective co-ordination and oversight, leadership that transcends departmental mandates, and better information for Parliament and the public on science and technology activities and performance.

If we were to look at this from 30,000 feet instead of from 30 feet... Am I reading correctly here? We have a purse of $5.4 billion being spent on S and T and, like a flow chart, from that $5.4 billion you have a series of different departments taking a chunk of that money and doing the S and T work.

Now, looking at it from on high, are you suggesting that maybe what there has to be is a co-ordinating body of some kind that takes a step back from each of the objectives of each of the different departments and what they're trying to do in S and T and how much money is being spent, etc.?

• 0915

Are you suggesting that maybe there has to be someone who sits back and looks at the whole pie and tries to co-ordinate the objectives and the ideas and where and how the money is spent, so that there's no duplication between departments, etc.? Should there be an oversight department? Is there one that isn't doing the job? I guess that is the primary question, because some might say, well, shouldn't cabinet should be doing that? Shouldn't cabinet be sitting back and discerning all these different expenditures?

I suppose that, to a degree, the Auditor General is in charge of that mandate, but the Auditor General's office, I think, is separate and apart from that kind of mandate, whereas someone or some department or some agency or some entity—whatever you want to call this—would be looking at the whole pie, doing the co-ordinating, and informing Parliament and the public. It would be doing the oversight.

Mr. Peter Simeoni: I wasn't at the discussions underlying the strategy, of course, but it strikes me that your option was probably considered. They opted for the system that they did create or are attempting to create. What you expect from the science management system in government is precisely what the government said it expected in its strategy. The system that is created is supposed to do the things that you would want it to.

I think that part of the difficulty in setting up one co-ordinating body is that not every issue is interdepartmental or is something that crosses into other departmental mandates. They can determine that, and the system that they wanted to create was supposed to be able to differentiate and figure out, okay, that's this department and this is all of us and who is going to do what? Now, that system is not yet operating the way the government wanted it to, but it's supposed to accomplish what you have in mind.

Mr. Stan Keyes: But since it's “broke”, we have to to fix it.

An hon. member: Oh, oh.

Mr. Stan Keyes: Or apparently broken?

Mr. Peter Simeoni: We haven't said it's broken—that may be the subject of a future report—but they need to turn it on to make it work.

Mr. Stan Keyes: Thank you.

The Chair: Thank you, Mr. Keyes.

One last question, Mr. Dubé.

[Translation]

Mr. Antoine Dubé: My question is as much for the committee as it is for you. You maintain that the federal government spends approximately $6 billion on R&D. I want to tie this in with point 22 of your presentation where you state that more parliamentary oversight is needed. The Industry Committee hears testimony from the Industry Minister and the three ministers responsible for the regional economic development agencies, but not from other ministers because they report to other committees. As a parliamentarian, I'd like to know how research and technology funding is allocated to various departments and agencies.

Perhaps this isn't a question that the AG's Office can answer for us, but how can we obtain this information? You have statistics on overall funding levels and on job numbers. In fact, you report on this in paragraph 9.9 on page 9.7 of the management report.

Mr. Richard Flageole: In our previous audits, we put a great deal of emphasis on the need for the best possible information on resources and the overall results of activities as well as on the need for a consolidated activities report, which is called for in the Strategy. The first such report was released in December 1997. It provided an overview of activities and some of the information you referred to. The 1998 report hasn't been released yet, but should be shortly. We do comment briefly on this in Chapter 22. It's a start.

• 0920

This report contains some interesting observations. Clearly, there is need for improvement in some areas, because we are still in the initial stages, but it provides a good starting point for improving the flow of information about activities in this sector.

Mr. Antoine Dubé: Are you referring to your report, or to that of...

Mr. Richard Flageole: This report was released by the government.

Mr. Antoine Dubé: By your office, or by the S&T committee?

Mr. Richard Flageole: By a group responsible for S&T.

Mr. Antoine Dubé: Fine. If there's a report, we'll find it.

[English]

Mr. Peter Simeoni: May I add something in relation to that question?

For the time being, while we wait for the next instalment of the performance report from the government on science and technology, Statistics Canada does provide some information on how much each department is spending on science, on research and research-related activities, and also breaks it down by different types of expenditures such as grants and contributions, money spent on research in federal labs, and all sorts of different categories. We can provide you with the Statistics Canada catalogue reference so that you can obtain that report yourself.

[Translation]

Mr. Antoine Dubé: Thank you.

[English]

The Chair: Thank you very much.

I want to thank you both for joining us today. This committee has been doing a long-term study on basic research and where it's going. Maybe in the future when you do your Auditor General's reports you'll actually consider how much that investment is worth to Canada and what the return is. You may want to take a look at what Congress published and what they say their return is on research. Maybe in the future the government will get some credit for the investment that we do make in research. I think there's a long way to go.

We appreciate the report, we appreciate the fact that you'll continue to monitor it, and, as Mr. Dubé said, we're looking forward to those other reports. Hopefully, from the 1998 results from the different departments, we'll see what we can look at as a committee.

Thank you very much.

The meeting is adjourned.