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37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, October 23, 2003

0905

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Mr. Jim Judd (Secretary of the Treasury Board and Comptroller General of Canada, Treasury Board Secretariat)

0910

0915

The Chair

0920

The Chair

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.)

The Chair

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance)

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

0925

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

The Chair

Mr. Jim Judd

Ms. Val Meredith

The Chair

Mr. Roger Gaudet (Berthier—Montcalm, BQ)

0930

Mr. Jim Judd

The Chair

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada)

Mr. Roger Gaudet

Ms. Sheila Fraser

Mr. Roger Gaudet

Ms. Sheila Fraser

Mr. Roger Gaudet

Ms. Sheila Fraser

Mr. Roger Gaudet

Mr. Jim Judd

0935

Mr. Roger Gaudet

Mr. Jim Judd

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Ms. Sheila Fraser

0940

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

Mr. Jim Judd

Mr. Shawn Murphy

Mr. Jim Judd

0945

The Chair

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance)

The Chair

Mr. Jim Judd

Mr. Paul Forseth

Mr. Jim Judd

Mr. Paul Forseth

Mr. Jim Judd

Mr. Paul Forseth

0950

Mr. Jim Judd

Mr. Paul Forseth

Mr. Jim Judd

Mr. Paul Forseth

The Chair

Ms. Judy Sgro (York West, Lib.)

Mr. Jim Judd

0955

The Chair

Mr. John Bryden

Mr. Jim Judd

Mr. John Bryden

Mr. Jim Judd

Mr. John Bryden

Mr. Jim Judd

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

The Chair

Ms. Val Meredith

1000

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

The Chair

Mr. Jim Judd

Ms. Val Meredith

The Chair

Mr. Jim Judd

The Chair

1050

Mr. Jim Judd

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Mr. Jim Judd

The Chair

Mr. Jim Judd

The Chair

Mr. Jim Judd

The Chair

Mr. Jim Judd

The Chair

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

1055

The Chair

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

Mr. Jim Judd

Ms. Val Meredith

The Chair

Ms. Judy Sgro

Mr. Jim Judd

The Chair

Mr. Jim Judd

The Chair

1100

Ms. Val Meredith

The Chair

Ms. Michelle Chartrand (Deputy Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat, Privy Council Office)

1105

The Chair

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

The Chair

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

1110

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

The Chair

Mr. Roger Gaudet

Ms. Michelle Chartrand

Mr. Roger Gaudet

Ms. Michelle Chartrand

Mr. Roger Gaudet

The Chair

Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.)

1115

Ms. Michelle Chartrand

Ms. Colleen Beaumier

Ms. Michelle Chartrand

Ms. Colleen Beaumier

Ms. Michelle Chartrand

Ms. Colleen Beaumier

Ms. Michelle Chartrand

The Chair

Mr. John Bryden

The Chair

Ms. Colleen Beaumier

The Chair

Ms. Colleen Beaumier

The Chair

Ms. Michelle Chartrand

The Chair

Ms. Judy Sgro

1120

The Chair

Ms. Michelle Chartrand

Ms. Judy Sgro

Ms. Michelle Chartrand

Ms. Judy Sgro

Ms. Michelle Chartrand

The Chair

Ms. Michelle Chartrand

The Chair

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

1125

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

Ms. Michelle Chartrand

Ms. Val Meredith

The Chair

Mr. Shawn Murphy

1130

The Chair

Mr. John Bryden

Ms. Michelle Chartrand

Mr. John Bryden

Ms. Michelle Chartrand

Mr. John Bryden

Ms. Michelle Chartrand

Mr. John Bryden

Ms. Michelle Chartrand

1135

The Chair

Ms. Michelle Chartrand

The Chair

Mr. Roger Gaudet

Ms. Michelle Chartrand

Mr. Roger Gaudet

Ms. Val Meredith

Ms. Michelle Chartrand

The Chair

Ms. Michelle Chartrand

The Chair

Ms. Michelle Chartrand

The Chair

Ms. Michelle Chartrand

The Chair

Mr. Wayne McCutcheon (Director General, Senior Personnel and Special Projects Secretariat, Privy Council Office)

The Chair

Mr. Wayne McCutcheon

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Mr. John Bryden

The Chair

Ms. Judy Sgro

Mr. John Bryden

Mr. Wayne McCutcheon

The Chair

Mr. Wayne McCutcheon

1140

The Chair

Mr. Wayne McCutcheon

The Chair

Mr. Shawn Murphy

Mr. Wayne McCutcheon

Mr. Shawn Murphy

Mr. Wayne McCutcheon

The Chair

Mr. John Bryden

Hon. John Reid (Information Commissioner of Canada, Office of the Information Commissioner of Canada)

Mr. John Bryden

Hon. John Reid

Mr. John Bryden

Hon. John Reid

Mr. John Bryden

1145

Hon. John Reid

Mr. John Bryden

Hon. John Reid

Mr. John Bryden

Hon. John Reid

Mr. John Bryden

Hon. John Reid

Mr. John Bryden

The Chair

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

1150

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

Hon. John Reid

Ms. Val Meredith

The Chair

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

The Chair

Ms. Val Meredith

The Chair

Hon. John Reid

The Chair

Mr. Roger Gaudet

Hon. John Reid

1155

The Chair

Ms. Val Meredith

Hon. John Reid

Mr. Roger Gaudet

Hon. John Reid

Mr. Roger Gaudet

Hon. John Reid

The Chair

Ms. Judy Sgro

Hon. John Reid

Ms. Judy Sgro

Hon. John Reid

Ms. Judy Sgro

Hon. John Reid

Ms. Judy Sgro

Hon. John Reid

The Chair

Ms. Sheila Fraser

1200

The Chair

The Clerk of the Committee

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 043

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, October 23, 2003

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good morning, everybody.

Pursuant to Standing Order 108(3)(e), the committee shall resume consideration of the special report of the Auditor General of Canada--the audit of the financial management and administration of the Privacy Commissioner of Canada--of September 2003. The meeting is scheduled to go from 9 a.m. until noon.

Our witnesses this morning are, from the Office of the Auditor General of Canada, Ms. Sheila Fraser, Auditor General, and Mr. Bruce Sloan, a principal with the office. We will also have a presentation from the Treasury Board Secretariat, from Mr. Jim Judd, Secretary of the Treasury Board and Comptroller General of Canada. With questions, that will take us through until 10:30 a.m.

Later on we will have, from the Privy Council Office, Ms. Michelle Chartrand, Deputy Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat; and Mr. Wayne McCutcheon, Director General, Senior Personnel and Special Projects Secretariat.

After that, we will hear from Mr. John M. Reid, Information Commissioner of Canada.

Let's hope we can get through all that. This is going to be a long morning.

Welcome to everybody.

We would ask the television cameras to leave.

Ms. Fraser has already presented her statement on this issue to the committee, so we'll move straight on to Mr. Judd.

Mr. Jim Judd (Secretary of the Treasury Board and Comptroller General of Canada, Treasury Board Secretariat): Thank you, Mr. Chairman.

[Translation]

I welcome the opportunity to comment on the Auditor General's report on the Office of the Privacy Commissioner.

Let me start by saying that we were as shocked as others by the findings of her report. This is not the public service we know. As the Auditor General has said, the conduct outlined in this report is not representative of the conduct of government employees.

The Treasury Board Secretariat agrees with the Auditor General's three recommendations directed at us and is committed to implementing them in collaboration with the interim Privacy Commissioner.

[English]

I now would like to deal with the nature of the secretariat's interaction with the Office of the Privacy Commissioner and how we learned of, and reacted to, the problems identified in that office by the Auditor General.

Prior to the tabling of the report of the House of Commons Government Operations and Estimates Committee on the Office of the Privacy Commissioner this summer, and the subsequent report by the Auditor General, we had two broad areas of interaction with the Office of the Privacy Commissioner. The first related to a number of policy issues and actions on them in that office, particularly with respect to privacy impact assessments and the prospective coming into force at the end of this year, or the beginning of 2004, of the Personal Information and Protection of Electronic Documents Act.

The second set of interactions related to several funding issues affecting the office, including: the costs it was incurring on legal advice and the mounting of subsequent litigation; the cost of having established separate corporate services operations distinct from the Office of the Information Commissioner; and finally, its needs for base funding both then and also in anticipation of additional workload associated with the coming into effect of the PIPEDA regime.

In January of this year, additional funding of $335,000 was authorized for the office to help offset the costs associated with legal contractual commitments and for the additional work there related to their activities on privacy impact assessments. But because of concerns over potential funding liabilities, in February of this year the office's executive director was told to take immediate measures to reduce spending in order to avoid exceeding the office's appropriations. Our officials were subsequently assured that the office would not exceed its appropriations for that fiscal year and that the necessary remedial measures would be taken to ensure that.

That same month, the secretariat directed that a review of the office's financial status and funding requirements be undertaken.

As the Auditor General's report revealed, the office did in fact exceed its appropriations by $234,000, although we only learned of this as a result of the Auditor General's audit. Consistent with the rules of the FAA, the same amount has been removed from the office's budget for the current fiscal year. The identified shortfall we were aware of, after the close of the last fiscal year, was in the order of approximately $73,000, an amount subsequently provided to the office to cover statutory personnel costs.

¿ (0910)

[Translation]

As a consequence of that overspending, we were about to have an independent third party carry out a validation of the office's resource review. Those plans were suspended because of the proceedings of the government operations and estimates committee.

While we did see an early draft of the office's commissioned resource review, it was withdrawn just before Mr. Radwanski's resignation. As the full scope of the problems at the office began to emerge, we engaged a former deputy minister to assess the management practices of the office and propose improvements.

[English]

The study that was conducted this summer was shared with the interim commissioner as part of our ongoing efforts to support Mr. Marleau in his new responsibilities. We also provided assistance to the interim commissioner through the summer on the office's management, financial, legal, and human resources procedures.

Separately, we commissioned a study of the office's staff to determine why they did not report any wrongdoing, under the policy on the internal disclosure of information concerning wrongdoing in the workplace, or seek the assistance of the Public Service Integrity Officer. This report was also shared with the interim commissioner this summer.

Since the release of the Auditor General's report in September, we have been working with the interim Privacy Commissioner to establish the current and prospective resource requirements for the office. We have also provided advice to the interim commissioner regarding disciplinary action for public servants. And as you aware, several such actions have already been taken.

[Translation]

As regards the Performance Management Program for Executives, I have written to Mr. Marleau, asking him to review the performance awards on a case-by-case basis and to take action to recover funds as appropriate. We have advised him that performance awards for the current fiscal year can only be paid after the Treasury Board Secretariat has approved the proposed payments.

¿ (0915)

[English]

The president of the Treasury Board and the interim Privacy Commissioner will complete a report before the end of the month outlining the action plan to respond to the AG's findings in respect to the restitution of funds.

To address abuses in the classification of positions, we will be reviewing all classification actions in the office over the last several years to ensure that any improper classification actions are addressed. We will also be working with the office to ensure the integrity of future classification decisions and enable the office to effectively manage its classification program.

The Auditor General's report found a number of questionable payments for hospitality, leave, and travel expenses. As a result, we have been working with the interim commissioner to deal with the appropriate recovery of funds. Arrangements have already been made for some recoveries, which will be detailed when the president tables the report on this issue at the end of the month.

On the issue of disclosure of wrongdoing, the president of the Treasury Board announced the creation of a working group last month to study the issue and propose options for an effective disclosure regime that would encourage all public servants to report wrongdoing and to protect them from reprisal. These could include legislative options.

The report is to be finalized by January 31, 2004, and it is the president's intention to provide the report to parliamentarians for their consideration and subsequent recommendations to government.

[Translation]

Financial management was one of the key areas where the Auditor General found a major breakdown of controls at the Office of the Privacy Commissioner. We are working with the interim Privacy Commissioner to select a new senior financial officer and to ensure that appropriate training and development are given to this individual.

[English]

The Auditor General's report contains three recommendations regarding the Treasury Board Secretariat.

The first asks that the interim commissioner and the president of the Treasury Board submit to Parliament by the end of this month a report on actions to deal with the restitution of moneys improperly retained. As I mentioned, action has already been taken in some cases, and others are being pursued. The report will be tabled next week.

The second recommendation concerns the performance awards given to executives in that office, and specifically a request that they be reviewed. That is being done now, Mr. Chairman, in collaboration with the interim commissioner.

Third, we were asked to revoke the Privacy Commissioner's authority to award performance pay until we were satisfied that the office is complying with the policy as intended. The Privacy Commissioner will not be allowed to award performance pay until we are certain that the office is compliant and that steps are being taken to ensure that in the future the policy is followed as intended.

That summarizes very quickly, Mr. Chairman, our dealings with the office in the last year or so. I'd be pleased to take any questions you may have.

The Chair: Thank you, Mr. Judd.

It does seem a bit--what's the phrase?--too little, too late. Nonetheless, the questions will come forward.

Before we move into questions, two things. We are expecting a vote at 10 o'clock, or within a couple of minutes thereafter. It will be a 15-minute bell. I will suspend the meeting for us to go and vote at that time.

Second, we have a delegation here from Mali, and I would like to briefly introduce them. Unfortunately, the leader of the delegation, Monsieur Ganfoud, is sick and not able to be with us this morning. However, we do have here:

[Translation]

Mr. Sylla, Chair of the Finance Committee, National Assembly; Mr. Muhamar Lassine Traoré, Primature Administrative and Financial Director; Mr. Tiéguè Ouattara, Chair of the OAG Implementation Committee; Mr. Sibide, member of the OAG Implementation Committee; Ms. Maïga, Technical Advisor to the MRERI; Mr. Gogolo, also a technical advisor to the MRERI; and Mr. Diara, Support Unit Adviser, Canadian Embassy in Mali.

[English]

I think the member from CIDA who's accompanying the delegation may also be absent at this point in time.

That's our delegation right there.

Voices: Hear, hear!

¿ (0920)

The Chair: I understand that in Mali they are in the process of setting up an auditor general's office. We congratulate them. Our Auditor General is before us this morning. We have great faith in our Auditor General, and her competence in pointing out government mismanagement is beyond question. Mr. Bryden, you have a question.

Mr. Bryden, you have a question.

[Translation]

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.): Mr. Chairman, when I was a student, I wanted to cross the Sahara all the way to Mali because this country has a very, very romantic city in anglophone lore; I am referring to the city of Timbuktu. I was therefore hoping to visit Timbuktu because for a young person, Timbuktu is a very romantic city.

Thank you.

[English]

The Chair: Thank you for your comments, Mr. Bryden.

We will now get down to business, and as I say, we will interrupt at 10 o'clock or shortly thereafter.

Ms. Meredith, eight minutes, please.

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Mr. Chair.

Mr. Judd, do you think it's fair comment to say that the Treasury Board was negligent in protecting taxpayers' funds that were being misused, going overbudget to the extent that they did? Do you not feel that the Treasury Board was negligent in terms of doing something sooner?

As our chairman said, it's kind of too little, too late. The horse is already out of the barn by the time you've shut the barn door.

Mr. Jim Judd: Let me make several observations. First of all, the Office of the Privacy Commissioner is an agent of Parliament. As I think the Auditor General herself said in her report on this, agents of Parliament are treated somewhat differently from the rest of the public sector, by central agencies of government, for reasons having to do with, principally, not wishing to give the appearance that the government is, in some fashion or another, impeding their independence.

Second, the Office of the Privacy Commissioner is a small agency, one of dozens of small agencies extant in the government these days. Again, I think as the Auditor General pointed out in her report, perhaps, as a category of institutions, they do not get the kind of attention from either the Auditor General's Office or Treasury Board that should be warranted.

Third, as I've said, the office was a small office. Our interactions with them, prior to the Auditor General's report on the office, were relatively intensive on the set of both policy issues and resource issues--

Ms. Val Meredith: But we're not talking about policy issues and resource issues. We're talking about an agency that came to you with a budget shortfall of $335,000. Whether they're a small agency or a big agency, I mean, does this happen all the time that it didn't ring bells, that here was a department that was obviously terribly overbudget? I don't imagine their budget is that large, but $335,000 should have rung a few bells of concern.

Mr. Jim Judd: As I said in my opening statement, we had directed the office before the end of the fiscal year to ensure that it took steps to not exceed its appropriations. We were assured at the time by the executive director of the office that these steps would be taken, but in the event, we also directed that a review be done of the resources current and prospectively necessary for the office, also before the end of the fiscal year.

As the Auditor General pointed out in her report, there was an amount in the order of about $234,000 that the office exceeded in its budget, but this was not known to us at the time. It was not reported, and it only turned up as a consequence of the audit itself.

¿ (0925)

Ms. Val Meredith: So could you tell me what's happened to the executive director who misled the Treasury Board?

Mr. Jim Judd: The executive director--

Ms. Val Meredith: Did he get a bonus, a performance bonus?

Mr. Jim Judd: Let me just say generically--

Ms. Val Meredith: I don't want generically, I want specifics. I want to know, what happened to the individual who misled you, the Treasury Board? Is he still there, and did he get a performance bonus?

Mr. Jim Judd: Disciplinary proceedings are in train with him and others in the office.

Ms. Val Meredith: You mentioned that you had a report going, trying to find out why the employees didn't come to the various levels of reporting with concerns that they had. Our understanding, from the report, is that they did.

So perhaps you could explain to me a couple of things--first, why you were not aware that employees were reporting that there were problems in the agency, and second, what your report came up with.

Mr. Jim Judd: We'd be happy to make the report available to the committee, if you wish.

Ms. Val Meredith: Would you please table it with the clerk of the committee? We'd appreciate that.

Mr. Jim Judd: Certainly.

The report concluded in sum that employees did not avail themselves of the policy on the disclosure of wrongful activity. There was no--

Ms. Val Meredith: To whom did they not report or disclose, the Treasury Board?

Mr. Jim Judd: The Public Service Integrity Officer.

Ms. Val Meredith: Is that with the Public Service Commission?

Mr. Jim Judd: No.

Ms. Val Meredith: That's with the Treasury Board.

Mr. Jim Judd: The office is funded out of our appropriations, but it is an office that is separate from the Treasury Board. The office was established as a consequence of policy put in place approximately two years ago.

Ms. Val Meredith: Do all civil servants, all personnel working for the public service, know that's where they are to report to? Are they advised of that? Are they given reminders on a regular basis that this is who they are to report to?

Mr. Jim Judd: The policy and the establishment of the office were extensively communicated at the time they were established.

Ms. Val Meredith: So a new employee may not know that this is where they are to direct their concerns.

Mr. Jim Judd: That is possible, but--

Ms. Val Meredith: Are you doing something to rectify that, to make sure that all present employees of the civil service know the proper process to register complaints?

Mr. Jim Judd: We will be, and have been, doing further communications to public servants on the policy and the office, yes.

Ms. Val Meredith: With the Auditor General's report, although she did indicate that she wants restitution, or she's suggesting that the individuals who got performance bonuses, and benefits that they shouldn't have, be required to return the money, if you will, I'd like to take it one step further. When we talk about performance bonuses, how on earth could you give anybody performance bonuses when they went overbudget? Isn't that part of a performance of an individual, that they are able to manage the resources they have, to manage the department in such a way that they fall under the guidelines?

How is it possible that the Treasury Board would consider giving performance bonuses when there isn't a performance given?

The Chair: Thirty seconds left.

Mr. Jim Judd: We did not give performance bonuses to the employees there. The policy that exists currently delegates that authority to deputy heads of institutions. It would have been the former head of the office who had done that.

As I said in my opening statement, we are, with Mr. Marleau, currently reviewing all the performance awards given in the office to see whether there are restitutions that should be made in those cases.

Ms. Val Meredith: Thank you.

[Translation]

The Chair: Thank you very much, Ms. Meredith.

Mr. Gaudet, you have eight minutes.

Mr. Roger Gaudet (Berthier—Montcalm, BQ): Thank you, Mr. Chairman.

Let me say that I find it difficult to understand the policy at the Office of the Privacy Commissioner. The commissioner is a parliamentary officer who reports to no one. Personally, I have a meager MP's budget and if ever I submit a $25 expenditure for something that is inappropriate, someone calls me to notify me that the expense is not eligible. But, when it comes to the commissioner, you could be talking about more than $300,000, $250,000 or $75,000, that doesn't seem to pose any problem and nothing is ever checked.

¿ (0930)

Mr. Jim Judd: Technically speaking, the commissioner reports to Parliament, like the other parliamentary officers, including Ms. Fraser. However, as far as the office budget is concerned, as I said in my statement, we took action during the last fiscal year to obtain assurances from the office that it would not exceed its budget. We also informed the office that it had to investigate its resources and we were about to ask a third party to review the findings to ensure that the questions were indeed justified.

The Chair: Ms. Fraser, please.

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada): May I add a comment, Mr. Chairman?

Up until now, our office was the only one, of all the offices of parliamentary officers, to audit its financial statements, but all of the officials or other parliamentary officers agreed that the Office of the Auditor General will be auditing their financial statements for the fiscal year ending in 2004, so all of the other parliamentary officers will have their financial statements audited.

Mr. Roger Gaudet: But before then, what was done?

Ms. Sheila Fraser: Nothing was done.

Mr. Roger Gaudet: So it was a free for all. Everybody had their hand in the...

Ms. Sheila Fraser: I would not generalize based on this specific case, far from it. You must understand that there are many small agencies and entities within the government. As Mr. Judd indicated, I think that we, namely the Auditor General or the central agencies, have realized that we perhaps did not pay enough attention to them. We are in the process of compiling the list of all of the small agencies; I think that we have already counted more than 90 agencies already. So a plan will be implemented and we will begin doing audits. We will not be able to audit everything, but we will conduct an audit over a certain length of time, depending on the risks identified. We would be happy to talk to Parliament about our strategy in a forthcoming meeting.

Mr. Roger Gaudet: If I have understood correctly, we may be in for some other little surprises from other independent organizations.

Ms. Sheila Fraser: I hope that that is not the case, but we cannot know this.

Mr. Roger Gaudet: Earlier, Mr. Judd, you said that Parliament was responsible. There must be somebody in Parliament who answers for these people. Who is it? Is it the Treasury Board? You said that it was Parliament, but Parliament is made up of 301 MPs, and we had never heard about that prior to these events.

Mr. Jim Judd: Indeed, that is very interesting. There are five offices headed by officers of Parliament, who are responsible to Parliament. There is Ms. Fraser, the Office of the Privacy Commissioner, the Office of the Information Commissioner, the Office of the Commissioner of Official Languages and Mr. Kingsley, the Chief Electoral Officer. At any rate, the Committee on Government Operations and Estimates, chaired by Mr. Alcock, who tabled the report on the Office of the Privacy Commissioner, recommended, I believe, that a parliamentary subcommittee be established to monitor the activities of parliamentary officers. However, I do not know whether this subcommittee has yet been established.

¿ (0935)

Mr. Roger Gaudet: How do you determine the budget for the Office of the Privacy Commissioner of Canada, for example? Do you have any criteria or specific standards?

Mr. Jim Judd: We use the same process used for the other agencies that report to Parliament, with the exception of the organization under Mr. Kingsley's responsibility. The agency budgets are approved by Treasury Board and then by Parliament. The Treasury Board Secretariat works with the agency offices to establish their budget requirements.

In all honesty, I feel that the Office of the Privacy Commissioner of Canada, even today, needs a bigger budget in order to fulfil its mandate. However, as I already stated, with agencies that report to Parliament, it is often difficult for us, as members of the executive, to maintain our positions during negotiations. There is always the possibility that they could accuse us of trying to curtail the flexibility of their policies through their budgets.

[English]

The Chair: Thank you, Mr. Gaudet.

Mr. Murphy, please, eight minutes.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

I have a number of questions for Mr. Judd on the apparent lack of governance, oversight, checks and balances in the system. Before I do that, I want to follow up on the performance awards and performance payments that seem to have infiltrated the federal civil service....

Yes, it's the “heads”, sorry, you're right.

I've been with this committee for three years. I should say that generally--and the Auditor General knows this--99.9% of our civil servants are honest and hard-working. But I've never met anyone who has come before this committee, and I guess I've never heard of anyone, who doesn't get a performance award. It seems to be that everyone gets it.

We went through the Groupaction file, we went through other files, and we're going through this file, and it just seems that the bigger the problem, the bigger the performance bonus. I think it's a system that's totally gone amok here. It's not known in the private sector, or not that I'm aware of, that you go through a system where everyone gets a performance bonus.

To the Auditor General, is this system good? I think this is a very serious issue, and it's embarrassing as a member of Parliament to see this going on, to see people who worked at the Privacy Commission get a performance bonus. There's something wrong with the way the system is devised and the way the system has been implemented.

Catherine Swift came before the finance committee the other day. Now, I'm not saying that everything she says, or her all her information, is correct, but she made the statement that civil servants are now being paid, without the performance bonus layered on, 20% higher than those in comparable positions in the private sector. And then we add on a whole layer of performance bonuses, which appear to be going to everyone, for no justification.

Ms. Sheila Fraser: Mr. Chair, we haven't done any audit work specifically on performance bonuses, so I'm a little reluctant to comment on how the system works and on how well it is working.

I do have some comments I would like to give on the whole question of performance pay, but I do believe the secretariat is reviewing performance pay. Mr. Judd might have some comments to add on that.

I think performance pay, per se, is not a bad thing. This is a bit of a personal opinion. It is, I believe, fairly common in the private sector. I know in the world I came from, performance pay was part of distinguishing between somebody who just did their job and somebody who'd had an exceptionally challenging year. I really do believe there has to be a way to reward people who are doing exceptional work.

I do not believe performance pay should be considered as something that everybody has a right to, that is given automatically, but I think there is a place for performance pay. I think the criteria and how it's managed should all be looked at very seriously, obviously. I think it's wrong when we see everybody at the high end of the scale when there's obviously a sign there that the system isn't working as it should.

I'll turn it over to Mr. Judd, because I think the Treasury Board does have a responsibility to manage for those employees under its responsibility how performance pay has been awarded to those deputy heads that it has delegated that responsibility to.

On the question of pay scales, we haven't done that comparison, but I can tell you just from a little knowledge that, certainly for the senior executives in government, I do not believe they're being paid more than the private sector. If anything, I think a lot of us take a cut in pay when we come into government.

¿ (0940)

Mr. Shawn Murphy: In your organization, do you give a performance bonus to everyone who's eligible for a performance bonus ?

Ms. Sheila Fraser: We do give performance pay for what we call our management category, and we do give limited performance bonuses to our unionized employees. Our performance pay system is much less generous than the one in the public sector, so our performance pay would probably be somewhere in the order of, I don't know, 4% to 5% of a person's salary--

Mr. Shawn Murphy: But does everyone get it who's eligible to get it?

Ms. Sheila Fraser: Everyone? Yes, but there are criteria, and not everybody gets the maximum. I would suspect--

Mr. Shawn Murphy: Everyone would get performance pay?

Ms. Sheila Fraser: Everybody in the management category who is eligible will get a performance bonus, but it is a fairly minimal amount.

Mr. Shawn Murphy: You see, that's my point. On the whole concept of performance pay for performance above and beyond the normal, to me, the fact that everyone gets it indicates that it has gone beyond that. It's systemic pay that has entered into the system.

Ms. Sheila Fraser: In part it is, yes, but it is a recognized practice in the public service. We have to be competitive to the extent we can with the departments and the agencies, so if someone meets their objectives for the year, and the evaluation shows that, they do get a bonus or an increase in salary--it can be either, depending on where they are in their salary range--but the amounts are much smaller than the amounts paid in the general public service.

Mr. Shawn Murphy: Mr. Judd, you can see my concern as a member of Parliament when I look at this file and the Groupaction file, and at all these executives who were involved. There's none of them, including the people in this file, who wouldn't get performance pay.

Isn't it Treasury Board's responsibility to establish the criteria and ascertain that the criteria are implemented? Do you not feel some kind of embarrassment about this whole performance pay aspect, about coming here and saying, yes, all these people who behaved the way they behaved all got performance pay? Is that not a concern to you?

Mr. Jim Judd: It obviously is. That's why we're doing a case-by-case assessment of the individuals in the Office of the Privacy Commissioner, and if necessary we'll take back--

Mr. Shawn Murphy: But that's after the fact, Mr. Judd. If you don't have the systems and the checks and balances going in, going back on a case-by-case basis after a schmozzle like this has happened helps no one. If you don't have the established criteria, and the level of governance, and the checks and balances going forward, which I don't think you have....

Mr. Jim Judd: I have three or four comments.

First of all, the system that exists in the public service was one that was recommended to us by a private sector advisory group as a means of trying to retain senior executives in the federal public service, in view of the fact that public service executives generally are paid less than their equivalents in the private sector.

The system in fact is a variable pay system, not a performance pay system, in the sense that the calculations are done on the basis that the base pay plus the performance award would represent the total amount of salary compensation for which an employee is eligible. Very few people get the whole amount in this system.

I would also say two other things. One, not everybody gets performance pay. In my own organization, 5% or 6% in the last fiscal year did not get any performance pay. Generally speaking, across the public service as a whole I think that is about representative. And based on the material we've seen from the Conference Board, our administration of the system is about the same as that in the private sector.

That said, as a consequence of the events in the Privacy Commissioner's office and other concerns that we've had about the system, the whole system is being reviewed. We will be putting out new directives on it next month to guard against the possibility of what happened in the Privacy Commissioner's office, where all executives got surpassed ratings.

For the current fiscal year and going forward, all performance awards throughout the government will be first reviewed to ensure that there is a legitimate distribution of awards before any payments are made.

So we are taking a number of steps to address the system.

¿ (0945)

The Chair: Thank you, Mr. Murphy.

Mr. Forseth, please. We're now in round two, so this will be four minutes.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Only four minutes.

I have three questions, and I want to get to them, but before I do, I want for you to affirm before this committee that you are giving evidence before a parliamentary committee, that you consider yourself to be under oath, and that you are subject to the consequences if that were violated.

The Chair: That's a given.

Mr. Jim Judd: As you wish.

Mr. Paul Forseth: “As you wish”? Well, all right.

First, you said in your brief:

To address abuses in classification of positions, we will be reviewing all classification actions in the Office over the last few years to ensure that any improper classification actions are addressed.

But I wonder, what about the role of the Public Service Commission? Isn't it their competency to do that? And when you say you're “reviewing all classification actions”, I hope the results of that will be made public.

This is pretty worrying to me. If it's a problem here reviewing classifications, obviously it's system-wide, I would think, or certainly it has system-wide implications. If it's here, it must be elsewhere, considering the size of the public service.

So I ask specifically, what is being done to ensure compliance with the rules related to classification? Short answer.

Mr. Jim Judd: Three quick points. Classification standards are the responsibility of the Treasury Board Secretariat, not the Public Service Commission. They are delegated to deputy heads to administer. In the case of the Office of the Privacy Commissioner, we expect it will take somewhere in the order of six to eight months to go through all of the classification actions that have been taken. That work is under way now.

As regards the public service at large, we are doing a rolling review of all classifications in the public service, starting on two fronts--specific occupational groups and individual departments. That will continue over the coming years.

Mr. Paul Forseth: Second question. You said:

We are working with the Interim Privacy Commissioner to select a new Senior Financial Officer and to ensure that appropriate training and development are given to this individual.

I find that somewhat incredible. I would hope that the kind of person we're appointing at that level already has those skills, and is probably able to teach them to others--not that we're going to hire somebody and then we're going to try to train them.

Now, the government operations and estimates committee, of which I am a vice-chair, has already clearly signaled that we want a change in structure to allow committees to examine, before appointment, the officers of Parliament. That's the expressed will of the government operations committee, and I'm wondering if you're going to comply with that wish.

Mr. Jim Judd: That's beyond my area of responsibility, I'm afraid. That would be something to be addressed to the Privy Council Office. We don't appoint. We have no role in the appointment of these officers.

Mr. Paul Forseth: But you said here, “We are working with the Interim Privacy Commissioner to select a new Senior Financial Officer”.

¿ (0950)

Mr. Jim Judd: That would be a public servant.

Mr. Paul Forseth: Okay. So perhaps I've made a mistake concerning senior financial officer and the senior officer that I was talking about, because I'm specifically talking about the officers of Parliament themselves.

The other thing is about appointments. You've raised the word “independence”, but what we found here was an inappropriate relationship financially concerning ongoing negotiations for personal compensation for the officer of the Privacy Commissioner. It seemed that he was viewed as independent when convenient, but not independent when it was useful.

These relationships of compensation are troubling to me, and I'm asking you, what are you contemplating to enhance, in a technical sense, the independence of officers of Parliament so that they're not renegotiating their pay? We're saying they're independent, yet they're not independent, because they're subject to their own renegotiation of personal compensation.

Mr. Jim Judd: I'm sorry, Mr. Forseth, but that's outside our jurisdiction as well. It's a matter for the Privy Council Office to deal with. Madam Chartrand will be here later this morning, and I presume you can put the question to her.

Mr. Paul Forseth: Okay.

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

Ms. Sgro, please, four minutes.

Ms. Judy Sgro (York West, Lib.): Thank you very much.

The line of questioning from Mr. Forseth and me will give you clear evidence that we both sit on government operations.

I'll try to be specific. On the staffing of the particular Privacy Commissioner's office, the fact that you assign, through Treasury Board, the staff who works there, including the chief financial officer, as an example....

If given direction to authorize various expenditures that clearly weren't within the guidelines, at what point do you come into it? It always seems as if we rely on Treasury Board to do the checks and balances on these things. We recognize that you can't hold everybody's hand and oversee everything. It's a big operation you have to look after. But by the same token, I need to feel a level of confidence, when you leave here today, that Treasury Board is where the buck stops.

I thought that's where you would oversee everything to the degree that you could, but it seems as though nobody was paying any attention to the things that were going on in that department.

Mr. Jim Judd: I have several points on that, if I may.

We do not appoint senior financial officers in organizations. That is a responsibility of the deputy head of the organization in question. In fact, if memory serves me correctly, the senior financial officer of the Office of the Privacy Commissioner was previously a financial officer here in Parliament.

In any event, he has since departed. We have provided an interim senior financial officer to Mr. Marleau, to help him get through his interim period, and we are working with him to identify suitable candidates from elsewhere in the public service to take that job on.

Senior financial officers currently have an obligation, under our comptrollership policy, to report to the Deputy Comptroller General any instance of wrongdoing, or problems, if you will, with respect to financial management. In the case of the Office of the Privacy Commissioner, the senior financial officer at the time did not do this. As it transpired in respect of the audit that Madam Fraser conducted, they in fact hid expenditures from us.

Our expectation, I suppose, with the reporting requirements we have in place and the various oversight systems that exist...we depend to some extent on reliability of information and confidence in the individuals to do this. More generally, though, as Madam Fraser has pointed out in the report, oversight of each and every small agency in government is something that both of us, I think, have to work on. We are working on that. We are looking at a whole series of measures with respect to small agencies to strengthen our oversight.

Much of our attention in the Treasury Board Secretariat is taken up with the large spenders, obviously, the big departments and agencies that account for the bulk of spending in the federal budget. My recollection is that the budget of the Privacy Commissioner's office is something in the order of $11 million, which, as Madam Fraser pointed out, many large departments would spend in half a day. So we tend to focus more on the larger risks, if you will.

¿ (0955)

The Chair: Thank you very much, Ms. Sgro.

Mr. Bryden, please, four minutes.

Mr. John Bryden: Mr. Judd, you mentioned that you became concerned about the costs of establishing separate corporate services by the Privacy Commissioner. As I understand it, the Information Commissioner and the Privacy Commissioner shared services, and then they were split apart, I presume at some cost.

Who made that decision? How would a decision like that be made?

Mr. Jim Judd: My recollection is that it was at the behest of the former Privacy Commissioner that the offices be separated on the grounds of better assuring confidentiality of the proceedings of his office, as I recall.

As a result of that action, we froze money in his budget, and I believe it was reallocated to the Information Commissioner's office to make up the shortfall in his budget that resulted.

We are, I should add, looking at, and have discussed with the agents of Parliament, Madam Fraser included, the general issue of oversight of agents of Parliament and the funding formula. That started in July. But again, I would have to reiterate, from the government's perspective there's a certain reluctance to appear to be too interfering in an agent of Parliament's work, particularly where the agent of Parliament is already a critic of government, as Mr. Radwanski certainly was.

Mr. John Bryden: So perhaps we should consider other methods. For instance, when it comes to offices of Parliament making representations for expensive changes like this, it should go through a committee like this one directly rather than leave the delicate onus on Treasury Board to make the decision. Would that be a fair thing to say?

Mr. Jim Judd: We would be happy to see a more active parliamentary role in the oversight of parliamentary agents.

Mr. John Bryden: You also said that until the audit, you weren't aware that the Office of the Privacy Commissioner had exceeded its appropriations by $234,000. You're familiar, I know, with the access to information task force review that was undertaken for Treasury Board. If I recall, one of its recommendations was that government departments not only should come under the Access to Information Act--and I think we agree that the Privacy Commissioner should do--but there also should be a more proactive disclosure of this kind of spending.

Now, had the Office of the Privacy Commissioner come under the Access to Information Act and followed the suggestions as outlined in the task force report, you would have known, or somebody would have known, that there were problems. Or would that have been the case?

Mr. Jim Judd: I don't think so.

Mr. John Bryden: Okay. Well, please elaborate.

Ms. Sheila Fraser: Mr. Chair, perhaps I could help to answer that.

There were certain payables in the year-end accruals, for salaries, for performance pays, amounts that were paid after the year end, that should have been recorded in the books and were not recorded. Those would not have shown up anywhere. Access to information would not have indicated those payments until much later after the fact. So the amounts would not have been discovered like that.

Mr. John Bryden: May I make the point, though, that surely, if there are things missing that should have been there, the staff in the Privacy Commissioner's office would have noted it, and it would have been grounds for reporting it to the appropriate authorities.

Ms. Sheila Fraser: Well, the staff knew that those payments were not recorded. They deliberately did not record them in order not to....

So it was not a question of not knowing. They knew.

Mr. John Bryden: Thank you.

The Chair: Thank you, Mr. Bryden.

The bells are ringing, but it's a 15-minute bell.

I think we have time, Ms. Meredith, for four minutes, and then we'll suspend the meeting.

Ms. Val Meredith: Thank you, Mr. Chair.

I want to go back to a concern that I have in the system. You mentioned that you're setting up a policy, or that there is a policy in place that you're reviewing, for employees to raise their concerns. It's been brought to my attention that the policy is that a department or an agency appoints a senior officer to be the reporting mechanism. And I mean, this was a prime case of where the employees didn't feel comfortable because that senior officer was part of the problem.

How can you expect a system where an employee who has problems with management is unlikely to go to management to report an issue of concern...? When you're looking at this review, are you looking at how a third party, maybe outside of the department, should be the person to report to?

À (1000)

Mr. Jim Judd: There already is a third party established in the policy, the Public Service Integrity Officer, Mr. Keyserlingk. So employees of the Office of the Privacy Commissioner had the option, had they not wished to raise issues within their organization, of going to Mr. Keyserlingk's office to seek redress.

Ms. Val Meredith: Is he with the Public Service Commission?

Mr. Jim Judd: No, he's an independent officer.

Ms. Val Meredith: An independent officer of...?

Mr. Jim Judd: Of the government. We pay for the office, but he's quite separate and independent from the Treasury Board Secretariat or anybody else in the federal public service.

Ms. Val Meredith: So an employee of any department who's not in management is going to know that this office exists, and the phone number, and the accessibility of it?

Mr. Jim Judd: I couldn't guarantee--

Ms. Val Meredith: Because my understanding is that they're given a senior officer in their own department as being the person they're to report to.

Mr. Jim Judd: Yes, that's true, but the policy also...and employees are informed that there are actually two routes. One is within the organization, to the senior officer of the department or agency, and as an alternative, should they feel the requirement, they can go to the Public Service Integrity Officer.

Ms. Val Meredith: When are they informed of this? At what point are they informed that this is in place?

Mr. Jim Judd: The policy came into effect about two years ago, and--

Ms. Val Meredith: So you're assuming that every new employee of the government is going to go and read a huge policy manual to find that somewhere in this policy manual is something telling them where to go.

Mr. Jim Judd: Actually, we have put out this year a new public service code on values and ethics, which incorporates elements of this, and it is a requirement for all new employees in the public service to have and read and hopefully understand the provisions in there.

Ms. Val Meredith: Do they have to sign off on it?

Mr. Jim Judd: Yes.

Ms. Val Meredith: So the employees themselves are then responsible for knowing that this in fact is in place to help them.

What is the protection for an individual who...? This Mr. Keyserlingk, he's an independent, so I assume his information would not be shared with the department--or would it be? Would he go back to the department and say, “Your employee X has accused you of fraudulent behaviour or harassment”?

Mr. Jim Judd: I believe it depends on the circumstances of the case. He filed his first annual report in Parliament last month, I think. He has had occasion to deal with a number of cases already. His office has been in existence for about a year and a half. He's dealt with a number of cases. Some are still ongoing. In other cases, in other circumstances, I understand he's taken it upon himself to refer individuals to other recourse systems in the government.

Ms. Val Meredith: So who's watching his budget? Who's making sure that he's not going to create this huge department that overspends $234,000?

Mr. Jim Judd: He has a small office, a small budget. It is more closely overseen because he's not an agent of Parliament, per se.

Ms. Val Meredith: Is it Treasury Board who's responsible for his office?

The Chair: Just a quick answer there, Mr. Judd.

Mr. Jim Judd: His budget is part of our budget, but....

Ms. Val Meredith: Thank you.

The Chair: The meeting is suspended for the vote.

I would ask everybody to return as quickly as possible after the vote so that we may continue.

À (1004)

À (1048)

Mr. Jim Judd: So far as I understand, Mr. Chairman, it was done in accordance with the FAA. The $234,000 in the current fiscal year is being reduced--

The Chair: You have that in your opening statement, but as I pointed out in the point of order I raised in the House, we're dealing here with incompetence. We're dealing here with falsification of records. We're dealing here with a deliberate attempt to mislead Parliament and information that would have been published in the Public Accounts of Canada. Do you think it's appropriate that the financial administration can just gloss over that?

À (1050)

Mr. Jim Judd: I don't think it was glossed over, Mr. Chairman. The Auditor General discovered the issue in the course of her audit. It has been made public, and in the circumstances of current legislative frameworks, we believe we have acted in accordance with the provisions of the FAA in dealing with this issue.

The Chair: How about the Auditor General? On this deliberate attempt to mislead Parliament, trying to hide the $234,000, which you discovered and which therefore got into the Public Accounts of Canada, that was not appropriated by Parliament for the year ending March 31, 2003, do you think it's A-okay to say, “Well, we've covered it off in the Financial Administration Act”?

Ms. Sheila Fraser: Mr. Chair, when the initial statements were provided by the Office of the Privacy Commissioner to the Treasury Board Secretariat, they did not indicate an overspending. When we conducted the audit, we found that certain expenses had not been recorded. Corrections were made immediately. We informed the interim Privacy Commissioner, they made a correction, and the Treasury Board Secretariat made a correction. This was going on in the summertime.

So I think people did take this seriously, and they did correct the public accounts for $234,000. And I believe the Financial Administration Act clearly lays out how that is to be dealt with.

The Chair: But do you think it's appropriate that this opportunity to cover off a problem identified, where perhaps there would have been an oversight in spending...? And here we're talking about a deliberate attempt by the chief financial officer, in consultation with others in his office, to mislead and misrepresent the public accounts. Should the FAA should be used in that situation, or should the government be required to bring in a supplementary estimate to cover that off?

Ms. Sheila Fraser: Mr. Chair, I can't answer that. The FAA makes provision--

The Chair: Mr. Judd, do you think it's okay?

Mr. Jim Judd: Well, I would dispute the assertion that the issue was covered up.

The Chair: No, I'm not saying it was covered up, but there was a deliberate attempt to cover up, which was found.

Mr. Jim Judd: Indeed, and action was taken with respect to that in accordance with the current provisions of the FAA. I would add that disciplinary proceedings are now in train, and that the RCMP, I might remind you, are also involved in the investigation.

The Chair: That's all fine, but my point is that the Public Accounts of Canada, which will be tabled very quickly, will contain expenditures that were not authorized by Parliament. Therefore, don't you think it's appropriate, because this was a deliberate attempt to mislead Parliament--one that was discovered--for the government to bring in a supplementary estimate to rectify the situation?

Mr. Jim Judd: At the moment, given the current provisions of the FAA, I think we proceeded appropriately, Mr. Chairman.

The Chair: One other question, and this deals with the hospitality. We know how grossly that was abused and misused. And it's been in the news that a few other people seem to have fairly generous attitudes toward expenditures on expense accounts.

Do you think it's time, Mr. Judd, that the Treasury Board had a full audit and review of the rules regarding an audit of some expense accounts and a review of the rules regarding hospitality and discretionary expenditures by senior executives?

Mr. Jim Judd: I'm glad you raised that, Mr. Chairman. The hospitality provisions are currently under review as part of a broader review, begun last year, of all Treasury Board policies. We expect to have the existing hospitality policy re-crafted before the end of the calendar year. We are also contemplating some initiatives with respect to greater transparency around reporting on them by public service executives.

The Chair: Okay.

We're soon going to move over to the PCO and invite them to the table, but if anyone has one or two quick questions they want to address to Mr. Judd...and Mr. Judd may want to remain at the table when we move over to questions for the PCO, followed by the Information Commissioner.

Mr. Bryden, you had a quick question.

Mr. John Bryden: Yes, just to follow up on your line of questioning, Mr. Chairman.

Is it practical, when a situation like this $234,000 comes up, and it was unexpected, for it to be flagged in the public accounts as something that wasn't authorized in the original estimates? Is that something we can do, or is that something we are doing now?

Ms. Sheila Fraser: Mr. Chair, there is a note of disclosure in the public accounts of any overspending of votes, of appropriations. So they are flagged.

Mr. John Bryden: Thank you.

À (1055)

The Chair: Ms. Meredith, you have a quick question, and then Ms. Sgro. After that, we'll invite the PCO to come to the table.

Ms. Val Meredith: Thank you, Mr. Chair.

I would just like to point out that I still believe there are serious flaws with regard to people within an agency or a department seeing this kind of thing going on and being able to bring it to the attention of somebody who is going to be able to deal with it. Have I your assurance that you are looking at a proper reporting mechanism for employees to go to, that will have some benefit to the general public, where they will be protected?

Mr. Jim Judd: That is the subject of the review my minister initiated last month. There are five individuals involved in this review, which is to be completed by the end of January of next year.

The group is chaired by Professor Kenneth Kernaghan of Brock University. He is a very well-respected public administration expert. The group also includes the current Public Service Integrity Officer, Mr. Keyserlingk. Madam Fraser's predecessor, Denis Desautels, is a member of the group. The head of the financial officers association of the public service is a member of the group, and there is one former public servant on the group.

Their work has already started. They are to examine all aspects of this issue and to have the report ready to submit to the president in less than four months, following which it is their intention to table it with Parliament.

Ms. Val Meredith: Could I make a recommendation that the report be sent, when it is completed, to the chair of this committee for our review?

Mr. Jim Judd: That's fine.

Ms. Val Meredith: Thank you.

The Chair: Ms. Sgro.

Ms. Judy Sgro: On the issue of timing, Mr. Judd, my understanding was that as we went through the reports, there were issues that were flagged within the Privacy Commissioner's office. Discussions had been done, and then another year passed. So there doesn't seem to be that follow-up where every three months, say, somebody is going to get on top of a department if they see something wrong.

My other quick question is, on the tendering of $25,000 and less, do you pay any attention as long as a department is doing tendering contracts under $25,000 and it's within their spending limits? Do any flags go up at any particular time to look at them?

Mr. Jim Judd: With respect to your second question, such contracts are subject to periodic audit and review, both within a department and externally, by external auditors.

On your first question, with respect to timing, the issues with the Privacy Commissioner's office and our particularly most intensive interaction, covered about February of this year through to the work of you and your colleagues on the government operations and estimates committee.... This was, I think it's probably fair to say, one of several thousand issues we were dealing with over the course of that time. I think we proceeded as propitiously and expeditiously as we could under the circumstances, but hindsight is 20/20.

The Chair: I now would like to invite Michelle Chartrand and Wayne McCutcheon to come forward, please, from the Privy Council Office.

I think it would be appropriate for you to stay, Mr. Judd, if you can afford the time, just in case. Is that okay?

Mr. Jim Judd: At your pleasure, Mr. Chairman.

The Chair: I would like you to stay, Mr. Judd, if it's okay.

We welcome to the table Ms. Michelle Chartrand, Deputy Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat; and Mr. Wayne McCutcheon, Director General, Senior Personnel and Special Projects Secretariat

Ms. Meredith, are you ready with questions?

Á (1100)

Ms. Val Meredith: Yes.

The Chair: Oh, my apologies, Ms. Meredith, they have a statement first.

Ms. Chartrand.

[Translation]

Ms. Michelle Chartrand (Deputy Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat, Privy Council Office): Good morning, Mr. Chairman and members of the committee. I was invited to appear before you today to discuss the Auditor General's report on the Office of the Privacy Commissioner.

[English]

I would like to assure you that the Privy Council Office takes very seriously the findings of the Auditor General. I am here today to tell you what we are planning to do to correct and to improve the situation.

First, I would like to share with you some concrete steps that PCO has already taken to brief GIC appointees. PCO provides to all heads of agency two information booklets. The first one is a guide on operations, structures and responsibilities in the federal government. The second one is on terms and conditions for GIC appointees.

Furthermore, PCO started offering in September 2002 to newly appointed heads of agency an orientation program on a one-to-one basis with senior officials in PCO, Treasury Board Secretariat, and the Office of the Commissioner of Official Languages.

This alone is not sufficient, and we recognize it. Therefore, we are working right now on ways and means to improve the training of new recruits. I am currently working with the president of the Canadian Centre for Management Development in order to develop a new formal training program, designed for GIC appointees, that will meet their needs.

I would like to share with you our thoughts and the direction in which we are going. First, it is important to recognize that those individuals appointed to GIC positions are well qualified and had successful careers in other sectors. However, when these individuals join the federal public sector, some of them face a steep learning curve. They are heading into an environment that is completely new. They know little about the federal public sector culture, our values and ethics, our rules and principles, and our financial and human resources management practices.

They need to better understand the role they have to play and how to play it. They need to find the right balance between maintaining the appropriate independence of their organization and ensuring that the rules and principles that are in place in the federal public sector are being respected.

The independence of an agency cannot be used, at any time, to justify ignoring the rules. The challenge for us will be to build this new training program at CCMD to increase the level of knowledge and understanding of the federal public sector's principles and rules, and at the same time maintain the right balance between rules, initiative, and independence.

It is possible at the same time to respect the rules, to demonstrate initiative, and to protect the independence required by the mandate of certain agencies. We don't want to kill all initiatives by concentrating only on rules and forgetting about judgment. However, people at all levels of the organization need to be aware that there is no room for risk-taking when we are dealing with ethical or legal issues.

We have to be very concrete and practical in our message. We have to demonstrate and explain what are the consequences of breaking the rules. There will be zero tolerance of breaching the law or violating fundamental ethics. This message must be delivered clear and loud. We need to recognize, however, that failure is not always as a result of a breach of laws. An error made in good faith must be addressed differently.

This training program we are looking to develop should be designed to reflect the culture that we intend to maintain in the federal public sector.

[Translation]

For the findings of the Auditor General to have a lasting effect, we need this formal training program that will keep alive the commitment for transparency, accountability and compliance with rules and principles.

To help us in the challenge that we are facing, I would like to express the need for the support of parliamentarians. With your support and these new initiatives, we are confident that we will make progress.

Thank you and I am prepared to answer your questions.

Á (1105)

[English]

The Chair: Thank you very much, Ms. Chartrand.

We appreciate your telling us where you're going, but you offered absolutely no explanation as to how you managed to hire Mr. Radwanski, who was an undischarged bankrupt owing the federal government about half a million dollars in taxes. Perhaps that will come through in the questions.

Ms. Meredith, four minutes.

Ms. Val Meredith: Well, it would if the chair didn't precede our questioning.

Thank you for appearing before us.

I agree, you have told us a good news story about the future, but I would suggest that the PCO failed Canadians in the appointment of Mr. Radwanski. Although there are other very qualified individuals fulfilling roles of servants of Parliament, in this case there is a 20% failure rate. I understand there are five positions. Four of them seem to be great and one of them isn't. That's a 20% failure rate, and a very expensive failure rate when it comes to the respect of PCO appointments.

There has been concern by parliamentarians in the past about how people get the jobs they do when they are Order in Council appointments. What is the vetting? What is the skill set you're looking for? How does an individual get vetted through the process? Do you think that maybe the PCO office should be allowing parliamentary committees—whose job it is, I would suggest, to make sure that government is operating properly—to vet the Order in Council appointments?

Ms. Michelle Chartrand: Let me come back to the--

Ms. Val Meredith: Before they're appointed, not after.

Ms. Michelle Chartrand: In the case that we are looking at right now, as you point out, agents of Parliament are appointed by the two houses--the House of Commons and the Senate. We have five agents of Parliament--

Ms. Val Meredith: Let's just clarify. These agents are appointed by the Prime Minister, not by Parliament. They are appointed by the Prime Minister. Parliament has very little or no say in their appointments.

Ms. Michelle Chartrand: Let me start over again.

The Standing Orders of the House of Commons require the involvement of the House of Commons and the Senate. The appointment is approved by cabinet.

In the case of Mr. Radwanski, he was appointed on an interim basis in the summer of 2000, and he was appointed because his predecessor, Mr. Phillips, was at the end of his term. It was urgent to find somebody to replace Mr. Phillips. This position could not be vacant very long because of the ongoing and the highly sensitive responsibilities related to the function of Privacy Commissioner.

Ms. Val Meredith: Can I just interject here? You knew that a position was becoming vacant and you had not gone out on a job search to find qualified individuals to fill that before it became vacant?

Ms. Michelle Chartrand: The name of Mr. Radwanski was recommended by the leader of the government in the House of Commons, and it was--

The Chair: I think the question was a bit different, Ms. Chartrand. The question was, did you start the job search?

Ms. Val Meredith: You knew the appointment was coming to an end at a certain period of time.

Ms. Michelle Chartrand: Yes.

Ms. Val Meredith: Did you start looking for somebody to fill that position prior to that termination?

Ms. Michelle Chartrand: The way in which the position was filled...as I said, it was only on an interim basis first. So a candidate search was not done. The name was referred by the leader of the government in the House of Commons, and the appointment was made first on an interim basis, for six months, starting September 1, 2000, when Mr. Phillips ended his term.

Á (1110)

Ms. Val Meredith: My concern then is twofold--one, that there is no vetting by Parliament for an officer of Parliament, which there should be; and two, that when you know that somebody's term is coming to a close, why would you wait until that person has left office before you would seek to fill the position? It's not like he retired unbeknownst to you. It's not like he had a twenty-year appointment and he retired in three. You knew his term was coming to an end and you did nothing?

Ms. Michelle Chartrand: What was done, as I said, was that we filled the position on an interim basis.

Ms. Val Meredith: After he left, because of the urgency.

Ms. Michelle Chartrand: Before Mr. Phillips left.

Ms. Val Meredith: Before he left.

The Chair: I guess that's a long way of saying “no”, Ms. Meredith, and I think that's the answer to your question.

Mr. Gaudet, four minutes, please.

[Translation]

Mr. Roger Gaudet: I must say, Ms. Chartrand, seeing you distribute tiny information booklets for all heads of agencies is something that is beyond me. And yet we are talking about qualified people and these details should not even be included in these booklets. This is beyond me. You send memos to senior officials, but for what purpose? Have they not been selected because of their abilities and experience, and based on established criteria? Do you really feel the need to tell them how things work, using a tiny information booklet? We're not talking about small-time civil servants here, we are talking about highly-qualified officials.

Ms. Michelle Chartrand: In answer to the first part of your question, I would say that you are perfectly right : the booklets alone are not enough to train these senior officials. Moreover, that is why we set up orientation sessions which have been provided to all recently appointed heads of agencies since September 2002. However, even that is not enough, and this has been confirmed by the Auditor General. The training we provide to new recruits is inadequate. Consequently, Janice Cochrane, who is the President of the Canadian Management Centre, and myself are in the process of setting up a formal training program.

We would like to be able to provide agency heads with a program including up to three days of training on the following modules : values and ethics in the public service, the culture of the federal public service, financial management, the financial management framework, human resources management and performance management. This training would be mandatory. As I have already said, the President of the Canadian Management Centre is in the process of setting up this program.

Since this program will not be available in the immediate future, Janice Cochrane and I have agreed not to wait until the course is completely ready. It takes a minimum of six months to develop a high-calibre course, and this is why we have agreed to use a course that had already been prepared for new deputy ministers and assistant deputy ministers. Minor adjustments will be required, but this will enable us to provide something to new recruits immediately, while waiting for the formal training program to be implemented.

Mr. Roger Gaudet: If they have to take a mandatory three-day training course, do you think that they will be more capable of doing their job? If, as you said earlier, they were appointed by the parliamentary leader of the House of Commons, regardless of what type of training we give them...

Ms. Michelle Chartrand: That pertains to the second part of your question. However, I would like to reassure you: the next privacy commissioner will be hired shortly, and we are planning, before the formal parliamentary process comes into effect—namely, a standing committee meets the candidate, the House adopts a motion, the Senate adopts a motion and it is approved by Cabinet— to develop selection criteria that have a direct bearing on the position of privacy commissioner, to consider a certain number of candidates, to assess their qualifications based on the position selection criteria, to retain the most qualified candidates and to conduct formal interviews before a group comprising a representative from the Prime Minister's Appointments Office, a representative from the senior staff of the Privy Council and a representative from the minister's office.

Mr. Roger Gaudet: In reality, it's almost partisan. You're talking about the Prime Minister's Office, the minister's...

[English]

The Chair: We'll now move to Ms. Beaumier, please, for four minutes.

Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.): Thank you for appearing.

I really don't believe that what has happened reflects on Mr. Radwanski's intelligence or his lack of knowledge of how the system works, but probably more on his integrity. However, I still have a problem, a serious problem, with the PCO and with the upper level in government, and I'll tell you why.

When I was elected, I couldn't promise my constituents very much except accountability, and if I can't get accountability from the bureaucrats, I can't give it to my constituents.

HRDC in my area--I was aware of a situation in HRDC. You go to the local directorate and you let them know what's happening, and you're warned to back off; they're more powerful than you are, and they'll make a fool of you. I have friends who are in the bureaucracy, in middle or upper management, and they tell me that they are told that the reports are to reflect what the minister wants to hear, not the truth. So for anyone here to pretend that they don't know that this is what the system is--they've either been greatly fooled or they're not prepared to say.

How do we fix that? You see, if I were king, when the government fell, that whole top level of bureaucracy would automatically be required, as in the United States, to hand in their resignations so that the next government...be the same, or the next one, you have an opportunity to put in place the people who you feel are more accountable.

I believe, with all my heart and soul, that violating the public trust, if you're a public servant, if you're from the PCO, if you're a politician, is akin to some of the most horrific crimes you can commit in this country. Because once you've destroyed the faith of the public, you no longer have a democracy, you have a cynical public, and I think this is just an atrocity.

So I would like a comment on what you think of the idea of everyone having to hand in their resignation on the day of an election or when a writ is issued. Because this happens, and I think we all know it.

Á (1115)

Ms. Michelle Chartrand: I understand clearly your statement, but I want to ask you, what exactly is your question?

Ms. Colleen Beaumier: Do you think the system would work better, and we would get more accountability from people sitting up in front of us--it's always pass the buck, pass the buck--if your jobs depended on this the way our jobs do?

And don't personalize this, because I don't mean you.

Ms. Michelle Chartrand: No, no, but the statement you make is on how far or how much we are accountable for what is happening in our department--

Ms. Colleen Beaumier: Well, when people who work directly under you are....

And I know this. I haven't been told by only one person in upper management, I have been told by everyone: Our job isn't to write an honest report to the minister; our job is to tell the minister what he wants to hear, because that makes our life more comfortable.

Ms. Michelle Chartrand: What you are saying seems to me to be an extreme case--

Ms. Colleen Beaumier: There are lots of extreme cases, then.

Ms. Michelle Chartrand: --and I hope the whole public service is not like that, or that it's not spread throughout the whole public service. I think as public servants we are accountable for what we do as managers and what our employees are doing.

The Chair: Mr. Bryden has a point of order.

Mr. John Bryden: Thank you, Mr. Chairman.

I'm sorry to interject, Ms. Beaumier, but in reality the decision on whether senior public servants are to be dismissed at the change of government is the decision of the government. So the question is more properly directed to the Prime Minister or the leader in waiting.

The Chair: Thank you, Mr. Bryden.

Ms. Colleen Beaumier: I was just asking for an opinion.

The Chair: Mr. Bryden, that was not a point of order, that was a point of clarification.

Ms. Beaumier, you may continue.

Ms. Colleen Beaumier: Thank you.

It's extremely, extremely frustrating for us, the lack of respect between the two parties. It's really quite a sad situation. I just wonder, how do we get accountability?

The Chair: Did you have any response for Ms. Beaumier?

Ms. Michelle Chartrand: I gave it.

The Chair: Okay.

Ms. Sgro, please.

Ms. Judy Sgro: Thank you very much, all of you, for your help in trying to deal with a difficult issue for us.

Madam Chartrand, I heard all of your issues regarding all of the training that is now going to be supplied for all of these officers and all of that, and I guess the bell rings that the kind of people we are appointing to these positions.... What was going on with Radwanski wouldn't be acceptable even in a private corporation, unless it was completely his own, for the kind of activity that was going on there, regardless of the fact that it's now public. You know, we would have to teach him what the rules of public service are, which means you respect the basic rules, the financial rules, and you are a “public servant” even if you are an officer of Parliament.

So right off the bat something had to be wrong. I don't know where his ethics were, but certainly you have to question whether he had any that he would abuse a position of trust, which is what an officer of Parliament has. That's question one, on how you can respond to that. But if he were given the interim position, prior to the interim position who would have done the kind of work that you tell me is done on these kinds of appointments, whether they're an officer of Parliament or filling other appointment process, which I know is a very thorough process? Whenever you try to get an appointment via any one of our own constituents, they go through a process of wanting to know whatever relative you've had and everything else. So I just can't understand, and I have no confidence in, this process of the appointments if we end up with someone like Mr. Radwanski in there.

Á (1120)

The Chair: Ms. Chartrand.

Ms. Michelle Chartrand: You're absolutely right. We could correct and improve the training package for the new appointees, the new GIC appointees, but it's not sufficient. There is also some progress we have to make within the selection process. I described a few minutes ago what will take place before the formal parliamentary process will take place, which is a selection process, as I just described step by step. That's progress.

Another thing we have to improve, and we recognize it, is our security check process. It is the responsibility of the RCMP to conduct the security check process--

Ms. Judy Sgro: I'm sorry to interrupt, but was that process followed with Mr. Radwanski?

Ms. Michelle Chartrand: Yes, it was done.

Ms. Judy Sgro: Then how come they didn't see some of these things?

Ms. Michelle Chartrand: The PCO requested that the RCMP conduct a security check process, and their report came that there was no problem. The report said there was no problem because in order to have seen a problem, Mr. Radwanski would have to have been under criminal investigation, and he was not. It was not the case. Therefore, we recognize in PCO, in close collaboration with the RCMP, that we have to improve our security check process. That's another area in which we have to work.

Another area in which we have to work is the oath of allegiance. You probably noticed, from reading the Auditor General's report, that the oath of office was not administered. It's our responsibility at the PCO to remind the receiving organization of their responsibility to administer this oath. That's another improvement we would like to put forward.

The third one is

[Translation]

the reference check process.

[English]

We recognize that this process also needs to be improved. So those two processes we are working on right now to make some improvement.

The Chair: Just before we go to Ms. Meredith, you said that on administration of the oath, you advise the receiving department. But he was going to be the head of the department. You're expecting a subordinate to administer the oath?

Ms. Michelle Chartrand: No, Mr. Chairman, it has to be somebody recognized by law, such as a lawyer, who could administer the oath of office in the receiving organization. It's the law.

The Chair: So you just pass the buck again.

Ms. Meredith, four minutes.

Ms. Val Meredith: I would like a very brief yes or no response to this question: Do you accept responsibility for having made the appointment of Radwanski?

Ms. Michelle Chartrand: The answer is that the process--

Ms. Val Meredith: No, I just want a yes or no. As a Privy Council officer--

Ms. Michelle Chartrand: Let me just say this first, and then I will say yes or no.

The process belongs to three parties--the director of appointments, the PCO, and Parliament. So, yes, it is partly our responsibility. That's why the security check process must be improved, working with the RCMP. That's why--

Á (1125)

Ms. Val Meredith: Okay. I'm going to interject. You mentioned the director of appointments. Under whom does that person work?

Ms. Michelle Chartrand: The director of appointments works for the Prime Minister's Office.

Ms. Val Meredith: Okay, so the PMO.

Ms. Michelle Chartrand: PCO, senior personnel--

Ms. Val Meredith: You said the Prime Minister's Office.

Ms. Michelle Chartrand: Yes. The director of appointments...sorry.

Ms. Val Meredith: Okay. So the director of appointments works for the Prime Minister's Office. The PCO, under whom do you operate?

Ms. Michelle Chartrand: The senior personnel secretariat, reporting to the clerk.

Ms. Val Meredith: So you in essence are under the Prime Minister's Office or under Parliament?

Ms. Michelle Chartrand: The clerk.

Ms. Val Meredith: Well, who is “the clerk”?

Ms. Michelle Chartrand: The clerk is the adviser to the Prime Minister and to cabinet.

Ms. Val Meredith: So under the Prime Minister, then, again.

Then we have Parliament, who you include in this. And Parliament is a rubber stamp, I would suggest; when the Prime Minister puts the name on the table, all of a sudden Parliament assumes the responsibility for this.

I want to ask you a specific question. Do you have the approval of the Prime Minister-to-be that all appointments made under the Prime Minister's Office will be vetted by a parliamentary committee, whether it's government operations or the committee who is responsible for the area? And I mean all appointments. I heard earlier that the deputy heads are also appointed through the PCO.

So if Parliament is going to be included in being responsible for these appointments, will the PCO, with the approval of the next Prime Minister of Canada, be submitting these names for approval before they are made? Before that job is awarded to an individual, will Parliament have the ability to say yea or nay, and to scrutinize that applicant?

Ms. Michelle Chartrand: This is a question that relates to a policy issue.

Ms. Val Meredith: What policy?

Ms. Michelle Chartrand: First, Parliament is involved in five appointments for the agents of Parliament, as we discussed earlier. As you said, in 80% of the cases it worked well in terms of--

Ms. Val Meredith: No, you're going away from my question. My question was...because it's not just the five people. We're also talking about appointments to semi-judicial bodies, we're talking about a whole bunch of other appointments that come from your office and from the Prime Minister's Office that Parliament becomes responsible for.

I am asking if the PCO office is now going to vet those through parliamentary committees. If we're going to accept the responsibility for these people being out there, acting on behalf of Parliament, are you going to vet them before the appointments are made, through Parliament?

Ms. Michelle Chartrand: It's not up to me to make this decision.

Ms. Val Meredith: You said there was a policy in place. Could you make that policy available to the committee?

Ms. Michelle Chartrand: The policy to appoint...?

Ms. Val Meredith: The policy that you use for appointing these positions. Would you make it available to the committee?

Ms. Michelle Chartrand: Yes, we could provide it to you.

Ms. Val Meredith: Thank you.

The Chair: Thank you, Ms. Meredith.

Mr. Murphy, please, four minutes.

Mr. Shawn Murphy: Thanks very much, Mr. Chairman.

It seems to me there are three issues here: how this appointment came to be, why there were no checks and balances on the behaviour of Mr. Radwanski, and what corrective action has to be taken. I guess you're here to deal with the first issue, the appointment.

You talk in your opening statement about an error in judgment. This to me is a total system failure. It would seem to me that if the proper systems were in place, all kinds of bells and whistles would have gone off when his name came forward. So we have to examine, how did he get appointed to the job?

Obviously, in hindsight, he didn't have the character, the integrity, or the ability to do the job. I don't think anyone in Canada is going to dispute that statement.

So instead of getting into a discourse here...and your report really won't help us at all in answering the question when we come to write our report. It talks about some policies and some corrective actions you're trying to take, but perhaps I can ask you to come forward and present to this committee again a written report dealing with the following issues--and I'll get them typed for you--that would be very helpful.

First of all, how does the order in council appointment process work? Second, specifically how was the Radwanski appointment made? Third, who in the system was recommending or advocating that Mr. Radwanski be appointed to this position? Fourth, why was the job search not started previously? You say he was appointed on an interim basis. Fifth, I'd like a detailed summary of the checks that were completed on Mr. Radwanski's character, integrity, and ability to do the job. And sixth and seventh, can you provide a detailed explanation as to why the system did not disclose that Mr. Radwanski at the time was an undischarged bankrupt, and give us a detailed summary of generally how the system was allowed to fail and what action has been taken so this will not happen again?

If you could present that to us, I think it would be very helpful, and we would appreciate it very much.

Á (1130)

The Chair: I will have the clerk send you the transcript of Mr. Murphy's comments.

You don't have to type it up, Mr. Murphy. The clerk will send it over.

Mr. Bryden.

Mr. John Bryden: Madam Chartrand, what truly astounds me in your presentation is the suggestion that of the hundreds of patronage appointments that are brought into the government--the Governor in Council appointees, the patronage appointees--all they get by way of training when they take over their jobs, as the heads of important agencies, is two booklets? Am I to understand from you that this is all that existed up until the time we had this problem with Mr. Radwanski?

Ms. Michelle Chartrand: At the time Mr. Radwanski was appointed, you're absolutely right, there were only two booklets. Since that time, a first step was taken by offering orientation sessions, since September 2002. Those sessions are on a one-to-one basis, as I explained, with seniors from PCO, the board, the Public Service Commission, and the Commissioner of Official Languages.

Mr. John Bryden: Well, if I may say so, it is an astounding omission on the part of PCO that formal training wasn't already in place for these patronage appointments.

Now, I point out that now you do have a formal training program proposed, in which you want to bring in transparency and accountability. And then I find that the senior officials that the appointees have to be interviewed with, on a one-to-one basis, are PCO, Treasury Board, and the Commissioner of Official Languages. How in heck can these people be trained in appreciation of the government's policy on transparency and accountability without being visited on a one-to-one basis by the Information Commissioner and the Privacy Commissioner? You have the Official Languages Commissioner, but you've missed the two people who I think are so important for any Governor in Council appointee to understand the government's policy on transparency.

Ms. Michelle Chartrand: We recognized it wasn't enough, and I think I said it very clearly in my presentation. That's why we are working on this formal training package that will be offered soon to new appointees. Obviously, we would like to cover more ground with a formal training program than we could cover with the information sessions we are already offering.

Mr. John Bryden: How can you keep alive the need for transparency when a Governor in Council appointee has an agency that isn't under the Access to Information Act, and he doesn't get any training from the Information Commissioner? It absolutely boggles my mind trying to understand how you're going to convey this in the formal training program you are proposing now.

Ms. Michelle Chartrand: I think the findings of the Auditor General were extremely clear, that the need was there to really think about how we could best train those newly appointed. So what I'm telling you is that we are working to develop the best product we can to really train them properly.

Mr. John Bryden: I think I've made my point.

I have one other question on a different line. You say there will be zero tolerance among Governor in Council appointees who breach the rules for fundamental ethics. What do you mean by “zero tolerance”? Do you have the capacity to fire them, or would it be a recommendation to the Prime Minister's Office? Because we have to bear in mind where these patronage appointments are coming from, and I do appreciate the limitations the PCO has on this type of thing.

Ms. Michelle Chartrand: What I meant is that when we discover that there is a breach of law or a violation of ethics, disciplinary measures could be taken, including termination. In the case of an agent of Parliament, the House of Commons and the Senate would have to be involved to remove from office--

Á (1135)

The Chair: But just following up on Mr. Bryden's question, you say that if there's a failure in ethics and there's some illegality, you could take some disciplinary action. I'm saying, will you take disciplinary action?

Ms. Michelle Chartrand: Yes, we would make the advice, and we would.... First we have to be aware of the problem and then we would prepare the advice and follow the process.

[Translation]

The Chair: Mr. Gaudet, please.

Mr. Roger Gaudet: Mr. Murphy pretty well summarized my questions, but I would like you, if possible, to submit, in writing, the hiring criteria for a senior official, as well as the title of the individuals sitting on the selection committee.

Ms. Michelle Chartrand: Who sits on a selection committee?

Mr. Roger Gaudet: If everybody comes from the same side, it's easy to... If this is coming directly from the Prime Minister's Office or somewhere else, you have no control over that; you're given the name of an individual and if you do not take this person, you will lose your job. You have to be a little bit logical.

[English]

Ms. Val Meredith: May I suggest that the letter go to the clerk so that we all have access to it?

Ms. Michelle Chartrand: Absolutely.

The Chair: Thank you very much.

I basically have one statement, Ms. Chartrand, and one question.

Here at this committee you've had a number of admissions of failure of your office. Of course, we all know what happened with Mr. Radwanski. It just boggles my mind that this could have happened. You didn't even follow through on the administration of the oath, to see that this was done properly.

Did you get a performance pay raise?

Ms. Michelle Chartrand: Did I? It's personal information, but--

The Chair: That doesn't matter, I'm asking a question.

Ms. Michelle Chartrand: --I did not, because last year I was not entitled to performance pay. I was commissioner of the Public Service Commission.

The Chair: So you were in a different position last year. Okay, that's fine.

Ms. Michelle Chartrand: Does that answer your question?

The Chair: That answers my question.

Mr. McCutcheon, were you there, and did you get performance pay?

Mr. Wayne McCutcheon (Director General, Senior Personnel and Special Projects Secretariat, Privy Council Office): It's personal information.

The Chair: I'm asking you a question, Mr. McCutcheon.

Mr. Wayne McCutcheon: I would prefer to keep it as personal information.

The Chair: A committee of Parliament is asking you a question, and you will answer the question.

Mr. John Bryden: On a point of order, Mr. Chairman--

The Chair: It's not out of order.

Mr. John Bryden: --I don't agree with this line of questioning with the witnesses.

The Chair: I'm sorry, but I've asked Mr. McCutcheon a question, and I want an answer now.

Mr. John Bryden: But, Mr. Chairman, I would point out to you that it's the proper place of the members of this committee to ask questions, and the chairman asks questions because the members of the committee allows the chairman to ask questions. You can check with the researcher, but I believe that is the situation.

I'm not at all happy, Mr. Chairman, because I do not think the line of questioning is really appropriate.

The Chair: I'm still asking Mr. McCutcheon a question of yes or no.

Ms. Judy Sgro: Then I challenge the chair. It's not appropriate.

Mr. John Bryden: On a point of order, Mr. Chairman--

Mr. Wayne McCutcheon: Mr. Chairman, the full answer is that the secretariat in which I work is an extremely professional, competent organization. I have heard this morning severe criticisms of the way in which Governor in Council appointments are made.

The Chair: That is correct, yes.

Mr. Wayne McCutcheon: I do not share the concerns of the committee. The way in which the appointments are made, in the vast majority of cases, is extremely professional--

Á (1140)

The Chair: You're avoiding the question, Mr. McCutcheon.

Mr. Wayne McCutcheon: I want to give you the preamble, sir, if I may, before I answer your question. I would like to put this in context, if I may.

We follow normal modern human resource management practices in the Privy Council Office. The vast majority of heads of agencies are very senior people, with a great deal of senior management experience in the private sector, before they come in and join the Canadian public service. They're extremely well qualified. We put them through a process where we do extensive interviews, extensive reference checks, background checks, security checks, and we ensure, as best we can, in collaboration with our colleagues and the Prime Minister's Office and the ministers' offices, that these are well-qualified people. They have long track records of success.

What Madam Chartrand has tried to explain to the committee this morning is that they are entering a different culture. It doesn't mean that they're not qualified coming in, and that they need training on how to manage an agency. They have an opportunity to, from their own staff, be oriented, and from us to be oriented, and we'll put more formal training in place to acclimatize them to our culture and to our way of working--to how the city works, if you wish. But these are already extremely well-qualified people. Appointments like Mr. Radwanski's are an aberration, in my experience, with the public service and with the Privy Council Office.

So to answer your question, yes; I work 12 hours a day, I have extremely dedicated staff, and yes, I did receive some performance pay last year.

The Chair: Thank you very much.

Mr. Murphy has a very small question, which I'll allow, because we have the Information Commissioner coming forward.

Mr. Murphy.

Mr. Shawn Murphy: To follow up on that statement, Mr. McCutcheon, did Mr. Radwanski, in hindsight, have the integrity, the character, and the ability to do the job of the Privacy Commissioner?

Mr. Wayne McCutcheon: I'd let the Auditor General's report speak.

Mr. Shawn Murphy: No, I asked you the question. I would say it would be a yes or no answer.

Mr. Wayne McCutcheon: From events as they came forward, and as the events were reported, I would answer the question with, no, he did not have the necessary integrity to perform that office.

The Chair: On that basis, Madam Chartrand and Mr. McCutcheon can stay at the table, and I would now invite Mr. Reid to come forward.

You want to be excused, Mr. Judd? You're busy and you want to go? Okay.

We will excuse Mr. Judd.

We now welcome Mr. Reid, who does not have an opening statement. I think Mr. Reid is here basically at the invitation of Mr. Bryden, so we'll start with Mr. Bryden

Mr. John Bryden: Yes, I have several questions.

First of all, just following up the last questions that were put forward, in your opinion, Mr. Reid--that's if this is a fair question, and I'm not sure it is--at the time that Mr. Radwanski was appointed, did he or did he not appear to have the qualifications suitable for the appointment he was given?

Hon. John Reid (Information Commissioner of Canada, Office of the Information Commissioner of Canada): I saw a copy of his curriculum vitae, and it seemed to be very impressive. That went forward to the parliamentary committee.

Mr. John Bryden: Perhaps I may just say in passing, for the record here, that I knew Mr. Radwanski in the past, although not very well--more by reputation, in passing--and I felt at the time his appointment was made that it was a good appointment. That's just so the officials know that they weren't the only ones who made a “mistake”, shall we say. I would have made the same mistake myself.

But carrying on, I'm very interested in what happened after Mr. Radwanski was appointed. The offices of the Privacy Commissioner and the Information Commissioner were merged at that time in terms of corporate services, were they not?

Hon. John Reid: That's correct.

Mr. John Bryden: And they were separated subsequently.

Hon. John Reid: We had a joint administration, called corporate affairs, that looked after all of the normal Treasury Board activities. We shared jurisdiction over that.

Mr. John Bryden: Now, if I understand correctly, there was a division of staff made. Mr. Radwanski acquired his own staff. There was an ending to the sharing of corporate services. Whose decision was that? How was that decision made? Was it your decision, Mr. Radwanski's decision, the PCO's decision? Who actually made the final decision?

Á (1145)

Hon. John Reid: All I know is that when the idea was first bruited by the then Privacy Commissioner, I had in my possession a report I had commissioned with the former Privacy Commissioner, Bruce Phillips, looking at what the relationship would be between the two offices over corporate affairs, because at that point we knew that the role of Privacy Commissioner was going to grow as a result of Bill C-6, the PIPEDA legislation, and that my office would stay relatively stable. As a result of that report, I agreed to become the junior partner in the administration.

When it was bruited that there should be a change, I wrote to the president of the Treasury Board to say that was not necessary, that it would be very expensive, particularly for me, and that the offices should remain united in this way, and that I was prepared to play, as I say, the role of the junior partner.

Mr. John Bryden: So it was ultimately the decision of Treasury Board that the division would occur and the additional expenses would occur. Am I correct in that?

Hon. John Reid: I can't say that. All I know is that he began to hire people solely to work for him, and in that way destroyed the corporate affairs. That forced me into a position where, if I wanted personnel or financial services or anything, I had to seek others. I then was forced, because I had no income to do that, to go to Treasury Board to say that the reason I needed this extra money was that the Privacy Commissioner had proceeded in a particular way. And I required funds to be able to provide the basic Treasury Board services to my staff and to myself.

Mr. John Bryden: So in the end, on this particular issue, the Privacy Commissioner and the Information Commissioner had equal voice to the Treasury Board, and in essence his argument won out and yours did not. Am I correct on that?

Hon. John Reid: The decision by Treasury Board was to give me some additional funding to meet my new ongoing costs, but Treasury Board refused to fund the one-time transitional costs. Those have caused me enormous financial difficulty.

Mr. John Bryden: Finally, would it have been better if this difference of opinion had been arbitrated by a standing committee of Parliament, such as the government operations committee, which at that time didn't exist?

Hon. John Reid: I think it would have been better for everybody had there been a place to go, but as you understand, under the regulations, that function is played out by Treasury Board and by, I suppose, the machinery of government.

The office is indeed the “Offices of the Information and Privacy Commissioners of Canada”. We are one office. Even though there has been a separation in the corporate affairs, we are still, under the Financial Administration Act, one office.

Mr. John Bryden: Thank you.

The Chair: Thank you, Mr. Bryden.

Ms. Meredith, please.

Ms. Val Meredith: Thank you, Mr. Chair.

I must say, I'm a little distressed to hear this. I happen to have been involved in the committee, I think the justice and legal affairs committee, where we talked about putting the two offices together, and the savings, and why that was going to be happening. It seems to me--and I don't know if it was you, sir--that there was some resistance at the time, and that the Treasury Board was pushing this joint operation.

So it distresses me when I hear, from what you're saying, that you brought it to the attention of Treasury Board that something was happening, and they chose not to respond.

Hon. John Reid: Well, they did respond by giving me some additional funds.

Ms. Val Meredith: No, but their response was in essence okaying what the Privacy Commissioner was doing. Their response was not to go in and say to the Privacy Commissioner, “This is not under the guidelines, this is not how the Treasury Board established these offices, and you will cease and desist.” Their response was in essence to say, “What he is doing is okay.”

Would I be wrong in making that assumption?

Hon. John Reid: I would agree with your assumption.

Ms. Val Meredith: In other words, Treasury Board was aware, at a point before the Auditor General's report came out, that there were some serious problems going on.

Hon. John Reid: Indeed, if you go back and look at my annual reports, you will see that I flagged this from the beginning in my reports.

Ms. Val Meredith: And your annual report would have been tabled when?

Hon. John Reid: We try to table it in June of every year, so I think it first would have been flagged in June of 2002.

Ms. Val Meredith: So in May-June of 2002, you had a report to Parliament that flagged this issue, and yet the Treasury Board didn't respond. They waited until the Auditor General's report of 2003 came out.

Hon. John Reid: And indeed, I had written to the president of the Treasury Board about this before, when I had first heard the argument, and I had forwarded to them the consulting report that Bruce Phillips and I had sponsored.

Ms. Val Meredith: So you had made a direct appeal. Who in the Treasury Board did you approach on this issue?

Hon. John Reid: Well, in this case, it was a letter to the president of the Treasury Board. In the case of the additional funds, once it became clear that I was going to require them, we went to Treasury Board in the normal way, with a request for supplementary estimates and additional funding.

Ms. Val Meredith: So on the response from the president of the Treasury Board, was there no follow-up from somebody in the Treasury Board department? I mean, your letter went to the president, but somebody must have been back in touch with you to get some clarification as to what your concern was.

Á (1150)

Hon. John Reid: To my knowledge, no, there was no clarification directly to me. There may well have been with some of my staff. But the submission was very clear in terms of what the causes were and why the funds were required.

Ms. Val Meredith: So not only did the Treasury Board know about this, but the president of the Treasury Board knew that something was going on in your office that was outside the boundaries of what the Treasury Board guidelines would have been when they merged the two offices. Is that right?

Hon. John Reid: In terms of my letter to the president of the Treasury Board, that would be probably a year before any action was taken by the Privacy Commissioner. At that point, the letter simply said that I was opposed to it, and the reason for that; here's the financial data that says that we can continue to operate as we have in the past.

Ms. Val Meredith: Okay, but what I'm trying to get from you is that we heard from the Treasury Board representative this morning that this was all news to them until the Auditor General's report came out. I'm hearing from you that there were indications prior to this, that they knew something was amiss with the Privacy Commissioner's office.

Hon. John Reid: Well, insofar as I wrote to the president of the Treasury Board in advance, I suppose that is notice. The second notice, I assume, would have been our request for additional funding to compensate for the services we could no longer provide with the split that took place in the corporate affairs office.

Ms. Val Meredith: Thank you.

The Chair: Ms. Fraser.

Ms. Sheila Fraser: It's unfortunate that Mr. Judd has left, because I think he would explain--I feel sort of compelled to do this--that the split of the offices I don't believe would necessarily have signalled the problems that were uncovered here. I mean, people can reorganize their offices in different ways, but that does not necessarily mean there is mismanagement or overspending of funds.

Ms. Val Meredith: With all due respect, Madam Fraser, what I understand Mr. Reid to say is that he indicated that the reason.... This merger of the offices was quite a conflict of the day when it happened. There was a lot of debate going on as to why it should happen, keeping the independence of the offices, not wanting to be together. I assume Treasury Board gave them guidance and direction that they were to merge. And all of a sudden we have one of the merged partners acting as an independent again. I would suggest that this would have been an indicator that there was a problem.

Ms. Sheila Fraser: Far be it from me to try to explain what the Treasury Board Secretariat did or did not do. All I'm saying is that I think you have to appreciate that these are officers of Parliament. The Treasury Board Secretariat, I think, is rather reluctant to be dictating to officers of Parliament how they should organize their offices. The Privacy Commissioner was facing a significant increase in scope of mandate, and it is our understanding that the Treasury Board agreed with the split on the basis that it would be cost-neutral, that there would be no additional costs.

I think Mr. Reid has been making the point that there were additional costs created by that, but I believe the Treasury Board agreed to that split, or accepted that split, on the basis that it would be cost-neutral.

Ms. Val Meredith: I need clarification here.

So you're trying to convince me that the Treasury Board would not have known that it would not be cost-neutral, that there would be cost to the other half of that partnership?

Ms. Sheila Fraser: I'm just saying that I don't think the fact that it may or may not be cost-neutral would have indicated the kinds of management issues that our report brought up.

The Chair: We're going to cut it off right there.

Ms. Val Meredith: But I think Mr. Reid indicated that there were management problems.

The Chair: And perhaps, Mr. Reid, on the letter you wrote to Treasury Board, you could send a copy to the clerk. Is that possible, or is that a confidential letter?

Hon. John Reid: No, I'd be delighted to make it available.

The Chair: All right. Make it available to the clerk, please.

Mr. Gaudet.

[Translation]

Mr. Roger Gaudet: Michel

This will not be very long. Given what happened, Mr. Reid, were you relieved when your office and Mr. Radwanski's office were separated? You must have been happy.

[English]

Hon. John Reid: Mr. Chairman, the fact is that when the offices were set up 21 years ago, they were merged. From the beginning, there was this corporate affairs function, so when the split took place, I was faced with a significant increase in costs.

The way Treasury Board proceeded to provide cost-neutral was to take the $325,000 that they gave me out of the budget of the Privacy Commissioner and transfer it to the Information Commissioner. What they did not do was provide me with the transition costs.

If you take a look at my figures, which are coming out now, I am now spending approximately $1 million a year more on administrative costs than I was the year before, when we had the combined office. Now, that's not a final figure, because I believe there are some things in there that we will have to take out, but that is a very significant increase in the costs of administration for my office. I feel really quite upset, because we had a really good arrangement going on that cost me about $500,000 a year, and now I'm looking at about $1.5 million or $1.6 million.

Á (1155)

The Chair: Mr. Gaudet.

Ms. Val Meredith: Ask him if he was in favour of the split.

[Translation]

Hon. John Reid:

The answer is no.

Mr. Roger Gaudet: Did you send the Privy Council a letter informing it of your opinion and of the fact that you were not in favour of such a division, or did you simply send a letter to the Treasury Board?

[English]

Hon. John Reid: What happened, Mr. Chairman, is that one of my staff received a call from Treasury Board saying that this split had been proposed by the Privacy Commissioner. I was opposed to it, so on that basis I wrote a letter to the president of the Privy Council, enclosing the documents that we had created on this--basically the consultant's report--and said that I was not interested.

That's about as far as I can go. I was not interested in the split. I can't say that I felt my circumstances would get better if there were a split. I was very much aware that costs would significantly increase.

[Translation]

Mr. Roger Gaudet: I have a brief question. Did the Privy Council respond to you in writing?

[English]

Hon. John Reid: Actually, it was not the Privy Council that we sent the letter to. I don't believe we sent a copy to the Privy Council. Our discussions were all with the Treasury Board. I believe we have received a noncommittal acknowledgement, but no substantive argumentation.

The Chair: Merci beaucoup, Mr. Gaudet.

Just short questions, Ms. Sgro. We're running out of time, unfortunately.

Ms. Judy Sgro: Yes.

Mr. Reid, did the offices, and your office in particular, function better as a result of the split?

Hon. John Reid: Since the split, I have been in financial turmoil, so I cannot say that it is working better. I have significant financial problems.

Ms. Judy Sgro: But if you put that on one side, which is critically important for us, of course, other than the increase in the dollars, is the office functioning any better or any worse than it was before?

Hon. John Reid: We're trying to cope.

Ms. Judy Sgro: It doesn't sound like you're doing too well.

Hon. John Reid: Let me put it this way: I have not yet been able to hire, because of my financial position, the staff I need to do the job in the corporate affairs. So we are short-staffed in a range of areas. I should also tell you that in small agencies, it's very difficult to get highly qualified staff to do the kind of work that has to be done.

We have another problem in that when we do get highly qualified staff, other agencies come and poach. So for small agencies life is very difficult, to maintain that kind of quality.

Ms. Judy Sgro: One other question, Mr. Reid, because we're out of time here.

Do you think all officers of Parliament, including the Information Commissioner and the Privacy Commissioner, should be under the Access to Information Act?

Hon. John Reid: Yes.

Mr. Chairman, I'm told by one of my staff that we do have correspondence with the Privy Council on this, and it will be tabled with the rest of the material.

The Chair: Thank you very much.

This brings to the end our hearings on the Radwanski affair. Therefore, I would ask Ms. Fraser for closing comments, if I may.

Ms. Sheila Fraser: Thank you, Mr. Chair.

I would like to thank the committee for its interest in our report. I would, I guess, just reiterate that it is a very sad situation that we uncovered. I do not believe it is generalized to the public service. I think this really is a very unique circumstance that developed, and I think it is important that we learn from this. I think there has been evidence given that many people have given thought to procedures on how they go about doing their work. In particular, the oversight of small agencies, I think, will hopefully be improved because of this.

Â (1200)

The Chair: Thank you very much.

Members, you may remember that I introduced a new policy that the clerk will read into the record all the correspondence he has received on behalf of the committee.

So, Mr. Clerk, please.

The Clerk of the Committee: Mr. Chair, since I last reported, we have received the government response to the fourteenth report of the committee dealing with foundations, which was distributed on October 10 to members' offices.

We have indeed the government response to the fifteenth report, Fisheries and Oceans, on the coast guard. That was distributed on October 1.

Yesterday I received a copy of a letter, dated October 21, from Mr. John Reid, Information Commissioner, to Mr. Scott Serson, president of the Public Service Commission, concerning a staffing review of the Office of the Information Commissioner.

The Chair: Thank you very much.

Copies of these are available from the clerk.

This meeting stands adjourned.