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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Monday, May 3, 2004

1530

The Chair (Mr. John Williams (St. Albert, CPC))

Mr. Alex Himelfarb (Clerk of the Privy Council, Privy Council Office)

The Chair

Hon. Robert Thibault (West Nova, Lib.)

The Chair

Hon. Robert Thibault

The Chair

1535

Hon. Robert Thibault

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

1540

Mr. Alex Himelfarb

The Chair

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC)

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

1545

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

Mrs. Diane Ablonczy

Mr. Alex Himelfarb

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Mr. Alex Himelfarb

1550

The Chair

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Diane Ablonczy

The Chair

Mrs. Marlene Jennings

The Chair

Mr. Alex Himelfarb

1555

Mrs. Marlene Jennings

The Chair

Mr. Alex Himelfarb

The Chair

Mrs. Marlene Jennings

The Chair

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

1600

Mr. Odina Desrochers

Mr. Alex Himelfarb

The Chair

Mr. Dennis Mills (Toronto—Danforth, Lib.)

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

1605

Mr. Alex Himelfarb

M. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

The Chair

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

1610

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

1615

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

Mr. Alex Himelfarb

Mrs. Marlene Jennings

The Chair

Mr. Alex Himelfarb

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

The Chair

Hon. Robert Thibault

1620

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

1625

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Hon. Robert Thibault

The Chair

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

Mr. Alex Himelfarb

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Mr. Jason Kenney

The Chair

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

1630

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

1635

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

Mr. Jason Kenney

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Hon. Shawn Murphy (Hillsborough, Lib.)

Mr. Alex Himelfarb

1640

The Chair

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

Hon. Shawn Murphy

1645

Mr. Alex Himelfarb

Hon. Shawn Murphy

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

M. Odina Desrochers

Mr. Alex Himelfarb

1650

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Hon. Robert Thibault

The Chair

Hon. Robert Thibault

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Odina Desrochers

Mr. Alex Himelfarb

1655

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

Mr. Odina Desrochers

Mr. Alex Himelfarb

The Chair

Mr. Alan Tonks (York South—Weston, Lib.)

Mr. Alex Himelfarb

Mr. Alan Tonks

1700

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

1705

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

The Chair

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC)

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

The Chair

Hon. Robert Thibault

The Chair

1710

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

Mr. Alex Himelfarb

Mr. Peter MacKay

The Chair

Mr. Alex Himelfarb

Mr. Peter MacKay

The Chair

Hon. Joe Jordan (Leeds—Grenville, Lib.)

Mr. Alex Himelfarb

Hon. Joe Jordan

1715

Mr. Alex Himelfarb

Hon. Joe Jordan

Mr. Alex Himelfarb

The Chair

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

1720

Mr. Alex Himelfarb

Mr. Alan Tonks

Mr. Alex Himelfarb

Mr. Alan Tonks

The Chair

Mr. Leon Benoit (Lakeland, CPC)

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

Mr. Leon Benoit

Mr. Alex Himelfarb

1725

The Chair

Hon. Robert Thibault

Mr. Alex Himelfarb

Hon. Robert Thibault

Mr. Alex Himelfarb

Hon. Robert Thibault

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

Mr. Alex Himelfarb

Mr. Dennis Mills

The Chair

Mr. Alex Himelfarb

The Chair

1730

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Alex Himelfarb

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

1735

The Chair

Mr. Dennis Mills

The Chair

Hon. Shawn Murphy

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 039

3rd SESSION

37th PARLIAMENT

EVIDENCE

Monday, May 3, 2004

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mr. John Williams (St. Albert, CPC)): I call the meeting to order. Good afternoon, everybody.

The orders for this afternoon are pursuant to Standing Order 108(3)(g), chapter 3, “The Sponsorship Program”, chapter 4, “Advertising Activities”, and chapter 5, “Management of Public Opinion Research”, of the November 2003 report of the Auditor General of Canada, referred to the committee on February 10, 2004.

Our witness this afternoon is from the Privy Council Office, Mr. Alex Himelfarb, the Clerk of the Privy Council.

It should be noted that Mr. Himelfarb has been the clerk since May 2002 and therefore not necessarily the clerk at the time of the events of the sponsorship program.

Mr. Himelfarb, do you want to take the oath, please?

Mr. Alex Himelfarb (Clerk of the Privy Council, Privy Council Office): The evidence I shall give on this examination shall be the truth, the whole truth, and nothing but the truth, so help me God.

The Chair: Okay, thank you very much.

Monsieur Thibault, s'il vous plaît. Is this a point of order?

Hon. Robert Thibault (West Nova, Lib.): On a point of order, Mr. Chair, before Mr. Himelfarb starts--just so that I don't interrupt--I have received from staff, I think, the relevant documentation referred to Mr. Cutler, as was raised in the questioning by Ms. Wasylycia-Leis this morning. I think the committee will find that the files that were referred to by Mr. Guité had nothing to do with sponsorship, because Mr. Cutler left in 1996, prior to the sponsorship program, and nothing in the testimony refers to the files that the Auditor General would have been interested in that would have validated the program in any way.

So I don't think the argument can be made that the Auditor General could have considered files that have been stolen as files that would have complemented the program.

The Chair: So what information is it that you have?

Hon. Robert Thibault: This is from the testimony of Mr. Guité at the committee.

The Chair: Okay, that's the public record.

¹ (1535)

Hon. Robert Thibault: Yes.

The Chair: Thank you very much.

Mr. Himelfarb, I read this for everybody:

...the refusal to answer questions or failure to reply truthfully may give rise to a charge of contempt of the House, whether the witness has been sworn in or not. In addition, witnesses who lie under oath may be charged with perjury.

That's from House of Commons Procedure and Practice, Marleau and Montpetit, page 862.

I normally also ask the question, did you discuss your testimony that you were going to give before this committee with anybody in order that you might have a coordinated response?

Mr. Alex Himelfarb: No.

The Chair: Okay, thank you very much.

You have an opening statement to make, Mr. Himelfarb. The floor is yours.

Mr. Alex Himelfarb: Thank you, Mr. Chairman, and thank you for the invitation to appear today.

I will make a very brief opening statement, and then I'll be happy, of course, to answer any questions members may have.

Quite evidently, since the Auditor General's report, the government has taken the findings of that audit very seriously. As you will know, the sponsorship program was terminated, and fundamental reforms in both the advertising and polling programs were instituted.

Apart from the important work of this committee, a public inquiry was launched, a special council for recovering moneys was launched, and a series of administrative reforms and studies were also launched, including a study on the relationship between ministers and deputy ministers and the accountabilities of each.

As well, the government obviously strongly supports--as does the public service, of course--the work of this committee, and it has taken the unprecedented step of sharing cabinet confidences that relate to the findings of the audit.

[Translation]

I understand that one of the key questions your committee is examining pertains to the issue of ministerial and deputy ministerial responsibility. To assist in your deliberations today, it may be useful for Members to have an understanding of the role that I play in the government.

[English]

As you indicated, I've been clerk for about two years. As clerk, I'm responsible for providing non-partisan advice and support to the Prime Minister on all policy and operational issues that may affect the government.

The position of clerk is generally described as having three principal roles. First, as Clerk of the Privy Council, the clerk is effectively deputy minister to the Prime Minister, which means the provision of advice to the Prime Minister on the machinery of government, on the cabinet decision-making process, and on overall government direction.

Second, as secretary to the cabinet, I provide support to the ministry as a whole to support the cabinet decision-making process.

Third, as head of the pubic service, I have a responsibility to ensure the quality of advice and support the ministry receives. Though deputy ministers do not have direct accountability to the clerk, deputy ministers are accountable to the minister for those powers delegated to them and to the Prime Minister who appoints them through the order in council for their corporate responsibilities.

[Translation]

The primary responsibility of the Privy Council Office is to provide public service support to the Prime Minister, to Ministers within the Prime Minister's portfolio, and to the Cabinet as a whole to support the effective operation of the government of Canada.

[English]

I would be pleased, in that context, to answer any questions you may have.

The Chair: Thank you, Mr. Himelfarb.

Before we open it up to questions, we wrote to you as Clerk of the Privy Council and secretary to the cabinet on Wednesday, April 7, basically asking that the order in council we had received regarding cabinet confidences be backdated or be effective from December 1, 1993, rather than July 1996, as in the one we had received. And you stated in your letter, in the last paragraph:

Please accept my assurances that we are proceeding expeditiously to complete the steps necessary to comply with the motion.

Where are the expeditious steps at, at this point in time?

¹ (1540)

Mr. Alex Himelfarb: The search of documents is complete. They have been very recently submitted to the former Prime Minister. We'll verify this week that, with his approval, we will expand the order in council.

The Chair: Thank you very much.

Mrs. Ablonczy, please, eight minutes.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): Welcome back, Mr. Himelfarb.

The Auditor General's report covers the period from 1997 until the end of August 2001. You became Clerk of the Privy Council in May of 2002. However, I understand that you are here to answer our questions on behalf of the Privy Council Office for the relevant time of the audit study. Is that correct?

Mr. Alex Himelfarb: Any questions you might pose.

Mrs. Diane Ablonczy: Thank you.

Mr. Himelfarb, the Auditor General said that considerable amounts of public funds were spent with little evidence that obtaining value for money was a concern. To quote her report:

The pattern we saw of non-compliance with the rules was not the result of isolated errors. It was consistent and pervasive. This was how the government ran the program.

I'd like for you to explain to the committee why the government ran the sponsorship program in this way.

Mr. Alex Himelfarb: I think it's probably safe to say that there was no intent to mismanage the program. There are a number of speculative reasons I could give for the serious management difficulties, but the Auditor General herself doesn't explain it.

One of the reasons that a public inquiry has been called is to find out just why.... The focus of the Auditor General in her report is clearly value for money, but also the failure of documentation. The failure of documentation also means it's very hard to explain exactly what happened for the Auditor General or for anyone else.

The public inquiry and your own work are designed to get at what a normal review of files doesn't seem to allow us to answer.

Mrs. Diane Ablonczy: Mr. Himelfarb, that's why I'm asking you. We're not going to find out if nobody tells us. You're speaking on behalf of the Privy Council Office, which was running the public service and overseeing the operations of the government at the relevant time. So you must have come up with some explanation as to why this could have happened, and we'd like to hear it.

Mr. Alex Himelfarb: I don't know how my speculation based on no information would be useful to the committee.

There are two processes that are designed to get to the bottom of this. The commitment to get to the bottom of this is clear. There's a special counsel looking at every financial transaction; there are forensic auditors in Public Works; there is a public inquiry, which Justice Gomery will head; and of course there's the work of this committee.

I could only speculate.

Mrs. Diane Ablonczy: We can all only speculate, but surely somebody knows.

It's clear that the government ran the program this way. Mr. Guité in his testimony to us said the following:

...I think there was a discussion around the table during the referendum year, 1994-95, when I worked very closely with the FPRO and the Privy Council, which is basically the Prime Minister's department. When I say “we”, I could probably give you a few names....

Then he said:

We sat around the table as a committee and made the decision that the less we have on file, the better.

The Privy Council was fully participating in this decision.

He said:

The reason for that was in case somebody made an access to information request. I think, as I said back in 2002, a good general doesn't give his plans of attack to the opposition.

Why did the Privy Council Office participate in a decision to have little or no documentation on these files?

Mr. Alex Himelfarb: What you've read is what Chuck Guité claims was said between PCO and Public Works. I have never heard of or seen a document that would verify that the Privy Council Office was in any way complicit in the failure to document the files.

Mrs. Diane Ablonczy: That's a very interesting parsing of your answer, Mr. Himelfarb.

We know that to a large extent this was a paperless operation, so I'm not surprised there were no documents.

My question to you is not about documents. It's about why the Privy Council would have participated in a round table decision not to have documents. That's the question.

¹ (1545)

Mr. Alex Himelfarb: The answer is I don't know that's the case.

Mrs. Diane Ablonczy: You don't know that's the case. Are you saying Mr. Guité did not give correct evidence to the committee when he alleged that?

Mr. Alex Himelfarb: I said I simply don't know.

Mrs. Diane Ablonczy: Mr. Himelfarb, you said to me at the beginning that you had come prepared to answer any and all questions, and yet you're not prepared. You have not prepared yourself to answer the most critical question of this investigation, and that is why the government ran this program the way it did. “I don't know” isn't good enough. We need to know.

Mr. Alex Himelfarb: Quite frankly, we would all like to know. If we already knew, I don't know why we would have called a public inquiry. It is clear that the files and documents themselves don't allow us to come to any conclusion.

Mrs. Diane Ablonczy: But, Mr. Himelfarb, it's not just documents. You have access to the people who sat around the table and made the decisions with regard to the spending of a quarter of a billion dollars of public money. It has not been contradicted that the Privy Council was part of this program and the planning and how it went forward. So we need to know what was the--

Mr. Alex Himelfarb: I can't make things up. All I can tell you is what I know. What I know is there is no document that would suggest there was complicity. Frankly, the people in PCO to whom I have access would deny that they would ever have supported such a strategy.

Mrs. Diane Ablonczy: Mr. Himelfarb, the Auditor General found that the CCSB disregarded its obligation to provide equitable access to government business in the sponsorship program. The Privy Council Office, as you've told us, provides strategic oversight and coordination for government advertising. Why did the Privy Council Office disregard the basic advertising policies? That disregard has been documented by the Auditor General in this report.

Mr. Alex Himelfarb: My understanding is that as soon as the audit was completed and as soon as the information was available to the officers at the Privy Council--

Mrs. Diane Ablonczy: But that's not my question. My question isn't what you did after this was discovered; it was why. Why did the Privy Council Office disregard proper practice in the first place?

Mr. Alex Himelfarb: I don't know how you can expect me to speculate about motives of people. I have no idea--

Mrs. Diane Ablonczy: It's not speculation; it was a decision. What was the basis of the decision?

Mr. Alex Himelfarb: I'm sure there was no decision to disregard the rules.

Mrs. Diane Ablonczy: Somebody certainly did make that decision, Mr. Himelfarb.

Mr. Alex Himelfarb: Not in the Privy Council Office. I'm quite confident the Privy Council Office did not know the rules were being violated.

Mrs. Diane Ablonczy: So here we have, Mr. Chairman, the office that runs the entire apparatus and operations of government, and the witness who is the officer giving evidence on behalf of that department saying he doesn't know anything and he hopes we'll find out.

Is this, Mr. Himelfarb, your position today?

Mr. Alex Himelfarb: On what happened during those years? It's absolutely my position today.

The Chair: [Inaudible—Editor]...afternoon that we're going to have here, but do remember, Mr. Himelfarb, that a decision to do nothing is still nonetheless a decision.

[Translation]

Go ahead, Mr. Desrochers.

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you, Mr. Chairman.

Welcome, Mr. Himelfarb. Were you aware that the notice of motion requesting your appearance before the committee was adopted with some members dissenting and that you are here this afternoon because of the Liberal majority on the committee?

[English]

Mr. Alex Himelfarb: Yes, I was aware of that. I understood it was largely to talk about the issues of accountability and relationship between deputies and ministers, not to talk about issues about which I have no knowledge.

¹ (1550)

The Chair: You do know there was no direction given to you as a witness to come here this afternoon, other than that you appear here as we are investigating chapters 3, 4, and 5 of the Auditor General's report.

I pointed out that you--

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): On a point of order, Mr. Chair--

The Chair: Just a moment.

I pointed out that Mr. Himelfarb has been the Clerk of the Privy Council since May 2002, and no doubt he can only speak to the information that he has had during the last couple of years. The motion to bring Mr. Himelfarb here was put forward by the Liberal side, with no real direction as to why, but nonetheless....

Madam Jennings has a point of order, so we'll hear from her.

Mrs. Marlene Jennings: Thank you.

Given that it was my motion, and I spoke to the motion, I believe if you check the transcripts you'll see very clearly that I thought it was pertinent to have the Clerk of the Privy Council come here to discuss ministerial and deputy ministerial accountability, given Mr. Ran Quail as deputy minister throughout the entire lifetime of APORS, the internal and external audit in 1996, the CCSB program. I clearly stated that.

Perhaps members of the opposition were so busy paying attention to their hot air and their wild accusations that they did not assimilate the information I gave. You obviously didn't either, Mr. Chair. So if direction was not given to this witness, it's not because direction was not given when the motion was tabled and debated before this committee.

The Chair: We're dealing with chapters 3, 4, and 5 of the Auditor General's report.

Monsieur Desrochers.

Mrs. Diane Ablonczy: On a point of order, Mr. Chairman--and I do apologize, Monsieur Desrochers--I would point out that the witness clearly indicated to me that in spite of the fact that he has been with the Privy Council only since 2002, he was prepared to answer any and all questions on behalf of the Privy Council, including the relevant time when the Auditor General made the study. So the argument that somehow he is not able to answer questions has been directly contradicted by the witness himself, and I think that should be very clearly kept in mind.

The Chair: I thank you, Mrs. Ablonczy. On that very point, when we're dealing with ministerial and deputy ministerial responsibility--

Mrs. Diane Ablonczy: We can deal with whatever we want. If Marlene wants to deal with something, then she's able to do it, but we are not confined to that.

The Chair: One moment please.

Order. You can speak when you're recognized, Mrs. Jennings.

Mrs. Marlene Jennings: Am I recognized?

The Chair: No, you're not recognized. When I recognize you, fine. Put your name down.

Mr. Himelfarb, we're talking about ministerial accountability and deputy ministerial responsibility. As you know, ministers, when they move, don't have to answer for their previous department. We're finding the same type of situation here where deputy ministers--yourself as in essence the deputy minister for the Prime Minister--say, not my watch, I don't have to answer for it. That is the frustrating part.

A voice: Mr. Chair--

The Chair: No, I'm still speaking. You will be recognized in turn.

We can bring back Mr. Cappe from London, who was your predecessor and there for a period of time. I can't remember who his predecessor was. But it's very frustrating for a parliamentary committee when they're dealing with ministers, and deputy ministers, who have overall responsibility for their department, to find out that they either say, as Mr. Gagliano said, I'm only accountable for what I did and I'm not accountable for what anybody else did. Now we have you saying, I'm only accountable for the time that I've been around for a couple of years and whatever happened before is somebody else's responsibility. These are the types of frustrating things we have.

Now I have Madame Jennings.

Mr. Alex Himelfarb: Mr. Chairman, with respect--

¹ (1555)

[Translation]

Mrs. Marlene Jennings: Thank you, Mr. Chairman...

[English]

The Chair: Mr. Himelfarb.

Mr. Alex Himelfarb: With respect, I never said I was or was not accountable. I never said I would not answer questions. What I said was, I would answer what I knew and I would answer all questions I knew. I am not saying it was not my watch, I'm not saying I'm ducking, but I will not make up answers where I don't know the answer.

The truth of the matter is, the Auditor General sent a team in to examine these files and she doesn't know. I didn't send a team in. I read the Auditor General's report, and we have a public inquiry and this process to find out the answers, but it is not the same as my saying I don't know. When I say I don't know, it doesn't mean I'm ducking my responsibility. It means I'm answering this committee respectfully and with the knowledge I have. But I'm not going to make up answers.

[Translation]

The Chair: Mrs. Jennings.

Mrs. Marlene Jennings: Thank you, Mr. Chairman.

I find it deeply regrettable that you are putting words in the witness' s mouth, but I'm pleased that he set you straight. I sometimes wonder about how certain opposition MPs were brought up.

In response to certain questions, the witness clearly stated that he didn't have an answer and that based on the information available to him, he could not come to any kind of conclusion. That doesn't mean that he is shirking his responsibility in this matter. Don't put words in his mouth, for heaven's sake.

You're the Chair of this committee and you have a duty to relate the witnesses' statements accurately. It's one thing for opposition members to misquote the witnesses, but it's quite another for the Chair to do likewise. In my opinion, it's deplorable.

[English]

The Chair: Mr. Thibault.

Hon. Robert Thibault: Mr. Chair, I won't repeat what has already been said, but I want to make one point clear. When Mr. Desrochers asked his questions, he pointed out that he's a witness presented here by the Liberal majority.

The Chair: Requested to come forward by the--

Hon. Robert Thibault: This witness is the top civil servant of the country. He's a professional individual. He's not a member of any political machinery. To make that suggestion I think is ridiculous.

I wasn't listening at the beginning, but I presume the chair has asked the witness if he had been coached, if he had discussions in here, to which he indicated he had not. The witness has agreed to answer any question of which he had knowledge.

When members intermittently mingle PCO--Privy Council Office--and Privy Council, I think it can become very confusing. Some witnesses who have come here may have mentioned that they had discussions with people out of PCO. That is a completely different animal from the Privy Council itself, Mr. Chair.

The Chair: Thank you, Mr. Thibault

To put this, in essence, to bed, in preparation for coming here this afternoon, Mr. Himelfarb, what steps did you take to prepare yourself as to what had transpired in the PCO during the time of the period of this investigation so that you could come here and answer questions?

Mr. Alex Himelfarb: I reviewed the findings of the audit, as well as the original audits of transactions that launched the audit. I reviewed the action plan that the government took in response to the audit, both the first audit and the second audit. I reviewed the transcripts of witnesses who appeared before this committee, and I spoke to members of PCO who were there at the time.

The Chair: Continuing on, Mr. Desrochers, s'il vous plaît.

[Translation]

Mr. Odina Desrochers: Mr. Chairman, in view of the many points of order raised, could you tell me just how much time I have remaining?

[English]

The Chair: You have seven minutes.

[Translation]

Mr. Odina Desrochers: Thank you very much, Mr. Chairman.

I was merely recounting an incident that occurred with respect to a notice of motion. I don't understand why everyone got so fired up.

Mr. Himelfarb, it's all well and good to say that you read and commented on certain documents, and so on and so forth, but you've only been on the job since 2002, and the AG's report recounts transactions that occurred from 1997 to 2000. I'd like to discuss a initiative that was in place from 1992 to 2004. Were you aware of the existence of a Canadian unity fund?

[English]

Mr. Alex Himelfarb: Absolutely. I was aware that there was a reserve in the budget for unity-related issues.

[Translation]

Mr. Odina Desrochers: Did you know what the Canadian unity fund was used for?

[English]

Mr. Alex Himelfarb: Specific uses. I know examples of what it was used for. The use of the fund was--

º (1600)

[Translation]

Mr. Odina Desrochers: Could you give me some examples?

[English]

Mr. Alex Himelfarb: As I recall, the Council of the Federation, the Terry Fox Centre...I believe I tabled the documents with this committee quite recently that lists all of the uses.

The Chair: I think Mr. Mills was saying he has that document. Is that the document--

Mr. Dennis Mills (Toronto—Danforth, Lib.): We all have it.

[Translation]

Mr. Odina Desrochers: When you were Deputy Minister at Canadian Heritage, did you receive any money from the Canadian unity fund?

[English]

Mr. Alex Himelfarb: Yes.

[Translation]

Mr. Odina Desrochers: How much?

[English]

Mr. Alex Himelfarb: I honestly don't know.

[Translation]

Mr. Odina Desrochers: You don't know?

You were the Deputy Minister at Canadian Heritage, you say you received money from the Canadian unity fund and you can't tell me how much?

[English]

Mr. Alex Himelfarb: No, but it's listed in the documents I've tabled here. I can do the analysis very quickly.

[Translation]

Mr. Odina Desrochers: Sir, we're trying to understand how your government, the Liberal government, operates. Who is responsible? Is it the minister, or is it the deputy minister? We've heard from a number of witnesses. Some told us the deputy minister is responsible, while others maintained that accountability rests with the minister. I'm asking you a question about a specific amount of money allocated to your department. You were the Deputy Minister at the time and you can't answer my question. Are you going to tell me that I'll have to ask Ms. Copps for that information?

[English]

Mr. Alex Himelfarb: No, I told you I would give you the answer.

[Translation]

Mr. Odina Desrochers: I'd like to know how this government works? Who is accountable? The minister, or the deputy minister?

[English]

Mr. Alex Himelfarb: I thought I just explained that if you ask me the question, if I don't have the answer now I will get you the answer. Is that what you're asking?

[Translation]

Mr. Odina Desrochers: I asked you a question about the Canadian unity fund, and you promised to give me an answer. For weeks now, we've been listening to ministers and former ministers deny responsibility, and to deputy ministers admitting that they were out of the loop. As Clerk of the Privy Council, given your experience as a senior bureaucrat, as Mr. Thibault mentioned, can you tell us who is accountable for this or for any other program, for that matter? Is it the minister, the deputy minister, or both?

[English]

Mr. Alex Himelfarb: Let me step back for a moment.

[Translation]

In fact, both are accountable.

[English]

Accountability can't be delegated. Authority can be delegated, but accountability can't. So if I delegate to officials, I delegate accountability, but I keep the same accountability for myself. So I remain accountable and senior officials are accountable. It all stems from the democratic principle of ministerial responsibility.

Ministerial responsibility is not about consequences or blame. Ministerial responsibility is a vital institution of democracy, which argues that the minister is responsible to the House for all things in that minister's domain. That minister answers to the House because it's the minister who's required to hold the confidence of Parliament. It's the minister who's in the House, not officials. So the minister is responsible for all that's in their domain, but ministerial responsibility is not the same as accountability or blame.

There's an entirely separate regime to describe the accountabilities of ministers, and it's called Guidance for Ministers. It's public, and they can be held accountable to it. The consequences of ministerial responsibility are entirely political, that is, they lose the confidence of the House or Canadians through the House.

More personal consequences flow from the nature of the act. They don't flow from responsibility; they flow from whether a person knew about the act, whether the person was personally engaged in the act, whether they should have known, whether they acted on their knowledge. It's based on specific things. A minister may be responsible for all things that happen in his portfolio, but it doesn't make him or her accountable. For example, under the doctrine of ministerial responsibility, a minister has to answer for what happens in a crown agency or a quasi-judicial agency, where the minister may actually be prohibited from exercising direction. You can't say because the minister is responsible in the House, they are also accountable. They're accountable for making sure information is given to Parliament, errors are admitted to, and corrective action is taken.

[Translation]

Mr. Odina Desrochers: I have one last question. It will only take a minute.

Let's be clear about things. Mr. Alfonso Gagliano was the Minister, Mr. Quail was the Deputy Minister and Mr. Chuck Guité headed up this branch. Are you following me?

º (1605)

Mr. Alex Himelfarb: Yes.

M. Odina Desrochers: In your opinion, should Mr. Gagliano and Mr. Quail both have been aware, as a rule, of what Mr. Guité's group was up to? Would this have been a normal part of the relationship between a deputy minister and a minister?

[English]

Mr. Alex Himelfarb: Should they both have known? Is that the question?

[Translation]

Mr. Odina Desrochers: No. You've explained fully how things worked. According to Mr. Gagliano's testimony, from 1997 to 2000, he was unaware of what was going on. Mr. Quail testified that he knew Mr. Guité's group was up to something. Mr. Guité, for his part, maintained that he was in contact with someone in a position of authority.

How can a department that operates in this manner be taken seriously? Is this an exceptional case, as far as the Canadian government is concerned?

[English]

Mr. Alex Himelfarb: It's the exception. Normally, you would have systems in place to provide the necessary knowledge.

The Chair: Merci beaucoup, monsieur Desrochers.

Before we go to Madam Jennings, I'm going to acknowledge that the Government of Canada issued a notice on April 29, 2004--I take it to be a public release--from the Honourable Reg Alcock, President of the Treasury Board:

...today released the list of projects and initiatives funded from the Unity Reserve from 1992 until 2003.

The summary of approved projects of the Unity Reserve are available on the Treasury Board of Canada Secretariat website at www.tps-sct.gc.ca.

For further information, one can contact the Treasury Board of Canada Secretariat at 957-2391. That document is now before the committee.

Madam Jennings.

Mrs. Marlene Jennings: Thank you, Mr. Chair.

Thank you for your presence here today, Mr. Himelfarb.

You've just explained briefly the difference between ministerial responsibility and ministerial accountability. On the definition you've given, Mr. Stephen Owen, who is currently the Minister of Public Works and Government Services Canada, is responsible for what is happening within that ministry and for ensuring that with all the mistakes, mismanagement, rule-breaking, and so on that the Auditor General highlighted in her report, as also the internal audit of 2000, which actually uncovered everything and led to the Auditor General's being called in, that all the proper oversights, controls, checks, and balances are put in place so that it does not happen again. Is that correct?

Mr. Alex Himelfarb: That's absolutely correct.

Mrs. Marlene Jennings: And the deputy minister who is in place right now, Mr. Marshall, is also responsible for seeing that all those checks and balances are put in place with proper processes, to ensure that this thing does not happen again. Is that correct?

º (1610)

Mr. Alex Himelfarb: That is exactly correct.

Mrs. Marlene Jennings: However, the minister or ministers and deputy minister--there was only one when this whole program was running--are actually accountable for what happened. He may no longer be a deputy minister in the public service--he is retired--but he is accountable for what happened on his watch, and the minister who was in place at the time is accountable for what happened under his watch. Is that correct?

Mr. Alex Himelfarb: That's correct, but to qualify it, “accountable” does not necessarily mean the direst consequences would befall someone.

Mrs. Marlene Jennings: No, it doesn't.

Mr. Alex Himelfarb: But they are accountable.

Mrs. Marlene Jennings: Yes, they are accountable.

To pose a hypothetical situation, you have a deputy minister, there's a whistle-blower, there's an internal audit. The internal audit finds that all of the allegations of the whistle-blower are founded: backdating of contracts, payout of money without proper procedures being followed, selection of companies not following Treasury Board guidelines--I could go on. As a result of the conclusions of the internal audit, an external audit is ordered. That external audit comes to the same conclusions and recommends that the contracting function should be removed from the section and put into the normal stream of approvisionnement, comme on dit en français. What would you say about the quality of the deputy minister under whose watch this happened, who's fully aware of the conclusions of both the internal and the external audit, who not only does not carry out the recommendations, but when a new program is begun and new moneys are assigned to that program, gives it to the section that came under the internal and external audits, basically hands off? What would you say about the responsibility and accountability of that deputy minister?

Mr. Alex Himelfarb: First of all, I should point out that it was that deputy minister who called for the audit. But it's clear that when you have the information from an audit, you are absolutely accountable for implementing its findings, and you have to be held accountable for the degree to which you implement the changes that are necessary.

Mrs. Marlene Jennings: If that deputy minister, who did call for the internal and external audits, then did not follow through on the recommendations, what would you say about the quality of that deputy minister? It's very important to know this.

The Chair: On a point of order, Mr. Kenney.

Mr. Jason Kenney (Calgary Southeast, CPC): Mr. Himelfarb just said the deputy minister called for the audit. We received testimony from Mr. Pelletier and Mr. Gagliano that it was Mr. Gagliano who initiated the audit. I wonder if the witness has evidence he can furnish to the committee to clarify this problem.

Mrs. Marlene Jennings: Can I add to that for just one moment?

The Chair: To Mr. Kenney's point of order?

Mrs. Marlene Jennings: Yes.

In fact, both Mr. Quail and other witnesses stated that Mr. Quail recommended to the minister that an audit happen, which was the internal 2002 audit. With the 1996 internal audit and the Ernst & Young audit, Mr. Gagliano was not the minister at the time, but it was the recommendation of the deputy minister.

The Chair: I was a little concerned about the question asking for an opinion on the qualities of a deputy minister when you were not the Clerk of the Privy Council. He may have been a colleague of yours, but he certainly wasn't reporting to you at the time he was a deputy minister. I'm a little apprehensive about your being asked to give your personal opinion on the qualities of the deputy minister. Perhaps somebody else can check the record, but I think he also said he was acting on the direction of his minister. There seems to be a great deal of confusion as to who was asking what.

I'll allow Mrs. Jennings' question to stand, but if you wish to defer and avoid it, you may do so.

Mr. Alex Himelfarb: I owe the chairman a debt of gratitude, and I will take the opening you've given me. It isn't ducking. It is very hard to comment on a particular person or his behaviour without having all of the information necessary on the scope he had to act--and I understood he took a number of actions. I can answer you generically. We should be held to account, when we have information, for acting on that information.

Mrs. Marlene Jennings: As Clerk of the Privy Council, you are the individual to whom deputy ministers report, in the sense that you actually define the scope of their work and the criteria on which their performance is going to be evaluated, on which their annual performance evaluation will take place. Is that correct?

Mr. Alex Himelfarb: Yes. That's done in consultation with the minister and the minister's mandate, because their authorities are delegated through the minister. There is no sense in which they report to the clerk, though the clerk does have a role to play in assessing the performance.

Mrs. Marlene Jennings: If one of your deputy ministers right now was concerned that a particular program being run under his or her watch was outside the normal organizational structure and that the public servant who was running that program was reporting directly to the minister and reporting as well to the chief of staff of the Prime Minister, would you expect the deputy minister to bring that information forward to you?

º (1615)

Mr. Alex Himelfarb: If a deputy minister had concerns about value for money or the effectiveness of management systems, I would expect him to bring them to me.

Mrs. Marlene Jennings: Would you expect them to bring to you the fact that a program had been created completely outside the normal government machinery, as was explained to us by individuals from the Privy Council Office and from the Prime Minister's Office right at the beginning of our hearings? The sponsorship program was completely outside the organizational structure. If there was a program being run right now completely outside the organizational structure of a ministry, and the individual running it was not reporting to the deputy minister but was reporting to the minister or to the Prime Minister's Office, would you expect to be informed of that?

Mr. Alex Himelfarb: The simple answer is, if the deputy felt that value for money was not being achieved or adequate controls were not in place, I would expect him to bring that to me.

Mrs. Marlene Jennings: How would the deputy minister know, if the individual escaped all the regular structural checks and balances within his ministry, if it's outside the box?

Mr. Alex Himelfarb: If the individual escapes all normal checks and balances within the ministry, I would expect him to bring that to me.

Mrs. Marlene Jennings: Thank you.

The Chair: Thank you, Mrs. Jennings.

Our researcher has just given me a quote here from Mr. Quail regarding the absence of a control framework: “Procurement was in CCSB, because in handling the matters, essentially, this way was the way the minister wanted it.”

If you have a conflict between a minister and his deputy minister as to the process, who is accountable for what?

Mr. Alex Himelfarb: If it's within the rule of law and the policies of Treasury Board, that is, if it's legal, public servants will loyally implement it. If it's outside the bounds of Treasury Board guidelines or policies, the deputy is expected to bring that forward to the Clerk of the Privy Council.

The Chair: Thank you very much.

Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Mr. Chairperson.

To follow on Madam Jennings' questioning, based on what you know so far about this whole affair, do you think it would be fair to pin this whole episode on one deputy minister?

Mr. Alex Himelfarb: I don't think it's ever fair to pin these things on a single individual.

Ms. Judy Wasylycia-Leis: Do you think, based on your knowledge of the way in which government works and the relations between PCO and PMO, it's quite possible for an operation to be set up that didn't report through to the deputy minister and had its own unique way of operating, and of which the deputy may have been somewhat aware, but not kept in the loop? Is that possible?

Mr. Alex Himelfarb: Do I think what Ran Quail describes could have happened? Is that what you're asking me?

Ms. Judy Wasylycia-Leis: Do you think what the Auditor General has described as happening could have occurred without the deputy minister necessarily being in the loop or held responsible?

Mr. Alex Himelfarb: The deputy minister would be aware that the circumstance had occurred, that this program was operating in that way.

Ms. Judy Wasylycia-Leis: You don't think it was possible for the deputy minister to be kept deliberately out of the loop?

Mr. Alex Himelfarb: I can't imagine that.

Ms. Judy Wasylycia-Leis: Do you think it's possible that Mr. Ran Quail was kept in the position of deputy of Public Works throughout this entire period of time, despite ups and downs and different problems identified, because he was useful to the government in executing this project?

Mr. Alex Himelfarb: No, I can't imagine that for a moment. This is a person of huge reputation and high standing, with great regard from his colleagues, who has had a long career of good service, who has performed extremely well on other files. I find that inconceivable.

Ms. Judy Wasylycia-Leis: I raise these questions because I'm also concerned that we, as a committee, could go down the path of trying to find a fall guy. I think we can no longer, based on testimony today, have anyone suggest that the Auditor General was less than complete in her report. Certainly, Chuck Guité didn't cooperate in being identified as the fall guy. So I'm afraid that we're actually headed down the path of people identifying Mr. Ran Quail as the weak link in this chain.

The Chair: Madam Wasylycia-Leis, there's a point of order.

Hon. Robert Thibault: The member wants to suggest that she herself, as a member of this committee, is looking for a fall guy. She may wish to do so, but I hope she won't talk about the committee generally when she does that. Her comment did say that.

º (1620)

Ms. Judy Wasylycia-Leis: Mr. Chairperson, on that point of order, it certainly wouldn't be my opinion. I'm reflecting a general environment around this committee in the way in which meetings have been scheduled this week. So it's open to that kind of hypothesis, if you see what I mean, Mr. Thibault.

Let me ask about the possibility of this being something that was concocted at the highest levels between the PMO and the PCO. Based on some of the evidence we've heard today--

The Chair: Ms. Wasylycia-Leis, you are straying into a hypothesis you will need to have some substantiation for. You may ask Mr. Himelfarb if he is aware whether it reaches up to these levels, but you've got to be careful in your questions here.

Ms. Judy Wasylycia-Leis: Okay. Let me try to determine whether Mr. Himelfarb can give us an indication of meetings that would have happened between the PCO and the PMO on the sponsorship file and CCSB.

Mr. Alex Himelfarb: My understanding is that there were no meetings between PCO and Public Works on specific files, advertising firms, or the like. I understand from testimony to this committee that there were some meetings between PMO and that unit.

Ms. Judy Wasylycia-Leis: You may be right. We haven't received testimony on specific files, but--

Mr. Alex Himelfarb: But to be honest--

Ms. Judy Wasylycia-Leis: --we've had documents tabled from Professor David Morell at the University of New Brunswick indicating a meeting with PCO and PMO involving the CCSB audit. Those present from the PCO at that meeting were Ron Bilodeau, Dick Fadden, and Mario Lague. Do you have any information about what was discussed at that meeting?

Mr. Alex Himelfarb: I spoke to each of those officials, in one case I believe an ex-official, on what happened at that meeting. As the meeting was described to me, it was an attempt to ensure that the management response was sufficiently rigorous, given the seriousness of the audit, and that the focus was not on the audit but on the management response.

Ms. Judy Wasylycia-Leis: How much time do I have, Mr. Chair?

The Chair: Three and a half minutes.

Ms. Judy Wasylycia-Leis: Thank you.

We've heard a lot over the course of the last couple of months about the Federal-Provincial Relations Office being an organ of the PCO. We've been told that this office was responsible for informing Mr. Guité that he could bend the normal competition rules in administering the government sponsorship activities. Would such direction be issued without the go-ahead from the PCO, and if so, on what basis?

Mr. Alex Himelfarb: I don't know that this direction was issued. I can't imagine this direction being issued.

Ms. Judy Wasylycia-Leis: So you would refute the evidence we've heard on a repeated basis about the FPRO being at the centre of this whole file and the link in terms of what happened around this whole fiasco.

Mr. Alex Himelfarb: I certainly have no awareness of any involvement. I know that the FPRO, or what was then the FPRO and is now Intergovernmental Affairs, believed in the importance of the objectives of the sponsorship program and promoted those objectives. I honestly don't know what involvement they might have had in specific instances.

Ms. Judy Wasylycia-Leis: Let me ask about the present process. Would you be the person responsible for implementing the Prime Minister's action plan, as announced on February 10, and be therefore somewhat responsible for the selection of the judge for the public inquiry?

Mr. Alex Himelfarb: I was engaged in that and provided my advice. I wouldn't be responsible, but certainly my advice was part of that process.

Ms. Judy Wasylycia-Leis: Did you give any advice for selection of a judge who might have been available to start sooner, who was not spending time on holidays for a good part of the time?

Mr. Alex Himelfarb: Unquestionably, we wanted this to move as quickly as possible.

Ms. Judy Wasylycia-Leis: So we're now at day 83 and there's no public inquiry to speak of, although Judge Gomery has said he's making a statement in a couple of days and launching something. But if that's the case, May 7 will make it probably day 85, which means 85 days since the public inquiry was launched. In the meantime, the Prime Minister has the audacity to criticize this committee for not doing a thorough enough job.

Does that make sense?

An hon. member: The Prime Minister never criticized...[Inaudible—Editor]

Ms. Judy Wasylycia-Leis: He certainly did.

º (1625)

The Chair: The Prime Minister certainly criticized the chair on many occasions, and by inference he was criticizing the committee as well. So there is no question that he was calling the committee into question.

Your point is very well taken, Ms. Wasylycia-Leis.

Some hon. members: Oh, oh!

Ms. Judy Wasylycia-Leis: Stop the clock!

The Chair: Order!

Mr. Thibault.

Hon. Robert Thibault: On a point of order, Mr. Chair, we can have little fights politically, and little spats, and point to another's motivations, but I don't think a member of this committee asking the Clerk of the Privy Council to comment on the validity of a statement, unrelated, by the Prime Minister brings much to the debate, and I don't think it's very fair to the witness.

The Chair: Just in answer to that, I'll refer you to Mr. Himelfarb's opening statement, where he describes the first of his three principal roles:

First, I am the Deputy Minister to the Prime Minister, which means that I provide advice to the Prime Minister on the machinery of government, the appointment of senior office holders, on the Cabinet decision-making system, and overall policy directions.

I'm sure if the policy of the government had been to get that public inquiry up and running in two weeks, it would have been up and running in two weeks. So I think Ms. Wasylycia-Leis' question, is 83 days a long time or a quick time, is a legitimate question.

Mr. Himelfarb, the answer, please.

Mr. Alex Himelfarb: I think I should provide the committee with as much information as I can about other public inquiries, because it's not an unusually long time to get started.

In addition to that, it's not that it hasn't started. In fact, counsel's in place, a lot of work is being done, and witness lists are being compiled. So a good deal of work is being done. I think it was in everyone's interest to move this as quickly as possible, and circumstances notwithstanding, this thing will move very quickly. I believe an announcement will be made soon.

Ms. Judy Wasylycia-Leis: Well, it would seem to me that if it is an urgent matter for the Prime Minister, there are ways to get something like a public inquiry up and running sooner. I've pointed to the example before of Great Britain with respect to the public inquiry dealing with the weapons of mass destruction, which was up and running in ten days.

Did you look around to see if there was a judge available who was competent to do the job and also available to start immediately, and if not, why not?

Mr. Alex Himelfarb: I think it's fair to say that a number of judges were surveyed for this position.

Ms. Judy Wasylycia-Leis: Could I ask one more quick question?

The other problem for this committee has been that the President of the Treasury Board has used some information that doesn't have any basis in fact, suggesting that in fact all we're dealing with is $13 million and not $100 million. He's obviously had to apologize for that.

The Chair: Okay, Ms. Wasylycia-Leis, a quick question.

Ms. Judy Wasylycia-Leis: Can you, on behalf of the PCO, distance yourself from those remarks and indicate to us that--

The Chair: There we go; I said a quick question, Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: --this was unacceptable behaviour on the part of...[Inaudible—Editor]

The Chair: A quick question, there we go. We'll just move on.

Mr. Kenney, please.

Mr. Jason Kenney: Thank you.

Mr. Himelfarb, you testified in response to Madam Ablonczy's questioning that none of the people you have access to currently would support Mr. Guité's contention about consultations with PCO officials to deliberately avoid the production of documents regarding the sponsorship program. Was that your testimony?

I think he needs to answer these questions....

The Chair: You have to answer the questions; you can't nod your head.

Mr. Alex Himelfarb: Sorry.

Yes.

Mr. Jason Kenney: Sir, you said that none of these people would support that, but how do you know that? Did you consult with these people to whom you have access?

Mr. Alex Himelfarb: The issue of the specific files that were most controversial, that led to the Auditor General's big audit, broke just the week before I came in as clerk. It was a huge and dominating issue. Shortly after that, the then Prime Minister came out with an eight-point ethical action plan, which included publishing the guidance to ministers, electoral financing reform, and a range of other things. This was taken very seriously right from the outset. Then of course we talked to everyone who was available, including in transition to the job, about what had happened, what people knew, and what steps should be taken. That's when a fundamental review of the three programs was first launched, the lobbyists registration bill was amended, and the ethics counsellor bill was proposed.

So it was a very hot issue over the first part of my tenure.

º (1630)

Mr. Jason Kenney: Then I have to say I'm a little confused, because when Madam Ablonczy was asking you for information on this, you were pleading ignorance, essentially, saying you knew nothing and you weren't there. Now you're telling us that when you came on board this was a huge and dominating issue, and there were obvious consultations, and you spoke to people about this. You asked them presumably about what they knew, what they remembered, and what direction, if any, they gave to Mr. Guité.

Is that now your story, that you in fact were engaged, when you came on board at PCO, in finding out what happened, as best you could, in 1995 through 1999?

Mr. Alex Himelfarb: But you have to understand, that's after the 2002 audit, based on the people who were available for the 2002 audit. What I said was that I couldn't possibly speculate on the motives of people who had made decisions.

Mr. Jason Kenney: You couldn't speculate on the motives, but to the best of your knowledge, then, you're telling us that nobody from PCO ever met with or spoke with Chuck Guité to give him direction on how to manage this program?

Mr. Alex Himelfarb: That's my understanding.

Mr. Jason Kenney: In 2002 Mr. Guité testified to this committee in camera that in 1995 he received a call from an official at the Federal-Provincial Relations Office.

Is the FPRO an organ of PCO?

Mr. Alex Himelfarb: At that time it was. It now has a deputy and a minister, but at that time it was integrated with PCO.

Mr. Jason Kenney: Okay.

He testified that in this call he was instructed by the FPRO official who worked in the Privy Council Office to be prepared to “bend the rules” in order to administer the sponsorship program, the advertising program, around and during the Quebec referendum. Do you have evidence of such a call ever having been placed, or such an instruction ever having been given?

Mr. Alex Himelfarb: No, none.

Mr. Jason Kenney: Now, when Jean Pelletier, former chief of staff to Prime Minister Chrétien, was asked about this, he told the committee that he would have known nothing about that, because essentially there's a wall, he said, between the PCO, or the chief of staff of PMO, and the PCO. Could you describe for us the working relationship that normally exists between the chief of staff to the Prime Minister and the Clerk of the Privy Council?

Mr. Alex Himelfarb: You normally would meet on a daily basis and generally, often in the company of the Prime Minister, each provide a briefing, the clerk providing non-partisan advice on policy and the chief of staff providing more partisan advice, often on the same policy.

Mr. Jason Kenney: So given that all of the people involved in the sponsorship program testified that this was the most important file, insofar as it was an integral part of the government's unity strategy, would you imagine that the chief of staff to the Prime Minister would have discussed these affairs with the Clerk of the Privy Council at the time in these daily meetings?

Mr. Alex Himelfarb: At the level of broad objectives or funding, yes, it would be reasonable to expect some discourse, although probably not on the basis of individual transactions.

Mr. Jason Kenney: I see.

Now, Mr. Pelletier testified that he met with Mr. Guité, when he was executive director of the CCSB, on a regular basis; he estimated once every other month. To the best of your knowledge, is it common practice for the head of a government program who is supposed to be at an ADM level or below that to have an ongoing, direct relationship with the chief of staff to the Prime Minister? Is that normal practice?

Mr. Alex Himelfarb: It's not normal, but it's not unheard of.

Mr. Jason Kenney: It's not unheard of. What other instances would one hear of this?

Mr. Alex Himelfarb: Without getting into specifics, if there was a very significant government file, something that was hot, the program officer, even at the DG level, might, for the time when this was “the” priority issue, meet directly with the chief of staff.

Mr. Jason Kenney: If he might do that, might he not at least notify his deputy minister that he's meeting with the chief of staff to the Prime Minister? Would not the Clerk of the PCO also be aware of that?

Mr. Alex Himelfarb: Yes, on both counts.

Mr. Jason Kenney: In this instance, I think the evidence, unless you can correct me, is that the deputy minister, Mr. Quail, claimed he knew nothing about this ongoing relationship with the head of the Prime Minister's Office. So this kind of circumvention of the ordinary reporting relationships would be quite extraordinary, in your experience.

Mr. Alex Himelfarb: A meeting of that sort, without the deputy knowing or without the clerk knowing, would be unusual.

Mr. Jason Kenney: Mr. Himelfarb, when were the contents of the Auditor General's November 2003 report, the chapters we're considering, brought to your attention? When were you briefed on that?

Mr. Alex Himelfarb: It was before the end of November. I can get you the exact date.

º (1635)

Mr. Jason Kenney: So you were briefed on it before it was publicly released and tabled in Parliament.

Mr. Alex Himelfarb: Yes.

Mr. Jason Kenney: And was the current Prime Minister briefed on this at the same time you were?

Mr. Alex Himelfarb: No, he was briefed after he took office.

Mr. Jason Kenney: After he took office. So in November he would have been briefed on the contents of the report.

Mr. Alex Himelfarb: No, December 12.

Mr. Jason Kenney: Yes, excuse me, December 12.

Mr. Alex Himelfarb: So it was sometime after December 12.

Mr. Jason Kenney: When his briefing on this ensued, is that when discussions began, to the best of your knowledge, on the government response to the Auditor General's report? Did discussions begin within the PCO/PMO on responding to the AG's report?

Mr. Alex Himelfarb: No, we had done an awful lot of internal examination of the kinds of things that should be considered, and we were developing options.

Mr. Jason Kenney: You testified in your written statement that the government has launched an independent commission of public inquiry. I suppose I really don't accept the word “launched”. It's been “announced”, it's been “created”, but for all intents and purposes, insofar as it's a public inquiry, it doesn't exist; it won't begin its hearings until September.

My question to you is this. Were you present at any meetings with the Prime Minister or staff members of the PMO where the start date of this investigation was discussed and it was decided that it would be preferable for the public inquiry not to begin its hearings until after an election was called and dispensed with?

Mr. Alex Himelfarb: I can say with absolute confidence that in every conversation about the inquiry, the Prime Minister and his staff wanted to move this as soon as possible.

Mr. Jason Kenney: He wanted to move it as soon as possible. So between his knowledge of this in December and September, that's as soon as possible.

Mr. Alex Himelfarb: I guess so.

The Chair: Is that a yes or a no?

Mr. Alex Himelfarb: I can tell you that a number of steps were taken, including the examination--

The Chair: But as soon as possible--

Mr. Alex Himelfarb: Let me....

An examination was made in terms of the implications of this against ongoing RCMP investigations. There was a survey of a number of judges expressing their interest. There was a negotiation of a mandate with the judges.

Now, could it have happened sooner? I think as a public servant I'm told that almost everything we do could have happened sooner. But there was no deliberate attempt to delay this.

The Chair: Okay, thank you, Mr. Kenney.

Mr. Murphy, please, eight minutes.

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

Mr. Himelfarb, I want to pursue this whole area of ministerial and deputy ministerial accountability and responsibility. I know Mr. Desrochers and Madam Jennings have talked about it, but this is the nub of the issue.

We all heard about the rogue department administered by Guité, with no checks, no balances. He didn't follow Treasury Board guidelines. And it wouldn't come as a surprise to anyone that taxpayers didn't get value for the money. The issue is why he was allowed to continue at this, or why the department was allowed to operate in this manner.

We have the concept of ministerial responsibility, which I certainly agree with. The minister is primarily responsible for his department. But we have the deputy, and on this the Financial Administration Act is very clear. Subsection 32(2) says the deputy is to “establish procedures and maintain records respecting the control of financial commitments”.

Second, we have the allowance of Guité reporting directly to the minister, or in some cases, when the minister didn't get it--in his words--he went right to the Prime Minister's Office. We had the very clear recommendation coming from the 1996 audit that the functions were to be separated, the functions of the selection of the agencies and the administration of the sponsorship contracts work, which I think would have caught this problem. The deputy minister ignored that.

Finally, we have the deputy minister allowing Guité to negotiate with the Prime Minister's Office--this is unbelievable--funding for his own department. That, to me, would indicate that the deputy failed the taxpayers of Canada in his duties as deputy minister.

First, do you agree with the conclusion I've made, and if so, was any disciplinary action taken against the deputy?

Mr. Alex Himelfarb: I'm going to, I hope with the chair's indulgence, take the chair's open door to say that it's not appropriate for me to comment on the performance of a deputy in particular circumstances when I was not in the position. I can, however, generically say that you are right in your reading of what a deputy minister is accountable for. A deputy minister is accountable, under the Financial Administration Act, for ensuring the propriety of financial expenditures, and for ensuring that the systems are in place to monitor that.

º (1640)

The Chair: Mr. Himelfarb, I said in response to Madam Jennings' question that you were not required to offer a personal opinion, but I think Mr. Murphy's question was on whether disciplinary action was taken. That, I think, is a specific question. It's not an opinion.

Mr. Alex Himelfarb: No disciplinary action was taken.

Hon. Shawn Murphy: Were you ever offered an indication of why disciplinary action was not taken?

Mr. Alex Himelfarb: No.

Hon. Shawn Murphy: Mr. Himelfarb, have you ever had experience...? We perhaps didn't ask this question of Mr. Quail.

So he's caught in a situation where what is his obligation? Is it to the laws of the country, to the Financial Administration Act, or is it to the minister, to the government? Have you ever had instances where the deputy has come to you and said, listen, the minister wants me to do something that is obviously wrong, and I want your direction?

You're the boss; you're the superior of the deputies, right?

Mr. Alex Himelfarb: Well, not exactly, but that is the appropriate thing for a deputy to do in that circumstance. I have had deputies come to me on about three occasions over two years to say, the minister wanted X; I have advised strongly that we cannot do X; I refused to do X; I want you to be aware that the minister may not be happy with me.

In every instance, they've taken the action consistent with the law.

Hon. Shawn Murphy: So what do you do when the deputy comes to you with that problem?

Mr. Alex Himelfarb: I can assure them that they've done the right thing and can promise them my support.

Hon. Shawn Murphy: But are you aware, from your investigation of this file, of whether Mr. Quail ever went to his superior, who I take it was Mr. Cappe at the time, to talk about his problem and get further directions from the Clerk of the Privy Council?

Mr. Alex Himelfarb: Not that I'm aware of. I don't know; I can't be certain that this didn't happen or did happen.

Hon. Shawn Murphy: Would there be any record in the files if this did happen?

Mr. Alex Himelfarb: There are no records. I checked.

Hon. Shawn Murphy: Another issue that comes up, Mr. Himelfarb, is this whole issue of performance pay. Not only am I aware that in this case nobody has been disciplined, but as far as I can see, everyone has received performance pay. The deputy...and Guité bragged about how much performance pay he was getting, he was doing such a great job.

From your vantage point at the top of the heap, is this system broken?

Mr. Alex Himelfarb: It is certainly controversial.

Let me take just a minute of the committee's time.

The Chair: Go ahead, Mr. Himelfarb.

Mr. Alex Himelfarb: The performance pay system was launched some years ago by an external advisory committee. They suggested a salary band for EXs, for executives and deputies. They suggested that a portion of the normal salary should be put at risk and should be re-earned every year. The assumption was that 90% to 95% of public servants doing their normal job would re-earn that income. In addition to that, they suggested bonuses for outstanding work, and they recommended that 20% or fewer should get those bonuses.

The system was pretty generous in its first years and deserved a lot of the criticism it received, but it is now quite rigorously managed in that over 5% don't re-earn their pay and fewer than 20% get the bonuses.

Is it broken? Well, it's brought more controversy than one would wish, but it's doing what it was designed to do, which was to take a portion of pay and make it re-earnable, with the expectation that the majority of public servants would re-earn that, but few would get a bonus beyond that.

Hon. Shawn Murphy: We see situations here, and we've seen them in other files too—I've been on this committee three or four years—where people obviously are just not doing their job—we had this case in this committee—and they invariably get bonus pay. The taxpayers are watching this show and they're seeing Guité come before the committee bragging about the bonus pay he received. As a member of Parliament, and I think most Canadians would agree with me, I am shaking my head. Where are the controls? Where is the oversight?

º (1645)

Mr. Alex Himelfarb: There's no question we get that very strong push back. One of the difficulties, one of the limits, in the performance pay system is it's based on an annual contract. It's based on a contract that's specified and signed off by both parties. Right through the system there must be a contract in place and the contract covers that year. Very often what one discovers is poor performance, or performance that should not be rewarded or acknowledged, several years previous, but it wasn't known during the period of contract. And it creates an enormous embarrassment. I do believe we have to fix that.

Hon. Shawn Murphy: My last question, Mr. Himelfarb, concerns this situation where Guité went not to his deputy or to the financial officer within Public Works and Government Services, but when he needed additional funds to operate the sponsorship program, he discussed it with the Chief of Staff of the Prime Minister's Office. Shouldn't that have raised all kinds of red flags and shouldn't bells have gone off in that situation? Instead of the deputy sitting back and listening to this story, shouldn't he have done something?

Mr. Alex Himelfarb: That would normally raise some concerns.

The Chair: I have a question I need the answer to, Mr. Himelfarb, based on what you're saying to Mr. Murphy. You said on three occasions since you've been the Clerk of the Privy Council, deputies have come to you with an issue where they said they strongly suggested to the minister that he not follow this path or course of action. You said, stay the course; you have our support.

The inference seemed to be that what the minister was advocating was something that perhaps wasn't quite legal and that you were backing up the deputy minister by saying, stay the course; stay within the confines of the law.

Mr. Alex Himelfarb: I wouldn't read it as that. It's entirely normal in the interaction between a minister and the deputy that a minister asks, can I do this, can you find a way to do this? The minister is asking the question, is it legal and within rules. There are unquestionably times when deputies—

The Chair: If we're talking about the sponsorship program, the program itself was within the rules if the paperwork and stuff like that had been kept.

My point was that you said you would support the deputy minister. What is the situation with the minister? Does somebody then go to the minister and say, look, you're going down the wrong road here? Is he reprimanded, or do you take it to the Prime Minister, who says perhaps you should let the minister know that we don't go down that way? What's the other side of the situation?

Mr. Alex Himelfarb: Fortunately, I haven't had to deal with the conflict because in each of the instances the minister agreed with the advice given and the deputies were worried that it had created a tension that didn't arise.

The Chair: Do you keep records of this complaint by the deputy as to the way this process was handled? You said there were no records of Mr. Quail having gone to, I presume it was, Mr. Cappe.

Mr. Alex Himelfarb: None in the files that I have access to.

The Chair: Is that a limitation on the files that you have access to? Is it in the files or just the ones you looked at?

Mr. Alex Himelfarb: It's not in the files situated in PCO, not in the public files.

The Chair: Okay.

Monsieur Desrochers, s'il vous plaît.

[Translation]

Mr. Odina Desrochers: Thank you, Mr. Chairman.

Mr. Himelfarb, I'd like to get back to the Canadian unity fund.

According to figures compiled last week, it seems that $100 million from the fund was allocated to sponsorship initiatives. Is that also your understanding of the facts?

[English]

Mr. Alex Himelfarb: Do you mean from the unity fund?

[Translation]

Mr. Odina Desrochers: One hundred million was allocated.

[English]

Mr. Alex Himelfarb: The sponsorship fund itself was created by drawing on the unity reserve. Each increase in sponsorship was from the unity reserve. I haven't done the math, but I don't have any reason to doubt your math.

[Translation]

Mr. Odina Desrochers: We were also informed that reserve funds flowed through existing programs. Is that also true?

[English]

Mr. Alex Himelfarb: Yes.

[Translation]

M. Odina Desrochers: I verified certain facts in the Public Accounts of Canada. Nowhere did I find the heading “Canadian Unity Fund” listing the amounts allocated to existing programs in each department. Is that your definition of transparency?

[English]

Mr. Alex Himelfarb: I think you'll see in the documents tabled by the President of the Treasury Board that the link between the public accounts and the table has been made. By the way, I have shared that material with this committee; I guess it hasn't arrived yet. You'll never find in the public accounts a reference to the source of funds.

So, for example, when you see public accounts describing security expenditures, the security expenditures were drawn from a security reserve in the last budget. In the public accounts, it will go through departments. It will be seen as a security expense; it will be captured in the supplementary estimates, but it won't say “security fund” because that's just a notional account in the fiscal framework.

In the history of government, the public accounts have never linked to the source of funds. That's not unique to this. That's true since 1992. That's true since the history of government that there are reserves. Those are expended through approved programs by Treasury Board. They're shown in the public accounts as government expenditures subject to the review of public accounts and no link is made to the source of funds. There's nothing new about that.

º (1650)

[Translation]

Mr. Odina Desrochers: Mr. Himelfarb, do you know a person by the name of Gérard Valiquette?

[English]

Mr. Alex Himelfarb: I believe I know him. Is he the one who worked on the Trudeau Foundation?

[Translation]

Mr. Odina Desrochers: That's right. Is it fair to say that when you were the Deputy Minister at Canadian Heritage, Mr. Valiquette was awarded a $150,000 untendered contract, specifically for services as a consultant with the Pierre Elliott Trudeau Foundation?

[English]

Mr. Alex Himelfarb: I don't know the details of the contract. The contract would have been let, I understand, by the foundation. I'd have to look into that. I think it was done by the board of the foundation, but I'd have to examine that. I'd have to look at that.

[Translation]

Mr. Odina Desrochers: Who awarded the contract? Was it Canadian Heritage?

[English]

Mr. Alex Himelfarb: I believe Canadian Heritage paid for it, but I will find the information and get it back to you. I just literally don't....

[Translation]

Mr. Odina Desrochers: Let me reiterate that you were the Deputy Minister, Mr. Himelfarb, and that a $150,000 untendered contract was awarded to Mr. Valiquette. That would have....

[English]

Hon. Robert Thibault: On a point of order, Mr. Chairman.

The Chair: A point of order, Mr. Thibault.

[Translation]

Hon. Robert Thibault: My only question to the member, through the chair, is whether his question is relevant or not.

[English]

The Chair: I'm tied up talking to the law clerk. If you can repeat your question to me once more, Mr. Desrochers, I will decide on the relevance.

[Translation]

Mr. Odina Desrochers: With your permission, I'll respond to Mr. Thibault first.

[English]

The Chair: No, I said ask your question to me and I will decide whether it's relevant or not. Repeat your question to me as chair, and I will determine whether it's a relevant question or not.

[Translation]

Mr. Odina Desrochers: I can't answer without prefacing my remarks, Mr. Chairman. We're here to examine questionable contracts and tenders. Mr. Himelfarb is here and I'd like to ask him a question about his actions at the time he was Deputy Minister.

If his way of doing business included awarding $150,000 contracts without putting them out to tender, how can he advise us on the structure of the Sponsorship Program?

Is my question relevant?

[English]

The Chair: Mr. Himelfarb.

Mr. Alex Himelfarb: I will track down the details of that contract. The way I recollect it does not correspond to the way the question was posed. I believe it was competitive and was issued by the board of the Trudeau Foundation, but I will detail that and get back to the committee.

The Chair: Monsieur Desrochers.

[Translation]

Mr. Odina Desrochers: Fine then.

Mr. Chairman, I was referring to an article in the May 8, 2002 edition of La Presse concerning this $150,000 contract. Getting back to the Canadian unity fund, apparently, we're not allowed to speak the name of Prime Minister Paul Martin in this committee. Nonetheless, I'd like to speak about the lofty principle of transparency.

Was it standard procedure for departments to have access to a reserve fund, as you called it, and for the Public Accounts of Canada not to specify where the money originated, because this was part of a special fund, as you called it? Where are we supposed to check the facts if not in the most official of all documents, the Public Accounts of Canada, to see how the Canadian government spends the taxpayers' money?

[English]

Mr. Alex Himelfarb: First of all, it's not a fund; it's a reserve in the fiscal framework, one of many reserves over time. But quite apart from that, all the documents, including those that link the list you have before you and the public accounts, have been made public on the website of Treasury Board and shared with this committee.

º (1655)

[Translation]

Mr. Odina Desrochers: Mr. Chairman, I'll tell you why I'm asking this question. The fact of the matter is that according to what the AG told us, only $300,000 was officially spent on sponsorships in 1996-1997. However, judging from this famous list, it seems that in reality $17 million was spent on sponsorship initiatives that year. At some point, Canadian taxpayers want to know where their money is going. Did you know that the official records listed expenditures of $300,000...

[English]

The Chair: You said the Auditor General said $300,000?

[Translation]

Mr. Odina Desrochers: The AG's records show an expenditure of $300,000, while the documents pertaining to the Canadian unity fund released last week refer to $17 million allocated to the Sponsorship Program. What figure should Canadian taxpayers believe, given the discrepancy between the numbers and the fact that information about reserve funds is not accessible to the Canadian public?

[English]

Mr. Alex Himelfarb: The source of the money is the fiscal framework, and all the expenditures are documented in the public accounts. One reserve within the fiscal framework was called, and has been for a number of years, the unity reserve, just like the security reserve. Those are notional amounts within a fiscal framework. Every dollar that's spent, approved by Treasury Board and captured in supplementary estimates, is reported in public accounts. To assist this committee in looking at this particular reserve and those expenditures, the link has been drawn.

[Translation]

Mr. Odina Desrochers: Mr. Himelfarb, do you think it's fair that the $800 million figure, even if its money in a reserve fund, was not disclosed until last week, further to pressure from the opposition parties, and that, had we not seen the AG's report, Canadian taxpayers would never have learned of this reserve fund? Is this, in your opinion, a normal, transparent process?

[English]

Mr. Alex Himelfarb: The annual reserve was never that large. The government committed itself to providing this information, and the reason it took so long was that we did the work of linking that information to the information in the public accounts.

[Translation]

Mr. Odina Desrochers: Nevertheless, this figure was calculated using standard accounting practices and was widely quoted in the press. I can't believe that you're challenging the figure of $800 million. Is that in fact what you're doing? The $800 million figure came directly from...

[English]

Mr. Alex Himelfarb: If you're talking about over 10, 12, 15 years, sure, it's possible. I guess over 30 years it would be $160 million.

The Chair: Merci beaucoup, monsieur Desrochers.

Mr. Tonks.

Mr. Alan Tonks (York South—Weston, Lib.): Thank you, Mr. Chairman.

Thank you, Mr. Himelfarb.

Mr. Himelfarb, during the time from 1997 to 2000, what was your role in the government, in the civil service? What was your major project?

Mr. Alex Himelfarb: The social union framework. I spent a year negotiating that with the provinces, 1999-2000. In the first of those years I was still at PCO in social policy, then I moved to Treasury Board. I was Deputy Minister of Canadian Heritage in 2000.

Mr. Alan Tonks: During that time one of the major projects that involved social policy was building a consensus with the provinces on a social action partnership. I'm going to try to refer this back to that same time. Mr. Guité indicated that in 1996-1997 he had taken some strategic direction from the Federal-Provincial Relations Office. There was, he said, PCO representation in the Federal-Provincial Relations Office. Was there also direction coming from the Federal-Provincial Relations Office when you were undertaking the social union framework initiative?

» (1700)

Mr. Alex Himelfarb: There was constant consultation and interaction with PCO and the intergovernmental secretariat.

Mr. Alan Tonks: Questions were asked on the role of the FPRO. It was an important entity in dealing with federal-provincial emergent relations, so it wouldn't be unbelievable for Mr. Guité to be working through that entity to get some direction. At that point he said the FPRO advised him and his unit how to reduce the number of advertising agencies from ten to five.

Mr. Alex Himelfarb: I see what you're saying. When you're dealing with federal-provincial matters, it is normal practice to consult with Intergovernmental Affairs and FPRO.

Mr. Alan Tonks: One of the concerns that has been expressed through the committee, and I think Canadians would like to know the answer, is in relation to not only internal audit and external audit, but the identity of the financial comptrollership that oversees the whole thing. If it isn't the Auditor General, if it isn't Treasury Board Secretariat, what is the fail-safe entity that clicks in when something goes wrong?

Mr. Alex Himelfarb: There are more than one. Deputies are expected to have a strong internal audit function, with a risk-based plan. By policy, those internal audits have to be made public, have to be posted on the Treasury Board website. Those issues can't be hidden. In addition, a deputy minister is required under the Financial Administration Act to ensure that adequate systems are in place. Recently the government has strengthened the Comptroller General function and has made it incumbent on a comptroller in every department to report to the Comptroller General any problematic financial transactions. So we've added an element of oversight that involves a separate Comptroller General's office.

Mr. Alan Tonks: Those elements actually came out of the 2001 audit?

Mr. Alex Himelfarb: Out of the 2001 audit we had a strengthened internal audit policy, we had a strengthened evaluation policy. More recently this government put in a strengthened comptrollership framework.

Mr. Alan Tonks: I'm reading from Mr. Steinberg's testimony, and he said:

Following on the heels of media interest in the HRDC audit and in anticipation of the internal audit being posted on the Internet, I was involved in a series of briefings to senior officials from the Treasury Board Secretariat, the Privy Council Office, and the Prime Minister's Office on the audit findings.

In the new architecture, to go back to testimony you gave earlier, if it came to the deputy minister's attention that the recommendations were not being implemented, who would the deputy minister report to in that instance?

Mr. Alex Himelfarb: The deputy minister would report to me.

Mr. Alan Tonks: I think this is why the committee wanted to have you here. We wanted to know what your role was. You have the advantage of hindsight, with reading of the testimony and what happened with respect to these events. With that hindsight advantage, what do you see as your role in this updated architecture? I want to make sure I have it clear.

Let's go to the Auditor General. In the Auditor General's terms of reference, according to the act, under “Inquiry and report”, the Auditor General is to “report on any matter relating to the financial affairs of Canada” and “inquire into and report on any person or organization that has received financial support from the Government”. It goes on to say:

The Auditor General may advise appropriate officers and employees in the public service of Canada of matters discovered in his examination and, in particular, may draw any such matter to the attention of officers and employees engaged in the conduct of the business of the Treasury Board.

Would the Auditor General also have responsibility to you?

» (1705)

Mr. Alex Himelfarb: The Auditor General is entirely an officer of Parliament, but has on occasion called me and given me a heads-up on issues she believes I should be apprised of. She does take the responsibility of ensuring that the clerk's office is aware of concerns she has.

Mr. Alan Tonks: Would it be possible for you to give a schematic of where the PCO fits in with respect to these new functions, this internal audit system, and show the role you play in the Privy Council Office?

Mr. Alex Himelfarb: With any luck, we don't play a role. When things are going well, we don't play a role. Normally, you would have internal audits shared with the Comptroller General made public, along with responses to that internal audit. Where the comptroller in a department finds problems, that comptroller is obliged, as a matter of policy, to let the Comptroller General know, and action is taken. Where a deputy is not taking the necessary actions to put in place systems to respond to the findings of audit, the Privy Council would be put in, but you would hope that does not arise.

The Chair: Mr. MacKay, four minutes. We're now in round three.

Mr. Peter MacKay (Pictou—Antigonish—Guysborough, CPC): Thank you, Mr. Chair.

Mr. Himelfarb, thank you.

To go back to this central issue of responsibility and oversight, you would agree that the Privy Council Office does provide oversight as well for government programs and government spending. There is an element of oversight expected of the PCO. Correct?

Mr. Alex Himelfarb: We would depend more on the Treasury Board, but there is an element of oversight.

Mr. Peter MacKay: There were a number of reports going around in 2000, the internal audit, the Auditor General's report, and you would have been in a unique position, I suggest. In 1999, I believe, you were the Deputy Minister of Heritage. Is that correct?

Mr. Alex Himelfarb: That's right.

Mr. Peter MacKay: In that capacity as a deputy minister, in discussions with other departments, in discussions with the PCO, weren't there red flags then? Wasn't there something then and there that said there was something badly amiss in this sponsorship program? Would you agree with that?

Mr. Alex Himelfarb: There was little doubt that there were management problems. They were known not necessarily by everyone, but by people who were close to those programs, and in Canadian Heritage we were....

Mr. Peter MacKay: I'm reading your eleventh report to the Prime Minister, which was tabled, I believe, in December of last year. Would you have had the benefit of having read the Auditor General's report in preparation for your own report to the Prime Minister?

Mr. Alex Himelfarb: I was reading it at the same time the report had to be completed. There was overlap, but I hadn't completed reading it. I've read it since, and there is a more recent report.

Mr. Peter MacKay: In your report, and in fairness, you're speaking about overall departmental spending generally, you talk about losing rigour: “We removed some departmental controls while we were reducing central oversight.” You said this government put the comptroller in place, but in fact this government also removed the comptroller prior to that. Isn't that correct?

Mr. Alex Himelfarb: I don't remember which government. I'll get that information, but there was a separate Comptroller General's department.

Mr. Peter MacKay: I suggest to you it was in 1996 that this government removed the comptroller--

Mr. Alex Himelfarb: And it was integrated with Treasury Board. I think that's right.

The Chair: On a point of order, Mr. Thibault.

Hon. Robert Thibault: Can we get that clarified for the record? I know it can't be done today, but I seem to remember from earlier testimony it was in that short period when Kim Campbell was Prime Minister. I'm not sure, but can we get it clarified?

The Chair: Mr. Himelfarb can perhaps provide that to the committee.

» (1710)

Mr. Alex Himelfarb: I'll provide that.

Mr. Peter MacKay: I want to go back to this issue--and I'm not asking you for speculation--that you've now had two years in your current capacity to look at and understand how this problem came about. From your experience as a deputy minister, and now your current experience as President of the Privy Council Office, is it possible that a mid-level or even a high-level public servant could have done all of this, involving hundreds of millions of dollars, without some kind of political approval or initiative, or direction from a minister or a deputy minister? Is it possible that it happened the way Mr. Guité would have us believe?

Mr. Alex Himelfarb: I really don't want to be disrespectful, but it's almost impossible for me to answer that question.

Mr. Peter MacKay: How is that impossible--

The Chair: Mr. Himelfarb has the floor.

Mr. Peter MacKay: --given your role?

Mr. Alex Himelfarb: It's because there are some ministers who really do not get into the details; they leave them for their public servants.

Mr. Peter MacKay: So the public service is on autopilot on something as important as hundreds of millions of dollars?

Mr. Alex Himelfarb: No, but that's why I say there's a loss of rigour. It's absolutely essential that we have systems in place that catch this kind of thing earlier, that report earlier. I'm not for a moment suggesting that what happened was acceptable.

Mr. Peter MacKay: Mr. Himelfarb, I have just a couple of very quick questions, and I have to ask you this. There's reference in some of the media reports to you having worked on political policy formation, if you will, in preparation for the red book. Is there any truth to that allegation?

Mr. Alex Himelfarb: None whatsoever.

Mr. Peter MacKay: Can you tell us, please, about the security clearance process for cabinet appointees? You're familiar with that process? If the RCMP or CSIS raises an objection, what's the next process?

The Chair: We're going to come back to that question. We'd sure like to have the answer. Perhaps you can write us a letter on that, Mr. Himelfarb.

Mr. Alex Himelfarb: Okay. Could you repeat the question?

Mr. Peter MacKay: Yes. I'm just interested in the clearance process involved for cabinet appointees when there's been an objection raised by CSIS or the RCMP--whether that has to be followed.

The Chair: He'll send us a letter on that.

Mr. Jordan, please, four minutes.

Hon. Joe Jordan (Leeds—Grenville, Lib.): Thank you, Mr. Chair.

Mr. Himelfarb, I want to pick up a little bit on the organizational structure. I think the Auditor General made the point that a lot of the oversight that would normally be part of the machinery of government wasn't present in this case, because of the sort of systemic way this office evolved over time.

On a very basic level, is it fair to say that the relationship between the political machine and the professional civil service is one where politicians get elected and serve at the will of the people, and we have all kinds of wild and wonderful ideas, but the continuity of a professional, independent civil service makes sure public policy is implemented with the rules and regulations? Is that a fair statement of the relationship?

Mr. Alex Himelfarb: It's certainly the way public servants would like to characterize it.

Hon. Joe Jordan: We had two gentlemen from the quick response team here last week. I think for the first time--although you've said you're not in a position to speculate--they speculated a little bit when asked how this happened. I have the testimony here if anybody needs it, but just to paraphrase, there were four factors.

First, program review--and we've touched on this--with perhaps the best of intentions, removed some of the oversight because it was viewed to perhaps overlap, or it was removed on a risk-reward basis.

Second, a culture of innovation at the expense of the rules was emerging in the nineties.

Third, the government was in the process of implementing large information technology systems. This is something industry went through as well. These large IT systems don't simply speed up the manual system. In some cases you have to revisit the processes at a base level to make sure they take advantage of these systems.

Fourth, within this department there was no segregation of duties. Mr. Guité not only awarded contracts, he also paid invoices. I think for the first time that kind of explained, in my mind anyway, how this was allowed to happen.

I want to speculate on perhaps another reason. Prior to 1993 and the Chrétien government taking office, APORS, the organization that morphed into CCSB, had two political staff in its office. I'm wondering, from a professional civil service point of view, about the implications of two political staff working in a small department. I guess my question is, would the civil service act any differently because of that?

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Mr. Alex Himelfarb: Perhaps I could go back to your first points as well. I actually think there's a good deal of sense and legitimacy in what the quick response team said.

I do believe that we cut a number of controls for two reasons. We thought it would be more flexible in response of service, and we thought it was better to put money in service than in control.

There's a case to be made that we overbalanced. We have to get the balance right, but in a way hopefully that doesn't destroy innovation and in a way that doesn't so control every transaction that the cost outweighs the service. Getting the balance right is tricky. You can make a strong case that we loosened up controls for innovation and service. We're looking at that now to see the cost of that, the non-financial cost.

I wasn't aware there were political staff in the unit. I have never seen that.

Hon. Joe Jordan: This is prior to 1993.

Mr. Alex Himelfarb: I've never seen that. Yes, I expect that would have a real effect.

The Chair: Thank you, Mr. Jordan.

Mr. Tonks, you're back on again. Another four minutes.

Mr. Alan Tonks: Thank you, Mr. Chairman.

Mr. Himelfarb, you supplied documents that were requested from the cabinet committee on government communications. Who chairs that?

Mr. Alex Himelfarb: In the past it has been the Minister of Public Works because Communication Canada was part of that portfolio before it was disbanded.

Mr. Alan Tonks: Sorry, what was disbanded?

Mr. Alex Himelfarb: Communication Canada.

Mr. Alan Tonks: Who chairs the cabinet operations committee?

Mr. Alex Himelfarb: That's a new committee. The government, this particular government, hasn't had the operations committee in the past, and that's chaired by the Deputy Prime Minister.

Mr. Alan Tonks: Okay.

I guess I'm looking for that fail-safe link. Are you the only officer of the government, from the civil service, who sits in on cabinet meetings as a secretary of...?

Mr. Alex Himelfarb: I do, but I'm not the only one.

Mr. Alan Tonks: Who else?

Mr. Alex Himelfarb: It varies: at cabinet, other PCO officials; at the operations committee, Finance and Treasury Board. It varies by committee.

Mr. Alan Tonks: Okay.

You've seen this chart. When an internal audit is called, this is the new architecture: planning phase, project screening, preliminary survey, examination phase, and reporting phase. I guess I'm trying to close the loop in terms of who would be the absolute point of contact in a fail-safe situation where the final report of a management action plan was placed on the Public Works website and the Treasury Board website.

In terms of ministerial oversight, would you agree that in your role you really would have the most access to anything that was coming up through the system where there was a problem? You would have the point of access to the Prime Minister in terms of saying, I now can turn the organization back down the line.

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Mr. Alex Himelfarb: Not exclusive, but absolutely....

Mr. Alan Tonks: Within the scope of this committee, would it not be, as part of the...? This combination of ethics and auditing...we even call it the “audit and ethics committee”. As part of the mission statement of the PCO, in particular your own role, could you see something that would approximate or would be compatible or would intercept with the new approach to departmental audits and so on? In terms of your oversight role, could you see yourself drafting a mission statement that would encompass it being a little bit more than your just being the top civil servant, although that's very important, but instead embody what this committee is attempting to do?

Mr. Alex Himelfarb: Without diminishing the responsibilities of the Comptroller General or the President of the Treasury Board—they have specific statutory responsibilities in this regard—because there's a significant role in the assessment of overall performance for the senior public service, I think we could go further than we have.

Mr. Alan Tonks: Okay.

Thank you, Mr. Chairman.

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

Mr. Benoit, four minutes, please.

Mr. Leon Benoit (Lakeland, CPC): Thank you very much, Mr. Chair.

It's good to have you here, Mr. Himelfarb. I'd like to start with a very general question. Are minutes taken of the daily meetings between the Clerk of the PCO, the Prime Minister, and senior staff from the PMO?

Mr. Alex Himelfarb: No.

Mr. Leon Benoit: Minutes are never taken.

Mr. Alex Himelfarb: Not in my experience. They're not taken.

Mr. Leon Benoit: That's been standard procedure for some time.

Mr. Alex Himelfarb: That's my understanding.

There will be notes that will have been submitted in advance that usually constitute the subject matter of the discussions. Notes will have gone up from the PCO, usually, and that will be the subject matter, and then I will take personal notes of follow-up actions.

Mr. Leon Benoit: What would there be for the record then, if this committee were to ask for those notes? What would they likely find in the notes? It isn't quite clear to me yet.

Mr. Alex Himelfarb: They would find directions to people to do work. It would be in the form of actions.

Mr. Leon Benoit: Why is it that those notes would be so general and so vague?

Mr. Alex Himelfarb: It's just that no specific detailed notes have ever been kept, to my knowledge, and it's generally, I think, because the.... It's not that they wouldn't be accessible under ATIP anyway. It's not to keep them. It's just a long tradition that this is usually a huge agenda, a half-hour meeting, and you just do the stuff.

Mr. Leon Benoit: Okay, thank you.

In terms of you, Mr. Himelfarb, at the operations cabinet committee meeting of January 19, 2004, we have a record here of a deck that was submitted in relation to the proposal of the Minister of Canadian Heritage for outlining a proposed community initiatives program. Are you familiar with that?

Mr. Alex Himelfarb: In general terms, yes.

Mr. Leon Benoit: The minister, Minister Scherrer, noted that, and this is a quote from her:

in the context of the cancellation of the Sponsorship Program, this initiative was meant to support meritorious projects under the existing terms and conditions of Canadian Heritage's programs and within the existing budget of the department;

What's the current status of that proposal?

Mr. Alex Himelfarb: I'll give you my best understanding and then correct the record if I'm wrong. My best understanding is that proposal was approved.

Mr. Leon Benoit: So it would be going ahead then.

Mr. Alex Himelfarb: That's my best understanding.

Mr. Leon Benoit: And is it fair to say that this proposal really was the Minister of Heritage seeking to find a new way to continue with the sponsorship program?

Mr. Alex Himelfarb: No. When the announcement was made that the sponsorship program was being cancelled, I think at the very same time it was noted that meritorious sports and cultural events at the community level that fit other program criteria would continue to get support if they met those program criteria. I believe it was indicated that the Minister of Canadian Heritage would consult with those groups.

The difference is, no longer is the objective visibility or sponsorship. This is now simply supporting cultural and sporting events that are seen to meet the pre-existing criteria of the department.

Mr. Leon Benoit: But the heritage minister said that “in the context of the cancellation of the sponsorship program, this initiative”, and she went on.

You're saying that this was approved, to the best of your knowledge.

Mr. Alex Himelfarb: I'll have to verify.

Mr. Leon Benoit: If this was approved, in the way it was presented by the minister, then how could this be anything but a continuation of the sponsorship program?

Mr. Alex Himelfarb: I think the message she conveyed was that some events—cultural events in a local community, a sporting event, a little league event in a local community—that had gotten, say, $20,000 from the government might have gotten some as a sporting event and, say, $10,000 for sponsorship activities. She would slightly increase her budget. It doesn't compensate for all of the sponsorship money, but she would slightly increase her budget where they qualified, to help those local and community events. But it would no longer be with the goal of sponsorship, no longer with the goal of federal visibility, but only if they met the cultural or other criteria that pre-existed in the department.

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The Chair: Thank you, Mr. Benoit.

Monsieur Thibault and Mr. Mills are splitting their time, so Mr. Thibault, for a couple of minutes, and then Mr. Mills.

Hon. Robert Thibault: Merci beaucoup, monsieur le président.

Thank you, Mr. Himelfarb, for coming.

You've clarified a point that I was interested in. It was a question of ministerial responsibility and the responsibility of your bureaucracy. I thank you very much for doing that.

I'd just like you to clarify two questions very quickly. When I reviewed the documentation supplied to the committee by the Privy Council, in all instances, when I looked if there had been approval by the Privy Council of the funds to be transferred, either for the sponsorship program or its successor or precursor, it was always contingent on the guidelines of Treasury Board being followed, and that it be done under the auspices of the Financial Administration Act.

Would I be correct in saying that?

Mr. Alex Himelfarb: In each instance where the original program was given increased funding, those requirements were set by Treasury Board.

Hon. Robert Thibault: That last point deals with the question of the deputy minister, Mr. Quail, saying he was out of the loop. I can see how that could be possible, if the minister were insisting that he deal directly with the director. There might not necessarily be any illegalities there, but it seems awkward or strange or different.

Would it be fair to say that it is the job of the deputy minister to create that loop that he is in, so that he can protect the Treasury Board guidelines and the Financial Administration Act?

Mr. Alex Himelfarb: Under the Financial Administration Act, the deputy minister is accountable for ensuring those systems are in place.

Hon. Robert Thibault: Thank you very much.

Mr. Dennis Mills: Thank you, Mr. Chair.

The Chair: Okay, Mr. Mills.

Mr. Dennis Mills: I have two very short points, Mr. Himelfarb.

Under section 10.2 of the contracting policy of the Government of Canada, under “Exceptions”, it reads:

10.2.1 Section 6 of Government Contracts Regulations contains four exceptions that permit the contracting authority to set aside the requirement to solicit bids. These are: (a) the need is one of pressing emergency in which delay would be injurious to the public interest;

It goes on, under 10.22, again in “Exceptions”:

...a pressing emergency is a situation where delay in taking action would be injurious to the public interest;

And then the last part says:

...or one that may result in significant loss or damage to Crown property.

These are the rules of the contracting process of the Government of Canada.

Now, in that pre-referendum, referendum, or post-referendum period, this was a section that Mr. Guité referred to, causing him to make decisions to create momentum to enhance the federal presence in the province of Quebec.

Would an exception like this be put forward to senior management, in order to have the qualification to use that exception?

Mr. Alex Himelfarb: Yes.

Mr. Dennis Mills: Thank you very much.

Mr. Chair, I realize I have about 30 seconds left. I think it's very important that our research staff, when we're doing our work, post this document, section 10.2 of the contracting policy of the Government of Canada, because sometimes when this experience is referred to, some people use the expression “bending the rules”, when in fact the rules here aren't being bent, but they're following the rules in the national interest.

The Chair: I was just going to ask for clarification, Mr. Himelfarb. Did you say this was considered an emergency under that section of the act, so that there would be no need for bidding?

Mr. Alex Himelfarb: No. The question was, if there is a desire by an official to use those provisions, would he notify his senior manager? And the answer was yes.

The Chair: Yes. And that wasn't done in this particular case. We understand that Mr. Guité decided on his own that—

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Mr. Dennis Mills: Do you know that?

The Chair: Well, that was his testimony. He said it fell within that category. If you'll read Mr. Guité's testimony, I'm fairly sure you will find he said he decided on his own.

Mr. Dennis Mills: Where?

The Chair: Well, I don't have it here, but he quoted the section on an emergency, so that he didn't have to go for public bids.

I have a question, Mr. Himelfarb. When you were the secretary of the Treasury Board for some time, dealing with.... Right?

Mr. Alex Himelfarb: No, but I was at the Treasury Board.

The Chair: You were at the Treasury Board. You weren't the secretary. What was your position at the Treasury Board?

Mr. Alex Himelfarb: Deputy secretary.

The Chair: Deputy secretary, in charge of the estimates, among many other things.

Mr. Alex Himelfarb: No.

The Chair: The Treasury Board looks after the estimates?

Mr. Alex Himelfarb: Yes.

The Chair: I'm trying to deal with the sponsorship fund and the unity fund, each being tens of millions of dollars, but neither are specifically identified in the estimates or in the public accounts of Canada. Now you say one flows from the other.

How unusual is it for a program of tens of millions of dollars per year not to be identified?

Mr. Alex Himelfarb: A program of that size has to be identified, but it would not be unusual for a fiscal reserve to not be identified. There are a number of fiscal reserves in any budget. Some are identified and some are not. But all expenditures have to go through an approval process. They are reported in the public accounts, but the source of funds is not identified.

The Chair: But the unity fund is not mentioned in public accounts.

Mr. Alex Himelfarb: No. That's because it's a fiscal reserve.

The Chair: But you just said a fiscal reserve is reported in public accounts.

Mr. Alex Himelfarb: No, I mean the expenditures from a fiscal reserve--

The Chair: They are reported under various different headings.

Mr. Alex Himelfarb: Exactly.

The Chair: When we as Parliament vote for the government to supply the funds you may spend, how much under fiscal reserves are you allowed to spend as you see fit, without having specific direction from Parliament?

Mr. Alex Himelfarb: The generic reserves, without their breakup, are reported. For example, collective bargaining is always a reserve in the generic reserves. The envelope is never specified.

The Chair: I can appreciate there are salaries and employee benefits--that's fine. But we're talking here about a specific political agenda of the Government of Canada that's taking money from a reserve. It didn't show up in supplementary estimates when the government needed additional funds for a particular program. So my question is, how prevalent are these reserves that allow the government to have political agendas that are unbeknownst to Parliament?

Mr. Alex Himelfarb: Well, when they're seen as notional reserves--

The Chair: But they can't be notional. We have voted the funds.

Mr. Alex Himelfarb: The reserves generically will show...and the compartments may not. But Parliament does approve the reserve.

The Chair: I appreciate that we approve the reserve, but it seems to me this wasn't money held in abeyance just in case; this was a deliberate, ongoing, annual plan of the Government of Canada to spend money on the unity fund and the sponsorship program. This wasn't a reserve per se; this was a program run by the Government of Canada.

Mr. Alex Himelfarb: It was a reserve, assuming that there would be initiatives over the year that had, as their priorities, unity or national celebrations.

The Chair: Okay.

Mr. Kenney, you gave me notice.

Mr. Jason Kenney: On a point of order, Mr. Chairman, I have a notice.

The Chair: You don't give a notice of motion on a point of order.

Mr. Jason Kenney: Well, some people do, but I won't.

My notice of motion is that the committee request copies of any notes taken by the Clerk of the Privy Council during meetings with the Prime Minister pertaining to items raised in chapters 3, 4, and 5 of the November 2003 report of the Auditor General of Canada, and that such notes be reviewed by the committee's law clerk to advise the committee on their relevance to its inquiry.

The Chair: Okay, thank you, Mr. Kenney. This is Monday. That'll be discussed on Wednesday.

Mr. Dennis Mills: A point of clarification, Mr. Chair.

The Chair: Mr. Mills.

Mr. Dennis Mills: We've finished all the questions. I think it's very important that we get a message to the clerk here, who is in charge of the whole machinery of government, that even though we're focusing on chapters 3, 4, and 5, this in no way, shape, or form should cause a lack of energy and ingenuity to be executed in all the other programs of all the other departments of government.

The Chair: I think that goes without saying, Mr. Mills.

Mr. Dennis Mills: But right now there are a lot of people who are taking a long time to process things because of the freeze that this committee has created.

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The Chair: I don't think so, Mr. Mills.

Mr. Dennis Mills: Well, you check into it.

The Chair: Your point is taken.

Okay. Is that everything?

I have some announcements for tomorrow. The steering committee will meet at 10 o'clock. The full committee will meet here from 11 o'clock to 1 o'clock. At this time, no witnesses for tomorrow afternoon have been lined up.

Hon. Shawn Murphy: Who are our witnesses for tomorrow morning?

The Chair: Tomorrow morning, KPMG will report to the committee in camera. The meeting will be at 11 o'clock in camera and at 10 o'clock for the steering committee.

The meeting is adjourned.