PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 4, 1997

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[English]

The Chairman (Mr. John Williams (St. Albert, Ref.)): Ladies and gentlemen, I'd like to call this meeting to order.

The order of reference for today is, first, a report of the steering committee; and second, pursuant to Standing Order 108(3)(e), consideration of chapter 17 of the April and October 1997 Report of the Auditor General of Canada dealing with “Human Resources Development Canada—A Critical Transition Towards Results-Based Management”.

The report of the subcommittee on agenda and procedure—and I think everybody has a copy—deals with the agenda we intend to follow for the next number of weeks. As I said, we basically chose today, November 4, for chapter 17. We are suggesting there be no meeting tomorrow, but it be deferred until Monday, November 17, after the break, when we will have an in-camera briefing for chapter 19. On the following day, November 18, at 3:30 p.m., we would deal with chapter 19, which was “Transport Canada: Commercialization of Air Navigation System”.

On Wednesday, November 19, at 5:30 p.m., there will be an in-camera briefing for November 26, when we will deal with chapter 13, “Health Canada—First Nations Health”. On Tuesday, November 25, at 3:30 p.m., we'll have a draft report, hopefully, on the millennium problem that we dealt with last week. On November 26, as I said, at 3:30 p.m., it's chapter 13.

On Tuesday, December 2, at 11 a.m., we will have an in-camera briefing. We have been advised that the Auditor General intends to table another report. Then the following day, Wednesday, December 3, at 3:30 p.m., we will hear from the Auditor General on the report he will have tabled the previous day. That leaves December 9 and Wednesday, December 10 open at this point in time.

Mrs. Barnes.

Mrs. Sue Barnes (London West, Lib.): In deference to our witnesses here today, I will move that we adopt this report, as it's stated.

The Chairman: Thank you, Mrs. Barnes.

Mr. Gurmant Grewal (Surrey Central, Ref.): I so move.

(Motion agreed to)

Mr. Philip Mayfield (Cariboo—Chilcotin, Ref.): Mr. Chairman, before we proceed, would the Auditor General be in a position to tell us which chapter we'll be looking at on December 2 and 3?

The Chairman: No, because that is up to the steering committee to decide, not the Auditor General.

Mr. Philip Mayfield: All right, then.

The Chairman: The witnesses for today are Mr. Desautels, the Auditor General of Canada; Mr. David Rattray, the Assistant Auditor General; and Louis Lalonde, the principal from the audit operations. From Human Resources Canada we have Mr. Ian Green, associate deputy minister; and Mr. Marcel Nouvet, assistant deputy minister of finance and administration.

We will have an opening statement of five minutes from the Auditor General, followed by one from Mr. Green. Mr. Desautels.

Mr. Denis Desautels (Auditor General of Canada): Thank you very much, Mr. Chairman.

I thank you for providing us with this opportunity to present our audit of results-based management at Human Resources Development Canada. I'm accompanied today, as you've indicated, by David Rattray, Assistant Auditor General, and Louis Lalonde, principal responsible for this work.

HRDC is a key player in the federal government, with $56 billion in expenditures in 1996-97 and some seven million clients in Canada. It's therefore vital that a department of this size manage according to results if the initiative of results-based management is to be successful throughout government.

The department's senior management, which is actively involved in this initiative, first clearly identified the transition that it wanted to make and it consulted staff and instituted a system for measuring results. Three key measures of performance were selected for each sector of activity. These will be used for reporting on results to senior management and to Parliament. Secondary performance measures are also used to facilitate the monitoring by management of specific activities.

Our audit showed, however, that certain steps remain to be taken to complete this transition. First, a balance must be struck among the indicators. The key indicators do not take cost and efficiency into account; only the secondary indicators do. However, the latter, as I indicated earlier, are not reported to Parliament.

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Costs and results are quality-related. For example, it's important to know the impact of service quality improvements on costs. We've therefore recommended that the selection of key indicators take costs into account in order to provide parliamentarians with an overall picture of the results achieved. The department should continue its efforts to present results in relation to the stated objectives by key performance indicators.

[Translation]

Moreover, we noted that performance information on the Employment Insurance Account is diffused. It is difficult to identify the results achieved in relation to the stated objectives, budget and activity plan. We believe that given the special nature and importance of the Employment Insurance Account, a distinct report is warranted.

The Commission has not yet decided on a reasonable reserve and the time required to establish it, in order to ensure that contributions are adequate and that rates are relatively stable during an economic cycle.

We have therefore recommended that the Department table in Parliament the actuarial analyses that are used for establishing Employment Insurance premium rates, including the size of an adequate reserve and the time required to achieve it. Such a practice would make the establishment of premium rates for Employment Insurance more transparent. We note that the actuarial report on the Canada Pension Plan is tabled in Parliament by the Minister of Finance.

We also examined the management of accounts receivable, one of the government's largest portfolios. Accounts receivable, mainly from student loans, Employment Insurance and Income Security programs, represent $ 2.6 billion.

The quality of the portfolio has deteriorated over the last five years. This is due, among other things, to the aging of the accounts. We recommend that the Department conduct an in-depth analysis of the factors affecting the cost effectiveness of collection activities and take the necessary corrective action.

[English]

Mr. Chairman, the department will soon table its first performance report. The committee can play an important role by encouraging the department to further improve its performance information, including costs. It could also ask the department to produce a distinct report providing complete and relevant information on the major employment insurance activities.

In conclusion, Mr. Chairman, we would like to thank you for providing us with an opportunity to present our findings. We will be happy to answer questions posed to us by the members of the committee.

The Chairman: Thank you, Mr. Desautels.

I understand, Mr. Desautels, that you need to leave the committee for a little while—or for today. Who is going to be speaking on your behalf?

Mr. Denis Desautels: Mr. Chairman, I'd like to be excused in a few minutes and Mr. David Rattray will continue on my behalf.

The Chairman: Thank you, Mr. Desautels. There is no problem about you being excused from the committee.

Mr. Green.

Mr. Ian Green (Associate Deputy Minister, Human Resources Development): Thank you, Mr. Chairman and members of the committee.

I'm pleased to have the opportunity to present our department's views on chapter 17 of the Auditor General's report on results-based management. We very much appreciate the work, by the way, of the Auditor General in developing his recommendations. We share the Auditor General's desire to improve the way government operates and we support many of the recommendations in the report.

[Translation]

As you have just mentioned, Mr. Chairman, I am joined today by Mr. Marcel Nouvet, Assistant Deputy Minister, Financial and Administrative Services Branch. This Branch is leading the introduction of results-based management to Human Resources Development Canada.

In 1996, they produced a Results-Based Accountability Framework. The Framework outlines what we must do to manage resources responsibly and achieve results. It addresses issues pertaining to accountability, values and quality services.

The Framework represents a systematic approach to managing by results. It uses eleven key performance measures to target and monitor strategic results. In addition, there are thirty-six secondary measures which provide complementary information on the organization's performance. Together, these indicators allow Human Resources Development Canada to measure the overall performance of its programs against expected results.

[English]

I appreciate that it isn't enough to simply appear before the committee, Mr. Chairman, and basically say we have a framework in place and that we recognize the importance of results-based management. In fact, we're incorporating results-based management into our corporate culture. It's an ongoing process. But to be blunt, it's also an ongoing challenge, because we're moving from one way of measuring results to another way of measuring them, and that takes time. It doesn't simply happen overnight in how we operate as a department.

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Also, over the last few years we've faced a number of pressures, which include fiscal restraint, service demands from the public, and changes to the Canadian federation which have a significant impact on our programs and how we deliver them. We clearly needed to move to an environment characterized by decentralized service delivery and increased management flexibility to optimize service to the public. An example of this is the establishment of our service delivery network and the powers that were delegated to our HRCs, or human resource centre managers.

We also recognize that increased authority and flexibility need to be balanced by management accountabilities. Our view on moving to management by results is that managers and staff need to know what they are to be held accountable for, what results are expected of them, and how the results will be measured and used.

In short, moving to a results-based management approach changes the way we used to operate. As I said, it's an ongoing emphasis and priority for our management. We think we're on our way, and it's a priority from the deputy minister through myself and all throughout the department.

To demonstrate our progress I would like to refer to chapter 11 of the Auditor General's report dealing with management by results and investigation and control, an area we call “I and C” in the department. This is an area where we've made significant changes since 1992 and where total savings were introduced as a key performance indicator. Total savings represent the extent to which investigation and control prevents, detects, and deters fraud and abuse in the EI account.

Before 1992, I and C performance measures were activity or productivity based. Performance was measured on the basis of efficiency—the total number of investigations completed, the number completed per investigator—rather than the extent to which activities contributed to the overall protection of the account against fraud and abuse.

Results-based management contributes to the overall objective of protecting the integrity of public funds, and we think the results we've achieved in terms of increased detection and prevention of fraud and abuse of the EI account are noteworthy. In fact, they have increased savings from about $390 million to $560 million in five years.

Another example of the way we've approached management by results, which is a complex area for us, is our labour market development agreements with the provinces and territories. The agreements have a built-in accountability framework which outlines clear expectations and results. These labour market agreements will be measured on the number of people who have returned to work and the savings achieved in the EI account.

We also have a formal review process, so results are measured and discussed throughout the organization. This way we feel we can make ongoing efforts to improve service to Canadians and meet the targets we establish.

[Translation]

We have set targets such as the effectiveness of new Employment Insurance legislation in moving unemployed Canadians to long-term employment, savings to the Employment Insurance Account from clients returning to work earlier than expected, the percentage of unjust dismissal complaints settled by inspectors, the percentage of Canada Labour Code-Part III complaints resolved within 120 days, the percentage of clients satisfied with Canada Pension Plan and Old Age Security services, the percentage of CPP client telephone inquiries that are answered, and the length of time required to process Employment Insurance, Canada Pension Plan and Old Age Security applications.

[English]

In concluding, may I say we agree with the Auditor General that more can be done, but we think we're on the right track. We intend to continue working closely with the Auditor General and his office. In the months ahead we will be following up on the recommendations in chapter 17 and others which touch on our operations. In the coming weeks, as the Auditor General noted, we will be publishing a departmental performance report which includes much of the additional information the Auditor General has suggested we provide. We're also moving ahead with our posting of national and local service standards to show Canadians our commitment to quality services.

We would be pleased to answer your questions.

The Chairman: Thank you, Mr. Green.

Mr. Mayfield, eight minutes.

Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

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In the last two or three years, Mr. Green, a significant number of centres have been closed. I'm wondering how you establish your targets. Considering that there has been a real discouragement of people who have used these services from attending the offices—in some parts of the country the offices are not available, and people have to drive long distances—how are you able to establish meaningful targets of providing service when the service provided has been reduced to such an extent?

Mr. Ian Green: Perhaps my colleague can help me out here.

In looking at the service delivery network, which in fact meant that we had to move, in terms of the savings required of us, from something in the order of about 450 points of service down to slightly over 300, we obviously knew in terms of our HRCCs and our satellite offices that we had some very difficult decisions to make.

In looking at this, we have been very focused on the question of trying to ensure that in terms of determining new locations, the quality of service was maintained. In virtually all cases they were done by trying to preserve, wherever possible, access to our services within a certain period of time.

We also were very conscious of the fact that technology could be a major assistance to us in terms of making the changes. For example, in areas where we were withdrawing from, electronic measures in terms of contacting the office, kiosks, etc., were used.

In fact, in some cases we believe we probably got better service at the end of the day in the sense that we were able to introduce technology into some communities as we were forced to downsize on the number of offices we had.

Marcel, I don't know if you want to add to that.

Mr. Marcel Nouvet (Assistant Deputy Minister, Finance and Administrative Services, Department of Human Resources Development): I would add that as a result of some of the consolidation we've done we have consolidated claims processing in certain areas. The speed of service has been maintained. The speed of service has improved, being measured by the percentage of claims we pay on time at the first legally possible date.

The phone inquiry service in the income security program has improved as a result of the technological changes we have introduced over the last couple of years.

Mr. Philip Mayfield: I have two or three areas I want to cover, so I need to move on this fairly quickly.

The difficulty I have with your answer is that it doesn't take into account the problems people have even getting to the centres that are available to them. When they get to the centre, the staff has been reduced to such an extent that the services they have been expecting are no longer there. It seems to me many people have been shut right out.

I wonder how you can measure the quality of your service when in fact a significant number of people who would use these under normal circumstances don't have the services available to them. I wonder if you've taken that into account.

Mr. Marcel Nouvet: The measurements we have...for example, for the payment of insurance claims. The result we're seeking is to pay people as early as it is legally possible to do so. That means day 28 after they've filed their application. We can't pay them any earlier.

Our services in that line have increased. In fact, the percentage of people who get paid within 28 days has increased. So the manager of any office is very much focused on making sure that the claims that come in are processed as quickly as possible.

We have extended the job banks we have across the country. We have put a significant number of job banks across the country to help people identify the jobs available and take up the opportunities.

Our read, quite frankly, is that on the indicators we have here, we have maintained the level of quality of service.

Mr. Philip Mayfield: We'll agree to disagree on that. I'd like to move on.

The Auditor General's recommendation 17.66 deals with the setting of the premium rate for the EI account. This account has grown substantially in the last two or three years. I believe it's up to the $12 billion to $14 billion range right now. That's a very short period of time, it seems to me, and beyond what the Auditor General deems as necessary for the size of that account, the size of that account being larger than it needs to be.

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In your response you say that the information that he suggests should be tabled is already available in the public domain. I can't find that information. Can you provide for me the analysis that the Auditor General calls to be tabled?

Mr. Ian Green: I don't have it all here with me, but I am aware that, in terms of the actuarial analyses that are used to background the premium rate establishment in terms of the unemployment insurance account, there are a number of different documents—the budget, part III of the estimates, material that is released around the time that premium rates are announced each year—that provide a range of background material that I would be pleased to put together.

Mr. Philip Mayfield: What I'm looking for is not a bunch of data. I'm looking for the analysis that is available to you now. The CPP makes that analysis available, but the EI doesn't seem to do that. Can you provide the analysis to this committee and to the House of Commons?

Mr. Ian Green: We are looking at the Auditor General's recommendation, in terms of providing more information on the EI account. I guess, as part of looking at that, sir, we would look at how much detail in terms of the actuarial analysis we could build into that account, in terms of providing it with the committee.

Mr. Philip Mayfield: It seems to me that if Parliament is going to examine the rates, they need to have an idea of the analysis of what this is based upon. I really believe that there is a degree of transparency lacking for parliamentarians to be able to do that. I would very much appreciate your presenting that to the Auditor General, to this committee, to have it tabled in the House of Commons. Could you provide it to this committee, please?

Mr. Ian Green: In looking at the Auditor General's recommendation in terms of providing a report on the EI account, we'll certainly take it into consideration and we will discuss it with our minister. But I want to underline that a significant amount of the information that lies behind the employment insurance account is already available. I'd be pleased to put it together and provide it to you in the interim.

The Chairman: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): If you don't mind, I would like to share my time with my colleague. My question is addressed to the Deputy Minister, Mr. Green.

Mr. Green, you referred to the percentage of unjust dismissal complaints settled by inspectors. Do you have an actual measure associated with that? If you want to assess the effectiveness of a service, you start with one very concrete measure and move from there to another. In your paper, you talk about improving percentages, but we are not told what your starting point is nor where you want to end up. Is that part of your department's efficiency-related performance measures?

Mr. Marcel Nouvet: As Mr. Green explained, we have moved from our traditional way of managing the department to a new results- based approach. We launched that new approach in 1996. Because ours is a large organization, you have to understand and accept the fact that we need a certain amount of time to achieve the goal we have set for the department.

We are currently refining the key performance measures we have defined and we will be attaching targets to those indicators. It's fine to have an indicator, but you also need a target. So, we are in the process of attaching specific targets to those indicators.

Mr. Odina Desrochers: How much time will that require?

Mr. Marcel Nouvet: They will certainly be ready in time for the next fiscal year.

Mr. Odina Desrochers: You also make reference to the percentage of Canada Labour Code-Part III complaints resolved within 120 days. Has it happened that these complaints took more than 120 days to resolve?

Mr. Marcel Nouvet: I can't give you a precise answer to that question, but I imagine that if we set a target of 120 days, it's probably because we had a problem to overcome in that area.

The Chairman: Mr. Laurin.

Mr. René Laurin (Joliette, BQ): I would like to find out from Mr. Green what is currently being done to make existing programs better known.

Many taxpayers come to our offices and find out once it's too late that a program currently exists from which they might have benefited. It would seem that these programs are not well publicized or that local HRCCs are not doing enough to tell people about programs they could benefit from.

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I am thinking in particular of programs for people on EI that help them become self-employed through a variety of other initiatives. They only find out about them once they've already started their little business. Two weeks later, they are told that since they've already started their business, they're no longer eligible.

What steps have you taken along those lines? Is this something you are hoping to improve? Before you can actually assess a program, you have to be able to deliver it.

Mr. Ian Green: I imagine my colleague will want to add something, Mr. Laurin, but I want to point out that we are making a considerable effort to ensure that people are kept informed about our major programs in our local HRCCs and throughout the Department. If you are aware of any specific cases that might help us to better disseminate information about our programs, I would certainly be interested in hearing about them. We have all kinds of publications that are intended to provide detailed information about our programs.

Mr. René Laurin: I am in fact aware of specific cases, and I can give you an example. You talked about your efforts at decentralization. I am more inclined to call it centralization, though, because we now have to go either to a neighbouring town or deal with machines that answer clients' inquiries, since we have lost our centre. Someone might go to an employment centre wanting to find out what programs he could benefit from. Let's say he recently lost his job, that he is forty-five or fifty years old and wants to start his own business. At the present time, no one is available to answer those kinds of questions. People end up going to MPs' offices, to Communications Quebec or to Industrial Commissioners' offices to get this information. They have to go to three or four different places but never actually manage to get the information they're seeking. Is that what you mean by decentralization? I think it would be more to the point to reduce duplication and introduce one-stop shopping, so that people could get the information they're seeking.

What is your assessment of that process? Have you set enough criteria to be in a position to assess what is being accomplished through what you call decentralization? What kind of results have you received and just how effective is this process?

Mr. Marcel Nouvet: I believe we've made a great deal of progress since 1996, when we adopted the results-based management strategy. We have made considerable progress in two areas.

First of all, with the coming into force of the Employment Insurance Act in the summer of 1996, the number of programs from which people could benefit was reduced. The large number of programs we were delivering made our system extremely complex, both for our clients and people serving our clients.

Secondly, as far as employment-related activities are concerned, three years ago, we had about a hundred performance indicators. Front line staff no longer really knew which indicators should take precedence. So, we replaced those hundred with two key performance indicators—the ones mentioned by Mr. Green in his opening remarks. Our main objective in serving our clients is to return them to the labour market as quickly as possible, and in so doing, to generate savings for the Employment Insurance Program.

Just to give you an idea of what we've done to reduce complexity, when we simplified our programs, we replaced eight 860-page manuals that explained our programs to employees with a 50-page guide written in very simple language.

Mr. René Laurin: Mr. Nouvet?

Mr. Marcel Nouvet: We have a reference card for clients that explains the four major services we are able to provide.

Mr. René Laurin: But that is not what I'm asking, Mr. Nouvet. You have implemented this new system. Have you actually begun to assess it? What kind of results have you achieved? Do those results jibe with your expectations? Are they satisfactory? Have you begun the assessment process? If not, when do you intend to do so? And when will you be in a position to report on it to the public?

[English]

Mr. Ian Green: The EI legislation requires that there be an annual monitoring and assessment report. That report is due to be released in December and tabled by this minister within the first 30 days of the House sitting in 1998. That report is designed in part to indicate the impacts of the EI changes both in communities and on our clients. That report will be available early in the new year, Mr. Laurin.

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The Chairman: Thank you, Mr. Laurin. Mr. Harb, eight minutes.

Mr. Mac Harb (Ottawa Centre, Lib.): Thank you very much, Mr. Chair.

First, I want to thank the Auditor General for his comments and for the points he has raised. I also heard the presentation of the deputy minister, and I can understand the complexity of the situation. In particular, I was interested in his comment about the service demands from the public and changes to the Canadian federation.

Over the past five years a number of policy changes have taken place at the national level, and the department is now in the process of negotiating with the provincial governments on the delivery of certain programs. I want to ask the deputy minister how that is progressing and what sort of pressure that is putting on the department itself to be in a sort of limbo.

Mr. Ian Green: We have eight agreements now, with eight provinces. About half of them are what one might call devolutionary agreements where the provinces have taken over the design and delivery of active measures or labour market programs within the context of the agreement and accountability framework we agreed to with those provinces. In four other provinces we have co-management deals.

Up to 2,600 staff could be affected if all provinces were to respond to the federal government's offer of May 1996 by saying they want to assume full responsibility for delivery. In the agreements we have so far, about 1,300 staff members are impacted and we're in the process of negotiating implementation agreements with provinces that will ultimately lead to their transfer to provincial governments.

In terms of the issue we're discussing today, managing by results, one of the key bottom lines in the framework we used to negotiate the new arrangements with the provinces was that we wanted to manage by results. We had two key indicators here in terms of savings to the EI account and putting individuals in jobs. It was interesting to me, because I was very involved in the negotiations, that all provinces were keenly interested in having those kinds of results reflected in the agreements. They were keenly interested in trying to put programs in place that could be measured on that basis. So it was very reassuring.

I would make the observation for the committee and for the Office of the Auditor General that managing by results, to be sustainable and effective in the long run, has to permeate the culture of a wide range of government organizations, and it seems to be having an impact on provinces as well. That made it a very important part of the negotiations we had with them.

I hope that answers the question.

Mr. Mac Harb: Yes, it does.

When we talk about results and reducing the EI, when somebody's eligibility lapses and he falls into social welfare, would you consider that a saving in EI funds, or is there some sort of mechanism to deal with those who fall off?

On the other side, there are community organizations such as agencies that provide services to the public and you give them lump sums on an annual basis. Many of these organizations are run by volunteers, who may provide hundreds of services in the community and help hundreds of people to find jobs and opportunities. Do you count those as people who have been off EI?

Mr. Ian Green: In the first instance, the savings to the account are based on using an active measure to get someone off EI benefits as quickly as possible and earlier than he or she would normally have gotten off the benefits. That's the primary interest we have, obviously, in savings, because this is money that is associated with the EI account.

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In the agreements we sign with provinces we underline that a priority had to go basically to EI clients. In fact, in most of the agreements the level is something in the order of 65% of clients served by active measures should be EI clients defined as eligible under the act.

We have what we call “reach-back” clients, who in many cases are on social assistance and could be served. While it's probably technically true that if someone goes off the EI account and goes onto social assistance...does that count as a savings? Well, it does in a narrow interpretation, but more broadly we're encouraging provinces to see people coming off SA and going on active measures as part of the savings as well. That's part of trying to develop a comprehensive approach.

Mr. Mac Harb: My final question has to do with the amount of money you cannot collect from student loan defaults, on an annual basis. Do you have any figures on how much money we lose every year? In parallel with this, how much money do we spend on administration of these loans and the administration costs? Is it part of your overall loss to the department, or are they separate amounts?

Mr. Ian Green: I'm sorry, I missed the last part of the question.

Mr. Mac Harb: I know we invest quite a bit of money in the administration of student loans. Also, we give out those student loans but a large number of students default on their loans. Do you have the figure for how much we spend on the administration of student loans and the amount of money we cannot collect, on an annual basis, from defaults?

Mr. Ian Green: I can remember some of them. I think we spend over $600 million on the administration of the account. I can get the exact numbers for you.

About 25% of students experience some problem in repaying their loans. At the end of the day, fewer than 7% of students do not in fact fully repay, which is a pretty good number.

About the actual amount we have in default, I wouldn't want to guess that, so I will look it up for you and get back to you.

Mr. Mac Harb: Just curious.

The Chairman: Mr. Grewal.

Mr. Gurmant Grewal: Thank you, Mr. Chairman.

I thank the Auditor General for the excellent report and I look forward to the minister addressing some of our concerns.

I have two questions. First, the EI benefit fraudulent claims amount to over $144 million, according to the Public Accounts of Canada report for 1996-97. It's over $144 million. How do the closures of HR centres mentioned by my colleague earlier affect the collection of these fraudulent EI claims? Why aren't these funds being collected, as is mentioned here?

Mr. Ian Green: In an overall sense, I don't believe the closures in fact have affected our investigation and control operations negatively. In fact, I think our investigation and control operations are more efficient today than they were a few years ago. We are collecting larger amounts of money than was previously the case.

I didn't understand the last part of your question, on recovery.

Mr. Gurmant Grewal: The amount not collected is increasing and it's $144 million. Why are the efforts not there to collect or to recover those fraudulent claims?

Mr. Marcel Nouvet: One of the key reasons the amount we are not collecting is increasing is that first, we have stepped up investigation and control activities over the past five years. When you do that, what you usually do is go back in time to detect abuses that have occurred in the past. So the amount has gone up.

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There were legislative changes in 1992, I believe, which increased the penalties we could impose on people who had intentionally created an overpayment, and those increased overpayments have added to the amount that is to be collected.

Moreover, in 1991 there was a change to the legislation that increased the window during which we could collect non-intentional overpayments. The change increased that window from three years to six years, so automatically it brought more money into the system to be collected—

Mr. Gurmant Grewal: Mr. Minister, I don't agree with what you are suggesting. I think there is a direct relationship between the closure of those centres and the collection of EI claims. But let me go on to my second question.

According to the Auditor General's report, in points 5 and 6, very little information on the results is communicated to Parliament. I wonder how the Minister of Finance will be accountable when we, the parliamentarians, have very little information at our disposal. When will this information be tabled in the Parliament, particularly in the light of the speedy build-up of EI surpluses to the tune of $12 billion or $14 billion or something like that?

Mr. Ian Green: As I've said previously, information on the EI account is tabled at the time of the budget, it's tabled in part III of the estimates, and information is tabled as part of the package when the premium rates are announced.

We know the Auditor General has recommended looking into doing a report on the operation of the account. We have that under advisement. We're discussing it, and obviously at an early opportunity we will brief our minister, who will respond to the recommendation of the Auditor General.

There is information. I wouldn't want to leave you with the impression that there is no information on the EI account. It's available through various documents that are available to Parliament.

Mr. Gurmant Grewal: Particularly the key indicators as to the cost...those factors and that type of information should have been tabled so that the finance minister could be held accountable and to increase the efficiency and transparency of this system. That probably could have been tabled earlier. I guess we should have that information in order to make proper assessment of the situation.

The Chairman: I take it that you feel you've already answered the question, Mr. Green.

Mr. Ian Green: I've taken note of the member's comments.

The Chairman: Thank you, Mr. Grewal.

Mr. Bachand, I wish to apologize for missing you on the first round. You have eight minutes.

[Translation]

Mr. André Bachand (Richmond—Arthabaska, PC): I would like to explore two definitions found in exhibit 17.13 and in paragraphs 17.94 and 17.95. The terms "indirect savings" and "direct savings" are used in a couple of places but are not clearly defined. I would like to be given a more precise definition of direct and indirect savings. There is some information in the Auditor General's Report, but I don't feel it's very complete. These are referred to in exhibits 17.13, as well as in paragraphs 17.94, 17.95 and 17.96.

Mr. Louis Lalonde (Principal, Audit Operations, Office of the Auditor General of Canada): If I could try to give you a simple answer to that question, direct savings occur when an over-payment is detected and EI payments immediately cease. At that point, the Department can calculate a direct saving, if I'm not mistaken.

In some cases—and that's the novelty of this approach—people tended to concern themselves with only direct savings because they represented a significant payback. However, certain steps have to be taken to ensure that the benefits stop. In that case, they become indirect savings.

So, the Department decided to keep track of both and calculate total savings. Thus people have an incentive to make decisions that factor all of that in—not just decisions that look good, but ones that may have an impact on funds.

Mr. André Bachand: I would like to pursue the matter of indirect savings. Prevention and deterrence are discussed at length. The idea is to avoid having people receive employment insurance benefits. There are different ways of accomplishing this: either people work, or they go on welfare. I would like to hear your views on deterrence and the direct savings that may result from it.

• 1615

Mr. Marcel Nouvet: One of our major challenges is measuring the indirect savings that flow from deterrence. In order to do that, we must be able to ascertain the number of people who would have abused the Employment Insurance system had the various deterrence measures and severe penalties that we impose in cases of abuse not been in place.

Just to add to what my colleague from the Office of the Auditor General just mentioned, direct savings are amounts that were paid out and that we recovered by establishing overpayments. Indirect savings are amounts that we would have paid out had we not investigated. Once we are able to put an end to the abuse, we can calculate the amount of benefits we would have continued to pay out had we not investigated the abuse.

As regards deterrence, we have yet to determine the value of our deterrence measures. We do publicize the number of investigations we carry out, the number of overpayments and particularly the number of intentional overpayments, but we have not yet been able to put a figure on those deterrence measures.

Mr. André Bachand: That will certainly be useful, because when it comes to recovering student loans, you increased your staff in this area from 250 in 1992 to 310 in 1997. There should be some monitoring to determine whether having all those investigators is paying off or not.

I would like to come back to paragraph 17.96 regarding the impact of reducing the size of the programs on total savings and the new Employment Insurance Act. What kind of monetary impact did they have?

Mr. Marcel Nouvet: Based on exhibit 17.13, I would say that our total savings are now less than $ 600 million, whereas before, they exceeded $ 600 million. That is a consequence of the fact that fewer people now qualify for Employment Insurance and when they do qualify, the benefits are paid out over a shorter period of time than they were previously.

Mr. André Bachand: You're right, and our Committee is not the place to be talking about Employment Insurance programs. There is another Committee that does that. I believe some of the savings are related to the fact that there are a lot fewer people receiving EI benefits for much shorter periods, fortunately or unfortunately. It is not up to our Committee to address that issue, but it is a fact. It's a matter of political choices.

Finally, I would like you to talk about accountability. You are all accountable. But in what way are you accountable? What would happen to you tomorrow morning if you had to account for a specific action you took? What does accountability mean to you? People in politics know what it means, but I'm interested in hearing what it represents for you?

[English]

Mr. Ian Green: There are two types. As a deputy minister I'm an order-in-council appointment and serve at the pleasure of the Prime Minister, so I have a pretty clear line of accountability at the end of the day.

In terms of my colleagues who are governed by the Public Service Staff Relations Act, their line of accountability is clearly to the deputy minister and to the minister. Indeed, managing by results means that a number of my colleagues who run programs are now basically accountable on the basis that they have to achieve the results that are indicated here or they have to explain to the deputy minister, to the minister, and ultimately to parliamentary committees such as this one why they didn't achieve those results.

At the end of the day their accountability is basically to the deputy minister, who will make decisions in terms of their performance. Managing by results is another important addition to the kinds of accountability that are brought to bear in terms of assessing whether public servants do their jobs or not.

[Translation]

Mr. André Bachand: Accountability in the Public Service of Canada is not the same as in Parliament.

• 1620

In conclusion, I just want to say I am very pleased to see that the new department has introduced certain control measures. Our role is obviously to ask questions, but I want you to know that I am quite satisfied, not with the programs, but with the control measures you have introduced. As far as the programs go, well, that's another matter.

Mr. Ian Green: Yes, I understand.

[English]

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): My question relates first to the report with respect to the CPP. The Auditor General made the observation that this ought to be available almost at the same time to the partners, the provincial and federal governments. Do you see any virtue in that observation and recommendation?

Mr. Ian Green: It's one of the issues that we have under consideration. I don't have an immediate answer today, but can I just suggest to the honourable member that, given that the Canada Pension Plan requires a fair amount of federal-provincial cooperation in terms of its overall operation, I don't personally have a negative reaction to providing the information as quickly as possible to both parties.

Mr. Rey Pagtakhan: Thank you. On that point, certainly each partner can in fact request the same analyses, and the analyses are assured of being provided. So I think the observation of the Auditor General is very relevant.

With respect to the EI account, have you now decided what will constitute an adequate reserve and in how much time it ought to be achieved? Has that been established yet?

Mr. Ian Green: No, we have not decided what constitutes an adequate reserve. The chief actuary of the account has indicated a figure in the order of $10 billion to $15 billion, which has been referred to by ministers previously. There has been, as you know, no decision on the premium rate, and obviously until that decision is made the question of what constitutes an adequate surplus is not answerable.

Mr. Rey Pagtakhan: With respect to the annual report on the employment insurance account, you indicated in your earlier response that all the information is available in two or three or four documents of Canada. Would it take any more effort to put all this information in a coherent, concise and clear fashion in one document? Do you see any virtue in that?

Mr. Ian Green: I want to be careful with my words. I didn't say all of the information. I said that a range of information is available in terms of other material.

One of the reasons why the recommendation is under consideration is to look at whether there are other types of information that would be helpful to Parliament and members of Parliament. So I don't want to claim that all of the information parliamentarians might be interested in is in those other places, but a significant amount of information is.

Mr. Rey Pagtakhan: Just to carry it farther, those are the other information, yet there is one specific set of information, the actuarial report, to project the premium rate. What is the basis for hesitancy in its being reported to Parliament?

Mr. Ian Green: In terms of the actuarial report? Traditionally it has been an internal document that has been available as advice to the minister in terms of the operation of the account. One of the things we're looking at, obviously, is the status of that and how it could be incorporated into a report on the EI account.

Mr. Rey Pagtakhan: But, again, you indicated in the department's response that all the relevant information with respect to the EI account is already in the public domain. If that were so, why not make it in a public domain that is immediately, clearly and simply available to the members of Parliament?

Mr. Ian Green: That is a question we're looking at, sir.

[Translation]

Mr. René Laurin: I would like to go back to a question raised earlier with respect to information communicated to Parliament. The Auditor General notes that annual reports to Parliament on the CPP are moving in the right direction. At the same time, he has proposed improvements that have been agreed to by the Department.

• 1625

The Auditor General is not satisfied, however, with the information communicated to Parliament on the Employment Insurance Account. He states that in the absence of legislative requirements, Parliament receives absolutely no report on the Account. Some information is available, but no performance information on the collection of premiums is provided, and neither are the actuarial analyses of the Employment Insurance Account.

My colleague asked a question about this earlier, but the answer did not seem very clear. Why isn't it possible to publish the actuarial analyses of the Employment Insurance Account?

[English]

Mr. Ian Green: On the first one, I believe the Canada Pension Plan annual report is required by the legislation. We are pleased that the Auditor General has acknowledged what an effective report it is, and we are pleased to try to incorporate in it a number of the things the Auditor General suggested around enhanced information on strategies and on performance, etc.

The EI legislation does not require an account. The legislation that Parliament passed does not require an annual report in terms of the EI account, at least as far as I'm aware. The Auditor General has recommended enhanced information for parliamentarians. We are looking at that recommendation, and have it under consideration. In the interim, I would just remind members that there's a fairly wide range of information that is available through other sources.

[Translation]

Mr. René Laurin: You say that you are looking at that recommendation. How far advanced is that process of review and when do you expect to table a report or make a decision? Do you undertake to provide a copy to the Standing Committee on Public Accounts?

[English]

Mr. Ian Green: I don't want to tie my minister down, Mr. Chairman. I'm sure he wants to respond to the committee's interest in this as quickly as possible,

[Translation]

...but I cannot give you a precise date at this time.

Mr. René Laurin: You say that performance information has been almost entirely delegated to regional offices, but the Auditor General doubts that HRCCs have the resources and skills needed to perform that work. What do you think?

Mr. Marcel Nouvet: I'd like to know what paragraph you're on.

Mr. René Laurin: Paragraph 17.43.

[English]

Mr. David Rattray (Assistant Auditor General of Canada): Mr. Chairman, while that's being looked up, I would like to state that it was the department's internal audit that concluded that, not our office.

[Translation]

Mr. Marcel Nouvet: I believe those comments are taken from a report prepared by our internal audit department in the year following the implementation of the new accountability framework. That report reflected the fact that our systems were not yet refined enough to assure local employees and managers that the data in the system were completely reliable.

We had problems about a year ago with data capture—when we made changes to employment measures, for example—and we realized that there are a great many improvements to be made to Income Security and CPP program information, because much of these data are still being gathered manually.

So, that whole comment reflects the fact that our system was not yet really up and running a year ago. Indeed, it still requires some refinement, and we are aware of the fact that we have two or three years of work ahead of us before we have a top-notch system.

[English]

The Chairman: Thank you.

Mr. Mahoney, you have four minutes.

Mr. Steve Mahoney (Mississauga West, Lib.): Mr. Chairman, if I might, I'd like to focus on the labour market agreements with the provinces for a moment.

You say you have eight provinces that have signed onto agreements. I'd like you to tell us the areas they cover and specifically to address presumably the reality that part of our responsibility as the federal government is to transfer the funds when we enter into an agreement, so that the provincial government can in turn deliver the service. Presumably, the reason for doing so is to take the service delivery closer to the people, thereby making it more accessible and enhancing delivery.

• 1630

When we enter into those agreements, what are the areas we're covering? Be specific if you can. And as a federal government, what recourse do we have if a provincial government fails to deliver on the terms of the agreement? Is there any kind of mechanism by which the federal government can re-enter that particular area of concern?

Mr. Ian Green: The areas covered by the agreements with the provinces cover off a range of issues. For example, they cover the treatment of human resources, or the framework within which are the guarantees that will be provided to federal staff being transferred to provinces for purposes of delivery. As I've already mentioned, they cover off the accountability framework and the kinds of results we want. They cover off, as well, questions of visibility—which level of government will get what kind of visibility in terms of the agreement.

Mr. Steve Mahoney: Can I just interrupt you? If they cover accountability in terms of results and you're not getting the results, you're not seeing them, the point of my question is what do we do about that?

Mr. Ian Green: I guess the short answer is that there is provision in the agreements to publish the results on a regular basis. In the first instance, that will obviously become the vehicle whereby that information would be available to prompt public discussion and debate if the results are significantly different from those that were agreed to or forecasted. Secondly, the federal government can obviously decide not to continue the agreements at their termination if it was in fact sufficiently concerned about the lack or absence of results.

Mr. Steve Mahoney: Let's take a specific example on the issue. Some of us have been talking about the area of apprenticeship training. We've signed off an agreement with the provinces for them to deliver apprenticeship training and have devolved it down to that level. We then transferred the appropriate funding, but they're not delivering the apprenticeship training. Under the terms of the agreement, does the federal government have the right to re-enter that particular sector and provide the training directly?

Mr. Ian Green: No, it does not.

Mr. Steve Mahoney: Do we have the right to withhold funds if the province is not delivering, along the same lines as our health transfers?

Mr. Ian Green: No, you do not. The only right to hold funds arises if the expenditure was made in such a way that was not eligible under the EI account. In other words, if it was for clients who did not meet the definition, etc., that would be a basis on which to withhold payment. Aside from that, there is no mechanism to withdraw funds. Nor, by the way, are the agreements structured in such a way as to require the province to deliver a particular program on behalf of the federal government.

The legislation lays out four or five kinds of benefits or measures. It indicates that the provinces are required, pursuant to the terms of the agreement, to have programs that are similar to those benefits and measures. In effect, however, it leaves the question of their detailed design up to the provinces, and partly for the reason that you mentioned: devolving it to the local level in order to allow flexibility in terms of responding to local needs.

Mr. Steve Mahoney: That's fine if it's in the same general area, but what I'm really concerned about is transferring funds unconditionally from one level of government to another, and then also transferring delivery responsibility for the program. As my colleague has said, those unconditional funds may then be used to build roads instead of for providing training. This is what I'm trying to get at: what mechanism does the federal government have in order to be able to go back in to either reopen the agreement or to take back the responsibility for the delivery of that service if the provinces, through whatever political designs the particular elected government has, unilaterally decide to do what they want with the money?

Mr. Marcel Nouvet: Under the agreements that we have, we are able to tell where the money has been invested, and we verify whether or not it's been invested with people who are eligible under part II of the employment insurance legislation. The provisions in the agreements say that if we ever were to find a situation in which the money has been diverted to other areas not sanctioned by the EI legislation, we simply would hold back that amount from the next payment that goes to the province.

Mr. Ian Green: In fact, the auditing arrangements have been done in consultation with the Office of the Auditor General and their equivalent provincial counterparts.

Mr. Steve Mahoney: I understand.

The Chairman: Thank you, Mr. Mahoney.

Mr. Harvard, you have four minutes.

• 1635

Mr. John Harvard (Charleswood—Assiniboine, Lib.): While we're talking about results-based management, Mr. Green, I'd like to ask you how you measure the results of the way your department handles public inquires, especially via the telephone, or perhaps more specifically, e-mail. We very often hear complaints from constituents about how they're received as a result of technological responses, not real, live human beings, behind the telephone.

I was talking to a constituent the other day. Her complaint was not untypical in that she wanted to have some basic information about how CPP works. Specifically, she wanted to know what her benefits would be if she retired at the age of 64. First of all, she had to be put through a number of recorded instructions, which is typical of e-mail. Then she wound up with a couple of real, live bodies. The second one was a little surprised that she took the call. She ultimately got the information, but it took about 20 minutes.

Now, 20 minutes may not sound very long, but if you don't get a busy signal it shouldn't have to take 20 minutes to find out that kind of simple information.

My guess—and this is where you can help me—is that we're using this kind of technology to save money. It's part of downsizing. If you look at one particular aspect of results—that is, the so-called bottom line—the results might be pretty good. But if you have a lot of Canadians out there who are royally pissed off—excuse my language—who are really mad because of the way in which they are treated when they make simple inquiries, when you look at it from that perspective, the results may not be so good.

Give me your response to that.

Mr. Ian Green: As I mentioned earlier, we have obviously turned to technology as a way of not only dealing with downsizing but also trying to improve service. We know there's a lot of frustration. We take the issue seriously in the sense that the performance results we talk about—for example, in terms of our income security branch—are based in part on trying to ensure quality of service in terms of telephone answering, etc.

We monitor on a monthly basis. We regularly bring it to our management table, where we talk about what's happening in terms of our telephone answering capacity. Client satisfaction is important to us.

I won't pretend that it isn't a difficult issue for us. For example, a problem that doesn't deal exactly with the question of the individual case you're raising is the way in which our telephone calls peak at certain periods of the month in terms of old age security, when the cheques go out—immediately before and immediately after. We know we have tremendous loads that create real difficulties for us in terms of responding. We're looking at a range of different ways to try to handle those loads in terms of trying to improve our service.

But it's tough. I know there are some individuals who are frustrated in terms of the quality of the service they receive.

Mr. John Harvard: Based on the way you measure things, at this particular juncture are you satisfied that the good outweighs the bad when it comes to e-mail?

Mr. Marcel Nouvet: We're satisfied that we have made significant progress and we're satisfied that there's still something to be achieved there.

A few years ago on the CPP side we were not answering the phone calls. Now we're answering them. The automated voice response is complex. It's not as user-friendly as it should be, but I think we have to recognize that the legislation we deal with is not as user-friendly as possible.

The focus we have in the department is verifying that we answer the calls. Within each call centre you have supervisors and managers who systematically sample and comment on the quality. So it's work in progress. We're working on that, but the first priority is to be able to answer the calls. I think we are now on our way to doing that well.

In a call centre you have regular monitoring to make sure that the information is as good as possible. We also know we have to streamline the automated voice response system we have, but we receive over 40 million calls a year in the department. It's something we have to keep on top of all the time.

The automated voice response system is great from the perspective that it offers extended hours. If offices close down, people can still get basic answers.

• 1640

The Chairman: Mr. Rattray, you wanted to respond to Mr. Harvard's question.

Mr. David Rattray: Yes. Thank you, Mr. Chairman.

Mr. Harvard, we, as you may know, did a report, a chapter, just recently on service quality and it dealt specifically with the aspect of telephones. We will be doing a follow-up as part of the normal process on that, which includes HRDC, and we will be reporting back in about a year's time on that in terms of progress of a number of departments on this particular point.

The Chairman: I am glad to hear that, Mr. Rattray, because that is one of the questions I have. When I look at exhibit 17.4, I find that efficiency... The whole column is blank because it is not one of the key performances defined by HRDC. I am looking specifically at the percentage of telephone calls answered, where there is nothing regarding efficiency.

I recall discussing this in committee sometime ago, and Mr. Nouvet mentioned the fact that you have a high volume of calls a couple of days of the month because you mail out the old age security cheques all in one batch on the same day of the month. I think we mentioned back then that if you were to spread the delivery of these cheques over the month, you could provide a lot better service at a lot less price and provide some real efficiencies along the way. So what do you have to say about your movement forward in that particular area?

Mr. Marcel Nouvet: About having efficiency measures?

The Chairman: I am talking about efficiency and I use that particular example of sending the cheques out on a staggered basis right across the month, which would eliminate this huge volume on two days of the month and provide better service at a lower cost. Surely that is what the taxpayers want.

Mr. Marcel Nouvet: We are certainly examining ways to spread the distribution of cheques, and it was in the legislative framework we have.

As the Auditor General's report points out, though—just to answer the question more broadly—we have efficiency measures that are part of the secondary indicators that are being looked at by directors and managers at the local level on an ongoing basis. So we have key indicators that we look at as a department, and underlying these key indicators are a whole bunch of secondary indicators that can give a manager the ability to manage his or her operation.

Mr. Ian Green: We obviously continue to look at how flexible we can be in terms of the cheque distribution, because it has obvious implications for service.

Just to give you some of the considerations that are in play, one of the problems we have, for example, is that if we move off the current system to putting cheques out, there are going to be costs involved. There are additional costs in the sense that if you change the timetable and you move to a flexible payment system, it starts to change your flows in terms of how much you pay. We have to take that into consideration in looking at the service.

The Chairman: But you were asked to take a look at that several years ago, and it would seem to me that you have not done very much about it. I look at your whole key performances, and efficiency does not even rate as a key indicator and secondary indicators are not even reported to Parliament. That is my point. Business has efficiency as the number one criterion for evaluation of performance, but it does not even rate as a number one key element with HRDC. I think you should take that under advisement and maybe change that.

On paragraph 17.34, again the department's key indicator does not take cost and efficiency into account, only the secondary indicators do. If you are not evaluating cost and efficiency, I wonder how good a handle you have on the department.

I happened to hear a real estate salesman talking on the weekend about how he was the number one salesman with a half million dollars in sales, but it cost him $550,000 to do so. So the benefit was not very great.

It seems as if your department does not have efficiency, cost analysis, benefits up there so that we can see whether or not we are getting a real return on our investment on the collection department.

Mr. Marcel Nouvet: I appreciate your comments. We do have efficiency measures. They are the secondary indicators, and we can certainly look to including some of them in the departmental performance review report that we have.

One of the problems that we have had traditionally in working in government is that we have been very focused on efficiency indicators and have not paid attention to the results that we are trying to achieve as a result of what we are doing. But if you look, for example, at the employment insurance operation, they look at the secondary indicators we have there, the percentage of claims processed by productive FTE, by productive—

• 1645

The Chairman: I appreciate that point, but I'm saying your number one thing, efficiency, is not showing up as a primary indicator.

About performance indicators, I look again at 17.36 of the Auditor General's report and the Auditor General has stated, and he has stated in his opening remarks, I believe, that it's important to have some consistency in the key indicators so we can see over a long period how the performance is being measured. Yet in section 17.36 you say you intend to review and refine your performance indicators on an ongoing basis. Finally, when I look at section 17.46, you say the department remains committed to maintaining its selected indicators.

You can't have it both ways. Which way are you going?

Mr. Ian Green: Can I jump in? The reason we focused down to a limited number of performance measures was to establish a kind of clear and focused basis for management by results, our view being that if we put all of them in play—and for example, a number of the efficiency measurements covered in the secondary indicators could have been put in—we would have developed an increasingly cluttered and confusing story line for our staff and for parliamentarians in holding us accountable.

We picked a limited number partly because we intend to sustain them and we intend to focus on them, but I don't see any inconsistency in saying we're going to assess them on an ongoing basis to make sure they are the right ones and they are effective. We intend to stick by the ones we have because they have to be sustainable in order for them to be measurable and effective.

The Chairman: Okay, let's turn to section 17.88, on the recovery of outstanding... And just as a matter of interest, for size, I'm taking a look at the public accounts tabled just a week or so ago. The amount of initial losses on employment insurance benefits is $144 million, and you expect to recover virtually all of that, with a final write-off of around $3.9 million. There's a significant amount of work in the collection of that amount of money. But it says in the report you don't take assets into consideration. If the person has the liquid assets to repay the debt in full, even although you're paying him EI benefits at the same time, you don't collect the entire EI cheque if the money is owing to you.

Why would that be? When I look at 17.87, it says the department's collection policy states an attempt should first be made to obtain the full amount and that the debtor should expect to liquidate certain assets. It seems to me you're doing one thing but the policy says something else. What is happening?

Mr. Marcel Nouvet: We're in the process of finalizing the accounts receivable policy. We have stated in the report that we will implement. First of all, the Auditor General recognizes we have made significant progress in the accounts receivable area. There is some progress to be achieved still. We will have the accounts receivable strategy fully implemented within the next three years, and we will be looking at those issues.

In the case of overpayments that have occurred intentionally in insurance, for example, we collect 100% right from the benefits. It's only if a person can show financial hardship that we will negotiate down from that. In the case of non-intentional overpayments a negotiation process is initiated right at first. We negotiate with the clients something that's acceptable to him or her, based on the financial situation. We have to deal with these cases with sensitivity.

The Chairman: Mr. Rattray, just for clarification, you state in your report that the department does not seek to recover immediately the full amount or a large portion of the debt even if the financial situation of the debtor so permits. That's in section 17.88. Now Mr. Nouvet is saying something different.

Mr. Marcel Nouvet: No.

The Chairman: So my simple question is, if they have the liquid assets, do you collect them?

Mr. Marcel Nouvet: No, we don't at this time.

The Chairman: It seems rather strange to me.

Mr. Marcel Nouvet: We are in the process of finalizing the accounts receivable policy.

• 1650

The Chairman: It's taking a long time.

Mr. Myers, do you have a quick question?

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Mr. Green, I noted in your comments, with respect to managing for results, the importance of assessing performance properly with valid indicators, good data and such. I was surprised to see, on page 17.17, employee skepticism about the credibility of the data, and more to the point, in terms of your response on that page, the notion that you're developing mechanisms and other systems related to this problem. I wonder if you could elaborate on what precisely you're doing to correct this concern.

Mr. Ian Green: May I ask my colleague to answer?

Mr. Marcel Nouvet: One of the big issues we had when we implemented the results indicator on the part II employment insurance legislation side, which is the labour market activities, was that we didn't have an automated system in place to collect the results that were achieved by third parties with whom we contracted to put people into employment and reduce spending in the EI accounts.

Since then we have developed a system that we call Contact IV. There are over 600 users out there. We are rolling it out to all the third-party users so local officers will have a real handle on the results that are being achieved by the third-party contractors.

On the income security side, a lot of the information is still collected manually and we're in the process of automating that. If it's collected manually, it means questions can be raised as to the reliability of the data you have.

Mr. Lynn Myers: Thank you.

The Chairman: Mr. Myers, do you have any more questions?

Mr. Lynn Myers: No, thank you.

The Chairman: I'll go to Mr. Mayfield, then I'll come back to Ms. Caplan.

Mr. Philip Mayfield: Thank you very much, Mr. Chairman. The committee seems to be working well together. You anticipated one of the questions I wanted to ask in your last intervention.

It seems to me there is more lack of transparency between the department and Parliament than I'm comfortable with. I wanted to ask Mr. Rattray or Mr. Lalonde of the Auditor General's department, in raising the issue of this lack of transparency on the EI account and the premiums, what suggestions they would have for us or the department about how the information Parliament needs could be supplied. Do you have any comments about that?

Mr. David Rattray: Of course the office is always very interested in serving the accountability relationship, and therefore the information that's presented.

One of the primary areas in which we've been particularly interested in this year's set of reports is the revisions to the expenditure management system and the new reports that are being produced from that. Very soon, either at the end of this week or early next week, all the departments will be expected to produce performance reports as part of that revised expenditure management system. We feel that is a key vehicle to enable parliamentary committees and parliamentarians to look at performance by various government departments. In that area especially, it's going to be an opportune vehicle to provide information.

We've also said that in large accounts like the employment insurance account there should be more transparency. On the call for a distinct report, we feel it would be appropriate to bring all the information together at one point and in one document, which would enhance transparency and also be linked to the performance report that is coming out very soon on departments.

Those would be two examples. We cite in here one of the cases, the Canada Pension Plan and the annual report that is produced on that. We're quite complimentary of the information included in there, including the fact that tabled along with that is a full actuarial report.

So there are several vehicles, but the short answer is the new expenditure management system provides for business outlook documents, followed up later by performance reports. They will be key pieces of information to enhance transparency.

• 1655

The public accounts, sir, are always provided, and have been referred to several times today. The traditional blue book part IIIs have been a key source of information as well.

Our office also does the audit of the employment insurance account and provides a financial opinion on it. That of course is prepared once a year and is included with the tabling of the public accounts.

Mr. Philip Mayfield: Mr. Chairman, I'd like to thank the witnesses very much for their participation today.

The Chairman: Thank you, Mr. Mayfield. Ms. Caplan.

Ms. Elinor Caplan (Thornhill, Lib.): I have a question that is related more to the cultural change required to achieve the focus of management by results. I think it sounds good, and I support it. I think it is offering greater accountability and is certainly a better way of doing business.

In reading between the lines in the report, I wondered whether you were experiencing difficulty with changing the culture within the organization, the culture that would allow this to happen, because I believe it takes more responsibility to the front lines, if you will. That's my understanding. I just thought you might tell us how you're progressing in changing the culture.

Mr. Ian Green: Marcel can fill in some of the details, but I think from an overall management point of view it is a big change.

We have a department that for a long time basically measured the number of interventions or did program descriptions. We're now trying to shift fairly dramatically and fairly quickly into managing to results.

That means there's a series of changes. One is that senior management basically has to constantly re-emphasize, I think, that this is an important cultural change, one that's important for the organization. Second, given that we are a highly centralized regional department we have to be able to make this relevant and credible in the regions, and particularly at the local level. It means we have to spend a lot of time working with local staff in terms of re-emphasizing the importance of moving to this.

I basically believe you have to keep it simple. You have to constantly repeat it and you have to ensure that from top to bottom the organization basically sees this as a priority. Otherwise it's very easy to slip off this as an objective for the organization.

Ms. Elinor Caplan: How do you establish the benchmarks against which you evaluate your results orientation? Is this something that is imposed? Do you take them from other organizations, or do you work together collectively within the organization to develop the benchmarks against which you will judge your performance?

Mr. Ian Green: It varies. For example, for the ones we established in the context of the labour market agreements, we looked at our historical capacity and at our funding and the direction the funding was going in. We looked at the nature of the legislation we had. We looked at the kinds of agreements we were signing with provinces. We negotiated with provinces what they thought were reasonable expectations, because clearly if we were going to do this in partnership with them we had to build them in.

All of those were factors in that particular case in setting results, and it took us some months to get to the point where we set what seemed to some to be relatively simple and obvious figures.

Ms. Elinor Caplan: Actually, the provincial auditor addressed this. I'm just wondering how you in the culture are dealing with the blame-filled environment, which the auditor pointed out often works against managing by results and greater accountability as opposed to being protected by past practice. I think it's a big change.

Mr. Marcel Nouvet: I'm not surprised by what we have in this report. The audit was done at the beginning of a cycle for us, which was instilling this kind of culture in the department.

We have consulted with staff on the front lines. They very much support the types of performance indicators we have put into place. They tell us the public understands as well and supports it and that it makes sense from a public perspective. I think proof that this was working for us was the fact that during the negotiations with the provinces where we didn't know how they would react to that kind of orientation, where we thought we would have a lot of trouble, they in fact embraced it.

It's work in progress. We're further ahead now than we were when this audit was done, and there's clearly a commitment in here from the department to keep improving on it. We're not satisfied with the eleven indicators we have there, but somewhere in his report the Auditor General also says we have to maintain the indicators for a sufficient period of time so that we can gauge progress. So we can't change the indicators on a regular basis.

• 1700

Mr. Ian Green: One quick point. There is in this a tremendous incentive for local staff. Let's say you tell the head of an HRCC that they're responsible—for example, in terms of active measures programs—not any more for how many interventions they have or how many programs they ran but basically for two important numbers: how many people did they get jobs for and how much did they achieve in terms of savings? That gives them a tremendous amount of flexibility in terms of deciding what line-up of measures makes the most sense for their community or their region. That's a tremendously attractive proposition to local staff. It's helped in basically selling this change.

The Chairman: Mr. Pagtakhan.

Mr. Rey Pagtakhan: In light of the question from the chair, I would like it clarified about the performance indicators, primary and secondary.

I would like to put it on record that the Auditor General's report, in paragraph 17.27 and so on, indicates the value of focusing on certain numbers of key indicators; in fact, it is a positive step and therefore a credit to the department. I think that must be recorded.

It does say, however, that they are not reported. The secondary indicators to Parliament may handicap Parliament to assess that. My question is, could the secondary indicators be reported to Parliament in a manageable way?

Mr. Marcel Nouvet: The departmental performance report that is going to be tabled in I think a week by the president of the Treasury Board includes some of the secondary indicators referred to in this report but does not include them all, simply because we worked with that two months ago and are not in total control of what goes in that report. That's driven very much by the Treasury Board. They want us to focus in our report on the key indicators.

But it certainly is something that I think we both agreed we would do as a result of this session this afternoon—go back and see the extent to which we can include the secondary indicators we have in place in the department. Some of them are already included in the departmental performance review.

Mr. Ian Green: Some of them will be in that document. We would be pleased to table the complete list of secondary indicators.

Let's see the report. We can look at the list. If there are other indicators that are deemed to be important, we're quite prepared to look at how we can best use them and communicate them.

Mr. Rey Pagtakhan: Mr. Chairman, I think the committee would be best served by having for our perusal a list of the secondary indicators.

The Chairman: Thank you, Mr. Pagtakhan.

I have a couple of questions too. I'm looking at exhibit 17.10, on the percentage of accounts, or the aging of the accounts receivable, for both employment insurance and student loans. The Auditor General has pointed out, and I'm sure you will agree, that the faster you collect the money the greater the chance you have of collecting it in the first place.

It would seem to me that the receivables of more than four years are growing at a fairly alarming rate. I refer back to public accounts, where you expect to collect virtually 100% of the money.

Why is it taking so long to collect the money? Why are your receivables getting older and older?

Mr. Marcel Nouvet: The increase of about $1 billion includes approximately $800 million in defaulted Canada student loans and a $200 million increase in overpayments and penalties.

The increase is due to two factors. Normally student loans take an average of eight years to be collected. The increased cost of education has increased the value of the loans. The economic situation has increased the repayment periods. That's causing the cases to age.

In 1995-96 we had on a priority basis cleared a number of backlogs. These are cases that the banks returned to us because they could not collect the money.

The Chairman: What about the employment insurance—

Mr. Marcel Nouvet: I'm getting there.

That added $350 million to the funds that had to be collected.

I would remind you that the responsibility for collecting newly defaulted student loans was transferred to financial institutions in August 1995. In the middle to longer term, that will decrease the amount of defaulted loans for which we're responsible in the future.

• 1705

About the employment insurance account, the recouping of EI benefits from active claims has decreased by 30% in 1996-97 compared with 1992-93. That's a reflection of the fact that we used to collect a lot from people who were coming back and receiving employment insurance. Their number has gone down, as has the duration of the benefits when they receive them. Therefore there is less opportunity to collect from them.

We increased the number of years, the period during which we could collect benefits. In the case of non-intentional overpayments it used to be three years. Now it's six years. That also automatically increased the amounts we would have to collect.

As you know, over the past five years we have tightened up on the investigation and control activities. We have increased them. We added staff in that area. We established greater overpayments, and with the new penalty policies the amount of the penalties increased as well, and that contributed to the increase in the account.

The Chairman: But your assertion that you're going to collect approximately 97% of the outstanding overpayments is still a valid statement.

Mr. Marcel Nouvet: It's based on historical data. If you look back, yes, it is a valid statement.

I would like to point out that the easiest way to collect is from an active account. When somebody is actually receiving money from the government, this is the time to intervene and collect that amount. It gets very difficult when they are no longer receiving money from the government. We are doing income tax set-offs on an increasing basis, so we collect from the refunds people are supposed to get.

Our cash recoveries on inactive accounts have increased by 46%. Inactive accounts are the toughest ones. They have increased by 46% in 1996-97 compared with 1992-93. So we're putting a big priority on collecting from inactive accounts.

The Chairman: On paragraph 17.41, where it deals with the department's internal audit bureau and problems in credibility of the program data, you state that you are going to rely on the ISP program redesign, which I understand now has been cancelled. Where do you stand on that matter?

Mr. Ian Green: What has been cancelled, Mr. Chairman?

The Chairman: I understand the income security programs re-design project, which has cost us around $365 million to enlarge the shelf... Is that still on the books, or where do we stand now on that particular program?

Mr. Ian Green: The program hasn't been cancelled. It's being reassessed with the company we entered into it with, on what are the best future steps in the redesign project. But about the actual terms, your question is about...?

The Chairman: The question was about the fact that this program is now seriously overdue. Are you still going to be able to use it to provide the data you expect to be done on an automated basis? You're now into, in your words, reassessing the program, and who knows where we go from here at this time.

Mr. Marcel Nouvet: We know we're going to have to modernize the program. We are reassessing how we're going to do that, but we will do it. That means we'll definitely move away, as we have done increasingly in all our other lines of business, from manual transactions to automated transactions. We will capture that data automatically.

The Chairman: Mr. Mayfield.

Mr. Philip Mayfield: I was interested in a response of yours, Mr. Nouvet, to Ms. Caplan. You said you were not surprised by the audit because it came at the beginning of a cycle. It led me to wonder if perhaps you feel this audit is a bit outdated. I'm wondering if you would like to comment on that, and if progress has been made and it's not reflected in the audit, would you like to comment on that as well? I would like to know where the audit itself doesn't reflect the department as it is today.

Mr. Marcel Nouvet: The answers we provided in this report reflect our best assessment of the situation back in August, when we provided the answers to the Auditor General. I don't think much has changed since then.

• 1710

We are in the process, for example, of refining the indicators for 1998-99. We are establishing a steering committee to look at where we want to take this over the next three years, in terms of answering some of the concerns the Auditor General expresses here. We know on the employment side that when this report was tabled we indeed had great trouble in collecting data on part II of the Employment Insurance Act. We have made significant progress since then in introducing a system, a contact form that we're distributing to the third parties.

So it progresses. It's slow and it's gradual and the situation will be different in a year.

Mr. Mac Harb: We have heard great deals of questions and answers. I just hope that the deputy minister and his staff won't go back with the belief that they should turn the operation into a for-profit operation where we have to look at the bottom line and whether we are in a surplus or a deficit situation. After all, it's a government service agency who are dealing with people on a regular basis. That's what we are there for.

Considering what we have heard from the department today, and from the Auditor General, I'm confidant that a lot of progress has been made, in that many of the questions that were raised in the Auditor General's report have been dealt with—at least in large part have been. Whatever's left will be dealt with in the very near future.

I have a question that really has no relation to the questions and answers. It has to do with the so-called surplus fund that we have in the EI. My impression is that any money that comes in to the government coffers, to any department, in fact does not stay within the department, but, rather, goes to the general revenue fund. Is that correct?

Mr. David Rattray: That is correct.

Mr. Mac Harb: So what is the incentive for a department like Human Resources Development if, for example, they run an efficient operation and they have a surplus. Can they take part of that surplus in order to improve the efficiency of their operation, to use it for some sort of spending within the department? If not, why not look at that?

Mr. Louis Lalonde: The answer is no. However, we should point out—and we do in chapter 11, I guess, on the benefit and control activities of the department—that because they were well organized and they had indicators, they were able to get more resources in a period during which everybody else was cut down. So there are some incentives to perform very well and to show your actions, and it's recognized by the central agencies.

Mr. Mac Harb: Is it a good idea to stay with the system—if departments have an efficient operation and they have a surplus at the end of the year, not to allow them to keep that surplus, versus taking whatever surplus, whatever efficiency exists in the system and putting it into the general revenue fund? Is there any move to say that we should perhaps have some sort of a percentage, 10% or 15%, kept within the department for their own use?

Mr. Marcel Nouvet: There are provisions that allow us to carry forward funds, on the operating funds, both on the CRF side and on the EI side. So there is a built-in incentive to manage efficiently so that you can carry forward. Within the operating budget envelope one has, there are certainly incentives to try to be as efficient as possible so you can reallocate some of these resources to other areas.

[Translation]

Mr. René Laurin: I would like to put a question to the representative of the Auditor General. In paragraph 17.66, the Auditor General recommends that the actuarial analyses necessary for setting the premium rate of the Employment Insurance Account be tabled in Parliament.

The Department's response was that all the relevant information with respect to the Employment Insurance Account is already in the public domain. Does this answer satisfy the Office of the Auditor General?

[English]

Mr. David Rattray: What we're referring to there are the actuarial analyses. You've heard earlier testimony that those analyses are not in fact part of that list of information that's in the public domain. Therefore there still is one critical element in our recommendation that we feel should be given serious consideration for public visibility or transparency. So while the answer is a lot of information is available, one of the critical pieces we think should be made available is not included in this list.

• 1715

[Translation]

Mr. René Laurin: But did you discover, as a result of that response, that you had forgotten to consider certain information? You asked that a report be produced and the Department's response was that you already have all the relevant information, including the annual economic update, the Main Estimates and the background material regularly provided with the HRDC press releases. I imagine that you are already aware of that information. You did not just discover its existence as a result of the Department's response. So, given that this information is available, do you still believe that in order to ensure greater transparency, the actuarial analyses of the Employment Insurance Account should be produced, as is done for the Canada Pension Plan Account?

[English]

Mr. David Rattray: The short answer is yes.

[Translation]

Mr. René Laurin: I would now like to put another question to the representative of Human Resources Development Canada. Why are these analyses not made public? You said earlier that you were considering this request. But why have these analyses not been published thus far? Are there political or perhaps technical reasons for not doing so?

Mr. Marcel Nouvet: Under the Employment Insurance Act, we are not required to publish those analyses. That's why we don't do it. As Mr. Green indicated, we are currently reviewing that and it will be up to the Minister to make a final decision.

[English]

Mr. Ian Green: I want to add that the report says, inter alia, two things. One is that some of the actuarial analysis around the account would be helpful to parliamentarians. It also raises the issue of tabling a report.

In the past we have not hidden, not that I'm aware of, actuarial analyses. Our view was that around the budget, around part III of the estimates, around the timing when the EI premium rates were announced, a range of information went out.

The Auditor General has suggested there might be additional information which would be helpful, and the idea of a report. We are looking at both of those. We will discuss them with our minister at an early opportunity, and we would be pleased to come back to the committee with as concrete a response as possible, as quickly as possible.

It's not a question of hiding large amounts of data or reports.

Mr. David Rattray: We certainly concur with that. We know there is a need for consultation on what the department needs to receive as instructions to make available, but we certainly feel some of these analyses are important. We see that the Canada Pension Plan by legislation requires the actuary's report to be tabled. In this case it's silent. Without legislation to drive the tabling, I'm sure the department has to consider how much, in what form, in what summary form, is appropriate. We would be more than happy to continue our dialogue on that point.

The Chairman: Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Green, you say that you are not required to do so under the Act, but you add that you have never wanted to conceal that information. Does that mean that if I were to ask you tomorrow morning to provide me with a copy of the actuarial analyses of the Employment Insurance Account, you would be willing to oblige?

[English]

Mr. Ian Green: The first thing I would have to check is whether there is actually an actuarial analysis. A range of analyses are done. I'm not sure it's rolled up in a single report I could hand over to you. I don't know that such a document exists. A range of—

The Chairman: You shock me, Mr. Green.

Mr. Ian Green: Why?

The Chairman: The fact that a report may not exist in one document.

We'll ask Mr. Mahoney to think about the last questions here. Mr. Mahoney.

Mr. Steve Mahoney: My question is on your department's involvement with the private sector in dealing with some of the programs you deliver. Generally, “results-based accountability” is a buzzword which in the past has been more comfortable in the private sector than it has in the public sector. I think results are easier to measure when they are revenue-based, when they are profit-based, etc., than they are in the public sector.

• 1720

I'm wondering if in some of the agreements for training you enter into with private sector trainers, with school boards, and with other service delivery organizations if you use results-based accountability as a measurement tool. Is there some way we can see information that would show how effective the transfer of this service to the private sector has been?

Mr. Marcel Nouvet: What we're doing on the labour market side on the part II of the EI legislation is very much in transition now because we're devolving to a number of provinces and we're co-managing with others. We had started to inject into our operations the whole notion that when we went to third parties we focused the agreement around the number of people they thought might be able to return to work. We started to do that in 1997. I'm not sure where we are at with it, but the opportunities to do so are increasing as we're devolving to the provinces.

Mr. Steve Mahoney: In answer earlier to one of the questions, I believe Mr. Green said that there are two very simple measuring sticks we would use: one is how many people have you got back to work, and the other is how much have you saved in the function of doing that? I guess that's what I'm asking in terms of delivery of this training. If you enter into say a training arrangement with an organization in a particular community, do you measure the number of people they get off EI and back into the workforce? And do you then have some way of measuring how much it saved by having them do it instead of you doing it?

Mr. Marcel Nouvet: As you remember, I talked about the system we have developed called Contact IV, which allows a third party to feed us the information directly so that we can actually track how many of our EI clients have returned to work and then from that calculate the savings.

Mr. Steve Mahoney: And can we see that kind of thing at a committee level? Is that something you could bring, be it on a spreadsheet or in some kind of a report, so we could actually see it and say “Look at this, this is working”?

Mr. Ian Green: Yes, we could.

The Chairman: Thank you, Mr. Mahoney.

I have one last question, gentlemen. Since we are in a results-based management chapter here by the Auditor General, how ready are you for this millennium bug? Since you deal with a great number of clientele and Canadians across the land, are you going to be able to deal with them on January 1, 2000, or are you going to write the cheques by hand?

Mr. Ian Green: We are spending a great deal of time and effort, Mr. Chairman, trying to make sure that our systems are up and ready for January 1, 1999—that we're a year ahead of time.

And I'll tender an invitation to you, which is that on the first day of the millennium you and I will take an elevator ride in our building and we'll see what happens.

Some hon. members: Hear, hear.

The Chairman: I think Mrs. Barnes has a question.

Mrs. Sue Barnes: I would like to add that I would encourage all Canadians who are receiving government cheques on a regular basis to do automatic deposits and make sure they get the paperwork in so we don't have to bother with writing cheques, because it's a lot cheaper to do it in the ultimate format that's available to Canadians.

The Chairman: Thank you, Mrs. Barnes.

And just as we wrap up, Mr. Rattray, on behalf of the Auditor General, do you have any closing comments?

Mr. David Rattray: Mr. Chairman, as the Auditor General mentioned in his opening statement, I think we would continue to encourage the department to make the progress it has made. We were pleased with this report. I think you can see by a lot of the conclusions here that they are in fact one of the departments that's making a fairly substantial effort at moving towards results-based management.

You may as a committee at some point in time, given the testimony you've heard today, wish to revisit some of the commitments that have been made today in terms of progress to be undertaken. There were several in terms of implementing accounts receivable strategy, integrity of data submitted by third parties, manual data gathering, inclusion of secondary indicators, and so on. I think there's probably some point there that you may wish to consider. But all in all I think you've seen that we have an overall fairly positive score card on HRDC and its movement towards a results-based management framework.

The Chairman: Thank you, Mr. Rattray. I'd like to thank all the witnesses for coming here this afternoon on behalf of the committee.

Mr. Green, do you have a final point?

• 1725

Mr. Ian Green: It's a quick final point. I want to reiterate the comments by my colleagues in the Office of the Auditor General. We are serious. We also know that the Office of the Auditor General is coming back in a couple of years.

Mr. David Rattray: That's correct.

Mr. Ian Green: We also know that we can look forward to future appearances before this committee, and I'm also seized with the committee's interest in actuarial analyses and reports on the employment insurance account.

The Chairman: Thank you, Mr. Green.

The next meeting is scheduled for Monday, November 17, 1997, at 3.30 p.m.

This meeting is adjourned to the call of the chair.