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PACC Committee Report

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Coat-of-Arms

HOUSE OF COMMONS
CANADA


Introduction
Observations and Recommendations
Conclusion


HUMAN RESOURCES DEVELOPMENT CANADA --- A CRITICAL TRANSITION TOWARD RESULTS-BASED MANAGEMENT

Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

THIRD REPORT

The Standing Committee on Public Accounts has considered Chapter 17 of the April and October 1997 Report of the Auditor General of Canada (Human Resources Development Canada --- A Critical Transition Toward Results-Based Management) and the Committee has agreed to report the following:

INTRODUCTION

Since the 1960s, advocates of public service reform have proposed the adoption of results-based management. This form of administration places an emphasis on results and outcomes, instead of process, an approach that narrowly defines success in terms of the ability to do things ‘by the book.’ Supporters of results-based management have argued that by adopting this approach, accountability for achieving policy goals would be strengthened, and programs better designed and implemented.

Until recently, the federal public service has been slow to implement a results-based approach to management. As a consequence of diminished resources and fiscal pressures, however, the government has recently begun the transition toward managing for results. This transition has received the support of the Auditor General and, in past parliaments, the House of Commons Standing Committee on Public Accounts.

In his April and October 1997 Report, the Auditor General included a chapter describing the transition toward results-based management in a major department, Human Resource Development Canada, whose activities affect the lives of millions of Canadians. This department is responsible for delivering some of the most important services of the federal government, in areas such as employment insurance, income security, and student loans. The Department’s expenditures in these areas are considerable. In 1996-97, for example, it made disbursements totalling $56 billion, including payments from the Employment Insurance (EI) Account and the Canada Pension Plan (CPP).

Because the Committee assigns a great deal of importance to efforts to achieve results-based management in the federal public service, the magnitude of expenditures involved, and the Canadians affected by the Department’s actions, the Committee decided to examine the report on its move toward results-based management. Accordingly, the Committee held a hearing with the Auditor General of Canada, and with Mr. Ian Green, Associate Deputy Minister, and Mr. Marcel Nouvet, Assistant Deputy Minister of Finance and Administration, both of Human Resources Development Canada, on 4 November 1997.

OBSERVATIONS AND RECOMMENDATIONS

From its study of the Auditor General’s Report, and from its meeting with witnesses, the Committee is generally satisfied that HRDC is making progress in implementing results-based management. At the end of the meeting, Mr. David Rattray, Assistant Auditor General, told the Committee that HRDC "is in fact one of the departments that is making a fairly substantial effort at moving towards results-based management." He added that the Office of the Auditor General has "an overall fairly positive score card on HRDC" in this regard. (17:20) The Committee takes a similar view.

Despite the Department’s accomplishments, however, the Committee believes that progress is uneven in a number of vital respects. In the interests of encouraging the Department to make further progress, the Committee offers the following observations and recommendations.

Performance Indicators

The Department has identified the indicators that it will use to measure its performance in delivering services. These indicators are divided into primary and secondary indicators and differ in terms of their availability to Parliament in departmental performance reports. The results of measures taken under primary indicators are reported to Parliament; those taken under secondary indicators are not. As secondary indicators, cost and efficiency are not part of the information on program performance that is presented to Parliament.

The Committee believes that the absence of this information weakens Parliament’s ability to assess how well programs are being delivered. The Committee notes that the Department is already gathering data with respect to cost and efficiency; reporting this data to Parliament should not impose significant cost or extra effort for HRDC. The Committee therefore recommends:

That Human Resources Development Canada should designate cost and measures of efficiency as primary performance indicators and report this information to Parliament in Part III of its Estimates and in its Performance Reports.

Now that the Department has selected its performance indicators, it needs to use them consistently in order to allow performance to be compared from year to year and to establish trend lines. According to the Auditor General’s Report, the Department is currently revisiting its key indicators for 1998-99. Mr. Ian Green, Associate Deputy Minister of Human Resources Development, told the Committee that he is aware of the need to sustain present indicators in order for them to be measurable and effective. The Committee welcomes the Department’s commitment to its present set of indicators and wishes to see this commitment maintained. It accordingly recommends:

That Human Resources Development Canada should retain its current set of primary and secondary performance indicators for as much time is needed to identify trends and to allow both Parliament and the Department to determine whether performance is improving or deteriorating.

Information for Parliament

A key advantage of results-based management is its ability to generate relevant information for Parliament. This facilitates the Department’s accountability to Canadians and to Parliament for the management of its resources and for the results it has produced.

From the Auditor General’s Report and testimony given by witnesses, the Committee learned that much --- but not all --- of the relevant information regarding the Employment Insurance Account is presented to Parliament. However, this information is not available in any single document. This makes it difficult to assess the results achieved in the operation of the Account, which is wholly funded by employers and employees.

The Committee notes that the Department already produces a single annual report on the Canada Pension Plan that is tabled in Parliament. In his audit, the Auditor General comments positively on this report. The Committee also notes that most of the information regarding the EI Account is already publicly available; placing this information in one document should not impose a burden on the Department. Therefore, the Committee recommends:

That, beginning in fiscal year 1998-99, Human Resources Development Canada prepare an annual report on the Employment Insurance Account for tabling in Parliament. This report should compare results against stated objectives and include audited financial statements, a summary of the services provided, the clientele served, and the benefits paid.

Several important pieces of information regarding the Account are currently not available to Parliament. The actuarial analyses used to set the premium rates for the Account are not made public. This is in contrast to the CPP where such analyses are released annually. Also unavailable is a determination of a reasonable reserve for the Account and the time required to accumulate it. The Committee believes that such information is necessary to strengthen transparency surrounding the setting of premium rates. It therefore recommends:

That the Chief Actuarial Officer of the Office of the Superintendent of Financial Institutions prepare, on an annual basis, an actuarial analysis for the Minister of Finance to be used in recommending the setting of premium rates for the Employment Insurance Account, and that the Minister of Finance table this report in the House of Commons; and

That Human Resources Development Canada includes, in an annual report on the Employment Insurance Account, the actuarial analyses used to set premium rates for the Account and the level of a reasonable reserve for the Account along with the time needed to build it.

As the Auditor General points out in his Report, there is a special importance attached to the Employment Insurance Account. In light of the Account’s importance, the Committee believes that the obligation to issue an annual report ought to be a formal one with a legislative basis, as is the case with regard to the Canada Pension Plan. The Committee therefore recommends:

That the Employment Insurance Act be amended to require Human Resources Development Canada to prepare an annual report on the Employment Insurance Account for presentation to the House of Commons.

CONCLUSION

Human Resources Development Canada has made significant strides toward the implementation of results-based management. This achievement is particularly commendable in light of the challenges involved in bringing about cultural change in large organizations. Success in this department, one of the largest and most important in government, should serve as an example to other departments and agencies.

The Committee wishes to encourage the Department to make further progress, an effort that the Committee believes will be assisted through adoption of its recommendations.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this Report.

A copy of the relevant Minutes of Proceedings (Meetings Nos. 6, 12 and 13 ) are tabled.

Respectfully submitted,

JOHN WILLIAMS

Chair