PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, February 27, 2001

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[English]

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

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I call this meeting to order, pursuant to Standing Order 108(3)(e), consideration of the report of the Auditor General of Canada, February 2001.

Our witness this morning is, from the Office of the Auditor General, Mr. Denis Desautels.

Before I turn it over to you, Mr. Desautels, for your opening statement, I would like to acknowledge that this is the final report to be presented to the House of Commons by Mr. Denis Desautels, the Auditor General of Canada. His ten years of office will come to a conclusion on March 31, a little over a month from now. The report, which was tabled in the House of Commons early this morning, reflects on key issues during his term as Auditor General.

Prior to hearing your words of wisdom, Mr. Desautels, I would like to say, on behalf of all Canadians, how much we have appreciated the contribution you have made to our country over the last ten years.

Many people say Parliament is not as effective as it should be. Many say there has to be more opportunity for individual voices to be heard. Many say government is getting too big and too uncaring. But there is one person whose voice is clearly heard above all others, and that is you, our Auditor General.

As an officer of Parliament, you have been outspoken on issues that are complex, such as debt and deficit. You stood up to the government and qualified your audit report on the financial statements when you deemed it necessary. You've written about the gaffes and scandals that make many people wonder how the government can deliver value for money to the Canadian taxpayer. So when you speak, the nation listens.

Therefore, Mr. Desautels, I turn it over to you for commentary on your final report, which I've sometimes referred to as your musings on ten years in office. We look forward to what you have to say. Over to you.

Mr. L. Denis Desautels (Auditor General of Canada): Thank you very much, Mr. Chairman. Thank you for your kind words. I'm indeed pleased and honoured that this committee has asked me to appear before it to discuss this, my final report, entitled “Reflections on a Decade of Serving Parliament”.

The idea for this report came from a number of people, including members of Parliament, and from my own panel of advisers, who asked me if I intended to write an end-of-term report. No previous Auditor General has tabled such a report, and I gave the matter much thought. Most of the parliamentarians and senior public servants I spoke to encouraged me to do this. In the end I decided to reflect on the work the office has done over the last decade and to summarize my thoughts and our findings. I sincerely hope the report provides a useful summary of the office's main messages, which otherwise would have to be extracted from our several hundred audit reports.

This report addresses five major themes: fixing the country's finances; fixing some of the fundamental systems of government; taking care of the environment; improving the delivery of services; and improving legislative audit. I'll speak briefly on each theme.

First, as to our public finances, at the beginning of the decade Canada was in the middle of a debt and deficit crisis. By the end of the decade things had greatly improved. Nevertheless, it would be wrong to be complacent. We need to draw out the lessons learned from our problems.

Since the beginning of my term I argued that Parliament and Canadians had to be kept better informed about the overall financial status of the country, in order to have a meaningful public debate on deficit and debt issues. And the government has improved the information it provides. The annual financial report, the debt management strategy, the debt report, and the annual economic and fiscal update all represent progress.

But we can do better. The government should reconsider its budgeting system, in particular the part which builds in prudence. This has resulted in large surpluses just before the year's end that create a temptation to spend. We also need to have longer range forecasts that show the consequences of various spending policies decades ahead, so Canadians can judge whether the government is headed in the right direction. Several countries already do this, while Canada still publishes only a five-year target.

We also need to continuously review expenditures, to cut non-performing or less important programs. Program review in the mid-1990s did this quite well, but on a one-time basis. Without this kind of discipline, inertia will allow spending to build up again in an unplanned manner.

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Finally, we need to ensure that the revenue side of the equation is secure. Serious challenges remain, such as taxation of the international activities of Canadian taxpayers and of the underground economy. Parliament has a key role to play by ensuring that tax legislation is equitable, that tax policy is consistent with objectives, and that policies have been adequately implemented.

Auditors spend a lot of time thinking about the plumbing and wiring of government. These issues sometimes appear to be remote from the interests of Canadians, and of importance only to government insiders. But the fact of the matter is that if the structure of government is not right, it will be much less likely that Canadians receive the programs they want at an appropriate price.

I believe there are three areas that deserve priority in Parliament's consideration: human resource management, new delivery arrangements, and management accountability.

[Translation]

Mr. Chairman, human resource management is at the heart of every government activity. The delivery of federal programs depends entirely on the public service. The federal public service was not functioning well at the beginning of the 1990s and renewal and reform efforts have been continuous since. Public Service 2000, a renewal project which started at the beginning of the decade, aimed at making the public service less rule-bound and more focussed on service. Another project called La Relève tried to deal with the malaise of the public service and with the forecast shortage of executives. Neither of these major initiatives completely met expectations. They were impeded by too many players trying to manage the public service and of a lack of interest in internal problems at the political level.

Without effective action now, things will only get worse. The federal government is having difficulty attracting and retaining knowledge workers and the demographics of the public service point to the wholesale depletion of senior, experienced staff in the next 5 to 10 years.

I am discouraged by this. The system does not seem to be able to reform itself. Radical measures are needed now more than ever before. The government should consider setting up an independent review aimed at changing the legislative structure of human resource management to break the log jam. At the same time, it might consider models put in place in other jurisdictions that are less centralized or uniform than the Canadian model.

This is a problem that should not—and cannot—be left to drift for much longer.

During the 1990s the government experimented with new ways of delivering services—to try to lower costs and to improve quality and levels of service. By 1999 we found that 77 collaborative and delegated arrangements with other levels of government or with the private and voluntary sectors cost the taxpayer about $5 billion each year.

Some of these arrangements lack adequate accountability structures such as appropriate annual reports. Sometimes the federal government did not demonstrate due diligence in finding out whether its partners could deliver their side of the arrangement. Often, little was reported to Parliament on the performance of the arrangement. Measures and baselines were missing.

Contracting out has been another new means of delivering services. The government has managed this well at times, as in the case of the Prince Edward Island fixed link. In other cases, such as the NAV CANADA privatization and the NATO Flying Training in Canada program, the government did not adhere to the basics of figuring out the costs and benefits of these deals.

Overall, two major improvements are needed: there has to be improved transparency and accountability; and if the government wants to do business in this way, it has to learn to negotiate contracts in a more business-like manner.

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[English]

Canada, Mr. Chairman, has a strong system of political accountability, but management accountability in government is more diffused. The two pillars of management accountability, financial and results management, are weak. While financial management is improving slowly, results management seems stuck in a perpetual planning phase, with managers looking for perfect measures.

Lack of progress is not caused only by technical difficulties. Rather, providing performance information that is balanced and candid is seen to carry too many risks. This can be true for both ministers and public servants. In short, we have a government culture in which mediocre reporting is safe reporting.

To break out of this, Parliament may need to legislate the provision of performance information by departments. Perhaps we should separate political and bureaucratic accountability more clearly. We should probably link the pay of senior officials to financial and performance results more closely.

Financial management is the cornerstone for ensuring that we receive value for money. We need to control our dollars and we need to know how much things cost. Until very recently, deputy ministers did not worry much about financial management. It was regarded as a subordinate administrative function. As long as there was cash in the drawer and rules were not being broken, everything was fine. The prime directive was never to allow funds to go unspent and lapse at year-end.

The government is now devoting a huge amount of resources to implement its financial information strategy, which should move us away from this very basic level of expectations. But problems remain. Accrual accounting will help departments record costs as assets are used up, but appropriations for funding will not be on an accrual basis for some time. This means that two accounting systems will be used. Equally important is the need to link costs and results, and to ensure that the performance of senior public servants is assessed on that basis.

Concern over the state of the environment has led to a huge change in our office. Creating the position of the Commissioner of the Environment and Sustainable Development is the embodiment of this concern.

The commissioner has identified three weaknesses in federal management of environmental and sustainable development issues: gaps between commitments and action; lack of coordination among departments and across jurisdictions; and inadequate review of environmental performance and reporting to Parliament.

First, the federal government is better at setting targets than working to reach them. This has created gaps. For example, the federal government and the provinces agreed on a plan to reduce ground-level ozone, an important component of smog, but never agreed on how to carry out the plan.

Second, when my predecessor, Mr. Ken Dye, considered the environment, he asked, “Who's minding the store?” We're still not sure who is. Federal departments are deeply divided on how to manage toxic substances, and the federal government and the provinces have entered into agreements that lack requirements to find out whether they have been implemented.

Finally, reporting of environmental information is no better than the reporting of other results in the federal government. In other words, it is rudimentary at best.

The commissioner, Madame Johanne Gélinas, is attacking these problems by working with federal departments to develop sustainable development strategies that work. She is also carrying out environmental audits and is administering the petition process through which Canadians can hold the government accountable for environmental matters. She's also planning to make this process more visible.

I would urge members of Parliament to give priority to those three key environmental issues.

[Translation]

Mr. Chairman, the largest share of audit work has been to examine the delivery of services to Canadians. It is impossible to condense what we have learned in the last 10 years down to a few words or cases. Indeed, some of our most important findings and recommendations were unique to a single case. Nevertheless, three themes run through our work of the last 10 years.

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First, it has been costly for the government to defer hard choices. Politics is said to be the art of the possible. One feature of the "possible" is that all stakeholders come out better off than they were before. However, when no win-win solution presents itself, there is a tendency to play for time and to avoid hard decisions. At a management level, this results in a drift and prevents public servants from designing economic, efficient, and effective programs.

The report provides some examples where there has been considerable drift over the last 10 years: An overall policy framework for sustainable fisheries has been elusive; improvements in the life of First Nations are proceeding at a frustratingly slow pace; and large budget cuts have been made but needed structural changes to the Canadian Forces have been pushed off.

Second, the cut-backs and re-organizations of the 1990s did affect departments. Human Resources Development Canada, Fisheries and Oceans and National Defence all provide cases where performance difficulties can be attributed, in part, to cuts.

Finally, the departmental cases presented in my final report reflect the management problems I have already mentioned: weak control structures, inadequate results management and a shortage of highly-trained people.

I hope that this Committee can consider these over-arching problems when it deals with specific cases that arise from the Office's usual periodic reports.

[English]

I think over the last ten years our office has also learned a thing or two about improving its own operations. I firmly believe that legislative audit is key to maintaining our government's current level of probity and efficiency and to improving it in the future. We need to safeguard the independence of the office and to allow it to maintain its effectiveness.

Looking at the office, I challenge my own colleagues to move beyond simply reporting that problems exist to identifying what caused them. We already do this to some extent, but the office needs to do more. Identifying causes moves management a step closer to a solution and makes ducking the problems more difficult.

Structurally, we need to review how the office's budget is set in order to preserve its independence. At present the office's budget is negotiated with Treasury Board officials. This is not a comfortable situation because the office audits many activities that fall under the board's responsibility. A better system is the one used in the United Kingdom, where the audit office budget is recommended by an all-party, non-partisan committee of members of Parliament.

We also need to clarify the rules as to which entities the Auditor General should audit. Functions such as food inspection, park services, and revenue have been moved outside of what we call the core of government, but the Auditor General has remained their auditor. However, in some cases, such as the millennium scholarship fund and the Canada Pension Plan Investment Board, the Auditor General is not the auditor. Parliament needs to set guidelines to establish when its auditor should examine new entities and report to the House.

In conclusion, Mr. Chairman, it has been a fulfilling ten years. I come away impressed by the importance and strength of our institutions and the political process protecting us from adverse social, economic, and environmental trends and guarding us against vested interests. Our institutions are important. Politics are important. Those of us who are or have been inside the system have a duty to ensure that we remain accountable for our actions and the vast resources and aspirations entrusted to us.

Finally, Mr. Chairman, I would like to take this opportunity to thank my colleagues in the office for supporting me with such skill and energy in the last ten years. I would also like to thank ministers, all parliamentarians and in particular the members of this committee, and public servants for the respect they've shown the office and me personally and for their hard work to implement our recommendations.

I'm grateful for having had this unique opportunity to serve Parliament and the people of Canada.

This concludes my statement, Mr. Chairman, and I would be very happy to answer the committee's questions.

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The Chair: Thank you very much, Mr. Desautels. We appreciate your overview of ten years in office.

I notice one point in your statement where you say “As long as there was cash in the drawer and rules were not being broken, everything was fine”. Deputy ministers are only now starting to grasp the idea that they should spend well and manage well the $165 billion we spend each and every year, or we intend to spend this coming year.

I think we're going to have some good questions this morning, so we'll turn it over to Mr. Day. Mr. Day, for eight minutes, please.

[Translation]

Mr. Stockwell Day (Okanaga—Coquihalla, CA): Thank you, Mr. Chairman. Mr. Desautels, I'd like to thank you sincerely for your dedication over the past 10 years. Even though it was not always easy, you carried out this enormous task with honesty and an open mind. And I think that you also changed things for the taxpayer. I thank you for that.

[English]

Please do not, sir, interpret any brevity with my appreciation of you with any diminishing respect in terms of the work you have performed. It's just that we only have eight minutes. So I'll continue to thank you profusely at a later date, but thank you again for the tremendous service you've performed.

As I look at your comments today, and certainly reflecting on previous comments, I admire your transparency in being able to say that taxpayers get upset and angry when they see their tax dollars squandered or used with less care and prudence than they must to make ends meet in their own household budgets.

I appreciate you showing your humanity when you say, and I'm quoting you, sir,

Frankly, I share their frustration. It is discouraging to witness new incidents of waste and mismanagement crop up hydra-like after older ones have been discovered and dispatched.

I have to also thank you for your transparency when you also say in your recent comments that you continue to answer the question of who is minding the store. You were reflecting on a previous Auditor General. Then in your remarks today you say that we are still not sure who is.

You're to be commended for your openness in asking that question. It leaves us, of course, with a great sense of frustration. We want to find out who's minding the store also and we have difficulty doing that. As we look to your reporting, there is a previous quote from a minister who said, and I'm quoting, “There is no money missing. We know where it all went.” But you had stated, and you continue to state, that there are problems with financial management and control, including weakness in the contribution agreements; amendments made without a supporting rationale; payments made for ineligible costs and expenses; payments made without claims having been submitted; improper advance payments; inconsistent treatment of shared costs; and payments approved without the necessary authority.

That's a long list. I won't ask you to comment on those, but would you agree that no money went missing? The department had said and the minister said that no money went missing. Do you agree that no money went missing, or did some go missing?

Mr. Denis Desautels: Mr. Chairman, Mr. Day is referring to the report that we prepared on HRDC, as well as, I assume, a lot of exchanges that have taken place on that particular situation. In our audits we concluded that the problems we found put the spending of public funds at unnecessary risk. We gave examples of certain payments that were made that should not have been made. Quite a number of other problems with the process followed before expenditures were made and after the expenditures were made.

Our conclusion—we don't use the same words—is that there have been errors in the dispersal of some grants and contributions, and not only at HRDC, as we have found the same thing in other programs as well. The bottom line for me is that at the end of the day not only have certain moneys been paid out—this is hard to quantify—that should not have been paid out, but the way in which those public expenditures were managed was far below the levels of control that should have been exercised. So in the end, it's not an optimal way to spend public funds.

Mr. Stockwell Day: Sir, do you feel money went missing then?

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Mr. Denis Desautels: Mr. Chairman, there were some grants and contributions that should not have been paid out. We know to whom they were paid, and we're saying there are cases where those moneys should not have been paid out.

Mr. Stockwell Day: I appreciate that you're in a difficult position, sir. You've said today—and again I appreciate your forthrightness—that initiatives were impeded by too many players trying to manage the public service. Of course I would agree with you politically, but you're saying in a non-partisan way that there's a lack of interest in internal problems at the political level.

You say that without effective action things will only get worse and that the system does not seem to be able to reform itself. I agree with you that this is a problem that should not and cannot be left to drift for much longer.

Given the time we have, if you could recommend one structural change that government should put in place to reduce the huge number of problems, what would it be? What would be your priority?

Mr. Denis Desautels: Mr. Chairman, we say in our report that the government should give serious consideration to other models of organization and look at situations where the public service's human resources are administered on a more decentralized and less uniform basis than what we're trying to impose.

What's happening at the federal level in Canada is that we strive to maintain a structure that initially tried to have the same standards across all government organizations—the same job classifications, the same remuneration and approach. That creates a very, very heavy system. Recently, other countries have moved away from this to some extent.

One of the things I mention in the report is that we give serious consideration to—or examine carefully—models from other countries that seem more decentralized and more flexible.

Mr. Stockwell Day: There are a number of other governments, including provincial governments, that have put in place a system of first goals that must be met. Basically, it sets out the mandate for spending, then establishes a process to measure spending, then publishes a final annual report, which gives the government a score on whether or not it has achieved the goals.

I don't want to appear self-promoting here, so I won't mention my specific province—Alberta. Are there any others you could recommend at the provincial level? Look, I'm not saying this to advance anyone's work, but there's been good work done by public servants in other provinces. Could that be a recommendation? Would it be worthwhile to pursue?

Mr. Denis Desautels: Mr. Chairman, we are aware of some very good initiatives in jurisdictions other than just Alberta. Ontario, Quebec, and I think Nova Scotia have started to legislate reporting standards for departments and other government organizations. I think it's time the federal government consider the value that type of legislation would have in terms of pushing the agenda ahead.

Besides Canadian jurisdictions, the U.S. and Australia and others have moved quite aggressively in that direction. So I think there are good examples around and we should look at them very closely and see to what extent this kind of legislation really works.

[Translation]

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

Mr. Desrochers, please. You have eight minutes.

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Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much. Thank you, Mr. Desautels, for taking the time to write this document relating your final observations about your work as Auditor General. I hope that the federal government will pay closer attention to your final remarks, because you have, time and time again, pointed out substantial shortcomings in this government, and those in power have often disregarded your numerous recommendations. I hope that this will be good bedside reading for the people in power, so that they become aware of what you said during the past 10 years.

Now I want to spend some time on two or three problems. This is the first one. I think that during the past 10 years, you witnessed the creation of many agencies that took over functions from departments. We know that this allowed the party in power to appoint some of its good friends to the boards of these various agencies, but was the functioning of the various sectors involved improved by the administrative and functional changes that these new agencies brought in?

Mr. Denis Desautels: Mr. Chairman, I feel concerned about the way some agencies were created and implemented and by the accountability mechanisms of some of these agencies. In some cases, as I mentioned in my statement, new agencies were created, like the Canada Customs and Revenue Agency, the Canadian Food Inspection Agency, and the Parks Canada Agency, which remain under government control. In fact, their accountability mechanisms are quite good.

On the other hand, many agencies were created and are still being created just slightly outside the range of government control, which means that Parliament does not have the same opportunity or capacity to see how these agencies really spend public money. I think that even if these agencies are structured in a way that places them slightly outside of government control, they spend public money nonetheless and they should follow just about the same strict measures as the departments do when spending public funds. Therefore, I feel concerned, and I mentioned this several times, about the way some of these agencies are created and about their accountability and auditing mechanisms.

Mr. Odina Desrochers: Don't you feel, Mr. Desautels, that for the past seven years the Liberal government has been resorting to this manoeuvre in an attempt not so much to hide things but rather to make the functioning of various sectors less accessible? For instance, you mentioned the Millennium Scholarship Fund and the Canada Pension Plan Investment Board. These things were slowly withdrawn from your view. If the watchdog—excuse my expression—is no longer there, if the one who must watch all that is going on within the government apparatus is no longer there, then who will watch these things?

Mr. Denis Desautels: Mr. Chairman, I think that Parliament should eventually deal with this question and, more specifically, with the Auditor General Act and with the principles that should determine who should be auditing what. I think that it would be good to have guiding principles that we could refer to when creating new agencies. This could help people to draft clauses on accountability, on auditing, and to stipulate who the auditor should be. Thus, the methods need to be clarified.

I say this, Mr. Chairman, not in order to protect the interests of the Office of the Auditor General of Canada, but rather to protect the interests of Parliament itself. Parliament must have a right to oversee those organizations, and the government's right to oversee them is partly exercised by the Auditor General. In the end, the interests of Parliament must be kept in mind when discussing the structure of these new agencies.

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Mr. Odina Desrochers: Now that you are leaving, don't you feel, since you began doing this work, that you have lost some of your power over what the government, over its expenditures and estimates?

Mr. Denis Desautels: Certainly, new agencies have been set up and they are responsible for rather large budgets that we can no longer audit or oversee. Can we consider that as a problem?

I think that the more serious problem, as I just said, is that Parliament itself has lost some of its ability to oversee activities that involve the expenditure of public money.

Mr. Odina Desrochers: I have another question, Mr. Chairman.

Regarding the sixth point, you make a comment that I think you have made many times. You say:

The government should reconsider its budgeting system and in particular the part in which it builds in prudence. This has resulted in large surpluses just before year-end that create a temptation to spend.

The current minister holds the record for the biggest gap between forecasts and reality. Some gaps are quite unbelievable. Sometimes they can reach 30, 40, or 50%.

Despite your numerous comments, do you think that the Department of Finance under the current government will take any measures to stabilize these things? I'm afraid that sooner or later, the Finance Department will loose credibility if it keeps making forecasts that are so far removed from reality.

Mr. Denis Desautels: Mr. Chairman, we've raised that point several times in the past. Obviously, I can not speak for the government. It is up to the government to decide whether it wants to change its methods in preparing the budget, but we emphasize the fact that by using a prudence factor in projecting revenue and expenditures, and by adding an extra cushion, we have had rather substantial surpluses right before the end of the fiscal year for the past two or three years. This means that the government is often tempted to quickly invest in new projects, and these decisions can be made rather quickly.

I don't think that that allows us to take the best decisions, because after all, large amounts of money are being spent and when things are done rather quickly, the decisions that are made are not always as well thought-out as they might have been.

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

Mr. Shepherd, you have the floor.

[English]

eight minutes.

Mr. Alex Shepherd (Durham, Lib.): Mr. Desautels, I'd like to express, on behalf of the government members, how we've always respected your decision-making process and the reports you've provided this committee. I think back to when I first started here, in 1993; I was vice-chair of this committee. We've been on the receiving end of your criticism sometimes, and that's fair enough, part of the governmental process. But we've certainly always respected your reports and looked forward to them.

On the issue of reinventing the public service, I think mostly what you're saying here is that we have to get on with the job of making this a more efficient and more effective public service to serve the people of Canada. Your comment on number 13 here says:

Radical measures are needed now more than ever before. The government should consider setting up an independent review aimed at changing the legislative structure of human resource management to break the log jam.

I think this is symptomatic of a lot of the problems that exist here—the human resource section—but you've also talked about that slowness to change. They all seem to be part and parcel of the same process. You have stopped short of looking at the structures that exist within the human resource package. I wonder if you could comment on them.

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Reading between the lines, a good number of public sector unions are involved in this process. Has that process outlived its usefulness to some extent? Is that process resistant to change in moving toward possibly breathing more life into the existing public service sector?

Mr. Denis Desautels: Mr. Chairman, in our April chapter entitled “Roles and Responsibilities for Human Resources Management in Government”, we did go quite a bit further than I did today in commenting on the structural dimension of this.

I think it's really fundamental to the resolution of the whole problem. There are quite a number of people involved in the system right now. While we cannot necessarily cut back the number of people involved, we should be able to clarify the role of each and also perhaps rethink what the role of each should be. There could be a rebalancing of responsibilities, let's say, between the Public Service Commission and the departments and between the Treasury Board Secretariat and the deputy ministers. If there's any pressure going in a certain direction, it would be toward giving deputy ministers more responsibilities than they have now for managing their human resources in their department.

These are terribly important issues, and we have to have the most appropriate structure. But I think we're at the stage where, when we talk about more radical changes, we should rethink how the responsibilities are shared among the various players in the system.

Mr. Alex Shepherd: You've stopped short of addressing the structural situation that exists today where we have a significant number of public service employees who are encompassed within a formalized union. I'm not criticizing unions. I'm just saying that the history has not been all that positive. It has been very confrontational during this period of time.

Clearly, to reinvent a public service, we need to create some kind of cohesion. We have to have cohesion within the workplace. It has to be a desirable place to work. People aren't working for the public service because they think it's not a desirable place to work. I've talked to lots of people, and there are a number of positive reasons they don't want to work within the public service.

I think we have to look at all of the factors that affect that. You haven't really dealt with some of the conflict that seems to exist in the workplace itself. I don't know if you have a comment on that issue.

Mr. Denis Desautels: I do have a comment. It may not completely address Mr. Shepherd's concerns.

In our April chapter we did review the history of human resources management and management-labour relations over the last 40 years, including all that has been done in those 40 years in terms of not just pieces of legislation but also jurisprudence that built up over time. We described there quite clearly the complexity of the system that has been built up over all of those last 40 years.

Indeed, we are saying that when looking at solutions, we should consider the legislation that's in place. Is it still appropriate in this day and age? Does it enable government to move quickly enough in terms of hiring and dealing with the new types of people who want to work in government, the knowledge workers? I think there's a need to reconsider not just the structural issues, but also the legislation that underpins all of that.

Mr. Alex Shepherd: I have another question. Some people are suggesting—it's not a big feature of this, but it's a partial feature—that what this country needs is whistle-blowing legislation to protect civil servants who want to address issues of financial impropriety and so forth in the workplace. I'm concerned about whether that adds to or takes away from the concept of cohesion in the workplace. I'd be interested in your comments on that.

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Mr. Denis Desautels: Mr. Chairman, I didn't talk about this today, but in the recent past we have done a certain amount of work on the issues of ethics and values in the public sector. We did consider the need for certain mechanisms for people to deal with ethical concerns or conflicts they have around ethical concerns in their departments.

We are in favour of some mechanisms for dealing with these concerns, but we think these mechanisms should be, as much as possible, early on in the process within an organization. You would then have much less need, if ever, to go public with a big confrontation over your problem. We think there should be measures within each organization of government for people, when they have that kind of conflict, to deal with those quickly enough.

I think if you have that, it should not go against this notion of cohesion within the workforce. In fact, it could help if you have those mechanisms of conflict resolution or mechanisms for dealing with ethical concerns early in the process.

The Chair: Thank you, Mr. Shepherd.

Ms. Wasylycia-Leis, please, for eight minutes.

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

I would like to extend thanks to Mr. Desautels for his ten years of service to Parliament, and I say so on behalf of all of my colleagues in the NDP caucus, both past and present. As a relatively new member of Parliament, I have certainly benefited enormously from your reports, particularly in the area of health care. I think you have exposed and enlightened us on some very critical issues that wouldn't otherwise have made it to the public agenda. I think in particular of your reports on the enforcement of the Canada Health Act, food safety, national health surveillance, and aboriginal health care.

My one frustration—and I guess I would like to ask you, Mr. Desautels, if you've experienced this or if you have any enlightenment for individual MPs around this—is that we can't seem to make the leap from these reports and these great recommendations into government action. I think most particularly of aboriginal health care, on which you've made recommendations for years—I raised this in the House yesterday—some of which have gone almost totally unheeded. Today, we end up paying a price for the failure to act on these recommendations, and the consequences are permanent and damaging in terms of Inuit and first nations control over health care.

I guess my question is what advice you would have for us, both in terms of structural changes and individual work that we do as MPs, to help ensure the translation of your work into actual, concrete recommendations and actions. Part of that is also a frustration I feel about getting government these days—and I think there has been an increasing tendency on the part of government to do this—to ignore completely or contradict your recommendations. I think, for example, of the recent food safety report and an issue as simple as the failure of this government to have a pathogen reduction process. To have that totally denied by the government of the day tells me that the necessary weight has in fact not been accorded to you and your office, and it's something we have to deal with.

My questions are really around how to deal with how we, as MPs, can give more prominence to your reports in Parliament. One of the problems seems to be that we get all these reports on one day and they all just get lost in the ongoing work of Parliament. We never get a chance really to explore each one separately. There is also no specific requirement for these reports to go to the appropriate departments, aside from public accounts, which is a frustration of mine as well.

I'll leave it at that.

The Chair: Let's hear what the Auditor General has to say.

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Mr. Denis Desautels: Mr. Chairman, I cannot overemphasize the importance of MP support for getting our recommendations eventually accepted and implemented. We try to gauge our success in terms of what percentage of our recommendations eventually get implemented. We estimated it's around 60%. It could be higher. We would like it to be higher. But the fact that it's around 60% is already not bad at all. I also give credit for that to support from MPs, in particular the public accounts committee.

I think the public accounts committee has a good process for reviewing our respective reports, calling in witnesses, obtaining from these witnesses acknowledgement of the problem and, many times, a commitment to correct the problems. The rule of the House whereby the reports of the committee then have to receive a response from Parliament or from the minister within a certain number of days—I think it's 150 days—also puts pressure on the whole system to deal with the recommendations we've made and have been supported by the public accounts committee.

I think that's a very sound process. I would not wish that to be diminished in any way. I would encourage the public accounts committee to maintain that intensity in their work, in their action. I also wish that other standing committees would conclude their hearings of our reports—because we do appear in front of a number of other committees—with similar reports calling for action. If we've recommended something, that's one thing, and the government does not always accept what we recommend. Most of the time they do, but if that's further endorsed by a standing committee, it means a lot. So I would hope that other committees would have a process similar to that of the public accounts committee.

I would like to add one comment, Mr. Chairman. There are situations where the government and ourselves will agree to disagree on an issue. Among those there have been some where, over time, the government nevertheless came around and eventually implemented changes along the lines we would have recommended. So sometimes the initial resistance should not be taken as a sign of definite disagreement with our proposals. With some persistence, eventually we've seen the tide changing and the government taking a different position.

The Chair: Ms. Wasylycia-Leis, a brief question.

Ms. Judy Wasylycia-Leis: I appreciate the response, especially the recommendation that your reports not only appear before public accounts, but go to the respective standing committees—something we've had some difficulty with in the health committee. I'm wondering if this recommendation, Mr. Chairperson, could be made from public accounts to Parliament as a whole, to give it some standing and merit, as a way for us to pursue that very useful recommendation.

The Chair: Perhaps when I'm the Prime Minister, I can dictate that, but in the meantime I can only urge all our colleagues in every committee to make full use of the Auditor General's report and to effect as much change as they can.

Ms. Judy Wasylycia-Leis: Could it be a recommendation to Parliament from a report of this Standing Committee on Public Accounts?

The Chair: Perhaps you can come forward and make that motion, and we can take it from there.

Ms. Judy Wasylycia-Leis: All right, I will. Thank you.

The Chair: Now we'll move to round two, which is a four-minute round. Mr. Day, four minutes please.

Mr. Stockwell Day: Thank you, Mr. Chairman.

Sir, you have talked in the past about your frustration with the system and your disappointment with the problems that keep cropping up year after year. You reflect on barriers you run into, in spite of your very good efforts and the efforts by your staff.

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You said today in your comments regarding certain initiatives that they were impeded by too many players trying to manage the public service, and you talked about a lack of interest in these problems at the political level. Since management is about people, have you been able to identify any of the players who have impeded the system and any who lack interest at the political level? Have you been able to do that?

Mr. Denis Desautels: Mr. Chairman, in terms of the management of human resources in government, there are a number of very important players. You have the Public Service Commission, which, as an instrument of Parliament, has a role that is initially meant to be a protector of the merit principle. But in addition to that, the commission has received responsibilities dealing with recruiting for the public service, with some training within the public service, and so on.

You also have the Treasury Board and the Treasury Board Secretariat, which constitute the official government employer. They negotiate, for instance, the collective agreements with all of the employees and also lay out the rules for the management of staff within the public service.

Of course you have the Privy Council, and the clerk of the Privy Council is the official head of the public service.

On top of that you have deputy ministers, who run huge organizations and have to manage the human resources in their departments.

These are the main players. Unless it should be important one day to have all the planets aligned properly with all these players so as to make the changes to the system both structurally and also through legislation in order to make the system run a lot smoother.... But it would be important for all these actors to really get together and agree on what the solution should be.

Mr. Stockwell Day: How about those showing a lack of interest at the political level?

Mr. Denis Desautels: This is, Mr. Chairman, a very general statement. I think members of Parliament in general and ministers as well really haven't seen this over the years as a top priority. I think that members of Parliament are naturally much more interested in things that affect their constituents more directly, that is, in the services to their constituents. So it's a natural tendency to put that aside a bit as just the internal functioning of government, not something that requires the same kind of attention. But I think it's a mistake, because in the long run a well-performing public service is key to giving Canadians the kinds of services they pay for and deserve.

The Chair: Okay. I understand Mr. Peschisolido is going to finish up the four minutes. Thank you, Mr. Day.

Mr. Peschisolido.

Mr. Joe Peschisolido (Richmond, Canadian Alliance): Mr. Chair, I'd also like to express my appreciation to the Auditor General. As a new member of Parliament, I found his statements and his reports very informative on how the government works, or in many cases does not work.

In 1992 and again in 2000, you laid out a list of 13 easy-to-follow rules, and you talked about the fact that they were quite user-friendly and that any public servant from a receptionist to the Prime Minister would be able to follow them when spending taxpayers' money. Some of these rules were: do not do anything illegal; do not waste public money; and act impartially, honestly, and fairly. So my question to you is the same. Why do these problems continue to exist, particularly within the HRDC area?

Mr. Denis Desautels: Well, Mr. Chairman, there have been in the last few years some problems of lack of control over the spending of public funds, and the whole area of grants and contributions across a number of departments has been highlighted as being perhaps the main problem or as a an example of what not to do.

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So I felt it useful in my December 2000 report to summarize what the basic rules of spending public funds should be. Hopefully it's not something that will have to be repeated every year. However, reminding us of these rules once in a while is in my view quite useful, particularly since we've seen some slippage in some situations in the last three or four years, especially in the grants and contributions area.

The Chair: Thank you, Mr. Desautels. Now we'll go to Mr. Desrochers for

[Translation]

four minutes, please.

Mr. Odina Desrochers: Thank you, Mr. Chairman. Mr. Desautels, I'd like to come back to your role and your work as Auditor General of Canada. Parliament feels that more and more power is being concentrated in the Prime Minister's Office. Don't all these agencies and organizations that have been set up just serve to facilitate this shift of information and administrative powers to the Prime Minister's Office?

You said that you visited the United Kingdom to ascertain how their Auditor General works. I would imagine that you also noticed other things. Did you really see a similar concentration of powers in the Prime Minister's Office there, like the one which is becoming increasingly evident here?

Mr. Denis Desautels: I'll present the challenge in a different way. We discussed this in our reports. There must be a balance between executive and legislative power. We have to give lawmakers, the House of Commons and Parliament as a whole, the necessary tools to hold the government accountable for its actions and to ensure, therefore, that a balance between the two powers is respected. Obviously, our role is to support elected officials in their duty of holding the government or the executive accountable for its actions.

Of course, in so doing, we must challenge the organizations which have been set in place because they can potentially aggravate the imbalance that might exist between the executive and lawmakers. The creation of new agencies means that some major activities now take place outside the government. Therefore members of Parliament cannot scrutinize them directly. Consequently, yes, it does have an impact on the balance between legislative and executive power.

Mr. Odina Desrochers: Mr. Desautels, the situation that you have just talked to us about seems to concern you. Do you think that given all the changes that have been made over the past few years, the Liberal government should, even if the agencies have been created—for example, the Department of Revenue, became an agency-change your mandate?

Should everything that has been set up by the government continue to be monitored by the Auditor General? Is the shift and the lack of information—information which it is becoming increasingly difficult to obtain in the House of Commons—the topic of one of the recommendations that you have made, in light of your 10 years of experience?

Mr. Denis Desautels: Mr. Chairman, as I said earlier, the issue of who should monitor the various bodies is crucial. We should look at this issue and we should set out relatively clear principles that have to be followed when a new agency is created.

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I'd like to point out to the committee that in the United Kingdom, members of Parliament looked at this issue. A member of Parliament there recently produced a report entitled: Holding to Account: The Review of Audit and Accountability for Central Government. This is a first look at the issue that we are discussing today and I think that it would be a relatively useful reference document for members of this committee and for members of Parliament as a whole.

The Chair: Thank you very much.

[English]

Mr. Myers, four minutes please.

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Thank you, Mr. Chairman.

First of all, Mr. Desautels, as a former vice-chair of this committee, I want to thank you for the tremendous service you have given, not only to Parliament, but to all Canadians.

I was heartened to hear Mr. Desautels say in response to an earlier question that in fact money was not missing. We know who they are, I think you said. There is an attempt by the government to recover that money. So I think that's good news for taxpayers.

I'm glad too we didn't go down the road of checking into individual provinces—Alberta, for example. We might have had to talk about grants to tuxedo companies and Dairy Queens and others. We didn't want to do that, nor did we want to look at the Goddard affair at $800,000 with a $70,000 cheque cut by Mr. Brittain back to the Alliance Party. We didn't want to go down that path.

What we're more interested in, Mr. Chairman, is first of all whether the Auditor General would now say, as he is finishing up his tenure, that it was a good move to report four times as opposed to one, as he was asked to do with the amendment in 1994.

Second of all, there has not been a review of the Auditor General's office since 1976. You are now in a very valuable position to comment on that. Is it time for a review of that? We know that when it comes to who's auditing the auditor, under financial considerations you have that done, and we know that it's done and everything's fine. With respect to quality of work, is there an opportunity now for us to take a look at peer review? Maybe you're already starting that. Somebody tells me that perhaps you have already been thinking about that.

I repeat, Mr. Desautels, that you are in a very valuable position to guide us, not only as a committee, but all parliamentarians, in terms of whether we should take a look at what has transpired since 1976. It seems to me governments change dramatically—technology, how things are operated, how departments are operated. It seems to me that perhaps it's a little outdated. Would you agree? If you do, tell us what to do, and if you don't, tell us why not. I'd be interested in the comments on those and then I have a subsequent question.

The Chair: I'm not sure we'll have time for a subsequent question after all that, Mr. Myers, but let's see what Mr. Desautels has to say.

Mr. Denis Desautels: I'll try to be brief, Mr. Chairman.

On Mr. Myers' first question, was the amendment to the Auditor General Act in 1994 allowing for periodic reporting a good thing, my answer is absolutely yes. It's something that should have been done much sooner. I think it's working out well for everybody. So it's something I have absolutely no regrets about.

Is it time to review the Auditor General Act more broadly? The answer to that is yes, as well. It's about 25 years old and things have changed in 25 years. There are things that need to be clarified. I talked about some of those today. The scope of the work of the audit office, the funding of the office, the maintenance, the protection of the independence of the office, and the entities that should or should not be audited by the office are examples of questions that need to be looked at fairly quickly.

In terms of peer review of the office, we have made progress in that area. In fact we've had a peer review carried out on our office in the last two years by an independent firm. So we're well into that direction anyway.

On the overall question of whether we should review the legislation, I think it's about time to do that.

Mr. Lynn Myers: Very briefly, Mr. Chairman—

The Chair: Your time is up.

Mr. Lynn Myers: Oh, you've been very lax with the others, Mr. Chairman.

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The Chair: Madam Jennings, you're next.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Desautels. I would like to join my colleagues in thanking you and your team for your excellent work during your term of office.

I am sorry to see you leave. Any general review of legislation should perhaps look at the possibility of appointing an auditor general for more than one term.

I have two questions. Firstly, as a parent, I receive school reports for my daughter, who is currently in third grade. For each subject, she is given a grade as follows: "has attained performance well above requirements", "has attained performance above requirements", "has attained performance requirements", "failed to attain performance requirements". An overall grade also shows whether she has met the performance requirements in all subjects, whether she has exceeded them or whether she has exceeded them greatly.

Following 10 years of monitoring all government departments and several agencies, do you think you are in a position to evaluate the overall performance of the government? That was my first question. Have they far exceeded requirements? We know that they have not. But has the required performance been exceeded? Has the government met the required performance or not?

My second question has to do with changes in the public service and the management of human resources. This area has become so complex that there is now a pressing need to review the whole system.

Having already worked in the private sector, I am aware that, in the case of GE, for example, some of the company's branches here, in Canada, manufacture light bulbs and that other branches in the United States and elsewhere in the world also manufacture them. Each branch must compete with the others for research and development money and investment from the parent company.

I was wondering whether a review of the powers and responsibilities of deputy ministers in managing their own human resources... Shouldn't a more flexible system, which would give more power to each departmental deputy minister and regional minister be seriously considered?

Thank you.

Mr. Denis Desautels: Mr. Chairman, the first question is obviously quite a difficult one. Appraising government performance is not like appraising a student's performance. Having said that, I have a few comments I would like to make.

I think that generally, management by the federal government has improved during the 90s. There have been major changes in federal government management. In particular, we have had to address a budget crisis which gave rise to a certain amount of prudence in terms of managing public money. Of course, new problems appear in different areas from month to month. My overall impression is that things have gone in the right direction.

However, there are areas where change has been too slow. Human resource management is a case in point. In the area of budget management, there has been some progress, but it has been very slow. Indeed, in reality, accountability focusses on performance and performance management remains a problem area. Things are moving too slowly. I don't know if what I said has helped you to understand the thrust that has been adopted.

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There are also areas where the Canadian public service compares very well to those in other countries. In particular, we could teach a lesson on organizing elections to our southern neighbours.

Voices: Oh, oh!

Mr. Denis Desautels: Our justice systems work very well. Despite criticisms that we have levied against it, revenue collection by Revenue Canada compares very well with that of other countries. In terms of monitoring financial institutions, I think that Canada is a leader in this area.

Consequently, there are areas where the federal public service is doing very well and there are other areas where there are concerns. Indeed, our report mentions the Department of Fisheries and Oceans, which has had to deal with stock depletion. I don't think that we can hold ourselves up as an example in this area. Therefore, there are areas where things are working very well and there are other areas where we still have to address major challenges.

Now, to turn to Ms. Jennings' second question...

[English]

The Chair: I think we're going to have to leave the answer to Ms. Jennings' second question. We're already up to over six minutes.

[Translation]

Mr. Denis Desautels: Mr. Chairman, I'll be very brief.

The Chair: All right, please be brief.

Mr. Denis Desautels: I think it would be appropriate to review the powers given to deputy ministers in the area of human resource management. This is one of our overall recommendations.

The Chair: Ms. Wasylycia-Leis, you have the floor.

[English]

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

Mr. Desautels, you make a very clear recommendation in your report today about accountability to Parliament. I want to raise that, because it seems to me that we need more than better reporting to Parliament; we need a total overhaul of the way in which we do business in Parliament, because there are very few provisions for MPs to have a say and to play a role in scrutinizing departmental estimates. There is no provision that requires standing committees to deal with the estimates. It's based on the chair and the will of the committee. You know as well as anyone how the democratic process can be subverted.

There is no requirement for the minister to appear before the committee, so we don't automatically have a way to hold the minister to account for spending of billions of dollars. In the move from committee of the whole to the standing committee process, we've lost the whole accountability of the budget. I'm expressing enormous frustration because of my experience on the health committee. I'm sure it's not dissimilar to some other committees.

I'm wondering if you have any recommendations on how we can, as MPs, have any kind of way to hold the government to account on the budget side in real terms.

Mr. Denis Desautels: Mr. Chairman, I don't know if I would have a specific recommendation to deal with that particular frustration. Let me say that I do share the frustrations. I think dealing with estimates, discussing estimates within Parliament and within committees, is an extremely important function of Parliament. We have been trying to do what we can to improve the process over the years and there have been some interesting changes made. The form of the estimates has changed over the last few years but there's still a long way to go. I think how Parliament deals with that is still a subject that needs to be further discussed among MPs.

I know that there have been subcommittees of the House formed to deal with the supply process. There have been recommendations made but they have not resulted in as significant a change, as large a change, as most people would have hoped. I think there should be more discipline within all of the committees, and stricter requirements that each committee does specifically approve the estimates of the departments for which they are responsible.

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I think right now estimates are deemed approved by the House even if they're not discussed. I think that's the easier way to do things, but I don't think it generates a good enough debate around the estimates themselves.

We have to find ways to get MPs more interested in those discussions. Part of getting MPs more interested is making it possible for them to have an impact on the estimates, if not the current year's estimates then at least future years' estimates. If an MP sees their role as having no impact, of course they won't show that much interest. We have to find a way to get them more interested in the process.

The Chair: Thank you very much, Ms. Wasylycia-Leis.

Mr. Penson, four minutes, please.

Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you, Mr. Chairman.

Mr. Desautels, I've been here since 1993. I know a lot of members have been here a lot longer than that, but I've followed this for a long time. It seems to me the Auditor General has had a constant battle to try to get improvements made. Every year you come out with reporting on programs that are deficient in terms of attaining the goals set out for them. Sometimes very few goals were actually set out, and I know you've recommended improvement.

It seems to me that with the Canadian public there's a huge credibility problem for all of us, not just for members of Parliament and government but for your department as well. Every year it seems the same old problems come back again and again. I know you've said there have been improvements, but for the public, here's another AG report on billions of dollars that have been wasted. I think it is a real problem in terms of credibility. There's a lack of will in trying to make the improvements necessary to really give taxpayers good value for the money they're sending here to Ottawa.

I don't even know how you get staff in your department, Mr. Auditor General. It must be terribly frustrating. You tell us that maybe 60% of the recommendations you make are accepted. I would think it would be a huge problem to even find someone to take your place as Auditor General in a few weeks. The process of obtaining a good person to do that would be a problem.

You're going to be free of this job in a few days. I wonder if you can comment on how we can improve our credibility in these areas.

Mr. Denis Desautels: There's no doubt that frustration comes with our role, and there's no doubt that changes take a long time to happen. One of the qualities any Auditor General has to have, therefore, is patience and persistence. We also fight a myth all the time. The myth we fight is that nothing ever changes, that you repeat the same things, that it's the same year after year. I say that is a myth.

There is, I think, a valid parliamentary process in place at the federal level that causes changes to take place. As I said, we track those changes and we can demonstrate, in quite a number of files, changes that were made as a result of our report, as a result of a PAC report, or the general interest of parliamentarians on a subject. I can also give you examples of changes made and announced the same day as the tabling of our report. Obviously, people knew what was going to be said in the report—

Mr. Charlie Penson: One problem is fixed and another one springs up somewhere else?

Mr. Denis Desautels: Well, we're talking about a big machine. If you fix one problem there could be another one somewhere else.

I want to make sure that people don't feel change can't happen. It does happen, and people should not get discouraged if it takes too long. In a way it's unfortunate, but that's the way it is. I think you have to keep coming back at those issues. Fortunately, the Auditor General has a ten-year mandate and a good memory, so we can come back to the same issue over and over again until something gets done.

The Chair: Thank you, Mr. Penson.

[Translation]

Mr. Desrochers, you have four minutes.

Mr. Odina Desrochers: Thank you, Mr. Chairman. I would like to broach a subject that you did not mention here today, but one which you have spoken about at great length in preceding reports. I wanted to ask you about the overall management of the Department of Human Resources Development.

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Mr. Chairman, I can wait. Given that we live in a democratic country, I hope that I will be allowed time to speak. Thank you very much.

So, if I could pick up where I left off, you mentioned several times, in various chapters of the report, just how difficult it was to monitor the operations of the Department of Human Resources Development. You also made reference to how difficult it was to closely monitor these operations, etc. Can the department continue to function in its current form? Given the scale and complexity of all the problems currently being experienced by this department, don't you think that it would be more efficient to change the structure of the department? Wouldn't it be better to divide it into two separate entities or to reorganize its operations?

Mr. Denis Desautels: Mr. Chairman, we have no opinion on this issue. Indeed, we audited activities at the Department of Human Resources Development and we came out with findings and recommendations. However, all that applied to the current structure of the department.

We think that the structure of the department could be improved, but that the problems that we highlighted can be solved under the current structure. There is no reason why the current structure could not be changed in the future, but for the time being, we believe that the problems that we identified can be corrected without changing the current structure.

Mr. Odina Desrochers: Given the scale of the problems that you pinpointed in this department, can they be solved quickly under the present structure, or do you think that it will take longer?

Mr. Denis Desautels: I think that in the case of the Department of Human Resources Development, the problems that we pointed out can be corrected. These problems are currently being addressed. Consequently, cutting the department in two or undertaking a major reorganization could delay the implementation of some corrective actions that have already been undertaken.

Mr. Odina Desrochers: Just one last question? Fine.

In conclusion, Mr. Desautels, I'd like to ask you to tell us what you consider to be your greatest achievement and your greatest disappointment over the last 10 years. In a nutshell, what have you liked the most and what has disappointed you the most?

Mr. Denis Desautels: Mr. Chairman, we have taken a great deal of satisfaction in the role that we have played in getting Canada's fiscal house in order. Indeed, both the government and public servants have had to make difficult decisions but we, as an office, highlighted the scale of the problem, and we also made recommendations on the quality of information that should be provided to Canadians to allow them to better understand the challenges facing the country. I hope that, to a certain extent, the part that we have played has helped, and, if it has, I think that this is the greatest change that has taken place in the machinery of the federal government over the past 10 years.

Of course, there are other areas where we, and indeed I personally, have been disappointed by slow progress. We have talked at length today about human resources management and the slow implementation of a comprehensive budget management system. These are two areas where not as much progress has been made as I would have hoped.

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

[English]

Mr. Harb, please, four minutes.

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

First, thank you very much, Mr. Desautels, for the excellent work you have done. I have a specific question arising from page 2 of your report, point 6, where you talk about the need to have a longer-range forecast that shows consequences of various spending policies and so on. You mention longer than five years.

My question is, how on earth can we have a plan by government for longer than five years? For example, let's say there was a Conservative government back in 1993, that government came up with a plan of five years, then went through an election, and suddenly didn't get back in.

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How can you have a five-year plan when the term of a government goes up to five years maximum? How could you go beyond five years? If you were talking about perhaps a capital budget, as in planification by the administration for the purchase of equipment, the construction of buildings, and so on, one could understand. But when we're talking about overall policy planning for more than five years, surely you agree that it's absolutely impossible, in light of what we have just seen recently in the United States, and also around the world. So I wanted to have your thoughts on that.

Mr. Denis Desautels: Mr. Chairman, I appreciate the question from Mr. Harb. This is an interesting point, and I've had many discussions about that with officials from the Department of Finance over the years. And I don't think we're that far apart in our views on this issue.

We have to understand properly what we're saying here. We feel that in order to better appreciate some of the changes that might be taking place further down the road, we need to anticipate some of them, and we need to make certain projections under various scenarios, so that we know what the consequences of one or another scenario would be. This would be useful in making certain fiscal decisions today.

This is not to be confused with a budget or a forecast that has the imprimatur of the Minister of Finance or the Department of Finance. These projections could even be done by someone or an organization somewhat at arm's length from the Department of Finance, so that we would have information in front of us, for instance, on changing demographics and the impact of demographics on public finances 10, 15, or 20 years from now. We know there will be huge changes brought about by the changing demographics, but we have to make sure people understand what the consequences of these could be.

So we're talking about projections under certain scenarios that would have some credibility, but would not be interpreted as the Minister of Finance predicting that's exactly what's going to happen. That is not what we're suggesting. We're suggesting providing information that looks further down the road, as projections. And that is done. This is not something we have dreamed up in our sleep, but it is being done in other countries right now. Australia is doing that, in the U.S. they're doing that, and I believe now in the U.K. they're moving in that direction. We give examples of other countries that do that in one of our recent reports.

The Chair: Thank you, Mr. Harb.

Mr. McCallum, please, four minutes.

Mr. John McCallum (Markham, Lib.): Mr. Chair, I have two points.

First, on the idea of continuous program review, I think there may be a case for a bit of a break after the wrenching experiences of the past few years, but in principle, in general, it certainly seems to me a good idea, if only because our resources are limited and our needs are great. I had not spoken to my colleague, but was also going to zero in on point 6, about long-term projections, coming at it from a different standpoint.

From my previous job as an economist, I'm deeply skeptical of the ability of economists to sensibly go out beyond five years, if even five years. And I recall, in the bad old days of the 1980s, we had these five- or seven-year projections, where the deficit would be eliminated, always two or three years from now—never was. They were useless. So I think the new idea of the two-year rolling targets has produced greater political accountability and is better.

Just a year or so ago, we private sector economists—I was one then—persuaded the Department of Finance to go for five years, but these were our projections, private sector average, they were not the Department of Finance's. And I guess my reservation is.... I'm not talking about political process, I'm talking about the capacity of economists to produce anything of much value beyond five years. I would have thought five years is about the limit to which we could go with any degree of credibility.

The Chair: Mr. Desautels.

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Mr. Denis Desautels: Mr. Chairman, first of all, I'm happy that Mr. McCallum agrees with the first point on the need for some form of challenge of programs on a continuous basis. In an era of surpluses, I think we need to replace the one-time discipline of program review with something a little more permanent that's done on a cyclical basis.

In terms of the second point, again I repeat what I told Mr. Harb: We've been having interesting discussions along those lines with the people from the Department of Finance. I have to keep repeating that what we're calling for are not specific forecasts of what will happen. I know the future is difficult to predict, and you have to be careful in how you interpret these longer-term forecasts. Indeed, they're not forecasts. I call them projections under certain scenarios.

Just to enlighten people somewhat as to what lies ahead much further down the road, the impact of demographics is what we've been talking about as requiring a longer-term view of the world. As I said earlier, this is being done with a certain amount of success in other countries, but they have to be interpreted very carefully.

Mr. John McCallum: Well, if you're very clear that they're not forecasts and that these are scenarios, especially if they're dealing with demographics, which have a longer-term, important dimension to them, then I would agree. But I think there's a risk that you give people the illusion that anyone in this world has the ability to offer accurate forecasts way down the road. I don't think that is correct.

The Chair: Thank you, Mr. McCallum.

Ms. Wasylycia-Leis, please, for four minutes.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

I appreciate your earlier comments about all of us needing patience and persistence in trying to hold the government to account, particularly on budgetary matters.

I appreciate your recommendation that we need to actually try to persuade the government, in this whole agenda of parliamentary reform, to structure at the standing committee level the time for estimates review and the requirement that committees actually go through that process and deliberately and consciously approve or disapprove of departmental spending. The current arrangement is just the antithesis of any kind of reasonable accountability over the government.

One of the issues you have raised over and over again—you raised it in this report, and you've done it many times before—is the question of aboriginal health care. To me, that's a good example of an issue on which you've made great reports and which we've tried to raise, yet I think we continue to be hoodwinked by the government. I don't know if that's too strong a word, but I think about the fact that you've recommended accountability measures. The government and the department say they're acting on them. Issues develop and we're told a new accountability framework is in the works, yet we thought that was part of the process all along.

I think there's a con job going on, and I don't think we as members of Parliament have the tools to get to the bottom of it so that we can hold the government to account on something as basic as good management and accountability practices in an important branch of government like first nations and Inuit health, or Health Canada as a whole.

Mr. Denis Desautels: Mr. Chairman, the example of aboriginal health care is one example among a multitude of examples in which it's difficult for members of Parliament to come to grips with how well a program is being managed. The key to the success in doing that, of course, is to have performance reports prepared on each program that are meaningful. That's why we have identified that as one of the pillars, one of the priorities that has to be addressed in the years ahead. We've made some movement in that direction, and I think there has been an acceptance that the culture had to change to an accountability for results as opposed to simply an accountability for process. But I think all programs are now at the stage at which they have to define their objectives a lot more clearly, and at which they have to report more clearly as to how they've managed those and how they've achieved those objectives, so that MPs have something to work with in terms of assessing what's been done.

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Ms. Judy Wasylycia-Leis: But on that, there's still a problem. For example, we get a performance report saying that a new accountability framework has been established within the Department of Health. However, we also learned that a number of problems have unfolded, particularly in regard to the Virginia Fontaine Addiction Centre and other organizations in my province.

We read in the newspaper that the government—the department—is developing a whole new accountability framework. Did one exist? Is there something new in the works? Are we being fooled? What's the reality of the situation, and how do we actually find out? Do we rely on another report from your office to get to the bottom of it, or is there some way to actually know the truth?

Mr. Denis Desautels: Mr. Chairman, I don't think the performance reports and the reports on plans and priorities can answer all MPs' questions—because things can happen, developments can occur that require answers. Departments have to provide a transparent reporting system through a proper base of information that would be accessible to MPs outside of the estimates documents. With today's technology, it is possible to very quickly post developments or new issues that have cropped up, and how the departments are addressing them.

This will never completely satisfy the need for information, but at least it will show a desire to be transparent about what's going on within the department, as opposed to forcing MPs to keep probing until they ask the right question. I think there's a need to be more forthcoming and transparent and use modern techniques to do that.

The Chair: Thank you, Mr. Desautels.

Mr. Day, four minutes please.

Mr. Stockwell Day: Thank you, Chairman.

There's been an indication from Treasury Board that they will increase the number of auditors to be hired. I think it's commendable, and we've given them credit. What percentage of those auditors would you suggest be assigned to the Shawinigan file? That's my first question.

Secondly, rather than react to your suggestion about longer-term planning—which I think is commendable—we'd be happy with short-term planning, which was showing good results. So we're not going to react to your suggestions. You say that financial management in some areas is improving slowly, but then you say that the progress of departments in managing for progress is painfully slow. You're reflecting on reporting to Parliament. You say that not much has improved since 1996. You give three reasons, one of which is the fear that performance reports could become a political tool of ministers or the opposition.

First, I assure you and your staff that the opposition would never intimidate public servants for good reporting. What should be put in place to reduce the possibility of ministers appearing to be intimidating toward public servants who want to report effectively?

Mr. Denis Desautels: Mr. Chairman, I'll focus on the last part of the question: what can be done to provide an incentive to report completely in a candid and balanced way without fearing the wrath of parliamentarians.

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I think, Mr. Chairman, that unfortunately it will be a long process to change our culture to the point where reporting in a candid and balanced way will be seen as a good thing. Right now—and we mean it when we say it—there are perceived political risks in doing that. I don't necessarily blame ministers for taking that position. I think that quite often public servants take that position on behalf of the minister, with the intention of protecting their minister from criticism.

We have to move towards a culture where there is virtue in reporting things the way they are. It's possible, I believe, to report news that is not good news without incurring political fallout as a result. I think, if departments have to announce news that is not good news, it can be accepted by people reading it, provided we explain clearly how we'll overcome those problems in the future and prevent them from happening again.

So it's possible, but it's going to take a long time, I think, to change the culture from what it is today.

The Chair: Thank you, Mr. Day. Mr. Shepherd.

Mr. Alex Shepherd: I think that culture is evident in this room, because Mr. Day is clearly trying to find ways to criticize the government, and it doesn't really matter whether it's the administrative side of government or the political one.

To address that particular point, I wonder how you see that unfolding, because clearly that is the problem. The perception and the reality of the day-to-day push-and-shove in the House of Commons is that ministers are responsible for every aspect of their department. You're trying to say that's unrealistic. If we can set a parameter here to free up.... How do you let the managers manage? That's the ongoing issue. Every time we allow the managers to manage, and they get into some kind of problem, then suddenly it reflects badly on the minister, and the whole system tightens back up.

You talk about the evolution of that process. How can we educate Canadians that it's unrealistic to think one person somehow can control all of these departments that go from sea to sea to sea, and that there is a certain degree of responsibility within the managerial side of government, at the same time defending the concept of responsible government? How do you see that unfolding?

Mr. Denis Desautels: Well, Mr. Chairman, what Mr. Shepherd is raising is the definition of ministerial responsibility and whether or not that should be reconsidered. This is a political question, of course, and I hesitate to delve in that area very far. But let me just say that in some jurisdictions there have been attempts to distinguish between the responsibility of the minister and the responsibility of public servants. The province of Quebec is an example of where this has been done recently.

So whether or not our interpretation of that at the federal level is the right one is a good question to be debated by parliamentarians. All I would say is that there has been an evolution in other Westminster-type parliaments towards making a distinction between the minister's direct responsibility and that of public servants.

The Chair: Thank you, Mr. Shepherd. Ms. Jennings, please.

[Translation]

Ms. Marlene Jennings: I would like to follow up on what my colleague has just said and talk about the difficulty of drawing the line between ministerial and officials' responsibility. Whether you like it or not, Canadian parliamentary tradition would have it that the minister is responsible for his department. Perhaps it's precisely because the deputy minister does not have the necessary power to really reorganize his own department, both in terms of budget and human resource management, that the minister himself has to shoulder this responsibility. If deputy ministers had clearly been given the necessary and adequate powers to manage their department at all levels, ministerial responsibility would look quite different.

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Currently, you can't help but think that the opposition isn't interested in knowing whether it's a structural problem or whether the problem stems from the minister himself. We only need to look to the Department of Human Resources Development for an example. Among other things, in your report you stated that the minister had taken the necessary steps. This did not stop the official opposition from waging a political war in the press, in an attempt to tarnish the minister herself and, by association, the government.

[English]

The Chair: A quick response, Mr. Desautels, please.

Mr. Denis Desautels: Mr. Chairman, I will just reiterate my response to Mr. Shepherd earlier. This is a subject that elected officials may wish to debate further on whether or not Canada has kept up with the interpretation of ministerial responsibility within the Westminster system that we've seen elsewhere in the world.

The Chair: Thank you very much, Mr. Desautels. Thank you, ladies and gentlemen.

Mr. Desautels, we're heartened by the work you have done over the last many years. We are saddened by your quote, if I may say, that “until very recently deputy ministers did not worry much about financial management”. We hope that will not be true in the future.

Since this is your final report to Parliament, on behalf of all parliamentarians on both sides of the House, and on behalf of Canadians, again, we want to thank you very much for the diligence you have applied to the work you have done and the service you have provided to Canadians to keep government on its toes. There's nothing better than accountability to keep people focused on providing good management and good service. Surely we, as parliamentarians, aided by the work that you provide to us as parliamentarians, are able to keep government focused and government accountable. For that we thank you.

The next meeting will be on March 1, 2001, when we'll be considering the Public Accounts of Canada. In the meantime, this committee meeting is adjourned.