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37th PARLIAMENT, 3rd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, May 6, 2004

0905

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

Hon. Shawn Murphy (Hillsborough, Lib.)

The Chair

Hon. Shawn Murphy

The Chair

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

The Chair

Mr. Vic Toews (Provencher, CPC)

The Chair

0910

Mr. Vic Toews

The Chair

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

The Chair

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

Mrs. Diane Ablonczy

The Chair

Mrs. Marlene Jennings

The Chair

Mrs. Marlene Jennings

The Chair

Hon. Walt Lastewka (St. Catharines, Lib.)

The Chair

Hon. Walt Lastewka

The Chair

Mrs. Diane Ablonczy

0915

The Chair

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

Mrs. Marlene Jennings

Hon. Joe Jordan

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

Hon. Joe Jordan

Ms. Judy Wasylycia-Leis

Hon. Joe Jordan

Ms. Judy Wasylycia-Leis

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Mrs. Diane Ablonczy

0920

The Chair

Mrs. Diane Ablonczy

The Chair

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

0925

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

0930

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

The Chair

Mrs. Diane Ablonczy

The Chair

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

0935

The Chair

Mr. Dennis Mills

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

Mr. Dennis Mills

Ms. Sheila Fraser

Mr. Dennis Mills

Ms. Sheila Fraser

Mr. Dennis Mills

Ms. Sheila Fraser

Mr. Dennis Mills

The Chair

Mr. Dennis Mills

The Chair

0940

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

0945

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Mr. Ronald Campbell (Assistant Auditor General, Office of the Auditor General of Canada)

Ms. Judy Wasylycia-Leis

Ms. Sheila Fraser

Ms. Beth Phinney (Hamilton Mountain, Lib.)

The Chair

Mr. Ronald Campbell

The Chair

0950

Mr. Ronald Campbell

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

The Chair

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

The Chair

Hon. Robert Thibault (West Nova, Lib.)

The Chair

Mr. Peter MacKay

Ms. Sheila Fraser

0955

Mr. Peter MacKay

The Chair

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

Ms. Sheila Fraser

1000

Mr. Peter MacKay

Ms. Sheila Fraser

Mr. Peter MacKay

The Chair

Mrs. Marlene Jennings

Ms. Sheila Fraser

1005

Mrs. Marlene Jennings

Ms. Sheila Fraser

Mr. Ronald Campbell

Mrs. Marlene Jennings

Mr. Ronald Campbell

Mrs. Marlene Jennings

The Chair

Ms. Beth Phinney

Ms. Sheila Fraser

1010

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

1015

Ms. Beth Phinney

The Chair

Mr. Vic Toews

Ms. Sheila Fraser

1020

Mr. Vic Toews

Ms. Sheila Fraser

Mr. Vic Toews

The Chair

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Mr. Jason Kenney (Calgary Southeast, CPC)

The Chair

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Hon. Joe Jordan

The Chair

Mr. Jason Kenney

The Chair

Mr. Jason Kenney

The Chair

Hon. Joe Jordan

1025

Ms. Sheila Fraser

Hon. Joe Jordan

Ms. Sheila Fraser

Hon. Joe Jordan

Ms. Sheila Fraser

Mr. Ronald Campbell

The Chair

Mrs. Diane Ablonczy

1030

The Chair

Mrs. Diane Ablonczy

The Chair

Mr. Ronald Campbell

The Chair

Mr. Ronald Campbell

The Chair

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

The Chair

Mr. Alan Tonks

Ms. Sheila Fraser

1035

The Chair

Mr. Jason Kenney

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

1040

The Chair

Ms. Sheila Fraser

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Walt Lastewka

The Chair

Hon. Shawn Murphy

Ms. Sheila Fraser

Hon. Shawn Murphy

1045

Ms. Sheila Fraser

Hon. Shawn Murphy

Ms. Sheila Fraser

The Chair

Mr. Ronald Campbell

The Chair

Mrs. Diane Ablonczy

The Chair

Ms. Sheila Fraser

The Chair

1110

Mr. Patrick Boyer (Adjunct Professor, Department of Political Science, University of Guelph, As Individual)

The Chair

Mr. Patrick Boyer

The Chair

Mr. C.E.S. Franks (Professor Emeritus of Political Science, Queen's University, As Individual)

1115

1120

The Chair

Mr. Patrick Boyer

1125

The Chair

Mr. Patrick Boyer

1130

1135

1140

The Chair

Mr. C.E.S. Franks

1145

The Chair

Mr. C.E.S. Franks

The Chair

Mr. Patrick Boyer

1150

The Chair

Mr. C.E.S. Franks

The Chair

Mr. C.E.S. Franks

1155

The Chair

Mr. C.E.S. Franks

The Chair

Mr. Jason Kenney

The Chair

Mr. C.E.S. Franks

1200

The Chair

Mr. Jason Kenney

Mr. Patrick Boyer

The Chair

Hon. Robert Thibault

The Chair

Ms. Judy Wasylycia-Leis

1205

The Chair

Mr. Jason Kenney

Mr. C.E.S. Franks

Mr. Jason Kenney

Mr. C.E.S. Franks

Mr. Jason Kenney

The Chair

Mr. C.E.S. Franks

The Chair

Mr. C.E.S. Franks

The Chair

Mr. C.E.S. Franks

The Chair

Mr. Odina Desrochers

Mr. C.E.S. Franks

1210

Mr. Odina Desrochers

Mr. C.E.S. Franks

Mr. Odina Desrochers

Mr. C.E.S. Franks

Mr. Odina Desrochers

Mr. C.E.S. Franks

Mr. Odina Desrochers

Mr. C.E.S. Franks

Mr. Odina Desrochers

Mr. C.E.S. Franks

1215

Mr. Odina Desrochers

Mr. C.E.S. Franks

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. C.E.S. Franks

The Chair

Hon. Shawn Murphy

Mr. C.E.S. Franks

The Chair

Mr. Patrick Boyer

1220

Hon. Shawn Murphy

Mr. C.E.S. Franks

The Chair

Mr. Patrick Boyer

Hon. Shawn Murphy

Mr. C.E.S. Franks

The Chair

Hon. Robert Thibault

The Chair

Ms. Judy Wasylycia-Leis

1225

The Chair

Mr. Patrick Boyer

1230

The Chair

Mr. C.E.S. Franks

The Chair

Mrs. Diane Ablonczy

Mr. C.E.S. Franks

Mrs. Diane Ablonczy

1235

Mr. C.E.S. Franks

Mr. Patrick Boyer

The Chair

Mr. Patrick Boyer

The Chair

Hon. Walt Lastewka

1240

Mr. C.E.S. Franks

Mr. Patrick Boyer

Hon. Walt Lastewka

Mr. Patrick Boyer

1245

The Chair

Mr. C.E.S. Franks

The Chair

Mrs. Marlene Jennings

1250

The Chair

Mrs. Marlene Jennings

Mr. C.E.S. Franks

Mrs. Marlene Jennings

Mr. Patrick Boyer

The Chair

Mr. Peter MacKay

1255

Mr. C.E.S. Franks

The Chair

Mr. Patrick Boyer

1300

The Chair

Mr. Alan Tonks

Mr. C.E.S. Franks

Mr. Alan Tonks

Mr. C.E.S. Franks

Mr. Alan Tonks

Mr. Patrick Boyer

1305

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 043

3rd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 6, 2004

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

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

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

Our witnesses this morning are, from the Office of the Auditor General of Canada, Ms. Sheila Fraser, Auditor General of Canada, and Mr. Ronald Campbell, Assistant Auditor General. That will be from nine o'clock to eleven, and from eleven o'clock to one o'clock we have, as individuals, Mr. C.E.S. Franks, professor emeritus of political science atQueen's University, and Mr. Patrick Boyer, adjunct professor,Department of Political Science, University of Guelph.

I think you were sworn in the other day, Ms. Fraser, so we don't need to do that, and we've gone through the refusal to answer questions and all that stuff. I understand you don't have an opening statement.

Before we get to questions, I have a notice of motion from Mr. Murphy.

Hon. Shawn Murphy (Hillsborough, Lib.): I have a notice of motion that I'd like to table, assuming it will be debated on Tuesday morning.

Mr. Chairman, we've been on this committee for three months now, and there's some debate as to how far we've come and how far we have to go.

The Chair: We don't need a long preamble, Mr. Murphy. Could we just get the notice?

Hon. Shawn Murphy: I'll just take a couple of sentences, Mr. Chairman.

I think we've come a lot further than some people think, and when I listen to the conclusions from the opposition, I find myself in agreement with most of them as they relate to the sponsorship issue, chapter 3. Of course, we have never dealt with chapters 4 or 5.

I would make the motion, which I will read into the record and present to the clerk, that this committee spend the allotted time on Tuesday afternoon, Wednesday afternoon, and Thursday of next week meeting in camera to discuss the issues and conclusions with our research staff, with our forensic auditors at KPMG, and with the law clerk and his staff, synthesize the evidence, and attempt to prepare and, if possible, table an interim report on the evidence adduced to date and any conclusions that can be drawn from such evidence; and furthermore, that the research staff be prepared to speak to this issue on Tuesday afternoon.

I will table that, Mr. Chairman.

The Chair: Okay, that is tabled. This is Thursday. With 48 hours notice, we'll discuss that on Tuesday. There's no meeting on Monday. It's every second Monday, so the next meeting is coming up on Tuesday. Thank you, Mr. Murphy.

Madam Fraser, I understand you do not have an opening statement. Am I correct?

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General of Canada): That is correct. I would refer members to the opening statement we made on Monday, Mr. Chair.

The Chair: Thank you very much. So we'll go right to questions.

Mr. Toews.

Mr. Vic Toews (Provencher, CPC): On a point of order, the Auditor General was here on Monday and gave us quite extensive testimony. It's apparent that she doesn't have anything further to offer by way of an opening statement, and I know she is here pursuant to a motion presented by Madam Jennings. Perhaps Madam Jennings could tell the committee exactly what she hoped to obtain from Ms. Fraser today, so that we can focus our questioning on that.

The Chair: It is an unusual situation. It's normal that you would be asking for a point of clarification. The motion was brought forward that the Auditor General be here on Monday, and another motion was brought forward that she be here today. There were two clearly different motions by Madam Jennings on different days. That's why Ms. Fraser is here today. If I recall, Mr. Toews, Madam Jennings asked for a recorded vote, and it was about 9 to 7--you know what the normal split is. So there you have it.

¿ (0910)

Mr. Vic Toews: All right. I just thought maybe we could clarify things for the people of Canada.

My colleague, I'm sure, has something she can ask Ms. Fraser.

The Chair: So, on to questions.

An hon. member: [Inaudible—Editor].

The Chair: I'm not entering into debate on Mr. Toews' point of order. I just dealt with it.

Ms. Ablonczy, you're numero uno.

Mrs. Diane Ablonczy (Calgary—Nose Hill, CPC): Thank you, Mr. Chairman.

No one has higher regard for the Auditor General and her staff than we do on this committee. We're always pleased to see the Auditor General here. However, the Auditor General was before us on Monday. We had an extensive discussion with her about some of the aspersions that were cast on her report. She answered those fully and completely, and certainly to my satisfaction.

Madam Jennings of the Liberals brought a motion to bring Madam Fraser back today, although there are 72 other witnesses on the list who we haven't yet heard from. I'm certainly at a loss to know exactly what Madam Jennings hopes will be gained by taking our time by again having the Auditor General here.

Now, I have no further questions....

I'd like to be uninterrupted, Mr. Chair.

The Chair: Order, please.

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

Mrs. Diane Ablonczy: I would like, Mr. Chairman, to hear--

The Chair: There's a point of order here.

Madam Jennings, is it a point of order?

Mrs. Marlene Jennings: Yes.

The Chair: Because she is on her eight-minute time, and she's entitled to that. I allow a great deal of latitude in people's interventions.

So you have a point of order, Madam Jennings.

Mrs. Marlene Jennings: Yes, I do.

If the opposition members see no reason for the Auditor General to be here, and have no questions for her, then I suggest they give their time over to the Liberals, because we certainly have questions to ask of the Auditor General. We'd welcome taking the time that's allotted to the opposition members in addition to our own time.

Thank you.

The Chair: That's not a point of order, Madam Jennings, and as you know, there seems to be a new thing starting on the Liberal side where if they don't use up their full time, they will delegate it to somebody else. Maybe Ms. Ablonczy has the same idea in mind. I have no idea. It's entirely up to Ms. Ablonczy to....

Yes, Mr. Lastewka.

Hon. Walt Lastewka (St. Catharines, Lib.): Mr. Chair, there was a notice of motion for this meeting. An agenda notice was properly sent out. We have the Auditor General here. I think we should be asking questions of the Auditor General.

The Chair: That's very well, Mr. Lastewka--

Hon. Walt Lastewka: We're getting into a lot of politicalness here, which this committee has heightened.

Mr. Chair, I don't appreciate your last remarks. Your job as chair is to get on with the meeting, to have questions asked of the Auditor General, questions about not only what happened but also how we fix it. I think it's very appropriate that we have the Auditor General here for both things.

The Chair: That's your personal opinion, Mr. Lastewka. My position and my responsibility is to run this meeting fairly, to give all people the opportunity to speak at this meeting. I ensure that everybody who wishes to speak has the right to speak and the opportunity to speak.

Ms. Ablonczy has the floor, and she has the right to speak. She has the floor.

Mrs. Diane Ablonczy: Mr. Chairman, I would urge you to bring before the committee the 72 witnesses from whom we have not yet heard.

Since Mr. Lastewka felt it necessary to comment on my motivations, I think it's fair to ask whether the Liberals are trying to shut off the possibility of more damaging evidence coming forward by simply recalling and recalling witnesses we've already heard from, and who clearly have nothing new to add.

We know an election is coming. We know we have only one more week to work. We already have a motion to not have any more witnesses next week.

How are we supposed to get to the bottom of this situation when this kind of nonsense is going on, recalling witnesses who have nothing further to add, who we've already heard from, but not hearing from 72 witnesses who are already on the list?

¿ (0915)

The Chair: We have another point of order here, Ms. Ablonczy.

Mr. Jordan, please.

Hon. Joe Jordan (Leeds—Grenville, Lib.): Mr. Chair, I don't necessarily disagree with your ruling on Ms. Ablonczy, but I think we need to stick to the facts.

I didn't get to ask the Auditor General questions last time. You people all got to ask questions last time.

Mrs. Marlene Jennings: And more than once.

Hon. Joe Jordan: I didn't. So I think I have a right--

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Why didn't you get your turn?

Hon. Joe Jordan: We ran out of time. Excuse me, we ran out of time.

So when she says that we're just stalling--

Ms. Judy Wasylycia-Leis: Now you're eating up the time.

Hon. Joe Jordan: Who's eating up the time?

Ms. Judy Wasylycia-Leis: You are.

Hon. Joe Jordan: Give me a break.

The Chair: Order!

We will have no comments across the floor, please, Ms. Wasylycia-Leis.

Hon. Joe Jordan: All I'm saying, Mr. Chair, is correct the record; we haven't gone through our rotation with the Auditor General. I didn't get a chance to ask questions, and I'm very glad she's here today.

I'll remind the committee that the one time the Auditor General was here, the filibuster over there had her sit in the crowd for three and a half hours. Let's get on with asking her questions.

If you want to grandstand, that's fine, but don't say that we've gone through the rotation, because I didn't get to ask the Auditor General questions, and I have questions I want to ask.

The Chair: Well, that's very well, Mr. Jordan, and as you know--and yesterday was an example--knowing that we were short of time, I cut the time down for the second round from eight minutes to five minutes and I gave everybody five minutes so that--

Hon. Joe Jordan: Except me, who you gave two minutes to.

The Chair: Yes, I did give you...you were down about three or four....

But based on that, I give every opportunity to everybody to speak as far as possible. And when we have long opening statements and so on, the chair is constrained by agreements by the committee that we have the first round of eight minutes, the second round of eight minutes, and four minutes in the subsequent rounds; and that is the agreement of the committee, that we give everybody a chance to speak.

Now, as we've said before, there are four members of the Conservative Party, there are two members from the Bloc, there's one member from the NDP, and there are nine members from the Liberal side. That way we've organized it so as best as possible it's fair for the party and it's fair for the people, if we get through it.

Mr. Jordan, we must also recognize that this is the seat of democracy in this country, and this is where people have the right to speak and say what is on their mind without fear or favour. We have all kinds of rules that protect the privilege of free speech in this place, and therefore that must be upheld. As far as possible my job is to ensure that there is fairness in this committee. Based on the rules this committee has agreed upon, that has to be upheld, and it is the chair's responsibility to uphold that. But I cannot direct anybody that they must only ask questions alone--I can't. This is a seat of democracy, and I can't get into a debate with you, Mr. Jordan, because this has to be protected.

Now, as I said, if anybody feels that my distribution of time allocations is unfair, then come and see me.

As you know, Mr. Jordan, your side seems to have someone who tells the clerks, and it's the clerks who receive who shall speak. I don't take it down. And if your name ends up at the bottom every time, I can't do that.

Hon. Joe Jordan: Mr. Chair, I can help you out here, and I think you're going into far too much detail. All I'm saying is that what was put on the record was the inference that we had all had a chance to ask this witness questions and now we have brought her back as filler, and I was simply pointing out that I didn't get a chance because there wasn't enough time.

I think anybody would argue that this is a very important witness in these particular proceedings. To somehow suggest that because I'm glad the Auditor General is here and I have questions for her that I'm somehow trying to circumvent this process I think is patently ridiculous.

The Chair: Well, I appreciate that point, Mr. Jordan, and we do have this ascribing motives on both sides of the committee and perhaps we refrain from that.

I've said before that it is important that we focus on an investigation rather than on cheap political points that we all seem to try to score at times. We're not here for cheap political points; we're here on behalf of Canadians, to conduct an investigation into a serious matter brought to this committee by the Auditor General of Canada.

Madam Ablonczy, the floor is back to you.

Mrs. Diane Ablonczy: Thank you, Mr. Chairman.

There are eight minutes for questions and comment, and then there are eight uninterrupted minutes to speak. Those are two different things. It's difficult to communicate my concerns to the committee when there are continual interruptions. I hope there won't be any more.

I'm very puzzled and concerned. My colleagues opposite say they have a thirst for knowledge on this issue, yet they voted down bringing Gagliano's papers and the Treasury Board daily briefings to the Prime Minister with regard to the sponsorship program before the committee. So I find it very difficult to accept that somehow there's a need for time to ask the Auditor General additional questions.

¿ (0920)

The Chair: I ask you to focus on the issue at hand, rather than trying to raise the political stakes around the room.

Mrs. Diane Ablonczy: With respect, Mr. Chairman, the issue at hand is finding information that would lead us to some meaningful conclusions about who gave the orders on the sponsorship program and where the money actually ended up. I do make the point that while we appreciate the Auditor General being here and all that she has added to the discussion in our study of the sponsorship program, I see no reason for us to spend more time today when there are 72 witnesses we have not heard from. I'm very concerned, Mr. Chairman, that we're not doing Canadians the best service. We're not getting to the evidence and the matters that would allow us to do our job on behalf of Canadians.

To the Auditor General, we do appreciate all that you've done. I think Canadians have the highest regard for the work you have done on their behalf to protect their money and their interests. But I do think there are other people we need to hear from. So I'm not going to ask you any questions. I'd be very surprised if there was any new evidence you could bring forward at this point that we could not better hear from 72 other witnesses who have not yet appeared.

The Chair: Thank you, Ms. Ablonczy.

Mr. Desrochers, for eight minutes.

[Translation]

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

Ms. Fraser, I'd like to talk to you about an article that appeared in L'actualité. I don't know if you've read it, but it touches on your duties as Auditor General and obviously, chapters 3, 4 and 5 of your report. The title of the article is La terreur d'Ottawa and I do think that you have indeed struck great fear in the hearts of some federal MPs. The title of the article is quite apt, especially in light of the following:

The Auditor General of Canada [...] has shaken the government and raised the ire of millions of taxpayers, while at the same time bringing new lustre to the accounting profession...Canadians are even touting her as a future prime minister!

You also share with readers your experiences since taking over this job:

The federal government is a huge machine. Change does not come easy and takes a great deal of time [...] but accountants are patient, persevering individuals...

I think those qualities apply to you as well, Ms. Fraser.

A few pages later, a photograph appears with you in the foreground and former Minister Gagliano in the background. The caption reads:

Is it normal that only the minister be held accountable? Shouldn't public servants be held accountable as well?

In my view, this article provides an accurate description of your work and I invite colleagues to read it. It appears in the May 15 issue of L'actualité. I want to congratulate you on the job you're doing. This article truly does justice to the high degree of professionalism and rigour that you have displayed since assuming the Auditor General's job.

Now then, getting back to chapters 3, 4 and 5, with your permission, Mr. Chairman, without initiating any kind of partisan debate, I want to say how very much we value Ms. Fraser's presence in this committee because after all, she is responsible for the work that the Public Accounts Committee does. Each time she tables her report, it's our job to examine the various chapters it contains.

Obviously, in recent weeks, the committee's attention has been focussed on chapters 3, 4 and 5. The Public Accounts Committee has much work left to be done. We mustn't lose sight of the fact that once we've wrapped up our examination of these chapters, we still have other business to attend to. I hope that harmony will be restored, that we can work together as a team and try to come up with solutions further to Mrs. Fraser's pertinent observations.

Mr. Chairman, I would now like to ask one or two questions concerning chapters 3, 4 and 5 of the report. Ms. Fraser, when you met with Mr. Gagliano, did you discuss relations with the PMO, in so far as the Sponsorship Program was concerned?

¿ (0925)

Ms. Sheila Fraser: No, we did not discuss that specifically.

Mr. Odina Desrochers: Did Mr. Gagliano ever say to you that he was not responsible for selecting the firms, that everything was handled by the PMO?

Ms. Sheila Fraser: No, not at all. We discussed the management of the program within the communications group of PWGSC. We wanted confirmation from him as to how the program was run. We never discussed anything other than that.

Mr. Odina Desrochers: At the time you met with Mr. Gagliano, were you far enough along in your investigation to point out that some of the expenditures incurred for managing the Sponsorship Program didn't quite add up, or were your discussions of a more general nature?

Ms. Sheila Fraser: We met with Mr. Gagliano in September. We had a draft of the chapter ready and we wanted to confirm certain facts with him or certain things that had been said by other parties, particularly with respect to the parts of the report concerning his office and how the program was run. We were also trying to find out where the program first originated. Basically, that was the gist of our discussions.

So our objective was twofold: on the one hand, we wanted to include him in our audit process, because he may have been a party to certain information and been able to clarify certain issues, while on the other hand, we wanted to share some observations with him. Obviously, we brought to his attention some of the cases profiled in the report.

Mr. Odina Desrochers: Further to the meeting, were your findings invalidated or confirmed by Mr. Gagliano? For example, did he appear surprised that tens of millions of dollars could not be accounted for? Had matters reached that point by the time you met with him?

Ms. Sheila Fraser: No, we did not discuss matters of that nature. We talked at length about transactions with Crown corporations. He told us that he was generally aware of these transactions, but that Public Works staff had informed him that everything was being done by the book, according to the rules.

Mr. Odina Desrochers: Did you discuss his working relationship with Chuck Guité? Did you ask him if he planned the work with Mr. Guité or whether Mr. Guité reported to Mr. Quail? Did you discuss any of that?

Ms. Sheila Fraser: Not really. We discussed certain meetings that may have taken place and existing relations, more or less to confirm the notes taken during our interviews with Mr. Guité and other individuals. However, I think all of this is reflected in the report.

Mr. Odina Desrochers: Did you meet with other former Public Works ministers?

Ms. Sheila Fraser: Yes, we also met with Mr. Dingwall and with Ms. Marleau.

Mr. Odina Desrochers: And did Mr. Dingwall fill you in on the origins of the Sponsorship Program?

Ms. Sheila Fraser: No.

Mr. Odina Desrochers: He told the committee that he didn't have that information. Many of the witnesses told us that they were out of the loop. In your opinion, who was in office when this program was first launched: Mr. Dingwall, Ms. Marleau or Mr. Gagliano?

¿ (0930)

Ms. Sheila Fraser: I can't answer that question, Mr. Chairman.

Mr. Odina Desrochers: You were unable to make that determination.

Ms. Sheila Fraser: The problem is that the program was never officially created. Certain activities were being carried out as part of Public Works' general communications operations and as such, it's difficult to determine... As a rule, you have the description of the program as well as it stated aims. However, in this instance, we were never able to find that particular information. That explains why we were trying to find out where the program first originated, but we were never completely satisfied with the answers we received.

Mr. Odina Desrochers: Thank you very much, Ms. Fraser.

Ms. Sheila Fraser: You're welcome.

[English]

The Chair: Mr. Mills, please.

Mrs. Diane Ablonczy: Mr. Chair, I have a point of clarification. I realize that when I spoke earlier, I referred to the briefings by the Secretary of the Treasury Board to the Prime Minister not being allowed to be brought before the committee by the Liberal majority. I should have said the briefings by the Clerk of the Privy Council. I had intended to say that, and I'd like to clarify that for the record.

The Chair: Okay, that's clarified.

Mr. Mills, please, eight minutes.

Mr. Dennis Mills (Toronto—Danforth, Lib.): Thank you, Mr. Chair.

Before I go directly to the Auditor General, I want to say through you to all the members of this committee, I've served in this House for 16 years, and I've considered this last 10 weeks one of the most satisfying experiences I've ever had as a parliamentarian. I do sincerely compliment your chairmanship. I know from time to time it gets a little crazy in here, but I think you've done a pretty good job.

¿ (0935)

The Chair: Thank you, Mr. Mills. I appreciate that.

Mr. Dennis Mills: Ms. Fraser, I want to go back to point eight of your opening remarks.

Under section 34 of the Financial Administration Act, before authorizing payments, public servants have an obligation to certify that the work has been performed, the goods supplied, or the service rendered as specified in the contract. They need a basis for making this certification.

Now, I continue to have a personal challenge when I look at your letter dated April 26 in which your 53 samples are listed. I know the Pan Am Games, the Molson Indy, the Montreal Canadiens Hockey Club, the Rimouski minor hockey tournament, or for that matter the Nagano Olympic Winter Games, and I know that those events had post-mortem analysis. If I were to go through all of these events and call these people.... As you've said, in many cases the records weren't there. Why they weren't there, we do not know.

Let's take a specific example, the Molson Indy. We now have all their post-mortems. I have them in my office, and I've checked with a couple of others. If we were to get all of these post-mortems to show that there was value for money--and I'm not saying in all 53, but even if it were 49 of 53--would it be appropriate for you, as the Auditor General, to respond to that evidence once it's produced?

I ask this question because two weeks ago on Cross Country Checkup the former Auditor General, Kenneth Dye, said to all Canadians that if subsequent information were found and brought to the attention of the auditor, the audit team, and could be verified, then it was his opinion that the Auditor General should then report to Parliament the results of that experience. What would your thoughts be on that?

Ms. Sheila Fraser: There are two elements to respond to.

First of all, I'd like to respond to the later element about Mr. Dye's comments. I think Mr. Dye made those comments in relation to a particular incident that occurred in the office, where in the course of an audit the audit team did not have all of the information they should have had. It was subsequently found that there was information in another department or another branch of a department that should have been taken into account in doing the audit.

So if that were to be the case, if somewhere in Public Works there were boxes of all the analysis, all the documents, and everything else we would have liked to have seen in this, and it suddenly appeared, of course we would have to take it into account--if it had been present at the time of our audit. I sincerely doubt that is the case in the sponsorship program because of all the extensive audits and all the attention this particular program has gotten.

The Chair: Would everybody please turn their cellphones off in this room.

Sorry.

Ms. Sheila Fraser: The main issue, Mr. Chair, is that the paragraph Mr. Mills refers to in my opening statement is that this is a certification that should be done by public servants before payment is made. All of those documents, all of that proof should be in those files before the payment is authorized. Quite frankly, it's not good enough, many years after the fact, to find a post-mortem payment to justify a payment. How could that certification have been made if there were not evidence at the time to make it? I think our report, the previous internal audit report, and the Kroll report clearly show that there was lack of sufficient evidence at the time the payments were certified to be able to justify those payments.

I would add one final thing, which I think is unfortunate. Our list of 53 is the files that we audited in relation to two specific paragraphs in the report. There are many other elements that we audited as well in those 53 files, and we are, I would like to reiterate, auditing the actions and the processes of the federal government, not the events that received funding.

Mr. Dennis Mills: I accept the fact and I've never challenged that you couldn't find these post-mortem reports. The fact still remains, though, that I have in my possession some of these post-mortem reports where they've been marked as not being there. I think what I should do is perhaps send some of them to you and we can go from there.

Ms. Sheila Fraser: I'd like to ask, Mr. Chair, if Mr. Mills had those reports from the federal government or from the event.

Mr. Dennis Mills: No, I called the event directly.

Ms. Sheila Fraser: Well, then I think that proves our point that those files are not available within the federal government.

Mr. Dennis Mills: Well, some of these people say they sent them, so I don't know where they went.

At any rate, here's my second question. You've kept contact with the testimony over the last little while. Have you heard anything that would lead you to suggest amendments to the Auditor General Act or the Financial Administration Act?

Ms. Sheila Fraser: To the Auditor General Act, no, Mr. Chair. We have at times had discussions with government about changes to the Auditor General Act. I know in relation to this audit there have been people who have mused that perhaps our powers should be expanded to be able to do what we call “follow the dollar” and go into organizations that receive funding from government. If that is the wish of the Parliament, obviously the Auditor General and my office will do as Parliament wishes, but we are, I would say, quite content with the mandate as we have it now, as long as people understand, obviously, the scope of that mandate.

Mr. Dennis Mills: Thank you very much.

Thank you very much, Mr. Chair. Is that all my time?

The Chair: You have ten seconds left.

Thank you, Mr. Mills; I appreciate that. I may use--

Mr. Dennis Mills: I want to say one final thing, because Mrs. Ablonczy made some opening comments. It's well documented in the Parliament of Canada and the House of Commons that I have said on more than one occasion that I think the Auditor General's budget should be quadrupled in order that she has sufficient resources to do her job, because $1 million per department--

The Chair: That's a bold statement, going into an election, Mr. Mills, that we spend more money, but perhaps that would be well spent.

Ms. Wasylycia-Leis, eight minutes, please.

¿ (0940)

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

Thank you, Madam Auditor General.

When you were here on Monday, when asked about the use of the words “stolen or missing”, you clearly stated that you had never said those words. Did you intend to leave the impression that this whole issue around the sponsorship file was less significant than had been portrayed by you and by some of us and the media?

Ms. Sheila Fraser: I tried to make it clear, Mr. Chair, that we view the conclusions of our audit as serious and troubling. We found in many of the files little evidence to support the payments that were made—the whole certification process that should have occurred—and we saw a few cases where we really question if the government received any value for the money that was spent.

To go beyond that, I can only talk about process rules, procedures, and good management practices that should be in place. To go beyond that to imply what one could even presume would be possibly criminal behaviour, obviously I can't do that.

Ms. Judy Wasylycia-Leis: I appreciate that. I just wanted to get the clarification, because when you're in the middle of pursuing this kind of issue, you sometimes get the feeling that it's a figment of our imagination. There are forces out there who try to suggest that this isn't a big deal. I need to be reminded that it's a big deal and Canadians believe it's a big deal, so I just needed to hear from you again why we're here.

With respect to that, I think you said when you released your report that it was important for us to get to the bottom of this, to find out not only what happened, but why it happened, so that we can prevent this from happening again and we don't send a message out there that it is okay to put in a false claim for $5,000. Can you reiterate that viewpoint?

Ms. Sheila Fraser: That is true. In any audit there are going to be recommendations, suggestions for improvement, and it is all trying to make the system better and management within government better. I view this audit as being very unusual and very particular. I do not think, as I've said many times, it should be generalized to the entire public service. I think this was an almost exceptional, unusual kind of case. It is not because of a lack of rules or procedures, and it's important to understand why it occurred and how it was allowed to happen for several years. If we don't understand that, how will we ensure that it doesn't happen again? I can assure you it's not because there aren't rules and procedures in place. So why did the control and oversight mechanisms that are in place in departments, which one would expect to catch this sort of poor management, to be kind, fail? That, to me, is the crux of the issue.

Ms. Judy Wasylycia-Leis: Thank you very much.

To summarize what you've said, it would be wrong of us, I think, to simply chalk this up to poor administration, lack of oversight. We should pursue all options in examining why this happened, including the possibility that there might have been criminal activity, there might have been corruption. Would it be fair to say that we should pursue all options?

Ms. Sheila Fraser: With all due respect, the government has set in motion a number of reviews. The commission of inquiry is obviously a very serious response to this audit. There are a number of RCMP investigations going on. They are the only ones I personally think should be investigating the possibility of criminal behaviour. I think we should leave it up to them to deal with those kinds of issues. The commission of inquiry can obviously do certain things. This committee has a different mandate, a different scope, different powers. I think that the government has responded in a very serious way and has put in place a number of avenues to deal with the various issues coming from this audit.

¿ (0945)

Ms. Judy Wasylycia-Leis: Thank you.

When we met on Monday, I asked if you had heard anything through the course of these hearings to make you believe you should change your recommendations or your report in any way, and you said absolutely not. Today I want to ask you if you've heard anything in the course of these hearings to suggest that we're close to finding an answer or coming to a conclusion.

Ms. Sheila Fraser: I hope you can appreciate that I really can't answer that. I've been following this, and my staff has been giving me briefings, but I think it's up to the committee members to make that determination.

Ms. Judy Wasylycia-Leis: Okay, fair enough.

One of the issues we tried to pursue with Mr. Guité was contempt of Parliament, something I know you're concerned about. He appeared to have shifted money from one vote to another, and he said, no, never. He said he was never in contempt of Parliament, yet it would appear that he did, in a way, shift money from one vote to another by using the route of agencies and crown corporations. So I would like you to comment on that development as it pertains to normal reporting procedures to Parliament and whether or not we are looking at a serious issue of contempt of Parliament.

Ms. Sheila Fraser: It is clear to us that the parliamentary appropriations process was not respected. Funds that were given to the Department of Public Works for communications activities--and it was even within their general operating budget, which included communications activities--through some of these transactions went to pay for the expenses of crown corporations and other agencies; for example, the RCMP. The RCMP has a separate vote. So there was a shift between votes. There are mechanisms within the government to do that. That can occur. But there are mechanisms, and one has to pass by the Treasury Board in order to do that. I think Mr. Guité made the comment that he had to do this in order not to go through that process with the Treasury Board. So it's clear that there was that situation. There are ways to move those funds. There are mechanisms available. He did not avail himself of those

Ms. Judy Wasylycia-Leis: On the issue of agency selection, did you ever run across evidence to suggest that there were instances when an agency--not as part of the group you've identified, but agencies outside of this direct affiliation with the Liberal Party--won a competition for an advertising project but that was subsequently overruled in terms of winning the contract?

Ms. Sheila Fraser: I'll ask Mr. Campbell to respond to that.

Mr. Ronald Campbell (Assistant Auditor General, Office of the Auditor General of Canada): Are you talking about agencies associated with the Liberal Party?

Ms. Judy Wasylycia-Leis: We heard a lot from you about agencies, that the competitive process was not followed, and that these four, five, or six agencies that were tied to the Liberal Party got most of the work. Did you ever hear of a competition for an advertising project where an agency that was not part of that group won the competition and then it was overruled by Mr. Guité, the minister, or someone else?

Ms. Sheila Fraser: I'd like to point out that we do not make any comments about whether or not an agency is affiliated or does business with a certain political party. That is completely outside our remit.

As to the selection of agencies, I'll ask Mr. Campbell to comment.

Ms. Beth Phinney (Hamilton Mountain, Lib.): I have a point of order. Bearing in mind your desire to keep this democratic, I don't think there has been any proof at all that one agency or another is Liberal, Conservative, or Bloc. I think we should all refrain from using that reference. I think that would follow your guidelines.

The Chair: Your point is well taken, Ms. Phinney.

I think the gist of Ms. Wasylycia-Leis's question was whether an advertising agency had won a competitive bid in a fair and open process but then that was overruled.

Mr. Ronald Campbell: The agencies that won the competitions, such as they were, were the agencies that got the contracts.

The Chair: So they were not overruled and someone else put in their place.

¿ (0950)

Mr. Ronald Campbell: The process wasn't followed properly, and these were the agencies that won.

Ms. Judy Wasylycia-Leis: I have a point of order. Mr. Chair, I'm wondering if we could find, through research or through our forensic auditors, information pertaining to a project--

The Chair: Ms. Wasylycia-Leis, that is not a point of order. You should have brought that up in your intervention.

Ms. Judy Wasylycia-Leis: I'll come back to it later, then.

The Chair: We're now on round two.

Mr. MacKay, for eight minutes.

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

On that last point, I don't think evidence was produced here or anywhere else that showed there was any other type of firm but Liberal-friendly firms involved in the sponsorship scandal.

The Chair: As Ms. Phinney pointed out, if we're going to try to keep the political tension reasonably low, we should refrain from making those kinds of comments.

Hon. Robert Thibault (West Nova, Lib.): I have a point of order. To correct the record, one of the witnesses stated that his firm had been doing business with the previous government, but under a different president.

The Chair: That's right.

Order, please. We won't have discussions going on across the floor.

There's enough in the public domain about the political affiliations of organizations that we don't need to heighten the political tensions here.

Mr. MacKay, continue.

Mr. Peter MacKay: Thank you, Mr. Chair.

Thank you, Ms. Fraser, for your attendance here, along with Mr. Campbell.

We are going to be hearing a witness later this afternoon, C.E.S. Franks, a respected professor from Queen's University. He is presenting a very interesting premise that I think all Canadians, and certainly this committee and you, would be interested in, and that is raising the level of ministerial accountability, raising the active ability to bring about responsibility in a situation like this and to trace how events such as this were able to unfold.

He references the British system, which I suspect you would be familiar with, wherein the equivalent of deputy ministers are designated as accounting officers. There is very much full and personal responsibility in that system that includes matters of prudence, probity, legality, and value for money under departmental spending. He references as well the Lambert commission on financial management and accountability, which I suspect again you would be familiar with in the Canadian context.

Do you believe that in the Canadian system an adoption of a system such as this, which is consistent with our own Westminster model--certainly the British are using this, and it appears to work for them--is something this committee should be looking at in terms of its recommendations?

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

I would refer the members to another chapter from the November 2003 report. I think at times we forget there were other audits and studies in that report. Our chapter 2 deals with accountability and ethics, and there is quite a discussion about the question of accountabilities, deputy minister accountability. We go through a bit of the history and we do make mention of the accounting officer concept showing a different model, if you will. What we are basically saying in this report is that the accountability needs to be clarified, needs to be much clearer than it is at present. There are some conflicting texts.

The model the Canadian system is working with is of course the accountability of ministers, but there are certain places where it would seem to allude to the fact that deputy ministers are also accountable. I would certainly encourage the committee to look at that issue. Obviously it's one of policy, so I do hesitate to promote one model or another. We haven't done the work to be able to give any opinion as to whether the accounting officer concept, which in theory may look appealing, does actually work in practice, and what the mechanisms are.

I know, for example, if an accounting officer, who is most usually the deputy minister, is not in agreement with an action by a minister, he would send a note to the Auditor General. So there is that mechanism. Now, has it ever been used, and in what circumstances, and how does that clarify...?

I think it would be an interesting issue to study. I know that Professor Franks is certainly very well respected, and I'm sure he can give some insightful comments to the committee on that whole question.

¿ (0955)

Mr. Peter MacKay: Thank you, Madam Fraser.

While I agree very much with my colleague's assessment that you have given very fulsome and extremely helpful testimony here, I don't think there's a lot more we can ask. But I'm going to use my time, I guess, in view of the fact that Liberal members of the committee will take that time if I don't.

The Chair: Mr. MacKay, we will just assign the time according to the normal schedule, and when we run out, we run out.

Mr. Peter MacKay: I'm going to ask you whether you ever received any reasonable explanation, or what you would accept as a reasonable explanation, for why what seems to me a very bizarre system of delivering government money to a crown corporation was allowed to occur. That is, was there ever any rationale that you're aware of for why advertising agencies were in essence being used as middlemen to deliver a cheque from the government to a crown corporation? Is there any way we can construe some sort of value for money that would flow from such an arrangement?

Ms. Sheila Fraser: We've never obtained what we would consider an adequate explanation for those particular transactions. We did not, in the course of our audit, obtain any evidence that would justify the amounts paid.

Mr. Peter MacKay: Correct me if I'm wrong, Madam Fraser, but we're talking about delivering of cheques for hundreds of thousands of dollars, of which a percentage was then siphoned off by those firms for literally no work done, other than picking it up and dropping it off.

Ms. Sheila Fraser: In the course of our audit we found no evidence of services rendered that would have justified these amounts. We tried to talk to various parties. In one case we talked to the producer of a series. We talked to civil servants and people in the crown corporations to try to understand what role, if any, the agencies played. We did not find sufficient evidence of value for money.

Mr. Peter MacKay: So zero explanation, zero value-added, correct?

Ms. Sheila Fraser: I hesitate to say zero, because there may have been some services. Let's say little.

Mr. Peter MacKay: With respect to the lack of documentation you encountered throughout this audit and your examination of government files to try to find justification for payments in many cases, is there any explanation you can give other than that this was intentional? Is there anything else that can explain how documentation of this nature would be absent from a file?

Ms. Sheila Fraser: The only explanation I can go back to is from the interview we did with Mr. Guité in 2002 when we did the initial audit of three contracts. He told us at that time that this was the way he ran the operations, that he kept very little documentation. That, to me, quite honestly, is the most plausible explanation I have had to date.

Mr. Peter MacKay: It was, therefore, intentional.

Ms. Sheila Fraser: Yes.

Mr. Peter MacKay: Finally, with respect to the printing aspect of the advertising scandal, if you will, in your examination did you delve into this issue? I'm talking specifically about Treasury Board policy that called for privileged administrative arrangements that gave a communications group a five-year monopoly on federal printing. Is this something that was audited by your offices?

Ms. Sheila Fraser: This was not audited as part of this audit. I do believe, though--unfortunately, I don't have the report with me--the office audited when the printing services were outsourced. It is my understanding from having briefly looked at that report some time ago that the privileged arrangement was part of the negotiation that occurred at the time of outsourcing. We reviewed that transaction, and we had no serious concerns with it.

À (1000)

Mr. Peter MacKay: Thank you very much, Madam Fraser.

Ms. Sheila Fraser: If the committee wishes, I can find the exact details of the chapter and the year. I can provide that to you, Mr. Chair.

Mr. Peter MacKay: If you wouldn't mind.

The Chair: Thank you, Mr. MacKay.

Madam Jennings, eight minutes.

Mrs. Marlene Jennings: Thank you.

Thank you, Madam Fraser, for being with us today.

Yesterday Mr. Ran Quail, the former deputy minister for Public Works, was here. He was questioned at length by both opposition and government members on the fact that the 1996 internal Ernst & Young audit--which he called an assessment--clearly recommended that the procurement function be removed from the APORS, headed by Chuck Guité's section, and moved into the normal procurement stream of Public Works. The response of Public Works and Government Services Canada at that time was to say it would begin the administrative work in order to move the procurement function back into the normal stream.

One of the points Ernst & Young clearly made, on the issue of procurement existing as a function within Chuck Guité's section, was that there was no expertise for that, and the expertise was actually in the normal stream. However, Mr. Quail was never able to properly answer or explain why--when the government decided to have an enhanced communications policy, and through a memorandum signed by Prime Minister Chrétien and Madame Marleau that new moneys would be given, and those moneys would go to Public Works, and there would be a sponsorship program, and Mr. Guité's section would take it over, and it would become CCSB--there was no follow-up to ensure that the procurement function moved out.

Was it an issue of concern that the same section that received the sponsorship requests evaluated those requests; decided which projects would receive funding and how much funding they would receive; selected the ad agencies or communications firms; determined which events they would supposedly manage, and how much they would be paid; and when the bills came in, approved payment of those bills?

One of the things you've talked about clearly is it was not that rules and procedures weren't in place; in fact, there were very good rules and procedures. So it was clearly mismanagement. It appears that one piece of that had to do with the fact that procurement was allowed to remain within CCSB, instead of in the normal stream.

Ms. Sheila Fraser: That was very much so, in fact. I think Ms. Jennings has sort of summarized the issues very well about the management within that particular program. That is one of our concerns.

I'll just refer you to paragraph 3.21, where we went through the process. The process within CCSB violated two fundamental principles of internal control: segregation of duties, and appropriate oversight.

It is interesting that this was very problematic within the sponsorship program. If you look at the public opinion research in chapter 5, which I realize people probably haven't looked at very much, it was not the same thing. It was within the normal procurement process of the department, and we did not find the same kinds of problems. So I think that is proof that if this had been managed through the normal procurement processes of the department--I guess it's hard to say “proof”--one could presume we might not have had the problems we are seeing in this audit.

À (1005)

Mrs. Marlene Jennings: I'm glad you made that point, because I have read chapters 4 and 5, and I did see that. It leads me to wonder if the program was wilfully designed and managed to not follow the proper procurement rules, procedures, and processes set in place by Treasury Board for management of programs where moneys go out and invoices...services are rendered and then paid for.

However, I want to come to another point. I believe I asked you this on Tuesday, but I may not have been completely clear in the way I asked the question, so I'm going to ask it again. Did any part of your audit of 53 sponsorship files include reviewing any files of the ad companies that had been audited by QRT?

Ms. Sheila Fraser: We audited, in fact, more than 53 files. There's a bit of confusion about how many files we actually audited, but Mr. Campbell can perhaps respond to that.

Mr. Ronald Campbell: We did, in effect, our own audit work. We audited the files we selected using our criteria. We did refer to the findings of the QRT and the Kroll report. They looked at the same files we looked at, so we looked to see if there were any dramatic differences there, and there were not. We also looked at their general findings. If there had been something notably different, either in the detail or in the general findings, that would have caused us to have other thoughts and to go and look. We did the 53 in that time period. We did a total of, I think, 124, when you take in the crowns and the other samples we took. We had taken a random sample in order to test what we were finding, just to make sure it was broadly based, and we did compare against the findings of all the other auditors, to ensure that they were finding the same things as we were.

Mrs. Marlene Jennings: Given that you, if I understand you correctly, had access to the files the QRT examined in depth, did you have access to their working documents, the actual company files, or was it simply the report of the QRT?

Mr. Ronald Campbell: We had access to all the information they had at the time we did our audit.

Mrs. Marlene Jennings: Okay.

The Chair: Thank you, Madam Jennings.

Ms. Phinney, eight minutes.

Ms. Beth Phinney: Thank you for coming again to answer our questions.

This one has partly been answered, but I just want to go over it again. We have a department with a minister who stated he was not responsible for the actions of his department, because he was too busy. This minister met with Mr. Guité about a program where we found many irregularities. The deputy minister was in yesterday, and he said he didn't know about these irregularities, he just expected his employees to do what was right. Therefore, he was not responsible. So we have 14,000 employees who have nobody, I guess, controlling what they're doing. It's our job to find out how this happened and why it happened, but we have to fix it. I'm wondering if you could suggest any ways.... You were mentioning just a minute ago 3.21. I'd like you to go over that again. Is that one of the ways you think we could fix it, and are there any others you see?

Ms. Sheila Fraser: I have two elements of response. First, it is clear to us that this branch was set up outside the normal oversight and control functions within the Department of Public Works. We did not, in the course of our audit, receive an adequate explanation for why that occurred or why it was allowed to continue for several years. If possible, I think it would be good to try to understand why that occurred and why it wasn't corrected. It could have occurred for various reasons at the beginning, but why wasn't it pulled back into the normal processes? How do you ensure that it doesn't happen again? I think if we can understand why these things occur, it's useful to prevent it from re-occurring in the future. I think that is an important element of this.

The other thing I'd just like to touch on--this is perhaps more related to the conversation you'll have this afternoon with the experts that will be appearing--is the whole question of accountability. In my view, you cannot transfer accountability to somebody else, you are always accountable. You can share that accountability with other people, you can delegate certain things, but at the end of the day, you are still accountable. I think that whole notion about accountability and responsibilities needs to be clarified. I think people have to appreciate how large and complex these departments are. I'm sure certain members will know, having had responsibilities previously, these are very large organizations, very complex, with a great many priorities. It's how you make accountability work effectively within a very complex system.

À (1010)

Ms. Beth Phinney: Okay.

My other question is about appropriate oversight, which has also been spoken about before.

Mr. Guité was working on this project. You mentioned that we have this department and the little box beside it, and I think we were on this topic in the very first week and we talked about this little box. Now, the deputy minister didn't know how they were proceeding in administering this little block on the side--at least that's what he says--he just paid the bills. Some of those bills were enormous.

I'm willing to accept the fact that maybe he didn't know about the irregularities, but I find it very strange or impossible to accept--as I'm sure the taxpayers do--that he would sign these huge cheques or would request the money for them and not go back and say “This is a lot of money. Maybe I should go back and look at what the requests are.” That's something that concerns me. Do you have any comment about that?

Ms. Sheila Fraser: Again, the first clarification is that once a payment is signed off, there's a certification. That is very important in the system of payments. It is a really key point. Once someone has certified that all the goods or services have been received and they're in compliance with the contract, that really then initiates the payment after that; it's almost an automatic process. And that function was within that branch.

The second point I'd raise, and I guess I have to be careful here, is that I know for all of us $1 million sounds like a lot, even $100,000 is a lot, but this is a department that is dealing with billions of dollars. They do the contracting and purchasing for most of the government departments. So transactions of $5 million to them are small in the stream of transactions going through. They are dealing with purchases of hundreds of millions of dollars, so one should not necessarily expect a procurement officer or deputy minister to question a payment of $5 million.

Again, it goes back to my comment that these departments are very large, very complex, and that these types of payments would be, in proportion to the rest of the business they're doing, very small.

Ms. Beth Phinney: I just would have thought that since Mr. Quail knew there was nobody but Mr. Guité doing this, he might have checked it out.

I don't know whether you have seen anything like this in any other department.

Ms. Sheila Fraser: We have not seen anything quite like this in any other department, which again reinforces my statement that what has occurred here should not be generalized to the entire public service. I think this is a very isolated case, and it would be quite unfair to the many thousands of public servants who do their jobs honourably and well.

À (1015)

Ms. Beth Phinney: I agree. Thank you very much.

Thank you, Mr. Chairman.

The Chair: Thank you, Ms. Phinney.

Now we're moving on to round three. We're now down to four minutes.

Mr. Toews, four minutes, please.

Mr. Vic Toews: Thank you.

I appreciate your comments, Madam Auditor General, that there is no evidence at this point to suggest that the same kind of wrongdoing occurred in other programs. So it's not that you have examined the other programs necessarily, it's just that you have no evidence at this point.

That brings me to the issue of the HRDC program. In your study of the HRDC program you studied about three or four programs, as I recall, with about $580 million worth of programming. And I'm going to get to the sponsorship program, because it's a comparison that I want to make; it's directly related to what Madam Phinney raised.

I understand there were changes in staffing or cutbacks that created the lack of a proper oversight of the program. It seems in that sense it was more negligence on the part of the government than a deliberate strategy to dismantle the oversight.

How does this compare with the sponsorship program and its forerunner? We've heard, for example, that in November 1994 there was a deliberate collapse of some of the oversight mechanism. Rules that had been operating prior to 1994, as Mr. Allan Cutler indicated, were collapsed and the procurement and the oversight function were put into one basket.

Are we looking at the same kinds of issues when we're dealing with the problems in the sponsorship program and its forerunner as we were with HRDC in your findings there?

Ms. Sheila Fraser: Mr. Chair, I haven't gone back over the HRDC audit. It has been a little while, so I will refer to it from memory.

What I do recall from the findings of the audit was that new programs were introduced, yet there was very little funding given to those programs for the administrative support that needed to go with the delivery. The workload, or the program load, increased quite significantly.

It was also during the time of program review. During that period, as well, I think there was an attempt made to keep the direct programs to citizens going. Many of what some would qualify as administrative procedures, internal audits, and administrative controls were reduced.

I think two other people have referred to the fact that there was a bit of a philosophy, at the time, to bring in more innovation. I mean, the phrase “let the managers manage” was there. There was less regard to process. I think we are in an era now when we realize the process is very important, particularly when we're dealing with public funds. It's not only results that count; it's how you get there that also matters.

I think there were several elements that resulted in the HRDC issue. It was, again, a lack of documentation in files, a lack of justification on why payments were being made. They were the same types of problems, I think. It's interesting that in this case it was part of the normal processes of the department. There had been internal audits done, which had signalled the issues.

À (1020)

Mr. Vic Toews: In the sponsorship file?

Ms. Sheila Fraser: No, in HRDC. The HRDC audit of 2000 was the one that signalled the whole issue in the public eye, but before that, there had been internal audits that had also indicated the same issues over several years.

I view that one as being similar in some ways, because it has the same problems of lack of documentation and lack of rigour in the process. But I view it as being very different from the sponsorship file, given the fact, as we discussed earlier, this branch was set up outside the normal processes and oversight mechanisms of the department.

Mr. Vic Toews: That distinguished the two.

The Chair: Thank you, Mr. Toews.

Mr. Jordan, please, four minutes.

Hon. Joe Jordan: Thank you, Mr. Chair.

One of my fundamental theories of politics is you set a low expectation and exceed, and I realize I've set a very high expectation for my questions here now. I want to assure you I'm going to dig deeply and do what I can.

Madam Fraser, one of the things that concerned me and one of the reasons I wanted to have you back was that I didn't get to question you. Canadians' window into this process is the people who watch this--and they do, because they send me e-mails--and also with what gets reported out there.

There was certainly this inference that you came before the committee here on Monday and you were responding to criticisms. I just want to say that I haven't seen a legitimate criticism of your work. The only thing that I think possibly approached it was the Canada Post argument that it wasn't sponsorship, it was advertising. And I don't think, as you say, you had the power to go in with enough detail to sort that out, but it was certainly a legitimate red flag.

In terms of the arguments that people are making, they can't take issue with what you found or didn't find in the files. I took this up with the quick response team. I made a request for more information, and your letter to this committee spelled it out more clearly.

I want to come back to the files in a second, but I think one of the things that concerned me was that people were not reacting, especially the ad agencies, to what you said; they were reacting to what people said you've said, which you have no control over.

I have a couple of examples. These are quotes from members of the committee, and I won't even say which side, because that's not my point. When a member of this committee goes on public television and says “The Auditor General has said that this Liberal government is the most corrupt in the history of Canada”.... I asked you about that the first time you were here, and you said you didn't say it.

An hon. member: But it's true.

The Chair: No, no, we're not going to have debate across the floor.

Mr. Jordan, please.

Hon. Joe Jordan: We've dealt with the $100 million stolen, and I agree with you, $10 stolen is too much. But when someone says $100 million was stolen--the Auditor General says $100 million was stolen--the ad agencies that got the money say “I'm being accused of being a thief. This is affecting my other business. I have to push back.”

So I think that what a lot of people were characterizing as criticism of you was more accurately criticism of what people said you said. That's why I like to clarify these things.

A member of this committee two days ago in the House said, “Senior political figures would buy luxuries on an agency credit card and it would get charged back to the government as advertising.” The Auditor General in her report also referred to the hiding of true sources of funds. I got through high school, I think, without reading a book, but I did read this one.

Did you ever say, did you ever...?

The Chair: Mr. Kenney, you have a point of order?

Mr. Jason Kenney (Calgary Southeast, CPC): The point of order is that the preface to Mr. Jordan's question is inaccurate. I know he wouldn't want to mislead the Auditor General, because in fact the quote he's just cited is out of context. It was preceded by “CTV News reported that...”.

The Chair: Okay, it's not a point of order.

Mr. Jordan, you have the floor.

Hon. Joe Jordan: I'm not taking exception to the quote. I'm reading it directly from Hansard.

Did you, the Auditor General, in your report refer to senior political figures buying luxuries on agency credit cards that would get charged back to the government as advertising?

The Chair: Mr. Jordan is quoting from Hansard. He's not suggesting that the Auditor General said this; he's just saying he's quoting from Hansard.

Do you have a reference on Hansard, Mr. Jordan?

Hon. Joe Jordan: I can table it.

The Chair: Well, you don't have a date or a...?

Hon. Joe Jordan: I'll get you the date, sure. I can table the support for all these comments, but that's not really my point.

The Chair: Mr. Jordan is quoting from Hansard. He will table the reference later on. Therefore it's legitimate, and that is it.

Mr. Jason Kenney: I have a point of order.

The Chair: What's the order?

Mr. Jason Kenney: The point of order is that he is attributing that statement to the Auditor General.... He is misquoting a member as having attributed that allegation to the Auditor General's report, which no member did. It was an allegation attributed to a CTV report. So I don't think it's fair for Mr. Jordan to put an inaccurate question to the witness.

The Chair: Mr. Jordan, the clock has stopped at the moment. Will you read your reference again, please?

Hon. Joe Jordan: It's a printout of Hansard. I can read the whole thing. After the member's name and riding it says:

Mr. Speaker, it was the Treasury Board, in its January report, that specifically discussed money laundering, using those very words. Does the minister read his own department's reports?

Senior political figures would buy luxuries on an agency credit card and it would get charged back to the government as advertising.

This is the key part:

The Auditor General, in her report, also referred to the hiding of the true source of funds.

And the dangling participle aside, did you in your report refer to senior political figures buying luxuries on agency credit cards?

À (1025)

Ms. Sheila Fraser: In the report we did use the words “hiding the source of funds”. In our main points we say “Some sponsorship funds were transferred to Crown corporations using unusual methods that appear designed to provide significant commissions to communications agencies, while hiding the source of funds and the true nature of the transactions.”

Hon. Joe Jordan: Mr. Kenney and I can argue, but by putting those two sentences back to back, it's very clear to me. My point is, going back to it, that I don't think it's useful when members of the committee, who I would argue probably know more about this file than they want to, but certainly more than our general colleagues do, put words in your mouth and people react to that. It gets us off track. I have given three example where I think people have quoted you or used your words to make arguments that are causing push-back, which is really getting us away from what we're trying to understand: what happened, how did it happen, and how do we make sure it doesn't happen again?

My question goes back to the files. I asked Guité about the files, and he said of course there were files--there has to be an invoice to pay a bill. In his mind a file is an invoice. So when the QRT team came and said files weren't complete, I asked them and they provided a list, and you very helpfully provided a list. My question is in two parts. First, there was a difference, not necessarily in the concept, but in the specifics, so what should be in a file? Does that exist in regulation? Second, if it doesn't, should it exist in regulation? Is that something we need to look at? Because there were differences in what the content of that complete file was.

Ms. Sheila Fraser: I will pass the specific question to Mr. Campbell, but I would just like to make one comment.

Many things have been attributed to me by many people. I am starting to learn that the environment in which I work likes to do that. We will respond when there are factual inaccuracies. With all due respect, Mr. Jordan, many of the comments made by certain witnesses I interpreted as an attack on the credibility of this office, and I will not allow that to happen without some response. The response will be made before this committee, as we did on Monday, and I would encourage any member, if they have doubts about anything anybody has said up to now in the hearings, to ask the question, so we have an opportunity to set the record straight.

Hon. Joe Jordan: Good for you. My point was that a lot of their push-back was, when it came right down to it, not anything you said or wrote.

Ms. Sheila Fraser: On the procedures of the documentation I will defer to Mr. Campbell, who will go through the answers.

Mr. Ronald Campbell: Mr. Chairman--

The Chair: On a point of order, Madam Ablonczy.

Mrs. Diane Ablonczy: The member who just spoke referred to a question I asked in the House.

À (1030)

The Chair: Yes.

Mrs. Diane Ablonczy: For his clarification, the Treasury Board presentation I referred to that used “money laundering” was the black binder, section 10, page 3. The report of senior political figures using ad agency company credit cards to buy luxuries that were then charged back to the government as advertising came from a CTV broadcast on February 24, 2004. The Auditor General has just confirmed that my quote from her report, “hiding the true source of funds”, was accurate.

Thank you, Mr. Chairman.

The Chair: Thank you, Ms. Ablonczy.

Mr. Campbell.

Mr. Ronald Campbell: Much of what was required in the files was laid out in the contracts. For example, it stated in most of those contracts that for cost reimbursable--

The Chair: What Mr. Jordan asked was whether regulations require the files to be maintained in a certain way, and if not, should they.

Mr. Ronald Campbell: Government policy requires that the files be maintained in a way that provides a full audit trail.

The Chair: Okay.

Mr. Toews....or no, sorry; Mr. Tonks. My apologies.

Mr. Tonks, four minutes.

Mr. Alan Tonks (York South—Weston, Lib.): I'm not sure who that's complimentary to.

Voices: Oh, oh!

The Chair: We will not go there.

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

Madam Auditor General, I'd just like to ask a question along the same lines as Mr. MacKay, with regard to the Lambert commission report. As has been pointed out, Mr. Franks is going to be talking to us about that.

I think the point that I am most interested in, and I hope the committee is as well, is the huge amount of conjecture as to why this architecture was set up. There are going to be varying opinions on that, and whether it was justified and so on, but I think your charge to the committee was “how”, as in how this happened, because then a number of things happened that were just totally unacceptable. And we certainly concur with that.

It's amazing that sometimes in the hierarchy of decision-making responsibility it's the lower part of the organization that starts giving you the feedback and the pushback. In our case, it was Mr. Cutler, who said quite early that he could see the sort of gerrymandering that was going on with respect to distribution of responsibility. He tried to do something about it, and that resulted in two audits.

Part of the Ernst & Young audit, which was the internal audit, said that the actual procurement of advertising and public opinion research should be removed from the sector. And you know the rest of that.

Then came Mr. Myer later on, who also was in a line position. He said the same thing, that this should have been done.

So that was the architecture that had been set up. We were told yesterday by Mr. Quail that when the CCSB was set up, nothing happened, really, through Mr. Stobbe or anything, because Mr. Guité had the final say. In fact, when Mr. Myer went to Mr. Guité, who would be his hierarchical superior, and said we should do this, Mr. Guité said mind your own...or it's just going to be done this way.

I guess my question is that if we applied the approach that was recommended--making the deputy minister an accounting officer, and responsible--as Mr. Franks indicates, in the Westminster model, if the minister, in terms of accountability, is told about a situation and he disagrees, he has to disagree in writing. Then the accounting officer has that in his back pocket to say, look, I have put the organization on notice.

You had said earlier that there is a mechanism that isn't used very often where the Auditor General receives a communication. Is that the kind of mechanism that you would see as a fail-safe mechanism, in some form? Because this committee will have to make recommendations, and I'd just take that little frame out in terms of the direction of a recommendation that the committee could make.

Ms. Sheila Fraser: Mr. Chair, the reference I made to the Auditor General receiving a note is in the accounting officer concept. So if there is a difference between the deputy minister...the note that documents all of this goes to the Auditor General. So it's a person outside of the department who is apprised of that.

Now, as to how often it actually occurs, I don't know. I have been told it has occurred, but I don't know with what frequency.

I think some mechanism like that would help to clarify who was actually accountable for a decision. I think another question that would require some serious reflection as well is the whole interface between the professional public service and the political level. I mean, a minister can make a decision. A minister is totally within his or her rights to make a decision affecting something in a department that could be contrary to the advice that is given by the department. But then the accountability should be clear. Civil servants should not be asked, just to use a hypothetical example, to try to somehow justify a decision with which they did not initially agree.

So I think that whole question would be a really good one to explore and to have some thoughtful reflection on, on how that system could be improved and the accountabilties made clearer, or on whether that's simply wishful thinking and it can't happen in our environment. I think some discussion of that needs to happen.

À (1035)

The Chair: Thank you, Mr. Tonks.

Mr. Kenney, please, four minutes.

Mr. Jason Kenney: I just wanted to say that I don't have any questions for the Auditor General. We have had her here three times now. I think her testimony has been exhaustive, and I appreciate her appearance before us again, and her work. I'll defer, because I would like to get on to hearing other witnesses as soon as possible.

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

Mr. Lastewka, four minutes, please.

Hon. Walt Lastewka: Do I get his three other minutes?

The Chair: No. You have four: you have his three, plus one more. That's generous.

Hon. Walt Lastewka: Madam Auditor General, I really appreciate your coming, because I think it's important for us to define a lot of things. We're here to find out what went wrong, why it went wrong, and how to fix it.

Having worked in a large corporation, I understand that when there are a lot of people under you in a corporation you need to be very careful how you work with the various systems in place. Over the last number of weeks there has been no doubt in my mind that there was way too much PCO and PMO over-involvement with Mr. Guité. The responsibility of the minister and the deputy minister...to me, they both have to take responsibility for what happened, whether they like it or not, because they're at the top of the pyramid.

I tried to understand the deputy minister, Mr. Quail, who tried to explain how he was at first out of the loop, and then how he was involved in three loops, and I can tell you that I was totally confused on the loops that he tried to explain. There was still no answer. The fact that he delegated or empowered somebody does not let him escape from being responsible and accountable. I think he must take responsibility for that.

There's no doubt, as you mention in your report, that Mr. Guité broke the rules, was very poor on paperwork for one reason or another, and his management style was the same before and during the sponsorship program, but it was allowed to continue. That's where I have been coming from, my concern on that.

I understand what the QRT people did in order to do exactly what you said had not been done--no plan, no vision statement, no implementation plan, nothing on how the goods and services were to be delivered, the final report, and then the wrap-up on what that event was to achieve and whether it did achieve it. Did it achieve 85%, 90%, or what?

The one item you did mention is that this group operated outside the structure. Therefore, the internal audits, your audits...it was allowed to operate for a long period of time, three or four years, before the crunch started coming down. The whys are very clear to me: it was the environment of the day; we needed to promote Canada; we didn't want to tell somebody that we were doing things and that was the excuse for not doing paperwork. I don't buy that.

But the fix is where I have concern, that the minister and deputy minister have responsibility and accountability, and we'll be hearing testimony on that.

I have concern when we have a large structure within the government, we have internal audits, we have comptrollers. We were allowed to remove comptrollers--I think in Ms. Campbell's reign--and now we've put them back. Pieces of the audit system get tampered with.

What is your recommendation on how we can solidify the audit system and not tamper with it, no matter which government it is?

À (1040)

The Chair: We'll have a brief response from the Auditor General.

Ms. Sheila Fraser: Mr. Chair, I would ask the committee for a little patience. We are currently doing an audit of the internal audit function in government, which we plan for our November report this year. We will be looking at how internal audits.... I truly believe that one of the basic essential items of the control framework is a strong internal audit function. Internal audit has to be strong in all of the departments. So we are looking at internal audit as it is throughout government.

I haven't seen the audit yet, but I presume there will be recommendations coming from that, and we would be pleased to discuss them with the committee at that point.

The Chair: There we have it, Mr. Lastewka, the answer to the age-old question about who audits the auditor. Now we know it's the Auditor General who audits the internal auditor.

Hon. Walt Lastewka: Mr. Chairman, I think it's very important for this committee--

The Chair: It is important. It's very important. I agree.

Hon. Walt Lastewka: --that in a large organization like the Government of Canada, when there are checks and balances, internal audits, and comptrollers, and then the overall corporate audit, being the Auditor General, it must not be tampered with--I don't care who was in government. In a large corporation, you cannot tamper with internal audits, because you get to exactly what we've got.

The Chair: Yes, we agree with that, Mr. Lastewka, and the issue, of course, is that I don't think anybody tampered with the internal audit here, but there was a failure of the system that wasn't picked up properly, and that is part of our investigation.

Hon. Walt Lastewka: I don't agree with you completely, Mr. Chair.

The Chair: Well, we're going to find out what Mr. Murphy has to say on this issue.

Mr. Murphy.

Hon. Shawn Murphy: Thank you, Mr. Chairman.

Ms. Fraser, I want to get your comments on an inherent problem with this investigation. You're the Auditor General. You're to audit the public accounts, the government accounts, and you have no mandate or role to go into ad agencies to investigate their workings. That is the same job of this committee. We're to investigate the public accounts.

You went in there and you didn't find the documentation that was necessary, and you're right in your finding of fact and conclusions. But then we get blurred when we get the ad agencies coming before us, and other government agencies, and in a lot of cases I'm quite prepared to make the conclusion that the Government of Canada--although I don't think there was any money stolen or missing--didn't get, or got very little, value for the money they spent.

In some cases--and I'll give you an example just to elaborate some of the difficulties, and that is the RCMP issue--you went in there to audit and you didn't find the documentation that you were expecting to find. We've heard from the ad agencies, who basically said there was a $3 million project, $1,704,000 was transferred to the RCMP, $1,081,910 was used for production costs, and their fee for doing the whole thing, with 700 events, was $244,000. This evidence was corroborated fairly strongly by RCMP Commissioner Zaccardelli, who basically described the 700 events, that they were very pleased with the way it went, that it was administered and supervised by Lafleur and Gosselin. He couldn't really comment on value for money, but it was a major job and he felt that they did a good job.

The wording that was used was probably fair from the information you had. The wording is “These agencies retained a total of $244,380 in commission fees for transferring funds from CCSB to the RCMP.” I guess you can see my difficulty as an MP, after spending three months on it. From your vantage point, that might have been a correct statement, but from where I'm sitting now, three months later, from all the evidence that has been heard in the committee, with all due respect--and I appreciate everything you've done--I can't agree with it. The evidence leans the other way. But I know that evidence wasn't in your possession when you did the report.

Do you see my difficulty?

Ms. Sheila Fraser: There were several other issues relating to the RCMP. The first is the parliamentary appropriations process. Why is money for an RCMP celebration coming out of the general vote for Public Works?

Hon. Shawn Murphy: I agree with you.

À (1045)

Ms. Sheila Fraser: That's the first one.

Then there's the question that the RCMP was already required to use the Canada wordmark, so what is the justification for doing that through a sponsorship program?

Then, concerning the agreements, there was over $1 million in production fees, quite apart from the commissions. I must admit that I have great difficulty with one department paying commissions to transfer funds to another department, fundamentally. If they had signed a contract with them for management services, to manage programs.... But it was simply a commission that was paid without a management contract.

Hon. Shawn Murphy: But that wasn't the evidence we heard. The evidence we heard from the commissioner and the ad agency was that there were 700 events, and they did more than just.... They supervised them, organized them, and did a lot of work.

I'm making the assumption that the--

Ms. Sheila Fraser: I'll let Ronald Campbell respond to the specific question.

The Chair: You're out of time, Mr. Murphy.

Mr. Ronald Campbell: There was a production contract in addition to the management contract--the management fee they got. So there was over $1 million in production for doing things like that.

On what they did for the management fee, that wasn't evident in the files. All the production and the specifics on what they did was in a separate contract.

The Chair: Okay, we're going to leave it there.

I have a couple of items. First, in reference to Mr. Jordan's point, I think we should ask Public Works to give us the criteria, the regulations, on what information is required to be in a file in order to meet appropriate standards. Mr. Campbell stated there had to be an adequate audit trail, but I think we need to have the regulations on this issue from Public Works.

There's another matter of importance. We've been dealing with many important things, but I understand that today is Ms. Ablonczy's birthday.

Some hon. members: Hear, hear.

The Chair: Since we don't know the exact number, we always ascribe the number 29. So happy 29th birthday.

Mrs. Diane Ablonczy: I can see, Mr. Chairman, why you're the head of the public accounts firm.

The Chair: Do you have a closing comment, Ms. Fraser?

Ms. Sheila Fraser: I would just like to thank the committee for its interest in our work. We look forward to future hearings.

Thank you.

The Chair: We'll suspend for a few minutes. We'll be back at eleven o'clock with Mr. Franks and Mr. Boyer.

The meeting is suspended.

À (1048)

Á (1108)

The Chair: We're continuing.

As I mentioned earlier, at this point our witnesses are Mr. C.E.S. Franks, professor emeritus of political science at Queen's University, and Mr. Patrick Boyer, adjunct professor, department of political science, University of Guelph.

For a little background on our witnesses, Mr. Franks taught at Queen's University for over 35 years in the department of political studies. Currently he is an emeritus professor in the department of political studies.

In addition to nearly 100 learned and other types of articles in chapters and books, Professor Franks has written or edited 13 books, including The Parliament of Canada. Mr. O'Neal, from the Library of Parliament, has Mr. Franks' book right here. Mr. Franks also wrote The Canoe and White Water—I thought that was more of an adventure book, Mr. Franks—and Dissent and the State. That one, I think, would be quite important.

His work includes explorations into public administration, government accountability, relations between governments and aboriginal peoples, the public service, and Canada's north. He was founding president of the Canadian Study of Parliament Group, and has conducted many studies for royal commissions, Parliament, and government agencies. He has worked as an adviser to legislative groups in Vietnam and Russia. Among his academic honours, Professor Franks has been elected a fellow of the Royal Canadian Geographical Society and the Royal Society of Canada.

Welcome, Mr. Franks.

We also have Mr. Patrick Boyer, who holds an honours degree in economics and political science from Carleton University, and a law degree and a master's degree in Canadian history from the University of Toronto. Mr. Boyer was also a member of this House, representing the Toronto constituency of Etobicoke—Lakeshore from 1994 to, I believe, 1993.

Is that correct, Mr. Boyer?

Á (1110)

Mr. Patrick Boyer (Adjunct Professor, Department of Political Science, University of Guelph, As Individual): It was 1984 to 1993.

The Chair: Oh, it was 1984.

Mr. Patrick Boyer: It's the time machine that I would like to have had.

The Chair: It was a short period.

He was parliamentary secretary, first for external affairs and subsequently for national defence in the early 1990s. He is currently adjunct professor in the department of political science at the University of Guelph, where he teaches courses in political ethics, leadership, and accountability in Canadian government.

More recently, he has worked on the underground royal commission. His latest book, Just Trust Us, was written in conjunction with the work of the commission. Just Trust Us explores how, over the past few decades, the culture of accountability in our system of government has been weakened and gradually lost. According to Mr. Boyer, the responsible government envisioned and implanted in our constitution exists only as a concept taught in civic courses today. Mr. Boyer argues that over the years governments have passed legislation and reforms that have greatly diminished the power of Parliament and other institutions that are supposed to scrutinize public spending and keep government in check.

We say welcome to our two witnesses this morning. They have a long academic interest in the issues of ministerial responsibility, government accountability, and accountability of all kinds.

Without further ado, I will first ask for an opening address by Mr. Franks, followed by Mr. Boyer, and then we will have a discussion.

Mr. Franks, the floor is yours.

Mr. C.E.S. Franks (Professor Emeritus of Political Science, Queen's University, As Individual): Thank you, Mr. Chairman.

Before I begin my actual remarks, let me say that I suspect their tenor will be academic and sound fairly impersonal, but like many Canadians, I'm very concerned about the sponsorship issue. I can get quite angry about it, but I shall not reveal that in my presentation, because what I want to do is dig down into some of the problems behind it. I titled my submission “Responsibility, Accountability, and the Sponsorship Affair”.

The investigation by the public accounts committee into the sponsorship affair has been successful and useful, although perhaps in an unexpected way. It has identified the crucial factor that allows such problems to happen. Not one of the many witnesses who have come before the committee, neither ex-ministers nor public servants, has stated, yes, managing this program was my responsibility, and I am responsible and accountable for what went wrong with it. Ours is a system of responsible government. Constitutionally, someone must be responsible and accountable to Parliament for what the government does or fails to do, but no witness before the committee has accepted that the problems were his or her responsibility. Ministerial or any other sort of responsibility has been missing. The breakdown of responsibility and accountability disclosed by the investigation of the public accounts committee shows that something is seriously wrong with the way the principle of responsibility is construed and practised in Canada.

Responsibility must be allocated to identifiable persons before they can be held accountable. In our parliamentary system responsibility, for the most part, is assigned to the ministers of the crown, but in an enormous and complex system like that of the Government of Canada there must be exceptions to the general rules, and the doctrine of ministerial responsibility has exceptions where responsibility is assigned to persons other than ministers. The Canadian Privy Council Office has, in various documents, given its interpretation of how ministerial responsibility should work in practice and what exceptions there are to the strict doctrine that the minister is responsible for all actions of public servants. Appreciation of these exceptions is crucial to understanding the frustrations and difficulties encountered by the public accounts committee.

The Privy Council Office's version of ministerial responsibility also has weaknesses. These weaknesses allowed the system to go so drastically wrong for so long in this sponsorship affair. Understanding both exceptions and weaknesses identifies what needs to be done to ensure that in the future these sorts of problems do not arise, or at least are detected sooner.

First, according to the Privy Council Office, only the minister who currently holds the post is responsible and accountable to Parliament. A previous minister is not responsible and cannot be held accountable or answerable by Parliament or its committees for what went on during his or her tenure. That is why previous incumbents of ministerial posts have appeared before the public accounts committee as private individuals rather than in an official capacity.

Second, Privy Council Office doctrine states that current ministers are answerable in Parliament for actions taken during the tenure of previous incumbents of the office. To be answerable means a weaker sort of relationship than to be accountable.

Third, the doctrine states that ministers are required to answer to Parliament by providing information on the use of powers by non-departmental agencies assigned to the agencies by statute. For exercise of these statutory powers the heads of these agencies are responsible not to ministers, but through ministers to Parliament.

Fourth, according to the doctrine, deputy ministers are only answerable, not accountable, before parliamentary committees. Deputy ministers are accountable to their ministers, to the Prime Minister, and to the Treasury Board, but not to Parliament or its committees. The responsibilities assigned exclusively to deputy ministers by the Financial Administration Act include crucial ones relating to maintaining accounts and ensuring prudence and probity in financial transactions. These powers are not assigned to the ministers. In effect, it appears that while ministers are not responsible and accountable to Parliament for the exercise of powers assigned by statute to non-departmental agencies, they are responsible and accountable for the exercise of statutory powers assigned to deputy ministers.

Fifth, when errors or wrongdoings are committed by officials, the doctrine states that ministers are responsible for promptly taking the necessary remedial steps and for providing assurances to Parliament that appropriate corrective action has been taken. The requirements of ministerial responsibility are met when ministers answer to this effect in Parliament.

Á (1115)

The Privy Council Office interpretation means that no minister, present or previous, is accountable to Parliament for problems stemming from the tenure of a previous minister. Responsibility and accountability belong to the office and its current holder. Nor are ministers accountable, rather than answerable, when public servants misbehave. More important in the sponsorship affair is that deputy ministers are accountable only within the government, to minister, Prime Minister, and Treasury Board, but not to Parliament, for the crucial management functions assigned to them alone by statute. It also appears, though the Privy Council Office does not explicitly state so, that it considers that the principle that responsibility belongs to the office and not to the person applies to deputy ministers as well as ministers.

Since both deputy ministers and ministers change office frequently in Canada, the responsible person interrogated by the public accounts committee is rarely the deputy minister who held the position when the contentious actions occurred. Ministers also change office frequently, making their accountability into answerability, as has happened in the sponsorship affair, by the time the problem comes to the attention of Parliament.

This Privy Council Office interpretation of the doctrine of ministerial responsibility accurately describes the way various witnesses have construed their responsibilities and accountabilities to the public accounts committee. Deputy ministers, regardless of their statutory responsibilities, did what the ministers and the Prime Minister's Office told them to do. Previous ministerial incumbents are not responsible or accountable, and the present minister has satisfied his responsibility by ensuring that the problems have been corrected. No one is responsible or accountable for the problems. The system worked as described by the Privy Council Office.

The public accounts committee now faces the question of whether it considers this to be an adequate description of what ministerial and deputy ministerial responsibility and accountability of government to Parliament ought to be. If the committee believes it to be adequate, its work is completed, and all that remains is for the judicial inquiry to make its study of what went wrong and for the police to investigate possible criminal activities. But if the committee does not believe this is satisfactory, it has an additional task: to find a better way of handling these crucial relationships between Parliament, ministers, and public servants.

A better way exists. Britain has a quite different approach towards responsibility and accountability to Parliament for administration and the use of funds. In Britain the permanent secretaries or heads of department, equivalent to our deputy ministers, are designated as accounting officers and have full and personal responsibility for the transactions in the account, including matters of prudence, probity, legality, and value for money, unless they have been explicitly overruled in writing by their minister. This responsibility of the accounting officers is personal and remains with them, even when they change office or retire. Either the minister is responsible or the deputy is, not both, not neither. Establishing the accounting officer approach and ensuring that it works in practice has been the central concern of the public accounts committee in Britain for over a century.

The accounting officer approach was recommended for Canada by the Lambert commission on financial management and accountability, but this recommendation was rejected by the government. The government's rejection was based in part on a misunderstanding of the British practice. Other persons have argued against the accounting officer approach because it is “unconstitutional” and goes against the principles of the Westminster style of parliamentary government. I find it difficult to understand how a practice that has existed in the British Parliament at Westminster for over 100 years can be unconstitutional or go against the principles of the Westminster model.

Another argument offered against adoption is that the present arrangements in Canada work well most of the time. This is true, but when the present arrangements do not work well, as they did not in the sponsorship affair, the consequences can be horrendous and destructive to the entire system of parliamentary cabinet government, including public trust and confidence in the neutrality of the public service.

Another argument used by the Privy Council Office against the accounting officer approach is that:

Formal and direct accountability of officials to Parliament for administrative matters would divide the responsibility of ministers.... Responsibility shared tends to be responsibility shirked.... Parliament prefers not to recognize the informal division between the answerability of officials and of ministers...and the attempt to identify discrete areas of official accountability to Parliament would likely result in the further blurring of lines of accountability, weakening the ability of the House to hold the minister responsible when it chooses for matters falling under his or her authority.

That's a quote from a Privy Council Office document.

Á (1120)

The public accounts committee might not agree with the Privy Council on these points. The committee is entitled to, and should, express its views.

The committee might conclude that the government's interpretations and practice, not Parliament's wishes, have led to the scandals and the obfuscation of lines of responsibility and accountability found by the committee in the sponsorship affair. It might conclude that the Privy Council Office's interpretation of responsibility and accountability in our parliamentary system contains far too many gaps, ambiguities, and contradictions and that the system does not work to the satisfaction of Parliament or the people of Canada.

I do not believe that responsibility and accountability could be much more shirked or the division of responsibility between ministers and deputy ministers much more confused and blurred than the committee has proven them to be in the sponsorship affair. If Canada adopted the accounting officer approach, then at least the public accounts committee and Canadians in general would know who was responsible and who should be held accountable. That, to put it mildly, would be a great improvement.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Franks.

Now we'll turn to Mr. Boyer for his opening comments.

Mr. Patrick Boyer: Mr. Chair and members of the committee, it's an honour to have been invited to appear before you on this issue and to appear with Dr. Franks, whom I have long held in high regard for his work and his commitment to the Parliament of our country.

Mr. Chairman, in introducing me, you did refer as well to the underground royal commission. That citizen organization, which was looking at the Government of Canada, involved many members of Parliament, past and present, from all parties, including many members I see around this table this morning. With that in mind, Mr. Chairman, I would like to begin by tabling with your committee the full report of the underground royal commission. In this, Mr. Chairman, are to be found 16 books, as the written part of the citizens' report on the Government of Canada, as well as 14 television documentaries in video format, which present the visual version of the same inquiry. I do this not only because a number of members around this table have been helpful to the work of the underground royal commission,

Á (1125)

[Translation]

that is investigative work done by highly esteemed individuals

[English]

but also because there's direct material in here of deputy ministers speaking about the relationship they have had with their ministers and about the evolution over the last 30 or 40 years in the country in terms of ministerial and governmental accountability. So it's highly germane.

The Chair: We'll take that as tabled. We'll not let you read it into the record.

Some hon. members: Oh, oh.

Mr. Patrick Boyer: Thank you.

The topic, ministerial responsibility, is quite specific this morning, and it's clear why this important subject is now front and centre for the public accounts committee as you begin to frame the issues of the sponsorship scandal. It is understandable that as a parliamentary committee that will make recommendations to the House of Commons as a result of your hearings on the Auditor General's report, you will want to focus on political accountability within our parliamentary system. Your hearings have already indicated this is an area requiring intense rethinking in terms of ministerial responsibility and contemporary Canadian government.

It is equally clear that the other processes underway to deal with the sponsorship scandal--for example, the pending judicial inquiry under Mr. Justice John Gomery, the police investigations, the recoupment-of-funds initiative--will have neither the interest nor the expertise this parliamentary committee has to address the core issue of ministerial responsibility and parliamentary oversight of government operations.

Now, when we're talking about ministerial responsibility, this can mean several things, such as the individual responsibility of each cabinet minister for the overall affairs of his or her department during the time he or she heads it. It can also mean--and it does also mean--the collective responsibility of all these cabinet ministers together as a political ministry and as the governing executive of our country. Both this individual responsibility and the collective responsibility entail political accountability to Parliament and a need to maintain the confidence of the House of Commons. Confidence in this sense is not some nebulous concept; it's quite specific. It means a majority of votes in the House of Commons; that's what we really mean when we speak about confidence in our system.

So that's one way to view ministerial responsibility, but we can take a second slice at this concept. We can cut into it and see several layers. We see its legal and constitutional dimensions, its administrative component, and another layer, its political nature. To get some perspective on how these different aspects of ministerial responsibility flow together and interact, it's helpful for us to step back and gain perspective of time. When we do, we can see some trends.

Two of the trends in the period in our country since World War II to the present--and which I have discussed, Mr. Chairman, at some length in my book Just Trust Us, which deals with the erosion of accountability not by pointing the finger at individuals but rather by looking at the structures and the behaviours and patterns of accountable government.... When we look at these trends over the past thirty or so years, we can see two that stand out. One is the politicization of the senior ranks of the Public Service of Canada, and the other is the fudging of the once-clear doctrine of ministerial responsibility. These two trends are intertwined. They are also highly germane to the issue that is now before you, the sponsorship scandal, as Mr. Quail's testimony before you yesterday afternoon made embarrassingly clear.

What it comes to is this. What happens when the very structures, procedures, and laws we have crafted under our constitution to institutionalize accountability become the very place where accountability is itself lost?

Á (1130)

The conundrum is that the outward appearance of operating institutions may still project an impression of peace, order, and good government even after their actual inner working has become a far different reality. In short, if the institutions and doctrines we have in place to ensure democratic accountability become dysfunctional, then those very institutions become the place where we lose accountability, and, even worse, they are the place where absence of accountability becomes institutionalized.

So we come back to the doctrine of ministerial responsibility. I said that in some ways it has become fudged over recent years. Mr. Chairman and members of the committee, if we were to take a humanist perspective on this, you could say this is an impossible job. What human can be a cabinet minister? It's an impossible assignment: to know everything that's going on in the department; to be busy with the House of Commons, your caucus, and the cabinet committees; to deal with the constituencies across the country that relate to your department and in some cases international constituencies as well; and not to overlook your own electoral constituency, your riding association, your constituents, the news media, both local and national, and family and friends. Really, you could take this view of it and say nobody can do this job.

We're talking here of roughly 30 cabinet ministers in a country of 30 million people, so we're talking about a one-in-a-million job. We are talking here about rare officials in our Canadian state. We are addressing here the structures of organized state power. We are operating here in this context of our constitution and under the rule of law. So while we should celebrate humanism and understand with appropriate tolerance the limits of human capacity and human nature, ministerial responsibility is not about that.

To overthrow the doctrine of ministerial responsibility so that we no longer have anywhere in the operation of government a primary and clear focus for accountability would be to usher in an even more anarchistic system than we apparently have now.

Mr. Chairman, any government department is a microcosm of the state, and its minister is to it what our Prime Minister is to the entire apparatus of the state, the Government of Canada. I think very few people would question that the ultimate responsibility for what happens in our national government comes upon the head of the incumbent Prime Minister. By the same institutional logic, very few should question that ultimate responsibility for what happens in a department of government comes upon the head of its minister of the day. Our parliamentary system entails a massive burden of accountability thrust upon ministers of the crown. That accountability is commensurate with the amount of power wielded by a minister in a democratic society.

A minister is not a chief administrator. That role falls to the deputy minister. Whereas the deputy minister is appointed, and generally from the top ranks of the permanent professional public service, the minister is elected on a temporary basis to the Commons and then appointed, with others of the same partisan affiliation, to a separate executive body, the cabinet, as a minister of the crown.

Á (1135)

Being a member of the executive council implies service to a higher loyalty than simply one's own department. Indeed, some ministers of the crown, members of the executive governing body of our country, do not even head up ministries--for instance, ministers without portfolio, the government leader in the Senate, and the Prime Minister himself or herself.

All of this is well known to members of Parliament on this committee, but I sketch it as prelude to make a single clear point about the essential structure of state power in our country. A cabinet minister is a severable, temporary, changeable, and sole political head of a department. It has evolved into this well-understood relationship for one reason: the minister is politically responsible for what happens, for better and for worse, in the department.

We are accustomed to ministers taking political credit for the work of their department, even if they did not author it, and we equally expect ministers to take political responsibility for the mis-workings of their department, again even if they did not author it. These are natural expectations for us, because in the structure of Canada's governing institutions these are but two sides of the same coin. This was simply the most efficient way we had to structure political accountability within the constitutional requirement of responsible government.

As a result, ministers can be changed with minimal disruption to the ongoing operation of the state administration, whether these changes result from a Prime Minister shuffling the cabinet to promote and demote ministers based on their perceived performance; from broader political and partisan requirements; from a change in government, with an entirely new ministry being sworn in; or when a minister either resigns on principle over a fundamental disagreement on policy or resigns under political pressure as a consequence of being responsible for a departure from the government when something has gone terribly, and perhaps scandalously, wrong.

To conclude, Mr. Chairman, I would like to succinctly express what I consider to be the five principles of ministerial responsibility in Canada today.

First, ministers are held politically accountable for their ministries as an inescapable reality of our constitutional requirement for responsible government.

Second, no axiom requires that a minister have personal knowledge of a departmental matter to be politically accountable for it. Ignorance cannot provide an escape hatch.

Third, being politically responsible is not the same thing as being legally responsible or morally culpable. Whether a minister is party to a criminal, illegal, or unethical act is a second and separate matter from taking political responsibility for it, and can only be established by both evidence and due process.

Fourth, ministerial responsibility is not determined by one's credibility, or lack thereof, but by virtue of holding office as a minister of the crown. It comes with the territory, and is neither acquired nor shed as a function of one's character.

Fifth, ministerial responsibility entails a continuous duty of mutual candour owed by a minister and deputy minister, one to the other. Failure of either or both to discharge this duty of office will necessarily compromise the functioning of responsible government and our parliamentary system for political accountability.

Thank you, Mr. Chairman.

Á (1140)

The Chair: Thank you.

Before we get into the normal rounds, the chair is going to take the first one himself, since this is more of an academic discussion than an investigation. It's an issue I've personally found very interesting over the years, the evolution of a democratic process from the autocratic processes of times past or in other parts of the world today.

We have a democratic process, which fundamentally boils down to the fact that a government is accountable. The converse, of course, is a dictatorship, which is not accountable, and we don't like that style of government. So we have a democratic government that has evolved over the centuries, starting, I guess, with Magna Carta back in 1215, or whenever it was, in the United Kingdom, where they started to wrestle away powers from the monarch, saying you cannot be an autocrat, you have to ask the people. Later on you had to get the permission of the people to govern and enjoy the confidence of the people to continue to govern. We have been enjoying the benefits of that evolution over the last 700 or 800 years.

But sometimes it needs a little tightening up. It gets a little frayed around the edges. Mr. Boyer pointed out that with the institutional rules we've created in this institution of Parliament, the people hold the government accountable. That's Parliament's role. Parliament is not an institution of management, Parliament is an institution of accountability. We're not here to run the government, we're here to hold the government accountable for the way they run themselves. When these institutional rules to hold the government accountable are lost and they use the rules to circumvent that accountability, we may end up with issues such as are currently before this committee.

Professor Franks talked about the personal responsibility of the deputy ministers and the equivalent title in the U.K and how that has been for a hundred years a way to ensure responsibility. I'm a believer that if you change the motivators, you change the results. Here in Canada we have allowed a system of accountability to be such that once you are caught, you now have to bring the facts forward, and there's a great deal of reluctance to bring these facts forward, as we've seen in this investigation. But what about some system that would cause changes at the front end, rather than waiting until it's all falling off the rails and saying, now that you're caught, where are we going to assign the blame? Is there a method by which we can cause motivators to change attitudes at the front end, so it doesn't fall off the rails?

Professor Franks, I'd like to talk about this personal responsibility of deputy ministers. You say the personal responsibility for transactions and the accounts, including prudence, probity, legality, and so on, continue with the person, so that even if they retire, they are held personally accountable. I'd like you to expand on that, because once a person retires, what is a Parliament supposed to do about holding a deputy minister accountable? What way does this personal accountability cause the motivators to blow the whistle before it falls off the rails, rather than trying to cover it up after there's been found to be a problem?

Mr. C.E.S. Franks: There have been books written about that, and I'll try to digest them.

The Lambert commission found when it looked at deputy ministers in Canada that the median deputy minister had been in office for one and a half years. The average one lasted less than three years in office. It was similar for ministers at that time. It has become longer since then, but what it means is that in Canada we have a very real situation, which doesn't exist in Britain, of ministers and deputy ministers changing positions so rapidly that normally the witness before the committee is not the deputy minister or the minister who held the office when the problem occurred.

To put that in perspective, Canada has a more rapid turnover of deputy ministers than Britain, the United States, France, and Germany in the equivalent positions. This is why that personal responsibility is perhaps less important in Britain, but it has meant that in the past former holders of the permanent secretary position in Britain have come before the public accounts committee after they've retired. They've had to defend their decisions in their own right as their decisions, and they'd be speaking as the officials who signed the accounts. That signature means they are personally responsible and blameable, to use the other definition of “responsible” that Patrick Boyer referred to.

Á (1145)

The Chair: But is there any sanction other than public humiliation for allowing problems to occur under their watch?

Mr. C.E.S. Franks: Historically, the public accounts committee in Britain tried to penalize their deputy ministers when they made an unwise expenditure; they didn't always succeed. One example I found in the 19th century concerned a British colonel who was captured by brigands in Greece. The ambassador to Greece ransomed him for 500 pounds and charged it to the treasury, and the public accounts committee tried to reclaim that 500 pounds--but did not succeed.

The answer is that even for ministers and for governments, the final accounting is in the court of public opinion, as you said, and the judging is done among their peers and by the Prime Minister. For deputy ministers and for ministers it's ultimately the electorate of Canada.

That's been true in Britain as well. Where there is a difference in Britain is that if the deputy minister--I'll use that term just because it's familiar to us--feels the minister is demanding something that is improper, he or she writes a letter to the minister saying, I can't do this because it's improper. The minister writes back and says, well, it's in the public interest to do it and I order you to do it. Then the deputy minister does it, and that correspondence is passed on to the auditor general and presented to the public accounts committee. Then when the deputy minister comes before the public accounts committee, the deputy minister says to the committee, this is not my responsibility; I protested and it still happened; the minister insisted it get done, and it's the minister who has to take the responsibility.

Now, we do not have that system in Canada.

The Chair: Well, that's very close to something we've actually been talking about, a few of us around the top of the table here: the concept, again, of Parliament being an institution of accountability, not an institution of management. But we want to get at the front end rather than at the back end in trying to clear up the problems and the mess when they occur.

The idea we were playing with was if there's a situation where the deputy disagrees with an instruction from the minister or knows the minister is doing something that's not exactly kosher, that he write to the minister; as you say, it happens in the U.K. But rather than a copy just being sent over to the Auditor General, who is constrained in her capacity to report to us, a copy will come to the public accounts committee right at the very beginning so we know there is a serious problem of accountability going on within the department, something that perhaps should be brought to Parliament's attention at the earliest opportunity.

I'd like to get comments from both Mr. Boyer and Mr. Franks. And finally, I'd like to get a point from you about the public accounts process in the U.K. It seems to be a bit stronger, perhaps, or is it stronger than it is here? Do you have any comments on us as a public accounts committee?

Mr. Patrick Boyer: I think the point made by Dr. Franks about the rapid turnover rate of deputy ministers is of course also reflected in the rapid turnover rate of members of the House of Commons and ministers themselves generally. So what we see, Mr. Chairman and members of the committee, is not a lot of institutional memory or continuing accountability within one official.

All of that serves to underscore the point you're now asking us about, Mr. Chairman, and that is the need to upgrade the procedures and the institutional practices that will serve accountability, regardless of how short or long the tenure is of any particular official.

I would have thought that as a fundamental principle one would want to retain the direct, express, and explicit responsibility of cabinet ministers to answer and be publicly accountable for the affairs of their department. This question you're asking about an alternate, additional mechanism for a deputy minister to do a reporting around the minister is problematic, and I would think it would only arise in an extreme situation.

However, it may be timely for you to consider this, since there is already discussion about whistle-blower legislation being brought forward. What this really is, as I hear you speaking about it, is a high-end, top-level version of that same procedure. It would occur within the reporting hierarchy of government where an official, such as one who has already testified before this committee, Mr. Cutler, finds the channels to which he has to report are more than hurdles; they are absolute barriers to the percolating up of information that should be going higher into the system, up to the politically accountable level.

I would see what you're proposing or at least considering ought to be an integral part of such a regime and would deal with these extraordinary remedies people within the operating part of government should have, first of all, when there was clear evidence that something was happening that was in violation of the rules and the ethical standards. Second, it would come into play when the established methods for reporting that up had been thwarted or were not functioning, so to his or her great credit, the committed civil servant who then wanted to keep going forward would have an acceptable and reasonably protected avenue for reporting that information on to the people who ought to know about it. That's if we're ever going to retain a politically accountable democratic government in the country.

Á (1150)

The Chair: Professor Franks.

Mr. C.E.S. Franks: Thank you, Mr. Chairman.

We have an unusual Parliament in Canada right now because it has more long-serving members than at any previous time in Canadian history. That was the opposite in 1994, when there was almost a 70% turnover. In the last election, it was 13%. The average in Canada is 40% to 60% per election. So what it means now is that the bulk of the members of Parliament have served at least ten years. The average is way above the four years historically. If this continues, Parliament might look different in the future from in the past.

The British public accounts committee, like the Canadian, has an opposition chair and a government majority on it. In fact, Diefenbaker, when he was Prime Minister, for the first time appointed an opposition member as chair of Canadian public accounts committee in 1958.

The reason for this relationship is to ensure that the chairman of the public accounts committee is separate from the government and rather enthusiastic about pursuing an inquiry into misdeeds by the government, whereas that's balanced by the government majority. So we're similar in structure.

The difference is that the Canadian public accounts committee--if you'll forgive me saying so--tends to divide along party lines more on its inquiries. We have a tradition of minority reports in committees that does not exist in Britain. So that's one fundamental difference. They try to reach consensus on reports.

Another fundamental difference is that they don't have the eight-minute and fifteen-minute rule for questioning by members that we have. In fact, in the public accounts committee, I've seen sessions in which the chair asks 90% of the questions.

I'm not suggesting, sir, that you should do that here--

The Chair: I would like that.

Mr. C.E.S. Franks: --but it's not unusual for the chair to ask 50% to 75% of the questions. Depending on the other members' interest, one member might ask 10% or 15% of the remaining questions. In other words, some members are silent, and other members ask a great many questions.

That's a huge difference. It means that an individual member might have an hour to pursue a witness, and if the witness is evading like this, you can usually catch them in an hour. You can't in eight minutes, and that's a big difference.

So there are those differences--a consensus report and the different mode of questioning. A third difference, of course, is that the average British member of Parliament has been there for well over ten years and they're very experienced in comparison with the Canadian, which is what Patrick Boyer referred to earlier.

I suppose the final difference is that the British public accounts committee now has a tradition, stemming from soon after the Exchequer and Audit Departments Act of 1866, of being a very powerful, independent committee, and of having done things like create the position of accounting officer. Our committee, for most of Canadian history, has been relatively ineffective.

Á (1155)

The Chair: Okay, and as one final question, which Mr. Jordan asked me to ask, are the British public accounts committee meetings televised? Does anybody know?

Mr. C.E.S. Franks: I believe not. I'm not even sure if any of the select committees are. In fact, up to the late 1960s, the meetings were held in camera. They published a record of proceedings afterwards, but the meetings were in camera until about 30 years ago.

The Chair: The public accounts committee has actually been very good in filing unanimous reports--with one exception, and that was a couple of years ago when we were dealing with the three contracts of Groupaction. It wasn't a majority-minority, but every party, including the government party, had their own independent report as well. But apart from that one, we've had unanimous reports in the time that I've been the chair.

Mr. Kenney, please. You have eight minutes.

Mr. Jason Kenney: Thank you, Mr. Chairman, and thank you both, Professor Boyer and Professor Franks.

While this may appear to some to be an academic exercise, I think it's critically important that we delve more deeply into these essential issues and hopefully draw from this investigation larger lessons about the practices in Parliament.

As a former philosophy student, I always, when presented with contentious terms, seek first to define the terms. We've heard from you, and the other day from Mr. Himelfarb, the current Clerk of the Privy Council, what I think are the key terms of authority: accountability, responsibility, answerability, and consequences. Sometimes these terms are used interchangeably, so I'd like for both of you to take a brief stab, if you could, at defining for me the terms “accountability” and “responsibility”. Do you see them as meaning essentially the same thing in the context of government and Parliament?

The Chair: Professor Franks.

Mr. C.E.S. Franks: I'll take a kick at it, because I've been worrying about this for some years.

First of all, in my view, “responsibility” has four meanings in terms of parliamentary government. One is that somebody is responsible in the sense that a minister is responsible. In other words, the minister has the authority and the power to do something. It's their responsibility.

Number two is responsible in the way of being responsible to inform people, and that's accountability. The term “responsible” is used in that sense.

Number three is responsible in the sense that a person is a responsible person. You trust that they behave responsibly.

In our system, we hope that the assignment of responsibility in the first sense of being responsible to ministers or someone else and the assignment of responsibility in the sense of being accountable make sure that they're responsible in the sense of behaving properly and prudently.

The fourth use of the term “responsible” is the equivalent of “blameable”. If a forest fire starts in Algonquin Park, they try to find the person who's responsible. They might find a camper who didn't put out his campfire. So he's responsible in that sense. That is more like criminal activity, or, as I say, blameable rather than responsible.

Then you get on to these dicey questions of accountability and answerability. The distinction made by the Privy Council Office winds up more or less that to be accountable means that you have to answer for what you've done, but then the person to whom you're answering can sanction you, they can punish or reward, whereas answerability means purely that you have a duty to give an answer, but the person to whom you're answering cannot punish or reward.

In practice--and as a philosopher, you'll appreciate there's always a difference between concept and reality--the distinction is blurred. I'll give you an example. All of us in this room would say, I'm sure, that in constitutional practice and theory ministers are accountable to Parliament. Accountable means that the person or body to whom you're giving an account has the ability to sanction. They can reward or punish. At no time in Canadian history has Parliament punished or rewarded a minister directly. In other words, there has never been a vote of non-confidence in an individual minister, which would be the sanction imposed by the House on a minister.

In practice, as I suggested in my analysis of the Privy Council Office documents, the relationship of a minister to Parliament is answerable, unless the minister is personally responsible for the act that's carried out under his instructions or something like that. At that point, it would be deemed accountable, but not in the sense that Parliament can sanction, because ministers are appointed and removed by the Prime Minister, not by Parliament. So the distinction blurs.

Â (1200)

The Chair: Do you want Professor Boyer to answer too?

Mr. Jason Kenney: I do, but I only have three minutes left in my eight-minute segment.

Mr. Boyer, do you wish to add anything?

Mr. Patrick Boyer: I find what Professor Franks is saying very helpful.

In my earlier presentation I talked about the legal and constitutional aspects of responsibility, the administrative aspects of it, and the political nature of it. I see accountability as a component within the operation of responsibility and responsible government.

Since your time is short, I can table with the committee, Mr. Chair, an essay on democratic accountability, which I use in my course on accountability in Canadian government. It's not accountability in the abstract; it's accountability in the context of the functioning of democratic institutions. We have to see the two as influencing one another. They go together. Democratic accountability is what is squarely before this committee.

The Chair: Before we go on, Mr. Kenney, I'd like to know what the committee thinks about this. We're having an academic discussion here. This is not an investigation per se, where we're all trying to move it forward. Perhaps you could give the chair the capacity to be fair, and we could just follow ideas. We could have more of a discussion, with the witnesses being as brief as possible. Is that agreeable?

You want the eight minutes. So you want it to stay as it is. I know we only have an hour. The point I'm trying to make is that it would be better to have a discussion, rather than eight minutes, eight minutes, and so on.

Mr. Thibault, you had something you wanted to say.

Hon. Robert Thibault: I might have a solution, Mr. Chair, that would take care of both of these concerns and give everybody equal chance.

I think it's important that we hear on these things from both our witnesses, for the reasons you've mentioned. You might remind the witnesses that they have a chance to speak at the end of questioning. So they could take notes, and if on any of these elements they haven't had a chance to give a full answer, they could come back to it.

The Chair: And they could also write us a letter after the fact.

You don't want to move on to a kind of free-form discussion? There's no consensus on that?

An hon. member: How about halfway through?

The Chair: Well, Mr. Kenney's was the first intervention after mine, and I thought if you're not prepared to do it, and there's no unanimous consent--

Ms. Judy Wasylycia-Leis: I agree with you, Mr. Chair. I think it's an excellent suggestion.

Â (1205)

The Chair: Yes, but there's not unanimous consent, so we can't do it.

We'll continue on, Mr. Kenney. You have just over two minutes.

Mr. Jason Kenney: Thank you.

You see the problems we're having.

Very briefly, Professor Franks, you said that under the current Privy Council doctrine, deputy ministers are not accountable, and certainly the former deputy ministers are not accountable. That's your testimony. Two days ago, Madam Jennings asked Clerk Himelfarb if a retired former deputy minister is in fact accountable for what happened as the deputy minister on the watch. And Mr. Himelfarb said that's correct, that accountable does not necessarily mean the direst of consequences, but they are accountable. That doesn't seem to square with your....

Mr. C.E.S. Franks: No. I think it doesn't square with other things the Privy Council Office has said.

Mr. Jason Kenney: Is there some particular document you could point us to that expresses formally the PCO doctrine on this issue?

Mr. C.E.S. Franks: Yes, but first let me make one qualification. If Mr. Himelfarb was referring to accountability within the system, that's fine, because the Prime Minister's Office still has the right to move deputies or whatever. If it's in relation to Parliament, I do not believe it is correct. So I think I'd have to know which of those you're talking about.

Let me give you the documents that are useful: “Guidance for Deputy Ministers”, a Privy Council Office document; an earlier document, “A Guide for Ministers and Secretaries of State”; a current document, “Governing Responsibly”, which in some manner supplanted “A Guide for Ministers and Secretaries of State”; and finally, the submission to the Lambert commission, “Responsibility in the Constitution”.

Mr. Jason Kenney: All right.

I have to drive to one last question here, because my time is almost up.

I'd ask you to read Mr. Himelfarb's testimony. What he said really concerns me, that:

Ministerial responsibility is not about consequences or blame.... The minister answers to the House because it's the minister who's required to hold the confidence of Parliament.... The consequences of ministerial responsibility are entirely political, that is, they lose the confidence of the House or Canadians through the House.... A minister may be responsible for all things that happen in his portfolio, but it doesn't make him or her accountable.

Essentially, he's saying there are no consequences, and it seems to me this entire discussion about responsibility and accountability is utterly meaningless if there are no consequences.

Is it not true that in the Westminster Parliament there is a very strong convention that when a minister transgresses responsibility he is held accountable, is expected to resign, and--

The Chair: Professor Franks.

Mr. C.E.S. Franks: On the question you're asking, there are two components. First, to what extent is a minister responsible for actions of civil servants of which he or she was not aware and might have gone against the intentions of the minister? That usually becomes answerability in both systems. The other question is that if the minister himself or herself does something the House of Commons does not agree with and considers reprehensible, then that minister is individually and personally responsible. That's when the bad consequences occur.

The Chair: Any sanction at all?

Mr. C.E.S. Franks: Well, the sanction has never been in Canada a vote of want of confidence in an individual minister.

The Chair: And in the U.K.?

Mr. C.E.S. Franks: No, because they usually jump ship first. They resign when they know it's coming.

The Chair: We're going to cut it there, Mr. Kenney.

Any quick comment, Mr. Boyer? Okay, nothing there.

[Translation]

You have the floor for eight minutes, Mr. Desrochers.

Mr. Odina Desrochers: Mr. Franks, your comments clearly show that Canada's parliamentary system should play catch up. Is that correct?

Mr. C.E.S. Franks: I'm not sure I understand what you mean.

Â (1210)

Mr. Odina Desrochers: I mean catch up.

A member: That's what “rattraper” means in English.

Mr. C.E.S. Franks: Not exactly. Firstly, the system is driven by public opinion and secondly, it's based on the confidence of the House in the government. If you mean “recover”, as in “recover damages”, then I would have to disagree with you.

Mr. Odina Desrochers: As I see it, Mr. Franks, before becoming a minister, an MP must be elected. Being appointed Minister means being accountable to the public. I don't see why the same person who has certain duties as an MP would not be accountable as well for the actions of other employees within his department.

Mr. C.E.S. Franks: I believe the word in English is “answerable”. However, if a public servant's actions violate departmental or ministerial rules and go against the minister's wishes, then it's clear this public servant does not have the confidence of the minister or of the department.

Mr. Odina Desrochers: I'm trying to understand the meaning of accountability. If the press or a certain document refer to a specific incident involving a public servant or a sector where things didn't go well, then questions are raised in the House of Commons and attempts are made to find out from the minister why these things happened and what action needs to be taken. That's why I maintain that on this score, the minister is accountable for the actions of his department's employees.

Mr. C.E.S. Franks: This is one of the problems with accountability in a parliamentary system of government. That's why I prefer the British system, where there are accounting officers. In my view, senior bureaucrats must be accountable for the workings of a government department bureaucracy.

Mr. Odina Desrochers: Then what is the minister's role in the British system? Is the minister still accountable for all transactions, or only for some?

Mr. C.E.S. Franks: The minister's role in the British system is the same as it is in Canada, with the exception that accounting officers are responsible for matters of probity or prudence.

Mr. Odina Desrochers: Based on your experience, do you feel that the Privy Council Office currently has too much power?

Mr. C.E.S. Franks: This is one area in which the Canadian and British systems differ. Firstly, the Prime Minister has more authority under our system and secondly, the Privy Council Office has more power than the British Treasury Department. The differences are significant.

Â (1215)

Mr. Odina Desrochers: You see, Mr. Franks, one of the witnesses who testified, ex-Deputy Minister Quail, admitted that some unusual things were happening but that he knew the Privy Council Office was either aware of, or had approved of these actions.

Based on that statement, do you believe the Privy Council Office wielded too much power?

Mr. C.E.S. Franks: I would have to answer that pursuant to the Financial Administration Act, the deputy minister, and only the deputy minister, is accountable. The only question that the committee needs to put to ex-Deputy Minister Quail is this: did you exercise your responsibility? That's all.

In response to the question, the Deputy Minister said that he was following orders, that this wasn't his responsibility.

Mr. Odina Desrochers: Mr. Franks, do you believe we need a clearer structure, one in which the role of the minister and deputy minister is more clearly defined? From the outset, we've heard increasingly contradictory statements about the role of these two officials. It turns out that decision-making ultimately rested, either in whole or in part, with an Executive Director, a deputy minister. As you stated, the Privy Council Office wields considerably more power than we see elsewhere and a deputy minister told us that his hands were more or less tied because of the orders of...

[English]

The Chair: You have one minute, please.

[Translation]

Mr. Odina Desrochers: Mr. Franks is speaking more slowly to me. Perhaps you should be more conciliatory, Mr. Williams.

[English]

The Chair: I don't think there will be unanimous consent to allow that, Mr. Desrochers.

[Translation]

Mr. Odina Desrochers: If one doesn't try, one will never know, Mr. Chairman.

I have one final question for the witness. Given the fact that we had a deputy minister who kept a low profile, but who maintained that his decisions were approved by the Privy Council Office, I think that from the very beginning, we've been unable to pinpoint the responsible party in the whole affair.

Mr. C.E.S. Franks: Theoretically, according to our parliamentary system, responsibility rests solely with the minister, except for those cases I mentioned earlier. However, in Canada, I often find that the system operates quite another way. Excuse me for saying it, but the expression that comes to mind is

[English]

ministerial musical chairs, rather than ministerial responsibility.

[Translation]

Consequently, that's where I believe the problems lies.

[English]

The Chair: Merci, Monsieur Desrochers.

Mr. Murphy, please, eight minutes.

Hon. Shawn Murphy: Thank you very much, Mr. Chairman.

Mr. Franks and Mr. Boyer, thank you very much for appearing. I really appreciate the presentations.

I'm going to start with you, Mr. Franks, and perhaps we can get a comment from Mr. Boyer. I'm very curious about your comment on page 5 of the report. I'll quote it; it will just take a second:

The Public Accounts Committee now faces a question of whether it considers this to be an adequate description of what ministerial and deputy ministerial responsibility and accountability of government to Parliament ought to be. If the committee believes it to be adequate, then its work is completed....

That was your comment, so I take it, Mr. Franks--and I'll ask whether you agree or not, Mr. Boyer--you're of the view that this is the overarching issue that ought to be before this committee.

Mr. C.E.S. Franks: Absolutely. I put that in a context of three investigations. There are criminal investigations being carried on by the police, and this committee is not an appropriate body to carry on a criminal investigation, with all due respect to the committee. Second, there's a judicial inquiry, which has a better ability to pursue the details of what actually happened--who's blamable--than this committee because you've found great difficulties in that.

However, what this committee has as a peculiar responsibility is that very serious function it carries on, on behalf of Parliament and the people of Canada, to say, “How is our system of responsible government working? Is it working, in this misuse of funds? And if it isn't, what can we do to fix it?” And that, it seems to me, is where you have to go, because in my view, it's proven that it doesn't work.

I think it's pretty clear. You can't insist that the government do something, but you can begin to enter into a dialogue with the government to the point that it has to make clear that its view on responsibility and accountability does not allow things like this to happen.

The Chair: Do you have a comment, Mr. Boyer?

Mr. Patrick Boyer: I agree, and I said the same thing in my opening statement.

In answer to the prior question from the member who is departing, on whether we need to catch up and whether Parliament needs to catch up, the answer is no, not in the sense that the dog chasing its own tail needs to catch up. There is a lot of prior history on this subject, and in our country, that makes it very clear we have had experience in the past, across Canada, that shows the institutions have been in place, they have worked, and accountability has come home to those who are culpable.

In 1953 Canada became the first country in the British Commonwealth to see a cabinet minister—this was in British Columbia, the Minister of Highways—go directly from the cabinet table to prison. In Atlantic Canada, in New Brunswick, at Sugarloaf Provincial Park, there were questions about how a motel was built within the provincial park and how it had permission. In the ministry, there have been criminal cases involving a number of ministers in this country, as well as sanctions applied for breaches of ethical conduct.

My point is simply this. In our most recent version of these problems, where we have come to is a result of some trends within the past ten, fifteen, or twenty years that have seen a blurring of, as Dr. Franks said, the willingness of people to say yes, they were in the office, it happened on their watch, and they are politically responsible. Whether that also means they are legally responsible is a separate question, as I indicated earlier.

Â (1220)

Hon. Shawn Murphy: Dr. Franks, you've made the position that you support the British principle of deputy ministers being accountable to Parliament for the administration of the departments, but not, of course, for policy issues. You have testified that the Privy Council has always given two or three reasons why it should not be that. It seems to me this case is a poster boy for government accountability and will be discussed by academics for years to come.

We've seen the systemic breakdown. We've had the minister come before the committee. He said he was too busy to run the department. If the whole concept of ministerial responsibility meant anything, I would think he would accept responsibility for the problem. We had a deputy minister who either says he was out of one loop or out of three loops, and he accepts no responsibility at all for anything that went on. Then we have Guité, who comes before the committee and brags about what he did. Not only did he think that he did a good job, but the deputy minister gave him performance pay for doing this job.

This is what we're faced with in the context of accountability, and I have extreme difficulty with it. I've been following this line of questioning for about a month now. I've asked the public officials who came before us about it, and I really haven't been getting too many straight answers.

I'm certainly very pleased that you are here today, but the Privy Council has given three reasons on why the British system will not work, not recently, but over its history: it's undemocratic, the system works now, and there's another reason. Given the life of this case, they are totally bare. If they are serious about objecting to this, they had better come forward soon and give the real reasons, because this is a poster boy example of why the deputy should be accountable to Parliament.

Don't you agree?

Mr. C.E.S. Franks: Yes, I do. If you pursue that continuously through this inquiry, with the support and leadership from the opposition members on the committee, this committee will have made the greatest impact on responsible government in Canada of any parliamentary committee in Canadian history.

The Chair: Mr. Boyer.

Mr. Patrick Boyer: I second that. I tell my students in courses on political ethics and on accountability in Canadian government that this committee, on this issue, has the potential to be historic in significance, in terms of the evolution of responsible government in our country.

Hon. Shawn Murphy: There's a silver lining in every cloud.

Mr. C.E.S. Franks: There may be few flowers that grow without clouds and rainstorms beforehand.

The Chair: We are waxing philosophical, aren't we?

Do you have anything more, Mr. Murphy?

Mr. Thibault, you had a point.

Hon. Robert Thibault: Mr. Chair, on the point about the clouds, the rain, and the sun, I think there is one other element we need for good agriculture, and there has been a lot of that here also.

The Chair: We're not going to go there, Mr. Thibault. It's enough that we just look up. I think that will be fine.

Madam Wasylycia-Leis, eight minutes, please.

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

Thank you both, Mr. Franks and Mr. Boyer, for being here. This is a rare moment in the life of Parliament, to actually have a broader discussion about parliamentary government and responsible government. We appreciate your broad theoretical approach.

I'll just follow up on Mr. Murphy's comments, and I think we all agree we feel that what we have is a huge responsibility on our shoulders to find, out of this morass, out of this mess, some recommendations that will actually make a lasting difference.

Now, I agree with Mr. Murphy when he says the problem is that we have--let's put it in a nutshell--a minister, at least one, who says “I didn't know what was going on” and/or the PCO was calling the shots. Then we have a deputy minister who says he was out of the loop in some instances.

In the midst of this, it would seem to me wrong on our part that rather than looking at what's wrong with the current system, we start talking about how we can change the system. I think that's what's happening. I worry about the fact that we're suddenly, in the middle of this whole issue, talking about deputy minister responsibility; in other words--and you've both addressed this--deputy ministers reporting directly to Parliament separate and apart from the simple notion of there being accounting within the departments and there being accounting officers.... I forget the words you used, Mr. Franks.

The worry I have is that we're going to turn responsible government on its head and actually lose something important if we, because of this crisis, suddenly say we have to have deputy ministers responsible to Parliament. Well, it seems to me, Mr. Boyer, that would fly in the face of everything the underground commission exposed, which is the fact that MPs have lost so much power. We have so little control over our lives now that many decisions are made by unelected officials. We surely don't want to move in that direction. Right?

Â (1225)

The Chair: Let's hear Dr. Boyer's response.

Mr. Patrick Boyer: That's right. I said a little earlier that we want to keep cabinet ministers accountable in a manner consistent with the existing procedures and doctrines. The only instance for a deputy minister to have an additional role would be in an extraordinary situation where, in that duty of candour I spoke about that must exist between a deputy and a minister, either finds.... If a minister finds the deputy is preventing information from coming out that ought to percolate up--or vice versa, the deputy is trying to get something brought out that hasn't had ears to hear it--then that could be the extraordinary situation.

I do think it was unfortunate about the Somalia inquiry. It began at the ground level and was just getting to the level of revealing what had happened at the senior level in the Department of National Defence, with deputy ministers and who knew what, when it was cancelled. It was aborted by Prime Minister Chrétien just on the eve of an election, so we never got the answers there. I was parliamentary secretary at the Department of National Defence during that period, and I know the complexity of these issues really needed to be ventilated around that issue. I think, again, to echo what you've been saying, this committee now has a chance to go into that.

You also asked about what can be recommended going forward. Very quickly, I'd mention two specific things. One relates to reporting standards. There was a discussion about philosophical concepts with Mr. Kenney asking what “responsibility” and “accountability” meant, but the quality of the information that is available is vitally important. This is why both the Canadian Council of Public Accounts Committees and the Canadian Council of Legislative Auditors have been working with the CCAF, the Canadian Comprehensive Auditing Foundation. They want to develop nine new principles that will move financial reporting on government operations to a higher level so all people have standards and criteria against which they can measure and understand things, whether they are members of Parliament, public servants, journalists, citizens, or employees. We really do need to move beyond the stage where we are, and those principles point to that.

The second thing related to that is, I think, that the Auditor General, in the report you're now discussing, talked about every rule in the book being broken, thinking of such things as the Financial Administration Act and so on. In addition to rules and in addition to legal procedures, there are standards, which would include contracting standards. It may be something the committee would want to look at in terms of the Treasury Board standards that are issued for performance and whether you find those to be adequate or not. If you really looked at not just the provisions of the Financial Administration Act but the dearth of standards issued by Treasury Board in this realm, you might quite readily see something you'd want to be making recommendations on as well.

Thank you.

Â (1230)

The Chair: Professor Franks.

Mr. C.E.S. Franks: I'm going to give a very brief and quite different answer to that. I'm not saying that I disagree with anything Mr. Boyer said there.

What we see in this issue of responsibility and accountability and the question of the allocation of those between the deputy and the minister is the interface between two systems. There's a political system. The political system is based on politics, which is intensely personal and intensely related to who supports you, what you believe in, and so on. The other system is the bureaucratic system, to use that in a sociological sense, which is a system of administration. And it's based on rules, neutrality, impersonality, consistency, and so on.

So on the one hand, we have personal, one-off, idiosyncratic politics. And God bless us for having politicians and politics. I think that bad though democracy is, it's the best system in the world, and I respect you people for taking on the burden. But then that meets the other system, the administrative system, which in theory belongs to the people of Canada. You as opposition members have it, the same as the government does. The only way you can feel you have ownership in it is if you know that it's operating politically neutrally, impersonally, according to rules and fairness as you understand it.

The problem is, how do we allocate responsibility and accountability to allow those two systems to work? The answer in the British one is that as long as bureaucratic rules are being followed, the senior bureaucrats answer, and if the political rules are being followed--in other words, if they overrule the bureaucratic rules--then the politicians answer, or in general, for political decisions, the politicians answer.

The Chair: Thank you, Ms. Wasylycia-Leis. Eight minutes does go by fast.

I have a dilemma. I have the next round of eight minutes, three people, and the 24 minutes will take us until one o'clock, or I can cut that short to allow the other people on the list to also be able to speak. As I mentioned earlier today, I believe it's appropriate and important that as many people be allowed to speak as possible in this institution that protects free speech, so I'm going to go to four minutes.

Madam Ablonczy, my apologies.

Mrs. Diane Ablonczy: Thank you.

Professor Franks, can you refer the committee to any other sources for the accounting officer approach?

Mr. C.E.S. Franks: Yes. I'm not sure if you've been given my own article on it, the one called Not anonymous: ministerial responsibility and the British accounting officers, but it's certainly available, and I'm sure your staff will do that.

There are some British sources, which I won't refer you to because they're fairly complex academic ones.

In Canada, Donald Savoie's recent book, Breaking the Bargain, has a great deal of material on the accounting officer in it. He supports my views there, so obviously it's a very good book.

Another thing that might be of interest to the committee is that it's my understanding that the Auditor General's office is preparing a study on why government programs go wrong, and in it there's a discussion of the accounting officer concept, which I'm sure would be of interest to this committee. My understanding is that this report has not been tabled yet--

A voice: In the fall.

Mr. C.E.S. Franks: Yes, well, whenever. I think it's a separate sort of study, from what I know. That one I think would be of great interest to you, because it's your officer of Parliament, the Auditor General, who's expressing her views on the issue.

Mrs. Diane Ablonczy: Yes, we'll be very interested in that.

I want to go with the two of you quickly through the difference between input and interference. One of the key questions here is who gave the orders to operate the sponsorship program outside the parameters of normal checks and balances?

Mr. Guité said he had input from the minister, input from the Prime Minister's Office, input from the Privy Council Office, but he didn't think of that as interference.I wish the two of you would comment on that fine distinction.

Â (1235)

Mr. C.E.S. Franks: The Americans sometimes invent brilliant vocabularies for discussing things, especially when things go wrong. The one that I think best describes the Canadian situation--and this is an American discussion--is called “plausible deniability”. In other words, in my view, the witnesses who've responded to the question of who's responsible, in the sense of who's blameable, have all invoked plausible deniability--“Oh no, not me. No, no, I didn't do it.”

Mr. Patrick Boyer: On that point, I made the distinction that ministerial responsibility is not really a question of credibility. It goes to the office. If you are in office at the time, it's like a question of strict liability. You can't say, well, I believe that minister when she or he says I shouldn't know anything about it, because some--

The Chair: I think Madam Ablonczy's question was.... Professor Franks has pointed this out that the political realm meets the bureaucratic realm, and there's an interface there between the minister and the deputy minister, and it goes on both sides. So when does political direction become political interference? There's a fine line there, and that's the issue. Cabinet can direct the bureaucracy and say this is what we want, but political interference, obviously, should not be tolerated. So where is the line drawn?

Mr. Patrick Boyer: Sitting here at this table yesterday afternoon, in the same place, was the former deputy minister, who put right on the record the fact that within his department there was this operation that was going on that included the Privy Council Office and the Prime Minister's Office, and that he was, as you said, not in that loop. Understandably for a deputy minister, it was a matter of offending his pride.

It's significant that he also sat here and talked about this vast expenditure program at the same time he was explaining to you about the huge layoffs that were being done to recover, I think he mentioned, $350 million, yet he reconciled that in terms of “Well, if the government wanted to do it...they're the government, and they're political”.

The reason I come back to that in answer to Ms. Ablonczy's question is that in the material from the underground royal commission you will see a former deputy minister, the Deputy Minister of Industry from 1992 to 1995, Harry Swain, pointing out--and this is on the point about the politicization of the public service--that when any document would go from the ministry up to cabinet, the civil servants were required to write a communications section in the document. That communications section dealt with the political spin that would go on the proposal.

As Dr. Franks was saying, there's the political side and the administrative side. My point has been that over the last thirty years we have seen a blurring and blending at that top level. That is why what now strikes everyone as being breathtakingly exceptional when they hear about it, as they did yesterday before this committee, is in fact simply an illustration of what has become fairly much the norm at the top level of the government.

The ministers, in theory--and I'll just finish with this--are responsible for the department's administration. It's the deputy ministers who are responsible for administering the department. In short, I think where this distinction lies is that a minister must get his or her arms around the ministry, but not get their fingers into its operations.

The Chair: Maybe that's a good analogy in the end.

Thank you, Ms. Ablonczy.

Mr. Lastewka, four minutes, please.

Hon. Walt Lastewka: Thank you, Mr. Chair.

I think you hit the nail right on the head. We heard all we needed to hear yesterday, the shrugging of responsibility and accountability.

So we had that situation, and whatever happened, happened. The deputy minister very clearly did not take total responsibility. We can get into the empowerment of others and delegating down, and there were rules for the people, but there was a very clear indication of his not taking the responsibility and accountability of the position.

My question to you is how do we get people in that position? What made that individual think the way he had been thinking? Mr. Guité is not someone who decided one Monday morning to operate, and away he went. He had operated that way before. So the system started to crumble in pieces. In the promoting of people to those positions, we need to make clear what you said earlier, that they have to get their hands around it. It's their responsibility, their accountability, and there has to be a system in place so that when they need help, they are able to go and get it, because they hold the position of deputy minister.

I'd like to hear your reaction.

Â (1240)

Mr. C.E.S. Franks: It's a very good question. As I said in my remarks, the Financial Administration Act gives responsibility to the deputy minister. It's a statutory responsibility assigned by the Treasury Board to deputy ministers under that act, and not to the ministers. So in pure legal terms, the deputy minister has responsibility and can't evade it.

The way that's construed in practice by the Privy Council Office is that responsibility equals accountability to the minister and the Prime Minister primarily, perhaps. That's where the problems come in.

Only one minor change would allow our system to be like the British system. That is if a one-clause statement in the Financial Administration Act said deputy ministers could be overruled in writing by a minister, etc. If we had that you could clearly say to the deputy minister, “Did you protest to the minister? If you didn't, can you say that the minister made the decision and not you?” Whether he says that or not, it's still the deputy minister's responsibility. That's the problem. That's where we have the confusion.

Mr. Patrick Boyer: I agree.

Hon. Walt Lastewka: There's another item I've been asking questions on. We get into a position where no matter who is in government, from time to time they make changes in structure, and the checks and balances of internal audits for controllers and the Auditor General get moved around because the system doesn't have a checkpoint that says, “Okay, government, you made these organizational changes. Let's go back and double-check to make sure there is no change in the checks and balances.”

I had some brief discussions with the Auditor General, and I guess it's going to be part of her report come the fall. How did the group get outside the normal system, without the checks and balances of the internal audit, the Auditor General, Treasury Board, and the comptroller?

Mr. Patrick Boyer: We probably both have some points to answer.

In this book there's a chapter that deals with the disappearance of the trip wires we used to have in the system. Over time, and for what seemed to be good reasons when the reform was being made, they have gone.

For example, the Office of Comptroller General in the Government of Canada used to be hugely significant. Today you will find someone who has that name on their door within Treasury Board, but in times past the Comptroller General basically looked at how much money the government had in the coffers before writing the cheques. So Parliament voted to approve spending, and that was the first necessary step. Then, whether it was for frigates, new airports, new hospital programs, or what have you, if the money wasn't there the Comptroller General exercised an upfront restraint and said, “When we get the money we'll cut the cheques--not until”. At the far end, the Auditor General would look back retrospectively and see if the spending was proper and there was value for money, and so forth.

Effectively, as a result of reform in the 1970s coming out of recommendations of the Glassco commission saying that had become a bottleneck in government, that government had expanded, that this was modern Canada, and “We have to let the managers manage”.... That was the mantra of the Glassco commission. So that process was effectively gutted, and a trip wire that had been in the system for upfront financial restraint disappeared.

A second change that came about was moving the approval of annual spending estimates, departmental estimates, out of the committee of the whole into committees, where four departments would be reviewed in detail in a year, with a free ride for the rest. By the way, if none of those had been approved by June 25, they were deemed to have been approved. That really meant that the scrutiny Parliament had previously given to public spending, and the accountability that public officials.... You talk about deputy ministers. They did appear with their ministers before the committee of the whole to answer questions about the departmental funding. That went.

I worked for the Attorney General of Ontario for two and a half years, back in the early 1970s. I saw the relationship between the minister, his deputy, and the assistant deputy ministers going to the estimates. I have to tell you, the deputies, the assistant deputies, and all the civil servants walked in terror in the weeks before that, waiting to see what they were going to be asked at estimates.

Once that didn't happen any longer--and not in one year--after a decade or two of those questions not being asked, the consequence is the kind of thing in the committee's report you're now discussing.

Â (1245)

The Chair: A brief response by Professor Franks, and then we'll move on.

Mr. C.E.S. Franks: I don't entirely agree with what Mr. Boyer said on that. I don't think there was any golden age in the past when things were done better. But I will say that what we have is a very real problem that we are not able to identify who is responsible; and that, to me, is the key to the whole thing.

The Chair: Thank you very much.

Madam Jennings, please.

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

I'm so pleased that my Liberal colleagues agreed with my motion to have you come in, notwithstanding the fact that none of the opposition members supported it.

Â (1250)

The Chair: Not that we had the time, Madam Jennings, but we enjoy Professor Franks and Professor Boyer. We appreciate their coming here—anytime, actually, when we have the time to listen.

Please continue.

Mrs. Marlene Jennings: I will. Thank you.

I actually am favourable to the idea of an accounting officer, in the sense that a deputy minister who feels that this minister is giving instructions that violate rules and procedures and policies that the government has put into place would then have a duty to raise it in writing, and get instructions in writing that “No, you're going to go forth and do it the way that I say”, because then there is accountability.

As it now stands—and you've both made the point, Mr. Boyer and Mr. Franks—we've had a parade of witnesses before us, former ministers, former deputy ministers, current ministers, and current deputy ministers, and basically everybody has said “I'm not accountable, I'm not responsible, and no blame can attach to me”. So I think this committee has a responsibility to do the work, with the assistance of experts such as yourselves, to define exactly what responsibility is supposed to mean in different circumstances, both political and administrative, and what accountability is supposed to mean and what blame is supposed to mean.

Unfortunately, because of the blurring of both, in the minds of most Canadians and in the minds of many of my own colleagues, if someone is responsible, they automatically have to be blameable. If someone is accountable, they automatically have to be blameable. And then you attach that to criminal responsibility and to civil responsibility, etc.

I think we have a duty as a committee to do the work, to try to come to some consensus on that, and to use that consensus to educate Parliament—our own colleagues—and the Canadian public. I think that both of you, and other experts like Donald Savoie, have a great contribution to make.

Now, when I listened to the testimony of the former deputy ministers, particularly the former Deputy Minister of Public Works, the one who was there, Mr. Ran Quail, and then the subsequent ones, as far as I'm concerned, they are responsible.

The former ministers are also responsible, and I think that the minister and deputy minister who were there when the program was conceived and put into place, and put outside of the normal checks and balances and governance and oversight mechanisms are accountable in addition. They're not just responsible, but also accountable for that, because in my view it was a wilful act to create that system or program outside of the normal checks and balances.

Do you both agree with me?

Mr. C.E.S. Franks: I will give you a very quick answer on it.

As long as the Privy Council Office doctrine is accepted, the accountability of deputy ministers for the duties for which they are responsible—and the word “responsible” is very important there—is to the minister, the Prime Minister, and perhaps to the Treasury Board, but not to Parliament. It means that the Prime Minister or the minister could say, “Okay, you've done fine, you've done good. Sure you broke the law, sure you broke the rules, but it was the right thing to do.”

What has happened in the past—and I'll refer to the tenure of the government before this one: when there was a contract for fighter maintenance that civil servants would not approve, they changed the civil servants until they got one who did.

So unless it's a personal responsibility, and unless you flag these things, you don't have a system that works. We do have a problem there, I agree.

Mrs. Marlene Jennings: Thank you.

Mr. Patrick Boyer: I agree as well. I think it's complicated, because the Privy Council Office, which, as Professor Franks has just pointed out, is integral to this linear statutory responsibility, has now, in the eyes of at least some members of the public, also been somewhat compromised with respect to the two Challenger jets. There was evidence that there was no requirement...or that within a matter of a very short time, $100 million could be found for their procurement, effectively through the Privy Council Office.

I think this taints in the public mind what had previously seemed to be the samurai of the Government of Canada. There they were, the mandarin class; they would fall on their swords for the good of the Government of Canada. And now somehow this system that was put in place for the sponsorship program, which was kind of, if not off-budget, then certainly off-line, including off the line and out of the loop, as we heard yesterday, of the deputy minister, entailed, as Dr. Franks just mentioned, a reporting through the Privy Council Office.

I think that underscores only more strongly why the issue before this committee is as profound as it is, and why Canadians are looking to the committee to be forthright in dealing with it.

The Chair: Thank you, Madam Jennings.

Mr. MacKay, please.

Mr. Peter MacKay: Thank you, Mr. Chair.

To both of you, our great thanks. You have shed a lot of light on our task, and perhaps even raised the stakes with your characterization of the Herculean task before us and what we might accomplish.

I want to move a little bit from the philosophic to the practical in terms of what we can do. One of the suggestions that has come out of these discussions, and very much from your own suggestions, is to insert back into the system offices like the comptroller general, which would perhaps counteract the deliberate dismantling, I would suggest, of some of the accountability that could and should be there.

Is part of that equation also to protect those working within the system, within departments, immediately below deputy ministers, ministers? Because the fear that doesn't seem to exist in a ministerial capacity, or even a deputy ministerial capacity, if there isn't going to be a direct personal expectation of accountability.... That seems to be where it goes off the rails, if you can feign wilful blindness, and there are no consequences, or you can use the words “plausible deniability”, and it will be accepted.

But for mid-level bureaucrats, they can lose their jobs if they point something out. That was the fear of Allan Cutler. We've talked a lot about whistle-blower legislation in recent days. As I'm sure you're both aware, in state legislatures in the United States, in California in particular, there's actually financial compensation if a person saves the government money by virtue of pointing something out. Rather than the fear that they will lose their jobs, there are protections.

Is that part of the Holy Grail we're looking for here, greater protection for those who have the courage and the fortitude to come forward and point out these indiscretions and these problems before we get $250 million down the road?

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Mr. C.E.S. Franks: Very quickly, on the whistle-blowing, it's a necessary thing but it's not a panacea. It's a desperate last resort. Nine out of ten whistle-blowers, in whatever jurisdiction you look at, including California, will say at the end that they regretted doing it.

The other thing I want to say is that we have oscillated in Canada between central controls within the central agencies of government and controls in departments over this sort of thing. What happens if you strengthen the central controls too much is that you create things outside the departments. That was the problem faced by Glassco: half the civil service was outside departments, in agencies that didn't come under central controls.

The really effective control finally lies in this committee and the Auditor General, and in having an effective system that knows that it can identify who's responsible and make them account for what they've done in a way that deters the misuse of funds. This committee, on behalf of Parliament, is the crucial body that closes the circle of control. It's not the comptroller.

The Chair: Mr. Boyer.

Mr. Patrick Boyer: Yes, I think the country is more than ready for whistle-blower legislation. I believe the government has indicated its plan to bring that forward. My point with it is that it is a double-edged sword and needs to be crafted with great care. We have experience in Canada with this and the need for it.

On the second point that you are raising, Mr. MacKay, on some of the things that might be added or reinstated or advanced to, despite what Professor Franks said, I did not use the term “golden age”, lest I be accused of being a Tory, or someone--

Some hon. members: Oh, oh!

Mr. Patrick Boyer: --who looks at the past with a fondness that is unworthy of the past.

I simply was trying to make a very realistic point about the exercise of power in government operations, which is coming to the core issue of how the money is approved and spent. We all can recognize that money is power and money is policy. If a government is deciding to spend a certain amount of money on day care programs or aboriginal programs or upgrading the armed forces, and so on, that is a way by which the government is expressing its policy.

The problem I found when I was here for a decade as a member of the House of Commons was that when the spending estimates were wheeled by trolleys and dumped in our offices, and we started to look at these things, it had already been long enough that most MPs had clued in to the fact that there was no political merit and there was no bonus for digging into this and going to committee rooms and probing into the issues, because it didn't cut it with anybody.

In terms of your point about the role of educating other MPs about the importance of this, I think as long as MPs are no longer required and responsible for financial oversight and insight and foresight in terms of the spending, then the salience has gone right out of the system.

One of my former professors from Carleton, Robert Jackson, has written a book that's used in all the introductory political science courses in the country, and it lists the five primary roles of a member of Parliament of Canada. These are things like recruitment into the public service, educating the public, ombudsman for constituents, and so on. Never once, of those five, is mentioned this oversight and control of the finances of the Government of Canada, one of the fundamental roles of Parliament itself.

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The Chair: We're going to hear from Mr. Tonks, and then we'll wrap this up.

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

Mr. Chairman, I've certainly found the presentations to be very helpful.

When there is a question within the architecture of ministerial accountability, when there is push-back, it seems to me the role of the Auditor General in terms of the accounting officer and the report is a check and balance. We're going to get a further report from the Auditor General. It appears that there's some work in progress that will take us in this direction. But I haven't heard anything in terms of the critical role of the Clerk of the Privy Council, and the changed dynamic with respect to the Clerk of the Privy Council and the apparatus and machinery of government being so absolutely fundamental to not only policy development but policy implementation.

In terms of the dynamic change as a result of what we've seen with the systems breaking down, do you see the opportunity here for looking at the role of the Clerk of the Privy Council and the apparatus of government, his or her leadership with respect to that, as the opportunity to have change, comparing the legislation--if there is legislation--that establishes that position, and updating it? I think that this is fundamental to perhaps some of the problems that have been created.

That's my question, Mr. Chairman.

Mr. C.E.S. Franks: Mr. Chairman, I'll try to give a very brief answer to that.

I have not seen in any committee of Parliament a very satisfactory discussion of the role of the Clerk of the Privy Council. It seems to me that one starting point might be to say to the clerk, “Here's Professor Franks making all these outrageous accusations about the Privy Council Office's view on responsibility and accountability. How would you like to respond to it?”

Mr. Alan Tonks: In fairness, Mr. Chairman, with respect to that role, the Clerk of the Privy Council did indicate that he thought we could do better in terms of accountability.

Mr. C.E.S. Franks: As head of the civil service, the Clerk of the Privy Council has two jobs. One is to represent the public service to government, and the other is to represent government to the public service. I have a sense that from time to time in the recent past, the second role of representing the political to the bureaucratic has overwhelmed representing the bureaucratic to the political. That might be at the root of some of the problems this committee is identifying.

Mr. Alan Tonks: I was a little concerned, Mr. Boyer, in terms of your first two points--the politicization of senior ranks, and then, leading from that, the fudging of clear lines of ministerial responsibility. I see that mainly manifest in the role of the Clerk of the Privy Council, as you outline that difficulty in terms of that duality of being responsible to the bureaucracy but also being a conduit in terms of policy implementation with the whole civil service behind it.

Perhaps Mr. Boyer could reflect on that for a moment.

Mr. Patrick Boyer: There are a lot of examples, Mr. Chairman. I think they show that this process has been underway for quite some time. It doesn't just happen one morning.

I was a member of the House when the former prime minister, Mr. Mulroney, appointed Dalton Camp, who had been a president of the Progressive Conservative Party of Canada, to the Privy Council Office, and I was flabbergasted, notwithstanding that I held the late Mr. Camp in particularly high esteem. I would have thought that a Prime Minister's appointing him to the top ranks of the government in Ottawa would have found him in the Prime Minister's Office, the PMO, not the PCO.

That is not an isolated incident. It is one of many that have been documented on the politicization of the public service. And I agree, I think the direction the clerk has been going in has been kind of preaching to the public service what the government's political view is, rather than equally--being the Janus-like figure that he is--turning his other face to the government and saying these are the standards we expect in a professional public service.

We heard yesterday from Mr. Quail that acquiescence on the part of top-ranking civil servants to what was stated to be something the government wanted to do, even when it ought not to have computed for him.

Thank you.

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The Chair: Thank you very much.

We've had a great deal of discussion in the last two or three months about the concept of accountability. We thank you very much for shedding some academic light on the issue. In the years that I've been here I've always defined “accountability” as being forces beyond one's control that cause you to think and act in a certain way. We have to fine-tune the forces beyond the control of the executive to ensure that problems such as those we've been talking about these last two or three months are identified and rectified at the early stages, rather than in the cleanup after the fact. I think Canadians would be well served if we, this committee, could find a way to correct that imbalance.

I'd like to thank Professor Franks and Professor Boyer for coming here today. Your knowledge is vast, and we appreciate very much your contribution to the investigation.

Thank you.

The meeting is adjourned.