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Standing Committee on Government Operations and Estimates



Wednesday, November 16, 2016

[Recorded by Electronic Apparatus]



     Colleagues, we have quorum. Not all of our members are here, but we do have quorum, so, out of respect for our witness, I would like to commence the meeting.
    Mr. Smith, welcome to our committee. Thank you for your appearance here today.
    The process we follow is fairly simple. We ask you for a brief opening statement. Thank you for the one you have provided me, and, I think, other members of the committee. Following that there will be a series of questions by members of our committee, starting with the government side, going to the opposition side, and we will continue until questions have been exhausted.
    With that brief opening, once again, thank you, and please proceed with your opening statement.
     I have a very brief opening statement just to establish what I might be able to contribute to the work of the committee.
    On August 3, 2016, as chief statistician of Canada, I wrote to the Prime Minister to inform him of three major concerns that I had regarding the impact of Shared Services Canada on Statistics Canada, concerns I had been unable to adequately address, in my view, through my not inconsiderable efforts up to that point. The first concern was that, as it is constituted, Shared Services Canada represented a major and unacceptable intrusion on the independence of Statistics Canada. Independence is essential to the credibility of a national statistical office. I reminded the Prime Minister that the government had made a commitment to reinforce the independence of Statistics Canada during its mandate.
    My second concern was that the arrangement with Shared Services Canada imposed on Statistics Canada was inconsistent with the confidentiality guarantees given by the Statistics Act to persons and organizations providing information to Statistics Canada for statistical purposes. Either the legislation needed to change or the arrangement needed to be brought into line with the legislation.
    My third concern was that dependence on Shared Services Canada was hobbling Statistics Canada in its day-to-day operations, reducing effectiveness, increasing costs, and creating unacceptable levels of risk to the delivery of Statistics Canada's programs. I advised the Prime Minister that if I was not able to materially address these issues before September 17, 2016, I would resign as chief statistician of Canada in order to call public attention to this deteriorating situation. It was a situation that, in my opinion, was undermining the effectiveness of a key institution in Canada's democratic process.
    No material improvement either was promised or occurred before September 17, and my resignation therefore became effective. Since that day, while I'm told there have been some short-term improvements in Shared Services Canada's support to Statistics Canada, I believe that all three underlying issues remain unresolved, and I continue to advocate for these issues to be addressed.
    Thank you very much.
    Thank you very much, Mr. Smith.
    Mr. Whalen, you have seven minutes. Go ahead, please.
    Thank you very much, Mr. Chair.
    Thank you very much for coming today, Mr. Smith. It was our hope that we would have some other individuals here with us today to balance viewpoints, but thank you for coming. At a future point in time, we'll have an opportunity to hear from management at SSC and perhaps your successors.
    Given that there's been a consultation process, or our committee had asked SSC to go back and do some additional work and consultations, did you participate in the additional consultations that happened with the development of a new strategic plan for SSC after May of this year?
    I was not, as I recall, directly involved in the consultations, no.
    Did you have an opportunity? Were you asked?
    No, I don't recall being asked.
    When we think about some of the things we've talked about with SSC in terms of managing the different projects, I fail to see how it affects the independence. Maybe you could let me know a little more how using the shared technology infrastructure that all the rest of government has to use has affected Statistics Canada. The rest of government doesn't complain about its independence being impacted by using the roads of government or any other aspect of the technology of government.
    Members, I believe the bells are ringing.
    Mr. Smith, my apologies. We'll have to interrupt the proceedings for now while we proceed to the House for a vote.
    Sir, we have a two-hour block of time in front of us. Are you available for that period of time?
    I'm at your disposal for that full time.
    Once again, we will have a vote shortly, and hopefully that will be the end of the votes. We're not sure about that, but we will be back. We will reconvene.
    We will suspend until the votes are completed.
     Mr. Chair, is it a half-hour bell? This is a half-hour bell, isn't it?
    Yes, but it's been our practice that when bells start—
    All right.




     Seeing that we have a quorum, committee members, I would like to reconvene the meeting and also advise you, since I was in similar situations as parliamentary secretary to the government House leader for nine years, that I suspect we'll be hearing bells again in about eight to ten minutes.
    Mr. Whalen, you had a question.
    Mr. Smith, I believe you heard the question. If you are prepared to respond, we'll try to get through as much of this as we can.
    The question was in what way is Statistics Canada unique, and how does independence have an impact on whether Statistics Canada should or should not be part of the Shared Services Canada initiative?
    The notion of independence for national statistics offices is established internationally. I think it is well known and well accepted in Canada. Clearly, the government accepts it, because the government has made a commitment not only to maintain but also to reinforce in law the independence of Statistics Canada.
    But that argument does not apply to any.... If you think of the 43 current partner departments of Shared Services Canada, no one is arguing that any of those other organizations have a claim to independence in the sense that it applies to Statistics Canada. However, there are other institutions in the federal universe that, in fact, do have that claim. Agents of Parliament are a particularly good example, because, in some sense, they play a watchdog role, in the same way Statistics Canada does, with respect to the activities of the government and its performance. In those cases, those institutions were left out of Shared Services Canada from the beginning. One case, where the issues of independence and confidentiality come into play, that was not left out was the Federal Court system. When that was pointed out by the court system, the Federal Court system was removed from the initiative by the current government.
    The notion that this initiative is inconsistent with independence is well established, and the fact that Statistics Canada is the sole institution that remains on the list of organizations that are involved in Shared Services Canada when it has a claim to independence is relatively easy to argue.


    Thank you very much, Mr. Smith.
    Before we broke, I asked about opportunities to consult and provide your views to Canada Post—sorry, Shared Services Canada—on their status and their strategic plan. You'll have to forgive me; we've been doing a lot of work on that other agency. It was my understanding that there was an opportunity to work...that Statistics Canada and Shared Services Canada had set up a type of war room in the month of May in order to work out differences between them and to try to find resolutions to their problems, including issues related to independence and to the adequacy of the technical information and the adequacy of the assets to provide the service.
    A group was set up. It was specifically not to deal with those strategic issues. They were set aside. It was to deal with immediate operational crises, essentially, to find solutions that would allow, for example, the census to go forward and meet its full commitments and that would allow Statistics Canada to deal with the workloads it was facing, because we were literally running out of capacity. It was very focused on resolving short-term problems. It was not at all strategically focused, and it was not attempting to resolve the issues of independence or protection of confidential data. It was really focused on day-to-day operational issues.
    Were those meetings successful, in your opinion? Were they able to deliver on the timelines of StatsCan and Shared Services Canada to meet the goals of the census?
    Absolutely not. Well, the census was generally a success, but there was one major project in which we had made commitments to improve the web service of Statistics Canada in time for the 2016 census. Because of repeated failures to deliver in a timely way on the infrastructure needed for that program, we ultimately had to go to a plan B in order to disseminate the census results, because we wouldn't have had the time to properly develop and test the system in the meantime. At that meeting, commitments were made about the delivery; they weren't met. Other commitments were made about delivery of additional capacity we needed to operate. When I asked about it the last time, my chief information officer said that not only did we not have a date for delivery, we also did not have a date for when we were going to get a date. Some of the stuff may have been delivered in the wake of my departure, but certainly at the time I left, it was seriously behind, and we were very concerned about the consequences.
     Thank you very much.
    Mr. McCauley, take seven minutes, please.
    Thank you for joining us, Mr. Smith. We apologize for the interruption.
    You mentioned that you sent a letter or held a conversation with the Prime Minister saying you'd like this or you would have to resign.
    Can you briefly walk me through what exactly that was? Was it a letter? Was it a conversation?
    It was a letter. It was written and sent at the beginning of August.
    Did you outline your specific concerns at that time?
     I did.
    From memory, can you tell us what you stated in the letter?
    What I stated are the points that I made in my introductory comments. I said that the relationship between Shared Services Canada and Statistics Canada was inconsistent with the internationally recognized principle of official independence of national statistical offices, which the government had endorsed. The Government of Canada had also endorsed the various recommendations of international bodies with respect to independence.
    My point was that Shared Services Canada has had and continues to have an effective veto on any program or activity of Statistics Canada that requires any change in our informatics infrastructure.
    Did you receive a response to your letter?


    Two days before my resignation, I received a letter from the Prime Minister reiterating his commitment to the independence of Statistics Canada, and it really didn't go any further than that. The Clerk of the Privy Council wrote me a letter essentially stating his disagreement with the points I was raising. I felt it was largely beside the point.
    The Clerk of the Privy Council sent a letter disputing your concerns?
    He wrote back indicating that he disagreed with the arguments I was advancing in the letter.
    Were there specifics, or was it, “Thank you, Mr. Smith. Goodbye. We disagree with you”, or...?
     The only specific in it, which provoked me to respond, was a claim that Shared Services Canada had fully and properly supported the 2016 census of population—which really wasn't true—to which I responded. On the other points, I simply said we'll have to agree to disagree.
    Who designed the census website that crashed? Was it Shared Services Canada, or was it done internally or through someone else?
    The census one was not Shared Services Canada's fault, nor actually was it Statistics Canada's. It resulted from a bug in the commercial database software, which brought the website down.
    The website, after we turned it on initially, was operating very slowly. We determined that the problem—
    Colleagues, I see the bells have started ringing again; however, at the risk of contradicting myself, only because Mr. Smith has taken the time out of his busy schedule to be with us today, I suggest that we complete Mr. McCauley's question and answer and go to Mr. Weir. At least that way we'll have had one question from each of the three parties before we suspend.
    After that, colleagues, I believe, if I'm reading the tea leaves right, this will probably be the last set of bells we'll have this afternoon, but we have about 15 minutes' worth of business in camera.
    If we can complete Mr. McCauley's and Mr. Weir's testimony, then, we will excuse our witness, and come back after hopefully our final vote for a few minutes of committee business before we adjourn at 5:30.
    Do I have concurrence of the committee?
    Are you suggesting that we stop now?
    No. As I just said—
    We'll finish mine and finish Mr. Weir's.
    We'll finish Mr. McCauley's and Mr. Weir's, so that each of the three parties—
    Is it a half-hour bell? We should have followed the same process last time.
    We didn't think there was going to be another set of bells. I hate breaking with precedents, Ms. Ratansi.
    We would like to get Francis's question in the four rounds, as normal.
    Okay. That's fair enough.
    We're going to be tight for time.
    Let's complete Mr. McCauley's turn, please.
    How much time do I have?
    We have 29 minutes left before the bells.
    Do we have the time for that?
    Do we have the agreement?
    We'll try to get Mr. Drouin's in.
    How much time do I have left?
    You have about four minutes left.
    You mentioned the effective veto. Could you expand on that a bit more?
    If you look at the governance arrangements for Shared Services Canada, nothing actually establishes any obligation on the part of Shared Services Canada to provide any specific service or volume of service to Statistics Canada.
    Statistics Canada transferred its resources and was stripped of the authority to supply informatics or hardware services itself or to buy them from any third party. They had to buy them from Shared Services Canada. At the same time, nothing was ever set down about what obligations Shared Services Canada had in exchange for those resources and what obligations they had, if Statistics Canada wanted in some way in future to accommodate a program of its own, to change the informatics support that it was being given.
    The result is that there is no obligation. The reality is that Shared Services Canada knows this and acts in that way in dealing with Statistics Canada.


     In what way do you mean? I know you said there's no obligation. We have no obligation to listen. We could walk out right now, but we don't. Shared Services, you said, has no obligation and acts in that way—
    For example, the money that was transferred was more than sufficient for Shared Services Canada to maintain the capacity of the legacy data centres in line with the requirements of Statistics Canada—
     But you're saying they didn't?
    —as they had been for years.
    They decided unilaterally that they would not do that. They also decided that they would not maintain the data centres, and that they would cancel the service contracts on the various servers on which our programs rely, creating enormous risk to Statistics Canada. Though I object to all of these things, there's nothing I can do about them.
    Operationally, can you give us an idea of what they did that affected or stopped you—by you, I mean StatsCan—from doing your work?
    At the time I left, the project to revise our website services was, effectively, in disarray. We had not received delivery of the hardware infrastructure that we required. Another program that was building a new integrated collection operation system to increase the efficiency of our collection operations was also going into a stalled state. We couldn't get the capacity to deliver the infrastructure.
    We are seeing more and more tiny failures of our website, for example, or of various processing systems.
    We're almost out of time. Very quickly, if you could go back in time, what would you have liked to see different, knowing that we have to operate with Shared Services? What could we have done differently or better to satisfy you?
    I said there were three...I have no issue with using Shared Services Canada as a service. I believe that Statistics Canada needs to have meaningful control over its informatics infrastructure. It needs to be able to make the decision that it requires a piece of infrastructure to be put in place and to have it done at an affordable cost, in a timely way, and effectively.
    As long as the budget has been transferred, Statistics Canada has been stripped of the authority to do those things on its own, and Shared Services Canada has no obligation to provide those services. They, effectively, control what we are able to do. The notion of some external authority preventing Statistics Canada from doing things that in its budget capability and its mandate are entirely reasonable for it to do is incompatible with the idea of the independence of the agency.
    I'm out of time.
    Thank you very much.
    Thank you very much.
    Mr. Weir, go ahead for seven minutes, please.
    Thank you very much, Mr. Smith, for appearing before our committee.
    You made the point that Shared Services' monopoly on informatics impeded Statistics Canada's independence. I wonder if you could speak to any studies that Statistics Canada was unable to complete or conduct as a result of these IT arrangements.
    Statistics Canada will struggle to get things done, one way or the other, no matter what the impediments are. We've never yet come to a point where we were simply unable to find a solution, even though it cost us more money, delayed major projects, and idled project teams. All of those consequences are there.
    I guess the most egregious example of how, literally, we were a failure was when infrastructure managed by Shared Services Canada shut us down for a significant period of time. It was in July. It was a failure of what was an uninterruptible power supply that should have been the safeguard, but it hadn't been properly maintained and assessed. It brought down our entire legacy data centre. Parts of it were down for a full day. That was attributable to aging and failure to maintain infrastructure. Those types of incidents are more and more likely to occur.
    That's certainly very troubling.
    You mentioned, as well, that Shared Services was not particularly effective in supporting the last census, but you also noted that the problem with the website was not the fault of Shared Services. I wonder if you could speak at all to how Shared Services came up short for the census.
     The one major piece was with respect to the dissemination, the website infrastructure that was required. I met very early with Liseanne Forand, and again with Ron Parker after he was appointed, to say that the census was a mission-critical project for the Government of Canada. It works to a fixed date. It cannot fail, and neither one of us in the room at the time wanted to see that happen.
    They were also explicitly directly funded to buy all the hardware infrastructure required for the census. We never had an accounting of what the money was spent on, and we were given additional bills for things that, in our opinion, they were in fact funded for. At the end of the day, they built and put the bulk of the infrastructure in place in time. The management effort required by Statistics Canada to ensure that happened was, by comparison to that for any previous censuses, enormous.
    I credit the fact that, in terms of the core operations, the major project aside, they did provide the support we needed to make the census a success, and it was an enormous success in terms of all the historical censuses of Canada.


    It's certainly great to get back to a mandatory long-form census.
    I wonder if you could address whether the arrangement between Shared Services and Statistics Canada put Canadians' privacy at risk.
    My view—and it's still my view because it hasn't been demonstrated to be wrong—is that the Statistics Act says that the confidential information holdings of Statistics Canada, the information provided by Canadians and their organizations for statistical purposes, can be in the hands of only Statistics Canada employees. There is a provision in the act that says that Statistics Canada itself can recognize people from other organizations as deemed employees but on the assumption that Statistics Canada is meaningfully in control of their activities while they are in contact with that data.
    I have argued from the beginning that the governance arrangements around Shared Services, which require us to transfer to them all these confidential information holdings, are actually inconsistent with the Statistics Act and are a violation of the Statistics Act because they are not, in effect, in any meaningful and acceptable way, deemed employees of Statistics Canada. In my view, that issue is still unresolved.
     Normally when I raise that issue, the argument I get back from Shared Services Canada is that we have all these bells and whistles that keep the data safe. That's not the point. The point is that, by law, they shouldn't be there in the first place.
    You mentioned in your opening remarks that you made considerable efforts to resolve these problems before taking the significant step of resigning, and you spoke a bit about the correspondence you had with the Clerk of the Privy Council. I wonder if you can tell us anything more about which government officials you tried to talk to in order to find solutions, and what they said.
    Obviously, as I mentioned, I met repeatedly with Shared Services Canada and raised the issues with them. I met with the various secretaries of the Treasury Board and raised the issues there. I've raised the issues with the portfolio office of Industry Canada, which is the portfolio in which Statistics Canada participates. I've obviously raised the issues with the minister. I've raised the issue with the Clerk of the Privy Council, and ultimately on August 3 with the Prime Minister himself directly.
    Did any of them propose anything meaningful to address these very serious concerns that you had raised?
    There was nothing. Quite literally, I've never received a meaningful suggestion about how these issues could be addressed, either within or outside of the existing framework. The discussion tends to go along the lines of, well, the Shared Services Canada initiative is important to us, and if we let you go, there's going to be a lineup at the door, so therefore we're not even willing to have this discussion.
    Okay, so your sense was that they were receiving perhaps similar or related complaints from a lot of other organizations within government and didn't want to make special accommodation for you for fear of having to accommodate many other agencies.
     That was my understanding.
    Thank you very much.
    Monsieur Drouin, you have seven minutes. Go ahead, please.


     I want to thank you, Mr. Smith, for coming here.
    I'm just trying to understand the rationale for saying that Statistics Canada is no longer independent or that the infrastructure is not part of Statistics Canada. When you look at the industry, you see a movement towards infrastructure as a service, a platform as a service, or software as a service. For instance, the Office of the Auditor General is now an SSC responsibility. I would have a hard time saying that the Auditor General is no longer independent because of IT issues. I'm just trying to understand why it is that you say this.
    I think that if the Auditor General is participating now, it is no doubt on a voluntary basis, which means he still has control over what happens and whether that relationship continues, and he can withdraw. If that situation existed in Statistics Canada.... I presume the Auditor General holds the budget. I presume that he is engaging with Shared Services Canada on a voluntary basis and is able if he so chooses to either withdraw, go to a third party, or deliver the services to himself. If I had had that arrangement with Shared Services Canada and Statistics Canada, I would have had no problem.
    Okay, so Statistics Canada, for instance, is responsible for its own applications, I assume, as are most departmental organizations.
    We are, but an application can't be separated from the hardware it runs on. I can write a beautiful application, which I have done in the case of this new website. If I can't get the hardware to run it on, it's useless. It's a wasted investment. It's money down the drain.
    I'm not here to defend Shared Services Canada, but just try to understand. If we go back to a pre-Shared Services world, there must have been IT issues within Statistics Canada, and I can point to other IT issues within other departments.
    Clearly there were. There were significant hacks of some government departments, but one of the things that kept Statistics Canada safe, that Shared Services Canada and other government-wide initiatives have forced us out of, was that we isolated our major networks. The networks on which we operate, where all the confidential data is held, were isolated. There was no connection to the Internet.
    Moving toward Shared Services forces us to create those connections, which introduces the possibility of penetration in a way that wasn't there before.
    Okay. The idea of shared services isn't new. It was there before. It just wasn't mandatory.
    I just want to go back to pre-retirement date or pre-resignation date. What happened? How many meetings did you have with Shared Services before this? Did you interact with...? You said you met with Mr. Parker.
    I don't know the exact number. I had three or four meetings with Mr. Parker in various contexts. My chief information officer met with him on a regular basis over the course of the summer, trying to resolve these immediate operational issues and not making a lot of progress. In the period between the time I wrote to the Prime Minister and my resignation, there was no meaningful discussion of any strategic issues. They were all tactical and operational issues.
    Okay. Did you know about the operations prior to Shared Services? Did you understand how Statistics Canada worked?
    Yes, I was there for 35 years.
    Okay. Were there any predetermined or service-level agreements within Statistics Canada?
    We had introduced some types of service-level agreements but they were less critical. Statistics Canada works in project teams. It doesn't work in its hierarchy. When we're building something and we're running a large program, each area is represented on the project team. Each area knows what is expected of it. Each area is accountable for delivering that, and if somebody fails, it creates a problem situation that has to be quickly addressed.
    Generally speaking, because we're all working towards a very clear set of common objectives, there is very little opportunity for the kind of head-butting that can go on between two organizations that aren't linked either by a strong service-level agreement that lays out very clearly what people are supposed to provide—when and how and at what cost—or by that kind of common culture.


     If you worked there for 35 years, tell me this: did they have an inventory of what was working or of all of their hardware and of what needed to be fixed in the next five or ten years?
    Well, we did, but one part of my mandate, in my tenure, was a complete consolidation of our informatics infrastructure under one management.
    It had been very decentralized. We knew what was there, but it was not particularly efficient. We had already taken steps to consolidate that informatics infrastructure prior to the arrival of Shared Services Canada, and we had already harvested a 10% efficiency from the informatics resources through this consolidation.
    At the time Shared Services came on, I think they noted that we were probably one of the best prepared departments, because we knew exactly where everything was and had it controlled centrally.
    For the census, you said you needed more hardware, more infrastructure, and that essentially the census was successful. Is that right?
    So Shared Services understood that this was mission-critical and they successfully did something with Statistics Canada?
    Yes, absolutely.
    I'm just trying to understand. We did a bit of this study prior to the summer break. We've spoken to a few stakeholders, including former CIOs, and I can bet that if I had other CIOs here, some of them would still be very frustrated. But why resign?
    In the culture of—
    It's a difficult question, Mr. Smith, but you have only a very short window to answer.
    It really goes to there being a culture of official statistics that says that if the independence of the organization is fundamentally compromised, you have to take whatever course of action you think will produce results.
    Having taken every step short of resignation, I thought I would try the ultimate measure and resign and call public attention to the concerns I have. That was essentially the logic. I felt that I had reached the end of any possibility of finding a solution inside of government.
    Thank you very much.
    Mr. Smith, once again I offer my apologies for your truncated appearance here, but unfortunately, because of the circumstances, it is what it is.
    Colleagues, we will be having a vote in about ten minutes that should take a little more than ten minutes, which would put us back here probably around 5:15, leaving us about the amount of time I would need to go over a report from our subcommittee on future agenda items.
    We will now excuse our witness.
     Thank you once again for your testimony. Mr. Smith, I would ask you one final question, however. If there are other questions that members of the committee have, would you allow them to correspond with you directly and would you then commit to giving a written response to the committee?
    Thank you very much, committee members.
    We are suspended.
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