CHER Committee Meeting

STANDING COMMITTEE ON CANADIAN HERITAGE

COMITÉ PERMANENT DU PATRIMOINE CANADIEN

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, June 10, 1999

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[English]

The Vice-Chairman (Mr. Inky Mark (Dauphin—Swan River, Ref.)): I would like to call to order the Standing Committee on Canadian Heritage and to welcome our guests, Dr. Leighton and Elaine Calder.

This is a follow-up meeting to the one we had in February of this past year. I guess the easiest thing to do is to turn the floor over to both of you and let you make your presentations. We'll ask questions after.

Welcome to our committee. The floor is yours.

Ms. Elaine Calder (Interim Director and CEO, National Arts Centre): After a quick discussion, we've decided that I will go first, Mr. Mark.

As members of the committee may know, I am leaving the National Arts Centre at the end of this week to take up responsibilities at the Hartford Stage Company in Connecticut. As part of my leaving process, I wrote a memo to Richard Flageole at the Office of the Auditor General of Canada on May 22. Copies of that have been provided to the committee in both languages.

In many ways, the Office of the Auditor General has really been the branch of government I have worked with most closely over the past seven and a half months. They have been monitoring, as have you, the progress of the National Arts Centre in addressing the issues raised in their special examination report of June of 1998.

I wrote a fairly lengthy memorandum to Monsieur Flageole in January, and provided him with an update in May. It went to him described as my final response. I think the copy you have is headed “Final Written Response to the Recommendations made in the Special Examination Report”. I should make it clear that these are my final responses, not those of the National Arts Centre.

That relationship with the Office of the Auditor General will continue.

I should also make it clear that the headings in this document relate back to the headings of the special audit document, and thus in a certain way may seem a little inconsistent or strange, but they're reporting back very specifically.

I've tabled the document. I don't wish to read through it. I would be happy to take you through and perhaps glance at key issues, but I'm in the hands of the committee, Mr. Mark.

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The Vice-Chairman (Mr. Inky Mark): What's the wish of members? How would you like to approach this?

Wendy.

Ms. Wendy Lill (Dartmouth, NDP): To me, since we've just received this, it might be useful if you could walk us through it.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Perhaps you could go through the key elements.

Ms. Elaine Calder: Sure. I'd be happy to do that.

I will go through the preamble in some detail. I think it's important, and it should be on the record.

Events of the past few months have done much to improve the public perception of the NAC and to ensure, more importantly, that the issues identified by the Office of the Auditor General in June 1998 are being truly addressed.

Most dramatically, the more than $2 million in extraordinary assistance provided by cash and in-kind donations as a result of Grant Burton's response to Alexei Yashin's withdrawal of his $800,000 pledge has demonstrated the very real support that does exist in Canada for this institution. It provided some much-needed positive publicity and greatly improved our cash position.

The announcement of our summer music festival of great composers, under the musical direction of Pichas Zucherman, has been greeted with very strong ticket sales and a realization that we did respond to the market research conducted during last year's Festival Canada by creating summer programming that the Ottawa Citizen has described as showing that the NAC “has its act together”.

Finally, I think the recent appointment of Dr. David Leighton as our new chair will ensure that the governance issues that have plagued the centre for the past few years will be addressed by a recognized expert in these matters. Dr. Leighton has quickly become involved in the search for and selection of a new director and CEO. He's confident that a couple of excellent candidates have now been identified. He will, of course, speak to that after I'm finished.

More privately, the corporation has made some significant changes in the senior and middle management ranks; recruited Deloitte and Touche and Ketchum Canada to conduct audits and provide restructuring assistance for its finance and development departments; hired an external auditor to review a number of the 1997-98 accounts; and completed a first draft of a business plan for the coming 12 to 18 months.

I should make it really clear that I haven't waved a magic wand and solved all the problems of the National Arts Centre. There is much work that remains to be done. I do believe, however, some key appointments have been made, real progress has been achieved, and the centre has a much clearer sense of what needs to happen over the coming months in order to fully restore internal and external confidence.

Mr. Chairman, I will now simply take you through the headings and highlight the important things.

The most significant deficiency identified by the Office of the Auditor General last year was the lack of strategic direction—indeed, the lack of any type of business planning document.

We have completed a corporate plan. It has been submitted to the minister with a cover letter from our new chair, Dr. Leighton. He has made it very clear, in his letter to the minister, that this is a draft plan, a work in progress. We do not wish to tie the hands of the new director and CEO.

We also recognize that with a new chair and a new director, there undoubtedly will be a shift in focus, perhaps even a change in strategic direction, for the centre, and that there will be significant changes to the business plan as a result of this. Nevertheless, we felt that many, if not all, of the issues we identified in the business planning document as corporate priorities will continue to be important no matter what happens. There are certain things that are fundamental to the management of any business, artistic or otherwise.

So we addressed some sets of short-term, medium-term, and long-term corporate priorities. Work on the short-term ones has begun, to some degree significantly. Work on the medium- and longer-term ones has or has not begun, depending on the necessity of the involvement of the CEO and the chair.

But I do think the plan will be a useful corporate document for an incoming CEO. It contains a corporate profile and an environmental assessment. It describes the departmental plans that have been developed by the senior managers for the coming season or two.

I think the most useful thing that happened in the development of this corporate plan was the realization that it is the process, not the product, that is most important. One of the things that leapt off the pages, both to senior management and to the board, when the first draft was completed was that many of our corporate priorities were not necessarily reflected in the departmental plans that had been submitted.

This is partly a result of the decentralized nature of planning that has gone on at the NAC over the past five years or so—pick your number—as there's been such turnover and change at the top of the institution. A lot of that strategic direction has flowed down to senior and middle management ranks, and there has been a bit of disconnect between a strong sense of corporate priority and how departmental plans can reflect this.

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I think that in itself was one of the most useful things to come out. It was instantly recognized by everybody. We now have a process in place that will continue, and that will address that particular issue.

On the issue of performance information and accountability, I have deliberately left three senior positions to be filled by the new director. These are key appointments, and I think it would be unfair to have made appointments in the last couple of months of an interim position. As well, it's very hard to recruit good senior people when they don't know for whom they're going to be working. It also means our management restructuring can continue under the new CEO.

In my brief period, we've brought the span of control for the director from sixteen down to nine. It is certainly possible to bring it down even more tightly than that, to two or three. Again, that should be left for the new director.

The recent appointment of Dr. Leighton, who has significant corporate experience and is a recognized expert in matters of governance, has gone a long way to reassure the centre's management and staff—believe me—that the relationship between the board and the centre is about to improve and that the new CEO will better be able to maintain the trust of the board.

Our first public board meeting was held in March, after this committee met with us in February. It proceeded without incident. We were very careful to determine which matters should be discussed in camera, as clearly there are matters of personal confidentiality to respect. But the trustees opted in favour of the greatest possible transparency, and were congratulated for doing so.

Management reporting has begun to improve significantly. This is something we were deeply criticized for by the Office of the Auditor General. I've hired a new corporate comptroller from the private sector.

We now have a board audit committee that is working very closely with the corporate comptroller and with me to improve the reporting and the nature of the financial statements. It's headed by Madam Louise Vaillancourt of Montreal. This is an excellent appointment. She is doing some tremendous work on behalf of the board and the centre.

Deloitte and Touche continues to assist us with the implementation of our financial accounting system. I'll let you read about that. Again, it was something that was underway when we audited. It was not proceeding well. It's proceeding in a more rational fashion, and we're achieving some significant results.

With regard to operational management systems and practices and performing arts programs, as I've said, we quickly noticed the decentralized nature of the programming department's planning. The new chair has already indicated that one of his priorities will be achieving a more balanced allocation of the centre's resources across the artistic disciplines of music, dance, English Theatre and Théâtre français.

I shouldn't take words out of his mouth, but he does not mean by this that he wants to destroy or reduce any of the amazing accomplishments of any of the existing departments. Rather, we must find a way to bring everybody up to the same level. We also need a more integrated reflection of our vision in our programming choices.

One of the truly remarkable things that has happened in the past few months is the creation of the Challenge Fund, thanks to Grant Burton's challenge. We now have almost $1.9 million in cash on deposit, earning interest, which we have pledged will be used to enhance our artistic development programs.

At the end of June, the programmers and I are presenting to the board recommendations for the expenditure of about $130,000 of that on some relatively small projects but ones that we think are important and that will signal to both the local and national community that the NAC has this ability now to restore some of the things it was able to do in the past and also to create some new programming. I think that's one of the most exciting things to have happened to the centre.

I've touched on some issues of marketing and human resources. I don't think they're of a sufficiently high level, Mr. Chair, that we need go into them now, but they are documented for the committee to read at their pleasure.

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Management accountability has been a key concern of the Office of the Auditor General. We did retain the services of an internal auditor to review some accounts for 1997-98. We, along with the Office of the Auditor General, were concerned that there were obviously no illegalities or irregularities that could cause embarrassment to the centre. We found no evidence of this.

We are, however, taking great care in the design and implementation of the new budgeting and forecasting process to ensure that managers feel they have sufficient input into and control over their own accounts to accept full responsibility for them.

It's very hard to hold people accountable for things they had no control over. That, I think, was the difficulty in the past. So we're putting structures and systems and processes in place to make sure that when we hold someone accountable, they can truly be held accountable.

In the fundraising area, which we call “development”, we hired Ketchum Canada to do a development audit for us. They've made a number of recommendations that we are implementing.

My report states, “A copy of the Ketchum report is enclosed with this memorandum.” That was enclosed to the Office of the Auditor General. It's not enclosed with this memorandum today. It is an internal document. I do outline here, though, the key areas we are concentrating on in the meantime, while we await the appointment of a new director and a new senior director of development.

I think we should point out too that our development department worked under extreme difficulty for most of this season. They were operating without senior management. We did lose the $200,000 pledged to us by Alexei Yashin, which it was his right to revoke. More significantly, we lost the $400,000 in corporate sponsorship we had last year for Festival Canada because we did not continue with Festival Canada. Right at the beginning of the year, then, they were hit with significant setbacks.

They then had to focus primarily on the Challenge Fund campaign, which was an enormous success but is not reflected in the operating results of the development department this year. In a way, then, they're not getting full credit for the tremendous work they did.

Even though the Challenge Fund campaign, through no ill will on anyone's part, coincided exactly with our annual Patrons' Circle campaign, we managed to secure both the $1.9 million in cash and a significant increase in Patrons' Circle revenues. There was real support demonstrated for the centre by both our ongoing Patrons' Circle members and largely the Ottawa-Hull community, who support us annually, and who made gifts as well to the Challenge Fund. So the fundraising this year has really been tremendously successful.

With regard to management information systems, we touch on this throughout the report. I don't want to overstate the obvious, but the key focus internally for management over the past few months has been improvement in the frequency, reliability, and sophistication of the financial and operational information provided to management and through management to the board. As you all know, without good information it's impossible to make good decisions.

Of necessity, this will continue to be a focus for a while yet. We're not 100% there. I do believe our new corporate comptroller and our director of administrative services have a very clear understanding of what is required and, more importantly, the skills and the experience to ensure that it is achieved.

We are also providing regular reports to our audit committee on our state of Y2K compliance. We are now 93% compliant. The remaining 7% has been identified as low risk. We expect to be fully compliant by October, and we do have contingency plans for both our limited internal exposure and the possibility of widespread general failure in the outside world.

Finally, on the issue of building management, I report in the document that we are in negotiation with the City of Ottawa and with the Regional Municipality of Ottawa-Carleton with the assistance of Treasury Board, the Department of Canadian Heritage, and the Department of Public Works. It has been a desire of the government since 1985 to transfer non-essential properties to the people who actually operate and use them.

The building title transfer to the National Arts Centre Corporation was delayed because of negotiations over renovations to the Mackenzie King Bridge. The government is now prepared to effect title transfer to the National Arts Centre Corporation.

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The trustees of the corporation have been reluctant to accept title transfer until they have some sense of where the money is going to come from for the $80 million schedule of capital repairs that we know this building is going to require over the coming decade or so. It's a 30-year-old building. Like all 30-year-old buildings, the fabric of the building is beginning to break down and the systems are beginning to break down. Naturally, we want to avoid any kind of emergency situation.

One of the things the public works department discovered as we negotiated building title transfer was that changes to the provincial legislation in 1997—Ms. Bulte would know about this—would seem to exempt theatres in Ontario that are operated on a not-for-profit basis from the payment of any property tax. This would immediately free up over $6 million for the National Arts Centre if we were to take this route, accept title transfer, and depend on provincial legislation for that interpretation of that assessment.

Our board made it very clear right from the beginning that they did not want to cause undue hardship to the local municipality and the local region, that the unexpected loss of $6.5 million in property tax revenue as a result of provincial legislative change was not something the city or the region had anticipated, and would in fact cause them great hardship.

We are in negotiation with the city and the region with regard to: how to effect this transfer; how to phase in the reduction in payments in lieu of taxes; how to retain some payment in lieu of taxes for the city and region on a basis that can be defended both fairly and equitably and on the basis of the assessment act; how quickly to do this; and how to proceed into the longer term.

The negotiations aren't easy. We would obviously like to see more money coming to the NAC to meet our needs in the near future than the city and region would. But we are very close. In the order of magnitude the federal government deals in, I would say the city and the NAC are in agreement on both the principle and the general amount of the funds involved.

However, I believe we're not going to have enough money to complete all of the capital requirements the building will have over the next few years, so the issue is not yet resolved. It will be discussed at our finance committee meeting tomorrow and at our board meeting in June. I think negotiations are going to be ongoing. It is something that I had perhaps naively hoped could be concluded before I left here in June, but it proved to be more complicated than that. So that is an outstanding issue.

I think I should state publicly that my experience has been that there's tremendous understanding and support from Canadian Heritage, from Public Works, and from Treasury Board that, for example, program review cut very deeply into the budgets of smaller agencies such as the NAC. It has left us in a difficult position with regard to both capital budget issues and program integrity.

Understanding does not necessarily mean cash, but I believe the understanding is there. We have been successful just in the past few weeks in securing a special allocation from Treasury Board to deal with a very critical, potentially high-risk capital issue of about $1 million, which we can address during the summer months, when we're dark, rather than deal with it on an emergency basis in the middle of winter. I'm grateful to those three federal departments for the cooperation and support they've shown to me during the past few months.

That, Mr. Chairman, completes my formal presentation. I'd be delighted to answer questions from the committee members on anything I haven't addressed or on anything of concern to them. I hope it provides the committee with a sense that the NAC is embarked on a new era of good management and of good relations between the board, the centre, and the centre and its community. And I use the word “community” in the broadest possible sense.

At your pleasure, I would now either turn the microphone over to Dr. Leighton or take questions from the committee.

The Chairman (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): Dr. Leighton, do you want to add to what has been said or do you want to wait until we reach questions?

Mr. David S.R. Leighton (Chair of the Board of Trustees, National Arts Centre): I think it might be more helpful if I were to make a brief presentation here in case the questions anticipate some of that.

The Chairman: By all means, do.

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Mr. David Leighton: As I think you know, I am only briefly in this job. I was appointed on May 3. I've had about a month, therefore, to get some feeling for what's required and to participate in the process of both planning and selection of a new chief executive.

I think my first priority—well, first, second, third, and fourth—has been the selection of the new chief executive. I think this is a critical decision, critical step, in the history of the National Arts Centre. It's very important, I'm sure you would all agree, that we do this job well.

I came in towards the end of a rather thorough search process that had been developed by the search committee and by the board. A large number of applications and expressions of interest had been received and had been screened, and applicants had been interviewed by members of the committee and by the consultants who had been engaged to help with the process.

I wouldn't say no stone has been unturned, but certainly most of them have been turned over. A pretty reasonable job has been done.

I happened to be away when my appointment was announced, and I think I spent my first day on the job participating in the selection committee, interviewing a short list of three candidates who had passed through the screening process to that point. That was on May 13.

Further interviews are scheduled for Friday of this week. The delay in carrying through with the interviews has been governed by the availability of candidates rather than any other consideration.

It's our hope—and I stress that it's still a hope—to have a recommendation from the selection committee for the board at its June 25 meeting. There are still imponderables in this process, of course, between now and then. It's going to be a board decision.

I'm sure you all recognize that it is perhaps a little unusual in the structure of organizations such as ours that the board has the responsibility for choosing the chief executive officer. I'm quite confident the board will make the right decision.

I do want to say, with regard to Elaine's comments, that I think she has reported very well on what has been done. I came in not really having much of a grasp of either the problems or the issues that faced the organization. I have since had a chance to form my own impressions of this. In my judgment, Elaine has provided exceptional leadership to the organization in a very difficult time. She has been thoroughly professional in the management she has provided, and I feel very good about the steps that have been taken.

As she has emphasized, this is an ongoing process, not a finished process by any means. In other parlance, the blocking and tackling has been done very well here. Fundamentals have been addressed, and we're well on the way.

I think the board, the management, and the stakeholders of this organization have been very well served by the work that's been done. I'm very sorry we're losing her services.

My personal priorities, after the selection of the chief executive officer, focus on the restoration of financial controls and an adequate reporting system.

As Elaine has mentioned, it's very difficult if not impossible to make sound decisions and sound judgments in an organization the size of the National Arts Centre without having good data, good information. I think this has been at the root of many of the difficulties that have beset the organization in the past. It certainly has handicapped the board in making proper decisions.

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Quite bluntly, the board simply was unaware of many of the things that were in fact happening within the system. That must change and that will change.

A good deal of the rest of my time has been devoted partly to extricating myself from other commitments and time demands but also to spending as much time as I could within the organization—meeting the staff and other interested parties who have a very strong identification with the National Arts Centre. My objective has been to become familiar with the issues but at the same time help size up our capabilities, our resources, our organization, and our ability to deal with these issues.

I've been looking at the plans that have been underway in the planning process. I do want to say that I think the planning process has been an excellent one and that we are, de facto, at a point where we have a workable strategic plan for the next couple of years. But I personally intervened in the process to hold back, to describe this plan as an interim plan. I really think it would have been a huge mistake for us to have committed to a plan on the eve of selection of a new chief executive and to pass on to that chief executive a plan that was, in effect, a fait accompli.

It may well be that the chief executive, whoever he or she may be, will in fact endorse the plans and be prepared to pass them on as final, but at this stage the window is still open.

I might also add that it would be very difficult, I think, to go to candidates of quality and say, yes, we'd like you to take this job, and by the way, we've just submitted a plan with projections and numbers, and there's nothing much you can do about it for the next two years. I think we would rapidly lose the quality candidates we are hoping to attract to this position.

I want to emphasize that I think there's a very distinct role here for me, as chair of the board of trustees, and it is not to manage the institution. My principal role, as I see it, will be to manage the board so that we have a board that can, and will, do its job, and do it effectively.

I have set aside agenda time at our meeting of June 25 for a discussion with the board members on such questions as the organization of the board; its committees; the frequency of meetings; the nature of its meetings; and the information needs the board has. A host of other factors, some of which I can't anticipate, I'm sure will be brought up to reflect on how we can, as a group, more effectively do our job.

I do this in the belief, the very firm belief, that what we need and what has been missing at different points in the history of the NAC is an activist board, a board consisting of capable and independent individuals who are committed to the NAC and are prepared to work at it. This is not an honorific operation, nor should it be. If it is, we will continue to have problems.

I've had the privilege of working in the corporate world and in the not-for-profit world with some extremely effective boards, and I believe we can do that if we have individuals of quality on the board at the National Arts Centre. We can, by ourselves, work out a process and a system where that board will become effective.

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I think much depends on the events of the next couple of weeks as far as the future direction of the centre is concerned. It's perhaps unfortunate, in a way, that this meeting immediately precedes several important events in the centre's development. One is the meeting of the selection committee tomorrow, and the other is the board meeting of June 25, which I think will be one of the more important board meetings the board has had in recent years.

Out of those steps, if all goes well in our selection process, we will then begin to have an organizational leadership pattern for this centre and I think an opportunity for rejuvenation and future direction.

Thank you very much for the opportunity to speak. I'd be very happy to deal with any questions you might have.

The Chairman: Thank you, Mr. Leighton.

First of all, I want to apologize for our late start. We had to launch our cultural report today. Secondly, if you see few members here, it's because debate on Bill C-55, the magazine legislation, is going on in the House. Many of our people are tied up there.

Mrs. Bulte has told me that she has to leave very shortly for the same reason, and Madam Tremblay has a plane to catch. Would members agree that we allow them to put their questions forward first?

Mr. Inky Mark: We all need to be somewhere.

The Chairman: Oh, you all need to be somewhere.

Mr. Inky Mark: I too should be in the House right now.

The Chairman: I see. All right.

Mr. Inky Mark: No, Madam Tremblay, go ahead.

[Translation]

The Chairman: Madam Tremblay, would you like to start?

Ms. Suzanne Tremblay (Rimouski—Mitis, BQ): The reports submitted are quite interesting, but I seem to remember—I don't have the document—that, when we met with the board in February, we had been told that the first priority was to hire a new director. There was already a committee in place and the appointment was supposed to be announced shortly.

I would like to know what has been going on between February and today. That key position is still vacant, but it has to be filled if things are to get done and everything else is to follow. I see there are still three positions to fill, including the person in charge of programming, etc., and the person in charge of patrons. Why has it taken so long? Maybe I was mistaken, but I was under the impression that the competition had been launched, the committee had been formed and the director was to be appointed shortly. What has happened?

[English]

Mr. David Leighton: Perhaps I can deal with that very legitimate question, one that I had when I came to the board.

Let me first say that the committee is pretty well on its own internal schedule for selection. I'm not suggesting that it has extended beyond what they had originally anticipated. I think this was about the time they had hoped to be able to make a decision.

I think the committee—and I'm speaking now second-hand, because I've only recently joined the committee—was determined to be very thorough in both soliciting applications and approaching people all over the country. They were determined not to make a mistake in selection on this job. That may have produced some caution on their part, which I think is probably justified in view of recent difficult events and the turnover of chief executives.

I think the process is moving quite well. Like most of these processes at the moment, the good candidates, not us, determine the pace at which we can go. Some of them are not available for discussion or interviews at the time when we would like to have them.

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So I would emphasize that the process is on schedule. I think there is a relatively high probability that we will be able to keep on schedule and have an announcement at the time anticipated.

I don't think any of us are happy with the time that's been taken, but I think it's necessary, and I hope it will prove to have been the right thing to do.

[Translation]

The Chairman: Madam Tremblay, I think the moment is well chosen to thank you for coming today. We are very happy to see you back. I hope everything is fine with you. Thanks for coming today.

Ms. Suzanne Tremblay: Thank you very much.

[English]

The Chairman: Mr. Mark.

Mr. Inky Mark: Thank you, Mr. Chair.

First of all, let me thank you for having patience. As you know, this week's been rather unpredictable, like the weather.

Ms. Calder, let me wish you all the best in your endeavours as you leave the employ of the board.

Dr. Leighton, congratulations on the appointment. I've read your biography, and there's no doubt that you bring a wealth of experience with you to this board. You'll certainly have lots of opportunity to exercise what's in your book, Making Boards Work. I have all the confidence you'll do a great job.

To both of you, having heard your comments, I'm pleased to hear there has been some effort and commitment made since February. As you know, February was quite a time with the board.

The biggest problem with public institutions or public-financed institutions that get into trouble with the media is that it leaves a bad impression. It's not an easy job, trying to get rid of this impression. As you know, the public demands transparency and accountability, and they're right. I believe it's about confidence when you turn a board around, and turn an institution around.

I'm also glad to hear that this board has had its first public meeting. This was one of the recommendations I believe the committee echoed during the February meeting. I'm glad to hear they took the risk and the gamble and actually did that. My background is municipal government, and the number one rule is that everything has to be public.

Now, you're telling us you've made these changes, but are you telling the public about these changes? I mean, they're the ones you have to convince that you're changing and that there's a new face to this organization.

My other two questions are related to governance. First, since you had your first public meeting, do you plan to have more public meetings on an annual or biannual basis? As well, how do you plan to get public input into your decision-making process?

Thank you.

Ms. Elaine Calder: I tend to believe that on matters of internal management, the proof is in the pudding. Whether it's the experience of receiving a tax receipt within a week of making a donation, with a thank you letter that's properly addressed, or whether it's the experience of coming to a performance or phoning for a reservation, it's the public's experience of the centre that tells the public whether or not the institution is being properly managed.

I'm not a great believer in sending out press releases that say, well, we've done this and that in the finance department, or this new system is now in place. As I say, I think the public experience of the institution is the real test.

I'm confident that the public's experience of the institution is improving. The feedback I get from our patrons—and I get a lot of feedback, because I'm there a lot, and I see a lot of people—is very positive, but I think there's understandable skepticism as well. This is why I'm being very careful today to say that the problems are not all addressed yet. Everything is not functioning superbly.

So there's ongoing work, but I think we've made a start.

Mr. Inky Mark: I understand that, but I think you must realize that this is a national organization you have. In other words, it's coast to coast. People need to know outside of just the valley here.

Ms. Elaine Calder: Yes. This business of struggling with our national and our regional mandate is part of the job every day of the week.

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I think the Challenge Fund campaign was tremendous. With the help of the National Post, we were able to do some really wonderful advertisements across the country, having artists who have been connected to the centre at various points in their careers talk about why the National Arts Centre is important. We did in fact receive contributions from every province, which was wonderful.

Mr. Inky Mark: I realize that, but I still raise the question that it's the governance people question. It's not about the product you market.

Ms. Elaine Calder: Yes. I simply was addressing the first part of your question about management. I'll let Dr. Leighton speak to governance.

Dr. David Leighton: I think your question implies what my answer is. Elaine has described very well the various steps that have been taken internally.

Let's face it, these are not very sexy things to do, to go around with a new accounting system or a new information system or a database or whatever is required to bring this place under control.

The step that will mean the most nationally and outside the community, as well as within this community, is the quality of appointments we make to the job. The chief executive is first among those. I feel very strongly that this is the greatest signal we can send to our community that we are doing something about the problems that have existed in the past. That's going to be in this appointment.

So that's what will be more meaningful, I think, than our trying to publicize whether we have a new set of internal controls or accounting. Those may be meaningful to professionals in the auditing profession or elsewhere, but they are not meaningful to the man or woman on the street.

Ms. Elaine Calder: And, yes, we are continuing with those public board meetings. Our board meetings are held quarterly, and they are all going to take place in public.

Dr. David Leighton: There will be a public element to all of them, including the June 25 meeting.

Ms. Elaine Calder: There has been preliminary discussion of, okay, who is our public, and should we, like some of the other national agencies, be looking at having board meetings in other parts of the country?

Dr. David Leighton: Perhaps I could address the third part of your question, which is ongoing public input.

My earlier career was in the area of marketing research and consumer research. This has now evolved into quite a major area of seeking out and finding information and responses from the people who use our services or who are interested in us. It's a much broader field than the information used for marketing purposes.

We have the potential, through systems, to gain a great deal of information on the individuals who use our services and who come to productions, and to gain information on the arts community and people across the country. Frankly, this has not been used very much or very well. The state of the art has moved on, and there are opportunities here for us to improve. We're aware of them. They have to take their place in line, because they're going to cost us some money to put in place.

So I am quite convinced that there is an opportunity here for us to do a better job of knowing what the stakeholder response is, if I can use the term “stakeholder”.

Mr. Inky Mark: Thank you.

The Chairman: Ms. Lill.

Ms. Wendy Lill: Thank you, Mr. Chair.

Thank you very much for coming to see us today.

I think we should go back to the original reason we invited the National Arts Centre—and I was part of that—which was to restore public confidence in the NAC. What I'm hearing is that all sorts of steps are taking place that one hopes will move us in that direction.

I'd like to ask you some specific questions.

Dr. Leighton, you have a business background. You obviously have a lot of experience on boards of arts organizations. I'm just wondering how you see bridging the gap between the business side of this and the fact that this is the central arts presentation institution in this country. Product, strategy, stakeholder—all those words are business words, but what we're talking about here are plays and concerts. Where do you put those things together?

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Dr. David Leighton: I was the chief executive officer of the Banff School of Fine Arts for 13 years. I have immersed myself in the arts over a good part of my life. Believe me when I say I don't see any difficulty, and nor do I see a division between business and the arts. They're not separate packages here.

The arts is a business. The National Arts Centre is a business. We have to generate income. We have to keep the organization run, and run well and effectively. In that sense, it's a business. It's not a profit-making business, but it's a business. It's an organization that must be managed well.

Good management is a friend to the arts. It releases the artist to do what the artist does best—that is, to focus on doing their creative work, not to worry about budgets, not to worry about the details of management that the organization might have. I believe that strongly, and I think I proved that in Banff.

Ms. Wendy Lill: I was interested in your comments about your job being to manage the board. One of the questions I asked a month ago was whether or not there would be new job descriptions and expectations for the board members. As well, you talk about it being an activist board. I'm wondering whether we are we going to see any changes in the composition of this board.

Going back to the letter that the staff wrote on November 2, they have enormous problems with the composition of the board and the selection process. How are we going to restore confidence in the actual board?

Mr. David Leighton: If I can be very frank, when I first was approached to consider the job of chair, the first thing I did was to ask the question, “Who's on the board?” I was provided with the list. I knew personally only one of the board members, Louise Vaillancourt, with whom I'd served on several other boards, including arts boards, and for whom, incidentally, I have the highest respect. She's a very competent individual.

So I had to go through the same process of thinking about who these people were, and what qualifications they had, and whether it was a group that could be, in effect, made to work through good management of the board.

I've spent a good part of the time in the interim with members of the board. I have not met personally all of them, although I've met most of them. I've been involved in a number of committee meetings and telephone meetings.

I have to say, my judgment is that these are good people. The board has really quite a remarkable group of people. I think they have been severely handicapped by inadequacies in the system rather than the quality of the individuals. I think we're quite fortunate to have those individuals.

Ideally, I would look for some other qualifications. For example, there's really nobody on the board who has the depth of accounting and financial analysis that one would see in a corporate board. I think that has handicapped the board in the past. I think Madam Vaillancourt, who is now heading the audit committee, is the right choice for that job. She has the most experience from that side.

So I think we start with a strong group of individuals on the board. I think they're looking for a way to become more effective. I think developing a job description of some type, if we can call it that, is a very big step in the right direction.

Ms. Wendy Lill: I have one more quick question on the board. I would like to know what percentage of members of the board you feel should be from the arts community. As well, what other areas of the community aren't represented but might in fact give people more of a sense of ownership of this committee instead of it still being “on high”, and decisions being made up there in some type of political patronage sphere?

Mr. David Leighton: I think in fact we should have more members from the arts community. We should have more members from the business community. We should have better geographical distribution.

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First of all, we're somewhat confined by the act, but I think there's a way around that in terms of having advisory members, or people who are members from the community, attached to committees of the board. Take the audit committee, for example. It's not unheard of in other organizations to have several well-trained, capable individuals from the accounting profession who would be, I don't know, adjunct members of the board. They would certainly not be appointed members of the board but they would assist with that committee. I think that's possible in the fundraising field, in development, for example. I think it's possible in the arts, where we're looking at programming, to have an artistic advisory group, not board members but attached to the board.

Personally, I've found a great deal of interest in individuals serving in that capacity.

The Chairman: Mr. Myers.

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

First of all, Dr. Leighton and Ms. Calder, I want to thank you for being here today and to indicate to you that it's like anything; while there are always improvements that can be made, you should be congratulated on the fine work you've done. Certainly when people come to Ottawa, I always tell them that the National Arts Centre is a must-see place that they have to visit.

I was interested, though, in terms of the annual gift from Mr. Yashin that was withdrawn. As well, I think there was some additional sponsorship money, as mentioned on page 8, the $400,000 generated in sponsorship for Festival Canada.

It was my understanding at the time of those reports, with the media and such, that others came forward to fill the void. I wonder if you could maybe explain that and what your plan was, or is, in terms of making sure you've covered off as a result of the loss of that income, and where you plan to go from here in terms of covering off that aspect.

Ms. Elaine Calder: With regard to the Festival Canada corporate sponsorship, if we were to create another festival I think that sponsorship money would be back. That's really marketing money for a corporation. It's the opportunity to put your name on something that is very high profile. So in a year when you don't have a major summer festival, you lose that money. That's unfortunate.

The response that was made when we lost the $200,000, when Grant Burton gave us $400,000 and said he would give us another $400,000 if we raised another $800,000, resulted in cash gifts of $1.9 million, almost $2 million.

We had been criticized publicly for our fundraising practices. We had raised a lot of money, it is true, but we had spent a lot of money raising that money. It was very important to the success of that Challenge Fund campaign that we make it very clear that the money that was given as a response to Grant's challenge would be protected and used only for what we called artistic development.

That's what we've done. That money is sitting in a separate account, and it's earning interest. We have not spent a penny of it yet.

Our programming departments have come up with a series of projects they would like to see funded for the coming year. We're going to present those to the board at the end of June. Then we're going to be working with the Canada Council in finding ways to use the rest of the money—and it's a significant amount of money—to lever it as much as possible. If the Canada Council has programs that we can be identified with and that we can put some of our money into to create greater opportunities for Canadian artists and arts organizations—and, ideally, tie into the private sector as well—that's what we'll do.

So we're being very cautious in the way we disburse that money. It's sitting on the corporation's books right now. The end result this year is financially very strong as a result of all that.

Mr. Lynn Myers: Okay.

This is just an observation. Sometimes you go through these difficult periods, but it sounds to me as though the events as they've unfolded have been somewhat of a blessing in disguise. I congratulate you for your wisdom and foresight and for making sure that these things are working in a manner in keeping with your mandate. I think you're on the right track.

Ms. Elaine Calder: Thank you.

Mr. David Leighton: It was quite well disguised, I might say.

Voices: Oh, oh.

Mr. Lynn Myers: At the time.

The Chairman: Mr. Mark.

Mr. Inky Mark: I have just one short question, Mr. Chair, thank you.

You're about to hire your new CEO, and I was wondering if you would consider returning before the committee with your new CEO six months from now to let us know your latest planning.

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Mr. David Leighton: Since Elaine won't be here, I think I'd better answer that question.

Yes, quite entirely; I think that would be a very good discipline for us as well to have to report to the committee. So I accept that. If the committee wishes, we'd be delighted to come back.

Mr. Inky Mark: Thank you.

The Chairman: Dr. Leighton, first of all, I'd like to congratulate you on your appointment and wish you much success. You come to it with a very impressive background in governance and also in the field of arts and culture at various levels. I think it's a new start for the NAC, and we rejoice in that.

You've given us a direction here that seems to be very poised and wise—for instance, not rushing into decisions with regard to a corporate plan before the new executive director is in place. I think that gives us comfort that the governance of the board is in good hands. We wish you much success in the future.

As I recall, Mrs. Calder, it has been less than four months since you came before us with members of the board on February 28. In the four months, I would like to say that from what I've heard and read today, a tremendous amount has been accomplished by you in a very short time. I think you should receive our thanks for what you've done, in an interim position, in a very short time. As you embark on new challenges, we wish you the very best.

Perhaps one of you could tell me this. I imagine, as you say, the great priority now is the appointment of the executive director. Mrs. Calder won't have the time—you leave at the end of June, I take it—to liaise with the new executive director, unless you hope to have one in place before Mrs. Calder leaves so that there will be some interaction.

Ms. Elaine Calder: There will not be an executive CEO in place before I leave. This afternoon, in fact, we are meeting with Dr. Leighton and members of the senior management committee to talk about how we're going to manage the centre in the interim between an interim and a permanent appointment.

Dr. Leighton may wish to talk about that.

The Chairman: I wonder if you would let us know, Dr. Leighton. There'll be this gap between Mrs. Calder and the new executive director, which is inevitable.

Second, there are three senior positions that still have to be filled by the new executive director. I think that is certainly the wise decision. That person will have a formidable challenge ahead of him or her.

I was wondering, Dr. Leighton, if in that interim period, when there will be a gap, the board is going to be meeting more frequently to back up the systems in place.

Secondly, will you, Mrs. Calder, have a chance to come back for maybe a week or so to talk to that person? If it were me, I would consider it an invaluable asset.

Mr. David Leighton: I would hope that Elaine could come back at an opportune time when she has time in her new job, although I suspect she's going to be immersed in that as well, so that may be difficult. But we'd welcome any help she could give.

I should say that we are actually meeting this afternoon, following this meeting, with the senior staff of the National Arts Centre, obviously minus those open positions.

We don't know for sure how long this hiatus may be between Elaine's leaving and the appointment of a new chief executive, or when that chief executive can be in place. So there's a period of uncertainty here. It may be very short term but it may not be.

• 1240

We've discussed this amongst the staff and senior management group, and a committee has been formed of a half-dozen members of the senior staff, with myself acting as interim chair of that meeting.

I want firmly to resist the temptation to get into the role of acting as the chief executive officer. That's not my intention, and I think it would not be a good move for the organization if I did. But I do think someone has to act as chair here of the group, and I will act as chair of a management committee that will meet regularly, quite possibly once or twice a week. We haven't yet set our own terms on that, and I'm not in much of a position to know how often they need to meet.

So the committee has been chosen. We'll discuss it this afternoon. We'll set our own schedule. I have appointed one of the committee members, who's with us here today, to act as my substitute as chair when I'm not able to be at a meeting. So it will be an ongoing process.

If this begins to look like something that's a longer-term situation, we'll have to regroup and rethink things, but I think a committee system could take us through the summer, for example.

The Chairman: To both of you, I have just one request to get your feelings on this. I see a lot of positive things in your report. It's encouraging. It seems as though a new era is opening, especially with the symbolic issue of open board meetings, which I think is a very positive step.

Mrs. Lill referred to the NAC staff's melees. There was a feeling there that people were not very happy. Can you tell us today, either or both of you, that today the staff, board, and management relationship is on an even keel, is getting rectified, so that there's much more harmony in the place?

Ms. Elaine Calder: I should speak to that.

As I'm sure members of the committee will understand, there was enormous anger and hurt when a very popular CEO left very quickly.

The Chairman: That's right.

Ms. Elaine Calder: That obviously is what produced the letter that Mrs. Lill referred to. That anger has gone. It cannot be sustained month after month after month, if for no other reason than people move on, and hurts are healed to varying degrees. There is now, I think, genuine pleasure in the appointment of Dr. Leighton. I cannot stress how much the staff sees that as a signal that there will be strong governance of the board. His statement that he's here to manage the board I think is being very well received.

The staff right now is understandably concerned about their future. Any institution that looks at a period of uncertainty has nervous employees.

Now, probably the last person you should ever ask to answer that question—namely, what the morale is like—is the person acting as CEO, but my sense is that the morale is a lot stronger, that there is real pride in the institution.

The Chairman: Good.

I have one last comment. Mr. Mark suggested that you come before us in six months, which I think is a very worthwhile suggestion. At the same time, you also indicated that the corporate plan will be left to the executive director to confirm or change or install. If Mr. Mark agrees, I think it would be important to have this meeting after the corporate plan is in place. Naturally, we won't wait forever, but it seems to me we should adjust our expectations. It might be six months, it might be seven months, depending on when you complete your plan.

Mr. David Leighton: We intend to act as if the corporate plan were in fact in place, final, and our guiding document. I don't think that should pose a problem. The corporate plan is at a stage where it sets out some very clear directions. Those directions have been communicated to the minister and her department.

• 1245

My only reservation in holding it back was that we not lock it up, and not have somebody say, well, you had so many dollars budgeted here and you're now changing that on me. I think it's very important to us in the selection of a chief executive to come in with a free hand and to participate in that decision.

So I can assure you that the plan that's in will be our guiding document during the interim. I don't see that as being an internal operating problem. But I agree with you, let's have it finished by the time the CEO appears here before this group.

The Chairman: All right.

Ms. Elaine Calder: Mr. Chairman, can I make one clarification? I would hate to have caused undue concern here. I referred to the fact that there are three senior positions I have deliberately left unfilled. The institution needs to fill one of them, the senior director of development, within the next few months. The other two positions we are operating quite satisfactorily without. That isn't to say those are unnecessary appointments, but I think it leaves room in the budget for the new CEO to determine what very specific assistance he or she needs in which senior areas of the corporation.

So from a maintenance point of view, we're fine. Going forward, there's provision in the budget for the addition of some senior people.

On the matter of my willingness to come back, I've found it a real privilege to serve the National Arts Centre. Although I am leaving, I will do everything I can to ensure a strong transition and a strong future for it. I would be delighted to provide whatever assistance I can to the new person in this position when they are appointed.

The Chairman: Thank you very much, Dr. Leighton and Mrs. Calder. We really appreciate your presence here. I think it has made us feel good before the parliamentary break. Thank you very much for coming.

Mr. David Leighton: Thank you.

Ms. Elaine Calder: Thank you.

The Chairman: The meeting is adjourned.