PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 27, 2001

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[English]

The Chair (Mr. John Williams (St. Albert, CA)): Good afternoon, ladies and gentlemen. We have a quorum to hear testimony. We don't have a quorum to pass motions and resolutions, but we may have that soon.

We have a fairly heavy agenda of items to be dealt with this afternoon. I will go through them, and when we have the full quorum of nine that is required to pass motions, we will interrupt the proceedings and move to the issues that require adoption.

The orders of the day are, first, the heating fuel rebate waiver request by the Treasury Board. Mr. Neville, the Deputy Comptroller General of the Government of Canada, has asked that the committee accede to the request for the publication waiver in the Public Accounts of Canada for the fiscal year ending March 31, 2001, respecting the ex gratia one-time relief payments for higher heating expenses to those individuals who qualify for the goods and services tax credit for the year 2001, applied on their 1999 income tax returns as requested in the letter dated December 21, 2000, from Richard J. Neville, Deputy Comptroller General, provided that the nature, the number, and total amount of payments are published in the Public Accounts of Canada.

The second order of the day relates to matters of special importance of the December 2000 report of the Auditor General of Canada; and the third, to Treasury Board internal audit and evaluation policy. We'll basically consider these two items together, because they are of similar intent. The Treasury Board has brought forward the policy on audit and evaluation, and the Auditor General's comments are apropos to that debate.

We also have a motion that has been circulated regarding the Canadian Evaluation Society, which actively sought to appear before this committee. I suggested that, rather than appear before the committee, they submit a brief of their information. The motion we're proposing is that the brief submitted by the Canadian Evaluation Society be printed as an appendix to today's Minutes of Proceedings and Evidence. While they don't appear at the table, they felt that they had something to contribute to the debate, so if we are able to pass that motion when we have a quorum...

We have as a witness today Mr. Denis Desautels, the Auditor General of Canada—and this will be his second-last appearance before he retires at the end of the week. With him from the Office of the Auditor General are Mr. Douglas Timmins, the Assistant Auditor General, audit operations branch; and Ms. Maria Barrados, Assistant Auditor General.

We also have as witnesses, from the Treasury Board Secretariat, Mr. Richard Neville, the Deputy Comptroller General; Mr. Keith Coulter, assistant secretary, planning, performance and reporting sector; Mr. Rodney Monette, assistant comptroller general and assistant secretary, from the financial management policy and analysis sector.

Good afternoon, all.

We'll start with you, Mr. Neville, and I understand congratulations are in order for you. You're now the chairman of the Public Service Audit and Evaluation—

Mr. Richard J. Neville (Deputy Comptroller General, Treasury Board Secretariat): It's the Public Sector Audit Standards Board.

The Chair: The Audit Standards Board...my apologies.

It is of course a board that became topical a couple of years ago when we had some debates in this committee.

And am I correct in saying that you were recently appointed a fellow of the chartered accountants...

Mr. Richard Neville: That is correct. I have just received my FCA from the Ordre des comptables agréés du Québec.

The Chair: Congratulations on being recognized by your profession, and we look forward to big things of the chair of the PSASB.

We will now hear what you have to say.

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Mr. Richard Neville: Thank you, Mr. Chairman, for the opportunity for us to appear before this committee.

We're here today to discuss three subjects: the ex gratia payments for the heating expense relief to low-income Canadians, as well as the Treasury Board's revised policies on internal audit and evaluation.

With me is Mr. Rod Monette, assistant comptroller general and assistant secretary, financial management policy and analysis sector; and Mr. Keith Coulter, assistant secretary, planning, performance and reporting sector—both within the Treasury Board Secretariat.

First, on the subject of the ex gratia payments for heating expense relief to low-income Canadians, on December 21, 2000, a letter was sent to the clerk of this committee seeking this committee's endorsement not to publish the names and amounts of those individuals who receive ex gratia payments under this $1.4-billion initiative.

Ex gratia payments do not normally have prior approval of Parliament, as do program payments, and are made on the authority of the executive. Each ex gratia payment is reported to Parliament after the fact, unless an exemption is obtained.

In this case, we have an additional consideration in that section 241 of the Income Tax Act prohibits the release of individual taxpayer information. Since the income level of the individual is used to determine the eligibility for this benefit, releasing the names would contravene the Income Tax Act.

Listings of individual ex gratia payments by department are contained within the Public Accounts of Canada, volume II, part II, section 10. Based on an estimated 8.6 million recipients, the listing of all payments would require approximately 70,000 additional pages in the Public Accounts of Canada.

I would like to underline to the members of this committee that the listing of all payments, requiring approximately 70,000 pages in the Public Accounts of Canada, would be times the number of copies of Public Accounts of Canada we print this year, which is approximately 2,800 copies.

If I could be more specific and deviate from my prepared text to try to make the point, the Public Accounts of Canada cost approximately $115,000 a year to print. To put in all the names would increase the cost by in excess of $7 million. So to bring it home, whereby today it costs a Canadian $29.95 to buy a copy of the Public Accounts of Canada, if we were to include these listings, the cost would be $4,950 per copy.

The Chair: And we'd need a—

[Editor's Note: Inaudible]

Mr. Richard Neville: I think the point has been made, Mr. Chairman.

However, that being said, we've undertaken to seek your endorsement of the exemption to list these individual payments in the Public Accounts of Canada. This committee has endorsed similar exemptions in the past. These include a 1989-90 summary listing of ex gratia payments related to HIV and thalidomide victims, the Allan Memorial Institute patients in 1992-93, and merchant navy veterans in 1999-2000 and 2000-01.

We recommend the committee endorse this request to exempt these payments from detailed listing in the Public Accounts of Canada, and we thank the committee for its consideration of this request.

[Translation]

I would now like to proceed with the other two subjects of our appearance today: Treasury Board's revised Internal Audit and Evaluation policies that become effective April 1, 2001.

The 1997 Report of the Independent Panel on the Modernization of Comptrollership in the Government of Canada and subsequent studies by the Treasury Board Secretariat have indicated the need to distinguish between internal audit and evaluation policies and the importance of strong TBS leadership for these functions.

As was also recommended by the Report, the revised Policy on Internal Audit highlights the repositioning of the function as a provider of assurance services. Assurance services will provide senior management objective assessments of the soundness of risk management strategies and practices, management control frameworks, systems and practices, as well as information used for decision- making and reporting.

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Within the context of Results for Canadians, the Treasury Board Secretariat has a responsibility to actively monitor the soundness of the government-wide management and control frameworks. In this regard, the Secretariat will rely heavily on the assurance work performed by departmental internal audit groups. This active monitoring process will also require the Secretariat to work closely with departments to ensure that the Treasury Board is aware of significant issues of risk or other problems in a timely manner, and that appropriate remedial action plans are developed and successfully implemented.

In summary, Mr. Chairman, our focus in government today is on achieving results and on responsible spending. Assurance services will provide management confidence that the information used for decision-making and reporting results is reliable. It also provides management, both within departments and more broadly across government, with an understanding of the overall soundness of its risk management and control frameworks.

[English]

The revised evaluation policy reflects the repositioning of the function closer to the needs of management, providing it with objective information for decision-making, as opposed to being solely an independent oversight function. The revised policy broadens the scope of evaluation beyond that of programs to include policies and initiatives and extends evaluation beyond a single department to include programs, policies, and initiatives involving partners outside the department. It also reflects the need for evaluation to be embedded into management practices throughout the life cycle of policies, programs, and initiatives both at the front-end design stage and periodic assessment of results. This will ensure that program objectives, activities, and key results are logically linked, that there is a sound performance measurement strategy in place, and that provisions are put in place to report on results.

[Translation]

Both policies and the corresponding standards were developed in consultation with the heads of internal audit and evaluation as well as other senior public service and private sector managers. Consultations also included deputy ministers and officials from the Office of the Auditor General.

The policies effectively support Results for Canadians, the government's management framework, by further promoting continuous management improvement, responsible spending and achieving results, and reinforce the government's commitment to transparency by ensuring that completed internal audit and evaluation reports are made accessible to the public, with minimum formality, in both official languages.

The revised policies will be implemented over the next four years and 40 million dollars have been earmarked to support their implementation over the next two years. The phased-in approach will provide departments the ability to match the growth in internal audit and evaluation capacity with their ability to recruit, train, and retain professional resources, and manage the increased capacity of these functions.

[English]

The Treasury Board Secretariat will provide leadership, advice, and support to departments to renew the communities and successfully implement the revised policies. We are currently in the process of developing implementation plans for these policies, which include the human resource strategies that are key to successful implementation.

During the first two years of implementation, our focus will be on building the right framework for implementing assurance services and embedding evaluation into the life cycle of programs, policies, and initiatives. During the last two years of implementation, we expect to see a rapidly increasing use of assurance services by departments and a significant improvement in results reporting across government.

Before I conclude, I want to take this opportunity to thank Mr. Denis Desautels, the Auditor General of Canada, for his illustrious career as the Auditor General. We certainly will miss his attention to our accounts.

In closing, Mr. Chairman, we thank the committee for the opportunity to appear here today and would be pleased to answer any questions you or any members might have at this time.

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The Chair: Thank you, Mr. Neville. I appreciate your comment regarding the Auditor General. As we all know, on Thursday the parliamentarians will also have an opportunity to speak to the Auditor General.

Just one point: in the English translation of your text, I think you said $4 million has been earmarked, but your written text says $40 million.

Mr. Richard Neville: I apologize. It is $40 million.

The Chair: Now, I mentioned that we have a few motions to pass.

We have quorum, Madam Clerk?

The Clerk of the Committee: Yes, we do.

The Chair: We have quorum, so the first one I want to deal with is the report of the standing committee. We dealt with it last week, but were unable to move its adoption because of lack of quorum. I understand that the clerk has circulated the order, which says that pursuant to Standing Order 108(3)(e), the committee resume consideration of the report of the Subcommittee on International Financial Reporting Guidelines and Standards for the Public Sector on October 16, 2000, as recommended by the subcommittee to the standing committee on Friday, October 20, 2000.

The first motion, as circulated, is that the committee adopt the report as a second report of the committee.

Mr. Alex Shepherd (Durham, Lib.): I so move.

(Motion agreed to)

The Chair: The second motion is that pursuant to Standing Order 109, the committee request the government to provide a comprehensive response to this report.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): I so move.

(Motion agreed to)

The Chair: The third motion is that the chair be authorized to make such grammatical and editorial changes to the report as may be necessary without changing the substance of the report.

Mr. John Finlay (Oxford, Lib.): I so move.

(Motion agreed to)

The Chair: Now, the next issue we're going to move to... Oh, my apologies: the clerk has given me five motions, not the normal three.

The fourth motion is that the committee print 50 copies of the second report in a tumbled bilingual format. Are we agreed to that?

Mr. Shawn Murphy (Hillsborough, Lib.): I so move.

(Motion agreed to)

The Chair: Finally, that the chair table the second report to the House.

An hon. member: I so move.

(Motion agreed to)

The Chair: So that issue is dealt with.

Now we'll move to the issue of the waiver I read. I'm not going to bother reading it again. We'll deal now with the waiver Mr. Neville is requesting. I read it earlier, and it has been distributed.

Ms. Marlene Jennings: I so move.

Mr. Joe Peschisolido (Richmond, CA): Mr. Chair, I'd like to begin by offering another motion and opening up debate. I'm not sure if that's possible at this time.

The Chair: You can do an amendment, but you can't have another motion.

Mr. Joe Peschisolido: Perhaps I can read this. I don't believe it's an unfriendly amendment.

The Chair: If I may interrupt, you have provided the clerk with copies—

Mr. Joe Peschisolido: I've provided copies to the clerk.

The Chair: —so I'll ask the clerk to distribute them in both official languages. You can read your motion.

Mr. Joe Peschisolido: Sure. The motion reads:

That pursuant to the request for a publication waiver made by the Deputy Comptroller General to the Public Accounts Committee regarding the Heating Fuel Rebate, the committee grant a waiver for the paper version of the Public Accounts of Canada for 2000-2001, but that Treasury Board shall publish the names of rebate recipients on their website and in the electronic version of the Public Accounts of Canada on the Public Works and Government Services website.

The Chair: Thank you, Mr. Peschisolido.

My clerk advises me that we can't have two motions on the floor—but since you all have your copies distributed, we can provide this as an amendment by adding the last part of this motion to the motion proposed by Mr. Neville. In the English version, we would add what follows after the date of 2001:

...but the Treasury Board shall publish the names of the rebate recipients on their website and on the electronic version of the Public Accounts of Canada on the Public Works and Government Services website.

Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): I don't want to spend a lot of time on this, but I think we were just told by the Treasury Board—and I'm sure the Auditor General agrees—that we will contravene the Privacy Act if we publish the names of individual recipients of government funds. It's almost like publishing the name of every person who earned less than $12,000 or $13,000 a year.

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I'm not sure if my colleague's intent is to ask eight million Canadians to publish the fact that they had a bad year in 2000 and received a GST tax credit, and therefore also received the energy rebate credit. I know his intent is to have transparency and openness in government, but while the intent might be all right, I'm afraid the thrust of it will be to put us in an awkward situation.

Before we vote on it, I would like to hear comments from the Treasury Board and the Auditor General as well.

The Chair: Mr. Neville, quickly.

Mr. Richard Neville: Section 241 of the Income Tax Act specifically prohibits the release of individual taxpayer information. Because individuals' income levels were used to determine eligibility for this benefit, releasing the names would therefore contravene the Income Tax Act.

The Chair: Mr. Desautels, do you have anything to add?

Mr. Denis Desautels (Auditor General of Canada): Mr. Chairman, that's a difficult question to answer. There are other benefits paid out by government that are means-based, and I don't think it's necessarily considered a contravention of section 241 if the recipients' names are disclosed. What about the child tax benefit, for example, or GST rebates? Is that all confidential information? I'm not completely convinced of that.

As far as I'm concerned, there's room for debate around that issue—and probably some legal interpretation as well. It's my experience that all recipients of transfer payments for grants or contributions are usually considered to be in the public domain. When a means test is used to determine eligibility, does that mean that you can't disclose the information? I don't remember hearing that argument before, Mr. Chairman, for other types of means test transfer payments.

The Chair: This is the conundrum that we as a committee have been asked to decide: is the identity of grant recipients required to be public information? Mr. Neville says that because means test information comes from the Income Tax Act, it's private. But you can't suck and blow at the same time, and information can't be public and private at the same time. We've got to make a decision.

Ms. Jennings.

Ms. Marlene Jennings: I'm not sure whether section 241 of the Income Tax Act applies or not. I'm not prepared to vote on this amendment precisely because of the issues of privacy. If there's any chance that it contravenes that particular section, I think the amendment itself would be out of order—because the committee would be recommending an illegal action. Therefore, I would suggest that the chair take that amendment under advisement, seek legal counsel to determine whether or not it does in fact contravene the taxation act, and come back to committee on that.

The Chair: Okay. Mr. Peschisolido.

Mr. Joe Peschisolido: Mr. Chair, I believe that we have here two legally sound precedents. This committee is being asked to do an extraordinary deed: it's being asked to give an exemption. On the one hand, we do have the privacy requirements of the Income Tax Act. On the other hand, we also have a very legitimate principle: that if the Government of Canada gives Canadians grants that don't go through Parliament, then it's incumbent on the government to provide a list of those individuals. That's clear. So you have two legally binding or sound approaches, even if you don't want to get into legalities.

However, I would agree with Mr. Neville: there are some logistical problems with presenting the names holus-bolus in written form. I think we can come up with a sound compromise, and deal with rationales on both sides.

The cost question is bang-on. That's why the amendment to the motion deals with the web, so you're not dealing with printing costs.

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Is there a privacy question? Yes, there is. That's why the amendment deals only with names, not with addresses. It is a difficult question, but I think that when this body is asked to make an extraordinary amendment, perhaps we should err on the side of transparency.

The Chair: I think Madam Jennings' point is valid: perhaps we should seek legal advice. We'll hear everybody once, so that everybody has a chance to speak. Then perhaps you may want to put the motion that the issue be referred to the chair to seek legal opinion before it's returned to this committee.

Mr. Shepherd.

Mr. Alex Shepherd: The Income Tax Act is based on a long tradition of voluntary compliance. The reason people do comply is that it's understood the information they give to the income tax system is confidential.

This information for the heating rebate came from the income tax system. I'm willing to bet dollars to doughnuts that it is a contravention of the Income Tax Act. But more importantly, why would we even entertain this?

If tax information becomes public information, that will affect compliance with the income tax system. Why would you file tax returns if you knew that the government was going to publish your name and address? Why not just publish the name and address of everybody who gets a refund cheque?

I think this should be voted down. It's not appropriate at all.

The Chair: Mr. Desrochers.

[Translation]

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

I too am somewhat hesitant about publishing this long list of recipients. I don't see how this benefits the discussion in any way. I don't think the people who received the rebates are the issue here, but rather the program's effectiveness. If we set a precedent today, perhaps there will be other similar payments in the future - we don't know what the government's plans are—and we may not want to publish such a lengthy list each time. I don't see the point in doing that.

If very large sums of money were involved, we could be more vigilant, but we are talking about similar amounts, in the $125 or $250 range, and this program was well publicized. I don't see the point of broadcasting this information on the Internet. Nor do I see the point discussing this matter. We all want to protect people's privacy. Mr. Neville was quite clear about this earlier. When you deliberately decided to use this list, you had to know that your actions were legal. Now then, if you tell us that this does not violate taxation legislation, then I think you have all the ammunition you need to convince committee members that the Alliance amendment must be rejected and that this list must not be published.

Thank you for your attention.

[English]

The Chair: Okay. Thank you, Mr. Desrochers.

Mr. Harb, you've spoken already?

Mr. Mac Harb: Yes.

The Chair: Mr. Adams.

Mr. Mac Harb: Is it my turn?

The Chair: I said everybody can speak once, because I agreed with Madam Jennings that we need some legal advice here. I'm not a lawyer, and nobody else around here practises law right now. Therefore, I will come back to the committee with a legal opinion. But in the meantime, we're going to hear the advice of all the committee members, who will speak once.

Madam Jennings.

Ms. Marlene Jennings: Excuse me. There hasn't yet been a vote on the motion I proposed, and I now withdraw the motion. I've heard the arguments presented on both sides of the table against withdrawing or not voting on the amendment. I would like to see us simply move forward, vote on the amendment, and vote on the main motion.

The Chair: Okay. Just one moment. I appreciate that.

Mr. Abbott.

Mr. Jim Abbott (Kootenay—Columbia, CA): I might suggest something that I hope would be helpful. Why could we not table the motion and amendment, receive the advice, and then deal with the issue later—rather than simply withdrawing the motion? You can't vote on the amendment if the motion is withdrawn.

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Ms. Marlene Jennings: I would like—

The Chair: No, we can't have two people talking at once. Just a second.

Mr. Abbott.

Mr. Jim Abbott: While I sincerely have a lot of sympathy for what Mr. Shepherd and Mr. Harb have said, this is an example of why these things should be made public.

We're all aware of many stories. For example, a young mom called me. She had three children and her husband was incarcerated last year. He got the rebate while he was in jail. She's on welfare, can't support her family and got no rebate cheque to help. This is the kind of thing that was going on.

A disabled man called and said he didn't get the rebate cheque because he got a one-time back-pay of benefits in the previous year that disallowed his GST but he still lives on under $800 per month and his heat has tripled in the past year. The stories go on and on. This is an item of public interest. So I go back to my suggestion. As a matter of fact I'll make a motion that we table the motion and the amendment. I believe we can have a vote on tabling it, with the idea that the chair would then have the opportunity to receive advice about this taxation issue and get back, and then we can deal with the motion and the amendment.

The Chair: Thank you, Mr. Abbott.

Mr. Jim Abbott: I don't believe there's any debate on tabling, if I may suggest that.

The Chair: Just a second. The reason I was checking with the clerk... I appreciate that a motion to table is not debatable. I had thought I'd give everybody the chance to speak once. But the motion to table, the specific motion, is not debatable, so we cannot continue. We have to have the vote on Mr. Abbott's motion to table.

All those in favour of tabling the motion until such time as the chair can come back with some legal advice?

Mr. Greg Thompson (New Brunswick Southwest, PC): Mr. Chairman, are we open to further discussion on this topic? You were going to recognize all the parties prior to the motion. That was my understanding.

The Chair: My clerk tells me that the motion to table is debatable. Is that correct?

The Clerk: Because it's referring to another meeting, that this be considered at another meeting.

The Chair: The clerk has advised me that we can continue the debate. I did say, remember, that I wanted to hear everybody once. I want to have this available, so that if the motion carries that I go and seek legal advice on behalf of this committee we will have the input of all members.

I will continue to hear all members once. At that point in time we'll put the motion to table and go from there. So we'll go to Mr. Thompson.

Mr. Greg Thompson: Mr. Chairman, I want to pick up on a theme that's circulating here in the room today in regard to this heating expense rebate. It goes back to the very reason we're here, the very reason we have an Auditor General. It's an example of government policy thwarting the House of Commons.

If you remember correctly, the government was in a panic to do something on the huge increase in the cost of heating oil, and instead of bringing this matter to the House of Commons and leaving it open to debate and suggestion, a handful of government officials and likely cabinet ministers basically went into a room and came up with this program without thinking it through.

As a result of that, our committee is faced with a dilemma. The dilemma came about simply because of the government scrambling around, ignoring Parliament, ignoring the role of Parliament and the contributions that everyone at this table could make on the floor of the House of Commons in consideration of this very problem that they themselves created.

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I do agree with Mr. Shepherd, in one sense, but also with Mr. Abbott as well. If I had to vote on it, I guess I would probably vote on the side of the argument that Mr. Abbott has put forward. They often say that watching government policy being made is something like watching sausage being made: you wouldn't want to eat it after you've seen the process. I think this would be an example here of the process being completely off the rails, with no consideration for individual members of Parliament.

With that I rest my case.

The Chair: Mr. Neville.

Mr. Richard Neville: Thank you, Mr. Chairman.

I think I'd like to come back with a comment that all the requirements of the Financial Administration Act, which incidentally was passed by Parliament, have been followed in this particular instance.

There is a section in the Financial Administration Act, section 30, whereby it states quite clearly when a warrant would be issued, and it's under the following conditions: one, that a payment must be urgently required for the public good; two, that Parliament is not in session; and three, there is no other appropriation pursuant to which payment may be made.

It states that provided the foregoing are met:

The Governor in Council, on the report of the President of the Treasury Board that there is no appropriation for the payment and the report of the appropriate Minister that the payment is urgently required for the public good, may, by order, direct the preparation of a special warrant to be signed by the Governor General authorizing the payment to be made out of the Consilidated Revenue Fund.

Mr. Chairman, the Minister of Finance reported the payment was urgently required for the public good. Parliament was not in session by reason of the general election, and the President of Treasury Board reported that no other appropriation was available to make the payment. Therefore, this was a legal payment.

The Chair: I don't think we're talking about the legalities.

Mr. Greg Thompson: Mr. Chairman, there are a couple of points I would like to make, because obviously we're here to be heard.

The Chair: Mr. Thompson, nobody, I think, is questioning the legality. The question is shall it be public or shall it be private? And therein lies the debate. As I say, we can't suck and blow at the same time. Is it private or is it public?

Mr. Murphy.

Mr. Shawn Murphy: Mr. Chairman, I agree with the remarks by Mr. Desrochers.

I don't think we can lose sight of the principle of transparency, and I think we, as parliamentarians, have to guard that. But I think we can't lose sight of common sense either, and I would be voting against the motion mainly because I don't know what public purpose it would serve.

I realize, in following up with Mr. Thompson's comment, that the program was passed by the executive when Parliament wasn't sitting and I realize there were anomalies in the system. In my own family, my son who was in university got a cheque, and I didn't get a cheque. There are all kinds of those problems in the system. The system wasn't perfect, but what purpose would it serve by publishing the names of 8.3 million people who didn't earn $15,000 or whatever and got the rebate cheque? As parliamentarians sitting here I don't see what public purpose we would be serving anyone by doing that, and I just think we would be losing sight of common sense. So those are my positions, Mr. Chairman.

The Chair: Thank you, Mr. Murphy. Mr. Alcock.

Mr. Reg Alcock (Winnipeg South, Lib.): Thank you, Mr. Chairman. I hit this committee at an opportune moment.

In response to Mr. Abbott's comments, I would say that the situation he references is certainly an indictment of the poor quality of the record management systems of the federal government and would be an argument for government getting on with modernization. I would be delighted if this committee would take that on.

In reality, there was a run-up in the heating costs, and there was a desire to provide some benefit to the lowest income segment of the population, but the target or the tool is imperfect. So you have exactly what you describe: you have a number of stories that seem outrageous on the surface, but as a percentage of the total benefit delivered they are trivial.

Personally, Mr. Chairman, I'd like to get this odious amendment off the table as quickly as possible. So call it. Let's vote on it and move on.

The Chair: Mr. Finlay.

Mr. John Finlay: Mr. Chair, I think Mr. Alcock pretty well said what I was going to say. I've heard all these stories too, and there's a simple explanation for all of them. It's taken me three days to get my father's T-4—and he's 98—out of a Montreal trust company. They've been paying him the pension since 1968, when he was 65, and they have no record of him in the books. So this sort of thing can happen in the best organized of worlds. Let's be a little sensible about it. It's ridiculous.

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The Chair: I previously said everyone had one opportunity to speak, and that was after Mr. Harb had spoken.

Have you basically covered your position, Mr. Harb?

Mr. Mac Harb: Truly I have not, Mr. Chair.

When I first started to speak on this, if you recall, I asked Mr. Neville a question, and with the comment of the Auditor General, I meant to conclude at that time, but unfortunately was cut off by a move to another speaker. That's fine.

In light of all of my colleague's comments and recommendations, I was struck by your comment, Mr. Chair, which is so apropos, that we can't suck and blow at the same time. This is what seems to be coming from my colleague in the Tory caucus, Mr. Thompson, when he indicates on the one hand that he understands what was said about the Privacy Act and the Income Tax Act prohibiting us from releasing personal information, but at the same time he wants to support Mr. Abbott's tabling with the view that we might eventually be able to release this information.

Sucking on a lemon and blowing hot air is frankly what this would bring us to unless we move very quickly to kill the tabling and move on with the motion before us, proposed on behalf of Treasury Board, and get on with the business of the committee.

The Chair: Okay, thank you, Mr. Harb.

Let's try to be civil when we have to debate motions that have as well some partisan intent or content.

Now, the motion is to table and defer to a subsequent meeting in order for the chair to obtain legal opinion as to whether we suck or blow, whether we go private or public. Then if the motion carries, I would of course bring in legal counsel as a witness to be examined by the committee members.

A number of government and opposition members feel it could be worth obtaining an opinion here. When this opinion is received, whether or not to abide by it will be entirely up to this committee. It will not be binding on this committee. It will only be an opinion as to where we stand with section 241 of the Income Tax Act and the requirement to make all grants public.

Therein is the issue. The first question is on Mr. Abbott's motion on deferring to a subsequent meeting, pending the receipt of legal advice by the chair.

(Motion negatived)

The Chair: We now move to the amendment.

I don't think we need further debate. The question is on the amendment. In consultation with the clerk, the amendment was:

...but that Treasury Board shall publish the names of rebate recipients on their website and in the electronic version of the Public Accounts of Canada on the Public Works and Government Services website.

That is an amendment to the main motion.

(Amendment negatived)

The Chair: The amendment is defeated.

Now the main motion:

That the Committee accede to the request for the publication waiver in the Public Accounts of Canada for the fiscal year ending March 31, 2001.

(Motion agreed to)

The Chair: That motion is carried unanimously.

Mr. Richard Neville: Thank you, Mr. Chairman.

The Chair: You're welcome, Mr. Neville.

Just before we move, continuing with the business we have on hand for the day, I bring a motion already in circulation that the brief submitted by the Canadian Evaluation Society be printed as an appendix to this day's Minutes of the Proceedings and Evidence.

Mr. Shawn Murphy: I so move.

(Motion agreed to)

The Chair: We are continuing with Mr. Desautels.

Sorry for the delay. May we have your report now, Mr. Desautels?

Mr. Denis Desautels: Thank you, Mr. Chairman.

• 1620

My colleagues and I are pleased to meet with the committee today to discuss internal audit and evaluation in light of Treasury Board's revised policies. I would be quite happy to elaborate as well on the matters of special importance discussed in my December 2000 report to the House.

For your information, Mr. Chairman, Mr. Timmins has been responsible for our work on internal auditing in government, while Mrs. Barrados has been responsible for our work on program evaluation.

As you know, we've been strong and consistent advocates of these essential management functions, and your committee's attention to them is particularly welcome. The Treasury Board Secretariat, as you heard, recently carried out a review of existing policies, and our office provided input to the development of the revised policies.

We welcome the clear separation of roles between the two functions in the revised policies. We believe this separation will remove confusion surrounding the existing policy, which puts the internal audit, evaluation, and other functions together under the label “review”.

Internal audit provides senior management with independent and objective assurance on the adequacy and functioning of an organization's risk management, control, and governance processes. Evaluation, on the other hand, provides information on the performance of policies, programs, and activities that is not available from ongoing monitoring systems. It can help managers understand why things are, or are not, working.

I'll comment on both of these fundamental tools for management fairly quickly.

[Translation]

To begin with, Mr. Chairman, we last examined the internal audit function across government in 1998 when we followed up on our 1996 audit. We noted an improvement in the quality of internal audit work, but consistency of quality across government departments remained a challenge. At that time, the Treasury Board Secretariat indicated that a number of initiatives were planned, including changes to the policies and standards for internal audit.

We are very pleased to see that progress has been made in this regard. We were consulted during the development of this policy and our comments were taken into account. The key challenge now is to implement the policy. Strengthening the capability of current staff, and recruiting and training additional staff will require a major effort. This will be more difficult given that additional resources are also required at this time to implement the government's important Financial Information Strategy and the Modern Comptrollership Initiative.

Equally important for the success of the new policy is the strong support of senior management, both in departments and in the Treasury Board Secretariat. Our past work has shown that the support of top management is essential for internal audit to be an effective, contributing part of the organization.

We support an improved internal audit function for many reasons. Most importantly, we believe internal audit is a fundamental tool of good management. A second reason is that we hope to place increased reliance on their work. As the government implements its Financial Information Strategy, we will want assurances that strong management control frameworks support these new financial systems. The internal audit work contemplated by the new policy in this area will be of particular interest to us.

An issue that warrants the continued attention of this Committee is the impact that Access to Information requests may have on the work of internal audit. Making completed reports public is entirely reasonable, but it is important to ensure that the nature and content of internal audit reports is not adversely affected by concerns about public disclosure. A further concern is that providing access to working papers and supporting documentation could be so restrictive for internal auditors that it risks compromising the function's effectiveness.

[English]

In our value-for-money audits, we frequently examine whether or not the effectiveness of policies, programs, or initiatives has been evaluated. We have also conducted several government-wide audits on the state of the evaluation function.

• 1625

In 1993, for instance, we reported on the recognized potential for evaluation to provide reliable analytic information to serve program management, resource allocation, and accountability. We found instances where good evaluations had clearly made a difference, but overall we concluded that the story of program evaluation was one of high expectations and great potential only partly fulfilled.

This committee held two hearings on our 1993 chapters and asked us to report again in 1996 on the state of evaluation. We reported on the government's progress in April 1996, and followed up on our recommendations in chapter 20 of our December 2000 report.

We found that progress on key recommendations to the Treasury Board Secretariat had been unsatisfactory. The secretariat had not set out government-wide priorities for evaluation, and despite Parliament's clear interest in the subject, had not informed Parliament since 1996 about the relatively weak state of evaluation in government.

In chapter 20, we noted that the Treasury Board Secretariat had undertaken a study showing a clear need for a concerted effort to rebuild the evaluation function in the federal government.

Recent steps taken by the government, Mr. Chairman—of which the revised evaluation policy is one part—are encouraging and timely moves in that direction, after years of neglect.

We have found in the past that most evaluation activity focused on lower-level issues and concerns. Evaluating and reporting the results of significant aspects of government continue to be key challenges. Evaluation must be an integral part of the government's commitment to manage for results. The government needs the capacity to effectively evaluate strategic issues, many of which cut across departmental, or even jurisdictional, boundaries.

The Treasury Board has made commitments to better position and to strengthen both evaluation and internal audit functions. We're pleased the secretariat is establishing centres of excellence to provide leadership, advice, and support to departments in implementing these policies.

In addition, the secretariat has committed to engaging senior departmental managers, including internal audit and evaluation managers, to support its policy on active monitoring of the state of management practices and controls across government. These developments provide a good basis for moving forward.

The success of the new policies will depend on their implementation. Mr. Chairman, your committee may want to pursue with Treasury Board officials how they will ensure that, in implementing these policies, the shortcomings of the past will definitely be addressed. Your committee might also explore how the Treasury Board Secretariat will evaluate and report to Parliament on the effectiveness of the new policies, and on the health of the internal audit and evaluation functions.

This concludes my opening remarks, Mr. Chairman. My colleagues and I would be happy to answer the committee's questions.

The Chair: Thank you, Mr. Desautels.

Is there unanimous consent for cutting the opening round to six minutes each in the interests of time, since we're now at 4:30? Are all agreed?

Okay, the first round will be six minutes. Mr. Peschisolido.

Mr. Joe Peschisolido: Thank you, Mr. Chair.

I don't have any specific questions on the internal audit itself. What I would like to know, however, is how to proceed in terms of more accountability within the individual departments and programs.

Mr. Desautels, are there mechanisms other than the internal audit that this committee could support to make the various departments and programs more cost-efficient in dispensing their funds?

Mr. Denis Desautels: Well, Mr. Chairman, there are indeed other mechanisms that have to be present in order to ensure proper accountability in departments. We have discussed those thoroughly in our December 2000 report. We had two chapters on this topic, one dealing with managing for results, and one on providing information to Parliament on results achieved.

• 1630

This is all in the interest of pushing an agenda of better reporting on performance by individual departments or programs within departments. This is at the core of accountability. When you're talking about internal audit and evaluation, these are complementary functions that will, if carried out properly, strengthen the reporting by a department itself, strengthen its own management information systems, so that the whole structure hangs together quite solidly. I think all of these functions, whether it be reporting on results, managing for results and performance, or internal audit and evaluation, all support each other towards the same overall objective.

Mr. Joe Peschisolido: We had an interesting debate on the actual heating fuel rebate program. If you were to employ those rationales and the systems you described, knowing what you know on how the program was implemented, the mechanism that was employed in order to get funds out to Canadians, the lag time of two years, do you believe the program was structured in a way that was efficient? Could there have been another way to devise that program to ensure the $1.4 billion would have been distributed in a more equitable way?

Mr. Denis Desautels: Mr. Chairman, I didn't come here quite prepared to deal with the heating rebate, because we haven't audited, obviously, that particular program as yet. All I can say in answer to the member's question is that it is a legitimate program for us to audit. Down the road, I'm sure my successor will consider that program. It is an important program, and we are aware there have been some implementation problems, some problems with targeting. So I think it is, as with any other program, quite legitimate to have a look at it at some point. I'm sure my successor will consider it and will consider the type of question the member has just raised.

The Chair: Thank you, Mr. Peschisolido.

[Translation]

Mr. Desrochers.

Mr. Odina Desrochers: Thank you very much, Mr. Chairman.

Mr. Neville, you requested a waiver so that the list would not published, in keeping with section 241 of the Income Tax Act which prohibits the disclosure of personal information about taxpayers. Was it legal to use this list to learn the names of persons in need of a heating rebate? Did you have the right to do that?

Mr. Richard Neville: Yes. I don't see why we wouldn't have the right. We are government and this decision was made internally to ensure that Canadians received their rebate within the prescribed time period. To my understanding, program officials from the same department used the available information.

Mr. Odina Desrochers: Have you considered other options for addressing the pressing needs of members of the public who must contend with high heating fuel prices or was this the only option selected?

Mr. Richard Neville: Mr. Chairman, I'm not privy to all the discussions that were held by the Finance Department and by the Canada Customs and Revenue Agency. Therefore, I can't answer that question.

Mr. Odina Desrochers: I'm sorry. Then let me ask you another question. A decision was made not to publish this list. However, if someone wanted to consult it, is there a copy available somewhere?

Mr. Richard Neville: No. If I've understood what my colleagues have said and if I've read the documentation correctly, this information is not accessible to the public pursuant to the Income Tax Act.

Mr. Odina Desrochers: Thank you very much.

The Chair: Thank you very much, Mr. Desrochers. That was quick today.

You have six minutes, Ms. Jennings.

• 1635

Ms. Marlene Jennings: Thank you, Mr. Chairman.

I have here a document that was appended to the evaluation policy. In the English version, the following is noted:

[English]

under “Evaluation as a Management Tool”

Evaluation has two main purposes:

—to help managers design or improve the design of policies, programs and initiatives; and,

—to provide, where appropriate, periodic assessments of policy or program effectiveness, of impacts both intended and unintended, and of alternative ways of achieving expected results.

This is for you, Mr. Neville. How would evaluation capture a situation where government has decided, for instance with the Perinbam report on the participation of visible minorities in the federal public service, that they endorse all of the recommendations of Perinbam, one of which is the setting of a target for the next, I believe, five years, that one in five new recruits, one in five promotions, etc. should be members of visible minorities, then you have resistance among managers, in some cases managers who are in fact in charge of human resources. How does the evaluation capture that?

Mr. Richard Neville: Mr. Chairman, if I could, I'll ask my colleague Mr. Keith Coulter to respond to that.

Mr. Keith Coulter (Assistant Secretary, Planning, Performance and Reporting Sector, Treasury Board Secretariat): Thank you.

That's a good example. That's exactly the zone we want to go into with managing for results and using all the tools we have at our disposal, evaluation being a very appropriate one for this. With that approach and the Perinbam recommendations, you have very specific, targetable results formulation. You can measure very easily. What we would do—and this one isn't very complicated—is come in with a framework at the outset, lay it out so everybody can see what the milestones are and managers can measure towards it, then come in later with a more complete, maybe a government wrap-up, kind of evaluation on that.

I'm happy to tell you that we are funded for a centre of excellence in the Treasury Board Secretariat, starting on April 1. That's a zone we're going to take everything into.

Evaluation is only part of it. You need day-to-day measures in this business too, and audits have an important role to play.

Ms. Marlene Jennings: My second point again concerns the Perinbam report and the recommendations. It's all well and good that the government is going to be doing significant recruitment over the next couple of years, given the demographics of the public service and the retirements that are going to be taken place. If you don't already have a base of visible minorities, then you're not going to be able to promote from within.

In regard to this plan that the president of Treasury Board has announced, an 18-month plan to completely overhaul the public service, the legislative framework, and so on, what efforts are being made with all these different tools, including evaluation, to bring in the point of view of members of visible minorities who are already in the public service? How do you ensure that this reform actually takes in their viewpoint in the matter of, say, recruiting from the outside for management positions, because you don't have enough at the base to be able to promote? If those positions are coming open and you don't have enough visible minorities to ensure that ten years from now, or whatever, there's an accurate representation, then they're all going to be filled by people who are not from visible minorities. So by the time you have enough visible minorities at the bottom, the jobs up ahead are going to be filled for the next 20 years, until the new wave becomes old and retires.

Mr. Keith Coulter: You're asking us a question that's more in the area of policy and the implementation plan concerning visible minorities. We are working on it. What the president is talking about publicly are the frameworks around all of this stuff.

• 1640

As we address those issues, we have to also address the issues you're raising, or we're not going to get there. We know that, and I think it's just a matter of working through it, taking it one thing at a time. We're here today to talk, in respect of performance information and evaluation, about what we can contribute, and I think that's a lot in measuring success and whether we get there or not.

Mr. Richard Neville: Mr. Chairman, if I could add something, what has already been announced in respect of some initiatives, whether it be with Perinbam or with others, is not ceasing as a result of the recent announcement of the minister. Those are ongoing initiatives. What will in fact occur is the review that has most recently been announced. That may change or improve on a number of fronts, but it doesn't change the initiatives that have already been announced. As of today they are ongoing. So Perinbam will continue as discussed.

Ms. Marlene Jennings: Thank you.

The Chair: Thank you very much, Ms. Jennings.

Mr. Thompson, six minutes, please.

Mr. Greg Thompson: Thank you, Mr. Chairman.

My question is for Mr. Desautels regarding the public service. I believe, if I'm not mistaken, Mr. Auditor General, you have mentioned in many of your reports the need for a strong, professional public service. Mr. Chairman, I'm referring to the concern the Auditor General has brought up regarding the aging of our public service and the need to attract young people, the professionals, with comparative salaries, so that we can get the brightest and the best in the public service. Is that still a concern of yours, and what do you see the Government of Canada doing to meet some of the expectations we have as Canadians regarding the professionalism of our public service?

Mr. Denis Desautels: Mr. Chairman, I'll try to be brief, because this is a very wide-ranging question.

This is very much still an issue with me and with our office. As you know, we've reported on that extensively in the last little while, particularly in the year 2000. We've done a chapter in particular on recruiting of young talent into the public service and raised problems concerning that.

Mr. Chairman, if there's one area where we've been really strong in our comments, I think it's the whole area of human resources management. We believe there's a need for major change in that area. We've indicated that this should include consideration of legislative change as well, and everything that's been put in place in the last 30 years or so should be subject to discussion.

It's an area where we feel—and I personally feel quite strongly—there is a need to rethink current practices, in order to have a much more nimble public service, capable of responding to the needs of the current age and attracting young people, good knowledge workers, and thereby be in a position to provide to elected members of Parliament, to government, and to the public at large the kind of service they require.

Mr. Greg Thompson: Thank you.

That's sufficient, Mr. Chairman. But I want to put the same question, maybe in a different context, to Mr. Neville, in regard to Treasury Board hiring practices—something along the line of Ms. Jennings' questions on visible minorities, but this is a new twist to the same sort of problem she sees.

Recently the Government of Canada has been hiring. In fact I've sent over to the House of Commons, Mr. Chairman, for the exact documentation on this. It's in my desk in the House of Commons. The question was raised in the House last week. The Government of Canada advertised for 50 senior civil servants, upper management jobs, if you wish, and other jobs as well, across the country. What astonished many of us, Mr. Chairman, is that while these are Government of Canada jobs, application for them is restricted to a specific geographical area.

• 1645

They actually use the term “400 kilometers radius of Ottawa”, which would include, by their definition, Quebec City, which is, I believe, outside the 400 kilometres.

We feel that this is very discriminatory. Why in the name of all that is right and sacred, if the Government of Canada is determined to hire the brightest and the best from across the country, would they limit the applications to a specific geographic region?

Mr. Chairman, I'm willing to table documentation, and I will do so, to prove that what I'm saying is accurate. It's not an exaggeration. It doesn't make any sense to me. Keeping in mind what the Auditor General has said, we know full well that to get the brightest and the best in Canada you might have to go to the east coast or the west coast. Not all the brightest and the best reside in Ottawa, whether on a temporary basis or permanent.

Of course, the question in the House that day pointed out that this type of thing breeds regional discontent, whether it be in Alberta, western Canada, Quebec, or Atlantic Canada. There doesn't seem to be any sense for a policy to restrict the applications based on geography. They even use postal codes in the ad, as in, “If you live in postal code K1A, you can apply”.

Mr. Mac Harb: The Tories put this policy in place.

Mr. Greg Thompson: Mr. Chairman, if only this member would have the fortitude to stand up in the House once in a while and say something. He comes in here just to disrupt me and other members of this committee.

The Chair: Mr. Thompson.

Mr. Greg Thompson: My belief is that he should go and hide under his furniture, as he always does on issues of concern to Canadians.

The Chair: Thank you, Mr. Thompson.

Mr. Greg Thompson: Now, that's out of line. I want to finish my question. I'm not going to sit here and take abuse from that member. He's a nobody. He's a Liberal backbencher—

The Chair: Now, Mr. Thompson.

Mr. Greg Thompson: —so he'll always be a nobody.

The Chair: Mr. Thompson, I would ask that you refrain from personal comments. That applies to Mr. Harb as well.

Mr. Greg Thompson: What comes around goes around, Mr. Chairman.

The Chair: Therefore, Mr. Thompson, if you have a question for Mr. Neville, I would ask that you put it.

Mr. Greg Thompson: Okay.

The question is, sir, when they're restricting it to postal codes beginning with K1A or K1O, why in the name of all that is sacred would the Government of Canada do that if they want to hire the brightest and the best? It makes no sense. It's very discriminatory, in my view.

The Chair: Mr. Neville.

Mr. Richard Neville: My understanding, Mr. Chairman, is that the legislation, which has been passed by Parliament, does provide for geographic limitations. As a result, individuals are following what has been—

Mr. Greg Thompson: But that's solely at the discretion of the minister. Why would the minister in this day and age do that? Written into the legislation is “at the discretion of the minister”. That was the exact answer the minister gave in the House, which was not accurate. That policy was introduced—

The Chair: Mr. Thompson.

Mr. Greg Thompson: —but it's at the discretion of the minister. We want some sense in this whole process.

The Chair: Mr. Thompson, thank you for that intervention.

Mr. Neville, do you have anything further to add to what you have said?

Mr. Richard Neville: No, I don't wish to add anything else, Mr. Chairman.

The Chair: Then perhaps our evaluation policy will deal with issues such as that, Mr. Thompson. I would ask that you look at the new evaluation policy published by the Treasury Board. Perhaps these discriminatory matters that you refer to, and the discriminatory matters Ms. Jennings referred to as well, should be issues that would come forth in an evaluation policy.

Perhaps you should be forewarned, Mr. Neville, that these questions are coming down the pipe in due course. You may want to address them soon in the evaluation policy you're adopting.

Mr. Peschisolido.

Mr. Joe Peschisolido: Mr. Chair, I would defer to someone else.

The Chair: Mr. Shepherd, please, for four minutes. We're moving on to the second round.

Mr. Alex Shepherd: I'm surprised at Mr. Thompson's comments. The Public Service Employment Act was passed in 1992 by a Conservative government. He should ask his own people why they put that in the act.

The Chair: We'll leave that issue—

Mr. Mac Harb: I'm sorry, Mr. Chair, but there is a correction of the record here. I think we've had enough. This member is abusing the witnesses, abusing his colleagues, and going off track.

The Chair: Thank you.

Mr. Mac Harb: The record speaks for itself. I think my colleague here is quite right. I think the officials here can testify to the fact that this policy was introduced back in the nineties by a Conservative government. I and many of my colleagues raised some questions at the time. We believe now they're the right policies, and we're just following through.

The Chair: That's very good, Mr. Harb, but the Government of Canada survives political parties, and according to what's been said, both political parties have endorsed the policies. So we will not have members calling the policy right or wrong according to their political persuasion. The policy is there, and, as I said, no doubt Mr. Neville will be evaluating it.

• 1650

Mr. Shepherd, do you have questions?

Mr. Alex Shepherd: Mr. Neville, I want to thank you for bringing us this new initiative on strengthening the internal audit capacity of government.

I'm interested in the risk management aspect of choosing those policies and procedures that are going to fall under the evaluation review. I'd just like to know what criteria we use for risk management. Obviously, a clear one is dollars, expenditure risk to the government itself, but I presume there are others, such as health and safety concerns, environmental protection, and so forth. I would be interested to know how you quantify those areas you're going to focus on for risk management.

Mr. Richard Neville: Mr. Chairman, on the risk management issue, we have just finalized the framework, which I think is very interesting. Rather than go through it in detail, I really would appreciate the opportunity to present this committee with an overview of our risk management framework. It has a number of components. We could either go through them all or present this committee with a specific overview. I'm quite open to doing either.

Mr. Alex Shepherd: It gives me time for another question.

With regard to the issue of access to information on this file, do you think the procedures are going to be compromised somehow because this is going to become a public document at some point in time? I know the Auditor General raised the issue as well. In other words, there's a certain degree to which internal audits are kept confidential because it helps in the collection of information. Does public access to this compromise the audit procedure?

Mr. Richard Neville: Mr. Chairman, we've had a lot of discussion on that issue, and we are quite specific in the new policy. We have put in the new policy that audit reports must be made public immediately after approval and as well that they are to be done in both official languages. We don't think it compromises the new policy whatsoever.

I think we should spend time on what the principles are: openness and transparency. I think it's fair to say we've reinforced the requirement to make completed audit reports publicly accessible, again in both official languages, with a minimum of formality. We also are sensitive to the issue that has been identified by the Auditor General. While we do not believe the internal audit function's effectiveness has been in any way compromised; it is an issue that has to be addressed.

As you are probably aware, the government established an access to information review task force to review all components of the access to information framework and to provide recommendations for improvement in the fall of 2001. I think it's fair to say our intention is to discuss this issue with the review task force to determine how we can best support the principles of openness and transparency while safeguarding the effectiveness of the internal audit function.

Mr. Chairman, keeping that in mind, we're back to the basic tenor of the policy of openness and transparency and getting the reports out in both official languages as soon as they're approved, with minimal formality.

Mr. Alex Shepherd: I note also in your—

The Chair: Thank you, Mr. Shepherd. Your time is now up. I'm sorry.

Mr. Desrochers, do you have any questions? You have no questions. Mr. Harb.

Mr. Mac Harb: Mr. Chair, the only reason I bring up this issue is because my colleague Mr. Thompson, who is not here, talked about the city of Ottawa and the geographical requirement. My understanding is that this policy was put in place back when his own government was in power. The rationale for it is to protect the geographical area. For example, if there's an opening in Newfoundland, P.E.I., Manitoba, or wherever, it is to protect the area so that people from the city of Ottawa, for example, would not apply for those jobs. It's to create jobs within a certain geographical area.

Is that correct, Mr. Neville? When was the policy put in place? Do you recall?

Mr. Richard Neville: Mr. Chairman, it's not my area of expertise, so I would prefer not to comment on that particular question.

Mr. Mac Harb: Just for your information, Mr. Chair—

The Chair: I'm not sure I need too much edification on this issue, Mr. Harb.

• 1655

Mr. Mac Harb: It's not because I come from the city of Ottawa, Mr. Chair. I take pride in the fact that I represent a constituency with the highest percentage of people with university degrees and a high level of education. So for someone to try to demean a region in this part of the country, it does not deserve a response, in a way. Nonetheless, I have made my point here.

My question is to Mr. Neville. The Auditor General made a comment about the allocation of the $40 million. He has raised some concerns in the past about the internal auditing that was not done properly, and he attributed part of that to the lack of resources. With the increase in the budget, I want to know how you are going to allocate those resources.

Also, the Institute of Internal Auditors has set certain standards for internal auditors to follow. I want to find out from you whether or not you are going to be cooperating with them. I also would like you to share with us some of the priorities you are going to be setting in place over the next year or so.

Mr. Richard Neville: Mr. Chairman, I'd be pleased to touch base on both of those questions.

I'll comment on the funding one first. The allocation of the $40 million is as follows. As you recall, I did say it was for a two-year period. For the year 2001-2002 we split the funding between internal audit and evaluation. I'll deal with them individually.

For internal audit for the year 2001-2002, for the centre of excellence we'll be setting up within the Treasury Board Secretariat, which we referred to, there's a $3.2 million allocation. For the evaluation component, there will also be a centre of excellence for the year 2001-2002, for which we've allocated $1.4 million. So the total allocation in 2001-2002 for centres of excellence adds up to $4.6 million.

We also have a component where we will be transferring money to departments to assist them in their internal audit capability as well as their evaluation capability. Within the internal audit community, we will be transferring to departments $7.2 million in 2001-2002, and for evaluation $3.2 million, again in 2001-2002. So the total for departments for that year will be $10.4 million.

If you add the $4.6 million for centres of excellence and the $10.4 million for other departments, for the first year, 2001-2002, we will be allocating $15 million.

Similarly, for the 2002-2003 fiscal year, the centre of excellence for internal audit will be allocated $3.2 million, and the centre of excellence for evaluation another $1.4 million. So for the two centres of excellence in the year 2002-2003 it will be $4.6 million. For the amount to be transferred to departments in year two, for internal audit it will be $15 million, and for evaluation it will $5.4 million, for a total of $20.4 million. So for the second year, 2002-2003, the total to be allocated is $25 million.

If you take the $15 million for the first year plus the $25 million for the second, it will total $40 million.

Your question also dealt with how we plan to allocate that. We will be asking departments to come in with individual business cases, and based on those business cases we will be going back to Treasury Board ministers with firm recommendations.

There was a second part to the question dealing with the internal audit, which was about standards. We're working on a number of policy standards, and we will be working very closely with international communities and professional associations, such as the IIA. Just to give you a listing of the policy standards that are being developed with regard to internal audit, it deals with independence, objectivity, competence of staff, adequate planning, effective and efficient conduct of audits, appropriate evidence, and reporting. So a lot of work is going on with a number of communities out there, including professional associations.

The Chair: Thank you.

Mr. Peschisolido, please.

Mr. Joe Peschisolido: Mr. Chairman, I'd like to preface my questions and comments by saying that even though we are going to be dealing with the geographical limitations at a later date, I can't let Mr. Harb's comments go without a comment.

• 1700

The intent of the questions I'm going to ask isn't to get into the partisan nature of who was to blame for the policy, but to find out whether or not the best and the brightest are exclusively found only 400 kilometres around Ottawa.

The Chair: Well, Mr. Peschisolido, I'm not sure we're going to entertain the question of where the best and brightest actually reside.

Mr. Joe Peschisolido: No, but if I may, Mr. Chairman, I would like to ask about the systemic nature of recruitment, and how we can draw individuals from outside the Montreal-Toronto-Ottawa triangle. I think this is an issue for Treasury Board, and I also believe it's an issue dealing with the governance of Canada and the programs.

The Chair: A valid question. Mr. Neville.

Mr. Richard Neville: Mr. Chairman, as I said earlier, this is not my area of expertise. I really don't feel comfortable responding to that question.

The Chair: But it does seem to be a concern of the committee regarding recruitment. In this country we have all kinds of concerns about ensuring that minorities and people in the hinterland are properly serviced by the Government of Canada. There seem to be some valid questions here that applications would be restricted to those who live in the centre of Canada, where all the services are readily available, and those living elsewhere would be denied the application.

Even if people outside the hub wanted to move here, at their own expense, it still seems rather strange to me that the policy would be that way. Do you have a comment on this, Mr. Desautels, or was I misreading you?

Mr. Denis Desautels: No, Mr. Chairman. If I could, I would like to respond very quickly to the last question.

Our chapter 21, on post-secondary recruitment into the federal public service, talks about that issue. In fact it recognizes that one of the objectives of the program is to recruit people into the federal public sector from across the country in the most efficient manner possible.

What this chapter basically says is that this is not being achieved properly. In fact, the whole recruiting process is too heavy, too slow. Young people get discouraged and don't bother.

Mr. Chairman, I think the messages in this particular chapter are quite clear and strong. If they're properly addressed by the Public Service Commission, I think they would address the particular concerns raised today by some of the members.

The Chair: Thank you, Mr. Desautels.

Mr. Neville, you had a comment?

Mr. Richard Neville: Yes, Mr. Chairman. The concern is registered, and I'd like to bring that back for clarification by my colleague.

The Chair: Okay.

Mr. Joe Peschisolido: I couldn't agree more with Mr. Desautels. Those recommendations are bang-on. There are people at the University of British Columbia or wherever, out west, with the skills to work as civil servants and serve our great country.

The problem is that if this policy continues, you can spend all the resources on the best mentoring programs, but if you have a restriction of 400 kilometres around Ottawa, well, someone at the University of British Columbia or Simon Fraser or the University of Alberta cannot apply. So you're going at cross-purposes—it defeats the purpose of efficiency, and also of basic notions of justice.

The Chair: Mr. Desautels.

Mr. Denis Desautels: If I may respond to that, very quickly, the programs we describe in our chapter 21 are for broad-based entry into the public service. Therefore, they should be totally accessible to everybody across the country. I understand that the restricted programs are for more specific positions, or types of positions. For those, the legislation does allow a more restricted approach. But for the broad-based entry programs for post-secondary recruiting, there should be no geographical discrimination. Everybody is welcome into those programs.

The Chair: Thank you. Now we're going to move to Mr. Murphy.

Mr. Shawn Murphy: Mr. Chairman, since I live outside this 400-kilometre radius, I'm reluctant to speak at this committee. I have your permission to continue?

The Chair: You have, because your electors reside out there too—and they sent you here to represent them, wherever they may live in this country.

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

I address my question to Mr. Neville, and I'm going to change the topic. I want to get your views and thoughts on audit independence—something that goes right to the essence of the audit function in the public sector.

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I understand that the auditor's function is to assess the risk management strategies, controls, and information systems of the public sector and crown corporations. But the internal auditor is hired by, reports to, and is evaluated by the senior management there. And the very essence of the whole audit function is that it sometimes has to question the decisions and systems established by exactly that senior management.

I think we've seen the problems out there in the HRDC affair. Perhaps this isn't the correct analogy, but if you look to the private sector, I think if the system works properly there—and I'm not suggesting it always does—then the internal audit function would bypass all the executives of the corporation and report directly to the chair, who would not be the chief executive officer.

Then how, sir, is the total independence of the audit system assured? These internal auditors should hold a fairly senior position in the public service. So how is their independence assured, and how can they perform effectively and efficiently in the public sector?

Mr. Richard Neville: Mr. Chairman, that's a very good question.

As you're aware, the deputy minister is responsible for the delivery of programs and services, so when we develop the revised policy, we certainly factor that into the final decisions. The internal auditor in the department must have direct access to the deputy minister. We've made that responsibility quite clear all the way through the policy.

There's also a requirement to have an internal audit committee, with a senior executive chair. So there's an appropriate governance system within each department to allow the individual responsible for internal audit to raise any concerns. Over and above that, within the Treasury Board Secretariat we are creating a centre of excellence for internal audit. This will assist departments, allow for professional development, and monitor a number of components of the internal audit function.

Coming back to basics, deputy ministers are accountable for their departments. The internal audit function is headed up by an individual who has direct access to the most senior person in the department. As well, we shouldn't forget that we do have an Auditor General who reports directly to Parliament. In fact, your board of directors is in that context.

The Chair: You're just five seconds short of your four minutes, so I'll draw the line there.

[Translation]

Ms. Jennings.

Ms. Marlene Jennings: I'd like to discuss with you the internal audit process, the new policy in place and so forth. If I understood you correctly, Mr. Desautels, you were consulted about the drafting of this policy. You are satisfied with the process and feel that if implemented properly, this policy should be effective. Essentially, you're concerned about whether there will be sufficient resources to implement the policy properly.

Furthermore, is there sufficient support for this policy among senior departmental management to ensure that it will be properly implemented? As you yourself mentioned, in the case of Y2K, for example, a concerted effort was required on the part of the Treasury Board Secretariat and senior management in each department. Is that basically what you said?

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Mr. Denis Desautels: Mr. Chairman, as I stated, we were indeed consulted when the Treasury Board Secretariat drafted its policy. We were able to make a number of comments, the majority of which were duly noted. In my view, the process was very sound and the final policy is very acceptable to us. Therefore, from that standpoint, we're pleased.

As far as policy implementation is concerned, a number of challenges remain. In previous years, we observed a number of problems as a results of cuts to internal audit resources as well as a lack of support on the part of some management officials. Now that have an updated, timely policy, it's critical for Treasury Board to monitor the implementation process closely. I believe that is part of the plan. In fact, it should be encouraging deputy ministers in each department to commit to this policy.

Ms. Marlene Jennings: I have another question, and you can answer it as well, Mr. Neville.

As a rule, deputy ministers and associate deputy ministers evaluate performance and annual performance according to a series of priorities. Normally, these priorities are set by Mr. Cappe.

Do you think that if departments were evaluated on the basis of whether they in fact implemented this internal audit policy, the Financial Information Management System and perhaps even the recommendations of the Perinbam Group, this might serve as an incentive for senior management to appreciate the importance of all of this?

I'll let the two of you answer the question.

Mr. Richard Neville: May I...

[English]

The Chair: A reasonable response, Mr. Neville.

[Translation]

Mr. Richard Neville: Fine. In the early 1990s, we had close to 700 auditors and we spent approximately $57 million on the internal audit function. Following Program Review, that is around 1997-1998, we were down to 240 auditors and spent only $34 million.

With additional funding for the internal audit function over the next two years, we will have close to $28.6 million. I think this will prove quite helpful to us in terms of getting this community to comply with new policy requirements.

Therefore, to answer your first question, I think we have accomplished a great deal and that there is still room for improvement.

As for your second question, you were wondering whether this might serve as an incentive in terms of the new policy. Absolutely. We feel that this will enable senior management to better administer responsibility centres as well as government departments overall. We firmly believe that this will impact the deputy ministers' performance report to the Clerk.

[English]

The Chair: Thank you, Mr. Neville.

Mr. Thompson, please.

Mr. Greg Thompson: Thank you, Mr. Chairman. I suggest you might want to consider giving Mr. Harb either a sedative or a straitjacket before I proceed with my next—

The Chair: We won't have any more personal comments, or you'll be ruled out of order and I'll move to the next question. That applies to everybody.

Mr. Greg Thompson: Thank you, Mr. Chairman.

I'm still waiting for my files, though they may not get here in time. But I do want to get into the HRDC situation—what we referred to a year ago as the “billion-dollar boondoggle.”

Now, we may disagree on the numbers, but I do know that the Auditor General has reported on that situation. He basically said that the senior management at HRDC failed to appreciate the value of the internal audit process. They had never taken action up to that time. That's part of the Auditor General's report of October 2000, Mr. Chairman; he basically said they had not taken appropriate action in the past.

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He goes back to and talks about the internal audit that was conducted in 1991. With the follow-up in 1994, the Auditor General found out that important recommendations had not been implemented and that problems still existed within the department.

Then, in 1995, the department greatly reduced its post-audit function. It was pointed out in 1994 that the internal audit report indicated this provided a consistent monitoring process of grants and contributions, but that was ignored. The department also reduced its internal audit resources in 1995, adding insult to injury.

Quoting from the Auditor General's report of October 2000, he stated: “The department placed little emphasis on the importance of maintaining key financial and management controls”.

The fundamental question would be, why did they ignore the advice you've offered beginning back in 1991?

In all fairness to my colleagues on the government side, to even the playing field and maybe make Mr. Harb feel a little bit better, obviously that was a Conservative government back then.

The Chair: So the question is to Mr. Desautels.

Mr. Greg Thompson: Yes, to Mr. Desautels, please.

Hopefully, Mr. Desautels was taking notes as I spoke. I was quoting from his reports going back to 1991, right up to the present day.

The Chair: Mr. Desautels.

Mr. Denis Desautels: Both our office and the internal auditors within HRDC made very critical reports during the 1990s on various programs within HRDC, and both can say that the reaction to those reports was not what it should have been. Those reports were not taken sufficiently seriously. In fact, the problems we found again in this last audit, which we tabled last fall, really are the culmination of what I think is inadequate response to the findings of earlier reports.

Mr. Thompson is asking why there was this imbalance. I think that's the central question, in a sense, and we've tried to address that in our report. There was an imbalance that crept in over that period, between, on the one hand, providing good, quick service, and on the other, respecting the basic principles of the Financial Administration Act and other rules.

I think this is something that got out of kilter within that department, and it should not have happened. I think that's at the centre of the issue.

The Chair: Thank you, Mr. Desautels. Thank you, Mr. Thompson.

Mr. Bryden, just a couple of short questions, please.

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.): First of all, Mr. Chairman, I apologize for being late, but I was caught between two committees. I was at the industry committee, which was studying the Lobbyists Registration Act.

In that context, perhaps I can bring the fruits of that committee to this committee and ask Mr. Desautels whether this new policy on internal audits touches on the effect of lobbyists on policy and program development. Do your auditors even consider lobbyists and what impact they have on program and policy development?

Mr. Denis Desautels: In the past, I don't think we've addressed specifically the influence or impact of various lobby groups on either the development of policy or interpretation of policy over time.

In terms of our work, we've been emphasizing the provision of sound, unbiased information to policy-makers, to decision-makers, as well as, again, sound, balanced information on results, in order to assess properly the real results of government programs.

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One of the subjects today is program evaluation. I think the integrity of the program evaluation function is very important in order to take out of any analysis any bias that could be encouraged by some people who may have a particular point to defend.

So having really balanced, unbiased evaluation of the functioning of key programs is absolutely essential in this context.

The Chair: Okay, one last question.

Mr. John Bryden: As one last question, then, in all your experience, Mr. Desautels, have we ever examined, as a government, who the lobbyists are lobbying in the civil service? Have we ever done an analysis of whether it's directed toward senior managers or middle managers? Do we actually know who is the target?

Mr. Denis Desautels: We ourselves have not done any specific work on the activities of lobbyists. I believe this is more within the responsibilities of the ethics commissioner. But in fact—

Mr. John Bryden: It's the effect on the civil service I'm after, not the ethics commissioner. It's an ethical activity, but have you ever examined, as a means of evaluating government operation, the effect of lobbyists and who their targets are, whether it's senior or middle managers, or whomever? It has never been looked at?

The Chair: I think the answer is no, right?

Mr. Denis Desautels: We have not specifically looked at the activities of lobbyists in that context.

Mr. John Bryden: Thank you.

The Chair: Thank you, Mr. Bryden.

I have a couple of questions of my own.

First, Mr. Desautels, you said in chapter 19 of your December 2000 report:

Departments should include plans for relevant evaluations in their reports on plans and priorities, and any relevant findings from evaluations in their performance reports.

Do you agree with that, Mr. Neville?

Mr. Richard Neville: I'll ask my colleague, Mr. Keith Coulter, to comment on that.

Mr. Keith Coulter: We have responded in a general way to the Auditor General that we are in agreement.

As we build our approach here—and as I said, we're starting on April 1—what we want to do is first of all connect with departments on their evaluation plans, and we'll be reviewing those, how they're going to sort through them. We'll have to look at how we integrate that in the reporting structure. Evaluation is a responsibility of my sector, as are the performance reports and the planning reports to Parliament. So we're going to build that in.

The Chair: Good. Then I would like to see that in your performance reports.

I think Mr. Murphy's point is a valid one, that the internal auditor should be apart and independent in order that he can challenge the decisions of senior management.

Mr. Neville, I think I mentioned to you privately that the internal auditor should be a Treasury Board official seconded to the department, in essence reporting to you, the Treasury Board, rather than to the deputy ministers of their department.

Briefly, I would like your comments, that you either agree of disagree—and Mr. Desautels, the same.

Mr. Richard Neville: As we have discussed privately, I've made you aware that this particular issue did come up during our deliberations and in consultations. The decision that was finally made, which is a public one, is that we believe the deputy minister is responsible and accountable for the delivery of services within his or her department, and as a result, the internal auditor should report directly to a senior executive but have direct access to the deputy.

The Chair: I fully agree with the direct access, but I have a serious problem with the “reporting to”.

Mr. Desautels.

Mr. Denis Desautels: Mr. Chairman, on this one, I don't think I would agree with you that the internal auditor should really be reporting directly to or working for the Treasury Board Secretariat. That would create certain problems within large departments, or any department, in that they would not necessarily be held in confidence by senior management of the departments.

I think it's important that they be seen as working towards the improvement of systems and controls within the departments and reporting to senior management of those departments the deficiencies that they find so that they can be corrected. So they have to be part of that team overall.

• 1725

As well, when we looked at private sector practices in the past, in enterprises that were well run, that was not a real issue. Our experience was that within large companies, internal auditors could be given sufficient independence to play their roles. In fact, internal auditing was quite often used as a training ground for future executives within those organizations.

So I prefer the model where they belong to the department and have some type of functional link to a central function situated somewhere else—for instance, Treasury Board Secretariat.

The Chair: I'm not sure we agree there, Mr. Desautels, but we're getting close to the end, and I have a few more questions. We'll wrap this up quite quickly.

I tabled a private member's bill today on program evaluation that states four questions: one, what is the public policy the programs are designed to do; two, is it accomplishing the goals; three, is it doing it efficiently; and four, can we achieve the same or better results in a different way?

Your evaluation policy, Mr. Neville, seems to be more on process than on specific results for the public. I would like your comment on that, just quickly.

Mr. Richard Neville: Again, Mr. Chairman, I'll ask my colleague, Mr. Keith Coulter, to comment on that.

Mr. Keith Coulter: I would disagree with that. We are taking evaluation directly into the zone of results-based management. That's exactly what we're trying to achieve. This policy is trying to move the thinking of management, and the thinking of evaluators, toward a very results-focused and results-oriented approach.

The Chair: Okay. Perhaps I'll leave my other questions.

Mr. Bryden.

Mr. John Bryden: I would love to ask a question of Mr. Neville, if I may, just one single question.

The Chair: Your colleagues are making all kinds of noise that it's time to wrap it up, so I think we'll just wrap up this meeting.

Mr. John Bryden: Are you sure, Mr. Chairman? I'm sure Mr. Neville would love to answer my question.

The Chair: I know he would, but my point is that if we're going to have people wrapping it up at 5:30, I have many questions of my own, and I'm sure Mr. Peschisolido has more, so where do we stop? I think we'll call it at this point in time.

Mr. John Bryden: One question?

The Chair: Well, you have one question, I have five.

I think we'll just ask Mr. Desautels for his comments.

Mr. Greg Thompson: But this could be the bombshell we're waiting for.

Mr. John Bryden: Sorry, am I going to get my one question?

The Chair: No. We're going to have Mr. Desautels wrap this up. We've had a fairly feisty meeting today, so I think we'll bring it to a close.

Mr. John Bryden: We're missing opportunities, Mr. Chair.

The Chair: We'll come back another day.

Mr. Desautels, closing comments.

Mr. Denis Desautels: Thank you, Mr. Chairman.

Let me repeat that we welcome the new policies that Treasury Board has come up with in program evaluation and internal auditing. Let me repeat as well that the challenge here will be in implementation of those policies.

I would therefore encourage the committee to follow up with Treasury Board Secretariat on such issues as the coverage they will achieve with those policies—and which programs, particularly in the evaluation—and whether or not they will deal with strategic and horizontal issues in evaluation, as opposed to the easier and more specific programs.

In terms of internal auditing, again, I think the committee could ensure that the provisions of assurance services within their organizations are made as strong and clear as possible, perhaps leading eventually to internal auditors taking a role in providing some form of assurance on the financial statements of each department that will be prepared, eventually, under the FIS, the financial information strategy.

So strengthening the assurance capacity of internal auditors in order to be able to provide that kind of service might be, I think, a desirable development out of this policy.

Thank you.

The Chair: Ladies and gentlemen, that will bring this meeting to a close. The next meeting will be at 3:30 p.m. on Thursday, March 29. That will be the farewell meeting for our Auditor General of Canada, Mr. Desautels. I understand we'll also have his wife as a witness that day.

This meeting is adjourned.

CANADIAN EVALUATION SOCIETY COMMENDS TREASURY BOARD OF CANADA

Ottawa—The Canadian Evaluation Society has commended the Treasury Board of Canada on the revised federal government evaluation policy that was released by Treasury Board President Lucienne Robillard on February 14th. Society President, Nancy Porteous, said today “The revised policy underscores the importance of evaluation in achieving a focus on results, which is critical to sound decision-making. Evaluation can and does provide objective evidence about the results of departmental, interdepartmental and intergovernmental policies, programs and initiatives.”

The Canadian Evaluation Society, with over 1500 members nationwide, is the flagship organization in Canada for evaluation specialists. Almost a third of the membership work for the federal government. The Society's goals are to:

Provide leadership to the evaluation profession in Canada;

Contribute to the development and dissemination of evaluation theory and best practices;

Undertake advocacy initiatives that will strengthen the understanding in government and not-for-profit organizations of the importance of evaluation to sound decision-making; and

Facilitate the acquisition by practitioners of the knowledge and skills needed for the effective conduct of evaluation.

CES looks forward to continuing a strong relationship with Treasury Board as the Board addresses issues around the new policy such as the challenges of implementation and ensuring that the knowledge and capacity for quality evaluation is developed.

For additional information, contact the Canadian Evaluation Society at 613-725-2526.