NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 18, 1998

• 1534

[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Colleagues, we'll start in about 20 seconds. Our temporary clerk is Miriam Burke. Our regular clerk, Marc Toupin, is dealing with Bill C-32.

I understand some of our colleagues may be dealing with Bill S-13 or something in the House right now. But with no further ado, we'll bring to order the Wednesday, November 18, 1998, meeting of the Standing Committee on Natural Resources and Government Operations.

• 1535

We are pleased to have with us today the Hon. Marcel Massé, President of the Treasury Board, and he has with him some of his officials. I won't go through their titles, you have all of those, but they are Richard Neville, Guy Bujold, Linda Lizotte-MacPherson and Ric Cameron. He will no doubt call upon them at different times to answer any of your questions.

So, Mr. Minister, thank you very much for attending. We invite you to say a few words, for 10 or 15 minutes if you like, on the Treasury Board Secretariat's estimates for the fiscal year 1998-99, and then we'll open the floor to questions.

Hon. Marcel Massé (President of the Treasury Board, Lib.): Thank you very much, Mr. Chairman.

I'll supply the positions you just identified. Richard Neville is the assistant secretary and assistant comptroller general.

[Translation]

Guy Bujold is the Assistant Deputy Minister, Corporate Services Branch; Linda Lizotte-MacPherson is the Chief Information Officer at the Treasury Board Secretariat, and you will definitely be seeing her often in the next few months because she is in charge of Y2K; and Ric Cameron is the Assistant Secretary, Strategic Planning and Analysis Division.

I have a few very brief remarks to make, Mr. Chairman. My comments will be rather short in order to allow sufficient time for your questions.

[English]

Mr. Chairman, it is thanks in large part to the program review exercise that the government has been able to begin rebuilding our country on a strong foundation. Now we can turn our thoughts to Canada's future and set about improving the way we plan the development of the best country in the world.

[Translation]

The government has a vision for change, is demonstrating leadership and is establishing renewed governance.

Canadians demand a government that is flexible, efficient, respectful of regional realities and receptive of its citizens' expectations. That is the challenge we are working on.

[English]

In its pursuit of fundamental Canadian values and through results-oriented management, the federal government is developing new ways of achieving greater consistency between policies and management. It is making greater use of a portfolio-oriented approach and new information technology, while modernizing its comptrollership.

Canada's public service of tomorrow will continue to improve its methods, will play a bigger role as a catalyst for national cohesiveness and our shared Canadian values, and will contribute to strengthening our international position.

The public service must transform itself with a commitment to renewing its workforce, its organizational structures, and its management strategies. We will have to manage for results.

[Translation]

Mr. Chairman, renewed governance means new and innovative organisational solutions: better service integration, a single- window approach and a greater use of information technology. Services to Canadians must be more centered on their needs, eliminating administrative impediments in departments, in programs and even in other levels of government.

What Canadians want are high quality, accessible services. The day is near when all Canadian citizens will be able to consult their file, look for employment, pay their taxes or easily access all government programs and services through a single point of contact.

My department has demonstrated its commitment to change and to renewed governance.

[English]

I have said it before and I will say it again: establishing partnerships will be one of the keys to the success of the government of tomorrow. In this way we will be able to enhance our knowledge, develop policies, and design programs in consultation as we respond to both national and regional needs.

[Translation]

Renewed governance also means greater use of information technology. Treasury Board has transformed itself into a management board that is both professional, adaptable and flexible. The modernization of the function of Comptrollership will help government carry out a number of fundamental changes essential to government's quest for results, to improved accountability and to risk management. The Canadian government is action- and results- oriented.

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Canadians can judge our work and I am sure they approve our performance in the renewed governance we are now establishing in government.

[English]

Thank you, Mr. Chairman. I'm now ready to answer questions.

The Chairman: We'll go to John Williams for the first question.

Mr. John Williams (St. Albert, Ref.): Do I have just one question? What's the order of this committee, Mr. Chair?

The Chairman: John, what we normally do is we try to keep everybody at seven to ten minutes. We've never missed anybody.

Mr. John Williams: Okay, thank you.

Mr. Minister, welcome. Yesterday, I'm sure you were disappointed to find out that the Muldoon decision was thrown out and it's back to square one as far as the Bell Canada employees are concerned. Of course, that has a major impact on the civil service claim that's currently being appealed by you to the courts. When are you going to amend the legislation to clarify equal pay for work of equal value?

Mr. Marcel Massé: We are presently working on the legislation. In fact, I had a conversation with the Minister of Justice today as to the process and the length of time it's going to take us.

Mr. John Williams: When can we expect that legislation? Do you know?

Mr. Marcel Massé: Perhaps next fall. We have to take a number of months to consult the employers in the private sector, because of course the legislation will apply both to the public and the private sectors. We know how difficult it is to put into the law the way in which pay equity should be measured and the principles that should lead to this. Once we have set out the first principles, which we are doing at present—we are establishing a first list of criteria—then we have to have consultations, which I think will take about six months. This is why I'm answering—

Mr. John Williams: Are you going to more narrowly define the definition of equal pay for work of equal value to somewhere along the lines of equal pay for equal work?

Mr. Marcel Massé: No. Equal pay for equal work, as you know, is already implemented in the federal government and now in most enterprises. This means, of course, that a man or a woman doing the same job has to be paid the same salary.

Equal pay for work of equal value is a much more difficult concept. It implies being able to measure jobs as different as a seaman and a secretary and trying to compare them. As we now know, there are quite a number of possible methodologies to do it from job to job, including the type of methodology that was invoked by Muldoon.

Mr. John Williams: Don't you think that's actually an impossible task to do at the bargaining table and it can only be determined after the fact? Also, isn't it a fact that now that the Human Rights Tribunal has ruled as far as the civil servants are concerned, you can't legislate retroactively to change that decision and it now stands?

Mr. Marcel Massé: There are many questions included in this. Let me try to take them one by one.

First, in terms of the effect of the judgment that you alluded to in your first question, the judgment of the Federal Court of Canada, Appeal Division, has not ruled on the substance. What they have indicated is that Judge Muldoon erred in not letting the Human Rights Tribunal look at the case. He should have let them look at the case, and therefore they sent the case back to the court of first instance. They specifically indicated that they would not rule either for or against the methodology that is provided there. What they have done is they've put Bell Canada in the same position the federal government was in six or seven years ago. They have not clarified section 11. Therefore, they have left the whole problem exactly as it was. It's in this sense that we're back to square one, but we're no worse off than we were before in terms of the law.

Mr. John Williams: You're no worse off, but you can't go back and change the ruling by the Human Rights Tribunal. That now stands.

Mr. Marcel Massé: That was the first question.

As for the second one, in the negotiations we concluded over the weekend we not only had a collective agreement for 2.5% and 2%, but we also implemented pay equity for the future in the sense that we had an agreement on the structure and on the universal classification standard, which by itself is a very novel way of looking at jobs. It permits you to compare jobs and eliminate the gender bias in the definition, therefore eliminating questions of pay equity or lack of pay equity by the way in which you classify your jobs. Doing this will eliminate the problem of gender bias for the future and will eliminate discrimination against women in future jobs.

• 1545

But you're quite right to point out that it still leaves us with a backlog of claims since 1985, which the Canadian Human Rights Tribunal talked about. For this, I have left on the table the $1.3 billion, because it's the only way for negotiations to come to a quick solution.

There's no doubt that this backlog cannot be solved by legislation. I'm now linking up with one of your other questions. Therefore, if we can, we have to establish in the legislation that's coming—this is not retroactive—a series of rules that will eliminate the possibility that there may be pay equity complaints in the future.

To do this, we will have to find a very new way of looking at pay equity. We cannot continue to describe it as we did in the future. We cannot, I think, continue to have a comparison between predominantly feminine and predominantly masculine groups as the basis for compensation.

Mr. John Williams: Changing the subject to Y2K, I see in your opening remarks that you say you'll have to manage for results. I hope the result on January 1, 2000, is that the government continues to work.

I find that the Treasury Board is still not taking a hands-on, direct approach as far as Y2K goes with the departments. It's still very much a coordination and consultation role rather than a direct “you will do this” type of role.

When can we see Treasury Board taking charge of Y2K to ensure that services will be delivered to Canadians? We hear that the army is going to be deployed to handle civil unrest. How bad is it going to be, and when will the Treasury Board get things under control?

Mr. Marcel Massé: First, we may disagree on what “hands-on” means. In a modern organization that involves hundreds of thousands of people, as in the federal government, and departments that are each empires of billions of dollars, as the federal government is, you cannot take a hands-on approach such that somebody is in charge of every detail, system, and embedded chip in the system. It just doesn't work. Big organizations of that size cannot work like that.

Therefore, you need the equivalent of a coordinating centre, which is what we are, that indicates for the federal organizations—of course, we're going to have links outside of our own departments and agencies—what the objectives and results are that are to be produced and what the methods are by which it should be done. Also, we monitor the plans made by each one of the component units so that they are efficient enough to produce the results we want.

I've answered your first question, which was why we don't have a direct, hands-on approach. The answer is that this is so because it would not work.

Mr. John Williams: Well, then my question is, what accountability is going to be held by these deputy ministers if they don't meet the criteria set out by Treasury Board? Is there to be any accountability or punishment for deputy ministers who fail to achieve what the Treasury Board sets out as minimum standards for Y2K to ensure that Canadians are served?

Mr. Marcel Massé: There is, of course, the usual accountability of deputy ministers, which has served us reasonably well in the past in getting the results that were asked of them.

In this case, however, we also have the possibility of intervening directly if at a certain point the directives are not put in place and there is a threat to the ability of the government to implement its results and objectives. In this case, not only are we in charge of all the departments and agencies, but we are also checking on departments and even considering the possibility of third-party audits.

At present, we have internal audits that give us the percentage of realization of the various departments. And we have a central fund that permits us to intervene to help departments to attain their objectives if they are not progressing in the regular way and at the pace that will give us reasonable certainty that they will reach their results.

So I answered your question in two parts. At present, we're making sure the departments are investing in the necessary changes. We're making sure the measures we use are not only the measures of the department, but they have the common elements that will permit us to check on departments. We're also able to intervene if the need comes.

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Now, I don't want to give any false hopes here, but we've indicated that we are ready to take all the means necessary to make sure that our basic, government-wide critical systems work on January 1, 2000. We're ready to spend the amount of money that is necessary in order to get there, and we have the powers that are necessary to intervene if there is a major problem. However, we cannot guarantee anything.

This is not an obligation in which you can guarantee the results 100%, since we're finding out every day that there are all kinds of new embedded systems that have to be checked because they could fail on January 1, 2000. We also have to make sure we have a test run of all the systems—for which we've left six months, by the way. We want to have all these systems tested—not only ready, but tested—and have the necessary repairs done, so that we can guarantee with reasonable certainty that all the government-wide critical systems will be in shape and will be able to function on January 1, 2000.

You're going to tell me there are other systems, and that we have to make sure the hydro companies—which are under provincial jurisdiction—do their job; that the banks do their job; that the financial institutions and so on do their job; and even that the small companies do their job. At present we have links with the hydro companies, with the provinces and the territories, and with other countries through the Department of Foreign Affairs, so that we can ensure that since we depend on so many other parts of the system, of the economy, these other parts function as well. For instance, we will certainly help developing countries attain certain objectives, but we cannot do it for them. We may be able to contribute a bit, but this is certainly an obligation that they have to undertake. We cannot pay for it, in the same way that we cannot pay for the small and medium-sized companies that are not cooperating in this, but we can make sure the lending institutions are aware that they may incur losses if their clients in the private sector do not apply the right policies.

So we're trying to influence the way the rest of the economy works. We're trying to make sure, first, that we don't make mistakes ourselves. By the way, the Gartner Group, which is the group that judges how ready countries are in terms of Y2K, puts us among the first three countries in the world in terms of Y2K readiness.

The Chairman: John, thank you for those good questions. We're going to come back to you, if you'd like.

We'll hear from Gerry and then Ghislain.

Mr. Gerry Byrne (Humber—St. Barbe—Baie Verte, Lib.): Thank you very much for appearing before our committee, Mr. Minister. It's always a pleasure, and we appreciate seeing you here.

Mr. Minister, you mentioned that the strength of our fiscal position is in large part a credit to the program review exercise and that the Government of Canada has spent great effort to right-size government. While the results have been quite spectacular and very noteworthy, it has to be said that part of it was achieved with some degree of pain and discomfort in some respects, albeit the results at the end of the day undoubtedly merit the fact that the means justify the end.

With respect to the departure incentives, the last time the Treasury Board officials appeared before our committee, they were there with the Auditor General reviewing departure incentives that were granted to the public service to basically assist in the right-sizing of government. At that point in time, I think the committee learned about those departure incentives and other measures that were put in place to give public servants a gentle bump, as it were, if it were determined that their positions were no longer required within the structure of the public service.

It was noted that the only reference to the Government of Canada's fiscal planning that was put in place at the time was in the 1995 budget, and it was a $1-billion target or figure that would be allocated for departure incentives and other measures. We now know that about $3.2 billion have been spent on departure incentives and other measures.

• 1555

Could you give us an overview, Mr. Minister, of why there's such a discrepancy in the amount of money that was originally allocated and referenced as compared to what was actually spent? Why hasn't there really been a substantial level of accounting to the Canadian public in terms of the direction in which this particular program or policy is going? What other future programs are in place in terms of departure incentives to gently lay public servants off?

Mr. Marcel Massé: In answer to your last question first, there are now no more general programs of departure incentives.

Let me give you a kind of historical perspective first. When we were looking at program review, at what the right size of government would be, and at what kind of criteria would be used in order to judge what would be financed or not financed—the basic program review exercise—we looked a number of options, including 35,000, 45,000, and 55,000. We looked at these as a result of the exercise of right-sizing the government. In other words we did not have a target of 35,000 jobs or 55,000 jobs. We had a target of what was needed in order to implement the basic purposes of a federal government in Canada in 1995, the time when this was done. We asked ourselves what the activities that we can and should finance were. As a result of this, as departments answered these basic six questions of program review—do you remember those?—we calculated what the results of downsizing would be. So the initial figures, which were never made public because we did not have a target, started to be made clear.

I'd say it took us until the end of the first phase of the program review exercise before we had detailed plans from government on how we would cut into programs, which programs would be kept, and which ones would not. Only after the initial decisions had been taken by the cabinet committee, after cabinet had seen what would be cut, and after the first approvals had been given, were we in a position to calculate in detail how many jobs would have to be shed—they were not always equal—and how much that could cost. The original estimate I saw was about $2.5 billion. The last one I saw was exactly the one you mentioned, $3.2 billion.

At that point, what we calculated was what the payback period would be. In other words, we calculated how much we were going to save per year over time and how many months or years it would take for us to recover our initial cost in terms of EDI and ERI, which were the departure programs. As the cost was mounting from $2.5 billion to $2.6 billion to $2.7 billion because more and more people were identified and things were becoming clearer, we checked all the time. Program review was basically four years. What we wanted in a period that was three-quarters of that time was to have recovered, in terms of the government's accounts, the cost that we would pay for departures while knowing that whatever amount we were going to save in a year would be eternal in the sense that we would save that amount every year.

The figures are now clear in terms of salaries and benefits for civil servants. The $3.2 billion, which we now have as the latest statistics—it will not vary more than by a few million now—will have been recovered in something like sixteen or eighteen months, which is much less than the three years we had as our target. We've made a ten-year projection, and we are going to save a minimum of $2.5 billion every year as a result of that initial downsizing. That was our calculation.

Mr. Richard Neville (Assistant Secretary and Assistant Comptroller General, Financial Management Policy Sector and Expenditure Analysis and Operations Sector, Treasury Board Secretariat): Maybe I could just add that when we had the discussions with the Office of the Auditor General—and those were at the public accounts committee—we did commit ourselves to producing a full disclosure on the ERI-EDI program at the end of the program review two period. So just to reassure you, we will be coming forth with all of the information.

• 1600

Picking up on what the minister said as well, we have been going to departments every year in April and May to ask for a detailed analysis. The reason there has been a change in it—it's a valid question—is that the take-up by those who were between 50 and 55 was higher than was originally planned for. Don't forget, this was an estimate at the beginning.

That's the rationale, but we'll be more than pleased to share it with everyone once we have the report finalized.

Mr. Gerry Byrne: Thank you.

Mr. Minister, you mentioned in your opening remarks that there was sensitivity to regional concerns, and that the objective here is to assist citizens, not to hurt citizens in any way. Could you give us some comments?

One of the concerns that I have as a member representing an Atlantic Canadian constituency, and especially a constituency in Newfoundland and Labrador, is that the ability for citizens to receive government services and programs should be equal. One of the things that I think has been a consequence of program review in my particular region has been that individual departments, acting within the scope of program review and trying to meet targets, have fundamentally shifted away from my province of Newfoundland and Labrador and into more central Atlantic Canadian facilities in Halifax, Moncton, or Fredericton. In other words, we've seen the shift of a lot of what were once regional headquarters of, say, Transport Canada. For example, Transport Canada closed down Newfoundland and Labrador as a regional status, shifting everything to Moncton. With that shift went a number of public servants. With that shift went senior executives of the Department of Transport, who moved away from Newfoundland and Labrador to Moncton.

In a good statistical variation in a random sampling, what you'd normally see is that some government departments would actually choose Newfoundland and Labrador as their regional headquarters for Atlantic Canada. The truth is that this has never happened in any instance. Federal civil servants and key senior executives, and therefore decision-makers, have actually been removed from the province. I just wondered if there's any process or policy in place under Treasury Board, through the program review exercise, that specifically says that provinces and regions have to be treated equitably in terms of the division or arrangement of federal offices, as well as executives within federal offices.

Mr. Marcel Massé: The first answer is that we do have a basic principle that we should have rough equity between regions. Don't forget, we reduced the size of government by about 20%. This has been a major exercise. In doing something like this, then, you have to apply rough justice rather than absolute justice, because you do so many actual cuts that you really have to balance a whole area of cuts against those in another region. At the same time, we knew that if we did not implement equity, it would become extremely difficult to justify to Canadians in general that what we were doing made sense. We therefore advised every department, and we checked on whatever cuts were made in every department. We tried to manage them so that you would get this balance.

We specifically indicated to departments that unless they had absolutely, tightly demonstrated proof that it was unavoidable, the program review must not result in any changes in the proportion of their operations in the field versus the operations at headquarters.

• 1605

I did not see the actual figures for Newfoundland. They must exist somewhere, but I did not see the results. If you have a headquarters in the Maritimes, though, instead of having two or three branches in the various provinces, they would concentrate one in Moncton. Would there have been a reconcentration of another department in Newfoundland? I'm sure this must have happened.

I remember this was one of the topics that we discussed, by the way. Brian Tobin, who at the time was, of course, the minister for Newfoundland, was quite jealous of the amount of money and the number of people in Moncton, and he made very sure that the overall proportion of federal salaries remained about the same for Newfoundland. This was discussed under ACOA and so on, and Mr. Tobin was very careful to see that the number of jobs being cut would be proportional in the various parts of the Maritimes, even within Newfoundland. He was quite careful to check all that out. So that's the basic answer.

On the fact that some areas may have suffered more in the end, I think that has to be true, and I'm thinking of military bases in particular. I think we closed 30 or 35, and there is no doubt that there was much more damage as a result in the areas where these military bases were closed than there was in, say, big cities—especially places like Toronto or Vancouver—where the effect of the program review was probably hardly felt.

The Chairman: Real short, Gerry.

Mr. Gerry Byrne: The latest Treasury Board figures that I've seen indicate that there has been a reduction of about 28% in Newfoundland and Labrador. I'm quoting that figure off the top of my head, but Newfoundland and Labrador have been cut the most significantly of any province in Canada. There have been a number of situations in which.... You referred to Mr. Brian Tobin protecting Newfoundland. The truth is that, literally within four days of Mr. Tobin resigning, Transport Canada suddenly sent out a press release rescinding Newfoundland and Labrador as a regional office. All of a sudden, within four days of Brian Tobin leaving federal politics, the office moved to Moncton.

I think I could recount a number of other things. For example, take alternative service delivery within the Canadian Forces. Whereas CFB Goose Bay has been substantially downsized to the tune of approximately 60% and has been heavily privatized as a result of a private company coming in to do most of the management, the Government of Canada invested $2.5 billion into Canadian Forces bases in western Canada for the purpose of NATO low-level flight training. CFB Goose Bay has been in the flight training business for NATO for approximately 45 years. Why weren't those measures implemented equally? As part of Treasury Board's surveillance, so to speak, why wouldn't CFB Goose Bay be a part of that particular contract to ensure equity across the board?

The Chairman: Thank you, Gerry. We'll let the minister answer, and Ghislain will be next.

Mr. Marcel Massé: I'll check the figures for Newfoundland once again, because I've not looked recently at the actual percentage. I'll make one general comment, however.

After we looked at the downsizing and so on—“right-sizing” would be a better word, I think—we had to leave departments free to make their decisions based on the criteria they usually use for investment. The investments that have been made in the western provinces were justified by Defence. Don't forget, Defence has a budget of about $9-billion-and-some, within which the department decides on its operations for the future. That was not a part of program review. That was an enhancement of a base, in part because DND is going to offer flight training for a number of European countries. That was an investment project that was based on criteria that made sense. As such, it was not part of program review. I'm just indicating that some of these investments may not have been within the purview of program review and were actual operational decisions by a department in a sphere in which we didn't intervene.

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The Chairman: Thank you Gerry. We can come back to you if you have more.

Ghislain, please, then Réginald.

[Translation]

Mr. Ghislain Lebel (Chambly, BQ): I am a newcomer to this committee, Minister. I have not had an opportunity to hear you before, or to hear your comments to this committee. In your brief, you talk about renewed governance. Does this mean governance by agencies, by increasing the number of agencies and privatizing in many cases? I may be completely mistaken about this.

I agree that often it is quite easy to find contract people to do work formerly done by government only, work that people had entrusted to the government. It is easy to imagine that if you were to give Pinkerton responsibility for the security of the country, that company would definitely pay salaries much below those of public servants, there would be no union, minimal wage would prevail, and so on. Thus, there is no doubt that we can turn responsibility for managing prisons and other such institutions over to Pinkerton, but I very much doubt that the prisoners will continue to get their glass of milk at every meal. I am sure that the work would be done within budget and that the costs would be minimal compared to the amounts you set aside for such activities, Minister.

My question, therefore, is as follows. Is there not a danger here? As members of the opposition, it has often happened, too often—I know my friends opposite will say that they've never seen this—that we are told that we were not supposed to ask policy questions about the administration of the Canada Post Corporation, for example, because it is an agency. As long as the corporation can report a balanced budget to the Minister, and as long as it doesn't do anything wrong, we are not supposed to be asking questions.

I therefore ask most respectfully, Minister, whether you are not afraid that this stand may mean that some day citizens will find that their government, to whom they had entrusted certain responsibilities, because they did not want to entrust them to others, has turned them over to others in order to reduce its costs? That would be a hard blow to the principle of responsible government.

Mr. Marcel Massé: You have asked a very important question that is related to the basic philosophy of a government. When we considered program review, there was no underlying ideology involved.

In other words, in some parties, the basic ideology is that the government must control much more. That is the ideology of socialist parties, such as the NDP in Canada. They think that the government's role in redistributing wealth is so important that the government must control a substantial part of the economy. There is also the example of the socialists in Great Britain, before Tony Blair, because he has changed the party's basic philosophy.

Other parties think that the best government is the least government. Clearly, the more you move to the right of the political spectrum, the more you find this concept. However, when we undertook program review, we neither privatized nor retained certain functions within government on principle.

The question we asked had to do chiefly with rationality and efficiency. We asked what the role of a modern government could be, with the arrival of new technologies, particularly information technology, and with the constant increase in people's level of education.

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Let me explain what I mean. In the government 15 years ago, it was much more difficult to get the information required to make policy decisions and there were far fewer people who could analyze data in order to make policy decisions. Thus, because of the information available and people's training, it became necessary to concentrate policy decisions.

As people become better educated, it becomes possible to assemble data from all sorts of sources in one place. I'm not speaking only about the trend within the Canadian government. The same phenomenon has occurred in all developed countries.

The issue is often as follows: which decision should be made by a government made up of elected representatives, because they concern fundamental values, and which decisions can now be made by the private sector, without affecting people's values?

Let me give you an example. In Canada, a decision was made to have a public health care system. You know that there is a controversy about this even within Canada. However, there is a general consensus among Canadians that they want a public health care system.

Now, let us consider the case of Canadian National. I'm trying to give you some concrete examples that have actually occurred. Forty years ago, the railway was in much more of a monopoly position, because it was not competing with other means of transportation with competitive costs. Today, there has been such a change in means of transportation almost everywhere that the railway holds much less of a monopoly than it did in the past.

As the government no longer needs to control the means of transportation, for example, it can focus on security and safety. I'm thinking of the legislation and regulations that will determine people's needs, one of which is security, and the standards that will allow the private sector to provide this level of security and safety.

That is why we privatized Canadian National and NAV CANADA. There are still discussions as to whether NAV CANADA should have been privatized or not. At the time, we had concluded that we did not need to control NAV CANADA in order to ensure that the standards of safety and security would be applied. That is why we proceeded with the privatization.

I will try to bring my answer to a close. The question you raised is very broad.

Mr. Ghislain Lebel: And, what's more, the Chairman might not let me ask you another question.

[English]

The Chairman: I'll give you a couple of extra minutes.

[Translation]

Mr. Marcel Massé: Your question is crucial. Clearly, it must determine many of our decisions.

In the same way, the governments of England, Australia, France, Germany and the United States realized that with increased communications capacity, it was no longer necessary to focus resources on huge, bureaucratically unwieldy departments. These governments realize that the planning and policy making activity could be separated from the enforcement activity.

In England, which is not a socialist country, Mrs. Thatcher established enforcement agencies for 80% of government activities. Why? Because you can give private sector enforcement contracts. If they don't do the job, you hire someone else. However, public servants are people we keep a long time.

Mr. Ghislain Lebel: I think you understood the focus of my question very well, Minister. I certainly agree with what you say about CN, for example. If we were to hire an agency to distribute old age security cheques, that would not bother anyone. I quite agree with you on that.

However, when we are talking about certain powers, powers which people generally, but particularly those in this country, have turned over to government...

Let me give you a few examples. In New Brunswick, at the beginning of the century, companies were allowed to log on private lands. After one week, three people had died in Northwestern New Brunswick. People said that they could accept the fact that the government might come on to their land, but that they found it unacceptable for private companies to do so. This had touched a fundamental nerve in people. The revolt of the Patriotes in Saint- Denis-sur-Richelieu was based on the same principle.

• 1620

I understand and respect the explanation you have given, Minister. My fear is that we may be going too far. What happens is that the government is having the work done at a lower cost, work that should be its responsibility. I'm afraid people might not accept this.

I come now to the proposed revenue and customs agency. I apologize if I don't have the right title. This is a case where a position of authority will definitely be occupied by "jobbers". That could be explosive. If a bailiff comes to serve me with some document or other, I might accept it, because he is acting on behalf of my government, whose authority I recognize. However, if he represents Pinkerton, I have my doubts about the kind of reception I would give him.

Mr. Marcel Massé: You make an entirely valid point. However, there is a grey zone somewhere between black and white. In the case of the revenue agency, not only did we look at the issue, we talked about it in depth and are continuing to do so.

The first proposal was for an agency at arm's length from the government. However, under the current proposal, the minister would retain full responsibility for the agency, many of whose board members are appointed by the federal government itself, by order in council.

So, as you can see, this is not a case of privatization. An agency such as the Canadian Broadcasting Corporation is independent of the department, Canada Post occupies the middle ground and the proposed revenue agency is close to what is known as a departmental agency. It amounts to a department in which some powers have been given to a board of directors, but in which many powers remain directly attached to the minister's obligation of accountability.

As the result of these discussions, which focussed exactly on the principles you have described, was to suggest the creation of an agency that would report much more directly to government—an agency that is not privatized and is not in the same position as Canada Post.

Mr. Ghislain Lebel: Let's take the case of Equifax Canada, which will do just about anything. Provided you pay, Equifax can deliver a pizza to you, beat people up or anything else. Equifax is interested in profits, nothing else.

Let us imagine for a moment that Equifax Canada is about to negotiate a contract with you and to accept some government representatives on its board of directors. Let us imagine that Equifax Canada is collecting income taxes for the federal government or for municipalities, because it states in the bill that... Do you think it will be possible to have or maintain social peace in Quebec?

I mention Quebec, because I do not claim to know the rest of Canada, but I know that in our province, people would have a hard time accepting this. As a Quebecker yourself, you know that as well as I do.

Mr. Marcel Massé: That is why we are not doing it.

Mr. Ghislain Lebel: There's no danger that we're headed in that direction.

Mr. Marcel Massé: I've seen the debates surrounding the creation of the agency, and as I said, much of the discussion focussed exactly on the fact that Canadians are very sensitive about this aspect—about what they are prepared to entrust to their government, what they want their government to look after directly—and what they are prepared to let go.

We did not see very much opposition to the privatization of Canadian National among the people of Canada. But you could see the reactions, including those of members of Parliament, regarding many other government initiatives that fell within the grey zone. In the case of the agency, which does fall within the grey zone, the result was that we changed its structure to bring it closer to the government, for the reasons that you mentioned.

[English]

The Chairman: Thank you, Ghislain.

We'll go to Rég Bélair, then Dave, then Carmen.

[Translation]

Mr. Réginald Bélair (Timmins—James Bay, Lib.): Thank you for being here today, Minister.

• 1625

For the benefit of the interpreters, I'm referring to page 2 of the information notes we received.

I'm coming back to your performance report for last year, Minister. In it you say:

The purpose of this report is to strike a fair balance between the information we are required to table in Parliament and the new philosophy of managing public expenditures, taking into account changes in the responsibilities of government in a constantly evolving society.

Could you please give us a further explanation of this new philosophy of managing public expenditures?

Mr. Marcel Massé: I think one of the very important points for parliamentarians is what we call results-based departmental performance evaluation.

You know how the estimates were traditionally presented. Starting this year, they will have a new format.

In the past, they were presented as a number of votes that had been passed in Parliament. I'm trying to remember some CIDA programs in order to give you an example. We said that in order to increase the income and wellbeing of people in developing countries, Parliament voted, let's say, an amount of $330 million. In an effort to reduce hunger in developing countries, Parliament voted an amount of $230 million.

An audit was performed to ensure that the $230 million earmarked for food aid had in fact been used for that purpose, had been used to purchase wheat or fish, for example. An audit was done to ensure that the money had not been used for some other purpose. That was the purpose of the audit.

What we are trying to give you now... You saw me file 80 reports from different agencies and from...

Mr. Réginald Bélair: Eighty?

Mr. Marcel Massé: Yes, not long ago. These are reports from agencies and departments.

What we're trying to determine now is, for instance, why we had to send food aid. If it has to be sent every year, there may be something not working properly. Shouldn't our program be aimed at making people in developing countries able to produce the food that they need for themselves? You see that the questions which are put are very different.

Currently we are asking the departments not to tell us that they will be spending $230 million on food aid for developing countries. That tells us nothing about the long-term results aimed at by the programs. We'd rather have them tell us that they are helping to free a given country from poverty. On a short-term basis, food aid is provided, but here is how the food aid will improve the country's mid-term capacity to produce its own food.

I'll say as a footnote, that before having entirely results- oriented management, we'll have to improve considerably the departments' ability to explain their true objectives to Parliament.

Mr. Réginald Bélair: That was my second question.

Mr. Marcel Massé: It will be difficult to obtain because we've barely begun implementing this kind of management style.

Mr. Réginald Bélair: In the same report, Mr. Minister, you have described a fair balance in the way you filed your own audit before Parliament to inform parliamentarians on what is really going on in the public service and with Treasury Board.

Aren't you afraid that certain compromises or omissions, be they voluntary or involuntary, could occur, and that finally people get frustrated with this? I am playing the role of the devil's advocate, as it were.

Mr. Marcel Massé: You're quite right in saying that the burden imposed on departments and civil servants will be much heavier because they will no longer be able to give us the usual pablum contained in most program descriptions found in conventional forecasts. They'll have to think for themselves and try to define the purpose of the management sector in their department. What is the Department of Natural Resources meant for? What is the Department of Agriculture intended for? Does each and every program help the minister to carry out his mission?

As they will try to define concrete and measurable results for you—because we want them to be measurable—they will become increasingly vulnerable to criticism. There is no doubt about that.

• 1630

Mr. Réginald Bélair: Will this new management style allow parliamentarians to know exactly how the funds were allocated, and compare this with what the funds were initially requested for? In other words, when the budget is prepared, certain sums are allocated for certain ends. With your new management style, will you be able to determine whether the funds were really spent as they were meant to be? Or will ministers still have discretion to spend the funds as they please?

Mr. Marcel Massé: The power of ministers to spend funds where they please is currently rather restricted.

Mr. Réginald Bélair: Yes.

Mr. Marcel Massé: During the course of the year, we rely on the ministers' discretion up to a certain point, but they have to operate within the limits of their votes or else they have to come back to Parliament to apply for more money. That is what the supplementary budgets A and B are meant for. This is why you see some items increase while others decrease. A $5 billion supplementary budget B seems enormous. In fact, the difference in government expenditure will be approximately $600 million. The rest has to do with reallocations. This allows departments and ministers to adjust during the course of the year.

Mr. Réginald Bélair: So there will be some flexibility left.

Mr. Marcel Massé: There will be some flexibility left, but all within the voted amounts. Otherwise, they will have to come back to Parliament for new authorizations.

Mr. Réginald Bélair: One final question, Mr. Chairman. I take it for granted that the Auditor General entirely agrees with what you intend to do.

Mr. Marcel Massé: Yes, because we took care to do it together with him, and told him that we did not want to have reforms that are costly in time and money to have him criticize them afterwards.

[English]

The Chairman: Thank you, Mr. Bélair.

We have Dave Chatters and then Gerry.

Mr. David Chatters (Athabasca, Ref.): Thank you for coming before the committee, Mr. Minister.

Treasury Board isn't where my expertise lies or where my greatest efforts are made; it's in the natural resources sector, and I'm looking forward to having our minister before the committee as well. But there are a couple of things that caught my attention when you were talking about this program review and the fact that you would be saving $2.5 billion a year from salaries and benefits after the program review, offsetting the cost of the departure incentives.

I again refer to the natural resources sector in studying the performance reports and the estimates. It's pretty clear you're really playing the same shell game governments have played for years and years. You see the downsizing in the bureaucracy and the savings you apply there against the cost of departure incentives, but on the other side of the ledger, the expenditure on external contracting has skyrocketed. If you're going to be honest about how much money you're going to save through this downsizing of the civil service, there has to be some consideration of how much of that saving is taken out and spent on the outside on contracting out those services. That's very obvious in the Department of Natural Resources.

The other concern is the same one Gerry brought forward. There seems to be a lot of politics going on in this whole issue of redistribution of government departments. I was particularly concerned about the announcement of the closing of the RCMP training facility in Regina, which is as old as the RCMP themselves, and the rumour—I call it a rumour at this point—that there will be a small training centre opened up in the Prime Minister's constituency. I find that to be most offensive and very political.

I would just like you to comment on those two things.

Mr. Marcel Massé: On the first question about contracting out and whether it consumes the benefits of the reduction in direct labour, as I mentioned, we looked at the budgets of departments and how much was spent in order to implement a specific purpose or play a specific role.

• 1635

In terms of departments, I know—because in program review we followed it—after we looked at their expenditures by chunks of programs, in terms of roles of the department and money allocated, the budget that was given to departments corresponded to the money that was judged by cabinet to be necessary to implement that role. That is why I indicated, when I talked about the number of jobs that were shed, that it was a result of the way we did it rather than a target.

In terms of the budgets of departments, we know the expenditures have come down because their budgets were cut. They were not given a choice. By the way, I was a civil servant during quite a number of so-called downsizings for years and years before, and I know how civil servants avoid downsizing. I also know if there is one thing they have to respect, it's their bottom line. If they are asked to shed labour, they will find all kinds of other reasons, such as contracting, to get around it. I've done it myself.

The way to make sure if you make a reform it is implemented is to try to make a judgment as to the amount of money necessary to fulfil that role. You put in the amount of money necessary and say they'll be judged on results—which by the way is the thing with results; you can't do that unless you judge them on results.

In program review we got our money and we know the number of people the department was decreased by. We also know we are spending $2.5 billion less in terms of the total amount of expenditures on everything that goes into paying people, whether it's contracting or civil servants. So I know I got my money.

On the more difficult question of whether there is politics in it, the responsibility of departments is to implement through the money they spend. We have a role in monitoring how that money is spent in terms of contracts and so on in Treasury Board, and I think we've played that role fairly. I cannot go further in terms of judging every other amount of money that may have been made according to the right rules but with the wrong intents, because that I do not know.

The Chairman: Thank you very much.

I have Gerry, Ghislain, Carolyn, and Marlene. I'll ask for the continued cooperation of members. The minister has to get to a meeting for 5 p.m., so we'll ask you to come to your points quickly.

Gerry Byrne.

Mr. Gerry Byrne: Treasury Board helped manage the financial planning and processing of significant Canadian disaster relief efforts in the last little while. I'm referring specifically to the Saguenay, the Manitoba flood situation, and the ice storm.

Does Treasury Board have an overview document of each of those particular initiatives, outlining the different amounts of government spending per department in both actual direct transfers through the official disaster relief funds and through incremental support from other government departments, such as Western Economic Diversification, FedNor, or whatever?

Has such a document been prepared to provide Canadians with an overview of the Canadian response to those significant disasters?

Mr. Marcel Massé: I'm told yes. I'm sure if we don't have it we will be able to provide it, because we have the figures.

Treasury Board is a bit incidental to this. The Disaster Financial Assistance Arrangements Act presides over it, but there is a group in Defence—

Mr. Richard Neville: Emergency Preparedness Canada.

Mr. Marcel Massé: The Emergency Preparedness Canada group, which is situated in Defence, is responsible for the contingencies. By the way, for Y2K the same group is preparing the contingencies.

They of course can call on the army, but they can call on all the other departments too. They have what we call a flexible budget.

• 1640

Within the overall budget they first use the money that's available, but then obviously they get transfers from the centre—therefore the involvement of Treasury Board—for programs that have to fit the criteria for contracts and programs in Treasury Board. So we may approve what they spend, but they're established there. They are the group that is responsible and does the coordination.

On the Manitoba floods, money was spent through quite a number of departments, and the same was true for the ice storm—Agriculture, Industry, and then the regional development agencies and so on. But I'm sure we can get these reports together if they're not there and send them over to the group.

The Chairman: Thank you, Gerry.

Ghislain.

[Translation]

Mr. Ghislain Lebel: Mr. Minister, correct me if I am wrong. I'm not absolutely sure of being right and I am relying on you.

When I chaired the Regulations Review Committee, it happened a few times that we wanted to study some regulations, especially for agencies such as Atomic Energy of Canada and crown corporations like Canada Post. The legal advisors of these organisations had told us that we had no authority to study their regulations, how they were adopted, etc. This, consequently, also divests the Auditor General of Canada of auditing power over certain government agencies, as for instance Canada Post.

I'll briefly tell you an anecdote about what happened in our region of Chambly. There's a splendid post office right in the middle of a shopping centre. Everyone was focussing on it and the rumour arose at a certain point that the post office was for sale. So people began calling the MP's office, my office in this case, and I had never heard anything about it.

So, I called Canada Post and finally got to speak to someone responsible for disposing of surplus assets. I asked him whether and when they would decide to sell the post office, whether there would be an offer by tender, etc. I asked him whether prospective buyers could make offers to buy. He answered that he doubts this very much and that it will surely be sold by private contract.

It is a flawed procedure, if you want to get the maximum price. He even went so far as to tell me that if Canada Post wanted to give the post office away, the government could do nothing about it. And so I learned that this, unfortunately, was true.

Don't you think that the government should, through its management, its new governance as you called it, introduce some kind of monitoring method into the system in order to avoid... Often these corporations, like Canada Post and others, were created, and made functional and viable with government funds. Once they become autonomous, once the baby can run on its own, they are no longer accountable to anyone at all.

This is the dangerous part, and it seems to me that we are risking the loss of substantial assets and that it will be at the citizens' expense.

[English]

The Chairman: Thank you, Ghislain.

[Translation]

Mr. Marcel Massé: Well, I will fist give you an answer regarding the principle and then we'll see the rest. On the principle I answer that Canada Post still remains a crown corporation and that consequently certain cases involve ministerial directives and that Treasury Board must approve its overall business plan.

But as government is no longer funding Canada Post... We still have a certain role, for instance, Cabinet has to authorize any increase in stamp prices, etc. So we have some power over the corporation. But as we are no longer directly funding it, it is very autonomous as far as management is concerned. You asked how far its autonomy in management should go. This is a difficult question because whether or not it should do this or that will always have to be judged according to concrete facts.

I must say that I would be somewhat surprised to see the assets of a Crown corporation disposed of, as in the case you are talking about, without abiding by certain marketing rules, unless it is donated. I am not familiar with the rules of Canada Post on this point, but the Corporation must have a fairly strict system when it comes to disposing of its goods. I am going to look into it.

• 1645

I think that in principle you are right; a Crown corporation should not be disposing of assets which often have been purchased with taxpayers' money, without following a procedure that will enable them to recover some of it.

[English]

The Chairman: Thank you.

[Translation]

Mr. Ghislain Lebel: I have an additional, related question. Concerning the audit of the—

[English]

The Chairman: Ghislain, we have a problem, because we only have about six or seven minutes left. I'm sure you'll have a chance, though.

Carolyn.

Ms. Carolyn Parrish (Mississauga Centre, Lib.): Thank you very much for coming, Minister.

Yes, downsizing is political, but you, your department, and the minister before you have all done an incredible job. We've lived through downsizing in Ontario and it has been brutal. The downsizing that has occurred here has been a gentle, very planned, very well-executed downsizing, so my compliments to you and to the department.

I just have a very quick question. I was in Scotland last week, at NATO, and I had three different people complain to me that when they were in Canada in the month of November there were no red-coated Mounties in front of the Parliament buildings. When we're finished tightening up the budget, I'm wondering if we could maybe find some money, sometime in the near future, to have two gentlemen out there in their red outfits. It sounds easy, but they're so quickly identifiable as a true Canadian treasure that I think it would be really good public relations. Is there any chance?

Mr. Marcel Massé: I'll look at that, because Treasury Board is also responsible for a program called FIT, which is the Federal Identity Program. We'll look at it.

Ms. Carolyn Bennett: Three Scotsmen in funny little short kilts all complained.

Mr. David Chatters: That's a good question.

The Chairman: Marlene Jennings, please.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): I will try to be brief. My comments will tie in somewhat with Mr. Lebel's. It's a little hard for me to say that on one point I agree with a BQ member.

Mr. Ghislain Lebel: That must be the first time.

Ms. Marlene Jennings: No, we agreed once before on the joint committee. It is a question of the autonomy of organizations and of governance. In the private sector, governance is done by the decisions of managers, either by the board of directors or by shareholders. Shareholders who do not like decisions made by managers only have to sell their shares. If everyone does so at once, it can have an immediate impact.

We are facing a problem with our independent organizations. I might be a little less concerned if we had a citizens' protector, a federal ombudsman, who would have the power to receive complaints, be it from an independent federal organization, an arms' length organization, an organization in the grey area, or something similar.

Let me say that this coincides with my own experience. I have already been a member of a quasi-judicial organization and of an administrative one, at the provincial level. If it were not for the fact that the province has an ombudsman, I know that some unfair decisions would have been made that would go beyond the terms of reference of these organizations.

Thus I would like to ask you seriously, in light of the role that you play as comptroller of all government operations in this field, to examine the possibility of creating a sort of ombudsman's office with this kind of power.

I understand that if we adopted this kind of management, it would be because we feel it is rational and effective, and that by privatizing it or removing it somewhat from the government apparatus, we would make it much more efficient and economic. But at the same time, the elected officials would lose their governance, to some extent.

I have no problem with the task not being assigned to me, as an elected representative, but there should be a federal agency with some measure of authority over this type of organization.

• 1650

I will let you think about this idea.

[English]

Mr. Marcel Massé: Je trouve que cela fait du sens, and we will consider it.

The Chairman: Okay, colleagues, I'm about to adjourn the meeting. Thank you very much, Mr. Minister and your officials, for attending.

Mr. Marcel Massé: It's been a pleasure.

The Chairman: In the year to come we'll probably have the minister back again. We appreciate your responses.

Marlene, you asked about the mineral policy. It's been e-mailed to all members, so the mineral policy you asked about is on their e-mail.

Our meeting tomorrow with Mr. Gagliano is in room 269, West Block. Gerry Byrne is working on dates for Mr. Goodale.

Thank you, sir. The meeting is adjourned.