PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 21, 1997

• 1535

[English]

The Chairman (Mr. John Williams (St. Albert, Ref.)): Good afternoon, ladies and gentlemen. I'll call the meeting to order. The orders of the day are the report from the steering committee, which we will consider now. The committee will then suspend until 4.30 p.m., at which time the Auditor General is supposed to join us.

I thought I saw the bells ringing for a vote, but it would appear that they have stopped. In anticipation that they may ring again, let's get moving and see what we can do here.

I believe the first report of the subcommittee on agenda and procedure has been circulated.

Point number one: the steering committee has set Tuesdays and Wednesdays for committee meetings, but they realize there is a potential conflict of time because the public accounts committee is in group number three. Members of this committee also sit on other committees that are in designated group number three and therefore sit at the same time. We are therefore only setting the meeting dates for the next two weeks, until such time as the steering committee can meet again, after those members who have a conflict have a chance to talk to their respective whips.

I'll go through the entire report and see if we can get it adopted all in one motion. If not, we'll just revert and take it item by item.

Point number two is that during the questioning of the witnesses, the chair recognize a government member as the third questioner on the first round.

Mr. Laurin.

[Translation]

Mr. René Laurin (Joliette, BQ): If we wish to propose some changes, should we do so after each paragraph, or should we wait until the entire report has been read? How are you planning to proceed?

[English]

The Chairman: What we'll do is give a synopsis of the entire report and then we'll come back and take it item by item. Okay?

So the recommendation is that a government member be the third questioner, and that we recognize that the public accounts committee has a different role from that of the other legislative committees and will endeavour to ensure that all members have an opportunity to speak at every meeting.

Number three: that we will reimburse travelling expenses if we bring witnesses in to appear before this committee.

Number four: that the committee meet next Tuesday at 3.30 p.m. to consider the report—sorry, that's this meeting right now—and that at 4.30 p.m. we will invite the Auditor General to address the committee.

• 1540

Number five is that the agenda for the forthcoming meetings will be as listed: chapter 12, Information Technology: Preparedness for Year 2000; chapter 21, Household Goods Removal Services of the Federal Government; chapter 13, Health Canada—First Nations Health; chapter 19 on Transport Canada: Commercialization of Air Navigation System; and chapter 17, Human Resources Development Canada. These chapters are all from the Auditor General's reports of April and October 1997.

Point six is that the research officers draft their reports and submit them to the steering committee within three weeks, where the most contentious issues can be dealt with. Hopefully we can get it through the full committee—maybe more than one report at any one particular meeting.

After all that, we will also deal with a motion that.... We have some information here that is prepared for us by the clerk.

Let's go back now and take the items on the report of the steering committee. Is there any discussion on item 1?

Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, could we know who the committee's research staff are? What exactly is meant by "research staff of the committee"?

[English]

The Chairman: We have two researchers. Marion Wrobel and Brian O'Neal are the two researchers assigned by the library to our committee. Brian, of course, is sitting right here, and Marion I understand will be joining us as much as he can.

[Translation]

Mr. René Laurin: Would it be possible to include the members' own research staff? While they don't need to be present at each meeting, I would like the members of the Public Accounts Committee to have the option of bringing their own staff along, when necessary. Their presence has already proved very useful to us in terms of preparing questions for the witnesses. I propose that they be allowed to attend when necessary, but that they not be seated at the table, but rather off to the side, in keeping with the wishes of committee members.

[English]

The Chairman: Are you talking, Mr. Laurin, about the in camera briefing meetings, whether you can bring your research staff into the meeting at the same time? Is that your question?

[Translation]

Mr. René Laurin: Yes.

[English]

The Chairman: We have never stopped members from bringing their research staff into a briefing meeting. They are certainly more than welcome to sit in the chairs around the room, but not at the table, of course.

[Translation]

Mr. René Laurin: The committee felt it was better not to include it in the report because... The reaction of the government members leads me to believe that they do not want their staff to be present. Wouldn't it be preferable to indicate this to ensure that this question does not come up again when a research staff member shows up at a committee meeting?

[English]

The Chairman: Mr. Harb.

[Translation]

Mr. Mac Harb (Ottawa Centre, Lib.): No, I don't agree completely with my colleague. I only want to say that I have some reservations when it comes to formally including our assistants in the committee's research team. Our experienced research officers already work very hard.

Mr. René Laurin: That's not the point.

Mr. Mac Harb: However, I don't object to members' research staff attending briefings.

Mr. René Laurin: Then it's settled.

My second point relates to the first paragraph and to the item on in camera preparatory briefings. Since you were yourself a member of this committee, you will recall, Mr. Chairman, that occasionally the committee wished to a public rather than an in camera briefing. I would hope that there would be a certain amount of latitude in allowing these preparatory briefings to be held in public and that we could specify in the report "at 5:30 p.m. for preparatory briefings, generally held in camera". This would give the committee the flexibility to hold a preparatory briefing in public if that is what it wanted without us having to discuss this point each time. I remember spending an hour and a half discussing whether or not we were going to hold a public or an in camera meeting. I want us to keep this option open.

[English]

The Chairman: I think the door is always open, Mr. Laurin. In fact, any member can always move that the briefing meeting be held in public, if they so desire, for any particular circumstance. A briefing I think by its nature tends to suggest that it be held in camera. It allows the Auditor General's staff, not the Auditor General himself, to amplify on their findings and perhaps even give us some information that may not actually be contained in the Auditor General's report, which, in essence, is not a public piece of information.

• 1545

But I'm certainly open to hearing if anybody else would support Mr. Laurin's position.

Mr. Mac Harb: My understanding is that the committee, by a vote, could decide to open a meeting to the public or it could keep it as a closed meeting. So if you say that from time to time the committee may have information held in public, that's fine. But I don't think there's anything in the rule that prevents you from doing that now anyway.

The Chairman: There's nothing in the rules to make the motion state—

[Translation]

Mr. René Laurin: That's the problem we face. Someone cited the report to argue that we could not hold a public meeting since briefings were supposed to be held in camera. I want to avoid another 90-minute discussion. If we specify that briefings are generally held in camera, that would mean that they indeed are most of the time, but that occasionally, at our request, they could be public. This would be agreed upon in advance in the report. We could thus avoid future discussions and arguments which could unnecessarily delay our work.

[English]

Mr. Mac Harb: If it's not already in the rules, maybe the clerk could help us out here in finding out where is the wording that will prevent us from holding it in public from time to time. If there is a specific wording, perhaps the clerk will tell us what section of the rules we're talking about here.

The Chairman: I think we have to say that we're either in camera or in public. To say we're generally in camera doesn't give the committee any guidance as to whether a meeting is in camera.

Mr. Mac Harb: So, Mr. Chair, with your permission, I'll propose that the committee from time to time hold its briefings in public, as the membership may wish to do so.

The Chairman: Okay.

Mr. Mac Harb: You will keep this motion somewhere with the clerk, so whenever we need it you can pull it out. We have said “we may”. We do not necessarily say that all of our meetings might be, but we may if the members of the committee wish to do so.

The Chairman: The clerk has a suggestion of simplification here.

The Clerk of the Committee: To simplify, instead of having a three-line amendment, maybe just add the words in that first paragraph, at the third line. It would read “Wednesdays at 5.30 p.m. for preparatory briefing, generally held in camera”.

Mr. Mac Harb: That's fine.

[Translation]

Mr. René Laurin: What an original motion!

[English]

The Clerk: The minutes can show Mr. Laurin, seconded by Mr. Harb.

The Chairman: So the minutes will show that.

Mr. Harb, is that okay with you?

Mr. Mac Harb: My understanding of this is not what Mr. Laurin is after.

[Translation]

Mr. Laurin, it's not so much the first paragraph that concerns you, but rather the matter of committee meetings. Isn't that right?

Mr. René Laurin: Mr. Fournier is proposing the exact same wording I suggested, namely that briefing sessions generally be held in camera. That's fine then.

I also wanted it to be clearly understood that our research staff can attend these meetings.

Mr. Mac Harb: Fine.

[English]

The Chairman: And that's never been a problem before.

Okay, let's just take a vote on item 1. All those in favour of item 1, as amended?

Some hon. members: Agreed.

The Chairman: Item 2: that during the questioning of witnesses the chair recognize the government member as a third member on the first round—which will be eight minutes for each person, as we discussed earlier, and on subsequent rounds we want to make sure that everybody as best as possible has an opportunity to speak, time and other factors permitting, of course.

Any questions on that?

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Mr. Chairman, would you review again for me the order of sequence of questioners—who's first, who's second? I know we're third.

The Chairman: The first is the official opposition, which is the Reform Party; the second will be the Bloc Québécois; the third will be the Liberal Party; the fourth will be the New Democratic Party; and the fifth will be the Progressive Conservative Party.

Mr. Lynn Myers: Just so I'm clear here, does that mean we get two questions in any given session?

• 1550

The Chairman: No, we normally go in rotation, but the question was raised. Because we are less partisan than other parties, we want to try to give as many people as possible an opportunity to speak. Due to the changing environment of different times and committees, we will try to ensure that everybody has an opportunity to speak. The first round will be eight minutes per questioner, followed by four minutes on subsequent rounds.

Mr. Telegdi.

Mr. Andrew Telegdi (Kitchener—Waterloo, Lib.): Maybe one of the things we could clarify for members on this side, anyway, is that often the government, when it takes its eight minutes, can do four and four.

The Chairman: Of course.

Mr. Andrew Telegdi: That can happen with other parties as well.

The Chairman: It's eight minutes per party on the first round, four minutes on subsequent rounds.

Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, why not put down what you just said instead of that the Chair will recognize the government member as the third questioner? I understand that the official opposition generally goes first, but nowhere is it clearly stated who goes second. I think we agreed that the first question should go to the Reform Party, the second to the Bloc Québécois and the third to the government party. Why not indicate the order in the report, namely the Reform Party, the Bloc Québécois, the Liberal Party, the Conservative Party and then the NDP?

[English]

The Chairman: Well, it's just the standard rule, Mr. Laurin, the same way as the first questioner is not down here as the official opposition. Normally it is the opposition parties followed by the government. We have put the government in as number three rather than at the end. That is the only change from normal, accepted practice. All the rest is normal, accepted practice.

[Translation]

Mr. René Laurin: Mr. Chairman, in the case of the Public Accounts Committee, it is customary for the Chair to recognize the Official Opposition, not the government party, as the first questioner. This is the only committee where the opposition asks questions first.

Therefore, while there is no question that the Reform Party gets to go first, there are three other opposition parties vying to go second. If we agree that this privilege falls to the Bloc Québécois, I would like this to be clearly stated to avoid a scenario where in your absence, another chairman might decide that there is no established order and take an entirely different approach.

Mr. Mac Harb: Mr. Chairman, I move that the Reform Party be recognized for the first question, the Bloc Québécois for the second question, and government members for the third question.

Are you satisfied, Mr. Laurin?

Mr. René Laurin: Yes.

[English]

The Chairman: Thank you, Mr. Harb. We now have that on the record.

Is there any further debate?

Mr. Bachand.

[Translation]

Mr. André Bachand (Richmond—Arthabaska, PC): Perhaps Mr. Laurin should have attended our last meeting. Many more details were supplied during the subcommittee meeting. I'm in no way blaming the clerk, but we discussed this procedural question at great length. The Chair assured the subcommittee members who were supposed to report back to the committee that indeed this matter had been discussed and that it had been agreed that if additional rounds of questioning took place, in order not to penalize the government party, the Chair would ensure that the opposition parties and the government party took turns asking questions.

That explains everything. We did not decide on this wording, but since we are now preparing to amend the wording of the report, I think it would be a good idea to specify the names of these two other parties, namely the Conservative Party and the New Democratic Party. If we're going to help the Chair, then we should be as clear as possible.

[English]

The Chairman: Thank you, Mr. Bachand. We appreciate that piece of advice. There is no question that the chair will follow after. The official opposition is first, followed by the Bloc second, followed by the government as the third questioner, followed by the New Democratic Party, followed by the Progressive Conservative Party.

[Translation]

Mr. André Bachand: Mr. Chairman, at the risk of repeating what I stated earlier, when the steering committee met, we reviewed this procedure at considerable length. We also agreed to defer to the Chair, to trust the Chair's discretion to conduct meetings in accordance with the procedures set out by the steering committee. Of course, if we want to put everything down in writing, we can do so, but in that case, we should perhaps re-submit this question to the steering committee and report back to the main committee later.

• 1555

[English]

The Chairman: Well, there's no question, Mr. Bachand, that we will follow that order, whether it's left up to the chair or whether it's a directive from the committee. That is the order we will follow regardless, and we'll follow that always.

Since we all recognize exactly where we stand, we should vote on the issue. Is there any further debate? Let's call the question. All those in favour?

Some hon. members: Agreed.

The Chairman: We'll go on to point 3, that we pay reasonable travel, accommodation, and living expenses for witnesses we invite to appear before this committee, up to a maximum of two people. Is there any debate on that point? All those in favour?

Some hon. members: Agreed.

The Chairman: Point 4 is that the committee meet today. We are meeting today, and we will suspend after we're finished this report until 4.30 p.m., at which time we've invited the Auditor General to be here. I don't think we need to vote on that one.

We'll go on to number 5, on the agenda for the public accounts committee, as laid out before you. I've read that once; I don't think I need to read it again.

Mr. Myers.

Mr. Lynn Myers: Mr. Chairman, is it assumed that numbers 5, 6, and 9, on the Auditor General's report, will be done after Christmas? He recommended that be looked at, and I was just wondering about the status of that.

The Chairman: Because the Auditor General will be tabling another report on December 2, I believe it is, the steering committee will then have a decision to make on whether they wish to continue with these particular chapters from this report or to choose chapters from the report that is yet to be tabled. So why don't we wait and let the steering committee make that decision and recommendation to this committee at that time?

Mr. Lynn Myers: A supplementary, Mr. Chairman: how were these determined in terms of priority?

The Chairman: Basically they were suggestions. There was no great rocket science in the order. I think it was Mr. Telegdi's recommendation for chapter 21, it was mine for chapters 13 and 19, I think it was either the Bloc or the Progressive Conservatives for number 17, and we put in preparedness for 2000 at the beginning. Everybody was quite happy.

Mr. Lynn Myers: Thank you very much.

Mr. Mac Harb: Normally a committee is in charge of looking at issues that are before the Parliament in which that committee was enacted. Would it then be our jurisdiction to look at the report of the Auditor General that was issued in April, when in fact this committee was not enacted?

The Chairman: The Auditor General did not table a report in April. He tabled it—

Mr. Mac Harb: Well, regarding his April and October 1997 report.

The Chairman: He didn't have a chance to table his April report; therefore his April report was tabled on October 17. So with two reports tabled—

Mr. Mac Harb: So those reports were tabled after Parliament enacted this committee.

The Chairman: And if you take a look, it's April and October 1997.

Mr. Mac Harb: Okay.

The Chairman: Mr. Telegdi.

Mr. Andrew Telegdi: I was just going to mention that it so happened that we really didn't pick anything out of the April report, but with the October one, even though there is a chapter on maintaining a competent and efficient public service, it might be worth looking at at some point.

The Chairman: The steering committee will look at that another day.

So that's the agenda.

Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, is the order given in paragraph 5 that which the committee intends to follow for reviewing the chapters in the AG's report? It says that we will begin with chapter 12, followed by chapter 21. Is that the order that we will be following?

[English]

The Chairman: That's the intention we wish to follow, Mr. Laurin. Of course, depending on the availability of the witnesses, it could perhaps be subject to change, but we intend to try to follow this order. As I say, there's no particular agenda as to why it is in this order. It was basically the way the issues were put forward.

Yes, Mr. Laurin?

[Translation]

Mr. René Laurin: Correct me if I'm wrong, but in the notes left for me by our representative on the steering committee, it says that we will be starting with chapter 21, followed by chapter 12. Perhaps there is a mistake.

• 1600

[English]

The Chairman: If I recall correctly, Mr. Laurin, we had chapters 21, 13, 19, and 17. Then we all agreed to start off with chapter 12, regarding information technology, and that would be next week because it was deemed to be the easiest one on which to get witnesses available because of the short timeframe. So there was no question. The committee did agree that chapter 12 was to be the first one.

[Translation]

Mr. René Laurin: Was the committee's decision unanimous?

[English]

The Chairman: Yes.

[Translation]

Mr. René Laurin: Thank you.

[English]

The Chairman: All in favour?

Some hon. members: Agreed.

The Chairman: On point number six, it was recommended that the research officers of the committee prepare draft reports for consideration of the steering committee within three weeks of the formal hearing. After the steering committee has perused it and made any changes they deem necessary, they would bring it forward to the full committee for its subsequent approval.

Are there any questions on that?

Mr. Gurmant Grewal (Surrey Central, Ref.): What is the timeframe within which this report has to be prepared?

The Chairman: Three weeks after the meeting where the witnesses appear, the report will be presented to the steering committee. Then if the steering committee finds it acceptable, it will be presented to the full committee.

Mr. Gurmant Grewal: Okay.

The Chairman: All those in favour?

Some hon. members: Agreed.

The Chairman: This first report of the subcommittee on agenda and procedure is adopted, as amended along the way.

We'll also move now to an issue that was raised at the steering committee, initially by Mrs. Barnes, which was to ensure that members had sufficient time to examine and study motions of considerable substance in order for them to think about them, rather than having to deal with them right away.

The clerk has prepared a presentation here and has outlined the procedures that this committee might wish to follow if the committee felt they needed more time to study a motion that had been brought forward by a member.

For example, any member can move that the debate be now adjourned—that would be the debate on the motion that has been brought forward. Of course, if that motion were to carry, then there would be no further debate on the motion until it was moved that we talk about it further at a later meeting, or someone could move that the matter under consideration be allowed to stand.

The clerk advises me that if the motion that the matter under consideration be allowed to stand were defeated, we would continue debate on the motion. If the motion that says that the matter under consideration be allowed to stand were not defeated, then the agenda would be open for new business.

Then there's the third issue that the clerk has put forward, which again is a motion that the committee proceed to the consideration of a new item of business. Then we would just pass over the motion and go on to something else.

The clerk has put that before us as three options that we can deal with in order to ensure that members have sufficient time to consider a substantive or significant motion before the committee.

The Clerk: What happened is that Mrs. Barnes suggested at the last meeting that the committee may wish to adopt a motion for 48 hours' notice so that nobody is caught by surprise. She said that we were one of the few committees that did not have that motion in the last Parliament. After that meeting I went through the files of all committees in the last Parliament and I found only three committees had the type of motion Madam Barnes was suggesting. I wonder why a committee would decide beforehand to bind itself with 48 hours' notice when there could be all kinds of reasons on all sides of the committee to deal with something that happened in the House, or happened in the last 24 hours, and especially if there were a 6-week break ahead, unless there's unanimous consent from all the representatives of all the parties; and that's the motion she was referring to and Justice provided. All representatives of all parties have to agree to it. You cannot deal with anything unless 48 hours' notice was given to all members.

• 1605

I looked into the procedures to avoid surprises. I found the use of the dilatory motion. If a member wants the committee to consider anything new that is not already on the orders of the day for that day, he can move a dilatory motion such as the three the chairman suggested. Those are non-debatable. They are put to a vote immediately. A majority of the committee decides whether they want to consider a new item or whether they want to continue with the orders of the day.

The most it would take a committee to resolve that type of issue would be one minute, because the most time it would take would be a recorded vote, if you wish a recorded vote. But they are non-debatable. You leave yourself the option of being able to deal with things as they happen.

Mr. Andrew Telegdi: If I could just add to that, basically it would satisfy a situation we had occur in the last Parliament, where you could go under a new motion and debate it for the whole meeting without coming to any kind of resolution and of course it would hold up the other business of the committee. By allowing a vote right away....

The Chairman: Mr. Myers.

Mr. Lynn Myers: Mr. Chairman, what is being proposed makes a lot of sense, and I would think we could move on it. I move it.

The Chairman: This is standard parliamentary procedure. I'm not sure a motion to adopt standard parliamentary procedure is actually in order. I think it's more important that everybody be aware this can be done.

Mr. Andrew Telegdi: We had this available for us in the committee in the last Parliament.

The Chairman: Maybe our ignorance stood in our way.

Mr. Andrew Telegdi: I'm not sure. I would have it on the record.

The Chairman: Mr. Myers, if you want to move that the parliamentary procedure items of these dilatory motions be adopted by the committee, then so be it.

Mr. Andrew Telegdi: And be readily available.

The Chairman: And be readily available.

Mr. Lynn Myers: Mr. Chairman, in light of the discussions that have taken place, it seems to me important that it be in place, so I so move.

The Chairman: Seconded by Mr. Harb.

[Translation]

Mr. René Laurin: In my opinion, Mr. Chairman, the motion now on the table runs counter to the mandate assigned to the steering committee. Am I to understand from this motion that the steering committee cannot suggest a topic of discussion to the committee without giving 48 hours' notice?

[English]

The Chairman: The motion here, Mr. Laurin, is to deal with substantive motions and motions brought before this committee so if any member needs time to research and think about the motion, he or she may move one of these three individual types of motions, and if that is carried then there is sufficient time to think about the motion, because it's no longer going to be debated at that meeting. The steering committee talked about asking the clerk to research this, which he has done, and he has given his report. This is standard parliamentary procedure. It's not a new rule that's being adopted by this committee. It apparently was available to us before, but no one availed themselves of it.

Mr. Myers has suggested we put it on the record for this committee that these options are available to us. We're basically confirming that parliamentary procedure rules will be used at this meeting if a member so desires.

The motion was carried.

• 1610

The meeting is suspended until 4.30 p.m. at which time the Auditor General should be here.

Thank you.

• 1611

• 1630

The Vice-Chairman (Mr. Andrew Telegdi): Order, please.

Welcome to the Auditor General. You will no doubt see some new faces around the table, certainly on this side. We have Mr. Mahoney, who has great experience in public accounts in the Ontario system; hopefully, he will add to our deliberations.

Please proceed.

Mr. L. Denis Desautels (Auditor General of Canada): Thank you, Mr. Chairman.

It's with pleasure that we again have the opportunity to meet with the committee. I have with me today deputy auditors general Raymond Dubois and Michael McLaughlin, both of whom I believe you know quite well.

We're pleased to note that your committee intends to be a very active one and deal with many of the issues we've brought to its attention. I'd like to take just a few moments, Mr. Chairman, to discuss some of the recurring themes in the April and October reports.

The first such recurring theme is the need for better accountability, particularly the need for accountability to keep pace with the changing nature of government. Key government operations are being moved out of the public service under labels such as devolution, commercialization, and alternative service delivery. In the design of these new arrangements, we need to ask the question, who ultimately will be accountable to Parliament in its role of protecting the taxpayers' interest? That's the first theme.

The second theme is related to the first. The government has not been providing, we feel, the quality and extent of information that Parliament needs and Canadians deserve, especially on the results of programs and services. This has been the common theme of our audits over the last few years. I'm encouraged by the work now under way in the expenditure management system to address the problem, but concerted effort and continued leadership will be needed.

[Translation]

The third theme is that government departments often lack key financial information needed to manage programs well. Throughout government, information is often lacking on actual costs—a sign that financial management and control needs to be strengthened. The government's Financial Information Strategy is a key initiative in this respect. I am also encouraged by the President of Treasury Board's establishment of the Independent Review Panel on the Modernization of Comptrollership, which is expected to report later this fall.

A fourth and vitally important area is the need to maintain a competent and efficient public service. We undertook the study published as chapter one to draw to Parliament's attention areas we believe are particularly important to the continued well being of the federal public service. In the context of pressure to change and adapt, particular attention needs to be given to renewing and rejuvenating the public service workforce, resolving long-standing human resource management issues, establishing a more constructive dialogue on performance and partnership and maintaining continuity of leadership.

[English]

It's important to note that not all our reports are negative, Mr. Chairman. Some of our audits reach mainly positive conclusions. Many departments do take action on our findings and recommendations. As our follow-up audit on tax and trade administration notes, Revenue Canada and the Department of Finance have strengthened tax and trade administration through numerous changes to systems, procedures, and practices. Your committee has indeed played a vital role in helping to protect the tax base through hearings and reports on these issues over the past few years.

• 1635

Thank you, Mr. Chairman. That will be the end of my statement today. We look forward to working with the committee, and we would be happy to respond to any member's questions on the issues that are included in this report.

The Vice-Chairman (Mr. Andrew Telegdi): Mr. Casson.

Mr. Rick Casson (Lethbridge, Ref.): I have one question. You mentioned renewing and rejuvenating the public service workforce and resolving longstanding human resource management issues. What are a couple of those that you see as needing to be resolved in order to...or do you get that specific at these meetings?

Mr. L. Denis Desautels: I'll give you a good example. One difficult issue is the whole classification system in the public service. The staffing regulations are also quite burdensome.

So there are issues that have been known for a long time and need to be addressed. There are people working on them, but finding solutions seems to be almost impossible. Indeed, I would venture to say that the desire sometimes to get away from the main government machinery and go to alternative service delivery is not totally dissociated with the difficulty of working under the current rules.

I think we deal with a number of these issues in our chapter 1, not at the very specific level but at a broader level. I think it would make for a useful discussion between parliamentarians and some of the central agencies that have this particular task.

The Vice-Chairman (Mr. Andrew Telegdi): Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, Ref.): Thank you very much for coming before the committee. I'm new to this committee; I have never sat on it before. I'm therefore going to ask a question that's probably of a very general nature just to inform myself as to what role you play in regard to all of this.

Do you ever do studies that try to determine whether the services delivered by government could be more efficiently delivered in another way, such as through the private sector or things like that? In relation to that, do you also do any studies as to whether the taxes being collected by government could be possibly reduced in some way, and, if that was the case, whether the people who would then keep those taxes could possibly purchase whatever goods and services are being provided in another way? Do you do things of that nature?

That may be an awkward question, so maybe you'd like time to think about it.

Mr. L. Denis Desautels: No, it's an interesting question. To a certain extent, I think you might be asking me whether or not we do, on occasion, conduct studies that could have an influence on government policy in certain areas. The idea of purchasing services outside versus providing them internally is a policy issue to a certain extent. On the question of levels of taxation and the impact of the trade-offs involved there, that too is very much a policy issue.

The basic rule we follow, as an organization and in how we interpret our role, is to try to stay out of the policy game, the policy business. We start our work from the directions, if you wish, given by parliamentarians or by what has been approved by Parliament for government to do.

• 1640

In the real world, though, many issues can have some influence on policy. You can't draw a perfect line and say that policy is that side and everything else is administration, but sometimes you can make remarks on initiative issues that could have some bearing on policy or the capability of delivering a certain policy.

As an example, in your first question, on whether we conduct studies to determine if a service provided by government could be provided more cheaply elsewhere, on occasion we've looked at some contracting out issues because a policy was made to contract out, and we had a look to see how well that was done. I remember one particular case a few years ago, when we looked at the contracting out of translation services and whether or not that paid off.

So our basic rule is not to get involved in policy, but parliamentarians might construe on occasion that we come quite close to that policy line.

Mr. Garry Breitkreuz: May I ask a supplementary question, Mr. Chairman?

The Vice-Chairman (Mr. Andrew Telegdi): Two minutes.

Mr. Garry Breitkreuz: For example, in the area of agriculture—and I don't know if you've done any research into this—inspection services are now run by government. People in agriculture are finding that this is very expensive, and feel very strongly that it could probably be delivered much more cheaply another way.

Do you do studies in that particular area? Have you done anything like that?

Mr. L. Denis Desautels: On that one, yes. What you're talking about here is cost recovery, or user fees. We think it's quite within our role to look at how well this is carried out by various government departments. We're particularly interested in the whole question of user fees. We see that now across a variety of departments, not just for agriculture. It's in the health side, the coast guard services—a multitude of places.

User fees have to be levied respecting certain basic conditions or principles. We use that as our benchmark to carry out audits of that. We're finding that as departments are encouraged to go to user fees, and resort more to that, it's causing people to question the level of the fees and forcing departments to demonstrate that on the one hand, that's what the service really costs. They're not always able to do that, because they don't have the right cost or accounting systems in place to really demonstrate what the exact cost of delivery is.

As well, some of the user fees are being challenged by users who claim that maybe they could do it more economically. I think that's a good kind of pressure. It's happening right now in a number of services.

Mr. Garry Breitkreuz: Thank you.

[Translation]

The Chairman: Mr. Laurin.

Mr. René Laurin: Mr. Desautels, in chapter 2, you talk about developing a capability model. You note that the problem is a long- standing one and that it remains very serious. You also state that decisions are made before the financial consequences are known.

In your view, what is the reason for this? Is it that the government is not thorough enough, that it has little regard for the consequences of its decisions or that it does not have the modern means to conduct audits? What is the primary cause of this state of affairs?

Mr. L. Denis Desautels: Mr. Chairman, it's not easy to answer that question in a few words because there is quite a history behind all this, not to mention that we are dealing with a kind of cultural phenomenon. There are also problems associated with the lack of information or with inadequate information systems and the two are linked.

Historically, I think the government has never given enough thought to the financial or long-term consequences of some of its decisions.

Mr. René Laurin: Could you give us an example?

• 1645

Mr. L. Denis Desautels: Yes, I could. If we look at the programs that were put in place to help groundfish fishers, we see that there are two types of programs involved and in both instances, they were set up relatively quickly with inadequate information about the cost of the various components.

No doubt there are other good examples in our chapter on Foreign Affairs. We refer to the lack of knowledge about the costs of renovating residences abroad. You may recall some chapters written in the past which concerned National Defence. In those instances as well, decisions had been made without adequate information about long-term consequences.

It's a cultural thing as well, because in the past, the importance of having adequate information was not stressed enough. Consequently, departments did not outfit themselves with accounting systems or cost systems capable of providing this type of information.

Mr. René Laurin: If I could interrupt Mr. Desautels for a moment, Mr. Chairman, you already mentioned this problem in previous reports and you say that it is not new. Despite past recommendations, there does not appear to have been any appreciable improvement, since you maintain that we still have a very serious problem. Something is missing. Is it that we lack the competent staff to find solutions or is it because we lack the political will? What's the problem?

Mr. L. Denis Desautels: As I stated earlier, it's a cultural problem and there are a number of factors involved. Politicians and bureaucrats did not emphasize enough the importance of managing this problem. Over time, they failed to develop the skills, the human resources and the information systems required to adopt a management approach comparable to what we find in the private sector or in large companies.

People who believe in the process arm themselves accordingly. Generally speaking, large private sector corporations are well equipped because they believe in the process. In the public service, the reward system—if we can call it that—has not encouraged the development of these skills and values, and as a result, we have neither the systems nor, from a human resources standpoint, the skills that we should demand of large organizations such as federal departments.

Mr. René Laurin: Mr. Chairman, I have a feeling that we are going to need more time to examine this issue. This is an ongoing problem in the Public Accounts Committee. We never have enough time to get to the crux of the matter.

I would like to focus on another subject. Chapter 6 of your report deals with contracting performance. It has already been stated in the House, and the minister has confirmed this as well, that 35 per cent of all government contracts are currently awarded to sole-source suppliers. Is there no competition in the marketplace? Is that why the government is compelled to use the same suppliers? Billions of dollars are spent in this fashion. In the course of conducting audits, do you check to see if there really are only sole-source suppliers or whether there may be others, but not enough effort is made to find them?

Mr. L. Denis Desautels: That's an excellent question. When we can, we do indeed look into a particular contract and we do check all of the points that you mentioned.

• 1650

There is one such example in the chapter on NAV CANADA that you intend to examine. To answer your question then, yes, when we conduct a particular audit, we do examine the awarding of specific contracts. As for drawing hard and fast conclusions, I must admit that occasionally, our findings are rather vague. We are dealing with highly complex issues. It's not always easy when dealing with military equipment or computer systems to prove that there are several contractors out there, not merely a sole-source supplier. Therefore, we are dealing with issues that at times are rather complex. However, wherever possible, we do take this factor into account, as we did in the particular case I mentioned.

Mr. René Laurin: After doing an audit, would it be hard for you to determine whether the amount of business you do with sole- source contractors could drop from 35 per cent to 5 per cent or 10 per cent? Is it possible for you to say how appreciable the reduction would be?

Mr. L. Denis Desautels: Well...

Mr. René Laurin: Thirty-five per cent is quite significant.

Mr. L. Denis Desautels: It is, and we seem to have reached a ceiling of some sort. This percentage has remained constant for some time. I think it's possible to do better. In chapter 6, we comment on the performance of the government and central agencies and on the issue of competition. I cannot answer your question with 100 per cent certainty, but in our view, it is possible to lower this percentage. I don't know if we can lower it to 10 per cent, but we should be able to bring it down below 35 per cent.

Mr. René Laurin: Have you been able to look into this?

[English]

The Vice-Chairman (Mr. Andrew Telegdi): Thank you very much, Mr. Laurin. You were over one minute, so we have to go on to the next questioner.

[Translation]

Mr. René Laurin: Thank you.

[English]

The Vice-Chairman (Mr. Andrew Telegdi): Mr. Myers, four minutes, to be followed by Mr. Harb.

Mr. Lynn Myers: Mr. Chairman, through you to the Auditor General, I was interested in your response to a previous questioner that you try to stay out of the “policy game”; I think that was the actual term you used.

I was trying to relate that to point three in what you handed out today with respect to, for example, an alternative service delivery and a policy decision that the government might take with respect to that kind of delivery. Then you go on to say, “Who ultimately will be accountable to Parliament...?”

I'm new to this committee, as you know, and new to Parliament and such. I'm trying to get a handle on your philosophy here in terms of the kinds of safeguards or benchmarks—whatever term you have—that you use to keep the division between policy and what the Auditor General actually does.

Mr. L. Denis Desautels: I think it's a question of professional judgment in each situation you're looking at. If you take this particular issue as an example of how you might exercise that judgment, we would not question the trend or the decision to go to alternative service delivery. To me, that is a policy decision. To decide what is within government or outside government, what is delivered by a department versus, say, an operating agency—those are policy decisions made by government with the consent of Parliament. We would not question that.

However, in the implementation of such a policy you can do things well or less well. In other words, you can neglect certain reporting by the organization to whom you've delegated back to Parliament so that Parliament will not be well informed as to what's been done through that particular mechanism.

• 1655

We would concentrate on the different factors that I would call related to the implementation of the basic policy, but we would not question the decision to go to alternate service delivery as such.

Mr. Lynn Myers: There are then in place, in your judgment, the kinds of safeguards you alluded to, from a professional point of view. Is that what you're saying?

Mr. L. Denis Desautels: I'm sorry. Could your repeat your question?

Mr. Lynn Myers: You have professionally the safeguards in place where that line is not crossed.

Mr. L. Denis Desautels: There's no absolute clear line on these issues all the time, as I was explaining earlier in answer to a question. It's a question of our collective judgment as an organization and making sure that in each situation we try to apply that judgment according to our own basic criteria and our own internal guidelines and experiences.

There is no set of rules out there that we can refer to. It basically comes back to our own interpretation of what that means and applying professional judgment in each situation.

It's not easy in some circumstances, and people might disagree on occasion with where we've drawn the line and with the interpretation we've made. It can happen.

I would be quite prepared to say that on the whole we exercise this judgment very carefully. I'm always conscious of where that line might be and make a cautious effort to stay within it.

The Vice-Chairman (Mr. Andrew Telegdi): Mr. Harb.

Mr. Mac Harb: Thank you very much.

I'm very much interested in the whole notion of certain departments in government adding an extra charge in order to provide a service to the public, notwithstanding that we pay for all the public service through taxes the government collects.

There are certain departments in the government that add an additional charge to people who want services from the specific department. The money that specific department collects goes back to the general revenue fund, which is the Receiver General of Canada.

The quality of the service that is provided to the public in some areas is suffering greatly. I will give you one example, which is the area where people apply for citizenship. Does the act clearly state that if after you have become a landed immigrant, three years after you are entitled to obtain your citizenship?

In some cases, it takes up to 12 months to obtain the application forms, probably an additional six to eight months to go and have an interview and fill out the form, and probably an additional six or eight months after that to have your interview and then to receive your citizenship. In some cases it has taken up to six years.

Notwithstanding that we're charging an extra fee, supposedly because one would think we wanted to approve the efficiency of the system, not only is the money not being channelled through the system but the person who is expecting the service from the department is not getting it.

As a result of that the taxpayer is getting it through a double whammy; he is being charged twice through his taxes for the services and an additional charge in order to receive the service, yet he's not receiving the service in time. I gave this example because I think this is a situation where it's very visible.

Another problem we have is that we have embassies outside the country that charge for visitor visas for people who wanted to apply to come to Canada. In some areas, they collect over $10 million to $15 million for the processing of the visas. There again part of the money does not go back to the embassy in order to improve on their services to the public. All of it goes to the Receiver General.

With the services they are providing they are trying their best, but one would say it's not 100% satisfactory to the applicant in those countries.

The Vice-Chairman (Mr. Andrew Telegdi): Could you rap up?

Mr. Mac Harb: My question is, has your department ever looked at the possibility that wherever there is a charge or an extra charge for a service rendered to the public, part of that money, if not all of it, will have to be channelled back to the department to improve on its services?

• 1700

Mr. L. Denis Desautels: We have looked at a related issue, and in this current report if you look at chapter 9, dealing with Foreign Affairs and International Trade, we touch on the issue of the visas and the passports and how that was being handled. That was handled by Foreign Affairs. Again, there the thrust of our work was to see how well the decision to recover costs from users was implemented, and we raised certain problems that were encountered in that area.

We also looked at another related issue in the past. In 1996 we had a look at service quality across government. Regardless of whether or not there are user fees or cost recovery, the government had adopted a policy of improving on service quality, and we had a look at that as a general issue back in that chapter in 1996.

We had a look and will continue to have a look at those issues from both perspectives, service quality and the proper application of user fees.

One important issue, for instance, in user fees is to ensure that the amount that's being recovered actually corresponds to the cost of the service, because if you're recovering in excess of the cost it becomes a form of taxation and that becomes illegal, because taxes that are levied have to receive special approval. So it's important for the department to demonstrate that what they're recovering is the actual cost of the service.

In the case of passports, it's the actual cost of providing the consular services all around the world. That's what we commented on in our chapter.

Mr. Mac Harb: A very short supplementary.

The Vice-Chairman (Mr. Andrew Telegdi): We've gone over the time already, so we will come back.

Mr. Bachand, eight minutes.

[Translation]

Mr. André Bachand: I'm new to this committee and that's why I won't exactly be starting with questions about the different chapters in your latest report.

I've not had a great deal of time to look into the exact role of the Auditor General or to find out what exactly he eats for breakfast. What is the budget of the AG's office? Does it manage to record an annual operating surplus? I would like answers to these questions to familiarize myself quickly with the situation.

First of all, has your operating budget been constant since 1993? Are you comfortable with it? I'm asking you this so that we won't have to go over these questions again in three years' time. They are important to me. I see that my colleagues know the answers, but I don't.

So then, what is the AG's operating budget? Has it been the same now for several years? Are you satisfied with the financial resources currently available to your office?

Finally, do you have a copy of the audit report of the AG's office?

Mr. L. Denis Desautels: Mr. Chairman, I will be happy to provide Mr. Bachand with some brief details regarding the size of the Auditor General's office.

Our annual operating budget is now around $50 million, which represents a decrease compared to the $60 million budget allocated for 1992-93, if my memory serves me correctly. At one time, we had a staff of 625 people. Currently, we have fewer than 525 employees. These cuts represent a decrease of between 15 per cent and 20 per cent in staff and budget levels, which is consistent with the overall cuts elsewhere in government. We agreed to participate in the fiscal restraint exercise.

• 1705

Our operating budget and appropriation requests are submitted to Parliament which refers them here every year to the Public Accounts Committee which devotes at least one of its meetings to discussing these items. Along with our appropriation requests, we also present to the committee and to Parliament a report on our activities and on the performance of the AG's office. In the report, we explain our activities over the course of a particular year and the improvements we feel we have made based on each of the objectives set within the framework of our mandate.

I believe the process is a valid one and as a result, our budget and our performance are scrutinized each year by the Public Accounts Committee. I expect the committee will turn its attention to these matters again early in 1998. We can go into more detail at that time. In the meantime, if you like, we can provide you with the latest report we tabled on our 1997-98 annual budget.

Mr. André Bachand: Chapter 17 of your report deals with Human Resources Development Canada. This is a very important federal government department accounting for an enormous amount of money. In your report, you forecast a reserve of some $12 billion in the Employment Insurance Account, based on the information supplied on the surplus. You project that by year's end, Human Resources Development Canada will have a $12 billion operating surplus, notably in the Employment Insurance Account. Your projections are based on departmental data. It is my understanding that any surplus is paid to the Receiver General. Where exactly does this money go? How are you able to forecast a $12 billion surplus? Did you take into account the fact that premium rates should normally decline, albeit only ever so slightly, in November?

Mr. L. Denis Desautels: As far as premium and benefit rates are concerned, this is a purely political matter which comes under the Finance Minister's budget which is approved by all of Parliament. The Auditor General has no say in this matter.

As for your question concerning the $12 billion surplus in the Employment Insurance Account, this is a relatively accurate forecast. It is common knowledge that by the end of 1997, there should be a surplus of this order in the account. This surplus is part of the public accounts of Canada and is consolidated into all Canadian government results. As everyone knows, although there is some confusion at times, the surplus recorded in the past two or three years has been used to lower the government's annual deficit. The Employment Insurance Account is considered to be a government program and is therefore consolidated into other government operations.

Mr. André Bachand: Is the $12 billion mentioned in your report the combined surplus for all previous years or merely the surplus for the current year? Your report doesn't necessarily say whether we are dealing with the current year's budget or with all of the previous years.

Mr. L. Denis Desautels: Mr. Chairman, this is a cumulative amount.

Mr. André Bachand: For the purposes of calculating this surplus, which year did you start with? The year the new government came to power?

• 1710

Mr. L. Denis Desautels: We went back about three years.

Mr. André Bachand: It would be interesting, however, to know what the surplus for the current year is and how this figure can be justified. Right now, we are recording a surplus and there is no question that next year, we will come in with a $15 or $16 billion surplus. In your report, you mention something very important, namely the way in which the surplus in the Employment Insurance Account is calculated.

In the case of this cumulative $12 billion surplus, a portion has already been allocated to new budgets, meaning that in terms of liquid funds, if ever a crisis arose, we would not necessarily have $12 billion to play with. We should know how much money would actually be available in order to follow through on your recommendation to build a reasonable reserve fund.

Mr. L. Denis Desautels: Mr. Chairman, the financial performance of the Employment Insurance Account is no secret. Each year, a separate report is released detailing the account's financial operations. It's quite easy to keep track of developments in so far as annual surpluses are concerned.

You're wondering if these surpluses are available, given that they are part of the public accounts of Canada. If, because of economic changes, the government were to decide at some point in time to incur a deficit for a given year, this deficit could of course be funded by borrowing against the Consolidated Revenue Fund or using the funds currently loaned by the Employment Insurance Account to the Consolidated Revenue Fund. The funds can flow either way. Currently, the Employment Insurance Account is in a surplus position and this surplus is available for the Consolidated Revenue Fund. If the Employment Insurance Account needs money one day because it is going to incur a deficit, the funds can be put taken from the Consolidated Revenue Fund and put back into the account. As I said, the funds can flow either way. This may be confusing for some, but if necessary, the Consolidated Revenue Fund could be used to finance a deficit incurred by the Employment Insurance Account.

[English]

The Vice-Chairman (Mr. Andrew Telegdi): Thank you.

Mr. Mahoney.

Mr. Steve Mahoney (Mississauga West, Lib.): Thank you very much. I would like to take you to the briefing book on some of your duties and focus a little on the issues around sustainable development, specifically page A(3), dealing with certain decisions your department would have to make, decisions that would appear to be quite subjective, decisions in which money has been expended without due regard to economy or efficiency. That is one. That's item (d). Then there is the one before that...appropriated for uses other than purposes designated by Parliament. And there is the issue around the regard to environmental effects. I understand we have a commissioner of the environment that would work under your department and would have guidelines to follow.

I have a perception of the role of an auditor general as somewhat of a watchdog of the government to point out areas of, perhaps, inappropriate spending or even more serious misappropriation, if that were to occur.

• 1715

We've seen examples of that in some parts of the country. In the province of Saskatchewan, under the Devine government, I would think the Auditor General was pretty actively involved in analysing the use and misuse of funds.

But I'm interested in your response as to.... This comes a little bit to some of the questions you've answered with regard to judgment, I guess. With some 500 auditors reporting to various departments, how do they make decisions with regard to the use of it from an economical or an efficiency point of view? Would the particular department that was being audited have an opportunity for input? Would they have, let's say, a chance to dispute before you went to print, to question or get involved? Is there some kind of a relationship there?

Mr. L. Denis Desautels: The role of legislative auditors has evolved quite a bit over the last 25 years, more so in the last 15 years, I would say. It's evolved from the traditional, more straightforward role of financial auditing, compliance with rules and regulations, to what we call now performance auditing or value-for-money auditing, where principles of due regard for economy, efficiency, effectiveness, and environmental concerns are now brought in. So it's a much broader role than it once was and requires not just the exercise of sound judgment but also the application of sound methodology and good professional standards to abide by.

All of this work is not being done totally without reference to any kind of standards. There are, even for this broader type of auditing, standards available against which we have to carry out our own work.

It's obvious that when we move to value for money and issues of due regard for economy, efficiency, effectiveness, and environmental issues, judgments are a little bit harder to make than they are in a straight financial situation.

On the other hand, the rewards are also quite important, because we can comment on issues that are of greater significance, I believe, for members of Parliament.

So it's been an evolution, but I think it's been a controlled evolution towards this broader form of auditing.

In regard to Mr. Mahoney's last point, yes, we do have extensive discussions with departments before finalizing our work. For one thing, we want to make sure, with all of the departments on which we report, that we agree on the facts of the matter or of the situation. So when our reports come out, they're not a surprise to the departments on which we report.

In fact, you will have noticed that in most of our chapters departmental responses are included along with our own conclusions. So even if departments were to agree on the facts but they disagree with the conclusions we draw from those facts, they have a chance to express that in the reports.

I think we're affording the organizations concerned plenty of opportunity, first, to voice their concerns to us and, second, to express them if in fact we haven't resolved them completely.

The Vice-Chairman (Mr. Andrew Telegdi): Mr. Grewal.

Mr. Gurmant Grewal: I didn't have an opportunity to listen to the whole report, as I was busy somewhere else. While I didn't have the opportunity to go through the Auditor General's report in detail, I have gone through the summary, and I have a concern here.

• 1720

I know the Auditor General's previous reports have been very critical of CIDA. This report doesn't mention anything about CIDA. Are you planning to cover it in your next report, or is there nothing critical to report about CIDA at this stage?

Mr. L. Denis Desautels: Mr. Chairman, that is correct. There's nothing on CIDA in this report, but we have made three separate reports on CIDA since 1993. There was a fairly substantial report in 1993 and two follow-up reports since then. We are now in the process of preparing a final follow-up of the 1993 chapter, which I believe should be finished some time in 1998 or early 1999. We would like to finish before the end of 1998, so CIDA is in our work program at this point.

[Translation]

The Vice-Chairman (Mr. Andrew Teledgi): Mr. Laurin.

Mr. René Laurin: Getting back to chapter 6 which focuses on contracting performances, your report cites the example of one department that obtained 40 per cent reductions on list prices by offering all requirements for competition. To which department are you referring?

Mr. L. Denis Desautels: I'm not in a position to give you that information today, Mr. Laurin.

Mr. René Laurin: It's not confidential, is it?

Mr. L. Denis Desautels: Of course not, but I don't have that information with me right now. We could get that to you at a later meeting.

Mr. René Laurin: I would appreciate that, but in the meantime, could you convey that information to my office? I don't know if we can ask that of the Auditor General. I'm not requesting confidential information, but as a rule, when a department fails to...

Mr. L. Denis Desautels: I could get that information to the clerk.

Mr. René Laurin: Fine. You indicated that immediate action is required in the area of contracting practices and policies. What type of immediate action are you suggesting to correct the situation? What steps should be taken in the short term? We are dealing with a whole culture, as you stated earlier.

[English]

Mr. L. Denis Desautels: Mr. Chairman, could I bring Mr. Minto to the table to respond to Mr. Laurin's question?

The Vice-Chairman (Mr. Andrew Telegdi): It has to be quick.

Mr. L. Denis Desautels: Mr. Chairman, if I understood Mr. Laurin's question properly, he wants to know what central agencies, like Treasury Board Secretariat and Government Services Canada, can do to change the situation that we've noted in the management of contracting across government.

[Translation]

Mr. René Laurin: Mr. Minto, do you understand me when I speak French? You can always use the interpretation, if you wish.

If the answer is that we must start with one agency in particular because the situation is more urgent there, then I would like to hear it. Basically, what I want to know is what steps should be taken immediately to start to address the problem? The situation has become urgent because the problem has persisted for years. The Auditor General is calling for immediate action, but where should we start and what should we do? I'm not talking about principles and I'm not interested in nice statements. I want to know what immediate action you recommend be taken.

[English]

Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General of Canada): The question certainly is very valid. I think this year's chapter 6 attempts to answer some of those questions.

There are various phases in a contracting process. For each phase there are different buttons and different things that have to be done to fix them.

• 1725

Let me give you as an example the issue of competition that was discussed earlier. What we say in this chapter...and we provide a chart under exhibit 6.6 that shows that basically the amount of competition in contracting has remained static for a number of years. Yet Treasury Board says competition is the cornerstone of government procurement. So the question comes back, well, why hasn't it improved, then?

If you look at the report, sir, we say Treasury Board has not set out any guidelines or any goals for what it really wants out of competition. Do they want 70% to be contracted fairly and openly? Do they want 30%? Do they want sole-source contracts with 20%? Unless you have those clear objectives, saying this is where we want to be, you can keep on running as fast as you want, but you will be in the same place. You can't measure where you're getting.

The theme of this chapter, sir—this took a very high-level view of contracting in government—really was, do we know who is in charge? Do we know who is asking what we really want out of government contracting? Once we know what we want, have we set up some method of measuring how we're going to get there or not? The answer on almost all counts was no, no, and no.

So that's the theme of this chapter.

The Acting Chairman (Mr. Andrew Telegdi): Thank you very much. Time has run out.

Mr. Casson.

Mr. Rick Casson: I would like to ask a bit about the systems and processes you've talked about here. You say it's hard to measure the results of programs, and I agree with you. Government programs sometimes need a hard look at them to find out if they are working. You talk about an expenditure management system there, then further on you say departments often lack the financial information they need to make accurate decisions, so a financial record system is also...and you indicate you are pleased with the process or the progress in both those areas.

Who establishes an expenditure management system for the government? Is it each department, or is there an overlying body? Is that you? Who does that? The same with the financial system. Maybe talk a bit about both of those.

Mr. L. Denis Desautels: Mr. Chairman, first of all, on the expenditure management system, that is essentially driven by Treasury Board, because Treasury Board is in fact the central agency responsible for the management of the estimates process. They are the ones who are in charge of ensuring the information to get approval of the estimates is properly prepared and presented to Parliament. So with the support of the ministers of Treasury Board they have been trying to change the so-called expenditure management system and make improvements in it. We've been quite supportive of that effort. It's driven by Treasury Board and the secretariat.

When it comes to financial management systems and we talk about the financial strategy of government, that is also driven by the same organization, essentially, the Treasury Board Secretariat and the Comptroller General. The Secretary of Treasury Board doubles up as Comptroller General and he has responsibility for putting in place a government-wide financial information system or strategy, including the capability of providing accounting information on an accrual basis. For those of you who are not accountants, this is as opposed to a cash basis, which is a more elementary form of accounting.

So they are working on this. They have been working on this for some years. Again, we are very supportive of that effort and we would like to see that come to a successful resolution or conclusion as quickly as possible.

• 1730

Mr. Rick Casson: Excuse me. So the funds that would be needed to implement those two systems would come directly from the Treasury Board. They would apply them overall to the departments to set up their....

Mr. L. Denis Desautels: Not totally, sir. For instance, on a financial information strategy, yes, certain funds come out of the centre of the Treasury Board Secretariat. On the other hand, in each of the departments there are systems that link into the main system, but they're responsible for developing their own system from their own funding.

The Vice-Chairman (Mr. Andrew Telegdi): Thank you.

Mr. Harb.

Mr. Mac Harb: I want to take you back to the question I asked you as to whether or not you have explored the possibility of allowing departments where they have a user fee to somehow keep part of the money so they can improve on the services they are providing to the public, specifically in areas where the service to the public may or may not be at a high level of efficiency.

Mr. L. Denis Desautels: Mr. Chairman, I believe it's under cost recovery and user fees. The departments do retain the money they charge for those fees. That's done, most of the time, through some kind of revolving fund.

If you go back to the example of passports, it's set up as a separate organization, so to speak, and so the fees generated by the service are kept within that fund and are used to pay the expenditures of providing the service. So the general rule would be that the department, through some mechanism, will keep the money.

Mr. Mac Harb: On the same thing, I'm concerned about citizenship, for example. So in the department of citizenship, when they collect on services for the application, that money goes to the department, and it doesn't go to the Receiver General?

Mr. L. Denis Desautels: I can't answer that question with total certainty because there can be some exceptions. But there are more and more operating agencies, so-called SOAs, where through revolving funds the money is kept within the department, but there could be exceptions to that.

Mr. Mac Harb: I'm concerned about that. If that is the case, if they are keeping the money, I think you just got the best tip of 1997, from me, which is to have a look at the service that is provided, because obviously the money they are collecting isn't enough.

Mr. L. Denis Desautels: Mr. Chairman, I think there are probably some managerial decisions made within departments, for instance, with that money.

If you look at the money generated by the visas and the passports, obviously some missions generate a lot more than others. But they don't necessarily have the benefit of that. I think it all goes into one central revolving fund. So it does not automatically flow back to the one organization or unit within the total that generates maybe more.

Mr. Mac Harb: It would be very useful to examine it, and I encourage you to do that.

The Vice-Chairman (Mr. Andrew Telegdi): Thank you.

We have one more left and that's Mr. Breitkreuz.

Mr. Garry Breitkreuz: Thank you very much.

As I'm sitting here listening, I have come to the realization that it's probably almost impossible for you to separate what you do from the impact it will have on policy. I can see that this is part and parcel of everything that happens.

The question I have is, who initiates the areas you investigate? Who helps you decide what areas you will audit?

For example, levels of crime are affected by policy of the government and legislative changes that are made. People in society feel they aren't as safe as they used to be. Do you do anything in that area at all? Do you initiate? How do you determine what areas to deal with? Would you ever deal in that area? To my knowledge, I haven't seen a report on that.

For example, we just happen to be looking in chapter 13 on aboriginal health care. How do you decide that's an area that's really of concern, and so on? Do you want to comment on that?

Mr. L. Denis Desautels: Yes, Mr. Chairman, I can try to answer that.

• 1735

We are basically free to decide what we audit in the course of a year or over a certain number of years. We have been given sufficient independence from government. We make our own decisions as to what we audit and when we audit it.

However, we don't work entirely in a vacuum. We pay attention to certain things in making our own decisions as to what we audit. We do, for instance, receive indications from parliamentarians that they are interested in certain issues. We factor that into our planning. On occasion we receive specific requests from standing committees and consider those requests very seriously as priority requests.

We basically have a responsibility to cover all of the operations of government over time. Of course we can't do everything at the same time, and the government being what it is we have to stretch that review of all of the apparatus over quite a number of years. But nothing is necessarily excluded if it involves the spending of public money.

I think you've raised a couple of issues. One particular issue, I think, deals more with the administration of justice and security in our present system. We do carry out audits of the penitentiary services, of Correctional Services Canada. We do carry out audits of the RCMP. We have recently completed an audit of the federal court and the tax court. In fact, we do cover a lot of the issues that you might be concerned with, except that in all of those areas we would still respect the policy line we talked about earlier today. In these areas we would not necessarily question what is clearly a policy approved by this Parliament.

Mr. Garry Breitkreuz: Okay. For example, if you did an investigation in the justice area, it would have an impact on the policies the government is putting in place, I would think. I don't see how you can separate any evaluation you made on legislation that has been passed.

Mr. L. Denis Desautels: If you look at the administration of the correctional services there are certain things that are entirely within our scope of work, such as the rehabilitation programs within and outside the correctional institutions.

How well that is being done is clearly something that we can look at to see that it's done with due regard for economy, efficiency, effectiveness, and so on, but at the same time, all of this is subject to certain policies on parole, which is a policy issue. You may or may not like the parole policies, but that is a policy issue that parliamentarians have to debate. We take that as a given. I would not question that.

The Vice-Chairman (Mr. Andrew Telegdi): Thank you very much.

In closing, I find section 1.87 intriguing:

An effective public service needs a Parliament and media that can fairly discuss errors in the context of overall performance. Where rules and control frameworks are too rigid or out-of-date, Parliament needs to be informed so that changes can be made. Instead of continuing the long tradition of exacting accountability for individual errors, a shift of focus to the nature of corrective action would shift the emphasis to improvement. Members of Parliament, the public, and the media ought to demand in their scrutiny that this kind of correction occur. Indeed, it is perhaps the absence of learning rather than the absence of perfection that most warrants criticism.

Certainly it talks about doing politics differently. Would you like to conclude with that?

• 1740

Mr. L. Denis Desautels: Mr. Chairman, this is part of a commentary we have in the charter dealing with managing performance in a more constructive way in the public service. It's basically a direction we're suggesting for dealing with what might be called “honest errors”.

As we move to the year 2000, I would hope that all of us, including public service managers, auditors like ourselves, and members of Parliament should be able to better handle risk, and in terms of risk management to develop a consensus as to what tolerance levels are acceptable or not acceptable. I think this would lead us to a more common-sense approach to managing performance in the public sector.

If one honest error leads to public condemnation of a particular manager, I think it will cause people to be overly cautious about everything they do and will make people adverse to risk, while in fact what we want is people to be able to manage risk in a reasonable fashion.

The Acting Chairman (Mr. Andrew Telegdi): You also intend it to relate to the ministers themselves. What you're suggesting is quite revolutionary, because instead of the opposition going up to the minister and saying, “This is what happened, Minister, you are responsible”, the opposition would say “A mistake occurred, Minister, now please tell us what you are doing to correct it”. That's quite a different approach. I was quite curious when I saw it.

Mr. L. Denis Desautels: I don't think it's that naive. I think there is some evidence of that happening in other places. As we say here, what's more important for public organizations is really to demonstrate that something did go wrong and it has been fixed; we've learned from that and it is less likely to happen in the future.

I think there's room for moving in that direction. I believe that in terms of new public management there is some encouragement for public management in general to move in that direction. But it won't happen overnight, because I think we have some long-established reflexes that will be difficult to change.

The Acting Chairman (Mr. Andrew Telegdi): I'm sure what you're talking about happens a lot more at the municipal level.

Thank you very much.

Tomorrow at 5:30 p.m. we meet downstairs in room 209. Thank you very much for attending. The meeting is adjourned.