HUMA Committee Meeting

STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 4, 2000

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[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.)): Colleagues, we'll officially begin when the cameras have left. This meeting will be televised. I'd be grateful if all the cameras would leave, please.

Colleagues, before I introduce our witnesses today, I'd like to remind you again of the schedule, which you all have. On Thursday our witnesses are the Canada Employment and Immigration Union and the Association of Public Service Financial Administrators, and that's at our regular time.

You will recall that next week we're dealing with discussions of our preliminary report. We have meetings tentatively scheduled for Tuesday, Wednesday, and Thursday. I would point out to you that there has been some discussion as to whether the House will prorogue for the break on Thursday or Friday of next week. If there's doubt about the House meeting on Friday, that means I may not be able to table our preliminary report. It's particularly important that we do a good deal of work next Tuesday and next Wednesday in order that we are ready to table the report, which we are required to table, by the Thursday, if we have to. Is that okay? Colleagues, you understand what I'm saying here, right?

Today I am pleased to introduce our witnesses. We have the Honourable Lucienne Robillard, President of the Treasury Board of Canada. Lucienne, you're most welcome here.

We also have Carole Swan, who is associate secretary of the Treasury Board and Comptroller General of Canada. Carole, I know “secretary” means “deputy minister”. I guess there isn't a deputy minister.

There isn't a secretary at the moment, Lucienne, is that right?

Hon. Lucienne Robillard (President, Treasury Board of Canada): That's right. This is the associate.

The Chair: Okay. Carole is the associate secretary, which means associate deputy minister in any normal department. Am I right?

Ms. Carole Swan (Associate Secretary of the Treasury Board, Treasury Board of Canada, and Comptroller General of Canada): That's right.

The Chair: Thank you very much.

We have Rick Neville, who's the deputy comptroller general. Rick, we welcome you also.

Madam Minister, we understand you have a statement, and perhaps your colleagues have something to add to that. We'd be glad to hear your statement now, and then we'll proceed as usual to the questions and answers.

Lucienne Robillard.

[Translation]

Ms. Lucienne Robillard: Thank you, Mr. Chairman.

Mr. Chairman and members of the Committee on Human Resources Development and the Status of Persons with Disabilities, thank you for the invitation to meet with the committee. I welcome this opportunity to outline for the committee some of the things the Treasury Board and the Treasury Board Secretariat are doing to improve management practices across government.

In light of your current interest, I will focus on the actions we are taking that relate most directly to the issues raised by the recent internal audit of grants and contributions at Human Resources Development Canada.

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The administrative problems brought to light by the audit by Human Resources Development Canada raise critically important issues that must be addressed—and let me assure you this is precisely what this government is doing. The situation must be corrected, and I can assure you that it will be.

This government is committed to ensuring that public funds are managed in an ethical, fair and responsible manner. This means operating transparently. It also means focussing on the needs of Canadians as citizens, clients and taxpayers.

And it means taking action when problems arise. In this regard, Minister Stewart is taking effective action to address this issue and the Treasury Board and the officials of the Treasury Board Secretariat will continue to fully support her and her department in their efforts to ensure sound financial management of grants and contributions.

Canadians have a right to expect their tax dollars are being managed prudently. This is a key pillar of good government. It is fundamental to the bond of trust that should exist between the federal government and Canadians it serves.

As you know, the Treasury Board and the Treasury Board Secretariat have important responsibilities focussed on ensuring responsible spending and sound financial management. I can assure you that these are responsibilities we take very seriously.

Given the recent experience at Human Resources Development Canada, I would like to highlight actions we have recently taken, or are now taking, that I believe are relevant to your examination of this particular situation.

Specifically, I would like to focus your attention on the following points. First, I will discuss our efforts to assist Human Resources Development Canada in the design and implementation of its remedial action plan. Second, I will talk about our work to strengthen the Transfer Payments Policy to include a more effective management framework for grants and contributions. Third, I will discuss the steps we are taking to strengthen the role of internal audit as a key element of modern comptrollership. Fourth, I will present the steps we are taking to improve our ability to actively monitor control systems in departments and agencies. Finally, I will speak about the implementation of a new management framework for the Government of Canada.

First, let me turn our attention to the issue at Human Resources Development Canada and to the issue of control.

If a failure in control occurs—and even in the best system this can occasionally happen—departments and agencies are responsible for taking early and effective remedial action. I would like to stress that in the case of the audit of grants and contributions, the Minister of Human Resources Development and her departmental managers have done this.

The six-point plan by Human Resources Development Canada is a good one—the Secretariat has endorsed it as a critical means of rectifying the issues identified. The Auditor General has also described the plan as “very thorough” and demonstrative of a will to change.

Mr. Chairman, if a serious failure occurs, it is the role of the Treasury Board Secretariat to satisfy itself that the proposed remedies are appropriate and that there is timely follow through to completion of all required actions. Simply put, it is our responsibility to monitor the implementation of remedial action and to be satisfied that the necessary improvements have taken place. If necessary, the Treasury Board and its Secretariat can, and will, take broader measures. Its actions can range from the provision of additional support and advice, to more direct interventions such as the withdrawal of specific authorities or delegations.

Officials from the Treasury Board Secretariat provided advice and guidance to Human Resources Development Canada on the development of their rigorous and comprehensive action plan.

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The Secretariat also assigned a senior official to work with Human Resources Development Canada and monitor the initial implementation of the plan. He ensured that the experience and expertise of the Secretariat was brought to bear on these issues.

The Secretariat assisted Human Resources Development Canada to hire one of the most accomplished accountants in the field to help guide its efforts.

Finally, the Secretariat arranged for Human Resources Development Canada to consult with the Standards Advisory Board, a group of respected business leaders. They have provided comments and advice that Human Resources Development Canada has found useful in developing its plan.

As a result of our work with Human Resources Development Canada over the past several weeks, I am confident that the Department has the capacity to effectively implement its action plan.

[English]

The second area of action I referred to is the Treasury Board Secretariat's fundamental review of the existing policies on the administration of grants and contributions. This work began last summer, many months before the audit by Human Resources Development Canada raised concerns about the grants and contributions issue. The issues being looked at include how risk assessments should influence the structure of grants and contributions programs and how accountabilities should be made clearer.

As a result of this work, a new proposed transfer payment policy is being developed right now. This policy will strengthen the existing framework to ensure that sound management practices are followed with respect to grants and contributions. Some of the recommendations include making more explicit the need for due diligence in the assessment of projects and clarifying accountabilities for program delivery by third parties.

Mr. Chairman, this work is very relevant to our mutual concerns about the recent experience at Human Resources Development Canada. I have asked the Treasury Board Secretariat to accelerate its work on its proposed policy, and we now expect to have a new policy in place in the very near future.

The third area I've referred to is the strengthening of internal audit. As I am sure you will agree, the existence of a strong internal audit function is vitally important to sound management and modern comptrollership. Indeed, I believe the audit at Human Resources Development Canada has demonstrated just how important the audit function truly is as a management tool.

As part of its ongoing efforts to modernize management and comptrollership practices across government, the Treasury Board Secretariat began a study of the internal audit function last summer, again before the situation at Human Resources Development Canada took place. This study was completed in January. The study has recommended that changes to the internal audit policy are now required to reflect its role in modern management. The study also recommended that professional standards for auditors be developed within an overall strategy for the revitalization of the internal audit community.

In addition, the study recommended that each department establish an internal audit committee, if it has not already done so, to ensure that audit plans address relevant management issues and that there is appropriate follow-up action taken to address approved recommendations.

These recommendations are substantial, and the Treasury Board Secretariat is now preparing, in partnership with the internal audit community across government, a plan to improve our professional capacity in this area to ensure we have the right people in place with the right skills. I have asked that this work be completed as soon as possible. The Treasury Board will receive recommendations on this matter very shortly.

The fourth area I referred to is the area of active monitoring. Mr. Chairman, I realize that the question many are asking is how the situation at Human Resources Development Canada could have happened in the first place. In other words, why did the alarm bells not go off much earlier? It's a question that concerns me as well. I would like to point out here that the Treasury Board Secretariat has always monitored management systems in departments and agencies and in the past has intervened whenever necessary. However, when something serious occurs, as it did at Human Resources Development Canada, the reasonable and responsible thing for the Treasury Board and its secretariat to do is to look at existing mechanisms with a very critical eye. In this context the Treasury Board Secretariat is currently examining ways to improve its ability to actively monitor the effectiveness of control systems across government. I have asked the secretariat to bring forward in the near future recommendations on what adjustments might be needed to improve our performance in this area.

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Mr. Chairman, the final area I will touch on in my opening remarks is the document I tabled in the House of Commons last Thursday entitled Results for Canadians: A Management Framework for the Government of Canada. This is a very important document, which describes the various efforts taking place to modernize government management practices. It sets out in a very clear way the management commitment that the Government of Canada is making to Canadians. It also provides a clear definition of the roles and responsibilities of departments and agencies and of the Treasury Board and its secretariat in helping the government to meet these commitments.

Work on this document began last fall shortly after my appointment as President of the Treasury Board, and the final product is the result of a great deal of collaboration across government. Given the situation at Human Resources Development Canada, we took particular care to ensure that the words around the need for adequate control of public funds are clear. Some have suggested that we should not delegate authority, thereby returning to strict command-and-control regimes. I do not believe that the command-and-control approach would serve the public interest. Canadians don't need more red tape. Indeed, quite the opposite; they want the government to continue to modernize its thinking and methods while keeping sight of the fundamental reality that tax dollars need to be managed responsibly and wisely.

One of the central themes in the Results for Canadians document is that we must continue to implement modern management practices. This involves delegating decision-making authority to the right level to achieve results, but in a way that ensures clear accountability, due diligence, and proper control of public funds. This framework emphasizes the need for clear standards, sound risk management, and early attention to control deficiencies. It also makes clear what is needed in terms of active monitoring to ensure effective control.

As this framework is implemented across government, I am confident that it will help strengthen resource management and reduce the likelihood of serious control failures in the future. That is what I believe Canadians want, expect, and deserve.

[Translation]

Mr. Chairman, ladies and gentlemen, I believe the actions outlined here are appropriate to the current circumstances. Needless to say, we will continue to work closely with departments and agencies to encourage vigilance, transparency and prudence. In conclusion, I would like to tell you, Mr. Chairman, that I look forward to receiving all recommendations, including those of this committee.

Thank you for your attention. My officials and I are now prepared to answer your questions.

The Chairman: Thank you very much, Minister. Would your colleagues like to add something?

Ms. Lucienne Robillard: No.

The Chairman: Very well.

[English]

Colleagues, I have as usual a long list. I'll give you a sense of it, and then we'll proceed in the usual fashion. I have on my list Diane Ablonczy, Bryon Wilfert, Paul Crête, Rey Pagtakhan, Libby Davies, Larry McCormick, Elsie Wayne, and then some others.

Diane Ablonczy.

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Mrs. Diane Ablonczy (Calgary—Nose Hill, Canadian Alliance): Thank you, Mr. Chairman.

First of all, Mr. Chairman, I would ask for an explanation. The minister stated yesterday in the House, in response to a question from the member from Nanaimo—Alberni:

...when internal audits are conducted in a department and problems are discovered, Treasury Board is notified and it helps the department put in place the tools necessary to correct these problems.

Mr. Chairman, an audit of the human resources department was done in September 1988. That audit said things like this:

Various reviews showed that accountability mechanisms were not functioning as efficiently as they could.

Generally, we found that good tools for monitoring management initiatives were not available.

In many interactions with HRDC managers, we found that “Control” appears to be a four letter word; yet it is the cornerstone which allows an organization to achieve its objectives.

Mr. Chairman, this audit was done in September 1998. The minister tells us that after internal audits such as this:

...Treasury Board is notified and it helps the department put in place the tools necessary to correct these problems.

I'm sure, Mr. Chairman, the minister would agree with me that the problems uncovered in the September 1998 audit were extremely grave. However, Mr. Chairman, we find that in an audit done in October 1999 the same problems were present. In fact, because this audit has now become somewhat notorious, we know that in fully 80% of the projects of this department there was no financial tracking done of the spending and that in 87% of the projects there was no monitoring of how money was being spent.

Clearly, the problems that were very sharply delineated in the September 1998 audit were not corrected by this good oversight that Treasury Board is supposed to exercise in the wake of internal audits.

I would like the minister to explain to this committee how her department fell down so badly in correcting the problems that were uncovered in the September 1998 audit, so badly that the problems were, if anything, even worse over a year later in the 1999 audit.

[Translation]

Ms. Lucienne Robillard: I want to be very clear here today, Mr. Chairman. It is true that the internal audit reports done by the departments are forwarded to Treasury Board. The policy provides that internal audit reports shall be forwarded to Treasury Board.

The honourable member is referring to a 1998 internal audit report. To our knowledge, there was no internal audit report in 1998. Allow me to clarify. In 1998, the Internal Audit Office of Human Resources Development Canada did a report entitled Briefing Book for Senior Management on the Status of Risk in HRDC. Strictly speaking, it was not an internal audit report. So this 1998 report was not forwarded to Treasury Board, unlike the 1999 report referred to at the end. The 1999 internal audit report was therefore forwarded to Treasury Board, and, once it was, the Treasury Board officials immediately started working with Human Resources Development Canada to devise an action plan to correct the problems identified in the report.

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We worked with them. We even sent a senior official directly to the department to help establish the action plan. We helped the department hire an outside expert. These measures were all taken in co-operation with department officials, but on the basis of the 1999 audit program, Mr. Chairman.

[English]

Mrs. Diane Ablonczy: I would just point out that according to the Treasury Board memo dated February 14, 2000:

It is very important to remember that according to the Review, Audit and Evaluation Policy, ALL COMPLETED reports are public documents....

Surely this 1998 report was a public document under Treasury Board guidelines. I find it passing strange that the Treasury Board can disavow all knowledge of this report when it's supposed to be, under its own guidelines, a public document. Does the Treasury Board not pay attention to these reports that are supposed to be public documents under its own guidelines? Does it just turn a blind eye or allow these things to be buried?

Surely, if reports are supposed to be public documents under Treasury Board guidelines, Treasury Board should be monitoring to make sure all these reports are in fact public documents. At the very least, they should be documents known to the Treasury Board.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I think we have to be very cautious about the terms we use. An internal audit, the program review and a management review can all mean different reports. When we say that we ask for all internal audit reports to be automatically sent to Treasury Board, that does not include the 1998 report; it is not an internal audit report. Let us be clear on this. It was a management report prepared by the Department of Human Resources Development...

[English]

Mrs. Diane Ablonczy: Mr. Chairman, if I might—

[Translation]

Ms. Lucienne Robillard: May I finish, Mr. Chairman?

[English]

Mrs. Diane Ablonczy: If I might, Mr. Chairman, this memo—

[Translation]

The Chairman: Minister.

Ms. Lucienne Robillard: This report has...

The Chairman: Minister.

Ms. Lucienne Robillard: This report, which is a management report prepared by Human Resources Development, was not forwarded to Treasury Board as such.

[English]

The Chair: Diane Ablonczy.

Mrs. Diane Ablonczy: The Treasury Board guidelines themselves do not talk about internal audit reports. They simply talk about reports, which the September 1998 document clearly was. So I find it a little annoying that the minister is trying to split hairs here and say, “Well, this really wasn't a report because it wasn't an internal audit report.” A report is a report and this clearly was a report—a very damning report. If the minister is trying to disavow all knowledge of it, I would suggest that isn't a very credible position to take.

The Chair: You have about 30 seconds.

Mrs. Diane Ablonczy: On the matter of the report referring to the 1999 audit, the internal talking points directed the employees of HRDC to start following the rules. By the rules they meant Treasury Board guidelines and the provisions of the Financial Administration Act.

I wonder if the minister can tell us to what extent, prior to this plan she's talking about that came out rather lately, the rules, i.e. Treasury Board guidelines and Financial Administration Act provisions, were not followed by the HRDC department.

The Chair: Please make a very brief response.

Again colleagues, I don't like doing this, but we're technically a minute to a minute and a half over. I would remind witnesses of this also. Long questions produce long answers. The time is used very quickly.

Minister.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, all I can do is repeat that departments regularly prepare management reports, and they are responsible for deciding whether those reports will be forwarded to Treasury Board. I repeat: the 1998 report was not forwarded to Treasury Board.

Secondly, the 1999 internal audit report did not indicate that Human Resources Development Canada had violated the Financial Administration Act.

[English]

The Chair: Okay.

[Translation]

Ms. Lucienne Robillard: Let us be very clear.

[English]

The Chair: Thank you, Minister.

[Translation]

Ms. Lucienne Robillard: Some problems regarding compliance with Treasury Board policies were noted...

[English]

The Chair: Minister—

[Translation]

Ms. Lucienne Robillard: ... but nowhere in the report...

[English]

The Chair: —we must move on.

Mrs. Diane Ablonczy: Mr. Chairman—

The Chair: We must move on.

Mrs. Diane Ablonczy: —this is important information that the committee would like to have.

The Chair: It may well be.

Next are Bryon Wilfert and Paul Crête. We'll come back, Diane, to the Reform Party in due course here.

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As you know, colleagues, there are eighteen of us. As I keep saying—

Mrs. Diane Ablonczy: Point of order.

The Chair: Diane, on a point of order.

Mrs. Diane Ablonczy: Mr. Chairman, it is in order to have the witness answer questions the committee clearly needs to know the answers to. To cut it off in the middle is simply not acceptable, if we're really going to get to the bottom of the situation.

The Chair: Diane, there are eighteen of us. To give ten minutes to each is three hours. We do not have three hours.

Mrs. Diane Ablonczy: This is a committee. It is not divided into sections. Surely the committee as a whole deserves this information.

The Chair: That might well be so. The Reform Party regularly gets the most time of all parties, Diane, on this committee. I do my very best. I understand the difficulties of the context.

Mrs. Diane Ablonczy: This is not a party matter. It is a public investigation of public interest.

The Chair: That is not a point of order.

Point of order, Rey Pagtakhan.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Actually, it's more of a suggestion. If we would like to have a total answer, let us get the preamble cut by 50%.

The Chair: That's not a point of order either.

Colleagues, we're moving on with the list. I do my best on these occasions. It is important that all parties are heard. I go to great lengths to see that all members and all parties are heard. There are eighteen on this committee.

It's Bryon Wilfert, Paul Crête, Rey Pagtakhan, Libby Davies, Larry McCormick, and Elsie Wayne.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Mr. Chairman.

Madam Minister, you mentioned in your opening comments that when the need arises the Treasury Board Secretariat could step in and take corrective actions, particularly in the removal of certain delegated authorities.

We've spoken here before about the Financial Administration Act under section 33, and that in order for payments, grants, or contributions to be made there must be receipts. My question to you, Madam Minister, is why then in this case, particularly in terms of HRDC, was that not done in terms of removal? Could you give examples where in fact that has been done in the past?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, obviously when there is a problem within a given department, that problem is assessed. We assessed the scope of the problem, its cause, and the department's ability to implement corrective measures. We also determine whether the problem is government-wide, or specific to that department.

In the case of Human Resources Development Canada, we consider that the department was well able to formulate an action plan to correct the problems identified, with assistance from the Treasury Board Secretariat and an outside consultant. This is why we did not withdraw HRDC's delegations of authority, as we had withdrawn another organization's in the past. In that case, we had withdrawn all delegations of authority from that organization when we saw that it did not have the capacity to implement corrective measures. In this case, however, HRDC does have that capacity.

[English]

Mr. Bryon Wilfert: Madam Minister, you mentioned earlier in your comments about modern comptrollership. Can you elaborate for the committee how this modernization will ensure that the type of situation that occurred in HRDC won't occur in the future?

[Translation]

Ms. Lucienne Robillard: That is a very broad question, Mr. Chairman. In essence, it touches on the issue of modernizing the control function, an issue on which we have been working for some years now. We even established a Blue Ribbon Panel to study the issue. You may remember the panel; in its report to the government, it stated that all aspects of control management had to be improved. One of the cornerstones of that improvement, Mr. Chairman, is of course the Financial Information Strategy, which we are currently implementing. As you know, the government still uses a cash-based accounting system. We have to move to accrual accounting, so that everyone has financial information—as well as non-financial information, of course. This information is not solely for accountants, but for everyone—citizens and parliamentarians. The new Financial Information Strategy will make it possible for us to account more effectively for departmental activities, and even to generate financial statements department by department. Mr. Chairman, this is a very important process that will enable more effective reporting to Parliament, and provide more information for people on the activities of all...

[English]

The Chair: There can be a question only if the reply can be very short.

Mr. Bryon Wilfert: Madam Minister, is there a timing mechanism in place? When will that information be available so we can take a look at it?

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[Translation]

Ms. Lucienne Robillard: Mr. Chairman, the Financial Information Strategy is a strategy that we plan to have implemented by 2001. By April 1, 2001, we will have implemented accrual accounting, and parliamentarians will therefore have better financial information when they study the reports.

The Chairman: Paul Crête, Rey Pagtakhan and Libby Davies.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): According to what the Minister tells us, the audit did not reveal any instance where the withdrawal of delegations of authority from Human Resources Development Canada was considered. Let me cite a case that was not covered by the audit: the Placeteco case.

As the Minister knows, in the Placeteco case a trust was established for the payment of $1.2 million, in violation of Treasury Board directives. The contribution was also in violation of the delegation plan set out in chapter 2.12 of the Comptroller's Manual, which states that, with any contribution of $500,000 or more, an initial advance is paid in the first month, and the balance paid out in monthly increments thereafter. In this case, the contribution was paid in one lump sum, in violation of the directive. Moreover, the contribution was paid out without submission of invoices for reimbursement. This is also in violation of Treasury Board directives.

In her brief, the minister states:

If a serious failure occurs, it is the role of the Treasury Board Secretariat to satisfy itself that the proposed remedies are appropriate and that there is timely follow-through to completion of all required actions.

Can the Minister tell me whether she took any specific action in the Placeteco case to remedy the problem?

Ms. Lucienne Robillard: Mr. Chairman, it is very difficult for me to answer questions on a specific case. Questions on specific cases should be put directly to the Minister of Human Resources Development. However, with regard to the trust funds, I can say that HRDC found two trust funds that were not in compliance with Treasury Board conditions, and put an end to them. There is no doubt there. For specific cases, however, I would recommend that the member put his question directly to the Minister.

The Chairman: Paul Crête.

Mr. Paul Crête: Mr. Chairman, let me repeat what I have just said. In her brief, the President of Treasury Board stated that, if a serious failure occurs, it is the role of the Treasury Board Secretariat to satisfy itself that effective corrective measures are taken. She acknowledges that the trusts were not established in compliance with Treasure Board directives. I repeat, some contributions paid were not in compliance with directives in the Comptroller's Manual governing payment of contributions. Payments were not made incrementally as stipulated in the directive, and no invoices have been submitted to prove that the sums reimbursed were for costs actually incurred, and incurred specifically by Placeteco.

In light of the above, does the Minister not feel that this is indeed a serious failure, and that Treasury Board should intervene to ensure that effective corrective measures are taken?

Ms. Lucienne Robillard: That is exactly what we have done, Mr. Chairman. Let us be clear on this. A trust fund is a legal agreement between departments and offices, and offices may have recourse to it when necessary. For example, a trust fund was established for the $3.5 billion Canada Health and Social Transfer.

That said, I think that the Department of Human Resources Development has pinpointed two trust funds that were created and that should not have been under the Treasury Board policies; to the satisfaction of the Treasury Board Secretariat, Human Resources Development Canada has taken the necessary steps to close the two funds and ensure that the approach is not taken in the future.

Mr. Paul Crête: Mr. Chairman, I find it surprising when the Minister says that it was done to the satisfaction of the Treasury Board, given that the grants program was carried out that way and that the $1.2 million placed in the trust fund were actually used to reimburse a loan with the National Bank.

Did this conduct, which was improper to begin with, not justify putting an end for this approach for all operations and cleaning things up so as to restore the necessary transparency to these activities? Otherwise, one might have the impression that, in the Placeteco case, favourable treatment was given, which is unthinkable.

Ms. Lucienne Robillard: Once again, Mr. Chairman, I think that in a particular area such as this one, you really need to address your questions directly to the Minister of Human Resources Development.

Mr. Paul Crête: Are there no other examples? Can the Minister give us other examples of trust funds, or other examples where there have been contradictions between Treasury Board directives and where the Treasury Board has allowed some latitude?

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Ms. Lucienne Robillard: The Deputy Comptroller General tells me that, to our knowledge, Mr. Chairman, we do not have any other examples to put before you.

Mr. Paul Crête: So the Placeteco case is a very special one, from what I can see. It goes completely against the Treasury Board rules. It is not part of the audit. Do you not see the need, as President of the Treasury Board, to take action? Is this not a case requiring intervention beyond the level of the Minister of Human Resources Development, as suggested by the President of the Treasury Board? Should you not take direct action, such as appointing an expert, as you did for the whole audit file? Since this case was not included in the audit, would it not be a good idea for someone at the Treasury Board to do an audit to ensure that the whole operation complied with Treasury Board directives, given that all the facts seem to support the opposite conclusion.

Ms. Lucienne Robillard: Once again, Mr. Chairman, it is very clear that when Human Resources Development Canada examined the situation—and I repeat that there were two trust funds created that definitely did not comply with Treasury Board policies—the department took the necessary steps to close those two funds and to ensure that this did not happen in other programs. In that regard, the Treasury Board Secretariat is satisfied.

Mr. Paul Crête: I have one last question. Putting aside the question of the trust funds, is the Minister aware that a grant in the amount of $1,190,000 was authorized by the regional director, when his decision-making authority was limited to $750,000? Is that not sufficient reason, in the present circumstances, to look into why there are a myriad of singular aspects to this file? The government seems to be determined to keep using the same political line, even though there is clear evidence of a number of practices that run counter to Treasury Board directives, including this $1.2-million grant awarded and authorized by someone whose authority was limited to $750,000.

Ms. Lucienne Robillard: Mr. Chairman, you will understand that not all grants and contributions from all departments come to the Treasury Board as such. There is an overall policy on grants and contributions that departments must follow. At Human Resources Development Canada, an internal audit report indicated the existence of serious enough problems for the minister herself to get involved and to propose an action plan to correct them.

It is true that some files present problems with respect to financial management practices, but I can tell you that the Treasury Board Secretariat ensures that remedial action is taken. We are confident that, with the action plan and the experts that have been hired to monitor the action plan, and with the Auditor General's approval, everything is now in place to correct these problems that were identified in the department's internal audit.

The Chairman: Thank you, Madam Minister.

[English]

Colleagues, so you know where we are, we have Rey Pagtakhan, Libby Davies, Larry McCormick, Elsie Wayne, Judi Longfield, Dale Johnston, Raymond Folco, and Christiane Gagnon.

It's now Rey Pagtakhan.

Mr. Rey Pagtakhan: Thank you, Mr. Chair, and thank you, Madam Minister and your staff, for appearing this morning.

With respect to the monitoring of the implementation of remedial action, you indicated that you take direct measures, including withdrawal of delegated authority. Have there been any recent examples of this withdrawal of delegated authorities?

[Translation]

Ms. Lucienne Robillard: As I have already said, we did not feel that that was necessary in the case of the Human Resources Development Department. However, Treasury Board has the power to withdraw delegated authority. We did that last year for one particular organization, the Canada Industrial Relations Board.

[English]

Mr. Rey Pagtakhan: You indicated, with respect to strengthening the management of grants and contributions, there is this emerging new transfer payment policy, and you talked about getting it in shape in the very near future.

You also talked about strengthening the internal audit of the many recommendations and how you would like to see it, again in the very near future, as well as the effectiveness of monitoring the control systems, again in the very near future.

Can you give the committee a sense of when this very near future will be?

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[Translation]

Ms. Lucienne Robillard: That is a very good question, Mr. Chairman. I would indicate to the committee that we have been working to update management practices over the last few years. I said that earlier when I was talking specifically about the modernization of comptrollership. We have also received a great many recommendations from the Auditor General, and I believe he has talked about them here. This work has been underway at the Treasury Board Secretariat for nearly a year, I believe.

Regarding the policy on transfer payments, we began our review of that policy last May. We are now in the final phase of consulting the departments and the Auditor General as well. So the near future in terms of this new policy on transfer payments should be within the next few weeks, Mr. Chairman.

Coming to internal auditing, that is a large scale operation. After the external report of the Blue Ribbon Panel, we undertook a review of the internal audit policy. A report was issued this past January, Mr. Chairman, and the committee members may be interested in looking at it. The newly revised internal audit policy should be out, I believe, by the end of the summer.

[English]

The Chair: Rey Pagtakhan, this is your last question.

Mr. Rey Pagtakhan: Mr. Chair, my last question is for the minister.

Toward the end of your presentation, you indicated that the Results for Canadians document makes clear what is needed in terms of active monitoring to ensure effective control. At the same time, you indicated in your presentation that you're still examining ways to improve the ability of this system to actively monitor the effectiveness of the control systems across government. I just want to be assured that the Results for Canadians document does not yet contain all the necessary ingredients for effective management control, since you indicated earlier that in fact you're still in the midst of examining ways.

The Chair: Minister, I know it may be difficult, but can you make it a short response?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I would just remind committee members that this document entitled Results for Canadians, which is a management framework for the government, is a background document that provides a framework for basic management practices. It contains all the important components. It says that our services must be geared to citizens' needs, that management must be rooted in public service values and that all management activities must be keyed to results and governed by proper spending controls.

That said, Mr. Chairman, I agree with the member that we at the Treasury Board Secretariat have a responsibility to oversee spending control and, in the light of the events at Human Resources Development Canada, we must absolutely look at our own practices, increase that oversight and become much more active and pro-active in monitoring spending and departmental controls.

[English]

The Chair: Right. Thank you very much.

Libby Davies, Larry McCormick, and Elsie Wayne.

Ms. Libby Davies (Vancouver East, NDP): Thank you, Chairperson.

I'd like to thank Madame Robillard and her staff for coming here today.

Madame Robillard, in your comments earlier, you asked why the alarm bells didn't go off a lot earlier. I found that interesting, because it seems to suggest that somehow the problems in HRDC or maybe in other departments have taken people by surprise.

When we had the Auditor General here on March 23, the Auditor General made it quite clear that he had a lot of frustration. In fact, he talked about the problems he has been identifying for over twenty years. Surely you're not suggesting that somehow the systemic problems in HRDC over grants and contributions is a mystery or a surprise, because it seems to me that the problems have been evident for a very long time, for decades.

• 1155

Secondly, I wonder why your government has not taken steps to put in place the necessary financial administration and controls to make sure we don't have to get to the point where alarm bells go off. For example, only 84 employees are in the executive group in the whole of the federal government in terms of the financial sector. Very few departments have a full-time senior financial officer. We know the financial administration officers have been severely cut back. We know staff has been cut back generally in HRDC, about 5,000. Given that scenario, which is a direct result of government policy, how can you be here today to tell us with any credibility that the government is taking this seriously and that somehow some of these issues have emerged as a surprise?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I did not say that it was a surprise. In my presentation, I said that when we look at the current system, ideally speaking, we would have liked to see much earlier signs and an awareness of the situation by the various levels of authority before they got to the point they did. I raise that because I want the Treasury Board Secretariat to play a very active, even pro-active role in vigorously monitoring everything that happens in the departments when internal audit reports are received.

We work very closely with the Auditor General and we're quite aware that the Auditor himself, last year, suggested a review of our policy on transfer payments so that the responsibilities of the departments and the Treasury Board Secretariat be much clearer, and we've already started doing that.

We know that the Auditor is concerned about the whole matter of grants and contributions government wide and that every time he audits a program he can find certain problems with departments. I think that the internal audit at Human Resources Development Canada showed a very serious problem for the department as a whole and this required a very serious action plan. That's the context in which I made my comment.

[English]

Ms. Libby Davies: Just very briefly, because I have to go into the House, surely it's time to get tough and to turn guidelines and policies into enforceable rules that have consequences. Would you agree with the idea that we have to have rules for departments in terms of financial administration and management and in terms of the dispensation of grants and contributions, and that if there's a violation of those rules there are consequences? I'm not aware that there have ever been consequences to departments in terms of any wrongdoing.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, as I said earlier, Treasury Board can take different steps with a department which does not comply with its policies or a department that goes beyond that and, for example, that doesn't enforce the Financial Administration Act, which is not the case at the Human Resources Development Canada. You can use different tools. You can go as far as taking away delegated authority from a department and that is very serious. When we did that in the case of one organization a while back, we had to make a very serious decision.

That said, we didn't think it was necessary to do this for the case we're concerned with today. We know that the department had the ability needed to bring about very specific remedial measures and that's what will be done in this department.

[English]

The Chair: Larry McCormick, Elsie Wayne, and Judi Longfield.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair, and thank you for being here, witnesses.

As we've heard so many times, there are severe problems in HRDC. I'm just wondering about the officials who are beside you, Minister. They've probably been with Treasury Board longer than you have.

I have a serious question, and it's one to which I've probably heard an answer many times. Have these situations—what's happening in HRDC in this alleged area—been more or less severe than what Treasury Board has seen before? Also, as the second part of that, are the initiatives you're taking more severe or less severe than what you've done before, in the past?

• 1200

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I'll ask my collaborators to complete my answers but I would like to tell the hon. member that in the light of the reports I have received since coming to Treasury Board, the problem presently prevailing at HRDC is more serious than others noted in any other department. Here's why.

When you audit the grants and contributions in a department managing ten or so different programs, you usually find problems in one or two programs. However, as you noted, at HRDC the internal audit looked at seven programs and problems were found in all seven. The scope of the problem was thus far greater than what is usually found elsewhere. Actually, a supplementary audit was done in all the other departments, Mr. Chairman, and I can tell you that at this time we can say that we don't have any systemic problems government wide. There's a serious problem at HRDC and the minister has taken it on. I must say that she has come up with very drastic remedial action to deal with the problems. Would my colleagues who have been at Treasury Board for quite a while, like to complete my answer?

[English]

Ms. Carole Swan: Thank you, Minister.

Mr. Chair, as the minister has said, let me just say that the problems in HRDC that the audit uncovered were problems across a number of departments, and they certainly are issues for us. My colleague Mr. Neville will be able to give you some examples.

Over the past number of years, there have been examples in which we have recommended to Treasury Board a much more aggressive approach in terms of removing delegated authority. In our judgment, the situation was so profound as to require that. However, as the minister has mentioned, we have worked closely with HRDC in terms of the development of their remediation plan. We feel that plan is an appropriate mechanism for dealing with the issues that have been identified in the audit to date.

The Chair: I would remind you that Larry only has about a minute and twenty seconds to go.

Mr. Richard (Rick) Neville (Deputy Comptroller General, Treasury Board of Canada): I'll be very brief, Mr. Chairman.

As you can appreciate, departments are always welcome to ask us for advice, and we have policy centres that can try to assist them. Over the years, it has been very normal that they would have come in to ask for assistance, and we work very closely with those departments concerned, Mr. Chairman. But there have been specific cases in which we have had to take very serious action to try to remedy the scenario that has been presented. It doesn't happen often, but over the last ten or eleven years it has happened in three or four instances. So that has occurred, Mr. Chairman.

Mr. Larry McCormick: Perhaps my comment to the Treasury Board, Mr. Chairman, would be that I hope any guidelines or recommendations that they might take or put forward to HRDC don't cause undue delay. Sitting where I do in the House every day, behind the minister of HRDC, I see that as soon as QP is over, the minister is getting lobbied by members from each and every political party in the House because of the value of the contributions that these programs make to Canada. Of course we want to clean this up, but I just leave you with that.

Thank you, Mr. Chair.

The Chair: Thank you, and I appreciate it that you were so brief, Larry.

Can I just ask something of the witnesses? You've mentioned this a number of times. Could you name an agency or the agency from which appropriations were withheld because of non-compliance with guidelines? You mentioned the general example a number of times but without a specific name to it. Could you let us know? We'd be grateful if you could let the committee know.

Ms. Carole Swan: We should just clarify, because I don't want to leave the wrong impression, Mr. Chair. To the best of our knowledge, appropriations were never withheld. It was an issue of taking delegations back temporarily to Treasury Board.

The Chair: Can I then repeat what my question would be? Colleagues, I think it would be useful to us to have an example or two of action that has been taken. Do you understand?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I've already given you an example: we took away a delegated authority from the Canada Labour Relations Board, which was an organization. We have taken such steps in the past.

[English]

The Chair: Elsie Wayne, Judi Longfield, Dale Johnston, Raymonde Folco, and Christiane Gagnon.

Mrs. Elsie Wayne (Saint John, PC): Thank you very much, Mr. Chairman.

On March 23, the Auditor General stated that he was very upset and frustrated by the way government manages grants and contributions—and we're talking about $17 billion. I'm wondering if the minister would agree that a royal commission inquiry would be in order. I say this because I think people have lost confidence now. Whether you're elected or whether you're appointed, $17 billion is a lot of money. When that's mismanaged, we have to get the politics out of it and really do something whereby the people will put their faith back in government.

So would she agree that a royal commission inquiry is in order?

• 1205

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I know that some experts have raised the possibility of setting up a royal commission and I've read their opinions. However, I must point out that many mechanisms have already been put in place to examine the difficult situation this department is in.

The elected members of the parliamentary committee are looking at what happened exactly. They will be making recommendations to government and they will be ensuring a follow up. The Auditor General himself has undertaken a study not just of HRDC, but of the whole government apparatus. As he came to tell you and as you know full well, the Auditor General is very independent and he answers to Parliament. The Treasury Board Secretariat is also very involved. When I look at all of those elements, it seems to me that we already have in hand the appropriate tools to correct the situation. So I have problems in accepting such a recommendation.

[English]

Mrs. Elsie Wayne: I have another question for the minister. Was the President of the Treasury Board advised of the results of the audit of January 2000 before it was made public? When they were preparing that audit during the fall of 1999, there were at least thirty meetings. That's according to the HRDC associate deputy minister. Was the minister's department ever involved in these discussions, and what precise actions were undertaken by her and her officials?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, we were certainly informed about this HRDC report. You will remember that when the Auditor General appeared before your committee, Mr. Chairman, he told you that an official from his office acted as an observer on HRDC's internal audit committee. You do remember that? An official from the Treasury Board Secretariat also acts as an observer on that internal audit committee. Some departments ask us to be there as observers. So, yes, we were made aware of that report. Personally, I was made aware the day after the report was made public. So, yes, we immediately started working very closely with the officials of that department to establish an action plan.

[English]

Mrs. Elsie Wayne: This is my last question, Mr. Chairman.

Could the minister just tell me—and all of us here—who was responsible for this management fiasco? Is anyone accountable for this boondoggle? I have to say, Mr. Chairman, that people are very upset about what has been happening with this mismanagement of grants and contributions. I'm sure you're hearing it too when you go back to your riding.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I know that the following question is often asked: who must answer for the problem we have today?

[English]

Mrs. Elsie Wayne: That's right.

[Translation]

Ms. Lucienne Robillard: It could become very frustrating if some of you wanted to find someone and say that that's the one who is responsible and must be punished. If that's what you're looking for, you're going to be quite frustrated. Why, Mr. Chairman, the internal audit report found a problem with the grants and contributions system. A problem was found with the system and not with a file in particular in a specific office under an individual to be held responsible. A problem was found with the system. So how does the system work? As you know, cabinet makes decisions concerning a given program, Treasury Board examines all the details of its implementation and the department comes up with very specific directives to provide for the way the program will be managed in all of its offices all across Canada. From that point on, the department must follow Treasury Board policies to answer for its expenditures and, in this case, a problem was found in the systems of seven different programs.

Mr. Chairman, I don't know if I'm making myself clearly understood. If we had found one problem in one file, in one office of HRDC somewhere in the country, we could say: “Oh, here's who is responsible.” That's not what happened; we found a problem throughout the whole system.

• 1210

It's very clear that, according to our parliamentary rules, the minister is responsible for the management of his or her department and she recognized this herself in the House of Commons and outside of the House of Commons. She said she was so totally responsible that she had personally taken on the task of setting up an action plan that will correct the situation.

[English]

The Chair: Judi Longfield, followed by Dale Johnston.

Mrs. Judi Longfield (Whitby—Ajax, Lib.): Thank you.

I want to thank the minister and her officials for coming. I appreciate the time they've taken.

Minister, I'm concerned about the status of the financial management community within the whole federal government system. We've seen downsizing of about 20% of our financial managers over the last ten years, recruitment rates that have fallen below attrition rates. In the next five or six years, we're facing that retirement bubble where 25% of those with the history, the corporate knowledge, are approaching retirement. I think you add to this the lack of opportunity for advancement, the small levels in the very upper level, and a general feeling that perhaps proper financial management practices when designing new programs and policies that are more client-based and designed to cut red tape.... We then have a couple of problems.

My question is this. What steps are we taking to ensure that the federal public service continues to be staffed by competent and professional financial managers? What steps are we taking to make certain that the needs of these financial managers are met and that we improve the retention of qualified and professional managers? I'll save my third till after you respond to that.

[Translation]

The Chairman: Madam Minister.

Ms. Lucienne Robillard: Mr. Chairman, that's a very important question. Actually, you first must have people who have the necessary expertise to fulfil those responsibilities of financial management in the different departments and, second, the employees who are part of the internal audit teams who are supposed to help the departmental managers to follow up on the results of their audit, must also have the necessary skills.

This question is quite relevant because, as you know, we are within the context of “la relève” in the public service. Many officials will be retiring within the next few years. This is a matter that was already looked at with the community of internal auditors. If you don't mind, Mr. Chairman, I'd ask Mr. Neville to brief us on this.

[English]

The Chair: Mr. Neville.

Mr. Rick Neville: Thank you very much for that opportunity, Mr. Chairman.

If you recall, the minister mentioned the blue ribbon panel back in 1997. That gave rise to modern comptrollership as we know it today, with a number of ramifications. We are trying as best we can to ensure that the financial community within the Government of Canada has the capacity to meet the challenges of the 21st century. There have been a number of initiatives that have been put forward, both in terms of training and in terms of staffing.

Specifically with respect to the internal audit capability, which is what I think we're referring to, we have carried out a study since June of 1999 through various sources that have allowed us to now assess that there are some deficiencies within the internal audit community. We're trying to address those and come up with some remedial action.

Some of the concerns deal exactly with what you referred to. In terms of capacity, there has been a significant reduction in the internal audit capability over several years, and it's now at a point where we feel it has to be addressed. There's also the question of standards, which has to be dealt with. What we would like to see at the end of the day is probably a change to the internal audit policy that Treasury Board presently has on its books. We're looking towards a number of initiatives that will give us the changes you referred to.

Mrs. Judi Longfield: My concerns go beyond the internal audit and go more to having financial managers right there at the beginning in the program design so that we don't have to clean up the problem after the fact.

The Chair: Dale Johnston and then Raymonde Folco and Christiane Gagnon. You can see we're starting to move into the second round, so we'll keep the pace going.

Mr. Dale Johnston (Wetaskiwin, Canadian Alliance): Mr. Chairman, I thank the minister and the officials who have come forth today.

I'd like to have the minister clarify a few things. The internal audit indicated that 87% of the projects had no supervision, that 80% of them had no financial monitoring, that 72% of them had no cashflow forecasts, and that 15% of them were awarded without any application. Yet I hear her tell us today that the Treasury Board has never refused a department's request for funds. I think that is totally contrary to the title of the group we have before us today, which is comptroller.

• 1215

If I had a comptroller working for me, or a finance department running my business, that paid out bills with no invoices, that had no idea what we were buying, that had no supervision over whether the goods were delivered or not, and various things like that, I would be extremely concerned. When I hear the minister say that perhaps we don't have the expertise in our department to do those things.... That's basically what she replied to Madam Longfield's question, that the department is so slim on people that they just don't have the expertise to do this. I think this should send up red flags right across the country. I wonder if the minister would care to remark on that.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, let us be very clear. I never said that either the Treasury Board Secretariat or the departments did not have the needed expertise to audit grants and contributions. I think that we must define responsibilities very clearly. On a daily basis, the Department is responsible for the proper management of grants and contributions, in accordance with Treasury Board policies. We, on the other hand, must actively monitor operations, and this is what I meant when I said that we should improve our own capacity to continue monitoring the various departments. But far be it from me to say that our departments, as a whole, do not have the needed expertise. They indeed do have the needed expertise, but this does not mean that we cannot improve the system.

Having said this, it is quite clear that HRDC had serious problems, so much so that the Minister had to get personally involved in this issue in order to bring remedial measures. I think that this shows in a certain way that the system can work because flaws were detected and measures were taken.

[English]

Mr. Dale Johnston: Is the minister concerned that departments routinely break or bend Treasury Board guidelines governing grants and contributions? Is that a concern to the minister of the Treasury Board?

[Translation]

Ms. Lucienne Robillard: The Chair of the Treasury Board must always take care to ensure that all policies be properly followed. Very clearly, grants and contributions policies deserve immediate attention because, as you know, the government has allotted rather substantial funds to these programs.

I must say that, when we look at what is happening in the government apparatus as a whole, there are sometimes problems with specific departments and programs, but there is no problem with the government as a whole. Such problems drive our efforts to improve our control over financial practices. This is what we are currently working on.

[English]

The Chair: Dale, briefly.

Mr. Dale Johnston: Very briefly, Mr. Chairman.

Does the minister believe the Treasury Board then should, for lack of better words, put a little more teeth into things here to make sure other departments do respect the Treasury Board's guidelines and put something in place to make sure that does happen?

The Chair: Minister, also very briefly, please.

[Translation]

Ms. Lucienne Robillard: I understand, Mr. Chairman, that committee members will be very interested in the new policy that we will be ready to table within a few weeks. In fact, this policy is aimed at reinforcing various control mechanisms.

[English]

The Chair: Raymonde Folco, Christiane Gagnon, Rey Pagtakhan, Reed Elley.

[Translation]

Ms. Raymonde Folco (Laval West, Lib.): Madam Minister, I am glad to meet you again as the Minister in charge of the Treasury Board Secretariat.

• 1220

A great deal was said about corrective measures around this table. You just said something that seems to me very basic with regard to the systemic problems found in HRDC and that, at worst, we could also find them in other departments. Thus, we could take a systemic approach in finding these problems, as well as a systemic approach for seeking solutions to these problems.

You just showed us a document entitled Results for Canadians. I would like to know whether this document's contents, which advocate changing the role of the Treasury Board Secretariat as the government's general manager, could be interpreted as a systemic change, which would bring improvements not only to specific programs but to the operation of departments and of the government as a whole. Could you give us more details about this, please?

Ms. Lucienne Robillard: Yes, Mr. Chairman. In fact, the honourable member is talking about a new role given to the Treasury Board in 1997. You may remember that the Prime Minister had asked that, henceforth, Treasury Board should be the government's management board. The Treasury Board still has its traditional roles, such as being the government's employer and expenditure comptroller, and, in addition, it has become the management board. This enables it to analyze government matters on a much more global scale, and to define upcoming trends and to recommend much more global measures to the government in its management practices. Yes, this is a new role that Treasury Board is beginning to play. This document will emphasize the new characteristics of Treasury Board. In fact, it has become the management framework for the government as a whole. Mr. Chairman, this is the kind of operations that will allow us to make specific recommendations to the government regarding public expenditures.

For instance, if we look at the social, cultural and economic sectors of our government, we may ask the following questions. Has the money been spent in the right place? What are the trends? What should be our focus? In this way, we will be able to make better recommendations to our government in management matters.

The Chairman: Raymonde Folco.

Ms. Raymonde Folco: As a follow-up, I would simply like to ask you, Madam Minister, what will be the connection between this new kind of management and the problems identified with HRDC. Is there a direct or an indirect link? In other words, how do you foresee management in the future? Can we revert to the past and can this document help us to remedy the problems that we experienced ad HRDC?

Ms. Lucienne Robillard: This document truly provides a global management framework, namely a framework on which ministers will rely in carrying out their responsibilities. Within this global management framework, there is a very important element, namely, a judicious control of expenditures. Here, we tell the departments that they have very specific responsibilities and that the Treasury Board will be very active in monitoring the way they control their expenditures.

In a sense, this framework can help HRDC with its general management. However, it holds no specific or direct answer to the problems identified in that department. I think that the plan of action proposed by my colleague Ms. Stewart, which has been reinforced by these two new policies, the transfer payments policy and the internal auditing policy, will help to improve the management of HRDC and will provide direct solutions for the problems that now exist.

[English]

The Chair: Christiane Gagnon, then Rey Pagtakhan, Reed Elley, and John Godfrey.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): The Honourable Minister of the Treasury Board told us that she recognizes that there is a problem with the system. However, she is not looking to the past, but rather to the future, and toward implementing structures that will allow her to better monitor the way departments control expenditures and grants. I doubt whether we can really get to the bottom of the cases we are dealing with. We know that the Minister of Human Resources Development showed in her action plan that she expected the Treasury Board Secretariat to give her advice. You told us that she had implemented very serious remedial measures to correct these matters. I, too, am waiting for your advice, Madam Minister.

• 1225

Some say that they want to correct previous overpayments. Do you not think that, in order to do this, a double standard must be applied. On one hand, Vidéotron refunded $220,000 for 44 jobs that it had not created; on the other hand, it is very difficult to get a refund from Placeteco because it did not create 42 jobs, but only one, two or three jobs. If we really want to get to the bottom of these controversial files, why is it so complicated to settle this one?

We have a right to expect advice from you, and the Minister is also expecting that, because her plan of action includes receiving advice from the Treasury Board Secretariat.

The Chairman: Madam Minister.

Ms. Lucienne Robillard: In fact, we are closely collaborating with HRDC, as I said. There is even a high official from the Secretariat currently working in the Department to help the officials implement the remedies and ensure the follow-up. The Auditor General is also watching this closely, as you know. The Department also hired an independent expert.

So I think that all the tools are in place. We are there to help the department implement the necessary financial practices to ensure a good monitoring of public expenditures.

Now, if you have a question dealing with a specific case, or a specific transaction, you must put it directly to the Human Resources Development minister. I cannot answer such questions.

Ms. Christiane Gagnon: Yes, but we know that in some cases, the way the grants were managed would lead one to believe that there may have been political interference. We are here to ask questions. Last week, we heard from senior officials to whom we asked questions regarding the eligibility criteria linked to pockets of poverty. We were told that the island of Montreal had been targeted and that the members from there had been contacted. I am personally investigating this matter on behalf of my colleagues from the Bloc Québécois, and I do not believe my colleagues were informed.

Therefore, regarding these two criteria, namely political interference and the flexible way in which eligibility criteria for pockets of poverty were applied, don't you think that there is enough subject matter for a major inquiry rather than a simple internal one, which ultimately will not shed much light on the situation. There really is much we do not know about what is really happening within the Human Resources Development Department.

The Chairman: Madam Minister.

Ms. Lucienne Robillard: Mr. Chairman, I think people have to clearly understand the role of Treasury Board and its secretariat. For instance, when the government decides to create a new program, it is subject to terms and conditions. The department must therefore receive approval from Treasury Board for the terms and conditions of the program. Once they have been approved by Treasury Board, the documents, to my knowledge, become public.

This means that the terms and conditions of the Transitional Jobs Fund were approved by Treasury Board. New terms and conditions were also approved when the new program called the Canada Jobs Fund was implemented.

Once the terms and conditions are accepted and approved by Treasury Board, it is up to the department to send out guidelines to its various offices and inform its partners about them.

That gives you a breakdown of each area of responsibility. Indeed, the terms and conditions of both programs were approved by Treasury Board, but the guidelines were established by the department itself.

[English]

The Chair: Christiane, a comment only.

[Translation]

Ms. Christiane Gagnon: I would nevertheless like to add that there was a two-year lag regarding the guidelines flowing from the terms and conditions. How is it that for two years, Members of Parliament were not aware that the application of the criteria depended on pockets of unemployment? It was vague. Based on what you say, you were aware of and had agreed to this principle. How is it that during those two years, no one was aware of this criterion?

[English]

The Chair: It's Rey Pagtakhan. Perhaps we can get the reply to that later on. We're moving around the parties.

[Translation]

Ms. Lucienne Robillard: Well, Mr. Chairman, this means that no one had read the terms of implementation.

• 1230

[English]

The Chair: Rey Pagtakhan, Reed Elley, John Godfrey, Paul Crête, Judi Longfield, Diane Ablonczy, and Bryon Wilfert.

Mr. Rey Pagtakhan: Thank you, Mr. Chair.

Madam Minister, of the 15% that were shown to have no application under the grants and contribution audit referred to earlier by some members, can you tell the committee if all of those instances needed application? The reason I pose this question, Madam Minister, is that in the briefing notes we have, we have grants that are statutory in nature and may in fact be negotiated with the provinces. I want to be assured that all of those grants and contributions had to have applications to begin with.

[Translation]

Ms. Lucienne Robillard: As far as I know, Mr. Chairman, unless I misunderstood my colleague's question, any application for a grant or a contribution... “Any application”. So there had to be an application for a grant or contribution. If I understand correctly, based on what the internal audit report said, that application was not documented, it may not have been put into the file or may have been made verbally.

[English]

Mr. Rey Pagtakhan: Okay, and that obviously is not an acceptable practice.

[Translation]

Ms. Lucienne Robillard: No. It must be documented in the file.

[English]

Mr. Rey Pagtakhan: Now—

The Chair: Rey, will you finish?

Mr. Rey Pagtakhan: Yes, very briefly by way of comment only, because it was asked earlier whether we should have a royal commission. Indeed, Mr. Chairman, citizens are concerned about the issue. I share their sentiment.

At the same time, when I polled my constituents and asked if they were pleased that the Minister of Human Resources Development Canada had instituted the six-point plan, they invariably said yes. When I asked if they were pleased that she is trying to monitor the situation now, the answer was invariably yes.

In other words, Mr. Chair—and I can conclude with this—imagine a medical doctor who has seen a patient, made the diagnosis, and now has made the prescription. The scenario is obvious. We should allow that doctor to continue to treat that patient for the patient to get well.

Thank you, Mr. Chair.

The Chair: Thank you, Rey, and it shouldn't be too large a pill to swallow, I would say.

Reed Elley, John Godfrey, Paul Crête, Judi Longfield, Diane Ablonczy, and Bryon Wilfert.

Mr. Reed Elley (Nanaimo—Cowichan, Canadian Alliance): Thank you very much, Mr. Chairman.

I might just continue the analogy of my colleague and suggest that what we're involved in here is preventive medicine so that this kind of disease doesn't happen again.

Ms. Lucienne Robillard: You're a doctor too.

Mr. Reed Elley: Well, we're all into wholeness and wellness these days.

The Chair: One medical doctor on our committee is enough, thank you very much.

Mr. Reed Elley: I would like to pursue the line of questioning of my colleague, Diane Ablonczy, and I want to try to get something straight because I wasn't quite sure of the minister's answer to the question about the internal review that was held in 1998 in HRDC.

I think I heard the minister say that this review was not sent to the Treasury Board. Is that correct?

Ms. Lucienne Robillard: That's correct.

Mr. Reed Elley: Well, from my point of view the Treasury Board is charged with the responsibility to make sure that government departments spend money wisely and that there are in place in those government departments certain guidelines that are supposed to be followed both by staff and ministers alike. If a 1998 internal review of HRDC showed some very serious concerns about the running of the department, why would this document not have been seen by the Treasury Board? Then the alarm bells that should have been ringing could have instigated some kind of preventive medicine at that point so this thing would not happen in 1999. Would the minister like to comment on that?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I think the member is right. I said it before and I say it again, the Treasury Board did not receive this management report. So, it was not sent by Human Resources Development Canada. I can only infer that the department's managers, at that time, did not believe that the report had to be sent to Treasury Board. So, we never received it.

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Mr. Chairman, perhaps the Deputy Comptroller General or the acting secretary could provide us with additional information. If you please, Mr. Chairman.

[English]

The Chair: Carole Swan.

Ms. Carole Swan: Thank you, Mr. Chair.

As the minister has indicated, our understanding is that this was a report done internally at HRDC. It's not technically a review document. Obviously, we would like the department to take the opportunity to share with us, at any turn, any documentation they have that's relevant to the operation of their department.

However, I would remind the chair that the department is responsible for day-to-day operations. We have been working with the department over a number of years to better understand the challenges it faces. It would have been nice to have had the document, but we didn't have it.

Since that time, the president has charged the secretariat with looking at how we can improve our active monitoring of departments, which is something we're looking at right now.

Mr. Reed Elley: I'm very glad to hear that, Mr. Chairman, because that is a recommendation that could have been made by this committee, if those kinds of things had not already been taking place with Treasury Board vis-à-vis HRDC.

When the Information Commissioner, Mr. Reid, appeared before this committee recently—if we're talking about alarm bells—he said he rang the alarm bell as loud as he could. He said he placed responsibility on Treasury Board to enforce the policies, but it has no desire and no intention of enforcing the rules.

Why in the world, Madam Minister, would the Information Commissioner make that charge of the Treasury Board?

The Chair: Minister, briefly, please.

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, I find it quite difficult to explain why the Information Commissioner would have made such a statement before you. What I can tell you, is that each time a report is tabled by the commissioner to Parliament, we study it very closely and we look into implementing the suggested recommendations.

It is quite clear, Mr. Chairman, that when the commissioner spoke to you, he was commenting on the government's Information Management Policy, and not on the Transfer Payments Policy, nor on the Internal Audit Policy. This is another policy that we have not yet discussed today, Mr. Chairman. I want to be very clear: the commissioner was referring to the management policy of government information. And this policy is first and foremost the responsibility of the departments, as you well know.

Now, it is quite clear that right now, the Treasury Board secretariat is working with National Archives—I think that the commissioner told you this—to try to improve this policy framework. Perhaps the Deputy Comptroller General, Mr. Neville, could provide you with more information.

[English]

The Chair: Rick Neville. Each time we get to you, Rick, time seems to be very short. Very short, if you please.

Mr. Rick Neville: I'll just support what the minister has said. We are working very closely and looking at some possible changes.

The Chair: Judi Longfield.

Ms. Judi Longfield: I'm going to follow up on my previous question on the use of financial planners' management at the beginning of the process. I think we all know that companies that are most productive and offer the best services have top financial planners right in their senior management. They're involved in the actual design of the program, the design of the policies. They're not simply at the bottom end or off to the side but are an integral part of the team that actually designs them, in the same way we have our legal advisers in there.

We have to clean up the mess at HRDC. And I think we all want to make certain that doesn't happen again. But throughout all levels of government, when we're designing programs, are we making an effort to make certain there's that sound financial planner right there at the beginning of the process and not just simply at the internal audit process?

[Translation]

Ms. Lucienne Robillard: Mr. Chairman, Mr. Neville will speak to this.

[English]

Mr. Rick Neville: Again, under the modern comptrollership initiative we are looking at trying to improve the way the financial community interacts with the line managers. A recommendation coming out of the blue ribbon panel is that financial officers know the business that much more and are, in a way, better able to assist and facilitate the line managers as they carry out their business. Whether in developing new programs or delivering programs to Canadians, that's one of the major cornerstones of what we have termed modern comptrollership.

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The Chair: Thank you.

Paul Crête, and then I'm going to wind it up.

[Translation]

Mr. Paul Crête: Mr. Chairman, I'd like to ask the president of the Treasury Board if she could summarize and table the mandate that was given to the Treasury Board expert who is responsible for the file at HRDC.

Ms. Lucienne Robillard: Mr. Chairman, we can provide additional information, but the Comptroller General informs me that this official did not receive a written mandate. He was told what his exact duties were. We can explain to you the work that he has done since being appointed, for one, and provide you with his reports.

Mr. Paul Crête: Mr. Chairman, if there is no written mandate, I'd like information on the verbal mandate or on what he was asked to do under this mandate.

Mr. Rick Neville: With pleasure, Mr. Chairman. First, we wanted to ensure that Human Resources Development Canada's action plan was implemented efficiently and to ensure that the steps, of which there are six, were very well formulated and that there was a weekly conference call with the regions. We wanted him to take part in this conference call to ensure that the implementation was well done, not only at the headquarters, but also in the regional offices.

In general, in a few words, that was his mandate. I must say, that since he has arrived, we have received a number of letters from Human Resources Development Canada thanking us for his help. This was from management.

Mr. Paul Crête: I have two quick questions. To whom does this person report when it comes to his activities? Who is his superior?

Ms. Lucienne Robillard: The Comptroller General.

Mr. Rick Neville: Myself.

Mr. Paul Crête: Mr. Chairman, I have one question for the Minister. This mandate that has been described, that is ensuring an efficient implementation of Human Resources Development Canada's plan, does this mean that the Minister will be taking responsibility for the grants and contributions?

Ms. Lucienne Robillard: No.

[English]

The Chair: Colleagues, before I thank our witnesses—I know there are other meetings going on—I'd like to suggest this. There are two notices of motion we've received and they have to do with other witnesses. I remind you that next week we'll be dealing with our interim report, but at the same time, as we discussed, we will in fact be planning what we will be doing after the break.

I suggest that at the end of our regular meeting on Thursday, we briefly consider the list of remaining witnesses and deal with that afterwards, as part of our consideration of the interim report. Is that satisfactory? In other words, on Thursday we will briefly consider the list of outstanding witnesses, including the two mentioned in the notices of motion we have here. Then we will consider that matter again next week, while we're considering the interim report and planning our activities after the break.

Is that okay.

A voice: We'd go in camera to do that.

The Chair: Yes, that's right.

I'd like to thank the Hon. Lucienne Robillard. Minister, we're most grateful to you for being here. Carole Swan, associate secretary, which I now know is associate deputy minister, we're grateful to you for coming. Rick Neville, we appreciate your being here. Thank you for taking the time. This is important work and we're very glad to have you here.

Colleagues, the meeting is adjourned until our regular time on Thursday.