HUMA Committee Report

Because this is an interim report, the members of this Committee believe that Canadians will be served best if we complete our study of the grants and contributions programs of Human Resources Development Canada before we make recommendations. We want our work to reflect our commitment to ensure that the federal government's programs are managed soundly so that they can achieve their goals —training Canadians for jobs, promoting social development and literacy, as well as assisting people with disabilities, youths and Aboriginals to participate fully in the social and economic life of our country. Grants and contributions programs delivered by HRDC can play a role in achieving this end but only if they are appropriately designed, operate according to a strong set of rules that are adhered to consistently, managed soundly, and remain responsive to real needs.

While this Committee does not want to limit its ability to make full and complete recommendations in its final report, we feel that it is the Committee's duty to provide Canadians with a true progress report of what the Committee has learned. This is the reason that we are raising the following questions.

In considering the overall scope and importance of this study, the Committee grew more convinced than ever that the proper management of grants and contributions is an essential part of good public administration in the federal government. Proper performance and financial management, including adequate levels of control, clear lines of accountability, and transparency in reporting to the public are all critical elements of administering the public good. Anything less is unacceptable.

In his presentation to the Committee, the Information Commissioner of Canada made a strong argument in favour of stronger information management rules. He pointed out that his predecessor had, in fact, called for these to be legislated. The audit of grants and contributions has, in fact, made the shortcomings of the record-keeping systems at HRDC obvious to all. The Clerk of the Privy Council pointed out that "…while there may have been monitoring [of HRDC's grants and contributions] being done, it was not being documented." According to the Information Commissioner the proliferation of electronic records has turned a serious situation into a crisis. He told us that Treasury Board policies to ensure adequate record keeping, preservation and access have not been followed. This Committee believes that sloppy record keeping, like we observed in the management of HRDC's records of its grants and contributions, must stop.

The Clerk of the Privy Council told the Committee at some length about the importance of training as one of the ways to meet the need for remedial action in the administration of grants and contributions in HRDC. The Internal Audit also found that staff would benefit from better training on the administration and financial management of grants and contributions that is part of their job. The Association of Public Service Financial Administrators endorsed this position but noted that they are not satisfied with the speed and level of commitment.

The Committee agrees, but as we pointed out above, the provision of training to frontline staff does not excuse managers from their obligations and responsibilities. Nor can training fully substitute for personnel resources adequate to ensure the proper functioning of a program. Training is not a panacea. No matter how well trained a staff member may be, training loses its positive benefit if he or she does not have the time to apply the training to situations and decisions that arise in the workplace.

The Action Plan of the Department has made a commitment to provide ongoing training. We endorse this commitment, and look forward to progress reports on how it has been met.

As the Committee has already observed, adopting a more open process that demonstrates results will bolster restoring the public’s confidence in HRDC’s administrative practices for grants and contributions. Pursuant to the Action Plan, all active files must be reviewed and updated and corrective action taken as needed by 30 April 2000. In addition, the National Grants and Contributions Performance Tracking Directorate will conduct ongoing monitoring on-site visits as well as issue national reports on a monthly basis beginning in February and regional reports every quarter beginning in April. The Committee will review these reports and analyze them for clarity and transparency.

In order for Canadians to benefit from its programs, HRDC needs to make sure that rules for individual programs are clear and that their terms and conditions are transparent.

Throughout our hearings, the Committee received conflicting interpretations of the eligibility criteria for one HRDC program in particular, the Transitional Jobs Fund (TJF). According to background information tabled by HRDC officials, the terms and conditions for the TJF were silent on the definition of "high unemployment." According to this information, departmental officials exercised judgement in determining the areas, including those that contained "pockets" of high unemployment, in which the TJF could be used to create long-term sustainable jobs. HRDC officials assured the Committee that regional offices informed Members of Parliament of these program criteria. The Committee has serious doubts that these program criteria were publicized widely or generally known by program sponsors and parliamentarians.

The Committee supports measures to ensure that all program eligibility criteria are applied equitably across the country and that the public, especially potential project sponsors, be adequately informed of these criteria and any changes following the introduction of a program. In future, Treasury Board and HRDC need to work together to ensure that equitable eligibility criteria are developed. The Department needs to abide by these eligibility criteria which should be monitored regularly by the Department's internal auditors and the Auditor General.

Given the inadequacy of information collection and retention that the internal audit uncovered, ongoing monitoring of the various projects funded by grants and contributions proved to be virtually impossible. The Committee supports the file review outlined in the Action Plan and would like to know the projected cost of continuing it into the future.

This Committee understands that the management of any government department, Human Resources Development Canada included, must make decisions about where to spend resources. Each department of government is responsible for the proper allocation of its funds. Each has to put in place a management structure, therefore, that makes it clear to the department's officers how they are to make their spending decisions, and how they are to manage those programs. During our hearings, we received evidence from the Association of Public Service Financial Administrators, among others, that the goal of due diligence had been challenged by the downsizing and restructuring of the public service. They told us that that this was resulting in a diminished institutional memory as well as increased training costs. The Association also expressed concern about the use of employees in financial administration who do not meet the educational and professional standards as established by the Public Service Commission. These concerns were echoed by the Canada Employment and Immigration Union.

HRDC should allocate its money so that it has the basic capacity on an ongoing basis to administer its grants and contributions programs with due diligence and an appropriate level of management.

Program officers and others told the Committee about the difficulty of reconciling the tension between serving the beneficiaries of the grants and contributions programs and respecting their obligations under the Financial Administration Act and Treasury Board guidelines. Senior managers also tended to delegate responsibility for resolving this tension to the program officers at much lower levels. The public service has recently set up an Advisory Committee on Values and Ethics to discuss some of these issues in their broadest context including that of "empowering" employees. The Committee would like to point out that when tensions between values, principles and goals exist, it is the managers' responsibility to provide clear direction to their staff on how to proceed. Delegating downward can sometimes lead not to "empowerment" but to the confusion in applying the rules that the HRDC internal audit uncovered.

The audit of grants and contributions that was released in January 2000 was but one of a long stream both of internal audits and of those conducted by the Auditor General. These are discussed in some detail above. The constant repetition of similar administrative failures in audit after audit left us wondering why changes had not been made. Each of these audits contained a management response to the findings but frequently these consisted of assurances that remedial action was being taken. Members of the Committee questioned officials about which recommendations in the earlier audits had been implemented, but answers were not forthcoming. The former Deputy Minister of Human Resources Development told the Committee that he was not aware of the results of the 1991 and 1994 internal audits.

In order to help prevent this unsatisfactory state of affairs from continuing, this Committee believes that all future audits should contain a plan for corrective action that sets out time frames and dates for completion of remedial action. Action plans such as that submitted to the Committee to remedy the administrative problems for grants and contributions should become the norm for all audits and not the exception (as in this case). These action plans should be made publicly available so that managers can more easily be held accountable. Each action plan should contain a commitment for ongoing progress reports at regular intervals (e.g. every six months).