PACP Committee Related Document

THE VIEW FROM THE HILL

Notes for an Address by Mr. John Williams, Member of Parliament for Edmonton – St. Albert, Chair of the House of Commons Standing Committee on Public Accounts, Chair, Global Organization for Parliamentarians Against Corruption.

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I'd like to begin by thanking the organizers of this conference, The Institute of Public Administration of Canada and the School of Public Policy and Administration, of Carleton University, for the invitation to be here today.

Mr. Justice John Gomery issued his first report on the Sponsorship Scandal two weeks ago dealing with the facts as he found them. We will now wait until February to read his final word on his proposals to fix the problems he identified and to prevent them from happening again.

The Sponsorship Scandal has cost Canadians $200 million or more. $100 million spent for little or no value according to the Auditor General, and about another $100 million to investigate how such a program could go so far off the rails. The cost is measured not just in money, but in lost reputation and pride. When so much has gone wrong, what can we learn from the scandal and the fallout?

I will speak today from the perspective as Chair of the House of Commons Public Accounts Committee which I have chaired for almost ten years.

This is not going to be the most partisan speech I have given, even though you have all read the newspapers today and who knows what next week will bring.

As the Chair of the Public Accounts Committee, I must speak for all members on the committee, government and opposition. I often say in other speeches that while it is the entire institution of Parliament that holds government accountable, government members can be and are sympathetic to the government's agenda, while we in opposition, are less than sympathetic to the government's agenda. Hence the partisan politics.

The Public Accounts Committee did valuable work in reviewing the findings of the Auditor General's report of November 2003 – which was tabled in the House of Commons in February 2004.

The Committee held 47 meetings over a period of 4 months, and heard from 44 witnesses, some of them more than once. We would have met longer and heard more witnesses, had a general election not intervened. The House was dissolved on 23 May 2004 for an election which was held on 28 June. At the time of dissolution the Committee had a list of 147 witnesses that it had yet to hear from.

When the House returned on 04 October 2004 as the 38th Parliament, the agenda had changed. The Gomery Commission was up and running and testimony was being heard in that venue. The Public Accounts Committee was reconstituted in October 2004 with a significant number of new members. It was not appropriate that we go back and rehear the testimony we received in the spring, therefore, the committee was at a crossroads. But Parliament couldn't walk away from such a serious issue, and I thought it best that we conclude the truncated investigation with a report to Parliament.

Always remember that Parliament is the institution of accountability, and given the enormity of the scandal, it was impossible to think that Parliament would have nothing to say on the issue.

The Public Accounts Committee is one of the least partisan committees in the House. While members of the committee take pride in their parties and in their partisanship, their focus as committee members is – like the Auditor General's – not on policy. It is on administration and the implementation of policy. We are first and foremost a committee of accountability.

Our meetings can be lively – as they should be – but when it comes to reports, we concentrate on making constructive recommendations. All Members at the table want the most effective, efficient, and economical delivery of government services as is possible.

This non-partisan approach is reflected in the fact that almost all of our reports are unanimous. As a Committee, all of us – Government and Opposition members alike stand behind what we say.

And this was the case in the reports which we adopted and tabled in the House of Commons on the Sponsorship Program.

In case we forget, the investigation was conducted when the Liberal Party, which stood accused of the Sponsorship Program, was in the majority, and two of the reports were prepared and presented when the Liberal Party was in a minority. But we managed to produce unanimous reports supported by Government and Opposition members on a highly controversial issue, one over which partisan lines could not be more firmly drawn.

I think that the Committee and its members should be congratulated on that accomplishment. It was a remarkable achievement, one that the media unfortunately overlooked.

Not only have we reported once, but we have actually tabled three major reports on the Sponsorship Program.

The first report was tabled in the House of Commons on 20 March 2003. It was based on the Auditor General's 2002 audit of three sponsorship contracts awarded to Groupaction.

The Committee made 12 recommendations that called for:

• Performance-based promotions for public servants engaged in procurement.
• Recovery, by the government, of public funds paid for services not delivered;
• Closer monitoring, by the Treasury Board Secretariat, of departmental contracting activities;
• Centralization of authority over internal audit and an evaluation of the resources allocated to the internal audit function;
• Annual reports to the House on whistle-blowing in the public service; and (AD LIB)
• A review of the policy regarding exempt staff in Ministers offices claiming a position in the public service.

The second report on the Sponsorship Scandal was tabled on 7 April of this year as the 9th Report of the Public Accounts Committee on the same day that Judge Gomery released the testimony of Jean Brault, therefore it was lost in the media scramble to report on Jean Brault's testimony.

As I mentioned earlier, the Committee decided that it owed Parliament and Canadians an explanation of what it had learned and what it thought ought to be done to prevent mismanagement and wrongdoing that occurred under the Sponsorship Program.

This Report summarized the evidence gathered by the Committee during four months of hearings (42 hearings, approximately 45 witnesses) and made 29 recommendations.

Our recommendations fell into the following categories:

• Tighter procedures for approving payment of contracts;
• Strengthening internal audit including a stronger role in monitoring contracting activity;
• Penalties including dismissal for failure to follow contracting rules;
• New power for the Auditor General to “follow the money” -- i.e. audit the recipients of government funding. [Note: several provinces, especially British Columbia, already give this authority to their Auditors General.] and;
• Full repeal of those parts of the Public Service Employment Act, allowing exempt staff in Ministers' offices to claim jobs in the public sector.

The third report of the PAC on Sponsorship, tabled in the House of Commons as the 10th Report, focused on governance.

We came to the conclusion that the relationship between the Minister of Public Works and his Deputy Minister contributed significantly to the problems that arose in the management of the Sponsorship Program.

The public servants running the Sponsorship Program – Chuck Guité and Pierre Tremblay – bypassed the Deputy Minister and reported directly to the Minister.

The Deputy Minister – the person who was supposed to be in charge of running the department – was in his own words, “out of the loop.”

The Minister and his personal staff intervened inappropriately in the administration of the program. This was clear from the testimony.

And for the bureaucrats in charge of the program, according to the Auditor General, they broke just about every rule in the book.

The Deputy Minister – responsible for the management of his department failed. And the public treasury was robbed.

We wondered why.

To understand the complexity of the philosophy of responsible government and its integration with Deputy Ministers, we held a separate series of hearings on governance in the public service. We focused on the accountabilities and responsibilities of Ministers and Deputy Ministers.

We heard from some names that will no doubt be familiar to you: Clerk of the Privy Council Alex Himmelfarb. Arthur Kroeger, former Deputy Minister. And Professor C.E.S. Franks from Queen's University.

We learned that Deputy Ministers hold statutory authorities in their own right. They are specifically named in the Financial Administration Act. They exercise powers delegated to them – and to them alone – by Treasury Board Secretariat and the Public Service Commission.

But according to the Privy Council's definition of Ministerial accountability, Deputy Ministers who appear in front of parliamentary committees can only speak on behalf of their Ministers. According to the Privy Council, they cannot account for the use of powers specifically assigned to them.

The Committee also learned that there is no formal procedure for Deputy Ministers to follow, if ordered to do something by a Minister that they consider unethical.

We were told that Deputy Ministers who find themselves in these circumstances can bring their concerns to the Clerk of the Privy Council. But is he the final arbiter of ethics in government?

We all know that the Clerk is, among other things, the Prime Minister's “Deputy Minister,” who is appointed by the Prime Minister and holds office at his or her pleasure.

And we know that the Prime Minister at the time of the Sponsorship Program had taken a great and direct interest in the administration of the Sponsorship Program which is highly unusual.

As the former Deputy Minister Ran Quail told us, he did not have to be hit over the head to know that the Prime Minister felt this was an important program.

It seemed pretty clear to the committee that for a Deputy Minister to go to the Clerk of the Privy Council to complain about Ministerial direction might be a career-limiting move. Especially since there were no established, formal procedures through which complaints or problems could be properly investigated. And everyone knew this was the Prime Minister's program.

We know, as well, that the public service culture puts a high premium on loyalty to the Minister. This is as it ought to be. But due to this loyalty, and the lack of formal procedures, the Committee believed that any Deputy Minister would be extremely reluctant to go to the Clerk of the Privy Council. However, Alex Himelfarb acknowledged to the committee that on at least three occasions, Deputy Ministers had discussed the ethical implications of the proposals by their Ministers.

Under our system of parliamentary government, the relationship between Parliament and Ministers is governed by the doctrine of Ministerial accountability.

The Public Accounts Committee is a strong advocate of Ministerial accountability. Parliament is an institution of accountability, not of management. Parliament's job is to hold government to account. We don't want to limit accountability – we want to make it work.

Yet while the doctrine is important, the Committee concluded that the way it works now, is the way it worked when government was small, when its costs were modest, and the scope of its involvement in society miniscule by today's standards.

For an understanding of how the doctrine should work, the government turned to the Privy Council Office. So did Judge Gomery when he wrote Chapter III of his Report.

But while the rest of the world has moved on, the Privy Council remains firmly planted in the 19th Century paradigm. It interprets the doctrine of Ministerial accountability in much the same way it was interpreted when Sir John A. Macdonald was Prime Minister.

But our system has grown since then and the way in which the doctrine is interpreted by the Privy Council contains some serious gaps. These gaps created a situation in which the former Minister of Public Works could tell the Committee that, “no, he wasn't responsible for the administration of the Sponsorship Program”, and therefore he could not be held accountable. That responsibility fell to the bureaucrats.

Then when we spoke to the bureaucrat who ran the department that delivered the program, he said: no, not me, only the Minister is accountable because I was out of the loop and he was running the show.

This “Yes, Minister” type of logic, which is ludicrous, can not be allowed to stand. We decided to fill those gaps.

To do this, we turned to the model on which our own parliamentary system is based – the Westminster model which we inherited from the United Kingdom.

And we found that the British had solved this kind of problem as long ago as the 1880s when they introduced the concept of accounting officer. This did not imperil the doctrine and practice of Ministerial accountability in the least. In fact the British solution enhanced Ministerial and Deputy Ministerial accountability.

In the United Kingdom, Deputy Ministers (or permanent secretaries as they are known) are designated as accounting officers for their departments.

This means that they have a clear set of responsibilities which does not diminish over time for the financial management of their department and that they are held accountable for the discharge of those responsibilities before the Public Accounts Committee.

When disagreements over the administration of department crop up between Minister and permanent secretaries, there are simple, clear procedures, known to everybody, that can provide resolution.

If there is a disagreement between a Minister and a permanent secretary, the permanent secretary can:

1. Discuss the course of action proposed with the Minister, explaining his reservations.
2. If the Minister insists that the permanent secretary proceed, the permanent secretary must put his or her objections in writing to the Minister.
3. The permanent secretary must then provide copies of this correspondence to the British Treasury and to the Auditor General who may share it with the Public Accounts Committee.

The success of this approach can be seen in the fact that it is hardly ever used. Its existence serves as a preventative measure. In effect, Ministers are assured that their permanent secretaries will have no hesitation in speaking out, if what is being proposed leads to a contravention of the rules – and potential embarrassment down the line. They are protected by the procedures.

Ministers would also think carefully before plunging ahead with unethical plans and policies. There would be a record – potentially available for all to see – of who had decided that the rules did not apply to them.

The Committee was convinced that if the accounting officer model had been in place, the Sponsorship Scandal could have been prevented or mitigated. We are not alone in that opinion.

On 17 October, Norman Spector (former Chief of Staff to Prime Minister Mulroney) wrote that had the accounting officer model been in place:

The Deputy Minister of Public Works would not have been able to look the other way while Chuck Guité handed out sponsorships to friendly advertising agencies. ^[1]

And in his book Breaking the Bargain, Donald Savoie wrote that

There has never been formal recognition of … a responsibility [for Deputy Ministers to request instructions in writing from their Ministers when propriety is in question]. Such recognition might well have strengthened the hand of the Deputy Minister of Public Works and Government Services. ^[2]

Furthermore, the Committee is not alone in calling for the implementation of the accounting officer model.

It was recommended by the Lambert Royal Commission in 1979.

In 2002, former Prime Minister Jean Chrétien may have had a similar idea in mind when he announced that he was instructing the President of Treasury Board to develop “new measures … to provide for more explicit accounting by Deputy Ministers for the affairs of their departments.” ^[3]

The adoption of the accounting officer model has been endorsed by Thomas Axworthy, former Principal Secretary to Prime Minister Pierre Trudeau. ^[4] Norman Spector, in his column which I just cited, also argued that Canada “should be moving toward the British model of direct accountability to Parliament for the administration of departments.”

Just recently, Professor Peter Aucoin, with Mark Jarvis, writing in a publication issued by the government's own Canada School of Public Service, stated:

We think the time has come to acknowledge that Deputy Ministers are directly and personally responsible and accountable to Parliament for statutory authorities that are assigned explicitly to deputies by Parliament and for those delegated authorities that are conferred directly on deputies by the Public Service Commission and the Treasury Board. ^[5]

If the Minister of Public Works had ignored warnings given by his Deputy Minister, acting as an accounting officer, and gone ahead with the Sponsorship Program as planned, Parliament and Canadians would have had a pretty clear idea who – Minister or Deputy – should be held accountable for the disastrous results.

It would not have taken more than three years and millions of taxpayer dollars to find out who failed society.

Our final report had only four recommendations. One of them called on the government to retain Deputy Ministers for a minimum of three years.

The other three recommendations all called on government to adopt the accounting officer model for use in Canada.

It said,

1. the Deputy Minister is asked to do something unethical by the Minister, he will write to the Minister and say so;
2. If the Minister insists on proceeding, he will give written instructions to the Deputy to do so;
3. If the Deputy still disagrees with the Minister, he will forward all copies of correspondence to the Comptroller General and the Auditor General.
4. If the Auditor General feels it is warranted, she will report the matter to Parliament.

In my opinion, this was one of the most important reports ever produced by the Committee. And it was supported by all members and all parties in the committee. There were no reservations, no minority reports, and no complementary reports. We all recognized that it was important to speak with one voice.

This was the Parliament of Canada speaking, expressing Parliament's desire for change. And it begs the question: whose will should prevail? Parliament's or the Privy Council's?

The Government responded in several ways to our reports.

It agreed with a number of our recommendations in the first and second reports which I mentioned. And the President of the Treasury Board outlined a series of measures on the 21st of October that will address several of the Committee's concerns regarding financial control and administration. These measures are contained in two documents tabled before the Public Accounts Committee by the President of Treasury Board on the 25th of October: The Financial Administration Act: Responding to Non-Compliance, and Management in the Government of Canada: A Commitment to Continuous Improvement.

However, when it came to our third report and our proposals regarding accounting officers, the government said definitely "no".

I find the government's rejection of our recommendations on accounting officer designation puzzling. In the government's report on its review of Ministerial accountability, also presented to our Committee by the President of Treasury Board on 25 October, it says:

The responsibilities of accounting officers are very similar to those of a Deputy Minister under the Financial Administration Act and Treasury Board policies. ^[6]

Given that this is so, and if we accept Norman Spector's assertion that “a simple amendment of the Financial Administration Act would suffice” to implement the accounting officer model, I am tempted to ask: “What is the problem?”

The government has stuck with the Privy Council's interpretation of Ministerial accountability, and in some respects has buttressed its thinking.

The government, for example, now says that it will make an effort to ensure that Ministers appear before standing committees to discuss the administration and operations of their departments, even when this responsibility is specifically assigned to Deputy Ministers in the Financial Administration Act.

Mr. Alcock is saying that since Parliament is a political place, any discussion about administration is bound to be tainted by partisanship, Deputy Ministers should not be drawn into partisan debates.

But I can tell you that the Public Accounts Committee has been reviewing departmental administration with senior officials, deputies included, for many years. These deliberations are largely free of the kind of partisanship Mr. Alcock seems to fear.

The Committee is still considering the government's response. It may accept the President of Treasury Board's invitation when he said that government “will welcome your views” on the measures it is taking and “will adjust our activities as a result.” ^[7]

As Chair of the Public Accounts Committee and as a parliamentarian, I welcome Mr. Alcock's openness. So the dialogue has begun. With some persistence and good will, some compromise, and above all the determination to make Parliament and government responsive to the needs of Canadians, we shall succeed.

But always remember, while the government has the authority to govern, that authority is subject to its accountability to Parliament. I do not think that Parliament and Canadians appreciate the dismissal of a serious proposal for reform following a Sponsorship Scandal that cost Canadians $250 million. If the government can be this dismissive, I can see problems ahead.

That is an overview of the perspective from the Public Accounts Committee. In closing, like to say a word about the staff that has supported the Committee – and me, as Chair – over the course of our work on the Sponsorship Program.

Clerks, interpreters, researchers, and support staff made sure that a difficult process flowed smoothly. It is the responsibility of a Parliamentary committee to hold the government politically accountable for its actions. With the support of professional and dedicated staff, I believe we accomplished that objective.

And now Mr. Chair, I'd be glad to answer your questions.