:
I'd like to call the meeting to order.
Bienvenue, everyone.
This meeting, colleagues, is called pursuant to the Standing Orders to deal with chapter 2, “Governance of Small Federal Entities”, of the December 2008 Report of the Auditor General of Canada.
The committee has before it a lengthy and distinguished list of witnesses.
First of all, we have from the Office of the Auditor General of Canada, the Auditor General herself, Sheila Fraser. She is accompanied by Richard Flageole, assistant auditor general, and Tom Wileman, principal.
From the Treasury Board Secretariat, we have the Secretary of the Treasury Board, Wayne Wouters. He's accompanied by John Morgan, assistant comptroller general, and Frank Des Rosiers, assistant secretary.
From the Canada Public Service Agency, we have Mitch Bloom, vice-president, strategic policy, planning and research.
From the Privy Council Office, we have Karl Salgo, director of strategic policy. Madam Santi, assistant secretary to cabinet, was supposed to be here, but can't be because of illness.
Those are the witnesses, but before we go to the opening comments from the Auditor General, there are a couple of housekeeping items I want to deal with, and a point of order.
First of all, I would like at this time to deal briefly with the minutes of the steering committee. Those minutes have been circulated. They're in front of you. There are only three paragraphs. I don't believe there's anything contentious there. The chair would entertain a motion for their adoption.
So moved by Madam Ratansi.
Is there any discussion?
(Motion agreed to)
The Chair: Then, of course, there's the draft committee schedule also in front of you.
The second item I want to deal with is Madam Faille wanting to make a clarification to the blues of the last meeting.
Madam Faille.
:
I do. Thank you very much, Chair.
I seek your guidance. On March 5 this committee adopted a subcommittee report that states that “all departments and agencies of the federal government that have been subject to a performance audit by the Office of the Auditor General of Canada provide a detailed action plan to address the audit findings and recommendations--including specific actions...”. It goes on.
My understanding is that at the last meeting we had with Public Works, we had such a document. It was an excellent document, actually, but I'm not seeing one here. I've just heard--it doesn't matter from where--that the response was that the answers we want, the action plan, are in the responses in the report. Of course, my understanding, Chair, is that what we want is the latest update on this, so that we don't have, as colleagues will recall, officials coming in and saying, “We have an action plan on that, we're all over it, and yes, we'll get it to you later.” That's why we moved this thing. We'd like to see those ahead of time so we can incorporate them into our thinking and our asking. Again, we had that on Tuesday, but we're not getting it here.
I'm just a little unclear on it. Is that something we're expecting to be tabled with us before every meeting? Or do I have a wrong interpretation? I seek your guidance, Chair.
:
Thank you, Mr. Chair. We thank you for this opportunity to meet with the committee to discuss chapter 2 in our December 2008 report entitled “Governance of Small Federal Entities”.
As you mentioned, I'm accompanied today by Richard Flageole, assistant auditor general, and Tom Wileman, principal, who were responsible for this audit.
Small entities are typically organizations with advisory, regulatory, or quasi-judicial functions. They have fewer than 500 employees, or annual expenditures below $300 million. Despite their relatively small size, these organizations can have a significant impact on the health, safety, and quality of life of Canadians.
We looked at the arrangements by which the Treasury Board of Canada Secretariat oversees small entities. We also asked the heads of 51 small entities for their views, focusing on six in particular. We looked at oversight and coordination, reporting requirements, and shared services.
Mr. Chair, the two long-standing problems that need to be addressed are the reporting burden and shared services. Your committee could play an important role in ensuring remedial action.
Small entities face a reporting burden. With limited capacity, they have to meet the same central agency and statutory reporting requirements as do large departments. Reporting requirements in areas such as financial and human resources management play their part in ensuring prudent and effective management and accountability. However, the number of required reports is high--in fact, over a hundred per year--and filling them out is a complex and labour-intensive activity. Over the last five years, the Treasury Board Secretariat has acknowledged the need to reduce the reporting burden. When we completed our audit in May of last year, the secretariat's response to our recommendation was that they had developed action plans. The committee may want to ask about the progress that has been made since then.
[Translation]
Another key issue is shared services. Small entities do not have the systems available to large departments and may have only a few people responsible for key administrative functions. They often lack the capacity for internal services such as finance, human resources management and information technology. Sharing services is a way to address these problems.
The Treasury Board of Canada Secretariat has undertaken a number of studies since 2001, and has recognized the need for shared services in small entities. Yet little has been done. A major initiative on shared services proposed by the Secretariat over the next three to five years has not included small entities.
We found that several small entities are sharing services, but face serious risks in the absence of a framework from central agencies. These risks include unclear roles and responsibilities and a lack of agreed-upon standards.
Last May, the Secretariat was developing a service strategy intended to address the issues facing small entities. The Committee may wish to ask about the strategy and what has been done to date.
Our audit also found that mechanisms for oversight and coordination need attention. In particular, the Privy Council Office and the Treasury Board of Canada Secretariat have not issued practical guidance to ensure effective coordination between the activities of a department and the small entities in its portfolio. Small entities told us that communication and interaction with the portfolio department has been inadequate.
[English]
In contrast, the recent creation of a central internal audit function is a positive step, potentially allowing for better monitoring by the secretariat.
That concludes our opening statement, Mr. Chair. We would be pleased to answer any questions the committee may have.
Thank you.
On this issue of the action plan, perhaps I could comment on that in the conclusion of my comments and we can have a bit of discussion on this, if you like, Mr. Chair.
Thank you for your invitation to appear before your committee to discuss the Auditor General's findings on the governance of small entities. My colleagues from the Treasury Board Secretariat and PCO have been introduced.
The Government of Canada is committed to building a culture of strong management in all its operations. To that end, we welcome the Auditor General's recommendations to improve the governance of small federal entities.
[Translation]
Her findings contribute to the work that is already underway to foster good governance throughout our operations.
[English]
I think many of you know what the picture is for small entities, but perhaps I could describe them a bit for you. There are about 50 small federal entities, generally defined as organizations that have fewer than 500 employees or annual approved expenditures of less than $300 million. They can mean organizations with as few as two employees, like the Northern Pipeline Agency, as well as organizations with over 400 employees, like the National Capital Commission. Together, these organizations represent less than 1% of total government spending. Their functions vary considerably. They can be administrative, quasi-judicial, regulatory, or advisory bodies. Like the mandates of the agencies themselves, the legal obligations of agency heads also vary considerably.
When you consider how many small entities there are, there have been few, albeit highly visible, significant management failures. I can assure you that the deputy heads of small entities take their jobs very seriously. In fact, over the past year and a bit, both the PCO and the Comptroller General have significantly increased their efforts to ensure that all newly appointed deputy heads of these small agencies fully understand their roles and responsibilities. This is done through one-on-one briefings on their key responsibilities, including financial and human resource management and the functioning and machinery of government.
As the government's management board, one of the Treasury Board's key responsibilities is to set management policies that make clear the accountabilities of departments and agencies for the full range of management functions. We support departments by providing guidance and tools and by developing capacity in key functional communities through learning and development activities. The responsibility of the deputy heads is to ensure the day-to-day management of their departments in compliance with Treasury Board policy.
TBS carries out its oversight of departments based on a risk assessment done through a number of tools, including audit and evaluation results and our own Treasury Board submissions. TBS reviews incidents of significant non-compliance and makes decisions on whether to intervene or take further oversight action.
TBS also relies on our management accountability framework assessments to measure the management performance of government organizations and to help deputy heads better understand where they are performing well and identify opportunities for improvement. These assessments are done for small agencies as well.
Now I would like to turn to the Auditor General's observations and recommendations with respect to the governance of small entities, beginning with oversight and coordination. We are very pleased that the Auditor General recognized that our policy on internal audit is sensitive to the situation of small departments and agencies.
[Translation]
Internal audit is an independent and objective organizational function that provides assurance to deputies, and reinforces good stewardship practices and sound decision-making.
[English]
Smaller organizations may not have the tools or the resources to undertake regular internal auditing work. This is why our internal audit policy mandates the Comptroller General to provide horizontal and other internal auditing on behalf of small departments and agencies.
In her report, the Auditor General recommended that central agencies provide more practical guidance on portfolio coordination. Portfolio coordination refers to the process used by ministers and deputies to ensure that the organizations within their portfolio cooperate and support each other while respecting, of course, statutory authorities and varying degrees of independence.
PCO has increased its guidance to portfolio deputies, and Karl can provide more information on that, if you wish. TBS has done so as well.
Earlier, I talked about the management accountability framework. As part of the annual assessment, portfolio departments are assessed on their performance with respect to portfolio coordination. Over the past three years in the 20 large departments that have portfolio management responsibilities, the results have been positive, and what's more important, the trend is on the upswing.
The guidance we have given to portfolio departments to explain how we are assessing them on coordination criteria is paying off. That said, we are also putting this guidance into a practical information piece or guide that will be available in a draft form in the coming weeks.
The Auditor General also commented on the need for better information to assess financial management and control. On this front, it really is a question of striking the right balance. We need to have sufficient information to ensure appropriate oversight, while recognizing that a one-size-fits-all approach is not necessarily the best for small agencies. This is taken into account in the MAF assessments and in the criteria developed for each round of MAF.
[Translation]
That is why we only assess small agencies every three years while large departments and agencies are assessed annually.
[English]
The same principle holds true with respect to reporting requirements. As the Auditor General points out, reporting requirements are an essential part of the governance regime. We need sufficient reporting, but we also recognize the capacity issues of small entities in producing these reports. Again, it's a question of striking the right balance.
The area that generates one of the highest reporting requirements is the human resources front. I think here we have made important strides to streamline these requirements. In fact, we have reduced the number of questions on our human resource reporting portal by 85% and have simplified those that remain.
We've also achieved similar success in reducing the people management reporting requirements under the MAF. In fact, in the current round of MAF, we have cut the volume of documentation to be submitted for these agencies in half.
The reporting version is a long-standing issue, and it stems from a number of different areas. An important part of the reporting burden is legislative. For example, all departments and agencies, large or small, have to report under the Access to Information Act and the Official Languages Act. In addition, many organizations have legislation that requires an annual report.
Another source of reporting is our own Treasury Board policies, and we are working hard to address this component as we streamline our policies and directives.
Finally, there are also significant requirements for parliamentary reporting. The reports on plans and priorities and the departmental performance reports are two examples. On this front, the challenge is not just for the public service but also for parliamentarians.
I do believe we've come a long way towards achieving the right balance in our dealings with small entities. We continue to strive to ensure the appropriate oversight, while respecting the capacity of small entities and taking into account the risks of their operations.
Those are my concluding remarks, Mr. Chair. I would just comment on the action plan.
I do apologize, I wasn't aware that this is now a motion that this committee had passed. Maybe I should have been, but I wasn't aware that this is now a requirement. If it is, the one question we will need to look at is that when the government does submit recommendations based on the Auditor General's reports, there is usually an action plan in those reports, but they're fairly high level. I think probably what members are looking for is more detail. I think we can answer them, but we do not have a report today.
The question we will have to ask is if it's the government who issued the initial set of recommendations, is it the government or the minister...or who is responsible for issuing the reports? This is something we will have to follow up on, based on your motion. But we can understand that in some ways having this pulled together in one detailed document may be a much better way to go than always having us try to answer all the questions.
We take the motion seriously, and we will follow up. If, in this particular case, you feel we need to do one later, then we will definitely go back and give that serious consideration.
Thank you.
Thanks to all of you for being here.
Mr. Wouters, in regard to the audit the Auditor General did, when the audit was taking place, I think the focus was on prudence, probity, and effective control of spending. I can appreciate it when you say that these small entities are 1% of the total government spending, which I assume is $2 billion, but how do you balance the risk versus overburdening these small entities?
You've given us the example of the Northern Pipeline Agency, which has two employees, and the National Capital Commission, with 400 employees; yet they may be facing the same reporting requirements. How can they manage when they have a lack of human resources, a lack of people with a financial background or an IT background? The Auditor General states in her report that they have to submit about 100 reports per year.
As well, I'd like to find out what happens to those reports. We all want reports. I have seen organizations that want this report, that report, and every other report. I would like to know what is being done with these reports. Are these reports useful? Are you able to do your governance well? If it has been used to improve governance, then I'll have to go to another page where the Auditor General talks about the risks in governance and in accountability. Could you give me an idea as to why these things are not moving forward and why they are still being burdened with so much reporting?
Then for the Auditor General, Mr. Wouters had responded that this was legislative and that there are sometimes Treasury Board requirements. Which of these, in your opinion, would help in being streamlined, from the small entities' perspective?
It is the case that reporting is very much part of the set of initiatives we have to deal with oversight in organizations. We agree with the Auditor General here that there is a balance, as I've said. There is a balance between good oversight and risk. Over time, I think, it is quite fair to conclude that for these small organizations, the burden that we've collectively put on these organizations for reporting has gone too far.
I think we are now collectively looking at what we can do to rebalance that risk versus oversight and prudence. I've outlined some of the areas. In regard to our policies, of the roughly 100 reports, about 45 of these reports are a result of the Treasury Board policies, so it's about 50%. We are now looking at every one of those policies and making a determination on the reporting requirements as we amend. In fact, we plan to reduce those policies from about 180 to about 45. That alone will reduce reporting requirements for all organizations, because it's going to streamline and modernize our overall policy suite. We're over halfway through that now.
But we're also, in each case, specifically looking at the small agencies. So for those policies that we do keep, we're making a determination as to what extent--if there is a report requirement--the small agency requires a report to be issued. For example, about three weeks ago Treasury Board passed a new evaluation policy. There, we're saying that in fact the small agencies do not need to comply with this policy fully or to the same extent as others do.
I talked about HR reporting. Of all our reporting, it's probably one of the more significant reporting requirements. We've had reports coming in for many different reasons. They have been streamlined, as I said. We've reduced that by roughly 85%. We are beginning to make progress in this area through our own policies and through the requirements we set through our policies, directives, and standards. About 24 of those 100 reports are because of legislation, and that's more difficult to get at.
:
Madam Chair, we didn't look at the use that was being made of these different reports, but certainly one of the major issues the small agencies brought forward in the interviews was that they found this requirement to be a significant burden on them. That was especially true for the very small ones.
I would raise three issues. As the secretary has mentioned, often when you look at programs or requirements one by one, the reporting requirements seem reasonable. It's when you add them all up that you start to realize there's duplication. For example, they raised with us the issue that while they have to produce a departmental performance report, many of them have to produce an annual report as well. It's basically the same information in both. People can say they can just reprint it, but is there not a way to combine them and do one report that is meaningful?
Another issue is that when policies are issued, no distinction is made between big and small. I know you come from the world of accounting, where we're even starting to talk about standards for small and medium-sized businesses. Maybe a distinction needs to be made for smaller organizations, and I hear the secretary saying they're considering that.
One of the options they might look at is the frequency of reporting. Do things need to be reported as frequently for smaller agencies as for the larger ones?
I think different alternatives are available. Some reports, of course, are required. We can't eliminate all the reports. They are absolutely essential to good accountability. However, I think there needs to be a focus given, a lens given, especially for the smaller agencies.
:
The process of reducing the rules for human resource management has been under way since the overall secretariat began a process of reviewing and evaluating all of its policies across the full range of management instruments.
In the case of people management and human resource management policies, that was part of this process. Piece by piece, it has started to look at the policies, directives, and standards that are promulgated by the board itself to try to streamline that suite of instruments. It has done that to the extent that Mr. Wouters pointed out.
What I would add is that we are now taking that work to another level. We're examining each and every instrument, those three levels, in great detail to truly understand their purpose and objective, and to establish what other tools we might have at our disposal in order to better understand the human resource management operations of those organizations.
We anticipate that this process will result in a further significant reduction in the number of instruments that we currently use, not necessarily in the sense of not wanting to be able to ensure the proper operations of government, but by looking at a broader array of tools and instruments that we could use in order to work with departments.
I would also underscore that in going through that process, we have added a very specific element related to small agencies. This is part of our ongoing work with small agencies in the area of human resource management. There is a specific requirement in that to examine every instrument against the lens of the impact on a smaller agency--and for all aspects, not just monitoring and reporting--in regard to the full impact on their operations.
:
Thank you very much, Chair.
Thank you all, again, for coming—those who are new and those who've been through the drill before.
As I said at the time this report was tabled, I too in a previous life have had some experience being responsible for smaller entities and having them report to me. So I am aware of the challenges of trying to manage all of this and I understand the seriousness of it. But I have to tell you I'm a little disappointed with your response, Mr. Wouters, and I'll tell you why.
In your response today, you state on page 2 of your opening remarks that the Auditor General's “findings contribute to the work that is already underway to foster good governance throughout all our operations”. I hear that, and it sounds like your thinking is, oh, thank you for the nice little report; it helped us do some of the little we were hoping to get around to do. It just didn't sound like it was taken seriously.
And then what I read on page 8 was, “The reporting burden has been a long-standing issue”, which you then go on to explain. But there's no sense, Mr. Wouters, you're taking it seriously, that this is a problem that needs to be dealt with soon. I get the impression that you accept that it's a problem, but that it's going on and on and on.
Last, your conclusion was, “I believe we have come a long way towards achieving the right balance in our dealings with small entities...”. Yet that's just a response versus what you were faced with on page 16 of the Auditor General's report, a subheading that read, “The reporting burden is well known and long-standing”, and paragraph 2.53: “ The reporting burden is a long-standing issue. It has been pursued by the Small Agencies Administrators Network (SAAN or the Network) for many years, and was clearly defined in a series of studies commissioned in 2003, 2004, and 2007.”
The Auditor General also went on to say on page 17, in a subheading, that the “Actions taken to date have not substantively addressed the reporting burden”, and in paragraph 2.55, that “Five years after acknowledging that they have a role in reducing the reporting burden, the central agencies have not taken substantive action to reduce it.”
So help me to understand, Mr. Wouters, the serious issues the AG has raised and your rather lukewarm responses—and that's my word, “lukewarm”.
:
But this was back in 2006, and I think if you look at it over the last couple of years, the most difficult set of reports...I'm sorry, March, I guess it was 2008, but for the period prior to 2008. But if you look at it over the last year and a half, one of the areas that we did focus on--and Mitch Bloom can talk about this--was the whole area of HR reporting. It was probably the most significant issue and the most significant area.
That is where we had the most reports, so we said, let's focus on where the burden is the greatest: HR reporting. We had a number of different organizations there: the Treasury Board Secretariat had reporting requirements, the old agency had a reporting requirement, and the Public Service Commission had reporting requirements. We said, can we make progress in that area?
I think we have made substantial progress. Mitch can outline exactly where we are. I said an 85% reduction on how we got there; Mitch can explain that. But also, as I said, in the last year and a half we have fundamentally changed most of our policies, which now will lead to a reduction in reporting for many of those small agencies.
MAF is another area. We've reduced the reporting requirements through MAF by 50% for these organizations. They are required to do an assessment only once every three years. Also, for the very small agencies, the micro agencies, we don't require them, in fact, to submit all the information that other organizations do. Now they essentially have to come in and have an interview with us, as opposed to submitting the full reports.
So if you look at the overall set of initiatives under way, I agree that we still have further steps to take, but we are looking at it, we are looking at it seriously, and we are making progress.
The one area I will come back to that we probably have not made as much progress on is the area of those reports that are a legislative requirement or a parliamentary requirement. As I said, of the 100 or so reports, 27 of those are either parliamentary or legislative requirements. That's something that perhaps we could have a discussion with you as--
:
I hear you on that. I have to say, though, that I'm still just one member. I'll listen to my colleagues, but I would have liked to hear a little more seriousness. What I'm getting is that you want us to acknowledge how well you've done, and what I'm looking at is that it's been pointed out that you haven't done that well, and you don't seem to want to say that. That always makes me frustrated.
Let me get into a question on this, on a detail. Again, it seems to me that everybody wants to talk about doing something, but nobody's really doing anything. That's my biggest concern.
On the reporting burden, the report states on page 18, at point 2.56, “The Secretariat brought to our attention its policy renewal initiative, which it believes will lead to fewer policies and fewer reporting requirements”. You've already alluded to this. It states, “The initiative was launched in 2005 with the objective of streamlining policy instruments and clarifying the accountabilities and responsibilities of ministers and deputy heads”. Later in that paragraph, it says, “Treasury Board officials informed us”--that's the Auditor General's department--“that this project will be ongoing into the 2008-09 fiscal year”. Finally, it says, “The impact of this initiative on the reporting burden will not be known before it is completed”. That just blows me away.
Then in March 2008, there was a committee formed. In point 2.57, the AG tells us, “However, at the time of our audit, the committee was just getting started and had not yet made specific plans or taken any concrete action”.
We've had reports going back for years. In 2005 you decided to do something about it and get serious, but we don't know exactly how much of the burden will be reduced when you've done the exercise, and the exercise is not going to be done until, at the earliest, next year. That's half a decade.
That's a long time to merge policies or to reduce policies. I'm sure there's a good answer, but it blows me away that you're going to go through this whole process and you really don't have any idea of how much of the burden it's going to alleviate at the end of it. Help me understand.
:
We spoke on the policy renewal process earlier on. It might be worth describing a little of what has been done with the MAF.
In the case of the oversight tools that the secretary spoke about, the ones that were described were critical ones. MAF is also a very important tool for us to track how well the departments are actually managing the enterprise. I don't know to what extent the committee members are familiar with it, but through 21 areas of management we track all the key lines of activities that a department or agency would be expected to perform, and perform well. In doing so, we set out what the expectation is from the centre, from the Treasury Board perspective.
In doing that, we were engineering along the way very much in response to what the small agencies network has been telling us. They said they totally recognized the importance of improving public sector management. They are all aware of the events that happened early in 2000 and they don't want to be caught in that situation. We work with them to find a way to get to that desired outcome by getting back to the balance the secretary was discussing and by minimizing meaningfully the amount of work that is required of them.
We came up with three levels of requirements that have to be performed.
Large departments and agencies above 500 FTEs and $300 million budgets have to go through an annual assessment and through all those various stages.
Smaller ones, those below 500 FTEs, go through an assessment only every three years. In the years between, they're free to do some self-evaluation or have ongoing dialogue with the Treasury Board, but they don't have to publish a report to the centre over and above what they would normally do for legislative or parliamentary purposes. Right there is a very significant time saver from their perspective.
Micro-agencies used to be those with under 15 employees, but we cranked it up to 50. Below 50 employees, an interview of two hours or so does the job. We have a conversation with the heads of those organizations. There may be some follow-up discussions if some issues warrant extra attention, but we felt overall that this was actually a very good example of striving to achieve the balance we were talking about. Certainly that's the feedback we've been getting on MAF particularly.
As we renew TB policies, we're trying to do the same thing by having this gradation. We don't want to lose sight of what's going on there, but we want to do it thoughtfully and deliberately and address those concerns in a meaningful way. In our view, these are meaningful and impactful ways to get at it.
:
Thanks to all of you for joining us today.
I'll address my questions to Mr. Wouters and then to the Auditor General, Ms. Fraser.
I was, at one point in my life, the principal of a small Canadian start-up. We had 12 employees, but as we grew, we doubled that. We were still pretty small, and we were pretty good at creating and manufacturing a product and then getting it out to market and marketing it. But there were a lot of things we weren't good at. We didn't have legal expertise; we didn't have HR or IT expertise. I thought, wouldn't it be terrific if there were a pool of specialized talent and expertise? So my questions are going to be around shared services.
I notice that the Office of the Auditor General recommended that you address the issues of shared administrative services in small entities. I was one and I recognize that there's a need for this. Would you agree, as well, that the needs of small entities are vastly different from those of the larger organizations, and that they can't often attract or afford specialized talent or expertise like the kind I described with HR, IT, finance, legal, contracting, etc.? Is it your intention to develop a shared administrative services strategy? If so, when? How will that strategy address the concerns of small entities in regard to sharing their administrative services?
Is there a plan? When do you plan to put it in place? Let's start there.
:
Thank you for the question.
I couldn't agree with you more that this is also an area where I think some of our small agencies are struggling. I have to say my personal view is that we have not moved along on this as quickly or as far as we can.
I would argue that it's perhaps not only for small agencies, but also for shared services more broadly across the public service. I think there are some real opportunities to provide better service at a lower cost if we start to combine some of our back office HR, finance, and the like. I think there's clearly room for improvement.
In fact, I felt that this whole area was an area where we have not progressed far enough, so a year ago I created a new sector, called the service sector, within the Treasury Board Secretariat to give this more emphasis and more profile. That sector basically has been mandated to develop an overall internal service delivery strategy to look not only at the major departments across the public service but at small agencies.
There, we've essentially created a number of councils to look at materiel management, financial management, and HR management. We have small agencies on those organizations. That is to determine where we need to go. I think there are a couple of different models. One is where we can actually share the services among these agencies by having a number of the agencies come together and share their back office services. Some of those agencies are doing that now. It's their own initiative to do that. Some progress is being made, but not as much as we need.
I think the second area is where we can perhaps find a larger provider for the smaller organizations. There, for example, Public Works right now is actually delivering HR shared services for about 26 smaller agencies. This is in the area of compensation, staffing, and the like. Some of that work is being done for the small agencies now, and other agencies are looking at moving in that direction.
A third possible area is outsourcing.
So for the work on developing the overall strategy, we hope to have it completed by the fall and go to ministers at that time to see, in fact, if we can move forward in this area. We are part of the small agency administrative network. We're working with them to see which of these models works for these organizations. The fact is that they're so unique and so different that, again, one size doesn't fit all.
But I do agree with the Auditor General again on this one. I agree fully. Collectively, we haven't made the progress that we need to in this area.
:
Thank you very much, Mr. Chairman, Ms. Fraser, ladies and gentlemen.
First of all I would like to cite a passage from the Auditor General's report which appears on page 17 and which states, and I quote: “Five years after acknowledging that they have a role in reducing the reporting burden, the central agencies have not taken substantive action to reduce it.” If I understand correctly, the small agencies are being asked to do a lot, whereas they don't have the necessary tools—which are mentioned in your report—to solve the problem. Five years later, much of the work should have been done to address the problem we are faced with. The Treasury Board Secretariat, first of all, should have significantly reduced this reporting burden or everything that was requested in the context of that report, whereas we find ourselves in a situation where virtually nothing has been done.
The same is true when it comes to reducing the number of policies from 180 to 44. Still not much has been done, from what I understand, even in the report. There is still talk of doing these things, whereas an enormous amount of work to that end should have been done in the past five years.
Are there any deadlines? Has anyone started to develop something to eventually solve these problems? Is anyone going to establish an operating structure? You get the impression that people are saying that these are 51 small agencies, that it's only $300 million and that they don't really need to address the issue. That's sort of what emerges, to my mind, from the Auditor General's report. I want to hear what you have to say on that.
Are there any deadlines, a real work plan?
:
Thank you for your question.
We entirely acknowledge the importance of the matter. In our mind, these are not 50 small agencies of no importance, with respect to the nature of their functions or their expenditures and activities. We are very definitely concerned about their proper operation and we want to make progress in that direction. We definitely could have done more in the past five years. In accepting the Auditor General's recommendations, we acknowledge that more could have been done during the period. However, as the secretary noted a little earlier, very significant efforts have been deployed over the past year and a half or so. Many of them have been orchestrated around this commitment stated in the Throne Speech last fall, when the issue was the web of rules and the government made a firm commitment to address the problem.
I'd like to draw a parallel. In the past 10 or 15 years, the Canadian government, like those of most developed countries, has focused on the impact of regulation on businesses, individuals and private sector organizations. There have been all kinds of twists and turns, all kinds of names, but it has very definitely been acknowledged that those regulations weighed heavily on the expenses and operations of small, medium-size and large businesses. It was environmental, regulatory and health and safety regulation. It was based on highly honourable intentions, but it imposed very heavy costs on businesses.
We've addressed those rules in the past 15 years or so. You'll tell me that the work isn't finished in Canada, as in most OECD countries, but it is still advancing. From an intellectual standpoint, we have a similar counterpart within the government: there is what's called the internal regulation of government. I must tell you, having had conversations with my colleagues in the United States, Great Britain, France and Australia, that Canada is in fact one of the most advanced in its thinking in this direction. Now we are at the stage of taking action.
Once the vision is established—the one the secretary stated earlier— we know the direction we want to take, which is to establish a certain balance between the risks and the impact that may occur. We've been told, by the committee chaired by Messrs. Mazankowski and Tellier, not to try to set objectives for five or 10 years, but rather to set short-term objectives over the next year, as you suggest, sir. If we manage to make progress every year, there is a good chance this will produce positive results at the end of the line. That's what we've done over the past year.
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We are. I think one thing you want to look at is our action plan on the web. There are some very clear deliverables laid out in that action plan in terms of the policies we want to change.
In reporting, as I indicated, one of the major reporting burdens we had at the Treasury Board Secretariat was our MAF assessments. I forget how many thousand reports--
A voice: It was 17,000.
Mr. Wayne Wouters: Yes, 17,000 reports were coming in. We've reduced that by over 50% in one year. I mean, why a thousand reports? We don't need a thousand reports.
I mentioned HR reporting. That's down by 85%. As I said, I can't emphasize enough how out of control, I would say, the reporting was. People ask who reads the reports. I would have to say that I agree; I don't know.
On the work that was done, if we think we can get the information through other sources--for the most part, we think we can--we don't need a report. So we're down 85% in the overall requirements through HR reporting, which is probably one of the most significant areas.
Financial reporting is an area as well in which I think we could make further progress. But again, a lot of it is for public accounts. A lot of it is for main estimates. A lot of it is just the business of government, reporting through Parliament to Canadians. I'm not certain that we could make a lot of progress there.
But there are other areas. In such areas as procurement and contracting, I think we can go even further. Where we've set the targets over the past year or year and a half, we've hit those targets. Now we will put in another set of targets coming up for the next year as part of our overall action plan.
That's how we've been going at it. To me, it's a practical way of going at it. It's doing it step by step.
I have to say that this is the first time I think we at this committee have ever dealt with the question of whether size matters or not. I'll just let that lie there.
Mr. Wouters, I apologize for mispronouncing your name. You've been in front of this committee often enough. I apologize, sir.
I would like to point out something in relation to my earlier point of order, Mr. Wouters, in responding to the Auditor General. She said: “When we completed our audit, in May last year, the Secretariat's response to our recommendation was that they had developed action plans.” That is something we would want to see.
Mr. Des Rosiers, you talked about the activities of the ADM meeting. I had raised the issue, and then you talked about it. That's another example of something that could have been put in front of us that may have negated a question or at least provided a more informed question. Those are just examples.
I wanted to go to.... My colleague has already raised this point, so I will not do that one again. Just give me one second.
By the way, Mr. Wouters, I also wanted to thank you for your forthrightness in answering. That's the kind of thing. It's not a question of coming in here and genuflecting in front of the committee, although there are times when that wouldn't do any harm, but to come in here and, when it's an honest problem, no matter who you are, to look at it and say it's a problem, to admit it, goes a long way in developing the relationship. So I very much appreciate your forthrightness in talking about the shared services.
On that point, page 21 says, in paragraph 2.67: “Following the 2005 Budget, the Secretariat launched the Corporate Administrative Shared Services (CASS) initiative. However, CASS does not take into account the capacity and business continuity risks that small entities face.” That's been addressed somewhat. It goes on: “Small entities have not been included in CASS for at least three to five years, since CASS is seeking investment funds.”
I'm going to leave you with a couple of questions, because this is a short round. Could you help me understand what that means? I didn't understand it.
Then paragraph 2.68 says: “A shared services framework or model could provide valuable guidance for small entities. The Secretariat had undertaken some preliminary business model analysis under the CASS initiative, and had developed a draft for discussion in May 2006.” Then I don't see it mentioned again. It just kind of lies there.
Whatever happened to that draft, and what actions came after May 2006?
I won't have time to respond again, so I'll just leave those two questions with you. Thank you.
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On the corporate administrative shared services initiative, we launched that a couple of years ago now, to basically look at this and to get almost like a pilot project moving forward on back office shared services.
We started that work, and my assessment is that we probably oversubscribed the initiative. We brought in 12 departments. We were going to take 12 departments and take all their back office functions--HR, finance, and materiel--and bring them together. That would have been part of a significant upfront investment. I think what we learned as we looked to other governments was that many other governments started a lot smaller than that and had a number of gates to move forward through and pilot it as they went ahead.
So a little over a year ago, we kind of went back to the drawing board. We reduced the number of departments. In fact, we have five departments now that are part of the shared service initiative. We have taken one function, which is HR, and we have looked at bringing HR functions for those five departments together in a shared service model. That proposal is essentially ready to go to the board now. I hope the board will approve it and give us the funding that we need to move it forward.
Unfortunately, in coming to a decision, we had to pick five departments of a reasonable size, so we don't have the small agencies in any of that, but they're part of the work we're doing, and we would hope that as we move this forward, we can bring other departments, including small agencies, into the shared services model.
I guess that in some ways you have to start someplace to prove that the model does in fact work. We feel quite confident that it does. Do you know why? Because this is not new. B.C. has done this. Alberta has been doing this. Other countries have been doing this. Our view is that we just need to get on with it. The quicker we get on with it and test it, the quicker we believe we can bring on the other departments and other agencies that really need this support.
I'm going to be very specific with my questions. My questions are to Mr. Salgo, to the Auditor General, and to Mr. Wouters as well.
In my previous life, I sat on boards and chaired boards. We were given parameters. We were told what our legal liability was. We were oriented. What I want to know is, what are some of the parameters that you provide to Governor in Council appointees? What is the orientation you provide? What pool do you choose them from? What skill sets are required? Generally, are these political appointees, or could they be appointees from elsewhere?
Keep that in your mind, because I have a question for the Auditor General.
Madam Fraser, in your paragraph 2.8 in the audit report, you said that the first risk you noticed was that “the practices and procedures for the appointment, orientation, and performance management...did not prevent...the instances of serious abuse and wrongdoing”. What was this serious abuse and wrongdoing?
You also found that accountability was at risk due to “a lack of clarity and consistency in relationships”. I have been told by the chair that if you cannot give me your answers because of time constraints, I'd have to ask for written responses.
The last thing I would like to ask is for the Treasury Board. Page 13 of the report states that there were “20 indicators and 84 measures”. However, the secretariat informed us that only four of these measures were applicable and used to assess small entities, and I guess Mr. Norlock was talking about some creativity. Can you give us an idea of whether there's an action plan to reduce the measurements to relevant measurements so that they are more applicable?
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I will happily speak to the issue of the orientation of new GIC appointees. I should say initially that when we say “new”, they're not always necessarily new to a role as a GIC appointment. We provide orientation whenever somebody receives a GIC appointment. Their welcome letter indicates that there's an expectation, in fact, that they participate in an orientation process. That orientation process is organized according to a menu, essentially, so that it's tailored to the particular needs of the individual and the organization they're in.
The senior personnel secretariat, one of my colleague secretariats within PCO, would make available to them a list of secretariats within PCO, within Treasury Board, and within other entities within government--a list of resources, essentially, and of assistant secretary and senior level individuals who are available to provide briefings to them, and substantial briefing materials in many cases, in a whole range of areas.
That ranges, for example, in the case of senior personnel itself, from explaining the terms and conditions of employment and their conflict of interest responsibilities to, in the case of the machinery of government secretariat that I'm part of, understanding where their organization fits within the larger framework of government, understanding the way that system works, and understanding things like portfolio coordination and the nature of a public servant's responsibilities in dealing with elected officials. There's a whole scope of things like that, as well as other areas such as management and control and oversight, that are offered by TBS.
There is a whole range of things. Individual GIC appointees do have some capacity to choose themselves what they need, because many of them.... You may have a seasoned public servant who knows a lot of these things or you may have somebody from outside the public sector who is not familiar with all aspects of this and may want more orientation--