Public Accounts Committee on March 26th, 2009

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

[The Chair, Liberal, Shawn Murphy]

Mr. Desnoyers, you have five minutes.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

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?

[Frank Des Rosiers]

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.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

I want to conclude with the issue of shared services because it's important, but I asked you whether there were any deadlines. Perhaps Ms. Fraser could add a comment on the subject. In five years, nothing or virtually nothing has been done. Are there any deadlines?

[Sheila Fraser]

When we concluded our audit, the government had started a series of initiatives. They are stated in the report. For an answer concerning deadlines, you should consult the action plan referred to at the start of the meeting.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

We're talking about establishing a strategy to implement shared services. In point 2.69, you state: “Other jurisdictions have developed approaches to shared services based on a model or strategy.” That's the case in Quebec, among others. Ontario, British Columbia and Alberta have taken measures in that direction. Why aren't we at the federal level capable of adopting a strategy or of implementing this kind of measure? Sharing with a view to providing services to these small agencies could be a good initiative. Is there a strategy, a deadline?

[Frank Des Rosiers]

I'd like to answer the first question, as to whether there are any deadlines. Absolutely. In the context of this web of rules, an action plan was established and submitted to Messrs. Mazankowski and Tellier. A report was produced on the subject quite recently. The result—and here I'm relying on the report; I didn't put the words into their mouths—was very favourable. In that report, the authors hailed the initiative, encouraged us to continue it and to launch it again next year. That's what we would be prepared to do around springtime. We'll establish concrete, measurable objectives. At the end of the year, you'll be able to determine whether you, as the government and parliamentarians, have achieved the objectives you set for yourselves. You'll see that those targets are quite bold.

As for the second part of the question, we absolutely draw on the experience of other jurisdictions, at the provincial level, among other things. You mentioned the case of Quebec. Those of British Columbia and Alberta are very interesting in our minds. We've deployed some of our officials to go and solicit opinions and advice. We've also invited those people to talk with our people, here in the departments, but also with people from foreign governments. The secretary went to Great Britain last fall to speak with his peers. He also went to France. That country, it has to be said, is more advanced than we are in this area.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Desnoyers.

Mr. Kramp, you have five minutes.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Chair.

Hi, everybody.

Just as an example, Minister Ablonczy reported to Parliament, and to the House, and to her colleagues that she was faced with a mandate of reducing paperwork and red tape and burden. In the course of two years, to the private sector in small business reporting, there was a reduction of 25%. My thought is, why can't you do it?

[Wayne Wouters]

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.

[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.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

We understand you can't have one size that fits all. Usually in the small entities, as you mentioned, there might be 500 individuals or there might be two individuals involved.

In designing or mandating a reporting process, what do you use as a criterion or benchmark? Is it the number of employees, the dollars expended? Where do you find the slide on that, and how do you categorize it?

[Wayne Wouters]

I wouldn't necessarily totally go to size, because I don't think size is necessarily the determining factor. It is a factor, but not the determining factor.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

What are the factors?

[Wayne Wouters]

I think one of the key factors in terms of looking at reporting is to remember that reporting is part of oversight, so it really comes down to risk management at the end of the day. If we're not necessarily totally comfortable that an organization's overall management regime is performing well, we may want to insist on more reports from that organization.

Size is certainly important, because they simply can't manage some of the reports, but this whole issue of reporting is multi-dimensional. The first concern is how to do it as efficiently as we can and with as few reports as we can, but we also have to ask if it is commensurate with the risk of the organization we are looking at. It's that balancing act. If we decide to remove all reports, which I don't think we'll ever do, and one of those organizations has a significant management failure, you will have us--the Treasury Board Secretariat--in here tomorrow to ask us what the hell went wrong and why you didn't know about it.

That's what we have to worry about when we look at this balancing act. We need to have somewhat of an oversight overall, but at the end we need to watch that we don't create too much burden in terms of reporting. That is not an easy thing to do.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Kramp.

Go ahead, Mr. Christopherson. You have five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

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.

[Wayne Wouters]

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.

[David Christopherson, NDP, Hamilton Centre, ON]

That's excellent.

I have a moment, I think, and I'm going to ask one quick question.

Under paragraph 2.47, there were planned audits in the departments. The Auditor General said, “We noted that the planned audits were delayed in a number of cases, in part because of resourcing problems.” It's the first time that I can recall a department coming in and saying they haven't been doing auditing of any sort because of resources. That's a troubling statement. Could you help me to not be so troubled on this?

[The Chair, Liberal, Shawn Murphy]

That's your last question, Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Yes, I hear you. Thank you, Chair.

[John Morgan]

That goes back to the recreation of the Office of the Comptroller General. In that office, we're recreating the internal audit function. Part of the challenge there is just competing in the marketplace. You have internal auditors hired into the government, professionally trained, and positioned in departments as well. It's a major challenge going forward trying to do that and rebuild that internal audit function.

[David Christopherson, NDP, Hamilton Centre, ON]

It wasn't because you didn't have the money to do the audit and you just decided to do something else? That's not what happened?