Government Operations Committee on Feb. 27th, 2012

[Denis Blanchette, NDP, Louis-Hébert, QC]

Great. Thank you very much.

I would like to get your opinion on what is called open government. We know that someone, somewhere in the public service, has the answer to every question that can be asked. The problem is knowing who that is. Basically, that is the issue.

Would a solution lie in an initiative like open government, where the budget would be systematically published through all its stages of development? Is that an approach that could be considered, do you feel?

[David Macdonald]

I'm not familiar particularly with those initiatives. Given the size of the federal government, I think you're probably right that any question could be answered by someone. Someone has that answer. In the same way that I'm trying to estimate the number of jobs that will be lost, someone knows this answer. I think it's really a question of defining for the bureaucracy what open government means. What does it mean for them to publish? What do you want to see them publish for you as parliamentarians, and for Canadians?

Putting out the question of potential new templates for what type of information should be published—when, how, and so on—could provide a very fruitful process for people like me, such as researchers, interested people in the private sector, and other interest groups.

[The Chair, NDP, Pat Martin]

You have 90 seconds, Denis.

[Denis Blanchette, NDP, Louis-Hébert, QC]

I think that templates and reference frameworks could be helpful in this. If we took that route and made a decision on the best templates and reference frameworks, do you think it would be difficult for an organization as huge as the public service to fall in line with it?

[David Macdonald]

The bare-bones reporting that happens at the federal level is very general, frankly, compared with the wealth of information contained in the SAP servers at DND or Finance Canada. It's a matter of defining what you want; I don't think it's a matter of the data not existing. I don't think parliamentarians should be concerned that data do not exist on expenditures, of all things, or the number of employees.

The data surely exist in an information form on a server somewhere. It's a question of asking for the right requirements and then demanding that they be correctly filled out every year with the kind of scrutiny that the Parliamentary Budget Office has been putting on departments in terms of improved transparency. That's one way that it can be done. Committees like this can also put departments' feet to the fire if they aren't reporting correctly.

[The Chair, NDP, Pat Martin]

That's about it for your time, Denis. Thank you.

That just about concludes the time allocated for this section of our meeting.

Go ahead, Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Macdonald. I appreciate the opportunity.

We want to have a non-partisan and open discussion on this matter. I spent nine years in local government and I've been here six years, and trying to decipher the books is overwhelming. It's a bit like how you eat an elephant: one bite at a time. We're trying to figure out how we can digest this.

Two-thirds of expenditures are base or statutory allocated. Basically, we never take a look at them. Have you looked at that portion of the expenditures to see how the parliamentarians might be able to hold the government to account more effectively?

[David Macdonald]

I wasn't particularly concerned with statutory versus non-statutory; I was interested in expenditures, pure and simple, and how they're changing over time at the departmental level. I think what the final number is, whether it's statutory or not, is what should be important. How that's changing over time is what should be important. The number of people employed to do that and how that's changing over time is what should be important at the end of the day. You're right to point out that there are statutory measures that just get passed, and then the supplementary estimates adjust those as need be.

Perhaps a differentiation with respect to expenditures for a program area, whether statutory or not, is important for parliamentarians voting on it, but I think the overall number is more useful for people like me.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Should we vote on program activities instead of operating and capital expenditures? How do we work on a numbering system?

[David Macdonald]

Both can be useful. As with other parts of budgeting, whether it's accrual or cash, I'm not sure that there's necessarily a right answer. Sometimes looking at capital versus operating expenditures instead of looking at program areas can be useful. Looking at standard objects like salaries and benefits and utilities you pay for can be useful as well.

I believe that different ways of breaking down the same number can be extremely useful in trying to tease out what's actually happening. Different approaches can be useful in trying to answer basic questions about how government expenditures are changing over time and whether they're delivering the services they should be.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's what economists thrive on.

[David Macdonald]

That's my answer: more data.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Data, data; give me data.

[The Chair, NDP, Pat Martin]

Thank you.

Thank you, Ron. We made good use of one hour.

Thank you, Mr. Macdonald.

I'm going to suspend the meeting for one minute while we change up our witnesses.

We'll also ask Mr. Wallace to assume the chair.

[The Vice-Chair, Conservative, Mike Wallace]

Hello, Mr. Jordan. Welcome back to that end of the table.

Thank you for coming. You're with the Capital Hill Group. I know you were a member of Parliament for a number of years and were active on the issues that we are dealing with in this discussion on the supply process.

The floor is yours, and we'll go to questions afterwards.

[Joe Jordan, Senior Consultant, The Capital Hill Group]

Thank you, Mr. Chair.

I sincerely want to thank the committee for the invitation to participate as a witness in your review of the process for considering estimates and supply.

I guess I'm one of those rare people who actually really likes estimates. I've studied them extensively. The fact that the committee has taken this on.... I think it's a very important subject, and I think there are a lot of good, solid recommendations the committee could propose to try to move us to a better place.

By way of introduction, I was a former member of Parliament. I served as parliamentary secretary to the Prime Minister as well as parliamentary secretary to the President of the Treasury Board, and I was also director of parliamentary affairs at Treasury Board.

I can now confess that it was only in these last two capacities, when I worked with Treasury Board, that I obtained any sort of relevant understanding of what the estimates process was and how it fitted within the larger public sector financial cycle. I wouldn't want to admit publicly that for the first five years of my tenure, I voted in the estimates process without having a clue as to what was going on, but that was in fact the case.

Although the transparent presentation of financial information by government has many uses and many users, I want to focus on the role of the parliamentarian in oversight of government spending.

The supervisory authorities of the Canadian Parliament have evolved over time. They are a combination of practice, precedent, and statutory definition, so we're not really drawing on a single solid foundation; it's the way that these things have evolved. As a result of that, the Government of Canada is legally subservient to the Parliament of Canada because of two fundamental supervisory constraints: the confidence convention and expenditure approvals.

The confidence convention holds the Prime Minister and cabinet responsible, and they must answer to the House as a body for their actions and must enjoy the support and confidence of the majority of the members of the chamber to remain in office.

On expenditure approvals, authorities require the government to make its financial requirements known to Parliament, which must authorize the instruments used to raise the money, which we call ways and means, in the granting of necessary funds, which we refer to as supply. Therefore, there is a legal foundation for this. It isn't something that the government thinks is a good idea; they legally are bound to undertake certain actions. No tax may be imposed or money spent without the consent of Parliament.

Now, clearly the mechanisms exist, and we can find recent examples of their application. The government of the 39th Parliament fell as a result of a non-confidence vote, and a number of years ago the opposition—John Williams, my good friend—was successful in reducing the estimates by an amount equivalent to what was spent on a poll that was determined to not be in the public interest, so the process works.

I think, however, that any objective analysis would conclude that not only are these situations rare, but their successful application is almost exclusively tied to the government being in a minority situation, so one of the first questions that I think we need to ask ourselves, if we're serious about reviewing the existing process, is just how real the challenge function of the expenditure approval process is as an oversight mechanism for members of Parliament, especially in majority governments. Keeping in mind that testimony is the weakest form of research, I'll offer my own view, which is that I think the existing process is not a very effective one.

Members of Parliament work in a partisan environment. Any process that's thrown into that arena will inevitably align with existing power equations, and the result will never reconcile with the original objectives.

Governments will defend their interests, and majority governments will defend their interests in a manner that sometimes appears to be working at cross-purposes to democratic oversight.

Therefore, my first suggestion would be to shift our thinking on the objective. The estimates and supply process is a terrible, partisan mechanism for trying to embarrass the government, but it could be a very useful mechanism if MPs saw it as a way to improve the effectiveness and efficiency of government operations.

As MPs, you are literally on the front line when it comes to Canadians' view of government services and program delivery. The Standing Orders define any number of tools you can incorporate into your partisan strategies.

I'd suggest that we accept the role government has in setting policy and see the estimates process as a vehicle for MPs to apply both their unique skill sets and their unique perspectives to the oversight of government operations within the policy parameters set by the government of the day—in other words, view the estimates and supply process as a study of “how”, not a study of “why”.

The next challenge I think we face is the sheer scope and scale of the information that's presented in the documents. This was touched on a little bit by the previous witness.

For example, the 2011-12 main estimates total $261.2 billion in proposed government expenditures. That's presented by each reporting agency in a 473-page document. That works out to $552 million a page. When we add the public accounts documents and the RPPs and DPRs, sheer volume of information makes this at best a needle-in-a-haystack exercise and at worst an unfathomable intellectual quagmire that is best avoided entirely.

I should add at this point that I'm not being critical of any participant in the process. During my time at Treasury Board I've seen first-hand the extraordinary efforts behind the production of the estimates and the collection and collation of department performance reports and reports on plans and priorities.

On this format issue, I'm not sure how helpful I can be to the committee, but I would suggest we consider a few things.

First, consult the private sector. The presentation and processing of financial information is a critical element, especially in the financial services industry. Money doesn't talk, it swears; the people whose livelihoods depend on understanding numbers have figured this out, and there should be elements that are transferable to the public sector.

Second, examine the opportunities that technology presents to help manage the volume. MPs and Canadians should be able to access online analytical processing tools or data cubes that allow for multi-dimensional extraction and analysis of data to increase understanding of government operations.

Third, look at baselines and benchmarks. To effectively perform their oversight responsibility, MPs need high-level information. This should be augmented with clear, comparable calculations that allow for reliable ratio analysis, both for departments over time and for efficiencies between departments. With limited hours to devote to the study of estimates, it strikes me that any techniques that can highlight exemptions and anomalies would be useful.

Fourth, the current estimates process involves three documents. Departmental performance reports outline the actual spending from the previous year and reconcile it back to the approved authority. Reports on plans and priorities are narratives that outline departments' intentions for at least the next fiscal year. The estimates themselves list the projected spending of each reporting department and identify the specific authorities that need to be approved by Parliament, what we refer to as “votes”. Both the DPRs and the RPPs make extensive use of program activity architecture and strategic outcomes, and I agree with the previous witness that those documents present information in a very useful way.

The estimates make use of input costing data and don't really correlate the votes to the strategic outcomes, which really is the only measure of efficiency and effectiveness. When we add to this the lack of synchronization between the timing of the estimates and the timing of the budget, trying to get a handle on the big picture is even more complicated.

The committee might want to liaise with the Public Sector Accounting Board to ensure consistency when considering reporting formats across departments.

If it is true that we measure what we value and we value what we measure, the only conclusion I can reach from the current process is that we value measuring. It's almost as if the process of getting the correct numbers into the proper voted statutory non-budgetary and budgetary categories has become the sole object of the exercise, and everyone assumes some oversight requirement is being met.

Returning to the objective, Canadians want to know what government is doing. They want to know where their money is being spent and whether or not they're getting value for that money. Anticipating the use of the data might be helpful in presenting it in a form that is much more understandable.

Again, I want to thank the committee for the opportunity and I look forward to the subsequent discussion.

[The Vice-Chair, Conservative, Mike Wallace]

Thank you, Mr. Jordan.

We have a series of questioners. We're starting with the New Democrats. Go ahead, Monsieur Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

Thank you for your presentation, Mr. Jordan. It was succinct, but crystal clear.

Like most of my colleagues here, I am concerned at the lack of transparency in the tools with which we are supposed to check on the way in which money is spent. I find the process to be both very long and extremely complex. In a lot of cases, it is spread out over 18 months, which prevents us from comparing the documents that are submitted to us. For example, the upcoming main estimates will have no connection to the budget that will be presented at about the same time. Those two documents were actually not prepared at the same time, by Treasury Board on the one hand or by the Department of Finance on the other.

Do you feel that this problem of timing is a major one in our work? Could we not give some consideration to putting off passing the budget until the fall in order to be more logical and coherent?

[Joe Jordan]

It certainly is an issue, I think, because the costing information isn't aligned to the same time period; as I said, it's very easy to miss the big picture for that reason.

First of all, the financial cycle, the time, is mandated through the standing orders, but because of budget secrecy, it wasn't possible for the government to put out the contents of the budget and have that information available at the same time.

I think it's also safe to say that the budget is also a much more political document than the estimates. The estimates are the nuts and bolts of the A-base funding of government, whereas the budget usually announces programs and funding that are much more aligned with the platform of the party.

If you did it in the fall, you could reconcile it and put those numbers in the main estimates, as opposed to what we do now, which is supplementary estimates (A) or supplementary estimates (B), depending on the time. I guess it would be up to the government of the day to decide whether the potential pain is worth the gain for that particular shift. Keep in mind that this has been going on this way for a very long time.

Again, estimates aren't as exciting as they sound, and I congratulate the committee for focusing on this, because nobody ever says in their householder that they're working on the budget. Nobody ever ran on this as part of their platform. However, it is a fundamental piece of how the system is supposed to work. As parliamentarians, regardless of the political party, when you get up in the morning, what do you do? This oversight function is a legislated bit, and I think everybody wants to make sure that the job is done in the best way possible, so I think you need to consider aligning the information so that people get a clearer picture. That's one of the problems: they don't know the full extent of what spending authorities are being sought.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much.

Yes, indeed, our supervisory role, our oversight role, is undermined by the process. The process has its defects and just because those defects have existed for ever does not mean that we must not try to fix them. On the contrary. It is not a very satisfactory situation at the moment.

I really liked your suggestion of using new online technology to bring all the data together, such as the public accounts of Canada, the main estimates, the supplementary estimates and previous budgets. In that way, people, meaning Canadians, public servants and ourselves, could do focused research. It would be a lot of work, but people would have to be able to compare documents to each other, which is not always possible at the moment.

[Joe Jordan]

Just to be clear, I wasn't suggesting that we not change just because we've done it that way. In terms of technology, we're not talking about simply putting the blue book online. We're talking about arranging the data in such a way that people can go at it from as many different perspectives as exist.

If you want, talk to some of the leading business software companies about the concept of data cubes and how allowing an unlimited approach to how you can drill down and extract and analyze information is going to allow people to get a clearer picture of what government is up to. It's not because the government is up to bad things and not because the government is trying to hide things. It's a huge, complex machine, and one of the things that MPs have to do is try to make sure that we're getting our money's worth.

It's not a case of pointing fingers; it's how we can get to a better situation.

[The Vice-Chair, Conservative, Mike Wallace]

Thank you for the answer. Thank you for the question.

The next questioner is Mr. Ron Cannan of the Conservative Party.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

It's a pleasure meeting you, Mr. Jordan. You mentioned John Williams. I know he was passionate about this as well. He spent many hours on the issue about government accountability around the world, doing his patriotic service.

I wanted to follow up on the timing aspect. I don't know if you heard the previous round of discussions. Several of us have come from local government, and a previous witness mentioned that the City of Ottawa has a good model to build on. Have you looked at any other countries to see if something from them might be incorporated? You mentioned software. I think that's using the technologies. Instead of lugging around the big blue books, we have computers and iPads. Why don't we make it more user-friendly in a spreadsheet?

[Joe Jordan]

I haven't looked at the way other governments do it, but I'm certainly more familiar with how business collects intelligence, and its use of technology is extensive. Certainly I have to believe that you could just transfer over some of those principles and applications, but again I say it's not simply automating the print-based material; it's allowing Canadians to go online and look at data and be able to come up with extraction analytical tools that can tell them what they want to know, as the other witness was talking about.

How many people work at DND? How much does HRSDC spend on information technology? You can't get that out of the existing documents with a 24-hour day. There just isn't enough time to mine at that level, because it's almost as if you're buried in information. There has to be a way to get around that, and I think you can look to the private sector and other governments to see what approaches they're using.

I don't know if there is a timeline on your study, but take your time. This is worth getting right.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I appreciate that.

I'm just following up on some research that's been done. You said you started in 1997. In 1998 the Standing Committee on Procedure and House Affairs recommended that the standing committee be able to reallocate funds during its consideration of estimates, which would throw everything, royal recommendations and all the present policies....

I have a couple of questions. Do you think the standing committee should be authorized to reallocate funds, and if so, how would this affect the principle of royal recommendation that all funding proposals proceed from the crown? How would it affect the ability of departments to plan their spending?