Public Accounts Committee on Nov. 9th, 2006

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for your presentations.

Mr. Desautels, during your remarks I jotted down, when you made reference to “entities”, that you talked about trying to get a sense of their state of health. Two things occurred to me. I think I know what you mean, but I wouldn't mind hearing exactly what you call the state of health and what sorts of things you would be looking at as determinants of health.

It also struck me that at no point prior would you have expected, under the current system, that any deficiencies in the yet-to-be-defined state of health had been detected by anybody. Therefore, your thoughts were, at this point, that this would be a good way to garner some of that information.

I am just concerned that you're not aware of any process, up until then--monitoring, oversight, accountability--that would let the powers that be know they have a problem with the state of health. Maybe you could comment on that for us.

[Denis Desautels]

I think I used the term “organizational health”, so what kind of shape is the organization in? There are certain departments where there's a lot of uncertainty because of rapid changeover in leadership. There could be situations where there have been chronic weaknesses in certain aspects of management, whether that be the financial management or the technology, and so on. So there are determinants of health. When you look at an organization, you could come up with half a dozen main areas.

I think central agencies--in this case, we're talking about the Secretary of the Treasury Board--should have a feel for which departments are doing well and which ones are in trouble, on a number of fronts. In my view, certain departments, when I was looking at them, showed that they were really struggling with a number of basic issues while others seemed to be doing rather well, with good leadership, good stability, strong personnel, and so on.

I know that centrally, probably somebody somewhere worries about that. I think that the PCO would have a prime responsibility for having that kind of feel. But I also feel that the Treasury Board Secretariat, if it's doing its monitoring properly, should be a source of information for other central agencies in terms of monitoring which organizations are doing well, which ones need help, and so on.

Why are those deficiencies not detected, or are they detected and no one really knows they've been detected? It's hard to answer that question. Certainly I had no real indication as Auditor General that the Treasury Board Secretariat itself had that kind of handle on organizational health.

[David Christopherson, NDP, Hamilton Centre, ON]

You're not aware that any other entity is actually.... If I asked you point-blank, as a former Auditor General, to tell me at exactly what point in the accountability oversight measures within the federal government a department that's going off the rails would be identified, what would your top-of-mind answer be?

[Denis Desautels]

The organization or the agent that would have the main responsibility for that would be the Privy Council Office.

[David Christopherson, NDP, Hamilton Centre, ON]

Can they do it, do you think?

[Denis Desautels]

Well, I assume that they do, but I'm not totally convinced they necessarily have all the tools, because I don't think some of the tools would normally come through an agency like the Treasury Board Secretariat. If we're talking about the role of the Treasury Board Secretariat here today, I think we have to ask ourselves if they should play that role, if they are playing that role, and how they should play that role, if we want them to play it.

I personally believe that since they're part of the head office, they should have enough information about what's happening in different departments to have a view on their state of health.

[David Christopherson, NDP, Hamilton Centre, ON]

I would assume that making the DMs accounting officers would only enhance that ability.

[Denis Desautels]

I think making the DMs accounting officers, with what that means and what that entails--being specifically responsible for a number of comptrollership-type issues--would really help. I think it would focus the deputy ministers on some of these aspects of management that get put on the back burner. They're not necessarily in their priorities.

[David Christopherson, NDP, Hamilton Centre, ON]

The reason I pursued it a bit is that if you recall--and correct me if I'm wrong, because I'm just going by memory--it seemed to me that most of the focus of the Treasury Board was really over the deputy. That is often a good litmus test of the department, but it is still separate. You can still have a strong, healthy department in which the DM is the problem, and if they don't deal with that, you're going to get into a problem with the whole department.

Maybe that's an area we ought to be delving into--making sure that when they're doing all this work around DMs, we have some ability to identify clearly who has that oversight. If it's not Treasury Board, then it's PCO or whoever, but who is expected to be the canary in the mine shaft saying we have organizational problems and raising the red flags and having that brought to the attention of people who are decision-makers and can do something about it? That may be one of the areas in which we may need a little more detail, and I thank you very much for that.

Further to questions other colleagues were asking earlier about the deputies, the other problem we had, aside from deputies coming in and saying “It's not my job”, and then the minister coming in and saying “Well, it's not my job”, and we couldn't get an answer from either one of them--hopefully that's going to be cured with the accounting officer designation--is that deputies move so quickly that when you call them in and ask them who's accountable--not why the problem happened, but who is accountable--their honest answer is, “I don't know; I wasn't there.” At that moment this committee is completely denied the opportunity to ask what their thinking was or what problems were not identified in their formal reports; we can't do it.

One of the answers we got from Treasury Board--and it was a good point--was that you can still do it when you have an inquiry. As we saw with Gomery, other DMs were brought back. That's pretty extreme if all you want to do is find out from a DM what he or she was thinking.

Do you see something we haven't yet done or something we're doing or something in the new bill that you think is going to help answer that? It's not necessarily to go after the DM per se. They're not always going to be the problem, but without somebody taking responsibility for having been there at the time the decision was taken, we're denied the opportunity to get behind that, other than through the factual minuted record, which is basically all the current DM offers up.

Yes or no?

[Denis Desautels]

There's no yes or no.

The issue of rapid turnover does not help. It makes accountability virtually impossible, if you're talking about that kind of personal accountability for performance. It always remains possible to have an organizational accountability, but if you want to hold a particular person responsible for certain results, with that kind of rapid turnover it becomes very difficult or impossible.

You stated a problem. The answer, of course, is a combination of remedies. The accounting officer concept, to me, would help very much.

I think doing something to keep deputies longer in positions would help, as well as having an approach on succession planning that we all can see. Obviously there is somebody who thinks about that somewhere, but succession planning is a very important function in large organizations with 40,000 employees. You just don't do that like that.

A number of mechanisms have to be put in place. I think lengthening the term of office in some fashion, whether through legislation or just a commitment to do so, would certainly help.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, monsieur.

[The Chair, Liberal, Shawn Murphy]

Dr. Clark, you had a comment earlier.

[Dr. Ian Clark]

Yes. I may never be asked back to this committee again, but I did want to take advantage of this time when appearing here with Mr. Desautels to endorse his position, which I think is a very powerful one, about organizational health, because every time Mr. Desautels and I appeared before this committee it was explicitly because we disagreed on something.

[Some hon. members]

Oh, oh.

[Dr. Ian Clark]

So I would like to endorse that position, and I would be a bit stronger and say that this is exactly the role of the Treasury Board Secretariat. So the Privy Council Office has to deal with the deputy minister's appointment, issuing a recommendation to the Prime Minister. But the organizational health is exactly the Treasury Board Secretariat's responsibility to have an idea on, and be able to take action. Exactly how they get that idea, and exactly how they take action, is something that each secretary.... I had a way that we developed called “the shared management agenda and departmental management assessment process”, which deals with a lot of things, and I won't take the committee's time to describe that. The current secretary and his predecessor have developed a process including the management accountability framework, and they're trying that way. But it is the Treasury Board's responsibility.

I'm exactly in accord with you, Mr. Desautels.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Dr. Clark.

Monsieur Proulx.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Thank you, Mr. Chairman.

Good morning, Mr. Desautels and good morning Mr. Clark.

Mr. Desautels, you say that the Treasury Board Secretariat should play the role of a head office. To what degree, that remains to be seen. I will explain. Almost all financial management regulations or others come from the Treasury Board Secretariat. We all tend to think that Treasury Board should also play the part of a policeman to ensure that each of its regulations is well observed. It remains that in fact, all kinds of departures can happen in departments without Treasury Board being aware of them or unable to notice them under the existing processes.

I am quite willing to see that Treasury Board Secretariat can become a head office but some responsibilities must be transferred to departments so that they can themselves look after their internal management. According to you, where do we draw the line?

The Auditor General told us recently that during audits, some sort of threshold was observed. In other words, they do not look into spending of $5,000, $10,000, $15,000 or $20,000 but on much greater amounts. I imagine that that was the way things were done when you were Canada's Auditor General.

Down to what level should the Office of the Auditor General lower this threshold? According to you, up to what point does the Treasury Board Secretariat must transfer its responsibility and let the monitoring to others?

[Denis Desautels]

Mr. Chairman, the dilemma raised by Mr. Proulx is real but this is however a situation with which a good number of organizations of some size are faced with. Private sector large companies, multinationals or even large Canadian companies have to deal with it. They have to determine what is the role played by the head office, the management of each of the branches or entities and asked themselves to what extent they should transfer their responsibilities.

The approach which seems to be increasingly developing would be not to have huge head offices. They must be able to provide a direction, as Mr. Williams was saying earlier, to determine the strategy, and the leadership of the group. The head office is therefore responsible for the implementation of all policies. In this particular case, we are talking about policies of financial management applicable to the whole of government. Should it play a policeman role and monitor everything itself? No, I do not think so.

In large businesses, it does not happen. They apply some systems, for instance on efficient internal audit which can be trusted. I imagine that Treasury Board could for the most part rely on internal audits which are done in all departments.

Moreover, we are talking about changing the role played by the deputy minister, so that he would become more of a financial agent. This would be quite consistent with the outline of this new role. In fact, the deputy minister would be required to make statements on his management. We want to know whether he can assure the elected representative and the central agencies that he observed all the guidelines his department must follow. This is what they do in a large organization. This can be done without playing the part of a policeman or draw a line with regard to the financial significance of such a process.

I think that mechanisms could be implemented to allow the centre to play its part as a leader while getting feedback from various sources, which would make it possible for it to decide if the policies have been followed.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

The Treasury Board Secretary would still be accountable to the Privy Council or to the Clerk through the Privy Council and ultimately to the Prime Minister. Imagine that the Secretary to Treasury Board should impose these regulations to the Privy Council Office for example and that the next day he had to be accountable to the Clerk, which is in fact the Privy Council Deputy Minister. Do you believe that such a situation would be tolerable?

[Denis Desautels]

Mr. Chairman, that does seem to me inconsistent. In my opinion, the Treasury Board Secretary can exercise his leadership with regard to financial management and policies of financial management while having a line boss if I can call it that way. This is quite normal; it happens in all organizations. I do not see why that would not work here. If we draw a parallel, we can say that the Treasury Board Secretary is like the vice-president of the organization.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

You see this in the same way when it comes to government?

[Denis Desautels]

This should be able to be done.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Thank you.

[Denis Desautels]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Mr. Poilievre is next, for eight minutes.