Public Accounts Committee on May 13th, 2008

[David Christopherson, NDP, Hamilton Centre, ON]

Let me understand this, then. As as long as people are qualified, if your government continued to only make phone calls--because both of these people who were in earlier received phone calls--then it's not patronage if every position is filled with known Conservatives.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

No. As I said with respect to MacPhie & Company, administrative functions were not followed, and they should have been followed.

[David Christopherson, NDP, Hamilton Centre, ON]

No, I agree. But my question to you was a little more specific. I was asking you whether or not.... You know what, let me go on a different track.

Your chiefs of staff, you trust them. You talk about trust a lot; I would assume you trust your current chief of staff and your previous chief of staff.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes.

[David Christopherson, NDP, Hamilton Centre, ON]

You found out that your chief of staff, who you trust, had hired someone and that this someone was hired because you trust him. But it was untendered, and they broke the rules. They were advised by the ministry that this was the case and that they needed to be prepared to defend it. Your chief of staff, though, didn't bring this to you. How did you deal with that? Your chief of staff broke their rules, and not advising you of it would seem to be pretty serious.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I was disappointed. My then chief of staff was already in the process of leaving. In fact, when I learned of this on July 24 last year, he had already left on vacation and would not be returning to the office.

[David Christopherson, NDP, Hamilton Centre, ON]

I realize you lowered your voice and spoke nice and soft and everything, but what have you done to ensure that your right-hand person—and those of us who have been there know the importance of that person—doesn't do this sort of thing again?

You said trust was the reason it was worth violating the rules to bring in Mr. MacPhie—

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

No. Excuse me, there was no violation of the rules.

[David Christopherson, NDP, Hamilton Centre, ON]

You talked about trusting him to work on the budget. Fair enough. But the trust that you placed in your chief of staff was obviously broken when this chief of staff didn't advise you of important advice coming from the ministry. What have you done to ensure that this doesn't happen again, since trust alone doesn't cut it?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

First of all, we reviewed all the contracts. I had my new chief of staff do that as soon as he started last summer. I made it clear to all of my staff that all Treasury Board rules are to be followed to the letter. I made it clear to the new chief of staff that he must consult the Department of Finance on every contract. I also made it clear to him that he must advise me of any departmental concerns expressed to him about contracts. That is designed to avoid what happened here.

[David Christopherson, NDP, Hamilton Centre, ON]

Mr. MacPhie was brought in on an untendered contract. He is a known Conservative, who has a great history with you. He was brought in because no one else could fill that position, or at least because he was ideally suited to it. Somehow, though, your people felt that this gave them the right to an exemption, even though it turned out not to be true.

I asked Mr. MacPhie what value he added, given that there are many professional staff within the ministry who work just as many hours and work just as hard and give up as many weekends as any political staff in the development of a budget. You can check the blues, Minister, but I didn't hear anything from Mr. MacPhie that justified why your chief of staff would think it was okay to reach beyond the rules and bring in someone like Mr. MacPhie.

I don't see the value added. I'm not sure what we got for breaking the rules and paying that much money. What value added did the Canadian people get?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

You're making an important point confused, confusingly here.

[David Christopherson, NDP, Hamilton Centre, ON]

That was clear.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

There was nothing wrong with hiring Mr. MacPhie. No one has said there was anything wrong about hiring Mr. MacPhie, except perhaps you. It was in compliance with all of the rules. What happened was that the administrative functions with respect to his contract were not honoured.

[David Christopherson, NDP, Hamilton Centre, ON]

What were those administrative functions, as you know them?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

He went over the level that the contract was supposed be, as I understand it.

[David Christopherson, NDP, Hamilton Centre, ON]

Why would your chief of staff think that was okay?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I have no idea. It's not okay. It won't happen again, because I've made it clear to my chief of staff that when concerns about contracts are expressed by the department, I'm to be told.

The other thing you said was that Mr. MacPhie has a great history with me. Actually, he never worked for me except on this contract. When I was at Queen's Park, he worked for a time on the Premier of Ontario's staff. We're not social friends. I admire his competence.

I respectfully disagree with you about communications people. I know there are some in the room, and they should close their ears. There aren't very many good ones. It's difficult to get. It's one of the most—

[David Christopherson, NDP, Hamilton Centre, ON]

Are you leaving office soon, Minister?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

—difficult positions to fill, a good communications person. I know that, and you know that from your own experience.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm not saying that—you are.

[The Chair, Liberal, Shawn Murphy]

Mr. Wrzesnewskyj.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Mr. Flaherty, we've seen that your office has handed out an abnormally high number of contracts valued just below $25,000, the limit prescribed by Treasury Board guidelines for untendered contracts. In fact, the number is approximately 67% higher than that of other major ministries.

What's even more worrisome is that many of these seem to have something in common. They have gone to supporters of your leadership bids or to people who have worked with you or with the former premier of Ontario.

You've stated, over and over, that this was a matter of trust. You used the words “trustworthy” and “trust” over and over. You said that you trusted Mr. MacPhie.

We've heard from the deputy minister that you had a communications team in the Department of Finance of 60 experts, highly qualified people. In saying that you did this because Mr. MacPhie was trusted, are you implying that your department was not?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

No, I'm not. And it doesn't follow like night and day at all.

What happens at budget time or budget preparation time—and I think you've already heard this from what's been said here today—is that we need more people. The deputy minister does not put departmental people onto the exempt staff of the minister to fulfill those functions. The deputy minister needs his people to do the budget work of the department, where there's an enormous amount of work to be done. And it's better to have people come in temporarily than it is to hire people full-time, because it costs less.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Minister, it's hard to believe that two additional people made all the difference, especially when you take into consideration that the year prior, you were able to make do with a contract under $25,000, and did not, in fact, break any rules.

But let me read you a quote. It reads:

I think it breaks [Canadians'] hearts when they see their tax dollars go to the finance minister, who then turns around and gives it to his friends in the form of untendered contracts.

That statement was by your colleague, Minister Monte Solberg.

Besides claiming value for money, what would you like to say to Mr. Solberg? In fact, what would you like to say to Canadians about this particular situation and the so-called administrative error? And what are you doing to make sure it doesn't happen again?