Public Accounts Committee on June 12th, 2018

[The Chair, Conservative, Kevin Sorenson]

I call the meeting to order.

Good afternoon, colleagues. This is meeting number 104 of the Standing Committee on Public Accounts for Tuesday, June 12, 2018. We are here today in consideration of the message from the Auditor General of Canada that accompanied his 2018 spring report.

I would remind all colleagues here today that we are televised, so I would encourage you all to please put your phones on silent or vibrate so there's less distraction.

We are honoured this afternoon to have Mr. Michael Wernick, Clerk of the Privy Council and secretary of the cabinet with us. As it is somewhat unprecedented for the Auditor General to write such a message, it is also unprecedented for me to open this meeting with a few words of explanation as to why the committee has requested your presence here today, Mr. Wernick.

Our focus is not primarily on the Phoenix pay system, nor is it with respect to the poor outcomes of indigenous programs. Although both are extremely important and are mentioned to great extent in his last audit, they will be subjects of future upcoming meetings. The objective of today's meeting and the objective of the Auditor General's message is “to lead to a deeper understanding and correction of the pervasive cultural problems at play” within the public service.

This is a culture that has created, in the Auditor General's opinion, “an obedient public service that fears mistakes and risk. Its ability to convey hard truths has eroded, as has the willingness of senior levels—including ministers—to hear hard truths.” This is a culture the Auditor General claims has caused and will continue to cause incomprehensible failures. It is this committee's sincere hope that this meeting today starts a process of change so that we do not experience any more “incomprehensible failures”, failures that have adversely affected so many people, failures that could have been avoided and can be avoided in the future.

We welcome you, Mr. Wernick, and I turn to you for your testimony today.

[Michael Wernick, Clerk of the Privy Council and Secretary to the Cabinet, Privy Council Office]

Thanks, Mr. Chairman.

I don't have a statement or presentation or anything like that. If you'd indulge me, I might make a few opening comments and then we could get right to your questions.

The first thing I should get on the record is that as soon as I received your invitation, I accepted it within the hour, and I'm very pleased to be here. Second, I am willing to stay here as long as you have questions. The last time I was before this committee I was deputy minister at what was then Aboriginal Affairs, and I was here for five hours spread over two days; I think Mr. Christopherson might have been there. I remind my colleagues behind me: I was there for five hours and no journalists attended, not one, so I'm pleased to have the opportunity to have an exchange with you on the record.

This is National Public Service Week, and it's a great opportunity to engage with you, and through you, I hope, with Canadians about their public service.

I have a couple of opening comments. The first one I think is very important to get across, and it is that Canadians should be very confident that they live under the rule of law in a healthy democracy and that they are served by strong institutions of governance—independent courts, free elections, a vigorous legislature, officers of Parliament, and a free press—and by a non-partisan, values-driven public service that is very good at supporting democratically elected governments, delivering their agendas, and providing a very wide variety of services to Canadians.

I consider it part of my job to engage Canadians in an ongoing conversation about their public service and to channel the stories of other public servants who do not have a voice. I have had the honour of submitting three annual reports to the Prime Minister about the state of Canada's public service, all of which were tabled in Parliament, and I've never been called to a parliamentary committee to be questioned about them. They've all been posted on the web and they have provided a vehicle for an exchange with public servants and other Canadians.

I am hidden in plain sight. I have a website. I have a social media presence. You can follow me. You can look up more than 40 speeches that I've given to a wide variety of audiences. I have tried to be very clear and candid about what I think, where we are as a public service, and where we can do better.

I only have a couple of opening comments, and then the point would be to take your questions and have a dialogue.

The first is that Canadians should have confidence in the excellence of their public service. That is not just an opinion; I bring you evidence. The World Bank, which is not a radical institution, ranked 200 countries on the effectiveness of their governments, and Canada was in the 95th percentile, with only a few small countries ahead of us. A think tank and a business school in the United Kingdom tried to rank the effectiveness of public services and created an index of 12 different factors of the effectiveness of public service: Canada was number one last year. The Global Government Forum took all the G20 and all the European Union countries and assessed them on the presence of women in leadership and public sector positions. Canada was number one. The World Wide Web Foundation, which tracks issues around the Internet and new technology, ranked 115 countries on how their governments are engaging with their citizens on open data: Canada was number two to the United Kingdom. Forbes magazine listed Canada's best employers in 2018, and seven federal departments, including two of the largest, are on that list as best employers in Canada.

One reason that the Canadian public service is strong is that there are many feedback loops on what we have done and what we could have and should have done better, and this committee is certainly an important part of that. I would assert that we have a culture of learning from mistakes and constantly striving to adapt to change and be better.

Another is that the senior leadership of the public service is very capable and guided by strong values. My assertion to you is that the senior leadership community of public service today is as good as or better than any that has ever served this country, and I would argue better, because the job's just getting more and more complex and challenging.

The second message to you is to urge you, as a committee with great responsibility and influence, to be very thoughtful in coming to a view about what should be done as we move forward. If you start from the wrong diagnosis and start applying harsh remedies and surgeries, you could cause very serious side effects and complications. You could even kill the patient. It has taken generations of work and effort to build a world-class public service that is envied by other countries and that people come to Ottawa to emulate. It will take a lot of work to make it even better, but it could be very damaged, quickly, in a matter of a few years, and it could take a generation to bring it back, so I would ask you to weigh very seriously the evidence you have heard and that you'll continue to hear, and engage Canadians on how we can have an even better public service to meet the challenges as we go forward.

I'm willing to stay as long as you want. I have some expertise and experience in the accountabilities of deputy ministers, how they are chosen, their tenure, and their turnover. I particularly welcome questions about the incentives and disincentives on which we operate, and I have some ideas for you on specific structural reforms that could be pursued in the future.

My view on the Auditor General's chapter.... I have enormous respect for Michael. We've met many times and had a lot of important conversations about his role and mine, and, as I think you're aware, we came to an agreement to give him even more of an unprecedented access to cabinet confidences in order to serve you as parliamentarians and Canadians. When he's on the ground of sound audit methodologies with strong recommendations about what can and should be done, he's of great service to the country, but chapter zero is an opinion piece with which I take issue and that I'm happy to discuss. I believe it contains sweeping generalizations. It's not supported by the evidence, and it doesn't provide you any particular guidance on what to do to move forward.

I also don't agree that the pay system was an incomprehensible failure. I think it's entirely comprehensible. It was avoidable. It's repairable, and it gives us all kinds of lessons about how to build a better public service.

I look forward to your reactions and questions.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Wernick.

We're now going to move to the first round of questioning. This is a seven-minute round. We're going to begin with the government side.

Go ahead, Ms. Mendès.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you very much, Mr. Chair.

Mr. Wernick, thank you for being here and for accepting our invitation on such short notice. I really appreciate that.

I would like to take this opportunity, as you mentioned this is National Public Service Week, to congratulate the Public Service of Canada for the excellent job they do in serving Canadians. We should never forget the important service they provide and how fortunate we are to have a public service that is so professional and so dedicated.

That said, you have just opened the theme of this meeting. You say you disagree with the sweeping generalizations that the Auditor General made in his chapter zero, or his message. We as a committee—and this was pretty much unanimous in the committee—were quite distressed to find that in his analysis, what happened, both with the Phoenix pay system and with services to first nations, Métis, and Inuit communities, had, for him, become almost the image of what went wrong, even though we had such a great series of checks and balances in our system. It's all there, so how could this happen?

I'd like to hear you tell us, as you say you have your own views on the matter, how you would consider it avoidable. What wasn't done that could have been done to avoid such a failure?

[Michael Wernick]

Thank you for your question.

I think there are several elements in there. I'll try not to go on too long.

I don't understand the comparison to indigenous policy, and it's an area I worked in. The situation of Canada's indigenous peoples is the result of generations of public policy and law, and other factors. There are many theories and explanations about how we got here, and very different views about how we can move forward. It's a policy failure, basically. It's going to be a difficult one to move forward on.

As some of you will remember, the Auditor General's predecessor, Ms. Fraser, tabled observations, a chapter zero on first nations, in the spring of 2009. It's a very helpful piece on indigenous policy. I commend it to you. It had four very specific prescriptions about what could be done to improve outcomes in government programming for first nations. I thought it was a solid contribution by the Auditor General to public debate, and it's something that I have used a great deal in advising ministers at the indigenous affairs department. I'm happy to pursue that, but it's a very big topic.

I think that you can continue to pursue the explanations of what happened in the pay system. My view is that it's comprehensible, and it's all there in the two reports from the Auditor General, in the Goss Gilroy report and in the Gartner report.

I don't want to put words in anybody's mouth, but I think what he's trying to say is that there's no single culprit or single explanation. To the people who are looking to simply say, “Here are two or three people we can blame” or “Here's the explanation”, my take on the pay system is that it was a perfect storm and confluence of all kinds of factors, which are laid out in the Auditor General's two chapters.

You can continue to pursue that line of inquiry. There have been many officials appearing at this committee, at the government operations committee, and at the Senate finance committee. It's perfectly legitimate to want to pursue the forensics of what happened and how we got here. In my view, it's not actually going to help that much in the urgent job of stabilizing the system and getting people paid on time and accurately today. It doesn't provide a lot of guidance on what to do going forward, other than the specific recommendations the Auditor General made on this topic and the report by Goss Gilroy, which I think provides lots of lessons on project management.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

We're more interested in understanding what can be done to avoid a repetition, because it's the accountability at different levels that seems to have failed. We understand the mechanics. I think we've gotten there. It's the accountability issues that failed throughout that we are concerned about.

How do you see it improving going forward? How can we correct that?

[Michael Wernick]

I think that the language in the two Auditor General chapters does provide you some advice on that, and there were some specific recommendations.

There was clearly a breakdown in information flowing up to the accountable deputy head in that department for a period of time, and there was a breakdown in the oversight by Treasury Board Secretariat and in some of the governance and the committees around it.

I think there is a specific breakdown around the pay system, which can be repaired. The Goss Gilroy report and the Auditor General chapter point to ways of doing that. I think it is inaccurate to generalize about that as a matter of culture across 300 different organizations. It's not even accurate to apply it to the department of public services.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

From what I've been hearing in the very many meetings we've had with the Auditor General, I think he was trying to come to the idea that delivering outcomes for Canadians is really what we should be worried about, but sometimes the preoccupation with process overcomes the objective of delivering services for Canadians.

In this instance, it's services for the public service itself. It's their pay system. It's their salaries that are in question. That we somehow failed to see to the expected delivery and the success of this system and the fact that we separated two projects is another of his comments. As you know, the project management itself and the IT transformation projects were not aligned. They were driven separately. That caused an issue.

How do you see your office overcoming these weaknesses?

[The Chair, Conservative, Kevin Sorenson]

Thank you, Ms. Mendès.

[Michael Wernick]

The quick answer is that my role is to give the Prime Minister advice on who goes into deputy minister roles and to give the Prime Minister advice on machinery of government, such as how decision-making processes can be organized, the creation of cabinet committees and working groups, that sort of thing, and how departments can be structured.

Successive governments have pulled apart and put together government departments and agencies in different combinations as they adapt to a changing world. There's a long history of that. Those are prerogatives of the Prime Minister, and the advice on who to put into deputy minister roles comes from me. I'm accountable for it, or answerable for it, and the advice on machinery of government comes from me through the Privy Council. After that, it is up to each minister to be answerable to Parliament and up to each deputy minister to be answerable for their responsibilities as the accounting officer, which I know you've had time to talk about at this committee.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wernick.

We'll now move to Mr. McCauley, please .

Mr. McCauley, you have seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Welcome, and thanks for joining us today.

The AG goes over in his report what appears to be a very disturbing situation in which it looks like the Department of Indigenous Services is skewing the graduation rate of indigenous students. Of course this data is being used to measure the success of the program, how much money should be spent, policy direction, etc.

I'd like to know what your opinion is on this and if we're taking the right corrective measures to address it. My understanding is that this is not a new complaint from the AG about the graduation rates and other metrics of success, so to speak, from investment in indigenous services.

[Michael Wernick]

I'll have to say I have no particular knowledge or expertise of the details of that methodology. I think the deputy minister of Indigenous Services would be the right person to ask. I could probably mess up an answer by venturing one.

I would take the opportunity to build on the last question as well. It's very important what measures you choose to chase. Measuring what gets measured is what people put their work and energy into. Successive governments of different stripes have worked at identifying the goals of different departments and agencies. Every spring you see the planning documents. They used to be called reports on plans and priorities; they're now called departmental plans, and there's an effort to set out specific objectives in specific areas. Every fall you see performance reports, which are an attempt to measure success as candidly as possible. I have no comment on what would be the right way to measure first nations education.

[Kelly McCauley, Conservative, Edmonton West, AB]

I understand that. It's not about the right way to measure it.

I'll quote for you: “...we found that the department did not assess relevant data it did collect to determine whether it was accurate and complete”. The AG is not saying we're setting the wrong goals; it appears they're purposely using the wrong information. It talks about not collecting the relevant data and not accessing the relevant data, and he goes on that we're poorly....

I agree with you that it's a failure of policy over the years in serving our indigenous people. It's very clear throughout the report. It's not a complimentary one on the bureaucracy serving indigenous people. It's very clear that they're not reporting correctly; they're not accessing the right data. It's almost like they're jigging the numbers to serve their own purposes.

[Michael Wernick]

I'm not sure what their purposes would be.

[Kelly McCauley, Conservative, Edmonton West, AB]

It would be the same purposes the Phoenix executives had when they hid information to perhaps protect their jobs or help their own promotions. I'm not really sure. I'm curious as to your opinion on the AG's comment about their accessing irrelevant data to come up with numbers that perhaps support their internal agenda and don't support indigenous students.

[Michael Wernick]

I'm not sure how to answer that question. Schools on reserve are run by the first nations with financial support from the Department of Indigenous Services. They have contribution agreements in which, in exchange for money from the department, they're asked to report on certain data. The data comes from the schools, and it flows through the department. This is a topic that has been discussed in previous Auditor General reports.

Madam Fraser complained about the reporting burden on first nations and the many reports they had to submit through funding agreements. She recommended statutory funding be the basis for funding first nations education. That's something I agree with, and that's something you as legislators can do.

[Kelly McCauley, Conservative, Edmonton West, AB]

Anyone reading the AG's report on services to our indigenous people would perhaps have a lack of trust in our system. Is this a concern that the public is going to have for other services and other numbers reported across other departments?

[Michael Wernick]

No.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you believe this is perhaps just an outlier, and every other...?

[Michael Wernick]

It it is an example of a specific issue in a specific department, and we have systems, including the Auditor General and other feedback loops of other officers of Parliament, parliamentary inquiry, and others that bring these issues to the surface. They are detected, they are corrected, and you move on. To generalize it beyond that is tricky territory.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you think they have been corrected over the years?

[Michael Wernick]

I think government constantly improves over the years. Otherwise, why would I be able to recite that set of statistics that says we have the most effective public service on the planet?

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm not doubting that we have an effective public service, but do you think these issues over the years have been addressed and fixed?

[Michael Wernick]

Many have and many have not, and one of the roles of the committee—