Public Accounts Committee on June 12th, 2018

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you, Mr. Chair.

I also want to acknowledge that it's National Public Service Week. Truly, I agree with the sentiment that's been shared around the table today that our public service does incredible work. Certainly we are here to look at ways in which we can improve and do better.

I've heard Mr. Wernick take issue with the Auditor General's chapter zero, specifically not agreeing with the “sweeping generalizations”, as he put it.

I read through chapter zero and tried to focus on what the Auditor General explained as the incomprehensible failure. He said that his work was able to determine what happened and how it happened, but his audit could not explain why it happened.

He speaks about the culture. Specifically he writes, “Organizational culture is often talked about, but it is difficult to define or measure, so it needs to be described.” He goes on to say, “I want to be clear that the current government did not create this culture—it inherited it—but it now has an opportunity to shape it for the better.”

Mr. Wernick, you spoke about the fact that there need to be profound structural reforms in the public service moving forward. Can you describe and explain what you mean by that?

[Michael Wernick]

First of all, let me take a little bit of issue with the way you framed the question. I don't want to get drawn into a partisan debate about “You broke the public service”—“No, you broke the public service.” My message to you is the public service is not broken. It's healthy, and it is learning and it is getting better. We learn the lessons and we move forward. I warned the Auditor General that his report could be weaponized and turned into partisan politics, and I think I've been proven right on that.

The issue that nobody really wants you to talk about is the underlying human resource system. We have 79 classification ladders. We have 650 distinct classification groups. We have thousands of special payrolls and allowances. It would be very challenging to build a pay system that can cope with all of that at a level of excellence. I think I would not be lured into spending a lot more time and energy on the forensics of what happened unless it's going to inform a way forward.

My advice to you is that we have to do some structural reform on the public service. There are too many layers. I joined the public service 37 years ago and I have climbed 15 layers to get to the job I have now. I'm very proud of that, but I'm dismayed there were 15 layers. There should have been fewer. I don't think we need five layers of executives. I don't think we need all the layers and complexity in the underlying HR system. If we're going to be nimble and fast and move people from place to place, from task to task, from work to work, we're going to have to have a 21st-century human resource system underneath it, but that's something the unions have a veto on because most of it is collective bargaining territory. It's going to be a big challenge to change that.

[Shaun Chen, Liberal, Scarborough North, ON]

If I hear you correctly, the complexity of the current HR system, the fact that there are multiple layers of bureaucracy, makes it not possible to implement a pay system that would be able to handle—

[Michael Wernick]

I wouldn't say “not possible”; it just makes it a lot more challenging. There are a lot of special pay rules and special allowances. People are getting promoted and have to be given back pay because we have a lot of narrow bands of classification. It's not a panacea and it's not the only issue: there are technology issues and vendor performance issues and oversight issues. There are lots of things that would contribute to a better pay system, and Ms. Raitt alluded to that.

If we go back with the same HR rules to the same vendor community, we're not going to get a high-performing pay system; we'll get an adequate one.

[Shaun Chen, Liberal, Scarborough North, ON]

That understanding was there, and I'm trying to tie it back because the Auditor General talks a lot about the need to change culture.

In recognition of what you just said, do you believe that the culture would have enabled the staff involved, the people who work in the system, the people who are part of these different layers of bureaucracy, to be able to articulate in an impactful way that such a pay system would be very challenging to implement, given the circumstances under which they operate?

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Chen.

Go ahead, Mr. Wernick.

[Michael Wernick]

I have said publicly many times that we are too bureaucratic and we need to be streamlined, simplified, and more agile. There are approaches to getting there that would make us more effective. The pace of change out there in the economy, in society, in the world is such that we just have to be able to move more quickly to offer solutions to governments and improve the kinds of services we deliver. That's an ongoing challenge.

I do take issue with a generalization of a cultural problem. The very same department—public works, public services—delivered the parliamentary precinct project. Over 10 years, there were 20 different construction projects. You're about to move to the West Block and other facilities. All of those projects were on budget, on time, and fully functional. It's the same ministers, the same deputy ministers, and the same department, so the generalization doesn't even hold up for the whole department. I certainly don't think it holds up for the entire public service.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wernick

We'll now move to Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

I'm glad you had an opportunity to respond. It's not meant to be a kangaroo court; it's meant to be an opportunity to exchange ideas and thoughts.

Since we're doing a little nitpicking back and forth, I would just say, in terms of that court decision, that no Auditor General has ever asked for cabinet confidences. They have no interest in what staff recommend to cabinet. It's not their business. It's not what they do. They don't care. The problem has been that information the Auditor General is entitled to, such as whether the staff have done the proper work to make sure the minister was informed to make the right kind of advice to cabinet, has been often swept under cabinet confidence by different governments that didn't want to release the information, so we get into these tug-of-wars. In terms of the raw information that Auditors General want, they are entitled to that, and they don't want the political stuff; they do everything they can to stay away from it.

Second, on chapter zero, it sounds as though I'm wrong. I stand corrected and I apologize. It also proves that Michael is no politician.

Let me also now move to a couple of comments to reaffirm what I've said earlier and my conclusion in terms of where I think we're going or not going. This is from the report:

As I said earlier, the bottom line is that the culture has to change. I don’t have a set of instructions to fix a broken government culture. But I know that the first step has to be to describe the current culture, which I have attempted to do, although I may not have captured everything. The second step is to admit that the culture problem is real and that it urgently needs to be fixed. How to fix it will be up to the government and the public service. The silver lining is that while there is a culture problem, the recent public service survey shows that the average public servant wants the culture to change, and wants to work in a culture that focuses on results for people.

Next, the reason I'm so disappointed in the direction that this discussion is taking today is that we have a perfect opportunity to do this in a climate where there is no weaponization or politicization of this document. The Auditor General has said that this has been going on for decades, that it is not the result of the Harper government such that we're going to go after them and demonize them some more, and it's not the result of the current government such that we're going to do everything we can to take down the current Prime Minister and replace him in the next election. The Auditor General is saying this has been going on for decades, and if we want to place blame, there's blame to go around for everybody. Coming from one of the parties that's never been in power, I tell you I'm not interested in blame. We do that in the House of Commons during question period and a whole lot of other places, but not here, colleagues.

I want to quote another couple of lines from the Auditor General's report, since again the Clerk has a different view from the Auditor General's.

The Auditor General says, “I am not assigning political blame, but my view is that both governments had opportunities to prevent the incomprehensible failure that Phoenix became.”

Let me just say what a great opportunity this is for us. Nobody's saying this is about partisan politics. It's about the culture. What a great opportunity. Nobody needs to feel defensive, colleagues.

He goes on to say, “A standard lessons-learned exercise won’t prevent future incomprehensible failures. Phoenix is a defining moment—a wake-up call—that goes well beyond lessons learned. It needs to lead to a deeper understanding and correction of the pervasive cultural problems at play.”

He continues: “What follows is my description of the culture in the federal government—a culture that has evolved with each passing decade. I want to be clear that the current government did not create this culture—it inherited it—but it now has an opportunity to shape it for the better.”

The last thing I want to say, Chair—a little indulgence, 30 seconds—is that we need mainstream and social media to jump on this and make it the issue that it is. I know the Phoenix thing gets all the headlines. It's nice and easy and it's the politics and it's sexy, and I get all of that, but this is what's underlying, what's causing Phoenix. If we don't see this as a focal point, it's going to go on and on, and basically this will get swept under the rug. That's where we are right now. Either this becomes an issue that we care about.... I think we need some outside pressure here from somebody in the media, from those who have access, who will focus on this and say, “Hey, this is a big deal. Please take this unique opportunity, where there's no political blame, to fix it.”

We're the ones who should be providing the leadership to do that.

Chair, thank you for your indulgence.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Just with respect to that, I'll take a little bit of the chair's prerogative here and say that one of the issues around having a meeting like this one is that in our offices all of a sudden we've been getting letters from people in the public service. This one was sent to me in advance of Mr. Wernick's appearance at PACP today: “I want to send you some thoughts on the culture of the public service that could have led to this Phoenix disaster.”

He says he worked at such-and-such a ministry and had been there for quite a few years. I won't give you the years or where he works.

He continues, “I had the pleasure of serving as an advisor to the deputy minister for one of those years. In my time in that office, I was profoundly disappointed to see how priorities were set—in short, the only concern to be satisfying the mandate letter commitments of the minister.”

He goes on and lists other things: “Having seen this up close and personal, I was entirely unsurprised by everything I read in the Auditor General's report. If MPs really want to tackle the broken culture of the public service, they could begin by demanding those responsible for the Phoenix mess to be held to account. As it stands, no one is ever held responsible for the screw-ups. People are simply shuffled into different positions.”

There is part of the culture. I think the Auditor General also mentioned that some of these deputy ministers are here for a year or two and then shuffled off to another department. I think that's part of what he says is the problem.

The Auditor General says, “In this culture, for a public servant, it is often better to do nothing than to do something that doesn't work out.”

The fear of risk: is that part of the culture? We're getting letters from public servants saying that this culture needs to be fixed.

Lisa...or Ms. Raitt; I'm sorry.

[Lisa Raitt, Conservative, Milton, ON]

You're allowed to call me Lisa, Mr. Chair. That's okay.

Picking up from what Mr. Christopherson and the chair said, if this were an isolated incident in which only the Auditor General was pointing to the culture issue, then I could accept the fact that it has no evidence, but we do have another individual, the Public Sector Integrity Commissioner, Mr. Joe Friday, who testified a year and a bit ago to the government operations committee. He said that “there cannot be an effective whistleblowing system without a culture shift—where speaking out about potential wrongdoing is an accepted part of public sector culture and where this can be supported and responded to in a climate free from fear of reprisal.”

I mean, he raised the alarm last year, Mr. Wernick, that Canadian bureaucrats will never routinely speak up about wrongdoing in the federal government until a deeply rooted culture of anxiety over whistle-blowing is eliminated. That's the beginning point. I don't know whether or not the Auditor General is actually out too far on a limb when he brings that up in the context of decision-making around Phoenix.

That said, I know that you've put mental health in your mandate letters for your deputies, and I think that's commendable. I think it's very good that people have to look after their workers within their own departments. I'm wondering whether or not there's room for you, going forward, to somehow deal with an issue that is apparent to other people who monitor the public sector but maybe is not as accepted at the higher levels that you work in.

[Michael Wernick]

Sorry, what issue is that? What was the question?

[Lisa Raitt, Conservative, Milton, ON]

What is your plan going forward for dealing with the issue of culture now that it's not only the Auditor General but also, previous to that, the Public Sector Integrity Commissioner who raised questions about culture? We are receiving commentary from individuals within the service. I have received commentary from individuals within the service. I mean, that's our role as MPs. That happens to us.

Do you have a plan to deal with it going forward—not admitting to the fact that there's a problem but admitting to the fact that there's discussion about a problem, and therefore that it should bring something in terms of moving forward?

[Michael Wernick]

Yes. I commend you to my report and all the speeches I've given on this topic. We definitely have to move on the culture. I would recommend the committee look at the incentive and disincentive structure within which people operate.

I go back to my opening remarks. If the diagnosis is wrong, you will prescribe remedies that could do great damage.

You alluded, Mr. Chair, to rapid turnover of deputy ministers. The facts speak otherwise. I have the evidence for that. The Auditor General left an impression that is factually incorrect, and you can correct that with evidence. The way to measure deputy ministers' tenure is how many years they were in the job from start to finish. If you look at the 33 deputy ministers whom I have some influence over, and the last three terms they completed—not the snapshot of the ones that are in now and haven't run out their clock—you see that's 99 deputy terms. Thirty-three ministers completed terms, and three.... Forty-nine of those were for more than three years, which is the benchmark this committee suggested in previous reports; 27 were in their jobs for more than four years; and 16 were in their jobs for more than five years. The median and the average are both greater than three years, so my view is we don't have a pervasive, generalized problem with deputy turnover.

They have a cumulative experience, on average, of about 20 years of experience as an executive in some form or another. I have worked hard to bring in other skill sets and talents. I have hired two provincial cabinet secretaries. We have brought in the chief of the defence staff as a deputy minister, and we have brought in people who have been private sector CEOs and have run think tanks. We are always trying to improve the leadership cadre that runs the public service.

Officers of Parliament have their role and have their opinion, but they are outside observers. The important thing for Canadians to understand is that all of these were designed to ensure Canada is well governed. All in all, Canada's public service is free of nepotism, free of corruption, and free of partisanship. There will be errors and exceptions to that, but they are detected, corrected, and remedied.

It's important in this day and age that Canadians have some confidence in their public institutions, and I am committed to making them better as we go along.

We have an annual survey now. The letters and the emails from constituents are an important feedback loop, and I understand that, but they are the people who are motivated to write to you, so we have tried to go to an annual comprehensive survey. The results of that survey, not all of which are flattering, are in my annual report. It's on the Internet.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wernick.

Go ahead, Mr. Arya, please.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

Mr. Chair, I have lived and worked in several countries. One thing I should say is we have one of the best public services in the world. I know there is no corruption. Public service employees here are very well qualified, and as Mr. Wernick mentioned, yes, sometimes mistakes do happen with 270,000 employees and 6,400 executives. Mistakes do happen, but if corrective action needs to be taken, it is taken.

Mr. Wernick, I have a question in terms of the decision-making. What decisions are made at what level? On Phoenix, IBM was appointed to develop and implement it. In 2012, IBM said Phoenix would cost $274 million to build and implement, but the Treasury Board had approved only $155 million in 2009. If anybody asks me, they can trace back the problems of Phoenix to one single major factor, which is this: IBM said it required $274 million, but the budget available was $155 million. Still the decision was made to go ahead with the same budget.

I would like to know at what level the decision was made. Was it at the Phoenix executive's level, or the associate deputy minister's level, or the deputy minister's level? At what level was the decision made to go with this low budget?

[Michael Wernick]

Budgets of departments and projects and initiatives are set by the Treasury Board, which is a committee of ministers. It's established under the Financial Administration Act. Any new resources flowing to a department or any major projects are approved by Treasury Board. It is the government's management board, so that's when the budget would have—

[Chandra Arya, Liberal, Nepean, ON]

I'm sorry. I have very limited time.

[Michael Wernick]

Then the officials are expected to work within that budget and to deliver with that, and, as I said earlier, they have no mechanism to ask for more resources if their minister will not go back to Treasury Board.

[Chandra Arya, Liberal, Nepean, ON]

Do you think that the deputy minister did not approach the minister, or that the deputy minister opposed the minister stating that this budget was equal to about 55% of the requirement? Should it have proceeded?

[Michael Wernick]

I don't know the specifics, but I think the context is not presented to you by the Auditor General. If I understand the report—and you can ask Mr. Ferguson about that—there was a window in the fall of 2012, or maybe 2013, when Treasury Board established the budget for the project in which it could have been resourced differently. That seems to be his suggestion, that somebody could have asked for more resources at the time. My point is that it was really a decision for the minister to approach Treasury Board ministers, and for Treasury Board ministers to make, obviously on the advice of the officials. I don't know specifically what the advice was, but I would remind you that at the end of March of 2012, the government delivered its deficit reduction action plan budget and announced its intention to lay off 19,500 public servants. It would have been a very brave minister who asked for new resources in the fall of 2012.

[Chandra Arya, Liberal, Nepean, ON]

Then it is possible that the minister in charge in 2012 declined to go to Treasury Board to ask for additional funding that was required to build and implement the Phoenix system in full, and that because of that one single wrong decision by the minister, we have this problem today?

[Michael Wernick]

I don't know what the considerations were at the time, and my job, as I said earlier, is to protect cabinet confidences. You can ask the ministers and the deputies at the time. My view on the pay system, as I said earlier, is that you will not find a single decision point or a single explanatory factor. It was a compounding of many issues. The resourcing issue seems to have been set in 2012, and all of the incentive structure—which, maybe, I'm not getting across—within which officials were expected to operate was, “This is your budget. Deliver the project.”

[Chandra Arya, Liberal, Nepean, ON]

You talked about multiple layers of oversight. The Auditor General specifically mentions oversight, I think, in three or four different places. To put it in a nutshell, he said that Phoenix was an incomprehensible failure of project management and oversight. You say there are multiple layers of oversight, whereas the Auditor General says there was no oversight in the building and implementation of Phoenix. Where do you think the difference is?

[Michael Wernick]

I think clearly there was not effective oversight. There was lots of oversight, and he sets that out in the report. There was a breakdown in the oversight, not a lack of oversight. I've tried to convey to you all the kinds of channels of feedback and oversight under which a department or a deputy head operates.