Public Accounts Committee on Oct. 29th, 2018

[The Chair, Conservative, Kevin Sorenson]

I call the meeting to order.

Good afternoon, colleagues, all those who are here with us in the gallery, and our witnesses. This is meeting 115 of the Standing Committee on Public Accounts on Monday, October 29, 2018.

We're here today in consideration of report 6, on employment training for indigenous people by Employment and Social Development Canada, in the 2018 spring reports of the Auditor General of Canada.

We're honoured to have with us, from the Office of the Auditor General, Mr. Michael Ferguson, Auditor General of Canada, and Mr. Glenn Wheeler, principal.

Welcome.

From the Department of Employment and Social Development, we have Mr. Graham Flack, deputy minister; Ms. Leslie MacLean, senior associate deputy minister and chief operating officer for Service Canada; and Ms. Rachel Wernick, senior assistant deputy minister, skills and employment branch.

Welcome today.

We apologize for our late coming. We had votes in the House. Thank you for your patience and for bearing with us. We look forward to your testimony.

We invite our Auditor General, Mr. Ferguson, to open.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to discuss our report on employment training for indigenous people.

The work on this audit was completed in December 2017, and we have not audited actions taken by Employment and Social Development Canada since then.

Many indigenous people face barriers to sustain employment, and have low wages. This audit examined how Employment and Social Development Canada managed two programs: the Aboriginal Skills and Employment Training Strategy and the Skills and Partnership Fund. The common goal of these two programs was to increase the number of indigenous people who had sustainable and meaningful employment. For both of these programs, the department worked with indigenous organizations across the country that provided training and employment support to first nations, Metis and Inuit clients.

Overall, we found that the department could not demonstrate that these programs increased the number of indigenous people getting jobs and staying employed.

Specifically, we found that the department did not define the performance indicators necessary to demonstrate whether the programs were meeting their objectives. For example, the department established an annual target for the number of clients employed after receiving services; however, it counted any employment obtained as a successful outcome, whether the work was short time, seasonal, part time or full time. This means that it didn't know how successful the programs were in helping clients find sustainable employment.

We also found that the department didn't do enough to ensure the completeness and accuracy of the data it obtained from indigenous organizations on the results their clients had achieved after receiving services. Notably, the department didn't know whether more than 20% of all clients who received services actually found a job or went back to school.

Furthermore, while the department used employment insurance data to verify whether clients were employed, it was able to do so for only about 10% of the program's clients.

We found that the department didn't analyze the program data it collected to identify trends, problems or good practices that could help indigenous organizations improve their services and results. For example, the department spent $130 million between 2010-11 and 2016-17 fiscal years on wage subsidies for employers who hired clients for a specific length of time. However, the department didn't track whether these clients continued working after the subsidy ended or whether they found other work.

We also found that the department allocated funding to indigenous organizations under the aboriginal skills and employment training strategy on the basis of 1996 population and socio-economic data that did not reflect the current needs of the population served.

In addition, the department didn't consider individual indigenous organizations' past success at helping clients find jobs as a means to redistribute funds to those that had demonstrated the capacity to achieve better results.

The department supported indigenous organizations by providing them with guidance and administrative direction, and it worked to reduce their administrative burden. However, it did not provide them with sufficient market information to help them determine which services they should provide to help clients prepare for and find available jobs.

In addition, the department did not consistently monitor indigenous organizations to ensure that they fulfilled their obligations under funding agreements, nor did it use the information from the monitoring it did to know how well the programs were working. This means that it missed the opportunity to explore ways to improve program delivery and to identify systemic issues requiring attention.

We made eight recommendations. Employment and Social Development Canada agreed with all of them and has prepared an action plan to address them.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Ferguson.

We'll now turn to Deputy Minister Flack for his presentation.

Welcome.

[Graham Flack, Deputy Minister, Department of Employment and Social Development]

Good afternoon, Mr. Chair.

I'd like to begin by thanking the members of the committee for inviting me here. I would like to take you through a quick update on the status of our work to implement the eight recommendations.

I'd like to acknowledge that we are gathered on traditional unceded Algonquin territory. This is particularly significant for these programs, the aboriginal skills and employment training strategy and the skills and partnership fund, which are delivered, as you know, in close collaboration with indigenous partners. As a result, we are co-developing the responses to the recommendations with indigenous peoples, which reflects our commitment to reconciliation and to advancing a renewed relationship based on respect, co-operation and partnership. We're convinced that this collaborative approach will allow our partners to better tailor the programs to the unique and diverse needs of their clients and their communities.

We are applying all of the lessons from the previous programs in the implementation of the recommendations as we shift to the newly announced indigenous skills and employment training program announced in the budget and also as we continue to make improvements to the SPF, the skills and partnership fund.

Recommendation 1 refers to the need for a performance management strategy with clearly defined indicators and targets. Since this spring, we've been engaging with our partners across this country on a distinctions basis to co-develop a new performance management strategy. The new framework focuses on measuring the program objectives to reduce the skills gap between indigenous and non-indigenous people by 50% and the employment gap by 25%. It includes strengthened indicators and enhanced reporting on post-program results.

We will also provide new tools and training to partner organizations to support their implementation of this more robust approach. We are on track to have that new co-developed performance measurement framework in place when the new program launches in April of 2019.

Recommendation 2 focuses on working in collaboration with agreement holders to identify, collect, confirm and analyze program data. In September, more than 150 people participated in a national data workshop to work through the collection of data and the management and analysis of that information to support results measurement.

Indicators of success are being co-developed to ensure that the outcomes of the program are meaningful to the individual communities and organizations that deliver the program. We are also on track to put the data and tools in place to support improved reporting on results and inform the design of interventions and services by April 1, 2019.

Recommendation 3 refers to funding allocation. As you know, budget 2018 provided additional investments of approximately $99.4 million per year. We have been working with indigenous organizations to develop an allocation approach for these new funds on the basis of distinctions-based funding streams. Allocations will consider factors such as current employment rates, unemployment gaps between indigenous and non-indigenous populations, and population density and growth. This new allocation model is on track to be implemented by the beginning of the new fiscal year.

Recommendation 4 speaks to the potential for overlap between programs and with the provinces and territories.

While both ASETS and the SPF have the objective of improving indigenous employment, we are confident they are complementary in design and approach. We will ensure the new ISET, like its predecessor ASETS, will also be complementary with the SPF.

With respect to provinces and territories, under the terms of the labour market transfer agreements, we have regular bilateral discussions on program complementarity. We have increased the emphasis on indigenous programming, with specific workshops dedicated to enhancing coordination of efforts. These have already been completed in western provinces, and will be ruled out in other provinces and territories in the coming months.

Recommendation 5 indicates the need to identify and provide labour market information that will support indigenous organizations in aligning with demand in their regions. This is one of the most challenging areas, given that existing tools are not able to provide high-quality, highly localized labour market information anywhere in the country—not just for indigenous communities, but in any community.

Highly localized labour market information has to be built from the ground up and tested. We have a survey pilot under way in four first nations communities, which will be expanded to 44 over three years. It will collect community-level data and create skills inventories that will better support labour market planning, training approaches and matching clients with available jobs. We will apply the lessons learned from this pilot across the service delivery network.

In the meantime, we've also created distinctions-based working groups to determine what labour market information will be most useful going forward. In addition, building on what we have to do by April 2019, we will link delivery organizations to the existing job bank data.

Recommendations 6 to 8 focus on reducing administrative burden and the monitoring of funding agreements. Further to extensive consultations with partners, we have already begun implementing changes that streamline financial and administrative reporting requirements. In addition, we will be implementing a new risk-based approach.

High-capacity organizations with a strong track record will see their administrative burden from reporting reduced. This will allow us to focus our efforts on organizations with a weaker track record and build their capacity to meet accountability requirements.

Again, thank you for the opportunity to appear before you today.

If you permit me a small personal note, while I have only been on the job for three weeks, I want to make it clear that I view my role as chief accounting officer not just as being accountable for the actions the department is taking now and will take in the future, but I am accountable to you for all actions it has taken in the past, and I will do my best to uphold that accountability to you for those past actions as well.

I would be happy to take your questions.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Flack.

I have Mr. Massé, but Mr. Arya is—

[Chandra Arya, Liberal, Nepean, ON]

In view of the remarks by the deputy minister, should we call a halt to this meeting and call the deputy minister who was involved with decision-making and the current deputy minister together?

[The Chair, Conservative, Kevin Sorenson]

I think what we need to do is...I'm going to go to Mr. Christopherson.

Certainly we want to hear these witnesses today, and we'll make a decision based on what we've heard today later, but I don't think I'm prepared to make a decision right now.

Go ahead, Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

I just want to add my strong support for the issue Mr. Arya has raised. We've talked about this issue before and we've said that maybe we need to change the policy. Our policy is that we don't normally call in previous deputies, but nothing's changing. I have great respect for what the deputy has said, but as a matter of policy, how many times have we had deputies say to us, “I wasn't there; I can't answer”?

If you can't answer, you can't give accountability. If there's no accountability, there's no democracy. When the time comes to look at this again, I think it's a very good idea. Maybe we should be looking at a policy change to deal with what the government just refuses to do, which is to put deputies in place and keep them there for a while.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

I am encouraged by hearing from Mr. Flack that he is prepared to answer those questions and is prepared to take the accountability of a deputy minister. That is very positive. We'll reserve our decision on whether to go further.

I appreciate, Mr. Arya, your coming forward with that suggestion, and Mr. Christopherson as well.

Mr. Massé, you have seven minutes.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Mr. Chair, I understand the comments made by my colleagues Mr. Arya and Mr. Christopherson. However, I appreciate that the deputy minister mentioned in his opening statement that even though he has only been in the position for three weeks, he wanted to make sure that he could answer our questions; he also said that he is responsible for questions arising from the Auditor General's report, and for activities in his department over the past years. I appreciate this.

I would also like to thank Mr. Ferguson for his report, which highlights certain concerns and provides the Department of Employment and Social Development with an opportunity to give us some clarifications, on its action plan in particular.

I'd like to start with a question for the department representatives. In his report, the Auditor General mentioned that the unemployment rate in indigenous communities was about 11%. That is, of course, an average, since the unemployment rate is much higher than that in some communities.

I will ask my first question. Can you remind us of what the department is doing to ensure that employment and training programs for indigenous communities will be more effective and better focused on the needs of those communities?

[Graham Flack]

Indeed, the new program we will put in place April 1 was developed in partnership with those communities, in order to guarantee better results and to help them reach their goals.

As you know, the seventh call to action published by the Truth and Reconciliation Commission of Canada in its 2012 report asked the federal government to eliminate gaps in education and employment between indigenous and non-indigenous communities. The joint strategy should reduce the 50% gap that currently exists in education, and the 25% gap in employment.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

As you pointed out in your statement, the Auditor General has criticized the data collection methodology and the department's performance indicators. Since you raised that point, please explain how you are going to collect better data to meet the performance requirements over the months and years to come.

[Graham Flack]

First, the final result should be an increase in employment among those groups throughout the country. However, how will we determine that that increase is truly the result of the programs?

Here is what we can do, and the situations where we expect it to be difficult to perform our verifications. Let's take the example of a person living on the Eskasoni reserve in Nova Scotia, who has registered in his community for a program offered by a partner organization funded by the department. If that person stays on the reserve and takes other training courses there, our partner organization will be able to follow that person's progress over the course of the year. However, if the individual leaves the reserve and goes to Halifax, for example, the partner organization will not necessarily be able to follow the person's journey.

Consequently, it is difficult for us to track things over a five-year-year period, which would be interesting. It would also be interesting, as the Auditor General suggested, to see the evolution of results over time.

As for those who leave their communities, it won't be easy to follow their individual journeys, except through data collected by the Canada Revenue Agency, CRA. In order to protect the confidentiality of that information, the CRA cannot give us their salary, which it would be interesting to know, in order to follow their progress over two, three or four years. By using the SIN, the social insurance number, we cannot know what happened to the Eskasoni former resident. However, the SIN allows us to link up the various data anonymously and determine the person's level of income after three or four years, once they have taken that type of training.

It is our global methodology to check overall results. Auditing a person's progress over five years is a real challenge. If people leave the community, as they often do, to go to Alberta, for instance, and take another training course in which the department is not involved, it is difficult to collect that information. We found a way of doing that in an aggregate way with individual but anonymized data, that is to say data we cannot access. Those anonymous results will be made available to the department as well as to the communities and researchers who might be interested.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Is this the type of solution developed following the consultations I believe you held? In your presentation you said that 150 people had taken part in a national workshop in September. Was that workshop organized only for the department's employees, or also for the communities?

[Graham Flack]

It was organized with community partners, and I think that Ms. Wernick was directly involved in this project. Its purpose was to obtain more detailed data about each community, so as to better understand their diverse needs, because the communities differ.

For instance, some of them will say that even though their ultimate goal is to have jobs, they prefer to focus their efforts on those who will soon be joining the labour market. For those communities, the employment rate would be the important figure. Other communities want to concentrate on individuals who are not ready to join the workplace. To those people they will provide literacy classes, for instance. And so those communities will use different criteria than those regarding employment, and will prefer intermediary tools to assess their progress.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Flack and Monsieur Massé.

We'll now move to Mr. Kelly for the first round.

Go ahead for seven minutes, please.

[Pat Kelly, Calgary Rocky Ridge, CPC]

Thank you.

Mr. Flack, thank you for coming and, I think, anticipating some of the frustration that happens at this committee when a deputy minister comes and says, “We accept the recommendations of the Auditor General, but since I wasn't there for the period that the Auditor General has covered, I can't explain what happened.”

You've expressed a willingness to be responsible for the department and to be accountable to Parliament and to Canadians for the failings or shortcomings of the department.

The floor is yours. Why did this department not collect data properly? Why did it not analyze the data it used, and why can the department not quantify and explain to Canadians the relative success or failure of its programs?

[Graham Flack]

Do you want me to focus exclusively on the data? Okay.

On the data area, there are areas for which the department had data available that it did not share back with communities when it did the analysis of the data. That should have been done and needs to be done, and it will be done.

There are areas in the data collection, though, as I've explained, where providing longitudinal data, such as how the individual performs over a period of five years.... As I explained, there are challenges, I understand, on how one captures that data, given a highly mobile population. The example I gave was that if you have an individual in an individual community on a reserve who takes a training course in that community, we can capture the data of how they did in the year and how they performed because it's within the year that they took the course. If they subsequently move to a larger community, the organization that's delivering the training doesn't have access to that individual anymore and can't measure it.

Those data things are challenging to collect longitudinally, and the way we are going to go about that, given that we can't directly access the Revenue Canada database to be able to tell you how that individual did after two years, three years and four years—

[Pat Kelly]

Was this not understood or known to be a shortcoming of the system at the time, or is this something that has only come to be appreciated in light of the Auditor General's report?

[Graham Flack]

You may wish to ask the Auditor General that. Inside the department, one of the reasons they were not collecting the longer-term data is that they doubted the calibre of that data to accurately reflect what was happening, given the inability of communities on the ground to do that.

The way we have attempted to address this, given that we can't access the CRA files individually because that would breach privacy, is by finding a way to link, through the SIN number, activities in employment and CRA filings, but it's done in an anonymous way. As the department, we will not be able to tell you how the individual did, but what we will be able to do with the anonymized data is take individuals who took this type of training and see what the results and income were for this type of thing—and that has taken time, yes.

[Pat Kelly]

I will ask Mr. Ferguson, then.

What explanation were you given for the department's failure to collect data and to make use of what data it did have?

[Michael Ferguson]

I'll ask Mr. Wheeler to respond to that.

[Glenn Wheeler, Principal, Office of the Auditor General]

Mr. Chair, in our audit work there are a couple of issues that are, I think, pertinent to your question. The first was the issue of the data that the department did collect. There wasn't a lot of work done to assess how reliable, accurate and complete that data was.

It's true that the department was able to use information on EI claimants to determine whether some folks continued to work, but EI data is located within a department. We didn't get into observations about links to information from other departments.

Maybe a related point is that there also exists a lot of other departmental data that could be used as a proxy for success. A good example would be the wage subsidy. The department has spent about $130 million on the wage subsidy since 2010. On average, that subsidy costs about $7,000.

What we found is that the department had a lot of information on the number of folks who received services using that subsidy. The program subsidized employers to take on people, but the department didn't then follow on and determine, based on that subsidy, whether the employer kept the worker on or if the worker was able to find additional work. There's a lot of data that exists that could be used to get a different aspect of—

[Pat Kelly]

Are you saying that data was not even collected?

[Glenn Wheeler]

It was collected, but it wasn't analyzed. The department had that data.