Proceedings of the Standing Senate Committee on
National Finance

Issue 1 - Evidence - Meeting of October 27, 2004

OTTAWA, Wednesday, October 27, 2004

The Standing Senate Committee on National Finance met this day at 6:50 p.m. to examine the Main Estimates laid before Parliament for the fiscal year ending March 31, 2005.

Senator Donald H. Oliver ( Chairman ) in the chair.

[ English ]

The Chairman: Honourable senators, I call this first meeting of the new session of Parliament to order. This evening, we will examine the government's Main Estimates for the 2004-05 fiscal year.

Ms. Cathy Piccinin, the Clerk of the Committee, is unable to join us this evening because she suffered a death in the family and had to leave the province on Monday. However, her replacement is no stranger to many here: Ms. Line Gravel, the committee's clerk from the previous session, has agreed to sit in today. Thank you, Line, for agreeing to fill in; you always do such an admirable job and we appreciate it.

This committee was first created in May 1919 as the Committee on Finance. In 1968, it became the Committee on National Finance. The committee's field of interest is government spending, either directly through the estimates or indirectly through bills that provide borrowing authority or bear upon the spending proposals identified in the estimates. The committee also has a mandate to examine the report of the Auditor General. Traditionally, it is the custom of the committee in each parliamentary session to invite the President of the Treasury Board of Canada to discuss the government's estimates for the fiscal year. I am grateful that Minister Alcock has agreed to appear again this year. We had an opportunity to begin our review of the same estimates at two meetings, on March 9 and 10, 2004. Thus, this is Mr. Alcock's second appearance before our committee on this matter.

Mr. Alcock is accompanied by Mr. Mike Joyce and Laura Danagher. Our committee has had an informative meeting with you, minister and your officials; nonetheless, we are pleased to have you here this evening. Mr. Alcock, please proceed.

Hon. Reg B. Alcock, President of the Treasury Board and Minister responsible for the Canadian Wheat Board: Mr. Chairman, honourable senators, I am pleased to be with you this evening. I enjoyed my last appearance before your committee and found the debate quite interesting. At the risk of breaking with tradition, I would like to read a statement this time rather than just launch into the discussion.

This committee's field of interest is government spending, both directly through the estimates and indirectly through bills that provide borrowing authority or that involve spending proposals identified in the estimates. That is an extremely important responsibility. I was pleased to note in Monday's article in The Globe and Mail that you, Mr. Chairman, are committed to enhancing this committee's oversight of government spending. I welcome your increased scrutiny and look forward to working with you and the other members of this committee to improve public-sector management and to provide better value for taxpayers' dollars.

Since we last met, my cabinet colleague the Honourable John McCallum has assumed responsibility for the Expenditure Review Subcommittee of Treasury Board. This group continues to conduct extensive reviews of government programs and expenditures. It will make recommendations to Treasury Board on funding decisions and reallocations. That brings me to the purpose of this evening's session.

The Main Estimates support the government's request to Parliament for authority to spend public funds. In addition, the estimates identify the spending authorities requested by individual departments and agencies for the upcoming year with a description of their programs and objectives. The Main Estimates also provide information to Parliament about previously authorized adjustments to projected spending. As part of this process, in a typical year, the President of the Treasury Board introduces four bills: interim supply in March, to provide spending authority until Parliament approves full supply; full supply in June, for spending detailed in the Main Estimates; first supplementary supply in December, supported by the supplementary estimates; and second supplementary supply in March. This year, as you know, things are a bit different.

The 2004-05 Main Estimates were originally tabled on February 24, 2004. Parliament has already provided three quarters of the spending authority required for this fiscal year. These estimates are being retabled to obtain Parliament's approval of the rest of the government's expenditure plan. This action was a result of the general election, which precluded final parliamentary approval.

When I last appeared before this committee in March, Senator Lynch-Staunton questioned the government's intention to table a new set of estimates in a few months. On October 8, I retabled the Main Estimates in Parliament. This document is identical to the version tabled eight months earlier. We have retained the original Main Estimates for three chief reasons. First, the legislation to finalize the machinery of government changes was still not in place. Second, no new substantial adjustments were required because of this restructuring. All of the major changes announced in December 2003 and July 2004 have been captured. Third, the $1-billion reallocation targets were still being finalized. That is actually what the staff say, but there is a fourth reason, which they were too polite to say: I had my fingers rapped because of my enthusiasm. I thought if we were going to come back in a few months we could table an adjusted set to reflect some of the changes that occurred. However, members of the House objected to that because it fell outside the traditional procedures of moving estimates forward. Thus, we have come back as we should have and are now retabling exactly the same estimates. In a sense, much of the work has been done.

For the next steps in the process, we have set the following schedule: The first regular supplementary estimates will be tabled on November 4; final details regarding the budget's $1-billion reallocation exercise for 2004-05 will be reflected in the supplementary estimates; and supply bills in support of the Main and Supplementary Estimates will be introduced on December 9. The 2004-05 Main Estimates provide information on $186.1 billion in government expenditures, including $2.8 billion in non-budgetary expenditures for loans and investments and $183.3 billion in budgetary spending.

I will speak for a moment about what we are trying to achieve through the funds in the Main Estimates.

The Government of Canada remains committed to improving reporting to Parliament and to providing Canadians with more information on our performance. This is a particularly high priority for Treasury Board Secretariat, which has three key areas of activity for the future. The first is management performance to maintain the highest standards of public management by ensuring that management expectations are defined, measurable and achievable by departments and agencies. The second is expenditure management to ensure that resources are aligned to achieve government priorities. This priority will focus on ensuring that ministers have the opportunity to annually assess and decide the reallocation of existing spending from lower to higher priorities. Improved expenditure management will also enable parliamentary committees, like this one, to have better information so they can play a more active role in the estimates process to provide broader oversight of government spending and management. The third is financial management and control, whereby the Office of the Comptroller General seeks to ensure effective control, oversight and monitoring of public expenditures so that value for money is a core consideration in spending, expenditure review and management decisions.

During my appearance before this committee in March, Senator Stratton asked me about controllership. I replied then that a major change was required. Tonight, I am pleased to report that we have made significant progress on this front. On May 6, I announced the appointment of Charles-Antoine St-Jean as the new Comptroller General for Canada — and he is with us tonight.

Mr. St-Jean will provide overall leadership in ensuring that departments comply with Treasury Board policies for strong expenditure control and rigorous stewardship of public funds. The comptroller general will review and sign off on policy proposals to ensure that expenditure plans are sound. Re-establishing the Office of the Comptroller General is a key part of our effort to strengthen financial oversight across the federal government. One of Mr. St-Jean's most important responsibilities is to promote the stronger financial controls that are essential to ensure rigorous stewardship of public funds and value for money.

I am encouraged by the new initiatives Mr. St-Jean has chosen to undertake first. These include providing leadership to ensure that appropriate frameworks and policies and guidance on controls are available across the federal public service; promoting transparency and openness of financial activity, including systems for accounting, asset management and procurement; and building financial management and audit capacity to nurture and manage professional development of the financial management and internal audit communities, including establishing accreditation and certification standards and advising on the modules of the public service learning curriculum. We are also deploying better tools to improve the Main Estimates process.

For example, the new Expenditure Management Information System, EMIS, will integrate government-wide information and provide a common database for all departments, agencies and Treasury Board Secretariat. This will enable on-line sharing of expenditure management and performance information and production of the Annual Reference Level Update and Main Estimates for 2005-06. Members of this committee have also expressed a desire to make the supplementary estimates process less confusing. Again, I can report that we are responding to your expectations.

For example, changes in format are being introduced to increase transparency and to improve the consistent treatment of information across estimates documents. These enhancements will result in incremental spending items being displayed with explicit identification of where offsets are being used to provide parliamentary spending authority. This will include a full summary reflecting all the changes since the Main Estimates.

Better summary tables are also under development. For example, a new summary of changes to voted appropriations will highlight all adjustments being proposed by individual departments in their supplementary estimates. We will also provide a summary of supplementary estimates by standard object of expenditure. In addition, a summary of government-wide initiatives is provided at the front end of the document, providing more context around these horizontal requirements.

I could continue detailing other initiatives for improving the main and supplementary estimates process, but I want to leave sufficient time to answer your questions.

Before I conclude, let us me say a word or two about our overarching strategy in this area.

On October 8, the same day I retabled the Main Estimates, I also tabled the government's Report on Plans and Priorities. In that document, Treasury Board Secretariat committed to improve reports to Parliament, the key element for enhancing accountability, providing a whole-of-government perspective and better aligning departmental efforts to government priorities. More specifically, the secretariat is committed to reform of the estimates and reporting that focuses on results reporting at both the departmental and government-wide level, and response to parliamentarians' concerns related to transparency, clarity and timeliness, while emphasizing the use of technology to provide parliamentarians with options for access to greater detail on program spending. The result will be a stronger capacity to promote accountability, transparency and good governance, a more streamlined approach to reporting and better information to support Parliament in expenditure approval and oversight.

When I originally tabled this year's Main Estimates on February 24, I noted that one the top priorities of this government is value for money. That commitment has strengthened in the intervening months. More than ever, the Government of Canada is working on many fronts to increase accountability and to provide Parliament with the information it needs to oversee the spending of tax dollars. Canada is the only G7 country with a balanced budget. We worked hard to get there and we intend to stay there.

Successful change programs begin with results — clear, tangible, bottom-line results — and the earlier the results happen, the better. We have begun to show significant progress through a series of wide-ranging improvements across the whole of government. We have more to do, but I am pretty proud of our achievements to date. With that, Senator Oliver, I will take questions.

The Chairman: Thank you very much, Mr. Minister. It is clear that your plan of government reorganization that you announced to us earlier in the year has really taken off and that you have made a lot of progress in a lot of areas. However, I am sure that honourable senators will have a number of questions for you and will challenge you on many of the things you have said today.

Senator Downe: First, I would like to congratulate you, Mr. Chairman, on your new responsibilities as chair of this committee, and to congratulate you as well on the article in The Globe and Mail . It was good for you and the institution of the Senate. I also want to thank the former chair of this committee. I very much enjoyed his leadership when I was on this committee last year.

Minister, I note from your presentation that the Expenditure Review Subcommittee chaired by Minister McCallum will make recommendations to Treasury Board. Do they make recommendations to cabinet or just to Treasury Board?

Mr. Alcock: To Treasury Board. We will make some decisions on where we move from there. There will be a discussion at the operations committee of cabinet on some of the recommendations that are proposed, but it is a subcommittee of the Treasury Board.

Senator Downe: The bureaucrat who is heading up the Expenditure Review Subcommittee is located in PCO, not Treasury Board, is that correct?

Mr. Alcock: Yes.

Senator Downe: But they report through Treasury Board to cabinet?

Mr. Alcock: Yes, the expenditure review committee, you will recall in the previous iteration prior to the last election, was a separate cabinet committee. It was decided to recreate it as a subcommittee of Treasury Board.

Senator Downe: Does the reporting remain the same, through Treasury Board?

Mr. Alcock: It is a subcommittee of Treasury Board. It would not be a subcommittee of Treasury Board if it were reporting elsewhere.

The Chairman: Previously, it reported to Minister Coderre.

Mr. Alcock: No, he is speaking about the Expenditure Review Subcommittee. You are referring to the human resource management agency.

Senator Downe: The first step was done already, I see, where you have saved $1 billion in reallocation. Where did that money come from?

Mr. Alcock: Well, we are moving outside of these estimates and calling on my memory to deal with the detailing of that. We have actually provided a table detailing all that in the supplementary estimates that will be before you next week, but we worked hard. In the previous budget, they had announced the desire to reduce expenditure by $1 billion, but they started late in the fiscal year and were having difficulty as the year passed. The proportional cut had got higher. We worked hard to try to book the $1 billion right up front before the beginning of the fiscal year, and that will be all detailed for you.

Senator Downe: I will ask the officials.

Senator Stratton: Congratulations to you, chair, and thank you to Senator Murray for his work in the past.

Welcome, minister. It is good to see you again. What you are doing is really required and useful for the operations of Parliament. After you have completed this work, how are Canadians, the public, going to be able to measure? How will you present to the average Canadian yardsticks by which an individual or group of individuals or Canadians as a whole can measure whether what you are doing has or will have an impact, so that they can clearly see that what you have done is appropriate and transparent?

Mr. Alcock: Are you speaking, senator, about the work of the Expenditure Review Subcommittee and some of the changes that will be developed through that, or are you speaking more about the overall desire?

Senator Stratton: Firstly, I think the overall desire is really how we are going do that. From there, you obviously go down into other areas such as expenditure. Coupled with that question, the next question was on implementation. When you were here in March, you were going through these steps; there was a tremendous amount of work that had to be done. When you give a status report as to where each one is, you do not necessarily tell us of a time frame. When you say that you are deploying better tools to improve the main estimates process, is that in place? If not, when will it be in place? There are two other areas where what you are doing is, I think, needed and good. However, could you give us a status report as to how you are travelling down this road? Do you have milestones, have you achieved them and, if not, when are you estimating to achieve them?

Mr. Alcock: Let me take a first cut at this. In terms of some of those details, you may want to ask Mr. Joyce to join me. In the meantime, he can poke me if I get too far off track here.

The first point I made last time was that we had to build the information tools to allow us to be able to see more quickly, and to produce more transparently, the expenditure information of government. How do you begin to hold people to account for results if it is hard to figure out what has gone on? That is the Expenditure Management information System. That work is ongoing; there is a team that is working on it. It is a huge project, as you can imagine, trying to standardize information across government.

However, the Treasury Board has gone further than this — and I take no personal credit for this; the credit goes to the great staff at the Treasury Board — in trying to organize not just the expenditure management information, but the outcomes, the results information, and bring those two together. You will see some substantial improvements in the reporting that you will receive on the sups, which was produced in a relatively short period of time, given that we have only been at this awhile. Realistically, you will see them before you will see dramatic changes from the other; it is difficult to predict how long it will take. You hear the discussion here about using some of the EMIS results in the next ARLU — annual reference level update — to draw information from operations to update the ARLU.

Realistically, as we get further down the road in terms of linking results to expenditure levels within departments, I think we will begin to display some of those results in the near term.

There is another activity going on, though, which is trying to capture horizontal information. We are right in the middle of trying to figure it out. I do not think we are close to predicting a time when we will start to reflect that, though.

Mr. Mike Joyce, Assistant Secretary, Expenditure and Management Strategies Sector, Treasury Board Secretariat: On that particular issue, we are trying to improve the reporting on horizontal issues both in the supplementary estimates, which we have started —

Senator Stratton: For the sake of people who do not know what horizontal issues are, could you give a brief definition?

Mr. Alcock: It has been identified in many places, including by staff, that you may have more than one department that is holding responsibility for a particular policy objective. If you look at it down the lines of the various departments, you do not capture a view of what is happening across government. Programatic responses are being carried out across a few departments for work that is being done on climate change, and we are trying to develop the information tools that allow us to capture that as a whole-of-government action also. So you can evaluate it from both perspectives.

We are doing work right now on funding within INAC, into the Aboriginal community. You will recall comments from the Auditor General about the disconnect between all of the reporting requirements and the impact on relatively small communities where there were multiple departments asking for information.

There would be two examples.

Mr. Joyce: In terms of timelines, with respect to the EMIS, we are calling it the program activity architecture, which will be a more granular look at departments that the president described, our intent is that the next Main Estimates will be based on that.

Senator Stratton: That is good to hear.

The answer to the first question as to how Canadians will measure the effects of this and whether or not it is indeed working, will it only be done over time, in your view? Will there be something in the near future whereby you can say to Canadians, ``here is what we have planned, here is what we have carried out, and here are the results''?

Mr. Alcock: A good starting point, Senator Stratton, would be for me to convince you that it was happening.

I do not know that there is an artifact at this point that says we have arrived. However, step by step, report by report, clarifying the information, making information more accessible, making details more accessible, for those who spend time engaging in oversight, encouraging committees such as this and committees in the House to become more directly engaged, all goes to building a better understanding of the process and better confidence.

Senator Stratton: You referred to work being done by committees. This committee receives the Main Estimates and the sups. This has been talked about before within this committee and the Senate. Perhaps we should be giving the Main Estimates to Foreign Affairs, for example, to go through an analysis. Would you be a supporter of such an initiative? It would not necessarily be every committee taking responsibility for their particular area, but there may be instances where that would be appropriate. I believe that is something we should be doing. In that way, Foreign Affairs, say, could take the time to do a very detailed analysis, with their background in such an area, that would help everyone.

Mr. Alcock: That was the thinking behind the design of the committee changes that took place on the House side.

Mr. Alcock: It is not for me to advise the Senate on how to organize itself, but if it were to follow creative impulses, it might be a —

Senator Comeau: Minister, thank you for appearing before us. You have always been very cooperative with this committee. We appreciate, as well, the cooperation we have had from your secretariat people.

To follow up on Senator Stratton's comment regarding sending estimates to various committees, as is done in the House of Commons, I will bootleg on that by focusing on an area of interest to me, which is the fisheries. Under the transfer payments for fisheries, I see that in 2003-04 there was an estimate of $161 million for contributions to support increased Native participation in commercial fisheries — the Fisheries Access Program. In 2004-05, there is an estimate of something in the vicinity of $97 million.

For every pound of fish that is transferred and for every licence that is transferred through these sums, it is transferred from one group to another group. Basically, there is a winner and loser here. Whenever I have asked government officials whether any consideration is given to the communities that have been affected by these purchases, I get the answer that there has been no consideration — other than the licence holder who had the licence is fairly well rewarded; he or she takes off to Florida and the rest of the community is left without the resources it had previously and historically.

Has your department ever asked for an impact study of the actions over the past years of the purchase and buyouts of not only lobster licences but groundfish licences as well? Has any analysis been done on the impact of those communities that had historically depended on these resources?

Mr. Alcock: Before I go to the specific question, it seems to me, off the top without turning around, that that question would be better put to the Minister of Fisheries and Oceans in terms of the broader policy implications. It is not for me to deal with. I would not be near as expert as he is.

I would ask Mr. Joyce to tell us if Treasury Board has ever asked for an impact study.

Mr. Joyce: I am not aware that we have specifically asked for an impact study on that issue, but I would have to check with my colleague who is responsible for that area. I will undertake to do that and report back to the committee.

Senator Comeau: The numbers in question are $161 million last year and $97 million this year. This is not peanuts. The impact on coastal communities and rural communities can be significant. The licence holder may be fairly well rewarded through the process, but it leaves those communities in a bind when those resources are transferred out of the community.

We will leave that for now; I will keep plugging at this from other areas.

Mr. Alcock: Senator, you do in a sense reinforce the same question that Senator Stratton was asking. The change in the committee structure in the House came about at the time I first arrived, so I was not involved in the design of it. As I understood it, the intention was that as committees gained expertise in the legislative suites and the policies and operations of departments, they were in a better position to oversee the estimates and to make value judgements about the appropriateness of certain decisions and attach those decisions to legislation that they had seen, program manual reports, audits, that give a more holistic point of view.

In theory, that sounds wonderful, and it would be wonderful if it could work that way. The dilemma is that, in practice, the committees are so busy with a combination of legislation and studies that the actual financial oversight has always taken second seat to that. Some would argue that part of the reason is that some of the tools were diminished with the deeming of estimates passed and all of that. At the same time, there is value in bringing the programatic expertise to the financial aspect.

Senator Comeau: I did not get a proper response when I asked the question at the Standing Senate Committee on Fisheries, which is why I was asking it now, perhaps through a back door. Mr. Joyce, would you look into this?

Mr. Joyce: We will endeavour to get a response from the department.

Senator Comeau: I would like to get back to the Expenditure Review Committee, given that it is a committee that responds to you. I will not get into the $1-billion reallocation, but I would like to discuss the involvement of parliamentarians, which is one of the objectives of this review.

What will be the mechanics of parliamentarians getting into this review? At what point and how would we get involved?

Mr. Alcock: Two things are happening. It is important to differentiate between the two exercises, although they are captured in the same event.

I believe the last time I was here we talked about the possibility of achieving so many efficiencies by process changes, and you will have seen some reporting on changes in procurement. Those operational changes are part of the work being done, and there have been presentations by various ministers on some of those possibilities.

As we come to conclusions or decisions about which way we will go, because at this point it is a cabinet exercise, the decisions will be reported and enacted through the House. The House will have to deal with it if there are legislative changes.

My memory is not as good as some, perhaps, but I think I had indicated last time that we were trying to do get much of this work done now and come in post-Christmas with a package of legislation that would reflect some of these operational changes.

Senator Comeau: Apparently, every program, when reviewed, has to pass a certain number of tests.

Could you indicate whether the program, in order to stay in, has to pass all the tests? Would one test be the provision of services in two official languages?

Mr. Alcock: The answer to that final question is yes. They have to respect the policy and legislation of the Government of Canada, which would include that. They cannot be detrimental to that.

In that exercise, we are also asking ministers and deputies to come forward with their decisions within a certain target. It does not mean all those decisions will be accepted or that the targets that have been asked for are in excess of the amount of money being sought over the period of time.

One reason for doing that was to ask departments to ask themselves questions about the reallocation of their own resources internally. It is as much a management exercise to help people focus on the fact that — in other words, it is always easy to create something new but hard to take something out of business if it is no longer performing a purpose. The reallocation exercise is trying to incent that kind of a constant consideration.

Senator Comeau: A provision has since been reintroduced to get up to around $12 billion over five years, I believe, so that is a fairly new objective.

Mr. Alcock: Yes, the targets have gone up. However, these targets were discussed in the last budget speech. In that budget, we had a clear year, and then we had to hit $3 billion over four. The campaign restructured that into — it hit a $3-billion ``A'' base cut, but the cumulative effect was $12 billion over five.

The Chairman: Following up on Senator Comeau's question, we are a parliamentary committee, and he asked about what the role will be for parliamentarians. That was the essence of his series of questions.

In terms of the expenditure review, Minister McCallum is in charge of that. In terms of cabinet, where does your responsibility for expenditure control and review end, and where does his begin? How are you cooperating on that, and how would you define the role of Mr. McCallum?

Mr. Alcock: He is chairing the process in much the same way that I was chairing it when it was a separate cabinet committee. It is functionally much the same. He has a collection of ministers. I am ex officio on it, as is the Minister of Finance, as we are on most committees.

His task is to come forward with a series of recommendations on which of these options to accept. There is a great range of them. All departments have been asked to participate in this.

There are a number of creative ideas about how services and operations can be reorganized. There are and will be recommendations for elimination of programs or combining programs. We have been wide-ranging in this.

Mr. McCallum's committee will come forward with a report on what it thinks the government should do across this range. The Treasury Board will consider that report, and then we will decide how to implement it.

The Chairman: Would Treasury Board have the power of veto?

Mr. Alcock: Treasury Board has the authority and the tools to implement that.

The Chairman: I might get back to that.

[ Translation ]

Senator Ringuette: Allow me first of all to congratulate you, Senator Oliver, for having been elected chairman. I would particularly like to thank Senator Murray for the many years he spent as chairman at the helm and for the advice he gave me. Please have no doubt that I will not hesitate to call on his wisdom again.

Mr. Minister, you advocated the establishment of the new health agency in Winnipeg. I congratulate you for your commitment to regionalizing federal government departments and operations outside of the National Capital.

However, we must be realistic. It is impossible to set up federal activities in all communities and regions.

We have to see to it that there is equal access to employment in the federal public service. To do that we have to conceive and put in place methods and programs so that regions can be operational in the National Capital.

When Bill C-25 was passed last year we had obtain a commitment on the part of your predecessor and yourself to eliminate geographical barriers to employment in the public service. If memory serves, that commitment included close to $11 million for the implementation of that objective.

During the summer I went on the www.employment.gc.ca website on several occasions and I noted some slight improvements. There is now an icon and the note on it that says ``sans barrière géographique'' [without geographic barriers].

A year ago, a commitment was made, both verbal and financial. Some ten months before the health agency was opened in Winnipeg, the possibility of setting up in that city was examined and the quality of the expertise to be found there was invoked.

In spite of this commitment on your part, we are still faced with an unfair situation that affects all Canadians. Mr. Minister, we are still waiting for the necessary funds to be disbursed. When will the geographical barriers to the hiring of our young and not-so-young citizens be eliminated within the federal public service?

[ English ]

Mr. Alcock: Thank you, senator. I was wondering where you were going with the health agency at the beginning of this. I am quite prepared to talk about some of the fabulous facilities in your region.

Senator Ringuette: You knew where I was going.

Mr. Alcock: What a strength for Canada it will be.

Senator Ringuette: There are some commitments and then there are some other commitments.

Mr. Alcock: If I may, I have to restructure your time frames on that because it was not eight months. I believe the good work on that particular project began — help me, Senator Stratton — in 1988-99, under the leadership of Senator Stratton and others who had the foresight and wisdom to build the lab in the great city of Winnipeg.

Senator Stratton: Courtesy of the Honourable Jake Epp.

Mr. Alcock: That is right. I am merely building on a foundation established by others who are both older and wiser.

The point you raise, senator, and you have raised it many times and we have had this conversation at the committee, in the corridors, at social events and anywhere you run into me, is a good one. I do not dispute it. I have not disputed it from the beginning. The reasons people have the policies that have been in place for as long as they have are for the reasons I discussed in the past, but I can tell you that the Public Service Commission is focussed on this. They have a budget. They are looking at a tool. In fact, I was meeting with the chief commissioner just before I came to this meeting. Going back to the question of milestones, I think we will have something that we will both be proud of in the very near future.

Senator Ringuette: In the very near future?

Mr. Alcock: Very near future.

Senator Ringuette: I know I can be intense and persistent, but as another senator has said, I stick to my guns. This one is something that every Canadian, and especially our young people, will be pleased is happening. I take your word that it will happen and it will happen soon. I am not going to thank you yet. I am going to wait to do that, but thank you for listening.

Mr. Alcock: It is more than that. Frankly, there is a saying that decisions get made by people who show up. Things happen in communities because people care about them and lobby for them and push for them. You are contributing enormously to a solution to an issue that has bedevilled people for a long time. The difference between today and when this policy was put in place is that we now have the tools, the technologies, to begin to handle this issue.

I know that Madam Barrados at the Public Service Commission has been working hard on this, she takes it very seriously, but it does take some time to get a system of this magnitude up and running, and debugged and all of that, but I think we will both be satisfied with the result.

I would, however, flag something for the chair. It is not for me to advise on your agenda, but you might want to spend some time on hiring at one point, bring the commissioner in and go through her report.

The Chairman: She will be here next week.

Mr. Alcock: There are two very interesting discussions that we are into here. One has to do with the new legislation, which will be coming to the Senate I hope soon, on the identification of wrongdoing, and how that gets embedded in legislation. As you know, I have recommended that it go to the commission for a number of reasons. You will have to make an assessment of that.

There is another thing, which is the modernization of how we manage human resources, the new agency and how it is getting up and running, and the tools that we might use, and not just to make hiring available. If you look at the statistics in the commissioner's most recent report, the description of what happens overall is not very flattering description of what happens overall, frankly. We have to spend some time and energy trying to figure out how we make that system a little more relevant to Canadians. Enough said.

The Chairman: Minister, in your introductory remarks, you referred to a question that Senator Stratton asked you the last time about the Comptroller General of Canada. As you know, the Office of the Comptroller General was separate from Treasury Board Secretariat for a long time; it enjoyed greater distinction from other functions of the Treasury Board Secretariat. Today, you announced that in May you had appointed a new Comptroller General for Canada. You said in your remarks that he will provide overall leadership in ensuring that departments comply with Treasury Board policies for strong expenditure control and rigorous stewardship of public funds.

How much control will this new person have over the comptrollers in individual departments?

Mr. Alcock: In terms of the first part of your question, the status and relationship of the comptroller general to other portfolios within Treasury Board, if you look at Bill C-8 you will see a separate description of that. Perhaps Mr. St-Jean can come to the table and answer your question.

The Chairman: Welcome to the committee, and congratulations on your appointment.

I think you heard the question that I was putting to go the minister. In view of your new job, just how much control will you have over the comptrollers in each individual departments? How heavy a fist will you have over them and their expenditure controls?

[ Translation ]

Mr. Charles-Antoine St-Jean, Comptroller General of Canada: Monitoring will be carried out in various ways. Firstly, any staffing action, nomination or withdrawal of such will have to be carried out with my agreement. This gives me a certain leverage with the various departmental comptrollers. Departmental comptrollers will have to communicate with their deputy minister, as the Prime Minister mentioned in his announcement, and so I will have functional control over them.

Second, the new internal audit system will allow us to review the way in which departments conduct their internal audit operations. Discussions are being held with the president and his colleagues in order to define the role of the internal auditors in each department and the way in which they will be accountable to the Comptroller General of Canada. The objective is to set up a very uniform system of internal auditing. The auditor would be appointed with the approval of the Comptroller General and the change of internal auditor would be done with the agreement of the Comptroller General also. This also gives the Comptroller General an important overview role to play as regards the exercise of the internal audit function. A training and improvement program for audit procedure will also be brought in.

[ English ]

Mr. Alcock: We will be coming forward with a series of policy statements on internal audit shortly, as the second phase of what Mr. St-Jean is working on.

The Chairman: In terms of reporting, will you be doing quarterly reports or an annual report, and if so where will your annual report go? Will it go to the President of the Treasury Board? What, if anything, of your findings and research will go to the Auditor General of Canada, in terms of recommendations?

Mr. St-Jean: The annual report, the DPR and RPP, will be a vehicle in which I will be reporting the progress of the implementation of the comptrollership throughout the Government of Canada.

I am in regular contact with the Auditor General, to assess the risks and what issues need immediate attention. I am consulting her regularly. Formally, Parliament, the House and the parliamentarians through the annual RPP and PR processes would be the process.

[ Translation ]

Senator Murray: I must take advantage of Mr. St-Jean's presence to tell him that I had hope that the comptrollers in the various departments and agencies would report directly to the Comptroller General of Canada.

The Prime Minister decided otherwise. The comptrollers will report directly to the deputy minister in their department or agency, and in another flowchart they will report to you. There is a potential issue of conflict of loyalty involving these people. If things don't work out as planned, will you have the right to say so out loud before a committee such as this one?

Mr. St-Jean: I imagine that that will be the case; I should have the possibility of reporting at that point on the soundness of the control function in general. I will first of all have discussions with the minister and the secretary, to ensure that things do not reach that point.

Senator Murray: You are not denying that there could be a problem, potentially?

[ English ]

Mr. Alcock: Could I speak to this, senator? This was the subject of lengthy discussion internally, not just around the comptrollership, but around internal audit also, looking at some of the changes in the internal audit systems that have come about in large corporations. We may have talked about this last time, but we spent a significant amount of time on this subject.

The problem that is argued — and it is not just argued here with the deputy heads, it is also argued in the corporate sector — is that you need to hold someone to account. Who is that someone for the performance of the unit of the department of whatever?

At the same time, you do not want to give them unchallenged or complete control over everything. One solution on the audit side under Sarbanes-Oxley is to have internal audit report around the CEO to the audit committee of the board, for example. We had some of those discussions relative to this situation with deputy ministers.

Do we have the comptrollers report to the comptroller general directly, with no reporting relationship to the deputy minister, and do the same thing with internal audit?

In the end, I was persuaded that if we want to hold the deputy ministers to account — and this will be another discussion we may have as we get further down the road with the accountability report coming out — then we do not want to diffuse responsibility, but we want to ensure that there are independent links, independent of the deputy head. Hence, Mr. St-Jean is involved with the hiring, disciplining and evaluation of comptrollers.

Senator Murray: Is he also involved with assigning them to the different departments?

Mr. Alcock: Yes.

It is a balance between not wanting to take the people who are ultimately to be held to account out of some pretty important control.

Senator Murray: I do not want to go down this road too far, but you know there are some horror stories being played out at the Gomery commission now about what happened with the audit function in one of the government departments.

Mr. Alcock: There are horror stories being played out with Enron and Citibank. I could go down a longer list, actually.

Senator Murray: Minister, in previous expenditure review exercises, it was understood by all those participating, and sometimes the general public, that certain areas of government spending were to be exempt. Spending on Aboriginals or seniors or whatever would not be touched. Are there any such exemptions in the present exercise?

Mr. Alcock: We are focused on the operational spending of government, not program spending in the statutory sense. We are not looking at transfers to provinces or people. They are not on the table.

Senator Murray: Are statutory programs not on the table?

Mr. Alcock: That is right.

Senator Murray: That is 65 per cent of the budget.

Mr. Alcock: Let us be clear. The base that we are looking at is a base of between $42 billion and $45 billion. That is where we are looking to find the $3 billion, not out of the whole $183 billion.

Senator Murray: If I understand correctly, or if I understand the previous exercise correctly — the one that your predecessor, Mr. Massé, presided over — yours is rather more concentrated than the 1993-94 exercise; is that correct?

Mr. Alcock: I think the imperatives are different. That exercise was around getting a deficit under control and getting us into balance. We are in balance now. The imperatives for this change have more to do with sound management.

If we had a $50-billion surplus, I would still want to reform procurement because I think we are wasteful. Our processes are old and need to be modernized. There is a management process rationale for doing this, not simply a process of finding a few dollars type of thing.

Senator Murray: For the record, on another subject, I take it from the absence of any report on the matter, and also from the fact that you had nine months' supply when you called the election, that the government did not need and did not have to resort to Governor General's special warrants.

Mr. Alcock: Yes.

Senator Murray: With respect to Treasury Board vote 5, the contingency vote, have you been using that?

Mr. Alcock: I think we have used it a couple of times. Do you want details on that?

Senator Murray: If I could be assured that this will be coming up in the sups, I will wait?

Mr. Joyce: It will be in the sups next week.

Senator Murray: I can contain my impatience. You will hear more about this.

When will we put this problem of Treasury Board vote 5 to bed? This is an outstanding issue with your department, you know that. We have gone into it in great detail. We made some recommendations. Treasury Board Secretariat came back and we had an informal meeting about the changes to the guidelines — and perhaps to the wording of the vote as well. In any case, we had a good dialogue on this and the ball is very squarely in the court of either the secretariat or the ministers; I do not know which. We would like to see this issue resolved. This is a long-standing issue between your department and this committee.

Mr. Alcock: You have me at somewhat of a disadvantage, senator, in that I have not had the time to get up to speed on that. I have not taken the time to get up to speed on that. Rather that give you an off-the-cuff response, I would be willing to take the time to get myself up to speed on it and come back to the committee with a response, if you would like. I would be willing to do that.

Senator Murray: That would be fine.

The Chairman: That is excellent.

Senator Murray: My final question has to do with the subject that dare not speak its name — at least not in the House of Commons — and it has to do with the salaries of parliamentarians. I will not ask you for your opinion as to what MPs and senators are worth. This is a process question.

In the Thirty-seventh Parliament, we, at the initiative of the Chrétien government, decided that henceforth the matter of parliamentarians' salaries would be attached to a formula, and the formula, as it happens, was judges' salaries. A few months ago, the matter came up when there was a report recommending increases in judges' salaries. The government had a panic attack and ran away from the decision that Parliament took only last year.

Senator Cools: That was foisted on us.

Senator Murray: I do not want to debate the matter. My own view is that if the government has another formula to suggest then let them suggest it. If they think judges' salaries is not the appropriate formula, let them suggest an alternative, but do not let us get back to the bad old days when we had to deliberate and debate and decide on our own salaries.

My question in brief is this: What is the government doing about this matter? Are you considering another formula, or have you just put the whole question on ice?

Mr. Alcock: We cannot do that. I do not think there are many who would dispute your statement or your concern. We were caught in an unfortunate position, though, vis-à-vis the way this particular report was structured. It was 9.5 plus COLA in the first year, a little over 10 per cent in the first year, versus a labour environment — and I was one of those who led this change in the labour environment — in which I am negotiating in the 2 and 2.5 per cent range in the first year. Frankly, it was unsustainable, when we were trying to get a decent, equitable statement.

It is in part an accident of timing, but it is in part, I think, a concern about whether that was the most appropriate thing to which to attach. I cannot speak further on this because we are in the midst of consultations and discussions. In time, we will come forward with a position on it.

I do not think anybody argues with your concern about not letting this float, not getting us back into the endless discussions. We are in the process of looking for that benchmark to tie to that is independent of our decision making, one that is not influenced by our decision making and that is defensible in terms of the lives of all Canadians. It was felt that perhaps the process for the judges was not producing the results that people felt were consistent with what Canadians were receiving.

Senator Cools: Thank you, chairman. I, too, add my congratulations to you, and I would like to say that this is the first committee I have ever served on where there was another Black person. I am used to being the only one. Congratulations.

I was just struck, minister, about what you were saying in respect of the compensation for Members of Parliament. I wonder if you could comment on the question. When the bill came before us, a significant number of us questioned the phenomenon of tying members' salaries to those of judges. As a matter of fact, the whole question of how judges' salaries are decided has been a matter of substantial debate in the Senate. Some of us have questioned the existence of the permanence of the so-called judicial compensation commission and the exaggeration of the Judges Act to finance that. A lot of work has been done on that issue.

I was very distressed to learn of the government's change of heart — I am not going to go into the matter of quantum at all — by virtue of an announcement of one of the Prime Minister's Office staff. I have very serious problems with the fact that the government believed it could foist its way on Members of Parliament, coerce members and punish members for not agreeing with them. I am sure you know what happens in this place where the leadership yaps and zaps people off committees because they will not agree to certain things and then, after members are punished — are punished! — for questioning an initiative, the government, out of the blue, and says, ``We will dispense with this bill; we do not like it.''

When we talk about accountability, that does not square very well with me. I believe the current Prime Minister was Minister of Finance when that compensation bill passed. Much concern was raised at that time because the judicial section of the BNA Act reads that the salaries of the judges shall be fixed and provided by Parliament. We now have the opposite — they are fixing their own salaries and we in Parliament just provide them. In addition to fixing their own salaries, they are fixing members' salaries. There was a huge controversy in this place about that.

As a matter of fact, when that bill was before us, I recommended at the time to the Liberal side that it should be sent to the Standing Senate Committee on National Finance to study.

Could you comment on that? I found it improper. As I said, I am not on the question of quantum, but I found the process extremely objectionable.

Mr. Alcock: Senator, you would have to go to someone of far greater expertise in these matters than I. I am not encumbered by legal training of any sort. Far be it for me to comment on the administrative practices in the Senate.

I was there at the House for this debate. There was a genuine attempt to take the setting of our salaries out of our hands. One mechanism that existed in law had been tested in the court — again, I am not a lawyer — as I understand, because we had a discussion about what are our responsibilities relative to changing this report. The advice back was that it was justiciable, that it had been in the courts before and we had lost. That created the kind of problems that other people might want to consider. There are greater experts here. Let me go further.

The choice of it, though, was that it was something that was completely independent of the House for that reason. That is why I thought, ``There is a mechanism you can attach to.''

The problem is that it considers a different set of circumstances. There is much opinion on whether that is the most appropriate one. Certainly, in a world where we have a responsibility to conduct ourselves in a way that associates itself with the lives of people, in a world wherein private-sector settlements are settling for 2.6 and 2.8 — and I am pushing the public sector 2.2, 2.4, 2.5. To say that we will accept 10, for myself — and you do not need to look at the Prime Minister's staff; I am one of those who people are annoyed at for this because I said I have a duty to be fair to the 170,000 employees on whose behalf I am bargaining. I am driving them hard to accept an alignment with private- sector settlements. I cannot at the same time in all conscience take a 10 per cent increase myself.

Senator Cools: I understand, and I am very sympathetic to that. As I said to you before, I had opposed the bill. I am one of the few senators who opposed the bill. I took a lot of blows with regard to that.

Everything you are saying now was known when that bill was passed. I would submit to you, minister, that all these issues were raised. The government would have none of it. I tell you it was intent to get those bills and it forced those bills. Since we are talking about transparency and accountability, to my mind it is a huge violation of accountability, because if all the information was known two or three years ago when the bill was passed, how could you suddenly discover — suddenly — that you did not like the bill? I would submit you probably voted for it yourself.

Mr. Alcock: No, the information of the size of settlement and the structure certainly was not known.

Senator Cools: Anyway, there is a huge set of issues as well. The whole thing with the judges is a huge issue. Perhaps this committee should undertake a study, because the salaries of the judges were constructed in a certain way to avoid confidence votes on salaries of judges. There is a huge, long history and it is well known.

That was my supplementary question, chairman. I thank Senator Murray. As a matter of fact, I am delighted to be back as a member of this committee. I was taken off this committee precisely for disagreeing with the government on yet another one of those kinds of issues.

Minister, I am pleased to see you in this portfolio, and I know you have been working on these issues, which are very dear to you, and you have been working on them for a long time. I would say you are quickly building up a lot of experience and expertise in the field. I think most of us welcome the very proactive approaches that you seem to be taking.

My question to you flows from the exchange you had with Senator Stratton a few moments ago, wherein he was asking you, in effect, to opine on the phenomenon of sending the estimates to individual Senate committees. That is a practice, as I am sure you know, minister, that began in the House of Commons as a result of the 1968 so-called reforms.

What I thought I heard you say was that committees have no time or are too busy to really study the estimates. Was I correct on that?

Mr. St-Jean: That is certainly a factor in why the committees do not put the time in.

Senator Cools: To that, Senator Stratton opined back to you that that is the most important thing any member could do. He used the words ``control the public purse.'' This sent me into reflection, because some years ago I read a study on the average amount of time that ministers actually spend on their departments in a week. I was flabbergasted at the small number of hours, because when you are looking at supervising these departments, it seems to be a massive task, and massive tasks, to my mind, take massive amounts of time.

In view of Parliament exercising its proper constitutional duties and its proper constitutional roles, how can Parliament cure the current malaise? The current malaise obviously is insufficient study of the estimates or insufficient control of the public purse. I speak to you as a minister of the Crown, and I want you to tell me what the cure is, minister. The government controls the agenda. The government controls the membership of the committees. The government controls what the committees will study. Finally, the government controls the volume of legislation that it is sending to committees which is preventing members from giving the financial matters the proper consideration that they should have. Minister, in all the talk of reforms and changes that you have been putting forth, what can you recommend that could be a cure for the problems that you and Senator Stratton have outlined?

These are issues that trouble me greatly. Around this place, you blink and an act for $10 billion has been passed, $10 million here, $20 million there, $1 billion there. There is something very wrong in all of this. It would be nice if we could begin to put some of this right. Have you given this any thought?

Mr. Alcock: Yes. I will spend a minute or two on it. This is at the heart of many of things that drive my thinking on this. I do not want to repeat some of the argument I have made here in past, but it is a combination of two things. It is the tremendous increase in the size and complexity of government, coupled with a system or a management infrastructure that just got more and more outdated so that it became harder to discern what was going on. I do not think there was any decision not to be involved. In the lives of parliamentarians in both chambers, there is more than enough things to work on. You constantly have issues being driven at you. That is unfortunate. There is a great deal of expertise at this table and in the House of Commons around issues. If you can line up that expertise so people develop a deeper view of what is happening in a given department or given portfolio, I think those people can provide sound oversight to the department. In doing so, several things happen that are quite important.

I think the public debate about the public service in this country is dreadful. It is awful. We could spend a lot of time on why that is. I sort of build it around the arrival of television and the move of the public side of the political debate into that hot medium, which is never around details or complicated issues, but around conflict.

You referenced 1968-69 when they passed the motion to deem the estimates passed. If you track the percentage of time committees spent on estimates from that day forward, it fell dramatically. Bob Marleau, the former clerk of House, said that oversight of spending in government is 50 per cent of the constitutional responsibilities of House; yet, the House spends roughly 5 per cent of its time on it. Members just do not have the tools to do it. For that reason, the work that these gentlemen are doing to rebuild the information systems is important.

The same questions come up here. Why is it so difficult to answer some of the simple cost accounting and to figure out how money has moved? These are issues that have been driven by this committee for a long time. Frankly, I am proud of what has happened in the sups, and it is the people behind me who have done it. They have really responded to this, so that when you see those sups, you will actually be able to see the story. Is it where we need to be in the end? No, we probably have years of work yet to go, to get down to the kind of granularity that will ultimately allow you to easily answer questions.

The Chairman: You said tonight in your testimony that you will try to use more information technology to make it more available to people on the net and elsewhere. Perhaps at another time you can take us into more detail in some of the ways you intend to do that.

Mr. Alcock: I would love to come back and talk about this in detail. One thing that troubles me enormously is the degradation, if you like, of public work. We have all contributed to that. The public debate contributes to that. I think better informed committees, better informed members and better engaged members will be one part of turning that around so people can start talking about real issues in public management and not this fabricated universe that we live in most of the time.

Senator Cools: Minister, I appreciate your answer. I know that you have given these matters much consideration over a long time. I am also aware that you wanted to be President of the Treasury Board precisely to tackle some these issues. I would like to accept your invitation for a greater debate among us. You have offered to come back and you are submitting an openness with us. Maybe at some point, chairman, the minister could come back and we could have a meeting with him where we talk more about how members could begin to recapture the ability to control the public purse.

The Chairman: That was at the heart of many of Senator Comeau's questions as well.

Senator Cools: It was at the heart of all questions so far, including Senator Murray's.

The Chairman: Could I ask that you bring it a close, Senator Cools? We have other senators waiting to ask questions.

Senator Cools: I will close off. It is very important, minister, because when you leave, you will be replaced, as we study these estimates, by the Treasury Board staff, the officials. You know that when the system started with the estimates committee as a contrast to the Public Accounts Committee, 100 years ago, in the U.K., the Auditor General used to assist the Public Accounts Committee, and the treasury staff used to assist the estimates committee. That is no longer. It is no longer an assistance. They come here representing the government solely, and the whole objective is to get the estimates approved and the bills through. I take you at your word, minister, that you want to see an improvement in the status quo, and I would be happy to continue the dialogue.

Senator Mahovlich: You say you made the announcement of the appointment of the Comptroller General. Who made the appointment?

Mr. Alcock: It was an Order-in-Council appointment. It is a prime ministerial prerogative, like a deputy minister- level position. An internal search committee went out and looked for a qualified person, and then we had to use considerable persuasion and guile to get him to step into the job. We were able to do that.

Senator Mahovlich: When I was in business, the most difficult persons I had to deal with were comptrollers.

Mr. Alcock: I can vouch for that.

Senator Mahovlich: They slowed the process. Will this happen in government now?

Mr. Alcock: It is terrible. Actually, I think at the heart of that, senator, is a really important question, and I did talk about this the last time I was here. The challenge for the Treasury Board Secretariat and for Mr. St-Jean in his responsibilities is what is modern comptrollership? The challenge is how to insert oversight and controls mechanisms that will bring value, without creating another layer of tests to jump through, making it worse, not better? I would say we are already there. In fact, I would say we are far past that point. Some of the work we need to be doing, and some of the work I would love to see this committee help us with, is to start to go through some of the oversight suites and begin to take them apart a bit.

I certainly know that this Comptroller General understands that and is working hard to modernize these systems, including the information system, so perhaps we can have the benefits of clarity and transparency without the difficulty imposed by yet another layer of oversight.

Mr. St-Jean: Hopefully, I will not be the blocker you are referring to. It is related to the question of not adding another layer of controls and then managing by the lowest common denominator. It is really to institute a culture of challenging the expenditure at the departmental level. ``If you do not achieve the desired result, you do not get the money.'' It is creating that culture, which is key in the solution. That is what we are going to be working very hard to do.

Mr. Alcock: We have created some terrible problems — and when I say ``we,'' I mean the House and politicians — that politicians could help take apart. As a result, some of this straight process stuff is so cumbersome.

[ Translation ]

Senator Ferretti Barth: I have two questions for you. I saw in your report that CIDA was asking for $586.9 million more than it had requested in 2003 and 2004, and that a part of that sum would be set aside for the geographic program. Could you explain to me what this program consists of? It appears that part of those funds would be used for the reconstruction of Afghanistan and Irak.

[ English ]

Mr. Alcock: I am afraid I would have to get more detail from officials. We would have to get more detail from the ministry about the specifics of that request. Certainly, we would have had a hand in approving it, but I am not equipped to answer that question in the detail you might like. I will certainly undertake to get that to you.

The Chairman: Minister, could you arrange to send that to the clerk, who will circulate the answer?

Mr. Alcock: Absolutely. There was also a request from Senator Comeau. We will undertake to do that immediately.

[ Translation ]

Senator Ferretti Barth: The Department of Public Safety and Emergency Preparedness is also asking for a sum of $145 million which would be distributed to the provinces when natural catastrophes strike. You spoke of the provinces. Would the territories be included and have similar grants available to them?

[ English ]

Mr. Alcock: I will give you the same answer, senator. I will get you the details to that question as soon as possible.

Senator Downe: Minister, I want to follow up on my first question and the follow-up question from the chair. Correct me if I am wrong, but my understanding is that, prior to the election, this expenditure review was the exclusive responsibility of Treasury Board. After the election, Minister McCallum was put in charge of the Expenditure Review Subcommittee, and bureaucratic support for that committee was moved to the PCO. Your statement today is that he makes recommendations to you and, I understand, through you to cabinet. Is that correct?

Mr. Alcock: Prior to the election, the committee was not a Treasury Board function; it was a separate committee entirely of cabinet, chaired by myself, and Mr. McCallum was the vice-chair. We began, as you will recall, a series of reviews — there were horizontal management reviews and reviews of procurement, among other things. A commitment was made during the election to identify the $12 billion in savings that we were looking for, and it was decided to restructure ERC as a subcommittee of the Treasury Board, the argument being the Treasury Board is the one that has the tools to implement the changes that are arrived at.

However, there needs to be work with all departments driving the basket of decisions that have to be made, and this is a whole-of-government exercise. These will be cabinet decisions in the end, when looking at reducing programs and those kinds of things, so these things will be presented to cabinet at some point. The decision is not made because we do not have the decisions yet. We do not have the recommendations yet, so it is a little hard to predict exactly what path we will take to implement. However, it is reasonable to assume that, where there are major policy changes or program impacts, these things will be presented to cabinet for a decision and Treasury Board will implement. That is, in part, the reason for the decision to have support from PCO to support the process.

Senator Downe: It is a subcommittee of Treasury Board.

Mr. Alcock: It is officially a subcommittee of Treasury Board, but it is a hybrid.

Senator Downe: Minister McCallum is appearing before this committee as well, so I will ask him similar questions to those we have asked you.

The last question, chair, pertains to the impact program review had on the public service in the regions of Canada. I appreciate the trouble you have finding out information. The Treasury Board website indicates that, in 1995, and in 2004, there are thousands of fewer public servants in certain provinces. For example, Manitoba, I understand, has close to 4,000 fewer, according to the Treasury Board Web site. When I ask whether we counting the same employees in 1995 and 2004, I cannot quite seem to get the answer to that.

I am sure Treasury Board is mindful of the impact of program review on the intended result of reducing federal public servants across Canada in the regions, basically maintaining the numbers in Ottawa, particularly at the highest level, the EX and higher — 70 per cent are in the national capital region. Your views on that as a minister for the region, I assume, are supportive of the comments made earlier about public servants being located across the country .

Mr. Alcock: This could be a meeting. As you know, Senator Downe, I did a lot of work looking at the impact of those cuts prior to my becoming the President of the Treasury Board. I noted that one the effects of program review at that time, or those changes, was to concentrate more and more of the public service in the centre, into Ottawa. The cuts were disproportionately large in the regions, on the cutting phase, so that there were much greater cuts in the regions. There were still cuts in Ottawa, but they were smaller proportionately. Then when we built back, the building back was much faster and higher in the national capital region than in the regions. This has left us with some problems.

However, I would like to pose the problem slightly differently. I am heavily engaged in this right now. As the President of the Treasury Board, I also have a relationship with the federal councils, and I made a point of meetings with the councils in the various provinces. It is a wonderful experience. There are many people out there working hard in an environment where not only are the resources reduced but also the tools that draw attention to the work that public servants do in the regions are quite constrained. I think we suffer as a country when people do not have any sense of what work is being done by public servants in the regions. I know that this committee will be hearing from Mr. Donald Savoie, who has written extensively about the problem of the lack of a mechanism that drives a policy thrust that is based on a regional view, not that it should be the dominant view.

Part of the problem, I would argue, that enters into the view of the public service or the public management, or of the federal government, is sometimes just the clumsiness in driving a single policy across the entire country. Mr. Savoie argues persuasively that if there were an empowered policy response that tested some of those things against the realities of functions in a region, then you might achieve a level of modification that would make things more valuable in the regions and, hence, you would have a better reception.

This is a large and complicated issue. Suffice to say I am spending a great deal of time on it right now looking at ways that we might strengthen the regional councils. We will see how that plays out. I perceive it as a serious problem for the government.

The Chairman: Minister, Senator Downe's first question in the second round raised an issue that is of great interest to me. The last time you were here I asked you a number of questions about concentration of power when you do this reorganization and restructuring. I asked many questions about PCO and, at that time, you directed me to a book entitled Governing from the centre: The concentration of power in Canadian politics. Rather than get into it tonight, I am hoping that, at our next meeting, I will have the time to put a series of questions to you about whether this expenditure review process, which you have now established in this restructuring and reorganization, is not doing just that — putting a lot more power back into PCO. I would like to give you notice that I will be asking a number of questions on that next time. Senator Downe's question raised an important matter that speaks to how accountability is actually dealt with by government.

I give you notice of that, but I do not expect you to answer it now, unless you want to make a comment.

Mr. Alcock: I would like to comment. Am I correct in understanding that is the final question for tonight?

The Chairman: Yes, it is.

Mr. Alcock: Then I will say a couple of things in closing as well. On your specific question, I am pleased that you will have Mr. John McCallum come before the committee. You will find it very interesting because he has been working hard on this.

The thing that is lost, and it is almost a semantic, is expenditure review and program review. We are all in the model of what happened the last time. It achieved the goal of bringing our spending into balance, which was not an inconsequential success. We have profited from that enormously since then. However, it also created problems that we have to deal with at times. I would invite you to speak to Mr. McCallum. This reallocation exercise is, in many ways, a good budgeting exercise. We gave up much of that in program review. We stopped looking at annual expenditure cycles, budgeting processes and the things that allowed you and other parliamentarians to engage in the conversation on that. We lost some of that, so I would encourage you to have that discussion with an open mind and look for the value proposition that has to do with rebuilding some of the systems for management internally. Mr. McCallum is very much into that and it will be interesting to know his conclusions.

I have said this before, but I want to add my congratulations to you and my thanks to Senator Murray. I profited from the last discussion that we had at this committee. Someone, I forget who it was because I have misplaced the note I made, talked about thanking Treasury Board officials for coming forward and being so open to the committee. I should not tell too many tales out of school but they like coming here. This committee has high regard from officials who work hard to sort out these issues. They appreciate the interest and support they receive from this committee for their efforts. I want to add my voice to that.

You have much expertise around this table and in the Senate. I personally would like to call on that expertise, because this is only the beginning. I have an internal audit report to do. Some of the issues that Senator Murray raised about the reporting relationships and accountability are critical issues. I have a report coming on Crown governance — how we restructure the governance structures in the Crown. Those are huge issues in this day and age.

Senator Murray: — and their accountability to Parliament.

Mr. Alcock: Yes, absolutely.

The Chairman: I asked a series of questions on the Crowns the last time you were here.

Mr. Alcock: Absolutely. The issue of accountability has been around for a couple of hundred years. How should we reframe that? The relationships between ministers, politicians and public servants are all issues on which I will come forward, as well as a few structural issues. I am prepared to come here as often as you will have me, but I would encourage this committee, if it would like to engage on any of these studies, to indicate so. I would be quite interested in your opinions on some these issues.

A minority government is a true advantage right now. I served two years in a minority house. I was the opposition house leader in a minority government in 1988-90 in Manitoba. The wonderful magic of the minority is that everyone is responsible. At the end of the day, with respect to the decisions that are made, no party can hide from the other. We are all accountable. That will have a wonderful effect on the quality of the decisions.

We are starting with Bill C-11 on wrongdoing, and I have a suite of proposed legislation that I am quite anxious to put through that process. I think Members of Parliament can walk and chew gum. They are smart, and when they get down to work on it they will demonstrate they can make high-quality public decisions. This committee has already demonstrated that. I welcome your engagement; I am quite pleased about this.

I look forward to coming back on the supplementary estimates because we can show you that we do take what you say seriously.

The Chairman: We will take up your challenge, and I will discuss it with the steering committee. We thank you on behalf of all senators here tonight. We appreciate your candour, your thoughtfulness and your time. Please be assured that the committee looks forward to working with you and some of the important changes you are trying to effect, which ultimately will give us much more accountability — and all Canadians would like to see that.

The committee adjourned.