Opening Statement to the Standing Committee on Government Operations and Estimates

Bill C-25, The Public Service Modernization Act

20 March 2003

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for this opportunity to appear before the Committee to speak about Bill C-25, The Public Service Modernization Act. With me today are Maria Barrados, Assistant Auditor General, and Kathryn Elliott, Principal, Human Resources Management audit team, who have conducted much of our audit work on this topic.

We have stated that good government depends on the performance of public servants. How they are recruited, trained, managed, and treated is of great importance to an effective public service. The government's personnel costs represent a significant investment that has to be managed well.

Mr. Chairman, several significant legislative changes are being proposed to update and modernize a legislative framework that is over 30 years old. Our past audit work has drawn attention to the importance of modernizing legislation. My comments are drawn from our previous findings that are likely to be relevant to your review. The attached annex summarizes the key points raised in my office's recent reports.

In chapter 9 of our April 2000 report, we noted that the current human resources management regime was unduly complex and outdated. We found that flaws in the system prompt managers to work around what they view as an overwhelmingly cumbersome process. We found that an alternative system of short-term hiring has emerged as the main hiring practice.

Clearly, the roles, responsibilities and accountabilities of the many human resources management players needed to be clarified. We also identified the importance of a strong accountability system that includes improved oversight and reporting. In 2001 the Standing Committee on Public Accounts Committee agreed with our findings.

Bill C-25 proposes to clarify the roles and responsibilities of key stakeholders. Treasury Board's role would be significantly enhanced through changes to the Financial Administration Act and the Public Service Employment Act. Furthermore, additional powers would be transferred from the Public Service Commission to the Treasury Board.

The proposals in C-25 would change the staffing regime. The new Public Service Employment Act proposes a preamble that outlines key concepts and values for the public service. The changes considered would also clarify the definition of merit; establish a new staffing recourse process, as well as bring changes to the system governing political activities. The proposed changes to the staffing regime are consistent with our previous reports and our findings from our recruitment audits.

The Commission would refocus on its core mandate as it relates to the staffing system, and the protection of merit and non-partisanship. Its operational role would therefore be diminished.

Deputy heads would be clearly responsible in law for many aspects of human resources management. However, in areas such as staffing, the government would use a delegated model. The practical aspects of accountability for these new powers would have to be worked out.

I would like to comment on oversight and reporting about human resources management. We are pleased to see that the Treasury Board's expanded role would include reporting to Parliament on human resource management matters. The Public Service Commission would also report annually to Parliament on employee appointments, its audits and investigations, and the political activities of employees.

The Commission would continue to oversee staffing. However, given its operational role would be diminished, it is not clear whether it would continue to play a role in public service wide recruitment, and language training and testing.

Mr. Chairman, we see the proposals as an improvement to the existing system. We believe that if this legislation is passed, it will contribute to reforming human resources management. We are also pleased to see that the new Act calls for a legislative review after seven years.

Debate about what should and should not be included in the legislative framework is healthy. However, a fundamental question must be asked when considering the proposal: To what extent do the changes enhance human resources management?

The legislative proposal is only one component of the modernization of human resources practices. Other initiatives, which the government has outlined, will have to be put in place to ensure the regime is effective.

Given the significance of the proposed changes, the transition must be well managed and supported. For example, training must be provided and expectations clarified. Parliament must ensure that the change is supported through program reviews and the reallocation of funds which was recently announced. Sufficient resources must be provided if this initiative is to succeed.

Momentum must be maintained over the long-run. This will require leadership from senior public servants, as well as Parliament's commitment to oversee the implementation of modernization initiatives. My Office intends to follow this situation closely and report on the progress to Parliament. We hope that this Committee will continue to monitor progress in this area.

Mr. Chairman, we would be pleased to respond to the Committee's questions.

Annex

Key findings of Previous Reports of the Auditor General

Chapter 1 of the 1997 Report: Maintaining a Competent and Efficient Public Service

• Particular attention needs to be given to renewing and rejuvenating the public service work force and resolving long-standing human resource management issues.

Chapter 9 of the 2000 Report : Streamlining the Human Resource Management Regime: A Study of Changing Roles and Responsibilities

• The current framework governing human resource management in the "core" public service is unduly complex and outdated. Administrative systems are cumbersome, costly and outmoded. The framework is ill suited to an environment that demands flexibility and adaptability - an environment that faces significant challenges in human resource management and an increasingly competitive labour market.
• Public service staffing is a major source of frustration both to managers and to employees. The system is rule-bound and inefficient. Managers need to have more authority in staffing, but they also must be more clearly accountable for their decisions. The interests of employees must be respected, but there is a pressing need to modernize and streamline the processes for staffing and related recourse.
• Concerns about "fractured responsibility" for human resource management are long-standing. Responsibility and accountability for the changes needed to simplify, streamline and strengthen the current human resource management regime need to be clearly assigned and appropriately supported. This is particularly important in areas of divided responsibility.

Chapter 21 of the 2000 Report: Post-Secondary Recruitment Program of the Federal Public Service

Lack of Corporate Direction Hampers Recruitment Planning

• We continue to find a clear lack of co-ordination and direction in dealing with the government's recruitment priority partly because of unclear roles and responsibilities.

Chapters 2 and 3 of the 2001 Report: Recruiting for Canada's Future Public Service

• Our review of public service recruitment found that an alternative system of short-term hiring has emerged as the main hiring practice. We found that flaws in the system prompt managers to work around what they view as an overwhelmingly cumbersome process. Systemic problems are further complicated by weaknesses in human resource planning, workload and funding pressures, and the need for improved recruitment tools. These system- and practice-related problems have combined to create a culture of short-term hiring that will have significant long-term repercussions on the public service.
• A more global view of human resource management is needed to break the cycle of meeting recruitment needs one job at a time and to ensure that actions will be taken to meet present and emerging needs.

Reflections on a Decade of Serving Parliament--February 2001 (Final Report of Former Auditor General Denis Desautels)

• In my view, the efforts to streamline and modernize human resource management have been stymied by the tangle of roles and responsibilities of the institutions that manage human resources and by the legislative framework that applies.
• The complex legislative framework and authority structure that applies to core departments dates back to the late 1960s, when collective bargaining was introduced. It has spawned an administrative regime that is cumbersome, costly, and constraining, one that needs to be modernized and simplified. The staffing system, in particular, is widely viewed by public service managers as an unreasonable constraint, notwithstanding the Public Service Commission's repeated efforts over the last three decades to streamline it and adapt it to departments' needs. Efforts to reform staffing have been largely nullified by almost three decades of legal decisions on appeals of staffing actions. The net result is a protracted process that impedes managers from getting on with the business of government, while many employees continue to question the fairness of staffing in their workplace.
• To ensure that their organizations can operate effectively in today's environment of constant, rapid change and become learning organizations, deputy ministers must make a further significant shift in the way they manage. They must go well beyond responsibility for administering central systems to assume a pivotal, ongoing role in creating and maintaining a healthy workplace. They must ensure that their departments develop and maintain a work force with the competencies and capacity to meet the challenges ahead. If statutory responsibilities were more decentralized, I think these changes would occur naturally as deputy ministers became more self-reliant. Perhaps now is a good time to reflect on the lessons that the new, more independent agencies have learned.
• Real advances in human resource management will require systemic, legislative change, as well as changed attitudes, practices and organizational culture. All of these changes must be managed coherently. The government needs to move beyond the pattern that characterized the 1990s - setting up committees of senior officials to study the problem and develop plans, but failing to resolve the issues. The rotation of senior officials exacerbates the situation, as each new appointee begins by re-examining the issues. Given the wave of retirements anticipated at the most senior levels, the problem will not be easy to solve. But a solution must be found if human resource management is to keep up with the challenges and rapid pace of the new century.