CONTENTS
Tuesday 16 April 1996
Estimates review process
Erik Peters, Provincial Auditor
Jim McCarter, executive director, finance, public accounts and general government audit portfolio
STANDING COMMITTEE ON ESTIMATES
Chair / Président: Curling, Alvin (Scarborough North / -Nord L)
Vice-Chair / Vice-Président: Cordiano, Joseph (Lawrence L)
Barrett, Toby (Norfolk PC)
Bisson, Gilles (Cochrane South / -Sud ND)
*Brown, Jim (Scarborough West / -Ouest PC)
Brown, Michael A. (Algoma-Manitoulin L)
*Cleary, John C. (Cornwall L)
*Clement, Tony (Brampton South / -Sud PC)
*Cordiano, Joseph (Lawrence L)
*Curling, Alvin (Scarborough North / -Nord L)
Kells, Morley (Etobicoke-Lakeshore PC)
*Martin, Tony (Sault Ste Marie ND)
*Rollins, E.J. Douglas (Quinte PC)
Ross, Lillian (Hamilton West / -Ouest PC)
*Sheehan, Frank (Lincoln PC)
*Wettlaufer, Wayne (Kitchener PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Lalonde, Jean-Marc (Prescott and Russell / Prescott et Russell L) for Mr Michael Brown
Also taking part / Autre participants et participantes:
John Hastings (Etobicoke-Rexdale PC)
Clerk pro tem / Greffièr par intérim: Todd Decker
Staff / Personnel: Steve Poelking, research officer, Legislative Research Service
The committee met at 1534 in committee room 2.
ESTIMATES REVIEW PROCESS
The Acting Chair (Mr John Cleary): Ladies and gentlemen, we'll call this to order. I guess our Chairman is still on television. This meeting was called today to discuss the estimates process, selected by the Provincial Auditor. We have the Provincial Auditor with us today to discuss and give us some guidance on what we should be looking for. We'll turn this over to him now.
Mr Erik Peters: Thank you, Chair. Let me begin by introducing the two people who are with me, because they had such an instrumental impact; they were the authors of the chapter of my report that we're about to discuss: Jim McCarter, executive director in my office, and Bill Pelow, who is the manager on this assignment.
I'd like to thank you very much for the opportunity to discuss with you chapter 2.02 of my 1995 annual report, dealing with the legislative estimates review process.
The primary focus of our review was to determine whether 1989 revisions to the estimates review process have resulted in the anticipated improvement in the Legislature's ability to scrutinize and evaluate the ministries' proposed spending plans.
Our review included interviews with nine members of provincial Parliament, three from each political party, who have served on the standing committee on estimates over the past few years. We also conducted research into how the legislative estimates review process works and what initiatives were taking place in some of the large Canadian jurisdictions, as well as in Australia, New Zealand and the United Kingdom.
In 1987, we asked a number of MPPs for their opinion on the effectiveness of the estimates review process. Based on their feedback, we reported in our 1987 annual report that the estimates review process was "maligned and ineffective." We were not alone in our criticism of the process, as the standing committee on public accounts and the procedural affairs committee had previously expressed similar concerns. We pointed out the urgent need for reform of the estimates review process.
In 1988, the public accounts committee reviewed this section of our report and issued a special report on the estimates process. In 1989, the standing orders relating to the estimates review process were amended by the Legislature to establish the standing committee on estimates. The chart handed out to you provides a synopsis of the more significant recommendations made in our 1987 annual report and in the standing committee on public accounts 1988 special report, which is the second column.
The chart also illustrates which recommendations were implemented when the standing orders were changed. As you can see if you go down the right-hand side, the first recommendation was partially implemented, the second one was implemented, the third one was not specifically addressed and the other ones seem to be in the planning stage or not addressed.
This chart is taken from chapter 2.02 of my 1995 annual report, which I have provided to you in its entirety and which I would like to briefly walk through with you now. If you wouldn't mind taking the other handout, the beginning looks like this. I'll just flip quickly through the pages. It is essentially the entire chapter, but rather than going through it in detail, I thought I'd just highlight some of the things we had noted in our work.
The first point I would like to highlight is on page 23, towards the bottom. I'll just go through them and I'll tell you where it is as we go along. We point out:
"As one MPP stated in responding to our question, `How effective is the estimates review process in holding the government accountable for its spending decisions?'" -- he answered: "`We do not serve the public very well in assessing whether the ministry is planning to spend or has spent the money wisely by the end of the day. This disturbs me. In theory, we are supposed to be looking after the finances of the province. However, by the end of the day we are no more enlightened.'" Quite an indictment.
On page 25 you'll find this chart that I mentioned to you before, which we just enlarged on a single page.
On page 26 we show a little bit of a table. The first table is the interviewed MPPs' assessment of effectiveness of the estimates review process. You can see that we are peaking somewhat below the 3 mark, which would have been the threshold of satisfactory. Six out of nine members of Parliament rated it either not effective at all or a little bit better than not effective, but certainly not on the very effective side.
The second chart is the interviewed members' perceptions of the committee's influence. It's a little bit better. We asked essentially four critical questions. They felt they were almost there in terms of influencing government actions; holding ministers/ministries to account was a little bit better; even better on enhancing informed decision-making and putting information in the public domain, but in all cases were again below the 3 mark in total.
On page 27 there are two important points that I thought I'd raise with you because ultimately I will make two brief recommendations to you. The first one will deal with timing, and that is of major concern. In the middle of the page we refer to:
"The following comments indicate the nature of the concerns expressed by the MPPs on this particular issue" -- being the timing issue.
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One said, "`Because of timing, estimates review is a useless exercise for influencing government expenditure decisions.'"
Another said, "`The fact that the estimates are considered two thirds of the way through the year makes the process much less meaningful.'"
The third view was, "`They shouldn't even be called "the estimates" as they deal with last year's budget.'"
At the bottom of the page you'll see a little table in which we compared the federal government and some of the provinces in terms of when they approved the estimates in the Legislature. That's normally done by way of the Supply Act. You'll notice that Ontario, which is highlighted, is by far the latest. In other words, by December 8, 1994, the year was almost nine months gone by the time Ontario got around to approving the supply. I guess the recordkeeper is Alberta, which did it by about April 18 in that year.
Another question we talked about was the time spent by the committee on estimates. In the top paragraph on page 28 there is some discussion: "...the standing orders established a maximum of 90 hours for review of ministry estimates by" your committee. "However, we noted the actual hours" were 41 in 1994 and 42 in 1993.
Below in the bullets, if you want to refer to them, but for the sake of brevity I will not go into details, are the three primary reasons which were given by the members as to why they did not spend the full 90 hours on estimates. All of them reflect to a certain amount the frustration of the members with the process.
I'd like to move on, if I may, to page 29, where we deal with the satisfaction of members with the estimates information. We have a little chart, and this one looks a little bit better. Generally, for the work they were doing the members felt that they were receiving the information they required, either through the estimates documents that were provided or in answer to the questions they were raising. The highest is the satisfaction with the minister's and the ministries' oral responses, at 3.6. It's probably one of the highest scores we found in all our statistics when we interviewed. Most members were generally satisfied with the estimates briefing books and responses to their questions. I deal with the information a little bit later because that is the information you'll get, but as the members have expressed previously, they are really dealing with outdated information at that time. The year is almost totally gone by the time they do it.
We did look particularly at, do other jurisdictions look especially for performance-related information? On page 30 you'll see a little table which talks about performance-related information required in other jurisdictions. You will note that although they are definitely very recent developments, there is a definite move in that direction under way. The federal government put out a guide in 1994. Jim, if I may turn to you for a moment, I think you said you had some word this morning.
Mr Jim McCarter: Yes. In the fall of 1995 they also put out an annual report dealing with performance indicators, so they're doing more in that area as well.
Mr Peters: Thanks, Jim. Alberta, which is the next one we are dealing with: "In February 1995, the government stated that `In June 1995, government will release the first comprehensive report card on the performance of government,'" and it did indeed do so. Not only did they produce this document, they also asked the Auditor General of Alberta, as a point of interest, to give an opinion on it, although it's a rather limited opinion by its very nature and merely says that the statistical and other sources that were used to prepare the information were found to be reliable or were found to be -- the report reflected what those organizations had said, like Stats Canada etc -- rather interesting for us because in many of the statistics Ontario is featured and we came out rather well.
In fact in some areas Ontario is featured as one of the target provinces where they'd like to get to. For example, and I'm quoting off the top of my head, I believe the number of public servants per 100,000 population in Ontario is by far the lowest in the country; other provinces are significantly higher. That's just one small example, but there are other statistics in there on literacy etc.
New Zealand, the United Kingdom, all of them are looking for performance information and are taking various initiatives in that direction.
As far as the information is concerned, I'd like to move on to page 31 and highlight for you the paragraph just above the heading "More Future-Oriented Information." We discussed with the members the role played by the legislative research service in assisting the public accounts committee with several MPPs who are particularly interested in this issue; in other words, what support they were getting and what support you were getting.
One of the interesting facts that came out of this discussion is that the public accounts committee -- and some of you are members on it; I see Mr Hastings, for example -- very often before they go into an open meeting have an in camera meeting in which I brief them, essentially, on the chapter they are about to discuss, and they raise various questions in camera with me to develop their own questions and what they would like to ask the witnesses who will appear before that committee.
The members of the public accounts committee individually have indicated to me that they have found this to be a very useful process. One of the thoughts we had is that your committee might want to give consideration to a similar process, I'm not saying with me, but with your researcher; in other words, if you have a particular minister or ministry appearing before you, you have an in camera briefing by the research officer to walk you through the material and deal with it. That's just one point for consideration in dealing with it.
As far as information is concerned, we are particularly concerned that, as an estimates committee, you should really be dealing with -- I shouldn't say that as a "should" from my office, but the members were concerned that they should really be dealing with future-oriented information, not looking back at what's happening now, but being able to evaluate information as to what the plans are and what is out.
To support this argument, we found that in other jurisdictions, Canada, Alberta, Australia, New Zealand and the United Kingdom, all of them have moved into information that is future oriented, that addresses a few more years out, one year or three years out from the time where you are, from the information that you're getting, in comparison. You're largely getting the current year's estimates, and they are now viewing a long-term strategy or three-year out.
Of interest is a quote at the bottom which comes from the federal level, where their estimates committee said:
"The committee is convinced that a goodly number of members would take an interest in the estimates and devote time to their examination if they felt their views would carry some weight. Approval of expenditure is, after all, a fundamental duty of elected representatives. The committee believes, however, that the situation will not change much, except possibly in a minority Parliament, unless governments decide that they are ready to accept advice from members on their estimates."
They proceed on the next page to say, "An approach which the committee favours would have ministers and senior officials discuss in committee in the early autumn proposed expenditures for the following year so as to make it possible for committees to offer views as to spending priorities that the government could take into account in preparing its final estimates."
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As far as the provincial members of Parliament were concerned, in the middle of that page we refer to the specific question that we asked the members. We asked them for their reaction to the more future-oriented approach recommended by the federal liaison committee:
"While all nine MPPs agreed there was a need to have a fresh look at the process, only five MPPs fully supported the committee's approach; one MPP offered qualified support; and the remaining three, while supporting the recommendation in principle, questioned whether it was workable given the current political environment.
"The rationale of those MPPs who supported a more future-oriented review of estimated expenditures was generally along the lines of the following statements" which two of the members were making.
One said: "The estimates committee is the watchdog of government spending. At times some programs are working very well, while others are just surviving. The estimates committee should help the minister to identify programs to save and program problem areas that warrant cuts."
The other said: "The review of the estimates should be done in advance of the fiscal year to which they apply. Currently, the review of the estimates is a complete whitewash process."
Very much of an indictment to end this with, but I would like to say in summary -- with this I'm stopping to look at this exhibit, although you may have questions on it and I'll be happy to field those -- that based on our 1995 work and discussions with the members of Parliament the following problems need to be addressed if the estimates review process is to be made more effective:
(1) The estimates are being reviewed after much of the requested funding has already been spent and members believe they have no real input into the proposed spending decisions.
(2) Although ministry briefing materials provided in support of the estimates have improved since 1989, additional information focusing on program results and service delivery levels needs to be provided.
(3) Members from all three parties expressed concerns that party politics play too great a role in the review process.
We believe the estimates review process can and should be improved to assist ministers and the government in their decision-making. Key improvements need to be made in two interrelated elements of the review process:
(1) The legislative review should be timed in such a way that the results of the members' deliberations can influence the government's decision-making.
(2) Those ministries selected for review should provide future-oriented business plans, better information on performance actually achieved and expected, and how legislative objectives will be met.
These proposed improvements would, in essence, direct committee deliberations towards providing the respective ministers with specific pre-budget input on such issues as the relative effectiveness of ministry programs, concerns over program results given the costs incurred, and possible service delivery modifications or alternatives. I stress "pre-budget." While the final decisions would still rest with the ministers and cabinet, committee members would have a very real opportunity to influence government spending proposals. We believe this would encourage more objective, thorough and collegial review of proposed government spending.
The recent report of the Ontario Financial Review Commission, which I served as a special adviser, contained the following recommendations which I would like to bring to your attention and have provided as a handout, and that is the third handout that you have. It's just a single page. I should alert you that I've only summarized the recommendations. There's also a brief discussion of these recommendations. Let's take a quick look at these three recommendations.
The first is, "That the requirement for business plans, as outlined in this report, at the government, ministry and agency level, be legislated." The source for this initiative was actually the government accountability act of Alberta, which has in fact legislated the preparation of these business plans. The federal government has similar legislation in place.
The second recommendation is: "That government have a review carried out with the goal of ending the current estimates process, which is ineffective. This review, by either a special task force of the Legislature or an existing committee, should focus on an earlier and more useful debate of spending authority."
That's the Ontario Financial Review Commission. I should remind you that for this report, which was entitled Beyond the Numbers: A New Financial Management and Accountability Framework for Ontario, the addressee was the Minister of Finance, and that's why I have particular clearance from the ministry to relate this to you, although this is a public document and I believe all members received a copy of the document. It's sort of a blue thing with a white stripe on the side.
The third recommendation is: "That the special review consider the following additional suggestions from the commission." The committee should be renamed -- well, this goes into a fair amount of detail so you may want to take a look at it as to what it means to you.
The one I would like to point out to you, if you go to the third dash, which is rather of interest, is, "In looking at each plan" -- provided to the committee -- "the committee should be able to consult with the appropriate minister and deputy minister" -- and this is new -- "the Provincial Auditor, and others as needed." The idea of putting the Provincial Auditor in was for your committee to have the benefit of what our audit observations were in recent memory about the value-for-money performance of particular programs run by that ministry.
As you can see, the recommendations of the Ontario Financial Review Commission are based on related concerns. The commission's report was issued shortly after I tabled my report and contains a discussion of its recommendations.
I hope you share my concerns and will consider implementing my recommendations to improve the estimates review process. This ends my presentation, and I would be pleased to answer any questions that you may have.
The Vice-Chair (Mr Joseph Cordiano): I think we'll go with the usual rotation. What have we decided in terms of time allocation, that we just open it up, 15 minutes for each caucus and go round, open it up to questions? How would members like to deal with this? Usually we rotate.
Mr Tony Martin (Sault Ste Marie): Yes, sounds good.
The Vice-Chair: So 15 minutes for each caucus. Mr Cleary, questions.
Mr John C. Cleary (Cornwall): I see your three recommendations that you recommend pretty strongly and I know this committee sure has needed guidance because I, for one, never figured that we had got a whole lot out of it, especially at the late date the committee is called, when we're almost into another budget. Anyway, other than some of your recommendations and your explaining to the committee, I don't really have too many questions. I think that any way we would go would be an improvement to what we have now. Other than that, I don't have too much to say.
Mr Jean-Marc Lalonde (Prescott and Russell): In recommendation I.20, the third one, when you say, "should be able to consult," you added "the Provincial Auditor, and others as needed." You say that was new. Is there a reason the Provincial Auditor had to be added to this recommendation?
Mr Peters: Firstly, it's not from my report but it's the Ontario Financial Review Commission's report, which was formed, as you know, by six chartered accountants and two members from the outside. The two others were Sonja Bata from industry and Helen Sinclair, who was at that time the president of the Canadian Bankers Association. It's that committee's recommendation.
They added my office or my name to it because they felt that the estimates committee, being on a forward-looking tack and wanting to take a look at the programs, should be alerted to highlights of audits that were published by my office on that particular ministry's activities or programs, so they could take into consideration those points that were raised in the audit, because the estimates also, when you look at it, should really take a look at the three things, whether there's due regard for economy and efficiency and whether they know how effective the program is for which funds are voted to them by the Legislative Assembly. Those are all issues that are covered in my reports.
Mr Lalonde: Mind you, I'm not against it because you're the expert in that domain and I am pretty sure that would help out the committee; also the fact that you'll be attending it.
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The Vice-Chair: Perhaps I could ask a question, if the committee will permit; of course, this will be in as non-partisan a fashion as I can make it.
In your statement here on page 2, referring to the ministries selected for review, they should provide future-oriented business plans, as you put it here. The government has just announced that they will be bringing forward business plans. I would hope that included in those business plans would be an accountability framework, something we discussed in public accounts committee and something that you've elaborated on in great detail in terms of what suggestions might be contained in that accountability framework. Is that what you're referring to when you talk about future-oriented business plans, including along with that an accountability framework?
Mr Peters: Principally, the business plans, as we see it, would really be part of that accountability framework. The part that my initiatives, which are really in another section of my report where we are advocating an accountability framework, I have always advocated a legislated accountability framework so that the legislators can take actions on the accountability.
I hope very much that will be taken into consideration. In other words, there will not just be consideration of business plans in isolation, but they must fit into something. That accountability framework essentially starts with a plan. The thought that, for example, the Ontario Financial Review Commission expressed in that particular area was that since the business plans would cover three years out there would be a selection made in any one year of, say, one sixth of the ministries.
But parallel to that process of the sixth that, through the research and the support this committee would have, there is also some monitoring of the performance-against-plan of all the ministries and that in addition to calling back that third, there would also be a calling back of those who are departing from promised performance for one reason or the other. That is one comment.
The second comment is one that I admit to you I am looking forward to with great interest. The government also announced in its fiscal outlook statement which was tabled, I believe, in November 1995, reference to the fact that on transfer payments they are considering -- and I don't have the exact words, but it's how it came across to me -- an approach of becoming less conditional on transfer payments and yet, at the same time, said they would look for greater accountability in this process.
The concern is how do we balance this, because we are currently spending -- and I only have the figures for the last audited year which was, of course, 1994-95; in that year, transfer payments to organizations which had some accountability amounted to somewhere in the range of $25 billion. These people all received grants so it's going to be very interesting for us to look at what controls and what accountability will be established over these grants which after all make up pretty close to half of all the government spending. So that balancing and what accountability will be demanded is of --
The Vice-Chair: Just to make clear, if it's not clear to members, these are non-conditional grants.
Mr Peters: That's right. These are the payments to what I call the CHUMS sector: colleges, hospitals, universities, municipalities and school boards, and they are all, in a way, conditional simply because the recipients are all either incorporated or have to follow provincial legislation. To give you an illustration, school boards, for example, implement actually the Education Act of the province.
Mr Martin: Actually, I have a lot of interest in this and have some concern. Before I get into that, would you mind telling me who are the MPPs that you interviewed?
Mr Peters: You mean names?
Mr Martin: Yes.
Mr McCarter: I could tell you a list, but I couldn't tell you who gave which quote.
Mr Martin: No, I don't want the quote, I just wondered who you interviewed.
Mr McCarter: Dave Ramsay, Steve Mahoney, Mike Brown, Cam Jackson -- who was the Chair of the estimates committee at that time -- Ted Arnott, David Turnbull, Gilles Bisson, Norm Jamison and Wayne Lessard.
Mr Martin: In putting together your review of this and your recommendations, you mention a couple of commissions. You also obviously had some advice. Who did you speak to in pulling all this together other than the MPPs that you interviewed?
Mr McCarter: Essentially, aside from the MPPs, most of it would have been -- we did a fair bit of research into other jurisdictions, so we did speak to say the clerk at some of the committees at the federal level. Essentially, there were two major components to it. It was basically discussions with the nine MPPs and then again, because the Provincial Auditor's office is not expert in this sort of thing, we wanted to find out what was being done in the other jurisdictions because we were aware that some of them were definitely taking a different route vis-à-vis the estimates process. Everybody was kind of grappling with how can it be improved. We were trying to find out what some of the others were doing vis-à-vis rather than reinvent the wheel.
Mr Martin: One chart here you had Canada, Alberta, Manitoba, New Zealand; you were looking at the United Kingdom and the United States as jurisdictions that you looked at.
Mr McCarter: When I say looked at, we didn't do a thorough, in-depth audit, but we did have literature from some of the other jurisdictions. For instance, Alberta sent us the stuff on the government accountability act, and we tried to extract from that and summarize things which we felt were relevant.
Mr Martin: I want you to know that I'm asking questions just from my own personal perspective and trying to get a handle on this, because I personally found the time I spent over the last few months at this committee quite helpful and informative and, probably even more than that, an excellent opportunity for me to participate in a forum with my colleagues of various stripes around questions. The estimates that we just looked at were our estimates from last year, but we were also, in our questions and our probing, projecting into the agenda of the present government and doing some comparing and asking some questions.
I'm a politician. We're all politicians here. We're all elected from various jurisdictions across the province. We all come to this place from political parties. That's the way the system works in Ontario. I don't think anybody, for a second, would suggest it's not a good system. We've had it in place for a number of years now and I suggest it's going to be around for quite a while to come.
One of the concerns I have re some of the observations and the suggestions, the recommendations that are made, is that somehow this group be non-political, that the politics that are brought to the table, the different perspectives that are brought to the table, somehow make what happens here ineffective and not helpful. I suggest it might be that if this is simply putting together a business plan, then that might be the case, but I don't think that's what this is about.
I didn't come to Queen's Park -- even though I owned a small business before I got here and I understand business plans and how bottom lines have to be positive, particularly after a while, if you're going to stay in business. Even though government, I know, strives to get value for dollar, which is something that I think you've certainly brought to the fore in your tenure, in the position that you hold, and have brought great focus on that, that we have a myriad of other considerations and that governing isn't simply a black-and-white bottom line, you put this much in, you get this much out, and at the end of the day you can measure all these things. In my mind, government is a very sophisticated, complicated, often frustrating exercise and you plod along for the most part. There are days when it is fairly exciting in that you can see some result and positive, quantifiable end to some of the things that you do, but mostly it moves along. The folks out there, in their wisdom, decide from time to time to change the direction of a government by who they put in as the government.
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I want to ask you to make further comment on the suggestion I hear here, that we be less political and more interested in bottom line and value for dollar and those kinds of things. Are they mutually exclusive or can they work together and can we find something that will allow for both of those things to happen or are we whistling in the wind?
Mr Peters: To answer your question, they need to work together. The partisanship that we brought out was really the members bringing it out and the members made it very clear that the partisanship only arose out of sheer frustration, because the members from all political parties -- there was no particular stripe that was strong on this or weak on this, they were all uniform, because the way the committee proceeds right now really does not make a difference; it's unlikely to make a difference. Let me talk about that for a moment.
Firstly, the money's already spent. The budget is presented. Assume for a moment that this committee were to find in its deliberation that one ministry has really made one colossal mistake in the estimates that it has brought forward -- it's out $1 billion. Now what? What can you do about it in the current process? Because really what happens is that you would come -- and I'm sorry to bring a dollar amount in, but just for illustrative purposes.
The only way that is open is really to put a motion of non-confidence on the floor of the House in the government, because, let's say, the budget was out by $1 billion. The likelihood of that succeeding with a government that has brought in that budget at the beginning of the year is really nil. It may be very attractive to the opposition parties to do so, but effectively it's just not going to be realistic. You may get a little bit of play for it in the press, but really, by the end of the day it will not have made a difference.
This is why the thrust that we received from the interviews with the members was really to say, "Look, why can't we restructure the process in such a way that it will make a difference?" The best difference it made was if it became an advisory process, where in advance of the budget being struck, in advance of the estimates being presented, that this committee looked at the plans future out and took into consideration all the good factors that you have brought into consideration, not just the dollars but also the effectiveness, the value that we're getting from the program, the impact that the program may have and all these things, and then write a report to the minister responsible for that particular ministry, with a copy, if you want, to the Minister of Finance, and indicate: "This is the result of our deliberation. Please consider this when the estimates are prepared for this particular ministry and when the budget is prepared."
In that regard, it would be contributory in consultative process. Also, when the budget then is debated, certainly you would bring that insight to the floor of the House at the same time, and when the budget is debated in the overall, it has, at least in the opinion of the members we interviewed, a much better chance of making a difference than the current contribution in the final budget. I hope I've answered your question.
Mr Martin: Yes, you've explained a couple of things for me and I appreciate that. Certainly if I'd been asked, I might have had a little different slant on it in that my own experience in government in chatting with some of the ministers who came before this committee was one that led me to believe that it was not something they took lightly. It was not something they saw as just the thing that they had to do so they can get on with the business of being minister and being government. There was the sense of, "I'm defending my record, my tenure and defending the plan that I'm laying out there."
So to suggest somehow that it's a waste of time maybe, and I'm getting that because it's too late and it's after the fact and it doesn't mean anything and really it accomplishes nothing is not quite my experience of it. I remember ministers in our government sweating bullets before they came to estimates, preparing and getting ready and making sure they had all the material in place and knowing that they were going to be asked some pretty tough questions by some of the people, particularly in the opposition because that's their job. My job in opposition is to query and to question and to probe and to put on to the table some alternatives that the government might consider in what it's doing.
I suggest to you that in some instances, and even in this government, to give some credit where it's due, there are some ministers who are interested in what a person like myself has to say representing a group of people coming from the place that I represent, Sault Ste Marie. We have a particular set of circumstances and issues that we have to have dealt with that are different than downtown Toronto and so there's that listening and opportunity to chat.
I would agree with you that it would make more sense that we do this sooner rather than later so that it's relevant, so that we're dealing with what's actually happening and have even a greater chance of having some influence at the end of the day in what the government's doing.
I would, however, challenge the contention by anybody that this committee is somehow not effective and may be irrelevant and a waste of time and that it is in fact way too after the fact and nothing really valuable comes from it because, as I said, my experience of it, having been here for six years now almost, is that it does have some relevance and it is an important forum. It's a chance for some of us who don't participate at the cabinet table or don't participate at cabinet committees or have a chance to sit on a regular basis with some ministers in areas that we might have some either personal interest in or some concern about because of some impact with our own jurisdiction. It's a chance for us to put on the table some of our concerns, to ask and to challenge some of the things that have been done and the things that are projected to be done and to in that way influence in some way the direction and the course of government.
The other question that I wanted to get into, and I'm not sure how much time I have left because --
The Chair (Mr Alvin Curling): If I was going to use my powers, I'd say you have three minutes.
Mr Martin: I've heard you since you've been appointed to this position harp very much on this value for dollar and bottom line and now I take it you're really excited by the prospect of business plans.
I'm trying to figure out how this fits in here, but I think it does. I think this is a committee that could perhaps challenge the government on the issue of government not simply being a business, that government is in an area of activity that affects the lives of all of the people of Ontario in very significant and interesting ways, and it's not as simple to measure value for dollar as some people would purport.
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I would ask you, in helping us deal with the activity of this committee, how do we bring to the table, with help from yourself, the wider context within which we have to operate here, the question of spending money in health care, prevention and promotion, that has a payoff 10 or 20 or 30 years down the road? How do we measure that? The protection of our environment and the forests, not turning them over, for example, to the private sector to be managed in their best interests, but somehow looking at them as a resource that belongs to all of us, and making investments that don't necessarily pay off next year or the year after but 20 or 30 years down the road because of the way we've dealt with things, how do we measure that? How do we keep track of that kind of thing and how do we bring it to this table so that we can hold the government accountable for that kind of a template as opposed to a very simple sort of bottom-line business plan, "This much in, this much out," and that kind of thing?
Mr Peters: I think the answer to your question -- let me just, if I may have a moment, put a few potential misconceptions that I may have inadvertently left with you off the table. When we talk about business plan and bottom line, we're not talking about profit or loss, we're not talking about the traditional business bottom line. My act is very specific. There are two additional things that I have to specifically ask that go very well beyond the bottom line. The first question is, is there due regard for economy and efficiency? That has a little bit of a bottom-line connotation. But more importantly, does the ministry measure and report satisfactorily on its effectiveness, the effect it has on the program?
I have been advocating, even in my appearances with the media etc, I'm really saying that there are three fundamental questions that I'm asking when I look at a program, and they may be of use to you. The basic question is, does the program meet the legislated expectations when this House passed the law and said, "The Education Act shall do the following things"? So the first question I ask: Is the program that I'm looking at complying with that intent, with those objectives? If it is not, how badly does it fail? Does it need to be modified, and can it meet those objectives with modification? Or the third question is, if it doesn't meet it, do we need to replace it? If so, with what? And should it be discontinued? That is far broader than the bottom line. That is really looking at the legislated objectives for a particular program and that takes into account all of the things that you were mentioning.
Let me get to a second point that you raised, and that is that in none of our deliberations, none of our report, nowhere, did the members of Parliament express the view that reviewing the estimates was a waste of time, and that's why we are only talking about improving the process. What they're all saying is, "Look, can we make it better by doing two things: One, the timing, when we do it, and the second, can the information that comes to us as part of this committee be improved in some way so that we do our job better?" I'm talking strict improvement. I'm not talking doing away with anything, nor did any of the nine members whose views I represent in my report. So it is just a view, what can be done to improve the process, not doing away with it.
I'm not overwhelmed by the problems, because both my office and subsequently, as I pointed out, the Ontario Financial Review Commission found the same frustrations but also came up with a solution and came up with a proposal to make to you as a committee as to how to improve the process, and it's a very important process.
Mr Frank Sheehan (Lincoln): I agree exactly with what you're saying in your last comments, that this format should provide us with a process for reconciling disparate points of view, bringing them to -- you look at the government's plan for what they're doing, you can have his input into the process and then it gets checked in the ongoing review process subsequently.
I found these exercises were frustrating and somewhat meaningless and that, one, the information was so old that it had must on it, and secondly, we were debating -- we ended up in debates on philosophy that weren't even necessarily germane to the subject we were looking at. I remember many accounts where people just took time to -- the word I use is "expatiate" on their own political philosophy, and it had nothing to do with the subject at hand.
I think this forum does provide us with an opportunity for input and it does provide us an opportunity to say, "What are your measurables? What are your outcomes?" and it's not just a bottom line, it's not just a value for dollar added, the point is, what is your program, what is your policy, how is it manifested in here, what's the good going to be derived by the public for this process and how much is it going to cost? Because you can't disregard cost. You've got to look at the jackpot we're into with debt right now. All our options are gone because we're broke.
Interjection.
Mr Sheehan: Excuse me. I thought you were telling me to shut up. That hurt. It squeezed the wind out of me.
That doesn't happen the way the process is now. I like the idea that these plans are an ongoing process, so the information should be given to us in advance, we should have time to contemplate it, think about it and prepare some questions to ask people and it should also contain a future aspect that you're talking about, this idea that Alberta has, moving out three years in advance, not only from policy considerations but for cost considerations.
You can say what you want about whether it's a business or not a business, but when you're broke, you can't achieve any of your philosophical aspirations. This process -- we've been through this last year -- I found as a businessman totally meaningless, just devoid of any sense except maybe to fill my hopper with some -- what do you call it? -- aggravation to get it changed.
So I think you have to have the information in advance. I think we have to demand that they set out their goals, both policy goals and their budget considerations. I think we've got to find some way to put a check on the political rhetoric -- we get enough of that in the Legislature. I think we detract from the government's ability to govern when we do that stuff.
I like your recommendations. I commend you for them. I would like you to give us whatever direction you can to make sure they get implemented. I don't know how you enshrine them in the law, but I would like to see them enshrined in the law, because then they have to be obeyed. Good report. Thank you very much.
Mr Wayne Wettlaufer (Kitchener): Mr Peters, I don't know why the government ever got involved in the present process; I just know that as a businessman I have always been reviewing plans in advance. I used to like to do two- and three-year plans, but unfortunately government got to the point that it couldn't even project a plan a year in advance, and that made it very difficult for business people to do the same thing. I like your suggestion that the Provincial Auditor should be involved in the planning process, in the review of the ministerial plans.
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One thing I do have a question on: Why did you recommend, under I.20, that the committee should conduct reviews on a three-year rotational cycle, ie, only one third of the ministries each year? Could we not review each minister's plan each year?
Mr Peters: First, I find it a little difficult to speak to that because the document you're reading from is not mine. It's just one I wanted to bring to your attention.
Mr Wettlaufer: I'm sorry. It's the Ontario Financial Review Commission.
Mr Peters: They provide an answer, actually, if you will, in their own -- this is what their document looks like. It just happened to be blue and black when they published it. Maybe I can quote to you from what they're saying:
"The estimates debate usually provides the only opportunity for the Legislature or a committee to look at spending plans in detail. However, several factors make this process less effective than it might be."
One, "the debate takes place well into the year in which the spending takes place," and we just discussed that. Two, "expenditures are not laid out in a way that promotes informed debate about how well they will meet ministry objectives." Mr Martin, that may also meet the concerns you expressed. Three, "There is no subsequent review of plans or performance."
Those are the three things that were of concern, and they say in the final paragraph, "The legislative review suggested by the commission could" -- and this is "could," not "should" -- "also deal with the issue of how the three-year rotation of ministry plans would be phased in." I'm specifically referring to page 34 of the report, which I believe is available in the office.
They are suggesting the three-year rotation. In my report we talked about the three-year because we found that is sort of the focus other jurisdictions were using. In Canada, the Alberta government does it and the federal government is looking at three years. New Zealand was looking at current year plus two, on that basis. Largely, the three-year seems to be driven by the normal term of government so there is a discussion of all ministries in the cycle of one government.
Mr Wettlaufer: But are they done on a rotational basis, the other governments, or do they review each minister's plans?
Mr Peters: The point was really one of practicality. At the moment we were looking at the 90-hour limitation, which exists currently, and how much can this committee achieve in 90 hours. It seemed to be practical. Just saying 15 hours per plan of a major ministry seemed to be quite a good number.
Mr McCarter: If you go back to page 25 of our report, that issue was considered in 1987 and they recommended, when the select committee on estimates was set up, they be given the mandate to review only a select number of estimates so that they could do it in detail. That was specifically addressed about 10 years ago.
Mr E.J. Douglas Rollins (Quinte): Thanks to you people for coming. I believe, being a new person on the block this year and coming in, when you look at estimates it's something where the word fools you right off the bat. "Estimates" is something that we're going to spend, not something that is already behind us. I think if the word was changed to "Spending review process," it would be a lot more practical and would bring us into the field of what we're doing.
True, we were looking at numbers from the previous government. Had we found anything major wrong, it was way too late by probably a year. If you bring that process into "Spending," it certainly gives the ministers the opportunity to appear before us and to dialogue with them.
I personally feel we should stay away from the same kind of questioning and rhetoric that we go through in the big House. I think we should be a little different in this room, where we can get down to a little bit different questioning and do it on the political lines. But I feel it's something we need to keep involved in because it is a very large learning process and it gives us, particularly the backbenchers, the opportunity to put our heads around some things we otherwise wouldn't have the opportunity to do.
The Chair: I think you folks were quite effective the last time. Your ministers were getting some of the toughest questions from their own members.
Mr Rollins: I think that's good.
The Chair: I said that in jest, but you took it seriously and you asked good questions.
Mr John Hastings (Etobicoke-Rexdale): Mr Peters, in the recommendations made by the Ontario Financial Review Commission, what is your thinking in regard to the idea that we ought to have some kind of rating system that tells members of the estimates committee, or public accounts for that matter, that a particular ministry is doing well in terms of the value-for-money audit concept you're trying to apply? Do we need some kind of a rating system, like a five-star like you'd have for the hospitality industry? Because right now there's no way of determining whether one ministry is giving you better value per dollar than another ministry.
My other concern relates to estimates spent before they arrive here. Are you finding yourself, when you audit an agency or ministry, that there's still the usual traffic pile-up at the end of March 31? "We have $50,000 in the budget of this division. We've got to go out and buy three more TV monitors," or whatever it happens to be, and that they're still rewarding themselves on whether they can get rid of that 50K or nearly, or has the thinking and behaviour changed there? I'd be very surprised if it has because there's no reward system to do so. The reward system has always been the more you spend or maximize even beyond the credit card, you'll probably get a promotion.
Mr Peters: All three are very good questions. Let me deal with one after the other, and maybe also get to Mr Rollins's point.
As far as the actual spending is concerned, the way the committee structure is right now, and that is up to the House and not to me, there are essentially three committees involved in the overall. As far as past spending is concerned, certainly the public accounts committee, to which I report and on which I serve as a permanent adviser, is dealing with my value-for-money issues; there is also the standing committee on finance and economic affairs, which deals with overall economic affairs and finance, and we have from time to time very interesting input; and there is of course, and I shouldn't say this last -- it's last but not least -- this committee dealing with the estimates.
Mr Rollins made the point -- and Mr Hastings, I don't know how you feel about that; I certainly agree with him -- that it really would be the intention that this committee deal more with forward looking, but you only can look forward if you know where you have been, where you're at and where you're going. If we take a look at the three committees, we find those are the questions they answer. Public accounts looks where we have been and what we can learn from it; the standing committee on finance and economic affairs is where we're at, what is our economic condition and what are our current affairs; and the estimates committee is where we are going. So we look into those three.
The second question, on a simplification of the rating process essentially, has been a little bit of a bane of mine, I should confess. My predecessor when reporting on a program and concluding on the government as a whole always gave a rating out of 10. You know, "The government right now is seven out of 10." My argument with that has been that I would find that a little bit unsatisfactory if I went to my physician for my checkup and he said, "Hey, you're a seven out of 10." I'd say to him --
Mr Joseph Cordiano (Lawrence): "What's not working here?"
Mr Peters: Yes. "What am I missing and what should I be doing?" So I'm a little bit reluctant to get into numerics.
There's also an implied issue, and thank you for the opportunity to bring that out. We have essentially stopped conducting value-for-money audits on a ministry-wide basis because the way the ministries are now run, they run a whole raft of programs and we are looking at how individual programs are run.
Again, to see whether Comsoc, for example, community and social services, gives you value for money as a ministry is very tough to judge, because they may be doing very well, for example, in providing shelters in the violence against women, but they may not be doing so well in the way they administer currently, say, GWA. I'm just pulling things out of the air. These are not audit opinions. There may be a wide diversity, yet I feel the public accounts, as well as this committee, may very well know how individual programs are managed as opposed to how the whole ministry is managed.
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That is why, in retrospect, my office could provide a service also to this committee in helping in the estimates because we could provide that advice as to where we found on certain programs where they have been, and since we make recommendations as to where they can improve, we can advise you also what is being done to make those improvements in the process the ministry is undertaking. I hope I'm answering your question.
Mr Hastings: You see the role of these committees working in sync then.
Mr Peters: Very much so.
Mr Hastings: For example, would that mean if the Ministry of Education had gone through public accounts and you had spotted certain areas where they could improve their performance financially and otherwise, that particular committee would be tailgated and followed down into this committee? That's what I was thinking of in terms of actually getting in sync, and not every three years, because they'll be out of sync.
Mr Peters: That's true, but if you for practicalities stuck to that recommended three-year cycle, in each of the ministries in the cycle, this committee, I believe, should have the benefit, first, of what the public accounts committee decided on audit reports that were discussed by that committee that I had filed. If that committee, as you know, currently is not getting around to dealing with all the chapters I have, then they may fall back on my chapter as it was. Public accounts will not deal with the entirety of my report either in any one given year, but because also I have an audit cycle, which is currently running three to five years, it would get into sync with that situation as well.
Mr Hastings: Where there are inadequacies you've found in public accounts and you recommended, do you think public accounts should be performing more of a targeted role in recommending to this committee if it's going to change its role somewhat? These three areas, say, independent study, home study, as an example, if we're not getting good value, could be followed up here? Is that what your thinking is?
Mr Peters: That's right. The report that the public accounts committee tabled in the House on that chapter would be available to this committee for questioning of the ministry and the minister when they come before you: "What have you done about it? Where are you going? What is your policy? What is happening?" I would certainly include that in the information that should be considered by this committee.
Mr Hastings: And hopefully this committee would do that.
Mr Peters: Would do that, make its input and say, "Yes, you're doing well," or not. You could go as far as, "We have trouble, we have concerns about what you're telling us, because we have heard this in the other committee."
The other part that is rather interesting, I may have inadvertently omitted one committee that has an important role because of a very important feature that has taken place effective with the 1994 fiscal year in this government, and that is that this government is now providing so-called summary financial statements, which do not only contain the information on the ministries but also on a wider circle of entities that have been created. There is an agencies committee out there somewhere and they might have to consider whether they should now not take a similar approach as this committee is taking with the ministries with the agencies which ultimately go into the public accounts.
This is one of the examples of where we have to look as to how business is being done, because I now give an audit opinion on something called the summary financial statements of the province and report on that to the public accounts, so it is getting a broader picture than any one of the other committees that is dealing with the individual estimates. That's another aspect of looking at information.
There's a lot to be considered. In particular, the Ontario Financial Review Commission is following up on it and really, I think, did it as a "Could you consider this?" and has taken the right step because there's something that the House and the committees of this House could consider.
Mr Martin: Just one question. I can't let you go without asking you this question because it really does genuinely concern me. It's the question of template, of what you hold things up against really. You know, does it work or does it not work?
Given the forum that we're in and the different political persuasions that we have here and the approach that we all take, in some instances the same but in many instances different, I would suggest that probably most of us who come here, whether we're Conservative, Liberal or New Democrat, really do have the economic, the social, the health wellbeing of the province at heart. We just have different approaches to getting there.
But is there any way to put together a template to which we can hold, for example, the public health of communities? Is there a measuring stick? Is there a way of taking programs and holding them up and saying, "This is going in the right direction; this isn't"? For example, the very dramatic decision that was made by this government to cut 22%, and I'm not saying this today to be politically argumentative, but is there some way to hold that up against a template that would say, "This is really harmful overall to the fabric, to the economy"?
I know in my community just one measuring stick that the labour council, the chamber of commerce and myself are using is the drag on the economy that that's creating. We're losing $2 million out of the economy of Sault Ste Marie by way of that reduction in the amount of money coming to people who, through no fault of their own -- there just isn't enough work out there -- are on the system and are now having a hell of a time making ends meet. That affects my community in many different ways, not only the individuals themselves who are getting less, but overall. Are there jurisdictions that have done that? Crossing all political lines, is there a way of doing that?
One of the things you responded to earlier re the comment I made about simple business plans, money in, money out, that kind, is there some other way of simplifying this very complicated business of the overall health of a jurisdiction like Ontario and how what a particular government is doing is either contributing to that or taking away from that?
Mr Peters: One of the words I used in my recommendation, and that is repeated also by the Ontario Financial Review Commission when they deal with the same thing, is the word "performance." Let me add to that that one is performance analysis. I'll give you a very practical example for a moment.
The public accounts committee, after my office had done an audit of universities, established a Task Force on University Accountability. That Task Force on University Accountability established a subcommittee under Professor Lang of U of T to look at performance of universities and they are still working at that. This is going to be a long-term goal, but one of the questions that should very well be asked is, "Are you looking at your performance?" and in that respect, to answer your second question, "In performance are you looking at the impact that your organization is having and in turn that the tax dollar has on your organization?"
So it's the two questions. The basic question we are asking in the template is actually, "How do you know you're performing well?" That's the fundamental, basic question. The criteria against which you judge wellness, we expect normally the organizations themselves to develop. When you have a ministry before you, you should be able to ask the questions, "How do you know you're doing well?" and "What criteria are you using to measure whether you're doing well?"
Mr Cordiano: We ask that all the time.
Mr Peters: That's right, and the third question is, "What are the impacts?" This is one of the things where we're involved, because the first thing we do in an audit of a program is develop the criteria against which we want to audit. One of the key features of our audit, which is rather interesting I find -- it's very little known -- the first thing we do is try to achieve agreement with the auditee ministry on those criteria, and then we proceed.
If we disagree and we have a very strong view, that's a reportable item. But normally, in my history, and it's actually fairly long because I was an assistant Auditor General of Canada at one of my earlier stages in the 1980s when we developed these concepts, I do not recall any incidents where we could not agree on criteria. So it's really those three questions. I cannot give you a template to do it. I can only offer the three basic questions.
Mr McCarter: What the member said is that would be one of the benefits of having a more future-oriented business plan, that they would be able to have input before the decisions were made as opposed to having input after the decision was made.
The Chair: Thank you very much. I think we were looking forward to this for a long time, and it has happened. The only process I see now is that I presume estimates will arrive earlier to us now. I'd hope the estimates arrive the same day as the budget. Then we can assess if the government can live up to the kind of programs and money they put forward. The question will be almost reversed at that time, to say, "You have stated that. Can you accomplish that within that time?" more than after the fact, which we've always done.
I want to thank you both for appearing before us. I know members were trying their very best to meet at one time or another. We have done it now. We look forward to getting the estimates the same day as the budget. Won't that be nice? Thank you very much.
The committee adjourned at 1653.