EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 9, 1995

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[Translation]

The Chairman: Welcome, everyone. During today's meeting, we will be discussing chapter 11 of the Auditor General's Report and focusing specifically on the management of scientific personnel in certain federal research organizations or establishments.

We have with us today, Mr. Desautels, the Auditor General, and Mr. Giroux from the Treasury Board Secretariat. Before you begin your presentations gentlemen, perhaps you could introduce the people accompanying you.

We also have with us Mr. Swain from the Department of Industry. Could I ask you to do the same, Mr. Swain, and introduce your colleagues.

I will, first of all, give the floor to Mr. Desautels who will make a preliminary statement.

[English]

Mr. Shepherd (Durham): Mr. Chairman, I want to make a comment on the 8th report, filed in the House. There seems to be a significant error. We had some discussion on page 5 of the report, on this recommendation to do with ``the employees assigned to Revenue Canada non-filer earn an average of $35,000.'' We had agreed in our previous meeting to delete that. I think if you refer to the minutes, you'll see that we had unanimously agreed to delete that paragraph.

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[Translation]

The Chairman: Very well, we will check that and get back to it tomorrow morning, when we study the tenth report.

Mr. Desautels.

Mr. L. Denis Desautels (Auditor General, Office of the Auditor General): Thank you,Mr. Chairman.

First of all, may I inform you that I am accompanied by Mr. Jacques Goyer, who was the drafter in charge of chapter 11, the one we will be discussing today. This chapter presents the results of our review of the management of scientific personnel in federal research establishments, as reported in our 1994 report.

During previous hearings we discussed with you the management of science and technology activities, both in an overall sense and at the departmental level, in addition to income tax incentives for research and development.

Our report on the management of scientific personnel touches on a number of issues. Some of these are primarily concerned with internal management practices in research establishments, while others involve the direction of science and technology activities in the departments and their research establishments, and the role of Treasury Board as the employer.

Today, Mr. Chairman, I would like to suggest that we focus on the latter two issues.

In connection with our audit, we examined seven research establishments reporting to the following departments: Environment Canada, Industry Canada, Fisheries and Oceans Canada and Natural Resources Canada.

In 1993-1994 there were an estimated 35,000 federal government employees working in science and technology. Of this number, close to 10,000 were assigned to research and development activities in the natural sciences and in engineering.

In our report, the term ``scientific personnel'' refers to scientists, engineers and managers who are working in research establishments and are part of this group of 10,000 employees.

In the federal public sector, many of the problems associated with the management of scientific personnel have been known for a long time as a result of the many studies carried out over the past three decades. However, most of these problems have not yet been resolved.

[English]

We noted that there are no global strategies or clear priorities which would provide a general direction to all the federal organizations involved in these activities and which justify the assignment of resources among various scientific and technological sectors. The need for such direction is felt not only in relation to the science and technology activities and budgets of departments and their research establishments, but also in relation to the scientists and managers assigned to carry out science and technology activities in these establishments. Indeed, the management of scientific personnel cannot be considered an end in itself. Scientific personnel are first and foremost a means to meet the government's objectives in science and technology.

Moreover, the results of research efforts and the credibility of research establishments largely depend on the expertise, knowledge, skills and motivation of scientific personnel doing the work. But it is not sufficient for scientists to strive for excellence. Their work must also be in keeping with the government's objectives. The relevance of research activities cannot, however, be assured without clearly defined objectives that are well understood by researchers.

Furthermore, without a clear direction either at the departmental level or within the research establishments, it is not possible to manage human resources effectively. In other words, it's not possible to determine clearly the types of knowledge and skills needed, the career paths to be developed, the level and type of new talent to be brought in, or the type of professional development activities needed to remain on the leading edge in required disciplines. Therefore we wish to reiterate our call for the establishment of strategies and priorities both at the government level and within each department and research establishment.

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A flexible and needs-oriented framework for the management of scientific personnel.

As the employer, the Treasury Board, with the support of its Secretariat, is ultimately responsible for establishing a framework for the effective and efficient management of human resources. This responsibility includes the development of human resource management policies and systems to meet the requirements of all the diverse entities in the public service, including research establishments.

Although there have been frequent communications between the science-based departments and the Treasury Board Secretariat, present policies and systems tend to cater to the needs of the public service in general; little consideration is given to sectoral specificities or to small, somewhat marginal entities, each with different needs, ``for fear of creating a precedent''.

The problems we identified in our report are not unique to the research establishments and do not apply to scientific personnel alone. However, it is for this sector of activity that our audit has yielded information and data that highlight some of the consequences of a human resource management framework that responds poorly to needs.

[Translation]

By way of example, I would like to remind you that there are over 150 research laboratories reporting to federal government departments and agencies. Of this number, there are some 120 for which Treasury Board is the employer.

Each of these laboratories is unique, through its mission, its organizational context or through the professional groups and the areas of expertise represented by its staff. Accordingly, these laboratories do not all have the same needs in relation to the management of their activities and personnel.

Our report also provides some examples of the problems that arise as a result of the standardized approach to human resource management which continues to prevail in the Public Service and which hampers the effective and efficient management of these resources in the research establishments.

For instance, there is a stipulation that term employment results in an automatic permanent appointment after five years. However, in many cases researchers hired on a temporary basis for a project that takes five years or more are no longer needed once the project has been completed. This takes place much more frequently now that research establishments are becoming involved in an increasing number of projects in partnership with private-sector companies or other laboratories, whose deadlines are often tight or subject to change.

Another problem is associated with the existing job evaluation system, which creates two classes of scientific personnel: the RES (Research Scientists) and the non-RES.

[English]

That a reasonable job offer must be made to scientists whose skills may no longer be required has proven to be another obstacle. In practice, because of the specialized nature of their expertise, it is virtually impossible to find alternative employment for them.

The last budget announced that the directive would be amended for the next three years for the departments most affected by the government's program reviews. Many of the large science-based departments are among them. It is too soon to know whether this new provision will meet the needs of their research establishments.

Finally, the superannuation legislation and pension plan are designed on the assumption of lifelong employment in the public service. The current context, however, with its emphasis on partnerships, wealth generation and cost recovery, calls for a complete rethinking of the concept of career, and of the related support mechanisms for scientific personnel; namely, in the future, it will be necessary and desirable to encourage greater mobility of researchers, to ensure the renewal of scientific talent and the maintenance of the knowledge base in research establishments.

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In view of the major changes likely to take place as a result of the review of science and technology, we feel it is important and urgent to modify the approach that has thus far governed human resource management in the Public Service.

In practice, this would entail a new sharing of responsibilities where Treasury Board would focus its efforts on resolving basic issues such as job evaluation or the pension plan and staff mobility, while departments would be responsible for the administrative issues such as term employment contracts or training, including attendance at scientific conferences. It is indeed our belief that in the research establishments managers will not be able to act effectively to fulfil the priorities and objectives ensuing from the review of science and technology without the support of a human resource management framework that is flexible and tailored to their respective needs.

Accordingly, your committee may wish to ask both the Treasury Board and Industry Canada whether, as part of the science technology review, if specific consideration has been given to the impact on scientific personnel of the changes likely to result from this review.

Your committee may also wish to know, once decisions resulting from this review are made by the government, whether there will be a mechanism in place to help define an overall strategy to support these decisions in the management of scientific personnel.

[Translation]

In what ways does the organizational status of the Communications Research Centre (CRC) differ from that of most federal research establishments in relation to their sponsoring department? Ideally, what would be the authorities needed by a research establishment for a more efficient management.

Finally, bearing in mind that it is itself one of the organizations most affected by resource cuts, what assurance can the Treasury Board Secretariat give the Committee that the problems related to the management of scientific personnel mentioned in our report will be resolved or nearly resolved within a reasonable timeframe?

As you know, the issues we are raising are not new, nor are they easy to resolve, but on the other hand, I believe that the current context may be conducive to the implementation of lasting solutions. Thank you for your attention, Mr. Chairman; Mr. Goyer and myself would be pleased to answer your questions.

The Chairman: Thank you, Mr. Desautels. I will now give the floor to Mr. Giroux from the Treasury Board Secretariat. Mr. Giroux.

Mr. Robert J. Giroux (Secretary of the Treasury Board and Comptroller General): Thank you, Mr. Chairman. Robert Émond is with me; he is the acting deputy-secretary of the Human Resources Policy Branch.

[English]

I am pleased to be here to respond to chapter 11 of the 1994 report of the Auditor General on the management of scientific personnel in federal research establishments. On March 25 my colleague Harry Swain spoke to you about the federal science and technology review and its profound impact on the 1995 budget and the program review. He spoke of the transformation of the government's approach to science and technology and the reduction of science and technology expenditures across government. These changes have a major impact on our staff, the managers, scientists, technicians and support staff who carry out science and research projects, just as they affect all public service employees who deliver government programs and services.

Innovation and the rapid commercialisation of ideas, building partnerships with universities and the private sector, and risk management are increasingly important challenges for the science sector. Equally challenging, from a human resources perspective, is finding flexible and innovative ways to manage our scientific and technological people who are facing these changes. We must ensure that we have the right people with the right skills, doing the right work, in the right environment.

The 35,000-member scientific community covers a wide spectrum of scientific and engineering activities in all departments, agencies and crown corporations. Treasury Board, as the employer, has some 23,000 people in the nine major science-based departments. Managing this diverse group presents significant challenges.

In his report, the Auditor General focused on research which involves some 10,000 members of the scientific community. I will deal, from the employer's perspective, with two areas that the report discusses. First is the long-term human resource requirements: bringing in newly graduated scientific personnel; ensuring that the talents of scientific personnel are put to the best use; and ensuring that research establishments maintain the skills and knowledge base the government needs. Second is the need for a stronger and more effective research management capability.

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[Translation]

I will deal with that issue first, since the report comments in strong terms on systemic barriers to effective management and the need for tailor-made flexible solutions.

I will outline briefly what we at the Treasury Board Secretariat are doing to eliminate constraints and barriers for departments in managing people.

Just as departments are changing the way they do business, so is the Secretariat evolving and changing its management role.

We are moving from an environment of strict policies, regulations and controls to one of policy frameworks, increased delegation, and practical guidelines.

These changes in our role will support the unique business needs of different government departments.

Although I was pleased that the Auditor General's report acknowledges our positive response to departments for changes when a business case is made, we are moving away from dealing with a constant flow of individual requests. We are now implementing major systemic and integrated changes to support the effective management of the Public Service. In his presentation, Harry Swain mentioned that the expenditure management system provides a new vehicle for managing science and technology in government.

Clearly, that is our intent.

We have asked departments to look at how they are going to adjust their existing businesses in order to meet both the expenditure targets of the last Budget and their top priorities.

To do a credible job, departments will have to look at all their resource - human, materiel, capital, and technological. They will have to establish an integrated approach to management that will help them meet their goals. Gone are the days of the old functional stove pipes.

In some instances, departments may need help from the Treasury Board with business adjustments they have to make. For our part, we are carefully looking into all the areas where departments have requested such assistance. These may take the form of increased delegation of authority under some policies, exemptions from other policies, or relief from reporting requirements.

The Secretariat, too, is moving to eliminate its stovepipes. We are dealing with departments as a team, drawing on the expertise of all parts of our organization. Our human resources branch has recently established a special unit that will work as a partner with other branches and the stakeholders. We will provide single-window service to departments for the human resource implications of business adjustments.

[English]

Initial discussions with the scientific departments have revealed that they wish to restore increased flexibility and changes with us, such as developing a new classification system for scientists; developing a new package of performance management tools for scientists; increasing secondment flexibility and relocation incentives; getting an exemption from the five-year rule for hiring terms; and being able to hire terms quickly.

These issues are also part of the Auditor General's recommendations. We are examining many ways to increase flexibility, based on how essential these are to program delivery, and we are negotiating with departments case by case.

Hand in hand with increased delegation and increased flexibility to departments goes our responsibility to ensure that managers are held appropriately accountable for managing their human resources. Supporting this is the human resources management accountability framework, or HRMAF. Designed with departments, we plan to tailor this framework to individual departments.

The framework addresses five key areas of human resources management: leadership; a qualified workforce; a productive workforce; a sustainable workforce; and an enabling work environment. Human resources management accountability framework identifies results and performance indicators that define clearly what is expected of deputy ministers and what they should expect of their managers. It is an effective and practical reporting framework suited to senior management. As well, it is valid for all government organizations and is easily adaptable to science-based organizations and separate employers.

[Translation]

More specifically, science-based departments can, and have, developed initiatives within the framework of Treasury Board policies to meet their needs. For example, various departments have set up the following programs or activities, with varying degrees of sophistication: long-term training programs; promotion programs for research scientists; emeritus scientist programs; award and recognition programs for research; visiting fellowship programs; transfer of work programs; succession planning exercises; new performance evaluation programs, and with industry and universities.

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I recognize that the application of these positive career management programs is uneven, that some departments have met the career management challenge better than others.

What is important is that departments share their successes and avoid duplicating unnecessary development costs.

With regard to this, the Secretariat's human resources branch is establishing a best-practices capability for human resources management.

This will put the branch in a position to identify those public and private sector organizations that have the best reputation and to promote sharing and take-up of their initiatives by departments.

With respect to some of the more specific recommendations in Chapter 11, I believe we have made great strides in getting rid of constraints for managers.

We are dealing with such workforce adjustment constraints as the reasonable job offer and restrictions on early retirement with the early departure incentive and the early retirement incentive.

As well, the new pre-retirement leave program, which allows scientists to ease into retirement by being able to work part time for up to two years before retirement and which counts as full-time service, will help to renew the community.

[English]

We have to realize the government is at the crossroads of program rationalization and major downsizing. Nevertheless, given the profile of the community and the recently announced departure incentives, departments should have some flexibility to adopt a long-term recruitment strategy. I understand that departments are already converting indeterminate positions to terms as they become vacant, in order to expand the possibilities of acquiring new talent for research.

Treasury Board has given its approval to exempt from its policy that limits the length of term appointments those agriculture research projects funded by specified-purpose accounts with moneys from industry and universities. As a result Agriculture and Agri-Food Canada can hire terms for projects that may last longer than five years. Term appointments would end on completion of the project.

If appropriate, conferences may now be approved as training and development, which should help to develop a continuous learning environment. Moreover, we are moving toward granting more authority to re-spend revenues, in order to increase management flexibility and improve program effectiveness.

Considering the number of obstacles and recommendations identified in chapter 11, I believe the Treasury Board Secretariat is moving in the right direction to develop an effective human resources management regime, a regime that is supported by business planning, an accountability framework and adaptable policies, and a regime that emphasizes cost-effectiveness that can be tailored to departmental needs for its science and technology community.

[Translation]

Mr. Chairman, I would now be pleased to answer your questions.

The Chairman: Thank you, Mr. Giroux.

We will now hear Mr. Swain from the Department of Industry.

Mr. Harry Swain (Deputy Minister, Industry Canada): Thank you, Mr. Chairman.

I would first like to introduce Mr. Jacques Lyrette, who is on my left, the president of the Communications Research Centre.

It will be a pleasure to add a few words to Mr. Giroux's words of wisdom.

[English]

Following the recommendations of a 1990 National Advisory Board on Science and Technology report on revitalizing S and T in the Government of Canada, the CRC was established as an arm's-length institute operating under a memorandum of understanding with its parent department, now Industry Canada. This type of arrangement has come to be known as a Lortie-type institute, after Pierre Lortie, the author of the NABST report.

[Translation]

We have found that, in spite of the increased flexibility CRC enjoys, the Lortie formula does not answer all our needs. Many of the challenges CRC faces are similar to those found in other federal research facilities. They are outlined in paragraph 11.83 of the Auditor General's report.

[English]

The point made there with regard to term employment also reflects the observations in paragraph 11.32, where the report observes the current mix of skills may not be appropriate and there is a need to acquire people with new skills and different kinds of knowledge.

CRC has addressed the question of the right skills mix in both our business plan and our human resource management study. In both instances we used term employment to provide the flexibility we need.

[Translation]

Term employment is used to create the flexibility we need to maintain the appropriate skills mix.

[English]

The human resource management strategy contains a section on responding to constant change, which calls for the hiring of a number of term staff in the scientific and professional category to respond to fixed-duration research activities sponsored by both the private and the public sector.

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We are pursuing this course because research labs require highly skilled employees for the duration of a project, and sometimes a research program. This frequently lasts longer than five years, the limit set, after which a term employee must be offered an indeterminate position. We find ourselves in a position where, absent a special understanding of the Treasury Board, we are in effect endowing people with lifetime tenure after their probationary appointment as indeterminate public servants or after they have been on staff for five years as a term. As part of our business plans this year, we will be proceeding to Treasury Board to seek a variance from this policy to fit the requirements of CRC.

[Translation]

The policy on term employees also affects how we respond to the issues outlined in paragraphs 11.35 through 11.43 - the need for more systematic renewal of scientific personnel. The report calls for more recruitment of newly-graduated scientists, and the CRC agrees.

[English]

The CRC has created a rejuvenation program aimed at bringing the best and brightest young people into the lab to replace our ageing scientific personnel. As the number of permanent staff is reduced through attrition and retirements, we hire graduates on term contracts.

We also intend to increase the exchange of personnel with organizations outside the federal government. Not only is this an excellent means of bringing new people and new ideas into the government, but other organizations benefit from the transfer of knowledge and technology.

For example, a Spar Aerospace research engineer recently worked at CRC as part of an interchange program. Both organizations benefited from this experience. However, overly strict constructions of conflict-of-interest norms can sometimes hinder the kind of collaborative, partnership-based and interchange-rich work everybody agrees we need. Technology transfer means people transfer; a point widely agreed. This in turn means we have to rethink not just mechanical rules on conflict but also on compensation, rights to intellectual property and restrictions on employment following a tour in the public service. These problems are of concern to research and development managers at non-PSEA institutions within the federal government also.

[Translation]

Paragraph 11.59 through 11.87 deal with the need to develop a stronger research management capability. CRC's human resource management strategy addresses this need and implements several management practices such as: evaluating managers on their people skills and practices; giving managers the authority and flexibility they need to manage; and matching employee skills and potential with evolving needs.

[English]

More than in most areas of the public service, managers in these facilities have often been chosen on the basis of scientific achievement rather than deep devotion or maybe even knowledge of the arts of management. This is changing, but it is a slow, almost generational process.

Another point of general interest is the growing uncompetitiveness of compensation in the federal government's R and D enterprises. We are frequently unable to hire top talent, particularly at career peak, especially in the hotter fields. The CEO of one multinational information technology firm, which operates in Europe, Canada, the States and the Far East, told me that in his knowledge-based enterprise he needed to fertilize by rotating key people among countries as well as among labs.

While he could take Canadians anywhere, he could not bring foreigners here, and increasingly Canadians, having gone abroad, were finding the financial costs of returning too great. His firm pays a good Ph.D. with three or four years' experience two and a half to three times what CRC pays.

More locally, we are now no longer competitive with Canadian universities. One of our major research establishments - not the CRC in this case - recently tried to hire a full professor as the director-general of a major laboratory and undershot by $20,000 a year.

About the management of research establishments, a more general observation is that our research facilities need to move from a system that controls expenditures to one that manages resources, one that provides us with more relevant cost information so we can review the relevance and justification of a project.

Under the current system, the management skills within the public service emphasize expenditure management, but they are not particularly well focused on time management and project management. CRC will not be waiting for the one best system, but will be working with our internal finance branch to install a proper time management and project costing regime within this fiscal year.

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The recommendations in paragraph 11.83 also describe the difficulties that result from two employment classifications of scientific personnel: the RES, who are promoted on the merits of scientific contribution; and the others, who are promoted through competition when a more senior position becomes available.

The non-RES positions are governed by classification standards that are gazetted in The Canada Gazette for purposes of union bargaining. We've been told by the Treasury Board Secretariat that the classification standards would be very difficult to change, and I believe them. Perhaps enough on that. I think that's a well-known problem.

With the assistance of Treasury Board, the CRC has been trying to rectify the situation of the RES and non-RES. We have an agreement to create a new benchmark position for a senior-level engineer that does not include management functions. This is a small but useful step, and we count on the help of our colleagues at the Treasury Board Secretariat to deal with the larger issue.

I would like to conclude my remarks by reminding ourselves of the role of government in the two-pronged strategy outlined in chapter 5 of the Auditor General's report: short-term experimentation combined with long-term vision. The government has the long-term vision: using its research facilities to promote innovation in our economy. The CRC is getting well experienced in short-term experimentation: trying out the Lortie model, which provides considerably greater flexibility to our facilities.

Chapter 11 points out several ways in which we can fine-tune that experiment further. It also underscores some of the lessons CRC has learned that may be passed on to other research institutions. As with the other chapters on science and technology in the 1994 annual report, it is a pathfinder piece which will help all departments and central agencies in the challenging period ahead.

Mr. Chairman, I would be pleased to try to respond to questions.

The Chairman: Thank you, Mr. Swain.

Questioning by members, Mr. Fillion.

[Translation]

Mr. Fillion (Chicoutimi): Thank you, Mr. Chairman.

I have a very short question for Treasury Board on the number of persons quoted, which was 35,000. Of that number, 10,000 carry out research activities. Need we conclude from that that a researcher needs three people around him to perform various other functions?

Mr. Giroux: Mr. Chairman, I'm going to ask Mr. Emond to reply to that question.

Mr. Fillion: Yes, very briefly.

Mr. Robert Emond (Deputy Secretary, Human Resources Branch, Secretariat of the Treasury Board): The 10,000 employees referred to are people who do pure research. The others include support staff and the engineers who work in the laboratories. A part of that group of 35,000 does not have Treasury Board as their employer.

Mr. Fillion: I have a second, follow-up question. What are the payroll costs for that group? Can you give me some idea of the figures involved?

Mr. Emond: I don't have the figure with me, Mr. Chairman. I am sorry.

Mr. Fillion: We can always get it later. Mr. Chairman, my comment is about the Auditor General's brief; starting on page 3, in the French version, each paragraph of the report informs us that there are not global strategies - I am looking at paragraph 6 - nor clearly defined priorities.

Paragraph 7 repeats the same thing in a different way. Paragraph 8 mentions that it is not sufficient for scientists to strive for excellence; their work must also be in keeping with the government's objective, and the report goes on to point out the absence of clearly defined objectives. As you can see, strategy is at the heart of these comments.

Paragraph 9 again notes the absence of a clear direction. Paragraph 10 concludes with a reiterated call by the Auditor General for the establishment of government-wide strategies and priorities.

My question is the following: will the new research and development strategy that is to be tabled here at the end of June be taking these remarks into account, especially those that concern personnel? It doesn't matter who answers the question.

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[English]

The Chairman: Mr. Swain, you have something to say?

Mr. Swain: It seems to me the question is at several different levels here. One is the government's overall objectives on science and technology and so on. These will certainly be established; to a degree they are now, and they will be reiterated and clarified with the science and technology review.

Second is the question of objectives, clear directions at the level of individual departments, research institutes and so on. The Auditor General says he has found instances of lack of clarity in various places, but I'm sure it wasn't in my department, so I won't attempt to answer for anybody else on that.

Third is the level of do we have the tools to manage the scientific personnel in pursuit of those objectives? I think the bottom line, from everything you've heard from all three of us, is that in large measure we do. There is work to be done. Some of that work is at the level of the central agencies, the Treasury Board. Most of it, I would submit, is at the level of the departments and agencies that have to operate where the rubber meets the road. But yes, sir, I think we can do that.

[Translation]

Mr. Fillion: Is it a fact that the new research and development strategy will be tabled soon?

[English]

Mr. Swain: It seems to me this is a matter for the political level of government to decide. I hope it will not be too long.

[Translation]

Mr. Fillion: As we speak, in the opinion of departmental officials, is that strategy ready to be sent to Cabinet and tabled in the House? Is the whole strategy ready?

[English]

Mr. Swain: Mr. Chairman, we are working very hard on that and we will respect the government's deadlines.

[Translation]

Mr. Fillion: It seemed to me that the deadline was the end of June. You hadn't heard of it? The government was to table its new research and development strategy in the House before the end of June. Do you agree? Surely, you are asked to prepare something for Cabinet to table in the House. How far along are you in meeting that request?

[English]

Mr. Swain: That is the timetable.

[Translation]

Mr. Fillion: I did not understand your answer.

The Chairman: Mr. Fillion, you say that...

Mr. Fillion: The interpreter did not hear the reply.

Mr. Swain: I'm sorry. Yes, that is our time table.

Mr. Fillion: That is your timetable; so it's June. Will the strategy you will be submitting take into account the personnel you have at the present time, the impact on collective agreements, etc? Or, in preparing the strategy, did you not take into account the obstacles posed by your commitments to scientific personnel or other persons you have to live with? Do you understand what I mean?

Mr. Swain: Yes. Both, sir.

Mr. Fillion: Both; I see.

Mr. Swain: Both.

Mr. Fillion: So that means that you...

[English]

Mr. Swain: Yes. That means we take account of current reality. We want to make sure we optimize what can be done within current resources, current management schemes, the personnel we now have. We are also conscious of what the country needs and is going to need in the coming years.

[Translation]

Mr. Fillion: Each department that has to deal with the Department of Industry or Treasury Board has, in light of the new strategy, tabled documents laying out its personnel needs, for instance. Do you have that for each department?

[English]

Mr. Swain: In the business plans of each department, coming forward to the Treasury Board in the context of the expenditure management system, specific plans are laid out, constraints discussed. If flexibilities are required, they are requested in that document.

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[Translation]

Mr. Fillion: Could you table it with the Committee? Could you table the requests of each department? Would that be a laborious task? Would it be possible to obtain that for the Committee?

Mr. Giroux: Mr. Chairman, I'd like to specify that the business plans that come from the departments are essentially provided in confidence to the Crown, because they are submissions addressed to the ministers of Treasury Board.

Now, as you know, in the context of the new expenditure management program, the departments will have to present some summary documents to the committees of the House, discussing the future directions they intend to take.

So, those plans - which are known in English as outlook documents, but the French term escapes me - will be tabled with parliamentary committees. The departments will then be given the discretion to share their challenges and future needs with parliamentary committees.

However, detailed requests come under the responsibility of Treasury Board and must be treated somewhat like Cabinet briefs, that is to say they are considered confidential Crown documents, since they are submissions addressed to the ministers of Treasury Board.

Mr. Fillion: Is there a legal advisor with the Committee?

The Chairman: No.

Mr. Fillion: This remark is addressed to our clerk: if possible, I would like a legal advisor to review what has just been said for the next meeting, I'd like to know whether confidentiality is an issue or not, because I don't know about that. I'd like to obtain a legal opinion in this regard.

The Chairman: Your request has been noted. Thank you, Mr. Fillion.

Mr. Williams.

[English]

Mr. Williams (St. Albert): Thank you, Mr. Chairman.

Good afternoon, gentlemen. I appreciate your coming here this afternoon to answer some more questions in front of the public accounts committee. Again we have a fairly critical review - I would say a seriously critical review - by the Auditor General.

We spend a very large amount on science and technology, and I'm wondering how the government determines priorities, skills, motivation, costs and direction within the context of the public service, which is not demand-driven, profit-oriented and so on.

Mr. Swain, perhaps you could give us a very quick - and I say quick - synopsis of how you can deal with these issues in the public domain versus the private domain, because the Auditor General has been quite critical of the fact that you hire a scientist and then he's on staff for the rest of his working career, whether or not he's productive. The civil service culture is not oriented toward innovative, imaginative scientists on staff.

Quickly, how do you deal with that conundrum?

Mr. Swain: First, I reject the premise. I don't believe the civil service is a poor environment in which to do science. I have worked in science in universities and in the public service, and I reject the premise.

Second, the question of setting priorities, making sure one has the skills and motivation to get things done and so on, is ultimately done on a very localized basis. It has to be, for the obvious reason that you're dealing at the end with individual human beings working in small groups.

There is a priority-setting system that operates from the very grand, through expenditure management programs and so on, down to the particular. I think my colleague Jacques, for example, could describe to you in some detail the process of how one of the research programs at CRC was done.

Mr. Williams: But if you're working in a very small and localized decision-making environment, my question is, why are we doing it within the public domain rather than, say, trying to motivate the private sector to do it, if it's small and localized and term-oriented?

Mr. Swain: We do. That is, part of the management decision is always ``make or buy'', and there is a series of considerations one brings to that question. That's always part of the analysis before a piece of work is commissioned.

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Mr. Williams: The Auditor General has pointed out the fact that if a person is hired on a term contract and is around for more than five years, they're automatically on permanent staff, and if they're hired at 25 and by 30 they're on permanent staff, they're there until they're 60 and 65. That is not going to be the most productive type of environment. He has raised serious concerns along that line. My question is why are we doing so much in-house when I think we get a better bang for a buck putting it out for a competitive private sector?

Mr. Swain: There are two observations. The first one is that frankly we can do a lot to deal with that five-year threshold within the existing rules, on a local basis.

Mr. Williams: So why haven't you done anything before?

Mr. Swain: We have been doing it. As I was describing, at CRC that is precisely what we are doing. We are managing projects so they finish within a period of five years, and for those few that go over a longer period, we are seeking the necessary legal flexibilities from the Treasury Board that will allow us not to endow somebody with lifetime tenure.

Mr. Williams: Mr. Desautels, this seems to be a change of heart from what is in your reports. You're saying it's not there and Mr. Swain is telling us they have been trying and they are continuing. Is this a serious situation within the scientific community, that they get a job for life with a term type of employment, as you have raised? Do you see this as a serious concern about the innovation capacity of scientists working for the federal government?

Mr. Desautels: Mr. Chairman, I just wish to say first that I recognize that the organizationMr. Swain is talking about has done certain things to try to alleviate that problem. On the other hand, they are one organization among quite a number of labs across government. As far as I know, it's not a generalized effort right across the government. We felt that it was still a problem.

I'll ask Mr. Goyer to elaborate a bit more on that.

Mr. Jacques Goyer (Principal, Audit Operations Branch, Office of the Auditor General of Canada): Mr. Chairman, I guess the problem varies according to the research establishment. We have to recognize that CRC has a different status from that of most research establishments. We raised this problem because in our view it is not necessarily affecting a large number of people, but the fact is it presents a problem. Mr. Swain's presentation indicates that for certain people - it may not be a large number - it is a problem because the rule applies.

It is difficult for the Treasury Board Secretariat in particular and it has taken time. For example, Mr. Giroux referred to Agriculture. The first time this problem was identified, as far as we can go back in our files, was by National Defence, and eventually Agriculture. It took about two and a half years to resolve it. If you look at Agriculture, it was maybe a year and a half. We're not talking about a big problem, but the fact is it takes time.

The reason why it takes time is that Treasury Board has to consult with other people, departments, that may not have the same problem. In fact, unions would argue that in the past, some departments have used the term employment for too long while they're trying to focus on specific projects. That's why it's taking some time to resolve some of those issues.

As Mr. Giroux mentioned, the agricultural branch does have the exclusion or the exemption for a specific part of its organization, but in the case where the project goes beyond five years, in the case of CRC, they still have permanent appointment after five years. It's the time it takes and the mechanism the Treasury Board must put in place to come to an agreement.

We're saying it's not necessarily a major problem. This is not the biggest problem facing science and research. The fact is it is difficult. It is not easy. The same thing for classification: these are not easy.

Mr. Williams: Would it be better therefore to have it farmed out to the private sector on a contract basis?

Mr. Goyer: It's not for us to decide what should be done within government. I think government has to decide what science and tech or research and development it should do inside and what has to be done outside. What we're saying is that the human resource management system must support whatever the institution or the research establishment is trying to do. As Mr. Swain has mentioned, we're not necessarily talking about 2,500 people, but it may be 10 people. But for 10 people we'll have to raise an exemption with the Treasury Board and it will take the time it takes to get an agreement from Treasury Board, and it has to deal with unions, because unions are involved in this project.

.1625

Mr. Williams: Mr. Giroux, you have about 120 labs under your direction as a Treasury Board employer. How does the Treasury Board or whoever is directing these labs determine what is important as far as scientific research is concerned? Are you cognizant of the marketplace? Do you sell this research in the marketplace or are you doing just some basic research that you feel may be worth while at a later date? How do you determine the priorities of these labs and find out if the staff there are productive and generating new ideas and new technologies that can be sold in the private sector and be a worthwhile return? Do you actually sell this stuff in the private marketplace?

Mr. Giroux: First of all, Mr. Chairman, it is the responsibility of the departmental minister and department management and the management of the labs to determine the research priority, the research that's going to be done, how it's going to be done, how its going to be managed. That is not the role of Treasury Board. Treasury Board is the employer for the sake of the human resource management regime, the collective agreements, compensation and a number of these things. It is up to the departments to do research on the priorities they feel are important for their mandate, how they use that research in the activities they will undertake and -

Mr. Williams: Is anybody evaluating this to find out if it's producing anything of value? We're spending this massive amount of cash on research every year. Who is evaluating what it is worth and what kind of payback are we getting? Mr. Giroux or Mr. Swain.

Mr. Giroux: Just to finish what I was saying, a number of the business plans that are coming in from the departments do have performance measures or some guidelines in this particular area. About who is evaluating this, I'd say all of the major departments in research and science do have internal audit and evaluation shops and they do have evaluation plans. These evaluation plans are intended to ensure there is value for money in what they are doing. Of course the Auditor General also has that particular mandate in its comprehensive audits when the auditors come around and do the reviews of the research that is being undertaken.

Mr. Swain: Yes, we do evaluate the results of research, just as we evaluate the ``make or buy'' thing.

Mr. Williams: Do you evaluate for profit, or what's the scoop?

Mr. Swain: We think we're returning value to the taxpayer. I would love to cite many examples. Going through a list of examples may not be what you want right now, but I would say yes, we are.

The Chairman: Mr. Williams, we'll come back after the -

Mr. Williams: I just wanted the same said about this same question, Mr. Chairman.

The Chairman: Okay, we'll come back after Mr. Shepherd.

Mr. Shepherd: As I sit here and listen to the testimony, I think there's a tremendous irony about all this. We're talking about innovation, technology, being in the modern research environment. You're telling us you're being restricted by the very fact that this is the way we did things 10 years ago. If we wanted to start a new research facility tomorrow, we might also go out and look at new management systems to manage that process. We might look at different remuneration systems. We have the Treasury Board here. We have people in the science industry. Why can't we do this?

Mr. Swain: I believe we can. One of the virtues of the review work we have been doing over this last year is that it's brought a number of these programs into quite clear focus. Frankly, if you can once specify your problem with precision, you're halfway to an answer. I believe you will see the diminution of a number of these hurdles over the next year or so across the system.

Mr. Shepherd: You're telling me you have to go and get an exemption certificate just to go to the next step here. Why do we have to do that? Why haven't we resolved that by now? Why can't we get around this five-year rule? Why aren't we looking at possibly grandfathering the system; any new scientists come under a new policy?

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Mr. Giroux: If you would permit me, the five-year rule is a very complex issue. It was brought in about 10 or 15 years ago by the employer agreeing to a lot of representations on the part of the unions that there was in fact a certain amount of unfair treatment of people who had been in term jobs for sometimes seven, eight or ten years. These people had virtually no employment security compared with the indeterminate employees in the public service. They did not have the benefit of the workforce adjustment, they did not have the benefit of the various separation packages that were in place, and so on.

The government as an employer, wanting to be a good employer and a fair employer, said that after five years it seemed to make a lot of sense that if they had been continuously on term employment they could become indeterminates. At the time, all the unions agreed that it should apply to their membership and so forth, because it provided a certain amount of security to terms - and fairness.

This is what we have today. We're now realizing...because employment has changed considerably in the last ten years. If you look at the private sector, if you look at what's going on elsewhere, more and more there is a requirement for project-oriented work. There's a requirement to define that this work starts on this date and finishes on that date. The qualifications of the person to do that work may not be transferable to other types of project-oriented work, because it's very specialized. Therefore if your project is going to last more than five years you have a problem when you hit the wall of the five-year rule.

We are looking at this right now. We have made some exceptions in the Department of Agriculture and Agri-Food, as I said. Quite frankly, it's one of our challenges to try to find a way to manage this better, to recognize project-oriented work. I think we gave very good grounds, a good case, to say, well, if it's eight years, it's eight years, and that's it, the project stops, versus people who have been in continuous term situations - for example, secretarial, clerical, administrative - and who really are doing a full-time job but do not get the benefit of what full-time employment will give them.

These full-time benefits are very large in today's public service environment. For example, if they are not a most-affected department they are under the workforce adjustment directive. They have employment security, they are entitled to a reasonable job offer, and they are also entitled to the various separation benefits in place.

This is what we have to manage. Both the Auditor General and Mr. Swain are right. It is a severe constraint in those types of situations where we are going to do some project work. We're looking at it.

But I don't want to lure the committee by saying it's going to be easy. The unions see this as a major gain, something they've worked hard to have. We'll certainly try to have discussions with them, but my sense is that it's going to be difficult for them to be forthcoming on this issue.

Mr. Shepherd: In view of how this is such a major constraint, should you not simply put a freeze on hiring at this time? Should you hire any more people under this system?

Mr. Giroux: We now hire people who are indeterminate, so they're not a problem. You make a conscious decision at the start. We hire people on term. That is a flexible way of hiring. The problem is when you have them for a longer period, a period that goes beyond five years. Many research establishments now establish programs - and Mr. Swain knows this better than I do - that last less than five years, at least not to tie themselves to making these people indeterminate after five years.

Mr. Shepherd: Once again it seems to me we're making the research community march to drums and songs written a long time ago, and maybe that's not where we should be going.

Mr. Swain, you mentioned in passing the need, possibly, if you're going to continue in this business, actually to remunerate scientists on a more competitive basis. Is part of the rationalization of the science and technology policy maybe to do fewer projects but possibly remunerate a little better the ones who are there; focus on excellence and only bite off what we can possibly chew?

Mr. Swain: I would like to be able to do that, but wage-bargaining is something the Treasury Board does on behalf of all departments, so there is no flexibility in that respect, particularly in the current era of wage freezes.

.1635

If one's trying to get something done in a field where the federal government is clearly uncompetitive, the only choice is to contract out. Then we sometimes run into some of the real difficulties with contracting.

You may be dealing in an area of serious national security. I mention cryptography as one possible example where we either do it ourselves or we let the Americans do it for us, and I think that has costs. If you're contracting out, you may have some interesting difficulties with the ownership of the resulting intellectual property. The Crown may want to have a right that's difficult to obtain.

There are circumstances in which, even for conflict of interest reasons, the public in general expects the research to be done in-house. For example, the testing of pharmaceuticals is not something the broad public wishes to leave entirely in the hands of the pharmaceutical companies. There are valid reasons for doing things within the federal government. Now, if that's the case, and you can't afford to hire top people in pharmaceuticals or information technology or cryptography or applied maths or computer science, then you have a problem.

Mr. Shepherd: So it looks as though you have a problem.

[Translation]

The Chairman: Mr. Fillion, you have five minutes.

Mr. Fillion: I would like a clarification from Mr. Giroux.

As I understand, while the Department of Industry supports the governmental research and development strategy, they ask you to suggest changes to the Public Service legislation in order to help them to implement that strategy. Did you get orders from them?

Mr. Giroux: Mr. Chairman, I haven't thoroughly examined the business plan of the Department of Industry which includes the research group, but as Mr. Swain mentioned, it asks the Treasury Board to allow him more management flexibility in order to reach its operational goal.

We are evaluating the matter and as I said in my introduction, the new expense management framework providing for business plans will allow us to recommend to the Minister of the Treasury Board a more flexible approach focused on the needs of the organizations that ask for it. So, we will try to give them as much flexibility as possible, taking into account the collective agreements and other restraints, since some regulations are extremely complex.

Mr. Fillion: Based upon what you just said about flexibility, can I say that there will be no global policy applied to all departments? Each department will have to argue its case, but there will not be any global policy.

Mr. Giroux: Mr. Chairman, we intend to have very general accountability framework and general policies that will provide for as much flexibility as possible to meet the specific needs of the departments.

However, we are a public service and not a series of small independent organizations. If we allow more flexibility in an area, we must assess its impact in other areas. It is all taken into account in our analysis but in any case, when we develop our policies, we will do our utmost to accommodate the departments.

Mr. Fillion: I would like to relate my question to those requests for exemption certificates, which seems to indicate a case-by-case approach.

The Auditor General suggests that the Treasury Board only deals with financial matters such as the pension system, the retirement system, and that the departments that are directly involved in research be responsible for the administration and the work contracts of these employees. Do you agree with such an approach, Mr. Giroux?

Mr. Giroux: I must say that we are currently studying our approach to the management of collective agreements, because we must not forget that we currently have collective agreements concerning the Public Service in general. What we would like to do, before the salary freeze is lifted within the next 18 months, is to allow as much as possible the departments to make their own decisions and to give them as much authority as possible for their operations, within the framework of general collective agreements. We are going that way, but I must say that it is not totally up to the Treasury Board to decide; we hope that when the wage freeze is over, we shall be able to come to an agreement with the unions.

.1640

Agreeing with the unions on the management of collective agreements in the future is an important step. We are not the only party involved; if my president was here, he would also say that we do not like to use a legislative approach. We would like to return to a collective bargaining system in which the two parties solve their problems together.

Mr. Fillion: You are in favour of a more decentralized system that would allow departments to manage their human resources more freely. That's what you just said.

Mr. Giroux: Roughly, you're right; that is the approach we would like to take.

Mr. Fillion: Very well.

The Chairman: Mr. Williams, five minutes.

[English]

Mr. Williams: I'm just quoting a few of the main points in the Auditor General's report:

Overall significant improvements are required in the management of scientific personnel and research establishments...Senior managers and research establishments recognize the current mix of skills may not be appropriate and only limited formal efforts have been made to determine long-term human resource requirements in research establishments.

With these kinds of comments, Mr. Giroux, and again referring to the Auditor General's point 27, are you prepared to give a commitment to the public accounts committee that the long outstanding problems identified by the Auditor General will be addressed in time for him to do his follow-up reports so that he can come back and give us a much improved bill of health?

Mr. Giroux: Mr. Chairman, the Auditor General quite rightly points out that the Treasury Board is one of the organizations that is facing severe cuts as a result of the program review. We will have to establish our priorities. These priorities are going to be the final prerogative of the President and the Ministers of the Treasury Board. However, we are conscious of the needs of the scientific community and of scientific personnel.

We've already started to work in the direction of the recommendations of the Auditor General's report. Certainly it's one of my priorities to go a long way toward establishing a regime that will make sure the research and science in the federal government fosters and has as much managerial flexibility to meet its objectives.

Mr. Williams: But is that going to be done in time for the follow-up report by the Auditor General so he can say yes, these problems have been recognized, they are serious, and they have been resolved for the benefit of the Canadian taxpayer.

Mr. Giroux: Well, I don't know when the follow-up report of the Auditor General will take place, but as I said to the previous question, a lot of what we may want to do and what departments are doing.... Remember, it's not only the Treasury Board, this is a joint effort between Treasury Board and departmental management. We also need to have from departmental management some clear objectives as to what they want to do, and we're working this out now.

But to the extent that we can amend collective agreements, to the extent that we develop new approaches, we will try to do our best to advance it and to be sure that we do meet the requirements of the management of the scientific community. As I said in my opening statements, we've already gone a good part of the way with some of the measures we've introduced recently in terms of early departures and so forth, which was one of the items that was identified in the Auditor General's report.

.1645

Mr. Williams: Perhaps Mr. Desautels would like to comment.

Mr. Desautels: Yes, Mr. Chairman. We, of course, would be quite influenced by the wishes of this committee in terms of what the appropriate time would be to do a follow-up, not only of this chapter, but I think we have to consider the three science and technology chapters together.

One of the factors I think we all have to take into account is the report that will come out of the review and what follow-up will be given to that particular report. I'm hoping that report will in fact set the tone for certain policy changes or changes that will address at least some of the concerns we've had in all three chapters. I believe it will be important for us at first just to keep a watchful eye on what will come out of the report and how the report will influence the future direction of this whole activity.

The Chairman: Mr. Williams, one final question.

Mr. Williams: You do put me in a spot, Mr. Chairman. I think we'll leave that one, because the committee can deliberate on that, Mr. Desautels, as to a timeframe that we feel is suitable to follow up. But I would like to state that I feel science and technology and research are so important that we must ensure that we're focused in the right direction, that we are getting bang for our buck, that we do produce something we can sell and ensure that it's going to enhance the standard of living in Canada.

That's a point I was trying to get to before, Mr. Swain. How can you determine that we are getting a return for our investment dollar? As I said, is this basic research we're doing or is it in-house research that we're doing that we don't want to farm out to the private sector? With this kind of investment, surely there must be major spin-offs to the private sector. Are we maximizing that opportunity?

Mr. Swain: I hope we are. The work we're doing at CRC is very much applied research; it's research with a mission in mind. The mission is established by statute, in effect.

Perhaps I could ask Jacques Lyrette to say something about the value of the work exactly.

Mr. Jacques Lyrette (President, Communications Research Centre): Two of the things about the CRC have been mentioned a few times. Basically, we do have a statutory responsibility and we do have a memorandum of understanding with the Department of Industry, but most important is the fact that we have an advisory board, which comes from both the public and private sector, that helps us and tells us when we're on the wrong priority or when we're doing the wrong research. They also tell us another thing: where we can partner, where we can gather some synergy.

We do have a business plan with performance indicators. One of them is the intellectual property that we sell and royalties that we negotiate with people taking technology from the lab. Most of them agree to reinvest in the lab.

We were talking a minute ago about some incentives to researchers. Part of the royalties go back to the researchers, and that's part of their incentive to spin off R and D results. Fundamentally, we go in and experiment, and Treasury Board gives us the authority to keep 100% of our intellectual property revenues to go into partnership both nationally and internationally.

What we're doing many times, being the government and not being the government, is first asking ourselves whether this is something we want to take on, whether the private sector is willing and able to take it on. But we also have to support the statutory responsibility, the interconnection of networks and some other things, the wireless technology that has to be developed, spectrum management. We do this research on behalf of the government, but basically what we try to do is spin this off.

We have started a program called the Innovation Centre, where small companies that want to take on technology can come to the lab, stay there for a limited period of time, and then go back into the marketplace and sell their wares. In Japan, the success rate of small companies that have been started that way is 80%.

We have been able to do some interesting changes to the way we manage the lab. f The board of directors has a very interesting formula, because not only do they spend the time and invest the time in the lab, but they also force me to push the envelope, from best management practices.

.1650

For instance, they were concerned about the ageing population of our scientists, as was the Auditor General. They've asked me to prepare a rejuvenation plan, which they've approved, which saw the number of permanent staff decreasing over a period of time, and what I call my transient population - which is both term or with a specific tenure and exchange people - increasing in an important way. Because we're one of the most affected departments, I will probably be able to.... I was going to meet my objective over the next five years; I'll be able to meet my objective in about two or three years. I'll be able to compress my timeframe about two years.

We are operating very much in an autonomous way with the Department of Industry. We are making some headway, in making sure that our research activities are relevant, support the public policy and public good - moving communication up in the north, moving the information highway in the north. We're working with carriers on that. We make sure we don't duplicate research efforts. I was asked by the Information Highway Advisory Council about two weeks ago to bring together all the CEOs of research labs, both government and private, dealing with issues related to information technology and telecommunications, to see how we can develop models for collaborating and getting a better synergy. We have been doing that.

I would like to invite you come to the lab and see what we're doing, meet some of the people who are part of the incubator. I would be willing and able to share some of the things we've done on the human resources aspect, the management system we've put together.

For instance, through attrition, through the program, we've taken on 24 young Ph.D. students this year. I must tell you they're first class and they come fairly cheap as far as the cost goes. Not only that, there was a comment about some of the government researchers not being entrepreneurs. I must say that some of my researchers are good entrepreneurs; if you give them the objective and give them the authority, they'll be out there beating the bushes.

We've been making some progress in the private sector. I have two responsibilities: one to the department, through my deputy minister; but I also report to the president of the board of directors of the CRC, which writes part of my appraisal. This is unique in the model we use. I get an appraisal both from the deputy minister and from the chair of the board, so if I don't deliver the goods, I get it from the private sector and the department.

Mr. Telegdi (Waterloo): I guess this science and technology review will address some fairly important questions, but, Mr. Swain, in your report you talk about the business plan calling for a reduction of 15% of the permanent staff. What's magic about 15%? Could it 25% or 30%?

Mr. Swain: That was a consequence of the overall financial limits the government handed down to us, and we had to partition those out among all of the activities of the department, to decide how much money we would take from the intellectual property organization, and how much from the industry sectors, and how much from research, and so on. Our business plan contains a pattern of very carefully chosen reductions across all of the activities of the Department of Industry, money driven; and the personnel are, if you will, a consequence of the amount of money in the single operating budgets.

Mr. Telegdi: I guess, depending on how much money was cut, you could have been down to 30%.

Mr. Swain: Yes.

Mr. Telegdi: I wonder, have there been studies done on cost-effectiveness of research conducted in-house and what contracting out would be, with us trying to supervise research being done by universities or private labs?

.1655

Mr. Swain: Yes, there have been a number of studies. The most convincing are at the level of individual research projects or programs. Once you try to generalize and compare apples with oranges you get into real problems of comparability. Very general results in that area are not to be trusted, but we do know some things. We do know what are the management characteristics that will increase the probability of success and cost-effectiveness.

Mr. Telegdi: It would seem to me that the universities are really suffering from an ageing faculty. There's little movement in by younger Ph.D. recipients. You mentioned with some pride that you've hired some younger ones.

Have you looked at the benefits if they were at the university? For example, they probably would get paid less, there would be greater flexibility, and they would get all sorts of volunteer help from graduate students and what have you. Depending on which university you look at, many universities have a great deal of partnerships with industry to make sure whatever is the research gets applied.

I'm wondering to what extent we could be brokers in making all that happen, in getting a bigger bang for the dollar.

Mr. Swain: Particularly at Waterloo.

Mr. Telegdi: Yes.

Mr. Swain: In fact, we do engage in partnerships of that nature. Various departments have sponsored chairs, short- and long-term research arrangements, research contracts. Of course, through the granting agencies the federal government supports a great deal of investor/investigator-determined research.

Our problem is essentially that if we want to get done a piece of research on time and on budget because it fits in some larger plan or we need it for policy purposes and so on, it is frequently highly inefficient to assign that to a university person, even under a contractual basis. Typically, university researchers have many competing demands on their time, not least of which is teaching and university administration. There frequently are problems of research overhead and infrastructure in the universities. Frankly, as a national problem it's rather larger than some of the ones we've been talking about today.

Yes, in some circumstances it can be useful, but a larger problem in Canadian universities is that they hired a vast number of people in the late sixties and early seventies, when it looked as though the world was expanding forever. This slug of people, now all middle-aged, are going like a bolus through the university system. If we think we have tenure problems, boy, they have them in spades.

That problem isn't going to be solved by our placing some young PhD-holders at the margins in the universities. It's something that has to be addressed either at the institutional level or by the passing of a generation into retirement.

Mr. Telegdi: Do you have studies on those comparisons, in-house versus contracting out?

Mr. Swain: They could be found. I haven't any handy, but there are studies of that nature around.

Mr. Telegdi: Can you make some available to the committee?

Mr. Swain: Will do.

Mr. Telegdi: Thank you.

[Translation]

Mr. Fillion: I am presently on paragraph 24 of the AG's opening statement and I put my question to Treasury Board. It says that without the support of a human resource management, framework that is flexible and tailored to their respective needs, it is difficult to fulfill the priorities and objectives. The departments are asking you to change the work contracts.

Before you do anything, do you wait for all departments to make their request or do you deal with them one by one? All the departments are not equally interested, and some research is not a priority. They won't take any notice of whatever Treasury Board says. But the other departments, where research is a priority, may make some requests. Do you wait for everybody to make their request before acting?

.1700

Mr. Giroux: Mr. Chairman, the business plans of the departments - it is one of their characteristics and one of their strengths - are tailored to their respective needs. A department will develop their business plan and will indicate to us within the framework of their activities and of the characteristics of their staff, the things they are in need of and will request from Treasury Board to give them some flexibility and to assess some policies, and so on and so forth.

We consider each department and if we can lift some of the constraints provided for in our policies, we make the necessary recommendations to the minister in charge of Treasury Board because it is up to him to make the decision. Our vision of business plans contains characteristics that are specific to departments.

However, we notice that many departments are making the same requests. Let me give you an example: they would like to be able to carry over to the following year a larger part of their expenses because it affords them more managing flexibility. There is nevertheless a financial impact that we must analyze because if we go too far that impact can be quite serious.

Before making our decision for a given department, we want to have an idea of the requests of several departments - in particular the big departments, the ones with the big budgets.

I gave you two examples of things that will guide our vision of business plans.

Mr. Fillion: It won't create a vacuum if a department does not have any request, you keep on studying the requests of a department even if another department has not made a request?

Mr. Giroux: Exactly. We consider each department individually. Before it was the program directorate that was in charge of studying the budgets, but we have realized that the departments' business plans do not strictly come under the mandate of the program directorate.

On the financial management, human resources and contracts side there are also a lot of requests and as I said in my opening statement, it is the reason why we have established multipurpose teams within Treasury Board.

When we receive a business plan from a department, all the directorates of Treasury Board that have an impact on the activities of that department join forces to put it under scrutiny, something that Treasury Board did not do before.

Mr. Fillion: Do you have one team that is in charge of the management of the business plans sent by the departments so you can respond more rapidly?

Mr. Giroux: It is mainly the responsibility of program management. In the case of the business plan of the Department of Industry, for instance, I have here Mr. Gershberg, who is the assistant secretary of the program directorate. For instance, he's responsible for the economy-oriented departments. It is him and his team who will give an idea to the departments of the reaction of the minister responsible for Treasury Board, etc. Before they do so they will make sure that they have the views of all the general directions of Treasury Board for which they will act as a kind of spokesperson. Otherwise, we will try to open only one window to Treasury Board.

Mr. Fillion: For instance, let's take a request from the Department of Industry for one of its labs. It is very specific and it goes to Treasury Board. Can you tell me how long it takes between the sending of the request and the response given to the department?

Mr. Giroux: For the time being, we are on a trial run because it is our first year of operation. We have asked for the business plan for mid-April. We have received several but we are still waiting for some. This week we start making presentations to the ministers of Treasury Board. After the meeting of the ministers of Treasury Board, we will relay to them the reactions to their business plans.

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We would like to review in-depth a dozen or so departments, especially those departments most affected by the program review and we will also be attempting to give some feedback to the other departments by the end of June.

That gives you an idea of the situation. There is a lot of discussions going on with the departments before the finalization of the business plans. Within two or three months we will have to give the various departments some idea of Treasury Board's thinking.

The Chairman: Mr. Fillion, a final question.

Mr. Fillion: Concerning downsizing within the Public Service, is there a guideline concerning the percentage of cuts in scientific research and development personnel?

Mr. Giroux: Mr. Chairman, there has been no comprehensive guideline. According to the plans that were approved by Cabinet within the framework of the program review, the responsibility for that belongs to each department and the impact on various manpower levels will determine actual cuts in personnel among the science and research community.

Mr. Fillion: You are not in a position to give the precise percentage? In the absence of a guideline, you are not in a position to determine what that figure would be?

Mr. Giroux: Not at this point in time. Several departments have not yet completed their program review, have not yet identified the persons that will be affected by it and the task will be ongoing in the coming months.

I believe you raised that very question last week and you were asking at the time whether we would be able to do anything about that before the end of the year. I think we will be having a much better year, there's no doubt about that. That being said, however, my understanding of the issue has not changed all that much since last week and I'm still not yet in a position to make any commitments on that point.

The Chairman: Mr. Williams.

[English]

Mr. Williams: Mr. Giroux, getting back to the Auditor General's comment in point 27 of his report, he says:

The committee may also wish to seek assurance that we will not witness a repetition of what has been happening over the last 30 years and that we will see indications of an innovative and forward-looking approach to the management of human resources.

That's a fairly serious indictment that he's making over the last 30 years.

The comments I've been hearing this afternoon are that, yes, we are going to address these problems, but it seems to be indicative of a lackadaisical attitude within the public service, or within, let's say, the Treasury Board, that we don't resolve these issues until we're pushed into resolving them.

Why is the Auditor General - and I'll also get him to comment on it - saying that the problems that have festered over the last 30 years are only now going to be addressed? For example, you talk about the multi-business plan reviews that are now going to be done. This is something the private sector has been doing for 20, 30, 40 years.

Mr. Giroux: I have to say that I'm not at all in agreement with the statement in the Auditor General's report. I firmly believe that the Public Service of Canada and its members are one of the best in the world, and therefore there has to have been some good human resources practices over the past 30 years. I've been part of the system myself, and therefore I cannot at all have any sign of sympathy for that statement.

What I can say, though, is that we're evolving in the public service as well as any other people, but we have had very good approaches in the past when the public service was in a growth mode. A lot of very innovative management practices were put in place in terms of human resource management. But we are now in a downsizing environment. We're in a more difficult environment, and we're adapting and going in the direction that I've indicated to you. We have not found these approaches overnight; they've been developed over a period of time. The Treasury Board has been delegating and adapting its approaches over the last eight to ten years that I can recall.

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There's no doubt that, with a reduced number of resources and more need now to provide more flexibility to departments, we're in the process of accelerating these measures.

Mr. Williams: Except the private sector had to do that over a two-year period in the early eighties. As it went through the recession it got the job done and moved on to smarter and more efficient business practices.

Mr. Desautels, with regard to your comment that there seems to have been a lack of motivation to be up to date in management of personnel, can you comment on your point there and what you really would like to see them do?

Mr. Desautels: I'll ask Mr. Goyer to explain that.

Mr. Goyer: I've taken note of Mr. Giroux's disagreement with our comment, but I think what is being raised by our report, instead of looking at each individual item, is one fundamental question, and that's what we're referring to when we make that statement.

The fundamental problem is very simply this: to what extent should departments' research establishments be responsible for human resource management? That's the fundamental question, and that's been asked for the last 30 years.

Now, we have chosen - and it's not my decision - a central form of human resource management. But everybody who has studied this problem has raised, in some way or another, this fundamental issue. I think we're saying that in the new context maybe we need a different answer.

I think you heard Mr. Giroux say that we're moving into a new direction. That's what we were referring to.

Mr. Williams: I'll address this question to Mr. Swain. At 11.94 of the Auditor General's report he says the government should create a forum specifically dedicated to issues related to the management of scientific personnel within the structure expected to be established by the government to oversee the science and technology portfolio and to coordinate the activities of science-based departments.

Do you agree with that recommendation that a forum should be created?

Mr. Swain: Yes.

Mr. Shepherd: I'm still mystified by a bit of the organizational structure. Under Treasury Board there are 120 labs. Is that...?

Mr. Giroux: No. Let me correct this. The Treasury Board is the central agency that is in essence the employer and responsible for the broad management policies, but the laboratories are under departments of government. What the ``120 labs'' refers to here are the labs in the departments governed by the policies of the Treasury Board, but the Treasury Board is not accountable for the management of those labs, for the output of those labs, for the priorities of those labs. The labs are the responsibility of ministers, deputy ministers and individual departments.

Mr. Shepherd: Why is it set up in that way in the first place? Why are you cutting the pay-cheques but you don't have much to say about how the pay-cheques were arrived at? Is that a fair analysis?

Mr. Giroux: Yes, it is a fair analysis. I think Mr. Goyer raised this question. The government in the past has chosen to manage the public service as essentially one big corporation with subsidiary organizations, I guess you could call them, with their own specific mandates. If you look at the private sector, if you look at governments elsewhere - the United Kingdom, New Zealand and others - they're moving more and more into providing organizations with the whole gamut, if I can call it that, of all their authorities and human resource management, and managing on their own.

That's not what we have now in the government. We're a bit of a hybrid, We have some of it but in other parts we don't have it. That's a key question in terms of the direction in which the government wants to go in the future.

Mr. Shepherd: The object of the exercise is to cut that link between Treasury Board and the labs, have the labs directly accountable to their individual departments and have the departments formulate human resource policies. Is that kind of the way -

Mr. Giroux: That is a way it could work, or the labs themselves could become, for example, separate employers with their own management regime and report directly to a minister. I think the National Research Council is an example of that, a separate employer reporting to - I think I'm correct, Harry - the Minister of Industry.

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That's one model.

Another model is labs within the departments themselves reporting through the departmental structure. But their management regime, the amount of freedom and authority they would have, in terms of hiring and firing, compensation policies, and all of these others, is the key question.

Do you wish to have it under the umbrella of one organization, one public service, or do you wish to break it down into a number of individual units? That is one of the key questions we're dealing with.

Mr. Shepherd: This is an interesting observation I had when I was in China, of all countries, a communist country. They took their agricultural marketing and research department and put all of those people on a combination of percentage of performance - they received a basic pay-cheque, plus bonus factor - and basically privatized the whole system.

Mr. Williams: In a communist country, no less.

Mr. Shepherd: The government was still contractually obligated to them, but managed to privatize.

Can we learn something from this communist country, which has gone a lot further down the road in privatizing its labs, and so forth, than we have?

Mr. Giroux: I'm not that familiar with China. I did have an opportunity to visit them a few a years ago. I know they're making quite a number of reforms in the way they manage their operations, but I cannot comment on that.

I can only come back to the very basic principle that it is a form of management. The fiscal pressures on us, as well as some of the directions to provide more authority at the place itself, are the kinds of things we will have to look at in the future as we proceed towards the management of the public service.

Mr. Shepherd: The fact that a country that's been a communist regime for years seems to be passing us is an obvious concern. We seem to be missing the boat.

On page 3 of your dissertation - and possibly we're talking at cross-purposes here - you talk about some of the objectives you want to see: developing a new classification system for scientists, developing a new package of performance management tools for scientists, etc.

Is this the report you're aiming at in June? Is that what you're talking about?

Mr. Giroux: You're talking about page 3 of my comments?

Mr. Shepherd: Correct.

Mr. Giroux: Could you refer to them again? I don't have the same page 3 as you have.

Mr. Shepherd: You say, ``Initial discussions with the scientific departments have revealed that they wish to explore increased flexibility and changes with us such as...'', and then you've listed all the points you want to address.

When would be a reasonable point in time for the committee to get a report on how that policy is evolving? Is that your June report?

Mr. Giroux: No, that is not the June report. These are the flexibilities the departments are bringing to our attention as part of the business plan review. I'm giving you a bit of a summary of the kinds of things they're asking us about, which are very similar to the recommendations in the Auditor General's report.

Some of these are easier to do than others. The first one, for example, ``developing a new classification system for scientists'', is not a simple task. First of all, we have to decide on what kind of classification standard we will apply. We've been doing some work on what we call the ``universal classification standard''. We have to ensure that if we do put it in place it's going to pass the test of being gender-free and acceptable to the Human Rights Commission. So that's a complexity.

Second, then we have to sit down with the variety of unions involved in this. There's not one union only, but a number of unions. The implications are you have one common group for scientists, but four or five unions may have representatives in there. That has implications for union security. Who's going to be the final representative of that group? There are a lot of complexities in all of this. So to tell you we will do this quickly is, again, luring you down a false trail.

But some of the others are easier to implement. We're well on the way to doing secondment flexibility. We've delegated to departments the ability to do interchange agreements by themselves. We've provided flexibility to the deputy head to introduce different approaches to the interchange agreements.

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We are conscious of relocation incentives. We're working on an approach that would make it easier to move people around.

A five-year rule for hiring terms.... I indicated to you that we're prepared to look at exemptions on a business case basis. I mentioned some of the complexities of tackling the major issue, but I agree with you, it has to be tackled. The ability of being able to hire terms quickly is really an area that is beyond the scope of the Treasury Board. It involves the Public Service Commission, because we're talking about the staffing process, but I presume that the commission will work with departments to provide them with the best possible means to do so.

I guess there are things that can be done faster than others. That's a long-winded answer to your question. I'm sorry.

Mr. Shepherd: Well, not today, but maybe you could send us a letter and just go through that and put some time lines on them: when you think it would be possible for the committee to see that these things were being developed. You put a time frame on some of these things that could be implemented within six months; some of them are going to take five years, that kind of thing.

Mr. Giroux: I'll ask Mr. Emond to elaborate on this.

Mr. Emond: I'll be very brief, because, as Mr. Giroux has indicated, a start point for setting up a classification system for the research scientist is a fundamental classification system that is acceptable to the Human Rights Commission and passes the test with the unions. That work has been in train for in the order of about three and a half or four years.

We believe the fundamental standard is well designed. We would like to see it accepted. It's with one of our major unions now. It's being reviewed by the Human Rights Commission for gender bias and just to cite this as an example, because it shows you the complexities. If we can get an agreement on that fundamental standard, we can then move very quickly, as we've told publicly we would do, to consolidate under a simpler classification system to accommodate special needs such as those of the research scientists and others. But you need to have a fundamental building-block, and that is one of the difficulties.

We have many interveners on some of these issues, whereas on other areas it's quite straightforward. We move as quickly as the departments provide us with the information in respect of their requirements. It's part of the difficulty that was being discussed earlier; namely, there are certain public service-wide principles that form part of the approach and others that have to take account of the unique needs of departments. Some of these, such as classification and pension, because it is something that was mentioned by the Auditor General in his report, are not things you change on a piecemeal basis. First, it doesn't make sense, and in respect of pensions it is a very complicated issue.

Mr. Shepherd: I think what the committee possibly is looking for is fine. I heard what you did was take the most complicated area and explained how.... So I think what they would expect is maybe you could say, ``Well, it's undefined''. But some of these other areas where you could put time lines on them and just report back to us what you think is a reasonable expectation of accomplishments.

Mr. Giroux: We will do our best to give you a fair appreciation of what can be done.

Mr. Williams: I meant to ask this earlier. Mr. Swain, when you said that you agreed with the Auditor General's recommendation that we should create a forum, I forgot to ask you when that is going to be up and running.

Mr. Swain: It's odd that you should ask this today, because in some sense the first meeting was last night. Think of it as a proto-group. The heads of the science agencies in Mr. Manley's portfolio met under Dr. Gerard's chairmanship last night to discuss a number of problems that related to the science and technology review, but also best practices approaches to some of the human resource problems that each of them faces. Maybe we can expand on that, sir.

Mr. Williams: A little bit of déjà vu there.

Mr. Swain: Thank you for the question.

Mr. Williams: So it's going to be up and running quite soon?

Mr. Swain: I think so.

Mr. Williams: Within the reasonable time frame.

Mr. Swain: Yes.

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Mr. Goyer: I'd just comment that the remarks that have been made by Mr. Giroux andMr. Emond are quite valid if we assume that the model we have - I'm talking here about the structure of one public service versus a more decentralized form - is valid.

All I can say is that one lab in our review of private-sector practices was in government, and it moved to the private sector. Of course if you change the model, the nature of the problem changes. We don't have to find one big system that fits everybody and that has to have.... We're not saying that should be the model. We're saying there's a basic assumption that we have either one public service or a fragmented public service and everybody.... For instance, in New Zealand the research institutes are employers, and they have to have in place merit, employment equity and things such as those.

That's a model. I'm not saying that's the best model, but it's a different model. The problems, therefore, would be very different. That doesn't mean that there won't be any problems, but that the whole thing is different. Some can develop simpler systems because they're smaller.

[Translation]

The Chairman: Mr. Giroux, before the close of the meeting there's a question I would like to ask. The Auditor General told us that the difficulties in managing science and research workers go back 30 years. Why would we this time be more optimistic concerning a possible solution of these problems?

Mr. Giroux: First of all, I said a little earlier on that I have a lot of trouble with that 30 year period. I'll admit that we do have problems and all I can say is that since that report was drafted in 1993 a number of initiatives have been taken, initiatives which, I believe, have set us on the desired path. I don't believe I misled the committee today in trying to portray the complexities of advancing on any of those fronts. I don't with to oversimplify the situation. It's all well and good to make recommendations, that's what the Auditor General is there for.

We, on the other hand, are responsible for trying to manage things and trying to keep things going within the constraints we have to deal with and working as hard as we can to come up with solutions. I've tried today to reassure you by giving you an idea of the directions in which we are headed. I cannot say to you that within two years all the problems will have been solved; I just don't know. There are many factors which are often very difficult to manage.

[English]

This week we are trying to do presentations before the board. The business plans that will be presented first will give them a very clear idea of what type of reaction their business plan has given. To the extent possible, we are going to try to look at about 12 business plans in an in-depth fashion and the ones that are most affected as far as program review is concerned. We will try to give these departments some feedback by the end of June, before summer vacation sets in.

You can't forget that there's a lot of discussion going on around these business plans between us and the departments. We should be able to give the departments an idea within two to three months' time of how we reacted to their plans.

Mr. Fillion: In the staff reduction plan in the public service, have there been any guidelines regarding the percentage of people who will be affected, who will be cut in the research and technological field?

Mr. Giroux: No, there's no comprehensive directive, or global directive. It's up to each department or each agency to decide on the basis of the plan approved by the cabinet during program review. It is the impact of this program review that will determine how many scientific and research people will be cut back in their organization.

Mr. Fillion: There's been no word from above as to how many positions?

Mr. Giroux: No, for the time being. Some departments have not yet identified the people who will be cut, and this work will continue in the months that lie ahead. I think you asked a somewhat similar question last week when you tried to find out whether by the end of the calendar year we'll have an idea of how many people will be affected by this. Yes, by the end of the calendar year we'll have a better idea of how many people are going to be cut. But I can tell you that in the week since I last saw you, not much has happened. I can't give you any better information.

[Translation]

The Chairman: According to the Auditor General, one of the reasons why after so many years we still haven't solved all those problems is that no one was put in charge of implementing comments and recommendations contained in the report. What do you think of that? Are you in a position to give us the name of someone who could supervise the implementation of these recommendations or do you think that those difficulties might more readily be solved if a specific question was put in charge? How do you react to that suggestion?

Mr. Giroux: Well we do have, and particularly at the Human Resources Branch, people who are in charge of implementing certain changes. But that person that you mentioned hypothetically, will not necessarily, despite all the good intentions in the world, be able to move things along unless some very basic decisions are taken concerning, as I said, the structure of the system and the approach to negotiating with the unions for example.

We will clearly be attempting, with the reduced resources that the Auditor General alluded to, move things along as much as possible. One of Mr. Emond's responsibilities is to more forward in the direction we indicated today.

The Chairman: Thank you. Before bringing things to a close, Mr. Desautels, do you have anything general or specific to add to what was said today? You have the floor.

Mr. Desautels: Mr. Chairman, I would start by saying, very quickly, that in the course of our work we have found that those departments and agencies concerned with research, science and technology, seem to be seeking a greater degree of autonomy with respect to the central system.

We ourselves have found that for more operational reasons this is to a good extent justified by efficiency and effectiveness concerns. We realize that these are issues that are not specific to the science and technology sector but which are connected to other rather complex and more general problems.

Treasury Board, on the other hand, has been quite cautious with respect to these quests for greater autonomy. It has, on the other hand, opened the way to a certain number of things. When I say that it has opened the way, I should say that in xxxxx to a large extent, on a case by case basis and suggested purely temporary solutions.

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I should say, on the other hand, that not every problem can be dealt with in that fashion. We have nonetheless drawn up a whole list of problems in the course of our report. The issue that we are all attempting to address is whether we should question the very model of our present scheme of things or whether we should be thinking of making a certain number of adjustments to our basic model in order to solve in a more definite, more comprehensive way some of the problems that have been raised.

I don't want to make things appear more simple than they are. There are some very thorny collective agreement issues. I hope we will manage, following our soon to be released report, to make people question the present model.

The Chairman: Thank you gentlemen, thank you Mr. Emond, Mr. Giroux, Mr. Goyer,Mr. Swain, Mr. Lyrette, Mr. Desautels, for having answered the questions we had for you today. This brings our meeting to a close.

The meeting is adjourned.