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V

The confederal nature of the system requires that the resolution of conflict take place throughout the system at all its levels. As noted earlier, this process is assisted by ministers with special financial and policy co-ordinating functions, and they in turn are supported by bodies of officials organized in what are known as the central agencies.¹ In addition, specialized policy areas and the provision of services common to the needs of ministers collectively are organized under the direction of special ministers who are also supported by bodies of officials.² The officials of these departments and agencies play an important role in assisting other departments to co-ordinate the initiatives that flow from the program (i.e. spending) functions of their ministers. The central agencies, in particular, play a key role in a network of interdepartmental committees that endeavours to coordinate the differing functions of ministers involved in particular complex initiatives.

The cabinet is the essential forum for the creation of consensus among ministers. It is uniquely the Prime Minister’s; he provides it to his colleagues as a forum within which he may lead them to agreement on particular matters that each will be prepared publicly to defend.³

The cabinet is the mainspring of modern ministerial government. It is essentially a political mechanism, and as such it remains an informal body even though its "decisions" are authoritative. Generally speaking these "decisions" complete the process of consensus-making whereby (in the formula of its recorded decisions) "the cabinet agrees" with the proposals of ministers to exercise their individual responsibilities in some particular way. Ministers do not ask the cabinet to agree to each initiative they take deriving from their individual responsibilities, but only those that have political importance: i.e. those items likely to involve the collective responsibility of the ministry, requiring all ministers to stand behind the initiative of one or some of its members. The cabinet’s historic role has been and is principally political in the sense described. In relatively recent times, however, the cabinet has also assumed a central role in the co-ordination of initiatives that require the administrative action of two or more departments. It is a matter of observation that these political and administrative coordinating roles of the cabinet have become enmeshed during the last two decades as a consequence of the growing complexity of the cabinet’s business and the elaboration of the support services provided by its secretariat. ⁴

The cabinet is served by its secretariat located in the Privy Council Office, which is responsible to the Prime Minister. ⁵ At the direction of the Prime Minister, the Privy Council Office provides the cabinet’s secretariat, and on behalf of the Prime Minister it organizes the cabinet’s committee system and support services. ⁶

The essential function of the cabinet’s secretariat and other officials in the Privy Council Office, all of whom answer to the Prime Minister, is to assist the Prime Minister in establishing the equilibrium essential to the system. The Secretary to the Cabinet and his or her officers coordinate the initiatives of ministers’ departments, ensuring informally as well as through an extensive system of interdepartmental committees that interdepartmental consultation takes place, to the extent possible disputes are resolved, and that remaining issues are clearly identified for discussion among ministers.

The Privy Council Office also supports the Prime Minister in the exercise of the other means that he uses to provide leadership and promote consensus in the system, including efforts to develop in consultation with his colleagues the general thrust of the government’s program, the appointment of deputy ministers and other senior officials, and the general organization of the machinery of the government and relationships among its key elements, including the arbitration of jurisdictional disputes between ministers.

In all of this the Privy Council Office seeks to facilitate and assist rather than to create and direct. The office must respect the confederal nature of the system in which power flows from ministers. Its roles are to co-ordinate the exercise of power and to assist the Prime Minister in leading his colleagues to establish the general orientation of the government. These are powerful roles. But the office, like its master, exists primarily to promote consensus by maintaining the equilibrium among ministers, and this raison d’être remains valid so long as neither the secretariat nor departments lose sight of the essential differences in their respective roles, the one co-ordinating and the others initiating.

The Treasury Board, a committee of the cabinet, is a second essential mechanism devoted to assisting ministers in the exercise of their collective responsibilities. ⁷ For the historical reasons set out earlier, finance was an essential part of the establishment of the office of the Prime Minister, and the Treasury Board exercises on the Prime Minister’s behalf the latter’s unifying functions of financial control.

Put simply, the Treasury Board is a mechanism that the ministry has imposed on itself for the preparation and reconciliation of estimates. It was established on the Prime Minister’s recommendation at confederation and provided with a statutory base two years later. ⁸ Until the Financial Administration Act was set in place in 1951, the Treasury Board conducted all of its business subject to the formal approval of the Governor in Council, and the cabinet continues to insist on its right to approve the estimates framed by the Treasury Board within the parameters set by the cabinet and to hear appeals by ministers against particular decisions of the Treasury Board. ⁹

The original Treasury Board was chaired by the Minister of Finance, and consisted "for the present" of the Minister of Customs, the Minister of Inland Revenue, and the Receiver General.¹⁰ The activities of the Treasury Board were supported by the department of Finance, which placed the Minister of Finance in a position similar to that of his British counterpart, the Chancellor of the Exchequer. The Minister of Finance was required, therefore, to work closely with the Prime Minister in fulfilling the basic duty of the Board ministers to reconcile conflicting demands for money from their cabinet colleagues. ¹¹

Until 1947, the Deputy Minister of Finance was also the Secretary of the Treasury Board, and it was largely his function to ensure that consolidated estimates were prepared. In this respect, our history paralleled developments in Whitehall where at about the same time (1860's) the functions of the Treasury commissioners were being taken over by the Chancellor of the Exchequer and his officials, permitting the Treasury Board to fall into disuse.¹² Over time, however, we were to move in the opposite direction from the British. The role of the Treasury Board ministers was strengthened, ultimately separating the Board’s secretariat from the department of Finance and providing the Board with a chairman (the President) separate from the Minister of Finance. These changes spanned 100 years of our constitutional development.

Financial control exercised by ministers collectively through the Treasury Board opened the way for the establishment of management and other administrative standards on a central basis. From the outset, the Minister of Finance through the Treasury Board assumed certain de facto powers that affected the management of individual departments. The Treasury Board, responsible for reconciling estimates, was in theory also concerned that the unity of the ministry not be made vulnerable in Parliament through the exposure of corrupt or inefficient practices in departments. As noted earlier, this function was well established in the 18th century Treasury in England, which was looked to by Parliament to provide assurance that such practices were vigorously safeguarded against. The Finance Act of 1869 set out clearly the powers of the Treasury Board with respect to matters of finance and expenditure, and by implication of management. These responsibilities have since been elaborated in a series of important Acts designed to improve the standards of resource management and to eliminate careless, wasteful, and corrupt practices. Each of these successive Acts has sought to strengthen the Treasury Board’s ability to provide a framework for the management of the public service that will reassure Parliament that the service is being managed efficiently.

The Treasury Board’s management functions had been fulfilled somewhat haphazardly over the years prior to the formation of Mr. Bennett’s administration in 1930.¹³ Estimates had been reconciled, and corrupt practices eliminated. Not much had been done, however, to standardize financial expenditure and accounting systems, and overspending of votes and other unauthorized expenditure was not uncommon. Parliament, more particularly the Public Accounts Committee, had shown little interest in improving the system.¹⁴ Mr. Bennett, who was also Minister of Finance, was disconcerted to discover that owing to widely differing standards and systems of accounting he could not determine the financial position of the government.

These circumstances precipitated the Consolidated Revenue and Audit Act of 1931, which imposed a highly centralized system for authorizing expenditure and a standardized accounting system. The Act created the subordinate position within the department of Finance of Comptroller of the Treasury. This officer was provided with a staff of accounting officers stationed in each department. ¹⁵ The Comptroller and his staff, responsible to the Minister of Finance, were responsible for authorizing each expenditure made under the authority of a particular minister. ¹⁶

The Bennett reforms ushered in a period of highly centralized financial control that spanned the succeeding 35 years. They were occasioned by hard times and stringent economies, but they also reflected a chronic weakness in departmental financial systems due to the absence of uniform systems for expenditure and accounting. The reforms were, however, somewhat repugnant to the principles of responsibility in the system.¹⁷ As times improved, as government activity grew, and as ministers increasingly exercised their program authority, the appropriateness of this centralized system was called into question. The Glassco Royal Commission’s theme of "let the managers manage" precipitated amendments to the Financial Administration Act in 1966 that set in place the organizational and financial relationship that currently exists between the Treasury Board and ministers in their departments. Summarizing the developments that had occurred since 1931, the Commissioners noted:

By divesting departments of the authority essential to the effective management of their own affairs, the system tended to weaken their sense of responsibility. Each new evidence of irresponsibility within departments seemed to confirm the wisdom of existing controls and to suggest the need for more. ¹⁸

The Commission argued in effect for a reassertion of ministerial authority. It proposed the separation of the Treasury Board’s secretariat from the department of Finance placing it under the leadership of a secretary with the rank and status of a deputy minister, the appointment of a separate minister to preside over the Board, and the substitution of management leadership and Treasury Board prescribed standards for the control functions exercised by the Comptroller of the Treasury. ¹⁹ These recommendations were incorporated in the 1967 amendments of the Financial Administration Act, which reinforced the role of the Treasury Board in setting management standards for the public service.

The system presided over by the Comptroller of the Treasury between 1931 and 1967 operated to the detriment of ministerial responsibility with adverse consequences for the exercise of constitutional responsibility and (as evidence of this) for the flexibility and responsiveness of government. During this period the idea of accountability disappeared and was replaced by the system of controls criticized by the Glassco Royal Commission. The post-Glassco reforms initiated a trend away from a highly centralized system based on controls and a move towards greater freedom for the exercise of ministerial autonomy, and since 1967 the Treasury Board and its secretariat have sought to elaborate a role more appropriate to the needs of ministerial government.

A discussion of collective institutions (i.e. central agencies) must include reference to the Public Service Commission. Unlike the cabinet and the Treasury Board and their supporting organizations, the Commission is neither of the ministry nor is it its agent. The Commission is a strange hybrid.²⁰ The Treasury Board exists in part to ensure probity in the use of financial resources because lack of probity will undermine confidence in ministers. The Commission, in carrying out its role to ensure probity in appointments, fulfills an important function in preventing abuses that could inter alia undermine confidence in ministers. Although the consequences for collective responsibility flowing from the activities of the Board and the Commission are similar, the obligations of the Commission are to Parliament rather than to the ministry. In the wider context of parliamentary control of resources, this similarity illustrates the interest held in common by Parliament and the ministry to ensure sound personnel and financial management in the public service.

In setting standards of selection and promoting the concept of a unified public service with careers spanning the entire range of federal activity, the Commission endeavours to provide ministers and their deputies with the best human resources available. In fulfilling its duty to ensure merit in appointment, the Commission safeguards ministers from the politically damaging effects of patronage. The advantages of a unified public service could, however, become disadvantageous if the service took on objectives separate and distinct from those of the individual ministers whom its members serve. In pursuing the objective of a unified professional public service, the Commission plays a difficult role that must neither centralize nor balkanize the service. Indeed, as with the central agencies proper, the Commission must guard against the evils of attempting too much or doing too little.

The central agencies play, therefore, an essential role in the successful functioning of ministerial government. They enable the confederacy to work. They pull the system together, synthesizing and co-ordinating, occasionally leading. When necessary, and this is particularly true of the special policy functions of the departments of Finance and External Affairs, they give direction in the development of matters of general concern to all ministers. ²¹

As has been noted, however, the distinction between serving the collective need without damaging the individual has not always been observed or even recognized, and this has been particularly true in the financial area. Indeed, it is probable that the absence of adequate financial accountability in the system stems from the long period of highly centralized management control experienced between 1931 and 1967. During those years central control displaced the need for financial accountability. At the same time the functions of government were growing. In consequence when central financial control was eased the system had forgotten the importance of accountability and had become too used to looking for central direction, which is a phenomenon that has remained in the system and accounts in part for the uncertain relationship that is current between departments and central agencies. ²²

Nonetheless, successfully worked, the mechanisms for collective responsibility make possible the effective exercise of individual responsibility, and the degree of success achieved by "central agencies" determines in large measure whether ministers are able to provide successful government based on the effective exercise of their authority.

² The Ministries of State and departments such as Supply and Services and Public Works. 

³ See above, p. 26, footnote 8. Sir Robert Borden said of the misnamed Imperial War Cabinet that it was a "Cabinet without collective responsibility and therefore without a Prime Minister". See Anson, Law and Custom of the Constitution vol. ii, pt. 1, p. 150. 

⁴ See below pp. 61-64. 

⁵ Order in Council, P.C. 1962-240, 22 February 1962. 

⁶ The secretariat was formed in 1940 when Arnold Heeney succeeded to the post of Clerk of the Privy Council and was (by the same instrument - P.C. 1121, 25 March 1940) appointed Secretary to the Cabinet. Prior to 1940 the Privy Council Office had been concerned solely with the formal work of the Council - the preparation of draft submissions for orders and minutes. The modern Privy Council Office is the responsibility of the Prime Minister. Until 1957 the Prime Minister always held a ministerial portfolio. In the early days it had been Justice and occasionally other offices (from 1912 to 1946 the Prime Minister was ex officio Secretary of State of External Affairs), but later the Prime Minister satisfied the conventional need (see below*) to hold formal office by assuming the Presidency of the Council. It happened that in 1940, Mr. King was both Prime Minister and President of the Privy Council, and the Clerk of the Council was responsible to him. Since the cabinet is the Prime Minister’s cabinet, it was natural that the Prime Minister be responsible for the organization of its secretariat and this was accomplished through the device of Arnold Heeney’s double-barrelled appointment. Since then the positions of Clerk and Secretary have been combined. When Mr. Pearson decided (as for a brief period before him had Mr. St. Laurent) to use the Presidency of the Council to attract senior colleagues without burdening them with departmental duties, and later Mr. Trudeau decided to devolve the leadership of the House on a separate minister, the Prime Minister gave up the Presidency of the Council but he kept the Privy Council Office. The office is not, therefore, a responsibility of the President of the Privy Council and there is not formal relationship between them.

* The Salaries Act provides a separate salary for the "Member of the Queen’s Privy Council holding the recognized position of First Minister". The original intent of this provision was to provide a higher salary for the Prime Minister than he would otherwise receive as the minister holding one of the other portfolios set out in the Salaries Act such as Justice or the Presidency of the Council.

The original Salaries Act of 1868 made no provision for the Prime Minister, and it was only in 1873 that provision was made to enable the "First Minister" to receive "in addition" to his regular ministerial salary the sum of $1,000. But an amendment passed in 1920 provided a completely separate salary for the "First Minister". This provision established in law the distinct nature of the Prime Minister’s office. Nonetheless; for many years it had the effect of merely ensuring that the Prime Minister would be remunerated as "First Minister" rather than according to whatever ministerial portfolio he happened to hold. It was not, however, until the last few months of Mr. St-Laurent’s administration that full advantage was taken of the statutory base provided in 1920 and the Prime Minister served without holding a separate ministerial portfolio.

⁸ See An Act Respecting the Department of Finance 32°-33° Victoriae, Cap. iv. The Act stated that the Board "shall act as a committee of the Queen’s Privy Council for Canada, on all matters relating to Finance, Revenue and Expenditure, or Public Accounts, which may be referred to it by the Council, and shall have power to require from any public department, board or officer, or other person or party bound by law to furnish the same to the Government, any account, return, statement, document, or information which the Board may deem requisite for the due performance of its duties."

⁹ The Governor in Council is a formal mechanism for authorizing action by the Crown as distinct from action by ministers on behalf of the Crown. Formally it consists of the Governor General acting on the advice of the Committee of the Privy Council, which has the same membership as the cabinet. It is, however, distinct from the cabinet, which is both informal and cannot in legal terms authorize action in the system. Put simply the cabinet determines the policy of the government, and that policy is effected either by a minister or by the Crown. If the latter, the Crown in order to take action usually must be authorized to do so by the Governor in Council. Although until 1951 the Treasury Board conducted all of its business subject to the approval of the Governor in Council, the Treasury Board was not originally constituted as a committee of the Privy Council. The Minute of the Council of 2 July 1867 recommended that a "Board of treasury be constituted with such powers and duties as may from time to time be assigned to it by Your Excellency in Council". Thus at the outset the Board had the potential to act rather than advise, and it was only when the Board was provided with a statutory base that it was constituted as a committee of the Privy Council, sharing the advisory functions of its parent body. Accordingly, from 1869 until 1951 the Board advised and the Governor in Council acted. In 1951 the Financial Administration Act authorized the Board to act for the Governor in Council in order to reduce the flow of formal paper through the Council. The Board remained, however, a committee of the Privy Council, even though unlike the latter it exercised executive functions. (To draw the parallel it should be noted that although the Special Committee of the Council acts for the Committee of the Privy Council in approving draft submissions to Council, the special committee does not itself take action, which may be said to occur when draft orders are approved by the Governor General, thereby fulfilling the legal requirement for action by the Governor in Council.) The reasons for this anomaly may be found among the Prime Minister’s prerogative powers, because as a committee of Council the Treasury Board’s actions remain subject to the intervention of the Prime Minister. Had the Board been given executive authority and not remained a committee of Council, its chairman would in theory be able to exercise the authority of the Board without reference to the Prime Minister. This evidence of the Prime Minister’s power in matters of finance illustrates the importance of finance to the solidarity of the ministry and the origins of the Prime Minister in using financial authority to help forge consensus among his colleagues. 

¹⁰Minute of the Privy Council, approved 2 July 1867. Privy Council Minute Books, Public Archives of Canada. 

¹¹ See Norman Ward, The Public Purse (Toronto, 1951) p. 233. 

¹² Anson notes "As the Treasury Board has diminished, so the Chancellor of the Exchequer has risen in importance. At the present time he is in fact a Finance Minister, with most important duties, and the Board of which he is a member consists of persons whose duties are unconnected with the work of the Treasury, the chief of them being the Prime Minister". Law and Custom of the Constitution vol. ii, pt. i, p. 192. Also see above pp. 23-24. 

¹³ In fact, most of its function had been fulfilled by the Minister of Finance. Sir George Murray, a former Permanent Secretary of the Treasury at Whitehall, who had been commissioned in 1912 to report on the organization of the government, recommended that the Board should be abolished and its duties carried out by the Minister of Finance. See Sir George Murray, Report on the Organization of the Public Service of Canada (Ottawa, 1912) sessional paper 57a, p. 9. 

¹⁴ Norman Ward has noted that it was not until the late, ‘forties that the Public Accounts Committee "had finally shaken off its antique obsession with scandal"; The Public Purse p. 216. 

¹⁵ An Act to amend the Consolidated Revenue and Audit Act, section 36. 21-22 George V, ch. 27. It is interesting that this section was not retained in the Financial Administration Act of 1951. 

¹⁶ For an excellent description of the Bennett reforms, see Norman Ward, The Public Purse pp. 167-172. Professor Ward notes that the role of the Comptroller’s officers as accounting officers was substantially the same as the role of permanent secretaries as accounting officers in Whitehall, except for the crucial difference that in Whitehall they were - and still are - generally responsible to the minister under whose authority the expenditure was made, even though they were specifically accountable to the Treasury for financial matters. See below pp. 75-77. 

¹⁷ The drafters of the 1931 amendments were obviously sensitive to criticism on this score; section 31 contradicted the consequence of the Act as a whole in stating that "No provision of this Act shall be construed to limit the responsibility of ministers, deputy ministers, departmental officers or other persons charged with the administration of grants of Parliament." 21-22 Geo. V, ch. 27 

¹⁸ Royal Commission on Government Organization (Ottawa, 1962) vol. i, p. 44. 

¹⁹ Royal Commission on Government Organization vol. i, pp. 55-56. In fact the Commission proposed that the Secretariat be transferred to the Privy Council Office, thereby emphasizing the Treasury Board’s de facto role as a committee of the cabinet stressing the Prime Minister’s primordial concern with finance. The recommendation was resisted because it would have distorted the service role of the cabinet secretariat, because the concentration of so much authority in a single central agency would have unbalanced the relationship between departments and central agencies, and because the equilibrium among central agencies is itself essential to the well-being of the system as a whole. 

²⁰ For a summary of the events leading to the establishment of the Commission in 1908 and its subsequent relations with deputy ministers and the Treasury Board, see J.E. Hodgetts, The Canadian Public Service (Toronto, 1973) pp. 263-286. 

²¹ Examples that come readily to mind are the role of the Minister of Finance in determining the appropriate level of government spending within the context of the national economy, and that of the Secretary of State for External Affairs in setting the political framework within which his or her colleagues will operate in their international dealings. 

²² Examples of this are seen in the failure of many departments to distinguish between directives and guidelines issued by central agencies, and in the tendency to urge operational roles on these organizations.

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