II

1994-95: The Year in Review

Introduction

In 1994-95, the size and role of the Public Service were affected by changes to the federal government's policy and programs. These changes modernized the collective decision-making process and focussed federal spending on priority programs and services. No major government activity or program went untouched by the events of 1994-95. It was a year of debate and reflection on the changing role and responsibilities of government. Government reforms to the Public Service in 1994-95 went beyond modernizing administrative, personnel and financial management systems, to addressing the basic question of what was required to situate the Public Service as a modern, affordable and relevant institution in the future.

The reforms of 1994-95 are another step in the ongoing process of change for the Public Service. This chapter will explore how the reforms of 1994-95 affected the role and management of the Public Service and its contribution to Canadian society. It will review reforms the government has made to its decision-making apparatus, how a start has been made on redefining the government's functions, and what steps have been taken to modernize government operations. It will address what these changes mean for the Public Service and for public servants.

Reform of the Decision-Making Process

The Government of Canada's decision-making processes were reformed in 1994-95 to better manage the complex and changing environment. The reforms build on the organizational and structural changes made to Cabinet and the Cabinet committee system in 1993. Cabinet was made smaller (24 members) and the number of standing Cabinet committees was reduced to four.

With fewer ministers, policy and program priorities are more integrated within single portfolios. With only four standing committees of Cabinet, ministers can focus on the government's major economic and social priorities, leaving the government's routine business to be dealt with by individual departments.

These changes strengthen individual ministerial accountability by allowing ministers to run their departments without resort to a complex Cabinet committee system. Collective responsibility is achieved by using full Cabinet to make decisions on key priorities. The fact that Cabinet focusses primarily on strategic priorities creates ongoing and increased demand for policy analysis and advice from the Public Service.

Strategic Planning Cycle

In 1994-95, Cabinet's strategic focus was reinforced by the introduction of an annual strategic planning cycle, based on three special Cabinet meetings held in June, October and January. The sessions permit ministers to take stock of progress in implementing the government's agenda, to consider options for managing key issues and to identify priorities for the future. With strategic leadership from Cabinet, the Public Service has a clear policy framework within which to manage the operations of government. As well, the framework sets the boundaries for developing policy options to address new challenges.

Expenditure Management System

In 1994-95, a new Expenditure Management System was introduced in order to respond better to the changing political, fiscal and public policy environment. The budget planning process is now integrated with the Cabinet planning cycle. New policy and program proposals are considered in the context of the government's overall priorities and the fiscal framework. Expenditure decisions on new priority initiatives are made at the Cabinet table, where ministers discuss the issues and the options.

Ministers also have greater individual responsibility and accountability under this new process. New initiatives can be considered outside the budget and planning cycle, but they must be funded through reallocations from within the fiscal framework as established in the budget. Reallocations may be made from within a single department or interdepartmentally. There is no longer a central policy reserve for new initiatives outside the budget cycle.

The capacity of the Expenditure Management System to reduce central agency control over departments and encourage a more strategic approach to portfolio spending needs to be tested. The coming year will be one of experimentation, learning and adjustment. Central agencies and line departments will need to work closely together to realize this system's potential benefits. On the one hand, central agencies will need to ensure line departments have the financial and administrative flexibility required to achieve innovation in program design and delivery. On the other hand, departments must use the system to develop strategic visions and policy frameworks based on clear priorities. Finally, for the system to be successful, the government will need to demonstrate the capacity to reallocate spending from existing programs and services to new priorities.

The Government's Policy Agenda and the Public Service

Over the past year, the Public Service has participated in several major policy reviews, including:

• Improving Social Security in Canada;

• A New Framework for Economic Policy;

• Creating a Healthy Fiscal Climate;

• Into the 21st Century: A Strategy for Immigration and Citizenship;

• the 1994 Defence White Paper;

• Building a More Innovative Economy; and

• Canada in the World, the government's foreign policy statement.

In the context of these reviews, the Cabinet and ministers called upon public servants to help develop creative and forward- looking policy options and to redesign program and service delivery. Public servants responded to the call and met the challenge.

In addition, the government launched three initiatives to help "get government right": the Program Review, the Efficiency of the Federation Initiative and the Agency Review. In each exercise, the Public Service made a contribution to finding new ways to provide Canadians with affordable government and better service.

Program Review

Of all the major initiatives of 1994-95, Program Review dominated the agenda and will have the greatest impact on the Public Service. Through Program Review, the federal government has started to fundamentally rethink not only what it does, but how to do it.

The Public Service has been managing with steadily shrinking financial resources for more than 10 years. During this period, measures to address pressures on public finances took the form of across-the-board cuts and efficiency improvements. However, it became clear that this approach to managing expenditure reductions was not sustainable in the long term. Several problems emerged:

• without an attempt to establish priorities, all programs and services were being adversely affected by the repeated cuts;

• there was no incentive to eliminate programs that no longer served the public interest or that could be provided by other organizations;

• with declining resources, the federal government no longer had the means to maintain all its activities; and

• the Public Service was reaching its limit in being able to provide quality service to Canadians in all traditional areas of activity.

The Program Review exercise was initiated to help redefine the roles and responsibilities of government in the Canadian society of today. It also grew out of a recognition that further progress in dealing with fiscal pressures could not be achieved by "doing more with less" and "across-the-board cuts."

Program Review was a collective exercise of reform in which ministers, with the help of their departments, led their own reviews and were the architects of their own reform. Central agencies were the guardians of the process, ensuring that a consistent approach was used and that the underlying principles of the Review were sustained.

Program Review has made a significant contribution to redefining federal roles and to deficit reduction. Broadly speaking, it led to:

• a greater focus on core policy and legislative responsibilities;

• withdrawal from certain lines of business of lower priority;

• significant reductions in subsidy programs;

• putting government activities on a commercial basis wherever desirable and possible;

• increased user fees for government services that confer a direct benefit on the recipient; and

• increased efficiency in service delivery.

Over time, Program Review should help to ensure that programs and services respond to a clearly defined public interest, are managed efficiently and do not displace the activities of others in Canadian society. In the long term, it should lead to a more targetted, more efficient federal government that delivers high- priority programs and services to Canadians.

Two factors have contributed to the success of the Program Review: firstly, the fact that ministers called upon the Public Service to help carry out the review of their own organization and, secondly, the hands-on role of deputy ministers and senior departmental management in undertaking their reviews. The Program Review provided public servants with an unprecedented opportunity to help determine the future of their organizations. The degree of involvement varied among departments, reflecting the circumstances and culture of each organization. Since Program Review is an ongoing process, departments will be able to learn from each other's best practices and see greater employee participation.

The success of Program Review will depend upon the quality of implementation. While Program Review provides a blueprint for action, effective implementation will require departments to work with provincial governments, clients and other stakeholders to achieve results. The philosophy of Program Review ­ to ensure that the federal government's functions are relevant, effective and affordable ­ remains a facet of how the federal government sets priorities and delivers programs and services in the future. The first phase of Program Review was department-centred; the next phase should address interdepartmental and intergovernmental issues.

Efficiency of the Federation Initiative

The Efficiency of the Federation Initiative was initiated by First Ministers at their December 1993 meeting. It is a process of intergovernmental collaboration aimed at making governments work better. Federal and provincial levels of governments are co- operating on an ongoing basis in order to increase administrative efficiencies and improve client service, to harmonize procedures and regulations, and to reduce both costs and unnecessary overlap and duplication.

Action plans, which include items aimed at improving program and service delivery in virtually all sectors, have been signed with most provinces and territories. There are multilateral initiatives, such as the ongoing work toward the establishment of a Canadian food inspection system that will harmonize standards and improve service. There are also bilateral initiatives, such as a community economic development item with Nova Scotia that will reduce the 50 to 60 associations, boards and commissions involved with community economic development to 12 regional development authorities.

The ongoing discussions reflect a pragmatic approach to governance by the federal and provincial governments. All participating governments have shown a willingness to reassess their policy and programs, and to negotiate new arrangements aimed at improving efficiencies. Much more remains to be done to reap the benefits of the flexibility inherent in Canada's federal system.

Agency Review

A review of all federal boards, agencies, commissions and advisory bodies was carried out in 1994. The Agency Review resulted in decisions to eliminate outdated organizations and streamline others. It had a direct impact on 30 per cent (120 out of 400) of the bodies reviewed. Close to two-thirds (73 out of 120) of the affected agencies are to be wound up. The remaining 47 will be restructured by such measures as:

• reducing the number of board members;

• changing full-time board members to part-time;

• refocussing the mandates of organizations;

• integrating functions within a department instead of having a separate agency;

• merging organizations doing similar work; and

• privatizing certain functions carried out by federal agencies.

Of the approximately 3,000 Governor in Council positions, 665 will be eliminated.

The next challenge should be to examine and modernize the accountability regimes existing between agencies, departments and their ministers. The key issues to be addressed are:

• the role independent agencies will play in the public sector of the future; and

• how best to ensure greater policy and program co- ordination between agencies and departments within a single portfolio.

Departmental Restructuring

In 1994-95, the government pursued legislative change to implement the 1993 government organizational changes. This reorganization created new departments, re-mandated some existing departments and wound up others. Without the permanency of legislation, a jurisdictional vacuum was created in some departments which contributed in part to the instability and uncertainty resulting from these organizational reforms.

To date, legislation for six departments has been brought up to date: Agriculture and Agri-food, Citizenship and Immigration, Industry, National Revenue, Natural Resources, and Foreign Affairs and International Trade. Legislation for Canadian Heritage is awaiting Royal Assent, while the Public Works and Government Services bill is in the House. Legislation for the departments of Health and Human Resources Development is scheduled for introduction in June 1995.

Impact of Major Trends on the Public Service

As a result of the reforms that have been outlined here, several major trends have emerged that contribute to redefining the federal public service of the future. These major trends include:

• an explosion of organizational models to deliver programs and services;

• a widening distinction between programs of general application and those that provide specialized benefits to specific groups;

• increased use of information and knowledge as the basis for federal leadership in public policy;

• ensuring that programs and services are organized from the perspective of the client's needs; and

• using information technologies to deliver programs and services in new ways.

If these trends continue, over time, the Public Service will progressively:

• put greater emphasis on policy development and on establishing legislative and regulatory frameworks; and

• delegate direct program delivery to specialized units.

The delivery of public goods and services will to a large degree remain the responsibility of the broader public sector, which will nevertheless use a range of organizational and accountability regimes.

Choosing Organizational Models

The Public Service is breaking out of its traditional organizational mode. Given new information technologies, the diverse needs of clients and the emphasis on efficiency and innovation, no single organizational model can be used to deliver all federal programs and services. The traditional model of large, hierarchical departments continues to work well in some cases. In recent years, the Public Service has experimented with alternative delivery mechanisms and organizational change, such as special operating agencies and public-private sector partnerships.

An illustrative example involves the government's 1995 budget announcement that the Air Navigation System will be commercialized rather than managed directly under the act creating Transport Canada. The system will not be funded by general tax revenues but through user fees and service charges.

The number of special operating agencies (currently 17 have been established) will continue to increase as well. The Translation Bureau, which was previously a unit in Public Works and Government Services Canada, will be made a special operating agency. Such agencies now employ a total of 7,000 public servants and are responsible for approximately $1.2 billion in federal program spending.

The exploration of alternative delivery mechanisms to deliver federal programs and services will continue. These organizational models can give public service managers and front-line staff the flexibility they require to provide the best service at the lowest cost.

Distinguishing Between General and Specialized Programs

Program Review has helped to make a distinction between federal programs of general application and those that benefit a specialized group. In the future, it can be expected that general tax revenues will be used increasingly to finance programs and services which serve the collective public interest, while groups and individuals receiving direct economic benefits from federal goods and services will be asked to pay more towards the cost of delivering them. In turn, program and service users can be expected to demand greater input in program design and performance. The Public Service will face ongoing pressure to control and reduce costs.

As a result of Program Review, several federal departments will increase cost-recovery for programs that confer a benefit on specialized groups. For example:

• Parks Canada will increase user fees to maintain and expand Canada's national parks system;

• Health Canada will impose cost recovery for drug approval and other regulatory processes; and

• Fisheries and Oceans will impose user fees for the issuance of fisheries licences.

Public servants will need to ensure that the concerns and interests of users and clients are addressed in program design and delivery. These measures should lead to strengthened partnerships between service providers and service recipients, and to greater mutual understanding.

Basing Federal Leadership on Information and Knowledge

Program Review confirmed the trend that an important role of the Canadian government will consist of the provision of information, knowledge and ideas. Knowledge and research can help other governments and other organizations to pursue common goals or to increase their understanding of how to meet new challenges. For example:

• Environment Canada will track and report on threats to the environment;

• Health Canada will establish a health intelligence network to identify threats to public health and safety;

• Industry Canada will use information gathering and dissemination to help industry develop industrial and science framework policies; and

• Fisheries and Oceans will do more research to help conserve the oceans' ecosystems.

In a global environment, governments are uniquely positioned to use information and knowledge to shape and manage emerging public policy challenges. Governments can help ensure that their citizens have access to the ideas and knowledge used by other nations to address similar issues. The explosion of new information technologies allows government to communicate and receive information in a timely and comprehensive fashion from citizens and groups.

Organizing Programs and Services from the Client's Perspective

Greater emphasis will be placed on organizing program and service delivery from the perspective and needs of clients. Public servants are making greater use of intergovernmental and interdepartmental co-operation to address the full range of clients' needs in program delivery and design. For example, Canada Business Service Centres have been established in all provinces. They bring together the activities and services of 19 federal departments, and often include provincial and private-sector participation. The centres provide single-window service to clients wanting access to government programs for business. Either directly or through interactive technology, clients can use the centres to tap into a large array of federal programs and services.

As a result of these arrangements, the clients' needs are paramount, not the needs of departments which deliver programs. The use of service delivery models, based on serving clients' needs, will accelerate in the coming years.

Using Information Technologies to Improve Program Delivery

New technologies are also helping public servants to serve clients better. New technologies mean that service delivery need no longer depend on the traditional approach of providing federal services during a standardized work day (for example, 9:00 a.m.-5:00 p.m.) and through direct exchanges between public servants and clients. The use of modern technology will allow clients to decide for themselves when they require a service and how much service they want. In many cases, client demand, not the availability of public servants, should determine how often a certain service will be used. Several innovative projects were pursued in 1994-95:

• the Electronic Procurement and Settlement System became fully functional, allowing the private sector to do business electronically with the federal government in the purchase of goods and services and settlement of accounts;

• through the Canadian Governments On-line initiative, the federal, provincial and municipal governments began working together to develop opportunities for the electronic delivery of government information and services to Canadians; and

• Statistics Canada conducted an on-line pilot project, which will be fully operational in 1995, allowing clients to obtain and customize highly disaggregated statistical information to meet their own needs.

New information technologies will continue to revolutionize how programs and services are delivered and will help ensure that the government remains close to the clients, and may even bring it closer.

Impact of Major Trends on Public Servants

Just as certain major trends are reshaping the Public Service as an institution, others are affecting individual public servants and how they do their jobs. The trends include:

• public service downsizing;

• changing demographics;

• a critical public environment; and

• recent changes in the public service employment contract.

Managing Downsizing

Public service downsizing is a result of changes in the core functions of the federal government and fiscal pressures. Certain functions and programs previously managed by the Public Service are being transferred either to the private sector or to other levels of government. Other programs are being moved from the core public service to the broader federal public sector through the use of alternative delivery mechanisms.

The 1995 budget and Program Review will mean 45,000 fewer public service jobs over the next three years. The need for downsizing was based on new priorities; it does not reflect an assessment of the professionalism and dedication of the people who work in the Public Service. It is important to keep in mind that those who will leave the Public Service are colleagues and friends of those who will remain. They have worked with dedication and served Canadians well. Their contribution is and will continue to be respected.

Many of those who will be leaving are looking forward with enthusiasm to new challenges and opportunities outside the federal public service. For others, it is a period of uncertainty and anxiety, and those who remain will share these emotions. Some employees will start new careers in the public sector, others in the private or voluntary sectors.

Special programs have been announced to provide for early departure and early retirement. Even with departure incentives, there will be a difficult adjustment. Every effort must be made over the course of the next year to help these men and women and their families through this transition.

For any large organization, managing downsizing is a difficult challenge for all employees. For the Public Service, downsizing will test the skills and judgement of its managers. In more general terms, downsizing will test the collective resilience and strength of the Public Service of Canada as an institution.

Those who remain also experience a sense of insecurity and anxiety about what is going on around them. For the vast majority who will keep their jobs, it will be a period of stress and change. Public servants are quite correct in thinking that their work world and the traditional concept of a public service career will continue to evolve. The changing nature of public service employment must be openly debated, and this debate must inform efforts to build the Public Service of the future.

Addressing Public Service Demographics

The Public Service is aging. Currently, approximately 30 per cent of the Public Service is in the 45-54 age range. In particular, over 60 per cent of those in the executive category range in age from 45 to 54 years. These senior public servants will be an indispensable resource in guiding the Public Service through its current transformation. However, in a very short time, the senior ranks of the Public Service will need to be replenished. Measures are required in every department to ensure a smooth succession at all levels.

Renewing the senior ranks will provide an opportunity to reassess what leadership and management skills are required to best serve the Public Service of the future. University recruitment will also be an important instrument of staff renewal.

The dual challenges of downsizing and renewal will need to be managed at the same time.

Restoring Pride and Respect

The public and political environment in recent years has been critical of the performance of public servants. Inefficiency and waste in public service activities have been seen to be more prevalent than high performance and dedicated service. This critical environment discourages public servants from taking pride in their institution and profession.

The Public Service faces several difficult challenges in the coming years: adjusting to the changing role of government, achieving downsizing, renewing its ranks, and shaping the institution that will serve Canadians in the future. The Public Service will need the respect and confidence of all those it serves, to do its job well. Public servants need to have a sense of pride in the importance of the institution. Respect must be a governing feature of how elected officials and public servants work together and of the relationship between public servants and citizens.

However, respect for the Public Service does not rest exclusively on positive political and public attitudes, but also on how individual public servants view their jobs and responsibilities. Public servants should recognize the important contributions they make to the quality of life of all Canadians. They have chosen an honourable and challenging profession. They must take pride in their institution and this pride must be evident in how they serve Canadians.

Modernizing the Employment Contract

The traditional contract between federal public servants and the government has been based on a commitment to provide employment security within the Public Service. Changes in recent years have led the government to revisit certain elements of this employment contract, while maintaining a commitment to the historical underpinning of the contract. The changing nature and role of government will inevitably lead to other changes in working conditions in the public sector.

While continued modernization of the public service employment contract is necessary, it must be recognized that ongoing salary and increment freezes do adversely affect the Public Service in its ability both to recruit the best talent in the country and to sustain morale and dedication. As the end of the current salary freeze approaches, the government must reflect on the consequences of future decisions regarding public service compensation.

Conclusion

Although much of the Public Service was fully engaged in major policy and program reviews in 1994-95, it maintained high quality in the delivery of a broad range of services and programs. Among other things:

• 6 million airplanes landed and took off safely at major and local airports;

• more than 18,000 tonnes of meat were inspected daily;

• some 80 million pension cheques were sent out on time;

• 200,000 applications from new immigrants were processed; and

• 108 million travellers passed through Canadian borders.

The daily efforts of public servants to be more efficient and innovative in the use of Canadians' tax dollars went unheralded. Success in the Public Service often goes unnoticed but it deserves nonetheless to be highlighted and celebrated.

The transformation of the Public Service must continue. The task ahead is to build a vibrant organization, adapted to modern needs and well suited to serving Canadians and governments in the future. There is no question that the Public Service of Canada will continue to operate in a turbulent environment. The leadership challenge for the senior ranks of the Public Service will be to articulate a coherent vision and ensure that public servants have the tools they require to do their jobs.

While the Public Service will continue to undergo a fundamental transformation over the next decade, it is not without guideposts. It will continue in its mission to provide high quality service to Canadians and policy advice to government. In carrying out these functions, the Public Service will be guided by its core values and principles. It will maintain its commitment to knowledge and honesty over opinion and expediency. The Public Service will remain dedicated to the principles of merit and fairness. At the same time, a greater emphasis will be placed on the importance of quality service, on the value of teamwork, on the will to innovate and on a sense of responsibility and accountability.

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