Mr. Sinclair:

The bill which was given

first reading last session to enable it to be in the hands of members of parliament, and the bill which we shall give first reading after this resolution is accepted, are almost identical, with the exception 'of a few changes in phraseology which I shall mention on

second reading. The principal change in the duties of the Auditor General is to remove from him the present regulations which under some circumstances require him to make a pre-audit of funds. Before the public accounts committee the Auditor General said it was neither reasonable nor fair to expect him to make a pre-audit before expenditure, and as Auditor General afterwards certify to the accuracy of the expenditures. I think that is the principal change in the function of the Auditor General. In other words, the Auditor General is completely removed from any departmental responsibility now. He is parliament's servant to audit the public accounts once they are through the Department of Finance; that is, through our auditor, the comptroller general.

Mr. Hansell:

It will not affect his freedom in any way? I notice in the public accounts recommendations have been made that I believe have been sound. Nevertheless, there is running through his recommendations the attitude that he is pretty well free to speak his mind, which I think is an important thing. That will not be affected at all by this?

Mr. Sinclair:

This bill gives the Auditor

General greater freedom than he has had before. The Auditor General is the servant of parliament, appointed on joint address of both houses, and is only removable by a joint address of both houses. The Auditor General is the one who I think is most pleased with the clearer definition of his duties which is contained in the new bill.

Mr. Hansell:

One other matter; the resolution also calls for the regulation of the terms and conditions upon which contracts may be made on behalf of His Majesty. Would the parliamentary assistant mind informing the committee just what relationship there is between the Department of Finance and the Department of Defence Production, public works or any other department that lets contracts? Evidently these departments are not permitted to let a contract without the Department of Finance having something to say about it. When the parliamentary assistant answers me, he might also give the committee some information as to where the Department 'of Finance may come in in advising whether or not contracts should be let on a straight tender basis, or on a cost-plus basis.

Financial Administration

Mr. Sinclair:

Once again, Mr. Chairman,

I do not like to get into the actual details of the legislation when, as far as this resolution is concerned, we have yet no final knowledge of the legislation. I think it was before the public accounts committee last year that the Auditor General gave his opinions on the various types of contracts which are let under varying circumstances: contracts by open tender to the lowest bidder, contracts on a management fee and the cost-plus contract. The relationship of the Department of Finance to other departments is specified very clearly in this bill. As the hon. member for Kamloops said, this is the key bill of government and of those other departments of government. What this bill is attempting to set up is a uniform practice in every department on the matter of letting contracts. I would not like to go into it very much more deeply at the moment, except to say that once again the bill is trying to translate into legislative form the recommendations made by the Auditor General in various appearances before the public accounts committee.

Mr. Knowles:

Will the parliamentary

assistant say a word about the provisions of this bill respecting the idea of revolving funds for stores? In particular I should like to know whether the proposal that is planned for stores accounting is the same as is now in effect in the Department of Transport. My other question is this: Will the passing of this bill automatically set up such stores accounts in other departments? Or will there be required other legislation or other enactments for each individual department wishing to have it done that way?

Mr. Sinclair:

So far as the first question is concerned, in his preliminary statement the minister said that provision for the revolving fund, so far as stores are concerned, will be modelled closely on the Department of Transport Stores Act which was debated at length a year ago. Again the aim is to have a more uniform system both of accounting and purchasing, and the benefit of bulk purchases for all departments, instead of having each department make its own.

I must confess that at the present time the answer to the second question slips my memory. However, I shall have an answer on second reading of the bill.

Mr. Wright:

I notice that in the schedule to the bill there are listed some thirty-three boards and corporations, but the Canadian wheat board is not included. I am wondering

1258 HOUSE OF COMMONS

Financial Administration if it was missed, or if it should be there. If it was left out purposely, then why was that done? Are there any other such corporations or agencies of government which are not listed in the schedule?

Mr. Sinclair:

I must confess, again, that without documentation my memory is not too good. I do recall a discussion concerning the wheat board and it is true that it is not listed. My recollection is that it is not a government agency, department or proprietary corporation within the terms of the bill.

There are however two crown corporations which definitely are agencies of government, or owned by the people, and which are not specifically listed in the bill. The Canadian National Railways, as such, is one-although it is covered by inclusion of the Canadian National (West Indies) Steamships, as well as the national railways as defined in the Canadian National-Canadian Pacific Act, and the Trans-Canada Air Lines. Another crown corporation which is not included in the schedule is the Bank of Canada. The reason could best be expressed by the deputy minister of finance and the governor of the Bank of Canada before the public accounts committee.

There is a difference between the central bank of a country and any other crown corporation. Normally one would expect all crown concerns to appear as corporations in the schedule to the bill. However on second reading full reasons will be given as to why the wheat board is not included.

Mr. Knowles:

Once again I should like to say a few words concerning the possibility of the government's inaugurating a suggestion system among civil servants and government employees generally. Last June the parliamentary assistant was able to inform me, to his satisfaction and mine, that the bill will contain a section making possible such a suggestion system.

1 hold in my hand a copy of Bill 401 of the last session of parliament, which was not proceeded with. My understanding is that the bill to be based on this resolution will be similar to the one which was given first reading on June 25, 1951. Section 7 (d) states:

The treasury board may make regulations . . .

(d) notwithstanding the Civil Service Act,

(i) authorizing the payment to persons in the public service of compensation or other rewards for inventions or practical suggestions for improvements.

I was glad to learn that that section was in the bill as it was presented last session.

I take it it is in the bill to be based upon this resolution-and I notice that the parliamentary assistant nods affirmatively.

When I raised this matter at the last session I indicated that this is a practice which has been in vogue in the United States for a number of years. When I spoke last June I placed on record one or two figures indicating its usefulness. I should like now to bring those figures up to date, and to say a further word about the practice as it is carried on in the country to the south of us.

At the outset let me say that I have before me a copy of the statute under which this system is operated in the United States. It is public law 600 of August 2, 1946, 79tli congress, second session. Section 14 of that law reads as follows:

The head of each department is authorized, under such rules and regulations as the president may prescribe, to pay cash awards to civilian officers and employees (or to their estates) who make meritorious suggestions which will result in improvement or economy in the operations of his department and which have been adopted for use and to incur necessary expenses for the honorary recognition of exceptional or meritorious services.

The section goes on to indicate a certain proviso, which I think I need not read at this time.

I have, too, a copy of executive order 9817, issued by the president on December 31, 1946, by virtue of and pursuant to the authority invested in him by the law from which I have just quoted. This executive order which, as I say, is over the signature of Harry Truman, and is dated at the White House, December 31, 1946, reads in part as follows:

Section 1. Any civilian officer or employee of a department (as the word "department" is defined in section 18 of the said act of August 2, 1946) who makes a suggestion, in such form and manner as his department shall require, which is adopted for use in the. department on or after August 2, 1946, and, in- the judgment of the department head or other duly authorized authority in the department, has resulted or will result in improvement or economy in the operations of the department by way of monetary savings, increased efficiency, conservation of property, improved employee-working conditions, better service to the public, or otherwise, shall be eligible for consideration for a cash award.

I should like to take a moment just to emphasize the various objectives spelled out in that sentence. They are the aims, as it were, of the legislation and the executive order. I would refer to them again: "Monetary savings"-that is certainly something

good; "increased efficiency", which is likewise desirable; and then, "conservation of property", and finally "improved employeeworking conditions, better service to the public." All would agree that these were desirable objectives when they were set out in the legislation in the United States. Furthermore, since there is now the possibility, under this resolution and the bill to be based thereon, that a similar system might be introduced in Canada, I should think hon.' members would be interested in knowing what the results of this system have been in the United States.

Before turning to that, however, I may say that this executive order 9817, which I hold in my hand, goes on to spell out the precise formula as to the amount of the cash award to be paid. In all cases the amount of the award is determined by the monetary savings to the public treasury. For example, if it is a saving between $1 and $1,000 the award is $10 for each $200 of savings, with a minimum of $10 for any adopted suggestion. Then, without reading them all, but going down to larger amounts, I may say that in the event of a saving of from $10,000 to $100,000 the award is $275 for the first $10,000 of savings and $50 for each additional $10,000 of savings.

Another section in this executive order reads as follows:

Whenever the head of a department believes that a suggestion he has adopted would benefit the government service generally, he may report it to the director of the bureau of the budget for dissemination to all departments.

Therefore I suggest that on paper this looks pretty good. It does appear as though the authorities at Washington have taken seriously the idea of soliciting from their employees suggestions as to ways in which money might be saved, efficiency improved and working conditions generally made better. The question arises: What has been the result of such a system? I have in my hand a letter addressed to me under date of October 12, 1951, by Charles F. Parker of the bureau of the budget, executive office of the president, Washington, D.C. I need not read the letter except to say that it indicates he was sending me certain information and documents, including tables, showing the results of this system as it has been in effect in the United States down to and including the fiscal year 1950. At the end of his letter he says:

I do not yet have the total results for the fiscal year 1951, ending June 30, 1951, but the reports I have received to date indicate improved results. I will forward a copy of the 1951 summary as soon as it is available.

Financial Administration

I have already said that Mr. Parker was good enough to send me certain tables, and I have no doubt that the officials of the Department of Finance also have copies of them. One of them is headed, "Agency Employee Suggestion Systems, Fiscal Year 1950". It is an excellent summary of the working of this plan. All the regular departments of the federal government at Washington are listed in the table and then there are many columns with respect to the various suggestions. Picking out two or three of the significant figures, I find, that in the United States fiscal year 1950 there were 87,582 suggestions received. Of those, 23,159 suggestions were adopted. That in itself sounds pretty good. It would suggest that the employees are taking the plan seriously, that they are submitting suggestions worth consideration, and that the government is considering all those that have merit.

The number of cash awards for suggestions amounted to 19,973, and the amount of the cash awards for these suggestions paid to civil servants was $573,865.90. Now comes the really significant figure. In return for those awards of the figure I have just named the estimated savings to the federal government in the fiscal year 1950 amounted to $20,652,988.76. Twenty million dollars may not be a huge sum of money in relation to the United States budget; it is a little more to us. But even if one omits comparisons, the plain fact of the matter is it is a sizeable sum of money, and if we could save a sum of that kind it would be well worth it, and the government ought to do it.

I go further and suggest that in addition to the actual dollars and cents that can be saved by such a plan it is bound to have a good effect on the morale of government employees. If employees in the civil service and the government generally know that the government really wants suggestions and that it will put meritorious ones into effect, it cannot but have a worth-while effect on the morale of the employees, the efficiency of government service and the respect, shall I say, of the public for what the government is doing.

It is interesting to me to note the departments of the United States government in which the major savings were effected. From looking at them I imagine that they run more or less proportionately to the amount of money being spent by the various departments. At any rate the departments at the top of the list in the amount of money saved are the three defence services. After you

Financial Administration move out of those brackets the next largest saving was made in the veterans administration department at Washington. The next three are the treasury department, which corresponds to our Department of Finance, the department of commerce, which I imagine would correspond roughly to our Department of Trade and Commerce and then the department of agriculture.

The amounts saved in the last three departments that I have named for the fiscal year 1950 were $252,698 in the treasury department, $230,030 in the department of commerce, and $222,090 in the department of agriculture. There again these are not sums that are going to wipe out the national debt but they are amounts of money that are certainly worth saving. If we could effect savings of that kind in our administration I am sure it would be worth while not only from the dollars and cents point of view but from the standpoint of morale and democracy generally.

In addition to this exhaustive table for the fiscal year 1950 Mr. Parker of the bureau of the budget at Washington also sent me another table which is headed, "Summary of Suggestion Program Results". This one separates the defence department from other government departments, then groups the two together and sets out the results across the years that this system has been in effect. In other words, it covers the United States fiscal years 1947, 1948, 1949 and 1950.

Again I will not take time to read very many figures, but I think it is interesting to note the total savings resulting from this plan in each of the four years covered by the table. For 1947 the total saving was $16,739,878. For 1948 the figure was $15,781,663. For 1949 the figure was $18,422,948; and for 1950 the figure is the one I have already given from the other table, $20,652,989. One other point that hon. members have to bear in mind when they look at these figures is that these savings are cumulative. When one gives the savings for the year 1950 what one has there is the new savings resulting from suggestions made by employees and for which awards have been paid during that fiscal year. When one takes into consideration the fact that the savings already effected in previous years have been maintained across the years-

Mr. Sinclair:

Not necessarily.

Mr. Knowles:

-one can see that in the course of time this can be a most beneficial system.

Mr. Sinclair:

Will the hon. member permit one interruption?

Mr. Knowles:

Yes.

Mr. Sinclair:

The saving need not be cumulative. It can be a saving in one individual expenditure made only in one year.

Mr. Knowles:

I believe that is'correct. It need not be cumulative but more likely it is because the saving usually results from a suggestion as to some different way of handling a governmental operation, and most governmental operations go on and on. As I say, I am very glad to note that the bill will provide for such a system being put into operation by our government. From a reading of the United States legislation I note that it seems to be in more compulsory terms whereas here it is in permissive language. That may be due merely to the different way in which our legislation is set up. We often get into little arguments here as to whether "may" means may or shall, but I certainly hope in this instance the fact that this section is in the bill means that it is the government's intention to go ahead with a system of this kind.

I have taken time to indicate the details of this plan because I strongly support the measure and dare to hope that by having given this account of what has been going on in the United States I have encouraged the government to inaugurate such a system as soon as it possibly can.

There is one suggestion I would make before concluding. I have these two tables. I want to state frankly that I am not asking that they be placed on the record. However, it might occur to some hon. members that it would be a good idea to have this information available if hon. members so desire and I shall be pleased to have these tables placed on the record.

Agreed.

Mr. Knowles:

I repeat that these tables are from Washington. They record the experience of the United States government and they are as follows:

[Mr. Knowles.l