III Public sector organizations

There is a great diversity of organizations in the public sector; each exists for a specific purpose and has its own role to play. Organizations differ from one another according to the accountability framework for Ministers and officials, the organizational structure, and the management and administrative regimes. This section provides a brief overview of organizational models in the public sector.

1. Departments

A department supports its Minister and the government by providing advice on policies and legislation, and by implementing ministerial decisions and programs. Headed by a Deputy Minister, a department carries out activities that require regular ministerial oversight and direction.

The Minister’s general authority for the management and direction of the department flows from statutes. In addition, statutes designate the Deputy Minister as the deputy head of the department, responsible for the management of its financial and human resources. The Deputy Minister is answerable to the Minister and, ultimately, to the Prime Minister for the quality of management and advice provided by the department and for any actions taken by departmental officials.

2. Agencies, Boards and Commissions

This broad grouping encompasses entities whose structures and functions are varied. Federal agencies, boards and commissions have been established to carry out administrative, quasi-judicial, regulatory and advisory functions within an established policy and legislative framework. These functions are by no means mutually exclusive, and many agencies carry out multiple roles. The institutions pursue a range of activities such as protecting human rights, regulating particular economic sectors, providing grants, undertaking research, and giving advice.

In general, such organizations are created by legislation, which sets out the organization’s mandate, authorities and organizational structures. The legislation normally also contains considerable details on the composition of the organization and the roles and responsibilities of key actors (e.g., chair, the board of directors, chief executive officer). In contrast to departments which are under the control and direction of a Minister, agencies are frequently structured on a corporate model in which decision-making powers are vested in a board or commission. That board or commission is accountable to Parliament and the public for the exercise of these powers.

Each organization falls within the portfolio of a Minister, who answers for it in Parliament. In accordance with the enabling legislation, Ministers exercise varying degrees of control and responsibility for the agencies which are part of their portfolio. The degree of independence from government varies with the type of organization in question, and it is important that Ministers and the officers of each organization understand and respect the relationship defined by the relevant legislation. Maintaining an arm’s length relationship to Ministers is particularly important for those organizations whose mandate is to make decisions that determine or regulate the privileges, rights or benefits of Canadians. Governments delegate decision-making powers to these bodies, in part, to preserve public confidence in the fairness of the decision-making process. In turn, the exercise of these powers requires careful attention to ensure that the appropriate degree of independence is maintained.

The nature of the relationship between a Minister and an agency is a particularly sensitive issue for administrative tribunals or other independent decision-making organizations carrying out quasi-judicial functions. These are statutory bodies responsible for administering, determining, establishing, controlling or regulating an economic or business activity, or adjudicating cases that affect individual rights and benefits.

Such organizations must exercise their statutory authority in accordance with government policies and in the public interest. However, because they are called upon to arbitrate among conflicting interests or to settle claims for various benefits, their independence is key to their effectiveness.

Normally, Ministers are responsible for the policies governing such organizations, but cannot intervene in specific decisions. Thus, the Minister is answerable in general to Parliament for the activities of the organization, but maintains an arm’s length relationship with it. The Minister’s role is frequently limited to making recommendations to the Governor in Council on the appointment of members, and tabling annual reports. Provision may in some cases be made for policy direction or appeals of certain decisions to Ministers. Consistent with their quasi-judicial role, the organizations themselves are responsible for developing specific rules and procedures and for following them in their decision-making. The purpose of such structures is to balance Ministers’ accountability for overall policy development and utilization of public resources with the independence needed for these bodies to make specific decisions in a transparent, fair and non-partisan manner.

3. Crown Corporations

Crown corporations are wholly owned by the government but operate at arm’s length in a commercial environment. They are not subject to the government’s human resource and administrative policies that apply to departments. In most cases, they have their own statutes that outline their policy and operational framework, including the responsibilities of the appropriate Minister, the board of directors, and the chief executive officer (CEO). In addition, the majority of Crown corporations are subject to Part X of the Financial Administration Act which provides a control and accountability framework respecting, for example, the approval of each corporation’s corporate plan and budgets, and the appointment of its directors, chairperson, chief executive officer and auditor.

The role of the appropriate Minister is to oversee the Crown corporation by recommending to the Governor in Council the names of prospective members of the board of directors, recommending the approval of the corporation’s corporate plans and budgets, and tabling their annual reports and the summaries of their approved plans and budgets in Parliament.

The board of directors is responsible for the overall management of the businesses, activities and other affairs of the corporation. The CEO is responsible for the day-to-day management of the corporation on behalf of the board of directors. Each Crown corporation is ultimately accountable, through its appropriate Minister, to Parliament for the conduct of its affairs.

For further information on the responsibilities of Crown corporation directors, consult Directors of Crown Corporations: An Introductory Guide to their Roles and Responsibilities and Corporate Governance in Crown Corporations and Other Public Enterprises – Guidelines. Information on these publications may be obtained from the Treasury Board Secretariat, Service and Innovation Sector, (613) 957-0138.

Contact for further information

Assistant Secretary to the Cabinet Machinery of Government Privy Council Office
Telephone: (613) 957-5491
Service and Innovation Sector Treasury Board Secretariat
Telephone: (613) 957-0138.