INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, September 29, 1998

• 1536

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Order. Pursuant to Standing Order 108(2), a study on information technology preparedness for the year 2000, today we have witnesses before us. They are: Mr. Timothy Garrard, chief information officer for Industry Canada; Jonathan Sunderland, the project officer for the student connection program; and from the Canadian Imperial Bank of Commerce, Mr. Robert Paterson, the general manager of small business banking.

We welcome you to the committee today.

It's my understanding that Mr. Garrard will begin the presentation.

Mr. Timothy Garrard (Chief Information Officer, Department of Industry): Thank you very much and good afternoon, ladies and gentlemen.

I'm the chief information officer for Industry Canada. I'm responsible to the deputy minister for the Year 2000 First Step initiative, and today I'm accompanied by a project manager for the student connection program, Jonathan Sunderland.

Year 2000 First Step employs specially trained university and college students as well as recent graduates to conduct audits and action plans to ensure that companies' critical business systems are year 2000 compliant.

Year 2000 First Step is delivered through Industry Canada's student connection program and in partnership with the Canadian Imperial Bank of Commerce. By the end of next year we expect that more than 15,000 business people will have used our service as an important first step to becoming year 2000 compliant.

Before I explain the program in detail, please allow me to define what we mean by “year 2000 compliant”. By this I mean the ability to, first, consistently handle date information before, during and after January 1, 2000, including accepting date input, providing date output and performing calculations on dates or portions of dates and, second, to function accurately in accordance with these specifications and without interruption before, during and after January 1, 2000.

[Translation]

Before talking to you about Year 2000 First Step, let me begin with a brief description of the Student Connection Program. It was introduced in May 1996 as part of the government's Youth Employment Strategy. Its mandate is to hire and train over 2,000 post- secondary students and recent graduates as Student Business Advisors who, in turn, teach more than 50,000 business people how using the Internet will increase their company's competitive advantage. The Student Connection Program is funded through Human Resources Development Canada, and is delivered by Industry Canada, because its target market is Canada's 930,000 small-and-medium- sized enterprises.

The Student Connection Program addresses the needs both of Canada's youth and its small-and-medium-sized enterprises in two important ways. One, the Program provides on-the-job information technology and business experience to post-secondary students and recent graduates, and exposes them to "real-life" business situations and potential employers. Two, it provides customized information technology training and awareness that meets the evolving needs of Canadian companies and is consistent with such government priorities as Connecting Canadians, the recommendations of Task Force 2000 and the recommendations of the Information Highway Advisory Council.

[English]

To date, the student connection program has hired more than 2,600 student business advisers and has trained almost 40,000 business people.

• 1540

The program is also expanding its curriculum to include more advanced training modules such as electronic commerce and PC banking, in addition to continuing to train on Internet basics such as getting connected, using search engines and electronic mail.

Further, with the introduction of Year 2000 First Step in June 1998, SCP is expanding to meet the needs of Canada's small and medium-sized enterprises.

In a published survey by the Canadian Federation of Independent Business, 97% of Canadian small and medium-sized enterprises said they are familiar with the millennium bug and its potential effects on their business systems. Seventy-three per cent have already taken some informal steps, but many have not implemented a formal action plan.

Mr. Jean Monty's Task Force Year 2000 report, “A Call for Action”, issued a number of recommendations aimed at ensuring that Canadian businesses are compliant, the number one of which is for SMEs to prepare, and I quote:

a formal action plan for year 2000 preparedness. The plan should include, at a minimum, an inventory and assessment of all systems, conversion or replacement, testing, contingency plans, and key partners' preparedness.

From this perspective, a large number of SMEs may learn that conducting a year 2000 evaluation without an action plan is not sufficient to demonstrate to themselves and their trading partners that they are Y2K compliant.

The student connection program and the CIBC worked in partnership to address Task Force Year 2000's recommendations. The student connection program invested $300,000 in curriculum development, promotion and delivery of Year 2000 First Step, with the CIBC contributing an additional $500,000 towards marketing and promotion. Year 2000 First Step is delivered through the existing student connection program infrastructure as follows.

Located in universities and colleges across the country are 14 administrative centres that deliver the program to over 85 communities nationally. The program is delivered by trained and certified student business advisers who undergo up to two weeks of rigorous training.

Depending on the number of computers in the business, the actual year 2000 assessment usually takes no longer than one day, with the action plan—and we've distributed examples of action plans to you in the yellow binders—produced in less than two weeks following the daylong assessment.

The assessment includes: an hour-long year 2000 awareness session to ensure that the small and medium-sized enterprises are aware of their year 2000 problems and will investigate the policies of their suppliers, insurance company and bank; a complete inventory of their business systems, including computers, fax machines, copiers and cell phones; a simple diagnosis of the hardware and software of a maximum of 10 PCs; a review of business risks; and a complete action plan with suggestions for making the business year 2000 compliant.

The price of Year 2000 First Step is $195 for the first 10 PCs, with an additional $15 charge for each additional PC tested.

[Translation]

While the success of Year 2000 First Step lies in the service it delivers, it is perhaps more important to note what the Program does not deliver. As the title denotes, this Program is only meant as the first step in the complex process of ensuring a company's business systems are Year 2000 compliant. While the Program delivers a complete inventory, assessment and action plan, it doesn't provide a Year 2000 fix. The Program is not a service provider; it does, however, suggest ways clients can research service providers in their area, and provides key questions to ask. Once clients have finished our Program, it is assumed that they will turn to more sophisticated private sector contractors to bring about compliance. Year 2000 First Step is meant to help business people understand the business issues surrounding the millennium bug and the potential for their businesses to be affected by it.

• 1545

[English]

As there is only a very short period of time left before the millennium, it is critical to make sure that as many small and medium-sized enterprises as possible know about Year 2000 First Step.

With the help of CIBC and IBM, the program has undertaken an aggressive direct mail campaign. During this past summer, CIBC and IBM mailed out a combined 400,000 brochures to their small business clients. In addition, SCP will be distributing an additional 300,000 to its previous Internet clients, to the Canada Business Service Centres and the Canadian Technology Network, and to the membership of the Canadian chambers of commerce.

Also, Profit magazine will run an ad on Year 2000 First Step and, through a joint agreement with Can2K, another Industry Canada year 2000 awareness program, First Step will be featured in a mail-out to one million households.

Since the launch of Year 2000 First Step in June, more than 600 SMEs have signed up for the program. As well, we have recently entered into an arrangement to audit the Rona Hardware franchises and are piloting a project with the Nova Scotia medical society that could result in auditing up to 2,000 of the province's doctors' offices.

We believe that Year 2000 First Step will have a positive effect on Canadian SMEs by increasing their awareness of the millennium bug, by creating a greater demand in the private sector for year 2000 solution providers, and, from the perspective of Canada's youth, by creating an environment to gain valuable work experience.

I'd like now turn to my co-presenter, Robert Paterson, acting senior vice-president for small business banking at the CIBC, who will talk about the role CIBC is playing in Year 2000 First Step.

The Chair: Thank you. Mr. Paterson.

Mr. Robert Paterson (Acting Senior Vice-president for Small Business Banking, Canadian Imperial Bank of Commerce): Good afternoon, ladies and gentlemen.

I'm very pleased to have this opportunity to appear before the committee to provide an update on CIBC's partnership with Industry Canada on Year 2000 First Step.

Tim Garrard has already given you a good overview of the program. I'll do my best to avoid covering the same ground by providing CIBC's perspective as a program partner.

It may seem unusual to see a bank rather than a computer company, perhaps, involved in an initiative dealing with microchips and the millennium bug, but in the past few years we've recognized that the changing needs of our customers require us to look beyond the traditional role and services of a bank.

Our small business customers in particular look to us today for more than basic banking services, such as an operating account and ready access to credit. Increasingly, they also want their banks to provide advice, to identify challenges and to assist them in finding solutions. As we see it, year 2000 compliance clearly falls within those expectations.

Year 2000 First Step, along with a number of other CIBC initiatives, such as easy access to credit and our job creation loan fund, is designed to provide unique solutions and a greater range of options to meet the growing needs of our clients.

Our goal is to see small businesses succeed, to be stable and viable enterprises, to grow and prosper, and to build employment. For many companies, small or large, the millennium bug poses a potential threat to success. Most big corporations such as ours have recognized the issue and have dedicated the resources necessary to ensure compliance. However, early on we recognized that many smaller enterprises would need assistance to essentially take the first step towards year 2000 readiness.

Task Force Year 2000's February report, entitled “A Call for Action”, focused considerable attention on the issues and clearly showed that almost one-third of all small businesses had not yet taken any action at that time. The report showed that while many businesses had heard of the millennium bug, few recognized either the potential impact it could have on their business or the more complex issues of suppliers who were not in compliance.

We recognized that the challenge was not a lack of awareness or interest, but a lack of understanding of where to start, of what they needed to know and of where to find affordable resources to deal with the issue. We believe that Year 2000 First Step can play an important role in bridging those gaps and that our partnership with Industry Canada's student connection program is a vital element in our effort to reduce the vulnerability of small businesses.

I also want to emphasize that this is not a program limited to CIBC customers. It encompasses all small businesses in Canada.

As evidence of our commitment, we've developed an extensive marketing and communications program designed to increase awareness. Our national advertising campaign, which is currently underway, promotes Year 2000 First Step, along with other CIBC small business initiatives.

• 1550

Employee training materials have been provided to all of our staff members who deal with small and medium-sized enterprises to ensure that they can explain the challenges and potential solutions to their clients.

We've also created a newsletter explaining Y2K and mailed it to each of our 330,000 customers. Copies have been provided for you today. In addition, we've developed a series of seminars dealing with the issues and recently began working in conjunction with Industry Canada and IBM to increase the number of venues.

I spoke at one of these seminars just two weeks ago in Scarborough, Ontario, and was impressed by the level of interest shown by an audience of over 100 small business owners. Clearly, people are hungry for more information about precisely how year 2000 might affect them and their businesses.

Initial feedback for Year 2000 First Step also indicated that the quality of analysis being carried out for companies and the value they placed on it was as good in practice as we thought it would be in theory. We recently received a letter—from a customer of one of our competitors, by the way—that characterized the program as, and I'll use his words, “a highly recommended invaluable business tool”. The customer went on to say that “the final audit report is and will continue to be an invaluable resource to us in our endeavour to become Y2K compliant”.

This is the sort of feedback we've been receiving, and I know Industry Canada has had similar responses, which further reinforces our view that it is a sound program capable of serving the needs of small businesses.

I am also proud to note that our experience with the student connection program and its effort to generate employment opportunities for youth fits with our own corporate philosophy and initiatives in that regard. The young people involved in the program will gain a heightened awareness of small business and its unique rewards and challenges, and some of them, we fully expect, will find permanent employment with the businesses they assist.

I applaud Industry Canada for developing a program with the ability to generate these positive results and for having the foresight to anticipate the type of attrition and putting plans in place to deal with it.

As you can see, Year 2000 First Step is a significant program. Not only are businesses educated about the year 2000 issue and its potential effects, Year 2000 First Step delivers a suggested and comprehensive action plan to help businesses effectively manage year 2000 compliance.

And at CIBC we're building on this program and taking the issue a few steps further for our customers. We have entered into an alliance with IBM Canada to have them provide year 2000-ready hardware and software at discounted preferred prices. This offer, in combination with the federal government's tax credit for up to $50,000 for equipment purchases and related costs, provides a strong incentive for companies to move forward.

I said earlier that businesses are looking to banks for advice, for help in identifying challenges and for assistance in finding solutions. Year 2000 First Step does all of that and more. In summary, CIBC is proud to be involved in such a valuable and worthwhile program and we look forward to continuing the successful partnership we've enjoyed thus far with Industry Canada.

Thank you.

The Chair: Thank you very much, Mr. Garrard and Mr. Paterson.

I'm going to begin with questions from Mr. Rahim Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Thank you.

First I'd like to applaud CIBC and its partnership with Industry Canada. You guys are doing an exceptional job. Thank you for taking the time to be here in front of the committee.

I have just a couple of short questions. To some extent, I think, you've answered them, but I would like to get more clarification.

Specifically, at the end of your talk you mentioned the feedback you're getting, and I would particularly like to know what sort of feedback you're getting in relation to the student program and the integration of students through this particular program, because it's obvious that there could be some long-term positive effects by integrating students into the economy and that sort of thing. Could you could talk specifically about that particular aspect?

Mr. Robert Paterson: Sure. I've talked to a number of the students who have actually been going out to the small business customers, and their feedback has been that it's expanded their minds with respect to the career opportunities that are out there for them. They are seeing how people have taken some entrepreneurial ideas and actually executed them and delivered on them.

The small business owners are actually getting into very good conversations with the students about how they started up the company and about some of the problems they've had and how they've dealt with them. I think it's been very eye-opening for a lot of the students and has broadened their understanding of the opportunities to actually set up their own small business, to go forward with that.

Mr. Rahim Jaffer: That's positive. As a young person myself, I think it's important to get that sort of experience.

I'm curious about a figure in the presentation that Mr. Garrard made which showed that 97%, I think, of the businesses are at least aware of the year 2000 problem and 73% are actually taking steps to get involved or to take care of the problem.

• 1555

Is that consistent across the country or are there certain areas of the country where you're finding that they are ill-prepared or unprepared? Or is that 73% of small business people working to do something about the problem quite consistent across the country?

Mr. Timothy Garrard: I don't pretend to be an expert on the statistics, but based on anecdotal information I've heard, awareness and action-taking tends to be greater in larger centres where the small business people will have been exposed to a larger population of other small business people from whom they will have heard stories and learned things. It's from that perspective that we're very mindful of the need to raise awareness about the year 2000 threat in smaller communities.

This program reaches 85 communities, but there still will be a lot of other groups in Canada outside the reach of those communities. In some cases we're able to get to them with support if they are near one of those communities. In other cases, as I mentioned, we have a program called Can2K, which is an awareness program that is being mounted jointly with the Commonwealth of Pennsylvania, interestingly enough, and with other partners, to provide awareness-building and information to all of the clients of the community access program centres, some 4,000 or 5,000 in rural areas now.

The Chair: Thank you very much, Mr. Jaffer.

[Translation]

Mr. Bellemare.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Thank you, Madam Chair.

[English]

I'd like to commend both the Industry Department and CIBC for this partnership, which is more than just doing business. Rather, it's making sure that business does work after January 1, 2000. It's very commendable and it's a necessity, and you're setting an example, CIBC, for other large institutions. That's good.

I have one question for the CIBC representative, Mr. Paterson. I presume that this booklet, “Your Business, Your Computer and the Year 2000”, is extra information and is not part of the program.

Mr. Robert Paterson: That's correct.

Mr. Eugène Bellemare: In this little booklet there are two items you discuss. You say small businesses should very careful in testing their systems by advancing the clock because some software licences are designed to expire after a certain date. If you tell them to do that— It's an interesting question. A lot of people might try that, not because you're suggesting it, but because it would be instinctive on anyone's part to set it at year 2000, to set your VCR at the year 2000, to set whatever.

What can be done to prevent the risk of jamming up your piece of equipment, whether you're at home working on your VCR, trying it out, or you're in a small business, a mom-and-pop shop, working on your personal computer?

Mr. Robert Paterson: I'm not a technical expert so I'll just state my limited opinion. The real thing we're trying to do is to get awareness out there, to let people know not to do it. And there are those who have done these things in the early days in certain businesses, so that's where we got the learning from. We're just trying to convey to people that they should be cautious. And when we hear about learning, either through the media or through our small business customers, we want to pass that on to as many people as possible. The piece you're referring to is actually one of our first commitment pieces. It came out in early 1997 in order to start the educational process.

Mr. Eugène Bellemare: My questions are now to Mr. Garrard. They will be short questions—for short answers, I presume.

You're going to have some university students. Are they graduates or just students?

Mr. Timothy Garrard: Some are graduates, but typically many are students who are in the second or third years of their programs.

Mr. Eugène Bellemare: Still liking the program, a question that would pop up would be this one: would they conduct audits and action plans?

Mr. Timothy Garrard: What you see in the book we handed out to you is a sanitized sample report, a sanitized real report, and you can see the things that are done for a sample small business.

• 1600

The first step is an inventory of what systems the business may have that could be date dependent. Certainly personal computers are all date dependent, but what about time-keeping machines? What about fax machines? What about special purpose manufacturing machines or other things that are peculiar to that business?

The student will help the small business owner identify all of the pieces of equipment in the business that are exposed to the risk, and the action plan will recommend courses of action. It will not repair the problems that are found. That clearly requires an expert, and referrals are made to expert advisers in the private sector who can come in and take the necessary steps.

The action plan tells the business owner what he or she has to do. The small business owner needs to be concerned about these systems, needs to contact suppliers to make sure he's not going to go out of business because the supplier can't supply him, and needs to contact other business partners he's critically dependent on so that he knows where they're at. The action plan generally gives them a checklist of the further steps they need to take.

Mr. Eugène Bellemare: You suggest here that student business advisers can teach more than 50,000 business people how to use the Internet. When learning how to work the Internet can take you all day, if not more, isn't there a risk in them going for a day at $195 a day? Is there a risk in that if they get into the kick of wanting to play with the Internet at that particular point they would not be really looking at the problem that you're trying to address, which is to make sure that small businesses, the mom-and-pop types, know how to assess the possible problems they have?

Mr. Timothy Garrard: There are two different programs. The student connection program, of which Year 2000 First Step is an element, was introduced in 1996 to raise awareness about the Internet and advanced computing technologies. And in that program, which is still running, with thousands of businesses still being trained, the idea is to raise awareness about the Internet, about e-mail, about searching for information.

There is another program that is quite different, with different students, training and curriculum, which is aimed at assessing the year 2000 risk. That's the one we were describing.

Mr. Eugène Bellemare: On your second-last page, you talk about the Rona hardware franchises project and the Nova Scotia medical society pilot project in which you have to check and audit some of the 2000 doctors' offices in that provinces. How did you address the problem of the Privacy Act in regard to that?

Mr. Timothy Garrard: The student business advisers are not reviewing files. In the case of a PC, they put a disk into the PC which contains a suite of testing programs that will test the PC's exposure. It won't read the PC's files. The student business adviser has no more access to private information than any other person in the doctor's office.

Mr. Eugène Bellemare: Finally, if a very small business, the mom-and-pop type, really can't afford the $195, what do you do?

Mr. Timothy Garrard: I'm afraid it is a cost-recoverable program. We're operating the program with partners. I'm sorry.

Mr. Eugène Bellemare: Thank you very much.

The Chair: Thank you very much, Mr. Bellemare.

[Translation]

Ms. Lalonde, please.

Ms. Francine Lalonde (Mercier, BQ): I'm trying to sort things out. I wish I'd received this documentation earlier because there are a lot of pieces to put together.

First, this program was announced in June and, in June, the Minister announced that some students would be trained and made available to businesses. In the June communiqué, the Minister was talking about over 15,000 small-and-medium-sized enterprises. I'd like to know how much Human Resources Development Canada is investing. How many young people will be available to small-and- medium-sized enterprises and till when, and how many SMEs will there be?

• 1605

Can young people obtain funding that goes beyond a certain number of weeks? Is this funding that lasts a year or a year and a half? I'd like to know whether it now exists everywhere, because, if they began training young people in June— From all the studies this committee has done, we didn't get the feeling that in-depth training could occur in so little time.

You say in the introduction: “—to ensure that companies' critical business systems are Year 2000 compliant.”

So a production SME can't use your services. Only the main communications equipment is concerned, or is this a mistake in your text? In other words, I'd like a full picture, which we don't have in this document.

Mr. Timothy Garrard: Thank you. You've asked a lot of questions; I'll try to remember them. To begin with, the Program hires students for one term. How many students are there at present?

[English]

How many students do we have now, Jon?

Mr. Jonathan Sunderland (Project Manager, Student Connection Program, Department of Industry): We hire 200 per semester.

[Translation]

Ms. Francine Lalonde: Two hundred each term?

Mr. Jonathan Sunderland: Yes.

Ms. Francine Lalonde: And it starts up again? They're not the same ones?

Mr. Timothy Garrard: Right now, the fall term has started. We have close to 200 students who have been trained under this Program and who now offer services to some 600 clients. We expect 15,000 clients will receive these services by the year 2000.

The service users are identified by the administrative centres. There are 14 in Canada and the students travel among 85 centres. The system depends very much on the administrative centres for administration. The administrative centres hire the students, take care of their training and, with the help of the Bank of Commerce, for example, and other partners, identify the clients.

Ms. Francine Lalonde: The business systems?

Mr. Timothy Garrard: What they examine in their Program with the companies is all the systems they depend on for their business. These are not the business or technical systems; these are all the companies' systems.

Ms. Francine Lalonde: I have one last question to ask you. Mr. Brassard prepared some questions for us. He must have had more information than us. He says that, since July, these services have been offered in the Maritimes. How many businesses have used these services and when will the services be offered outside the Maritimes?

Mr. Timothy Garrard: We are offering the services throughout Canada now.

Ms. Francine Lalonde: Since when?

Mr. Timothy Garrard: Since August.

Ms. Francine Lalonde: And how many businesses have used these services up to now?

• 1610

Mr. Timothy Garrard: Up to now, close to 600 businesses have already finished or are finishing.

Ms. Francine Lalonde: Thank you. I know it's a praiseworthy effort, but in view of the urgency of the situation, we are demanding.

The Chair: Thank you, Ms. Lalonde.

[English]

Mr. Murray, please.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks very much.

I should probably address this question to Mr. Sunderland. Now that you've been out in the field for awhile, are you finding any horror stories? What are you learning about the state of preparedness in small businesses in Canada? What are the students reporting back to you?

Mr. Jonathan Sunderland: I think it's much like the reports that we read about from the Canadian Federation of Independent Business, for instance, and that is: a lot of people know. The message is out there and people understand what's going on. I think what's confusing to people is that they don't really know how to address it. They don't know how to get their systems or what systems they should be concerned about. That's why our program works so well for them. We help them understand what the issues are. We help them sort of get their heads around it.

Once we help them understand what the issues are and what particular business systems are susceptible to Y2K problems, the next step is that they have to go to the private sector and find somebody who can actually be a solutions provider for them. But the important first step is for them to understand just how susceptible they are to a year 2000 problem.

Mr. Ian Murray: Have you had examples of business people who almost just throw their hands up when they find out they are perhaps facing a huge bill to rectify the situation? Or are you able to tell them that? Do you go far enough with them to tell them whether they have a real problem or not?

Mr. Jonathan Sunderland: We tell them what systems could be problematic for them. It's sort of like a high, medium or low type of scenario. A brand new system would have a very low number of or no problems, but a 386 or a 486, yes, that's something they have to be concerned about.

One of the things we point out too is that we give them good questions they should be asking of the service providers in their areas, based on their business systems. We provide them with some backup so that they're not completely defenceless when they go out to actually find a service provider.

Mr. Ian Murray: You don't refer them to any service providers?

Mr. Jonathan Sunderland: No, we don't. That's up to them. We help them with ideas about how to research it. We suggest that they check the Yellow Pages, that they check with the high-tech industry in their community, and we suggest that they go through Strategis and check that database.

Mr. Ian Murray: How are you training the students? Is it uniform across the country? Do you have one contract with one firm for training or do you do this region by region?

Mr. Jonathan Sunderland: The training is uniform across the country. It was developed by the Midwestern School, in Winnipeg. They helped us develop the program. Then, to ensure consistency, we sent a representative from each of our admin centres to Midwestern, where they were trained by the actual developers of the program. Those people then disseminated that information to each admin centre to ensure that the same message was being delivered across the country.

And now, because each four months we have a turnover with students going back to school—and most of our students go back to school because they're university and college students—a certain number of students always stays behind to create a bit of a history. So they in turn are disseminating that information once again.

Mr. Ian Murray: I have one final question. Are any students offered jobs as a result of this program?

Mr. Jonathan Sunderland: Yes. With the student connection program about one-third of our students are offered jobs by the people they're training. In fact, that's kind of low, I think, for the quality of students we have, but it's largely because the majority of our students go back to school. They're usually on a co-op term or on summer vacation.

Mr. Ian Murray: That's interesting, because a lot of these businesses probably wouldn't have been looking for staff, but they were exposed to talented young people and decided to take them on when they could. That's encouraging.

Thanks, Madam Chair.

The Chair: Thanks, Mr. Murray.

Mr. Jones, do you have any questions?

Mr. Jim Jones (Markham, PC): Yes. Thank you very much.

First of all, Tim, how long has this program been going on?

Mr. Timothy Garrard: Year 2000 First Step was announced in June, Mr. Jones, and although it had been tested before that, it was really rolled out on a national basis in August. The student connection program as a whole has been going on since 1996.

• 1615

Mr. Jim Jones: And I think you just said that about 100 businesses have been audited.

Mr. Timothy Garrard: In the Y2K first step program after one month, about 600 people have been audited or have been booked for audit.

Mr. Jim Jones: How many have been completed?

Mr. Jonathan Sunderland: Three hundred and thirty-one.

Mr. Jim Jones: And there are about two to three million small businesses out there and we're saying that 27% of the people are not aware of or doing anything about it. That's about 500,000 to 600,000 businesses that we have to attack. This program is probably not even going to address 10%.

What type of legal liabilities do the people who are doing these audits have? If you do an audit on a small business are you just suggesting that they look at this stuff versus taking this as the Bible and just following everything that has been said? Is there any legal liability for people doing these audits?

Mr. Timothy Garrard: This is a subject that both the bank and ourselves were very interested in—the design of the program—and our lawyers worked hard on it. There is a legal liability clause in the contract signed by the client. It limits the liability of the service providers and the partners to doing a good job for the work contracted. We do not offer guarantees that all of the problems have been found, and we certainly don't fix the problems. This is a first step program so it seeks to identify problems. If subsequently they're not fixed properly, we're not at fault.

One way of answering the question is to say that we're quite concerned about this too, and that's why we asked our lawyers to work very hard in coming up with a clause. At the end of the day, they were satisfied.

Mr. Jim Jones: So basically it's just a recommendation. They should not take this as a comprehensive audit such that if they do everything that somebody has said they should do they're out of the water. There still could be other problems looming and they should really get professional help.

Mr. Timothy Garrard: Very much so. We aren't warranting that the year 2000 problem will be avoided by the company, and we certainly recommend that they get more expert professional help to fix the problems that are identified.

Mr. Jim Jones: Are the students located right across the country in all the universities or community colleges? Or are they signed up and trained in one area and then deployed to these 85 centres? How do we arrive at the number of 700 students, these 200 students per term?

Mr. Timothy Garrard: The students are recruited by the administrative centres. There are three recruitments a year, one for each of the three school semesters. They are associated with the administrative centres, but they don't come from the schools to which those administrative centres are attached.

For example, in the Ottawa area there's one administrative centre, but the students for which that centre is responsible have been recruited from all of the educational institutions within the region for which the Ottawa centre is responsible. While I don't remember exactly what the boundaries are, if somebody wants service in Arnprior or Smith Falls or maybe in Cornwall, that area will be served from Ottawa. Students may be located in that centre or, if they aren't, they'll travel there.

Mr. Jim Jones: That's all I have.

The Chair: Thank you, Mr. Jones. Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): Thank you.

This is a sample report of what you generate and so forth, isn't it? Could you show me the reference to the government's super tax deduction as an incentive for small business?

Mr. Timothy Garrard: In the report?

Mr. Alex Shepherd: Yes.

Mr. Jonathan Sunderland: It's actually delivered to the client. When we meet with the client we give them information about the program, and part of the information is the news release and the actual letter from Revenue Canada about the tax deduction.

Mr. Alex Shepherd: I see. Do you find that the targeted companies express interest in utilizing that deduction?

Mr. Jonathan Sunderland: Yes. Actually, the gentleman over there asked if a lot of these companies find problems today and throw their hands up and say it is too expensive to fix. This opportunity gives them sort of an out. It's a difficult task to replace your business systems, but it makes it more palatable when you know you have this tax incentive.

• 1620

Mr. Alex Shepherd: Do you have any idea of the number of these businesses that would avail themselves of that credit, perhaps on a percentage basis?

Mr. Jonathan Sunderland: No, I wouldn't be able to guess, sir.

Mr. Alex Shepherd: This question is for the banking industry. I think one of the thoughts behind providing this super tax deduction was that the financial community would get on board and also provide small businesses with loans, possibly, or whatever the case may be, in order to take advantage of this so that it wouldn't be a negative cash flow. Is that being done?

Mr. Robert Paterson: As soon as the tax credit was announced, we disseminated the information to all of our account managers for small and medium-sized businesses so that, first, they would be more than up to speed on it.

And two, CIBC introduced two lending programs. One is our new small business credit offer, which is a low-touch, simple, basic application. There are no fees on the instalment loan side, which is great for capital financing to fix year 2000 problems. That could be used in conjunction with the tax credit.

As well, there is the job creation loan fund program, which we added an additional $100 million to a couple of weeks ago, so that when FTEs are hired from either this program or other programs to help with, work on and fix the year 2000 program, those doing the hiring would get loans for up to $100,000 at a percentage point below prime.

We've really been trying to educate our sales force so that they can bring the tax credit to the attention of our small business customers, in conjunction with the year 2000 first step program and those other programs I mentioned, in order to have the maximum amount of advice conveyed to our customers during this period to help get them prepared.

Mr. Alex Shepherd: I had a briefing today with the CBA, which has been doing these seminars across Canada. One of the comments was that this tax cut is not understood well by the small business community. They don't understand that it's available. The message doesn't seem to have hit them at this stage.

And you're nodding your heads to say that's true.

Therefore, what do we, as a government, have to do to promote that more? What more can the banks and others do so that people know it's available?

Mr. Robert Paterson: One thing is to try to get the media to help and support and continually expand on the coverage, so that when they talk about year 2000 they'll expand it to include things like the first step program and the tax incentive program. As well, it would help to just generally make the information brochures and all those types of things available and get them out to the small business customers.

At CIBC, one thing we've been doing is expanding our small business newsletters in order to get all of that information in there. And you'll notice that in our newsletter we sent to our 330,000 customers, it is mentioned. We're going to continually be bringing those components directly to our customers as well as educating our account managers to continually bring it up.

Mr. Alex Shepherd: My last point is territorial and is one of those questions that members of Parliament seem have to ask. When this program was first being implemented—I must admit I haven't kept abreast of it—I contacted Seneca College, I think, in my area, which was sort of administering it. I discovered that there were no students in it from Durham College, which has a computer program, a very respected one, and I also discovered that there were no targeted businesses in my riding making themselves available for it or getting the benefits of it.

Is there a tendency to be more focused on purely urban areas where there are larger population bases to work with or are you getting out across Canada?

Mr. Robert Paterson: I can talk about it from just a CIBC perspective and then maybe turn it over to get the national perspective.

From the CIBC perspective, we have sent out the information and literature, including the 1-800 number in that pamphlet, to all of our 330,000 small business customers in a direct mail piece, as well as with the newsletter. As well, all of our branches are equipped with in-branch brochures to provide additional information. And we're also combining it with our national advertising program that's currently out there.

We feel we have made sure that they've received the information several times, and we are going to continue. It's not something we're going to stop. We're going to continue to get information to our small business customers in order to get them to use the various programs.

Tim?

Mr. Timothy Garrard: I'm afraid my geography is failing me so I'm unable to—

Mr. Alex Shepherd: Oshawa.

• 1625

Mr. Timothy Garrard: I'm sure we serve Oshawa, but from which centre I don't know.

Mr. Jonathan Sunderland: We do.

Mr. Timothy Garrard: It would surprise me if no one in your riding has heard of the program, because we are promoting it. Certainly every small business in your riding would be eligible for it. The students are chosen—

Mr. Alex Shepherd: I looked at this a while ago, so it could well have been corrected by now. I looked at it at the time it was being implemented. I thought Seneca College was the centre for it.

Mr. Jonathan Sunderland: For the student connection program—

Mr. Alex Shepherd: Yes.

Mr. Jonathan Sunderland: —or Year 2000 First Step? For the beginning of the student connection program it was the University of Toronto and Centennial College in that region, but in the Oshawa region the University of Toronto had that sort of sphere of influence. That was the area they were delivering their program in. Centennial was doing it on the other half of Yonge.

But what happened was that they hired their students from the schools in their region, based upon market demand. That's how we were able to extend the reach of our program. We hire the students and train them and the students go back and live in their communities and deliver the programs in their communities. It was based on the market.

Mr. Alex Shepherd: I hear what you're saying, but the University of Toronto is a fair distance from Oshawa.

Anyway, I know you're trying to implement the programs so maybe it's taking you some time. I don't know. I'd have to study it myself to see what is actually being delivered in my area.

The Chair: Mr. Shepherd, are you talking about the student connection program or the first step program?

Mr. Alex Shepherd: The first—

Mr. Jonathan Sunderland: There's a handout in your booklet that actually outlines the centres that we deliver the programs in.

The Chair: But that's for the student connection program.

Mr. Jonathan Sunderland: Year 2000 First Step is offered by the student connection program.

The Chair: So wherever it's offered—

Mr. Jonathan Sunderland: So wherever that's offered, which is in Oshawa, and which is pinpointed in that chart, we offer the program.

The Chair: Okay. Thank you very much.

Mr. Jaffer.

Mr. Rahim Jaffer: It's been good to learn more about the program and, obviously, the positive side. I'm going to play the devil's advocate here for just a moment. In government we have to be careful not to create unfair competition when we're introducing new programs into the market.

I'd just like to hear your opinion. Obviously in this case there's been a demand for governments to get involved and to help with this Y2K compliance problem, but private sector companies within the market have been working on this Y2K solution. In your opinion, is this program—and others like it—complementary to the various organizations currently working on this problem in the private sector? Do they create unfair competition or would you encourage this sort of thing? It would be interesting to hear a perspective on that.

Mr. Timothy Garrard: We're very conscious of the potential for unfair competition and we specifically designed this as very much an entry-level awareness program. We'd like to think that rather than taking business away from the private sector it's probably delivering business to the private sector, because for a price of $200, which is really below the threshold of most serious computer consultants, it provides a level of awareness to business owners along with some pointers on what they need to do to deal with a very serious issue, including some information on where they can go for help.

For example, my department's Web site posts the names of firms that offer year 2000 solutions. Also available are other sources of information on where the business can go for year 2000 solutions, which the adviser can help with. If the business had never become aware, it might not seek those solutions out.

I don't think we're competing with anybody at this very low end, and I think we're probably delivering business to consultants who are on the higher end.

Mr. Rahim Jaffer: That's really all I have, Madam Chair.

The Chair: Thank you very much, Mr. Jaffer.

Mr. Lastewka, do you have questions?

Mr. Walt Lastewka (St. Catharines, Lib.): My question is similar to Mr. Jaffer's. You mentioned earlier that you didn't refer people to any other company or anything like that, but you said you guided the people in regard to where to look. They have to search out their own providers in their own area.

I guess it really means first step when you say first step. It means just getting the attention of people and making sure that they get on doing their work to become Y2K compatible. I appreciate the question that Mr. Jaffer brought forward because I was curious about that.

• 1630

So actually, we're just hoping that instead of having a big peak closer to the year 2000, we're trying to accelerate that notification.

How many students do you think you're going to end up training—because some go back to school and so forth—over the life of this project? Have you estimated a total?

Mr. Jonathan Sunderland: Currently the program is set to sunset as part of the youth employment strategy in March 1999. By March 1999 we expect to have about 3,500 students who have been trained and have experienced the student connection program.

Mr. Walt Lastewka: So with regard to the students who come and go, cumulatively you will have trained 3,500 on Y2K?

Mr. Jonathan Sunderland: No. The student connection program started much before that.

Mr. Walt Lastewka: No. I want to talk about the Y2K portion.

Mr. Jonathan Sunderland: Seven hundred.

Mr. Walt Lastewka: Seven hundred on the Y2K—

Mr. Jonathan Sunderland: Correct.

Mr. Walt Lastewka: —between now and— I saw the sunsetting in March 1999. Somewhere along there, by the end of next year, we should be able to get a measurement saying that there will be a lot of work to do beyond that. When is that review session going to be forecast?

Mr. Timothy Garrard: For the youth employment strategy?

Mr. Walt Lastewka: Well, I think there will be a lot of things happening closer to the end of next year—

Mr. Timothy Garrard: Yes.

Mr. Walt Lastewka: —and at the beginning of the year 2000, to the tune that you might need to extend the program.

Mr. Timothy Garrard: We're looking at that from a couple of different perspectives. I'm not able to speak knowledgeably about this, but it's conceivable that the government might wish to extend the youth employment strategy.

If it doesn't, though, we're very aggressively looking at developing partnership arrangements and sponsorship arrangements by which the student connection program could continue without government support—or perhaps with a very minor level of support from the administrative systems that we could find from within existing budgets. In a sense, you could regard the partnership with CIBC as an example of the kind of partnership that we're looking for.

There are a number of other partnerships in the program already. We're looking for more. At the same time, the program has become a much more cost-recovered one, with the central administrative costs of the program now very largely covered by the total revenues received by the student business advisers who contribute revenues back to their administrative centres.

One way or the other, we're very hopeful that we'll be able to carry on with this program after March 31, 1999, without interruption.

Mr. Walt Lastewka: I want to go a little further with Mr. Shepherd's question.

The Chair: A short question, Mr. Lastewka.

Mr. Walt Lastewka: Sure. If an MP wants to find out who the contact or person is that he or she should be talking to about working in their riding, for example, no matter where it is across Canada, what is the easiest way for that MP to find that out?

Mr. Timothy Garrard: You can call me or you could visit the Web site that the student connection program has. The Internet address is included in the package that you have. Or you can phone the 1-888 number that has been organized for this program, where you'll be referred to the people in your area who have the specific information you need.

Mr. Jonathan Sunderland: If you want to talk to your closest admin centre directly, perhaps the easiest way would be to use the toll-free line. The toll-free line acts like a Pizza Pizza number: you phone it, you phone one number, and it automatically directs you to your closest admin centre.

Mr. Walt Lastewka: Okay. Thank you.

The Chair: Thank you very much, Mr. Lastewka.

[Translation]

Mr. Dubé, do you have a question to ask?

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): No. I wouldn't like to repeat a question that's already been asked.

The Chair: All right.

[English]

Mr. Jones, do you have another question?

Mr. Jim Jones: Yes. I have a question and a comment. When you folks have been out there doing audits, have you observed that the small business people are still buying products and software that are not year 2000 compliant?

Mr. Jonathan Sunderland: I don't know if I can comment on that. As far as the latest software goes, though, they all appear to have compliance in mind when they're buying it. I think people are quite aware of the issue itself.

• 1635

Mr. Jim Jones: You probably do some cursory audits, like being able to check the BIOS or something on a computer.

Mr. Jonathan Sunderland: That's right.

Mr. Jim Jones: I've had situations where people say it's compliant, but when they put a piece of software in there and check the BIOS, it's not compliant. Are you observing this? And if it's happening, we should be doing something about it to make sure that it almost becomes illegal; vendors should have to sign up to say that what they're selling is year 2000 compliant. The other way, the onus is on the buyer. You're not noticing that?

Mr. Jonathan Sunderland: It's not that it doesn't happen, but I don't know the trend.

Mr. Jim Jones: Okay. My other point is that 200 people looks to me like a small number of people we're putting out there compared to the size of what we need to solve.

A few years ago when I was in local government, we were trying to do a program of house audits for trying to conserve water. They would audit your house and suggest what you had to do to replace things. This sort of sounds like that program and is a lot more serious.

And you've talked about sponsors. I know that I have a desk and a computer in my office and they could have access to that. You could almost add another 301 people, and each MP's office could have a trained person there who could use that office and cover even more people. Is there any thought of having sponsors like that or is there a limitation in that you can train only 200?

Mr. Timothy Garrard: We could expand the size of the program. We could recruit more students and train them and expand the size of the program if we see that the demand significantly exceeds the number of students. It's early days—

Mr. Jim Jones: Right now it might be office space or something like that which is a limiting factor, but I think that for most of the MPs it would be a good public service that they could perform for their constituents. And they would have a home base.

Mr. Timothy Garrard: I think you have to go into the business, though. You could bring perhaps a single computer to an MP's office—

Mr. Jim Jones: No, I agree. You go—

Mr. Timothy Garrard: —but you have to go in to have a student attached to the MP's office.

Mr. Jim Jones: He could work out of that instead of— There are 85 offices. That means I have to drive quite a distance to get to an Industry Canada office. So they could have MPs' offices as sub-offices that they could work out of in covering the geographic territory of those MPs. It's a self-recovery program so it's going to pay for itself. It's just that they would have a location closer to where they could audit local people. It's sort of similar to what we did with the water conservation.

Mr. Timothy Garrard: Okay. It's a good suggestion.

Mr. Jonathan Sunderland: I know that—

Mr. Jim Jones: And it's not MPs who go to municipal offices—

Mr. Jonathan Sunderland: —as our program starts to roll out more and and we're starting to have businesses calling us from other regions besides the cores or centres that we're delivering in, students are more interested in having a space that they can work in. That gives them a sense of legitimacy and they have the area in which to produce a key report. I think that's an excellent suggestion.

Mr. Jim Jones: Also, the other thing—I would be willing to drive out of mine—is whether you folks would then be willing to put on the seminars that would create the business.

Mr. Jonathan Sunderland: We actually do seminars on an ongoing basis. We call them “information sessions” and we do them as a marketing and information type of thing, just to get people aware of the issues and then to get them involved with our program.

For instance, we do information sessions at the Canada Business Service Centres and at public libraries, chambers of commerce and other business hubs where we can meet our clients first-hand and show them what the issues are.

The Chair: Thank you.

Thank you very much, Mr. Jones.

Madam Jennings.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Madam Chair.

Thank you very much for your presentations. And congratulations, it sounds like a really interesting program. I'm going to come through the back door on a particular question that you may not have the answers to, but I expect that you will be able to get them.

One of the reasons for the youth strategy employment program is to address the needs of youth who have difficulty finding employment, regardless of the level of education. Also of course, there is the high unemployment rate of our youth.

• 1640

And the statistics are very clear: youths who are of ethnocultural communities and visible minorities or who are aboriginals suffer much higher unemployment rates than does the general population. I'd like to know what mechanisms have been put in place for the student connection program to recruit and hire members of ethnocultural communities and visible minorities, women and aboriginals.

Mr. Timothy Garrard: We're just looking for some statistics on that.

Ms. Marlene Jennings: Yes.

Mr. Timothy Garrard: In the first instance, the program requires that the students have a degree of technical knowledge and a degree of business knowledge. And clearly we need to look for people from all communities who can meet those requirements so that the client can be satisfied.

Ms. Marlene Jennings: Yes.

Mr. Timothy Garrard: Special steps have been taken, however, to try to make sure that representation from minority communities is there.

I have some statistics, but you'll recognize that this is for the student connection program as a whole, because after one month on the Y2K first step program we really don't have the data.

The data are: 1% aboriginals; 16% visible minorities; 36% females; 3.7% disabled; 35% bilingual; and 23% French mother tongue.

Ms. Marlene Jennings: Sounds good. Could I have a copy of that?

Mr. Timothy Garrard: Sure.

Ms. Marlene Jennings: Thank you.

That was my only question, Madam Chair.

The Chair: Thank you very much, Madam Jennings.

Mr. Shepherd has one final question.

Mr. Alex Shepherd: In response to Mr. Jones, you talked about the fact that you only have 200 as being “demand driven”. Are you saying you don't have the demand for more students?

Mr. Timothy Garrard: Really, after one month, we don't know what the demand is. If all of the marketing that's about to happen as one million households receive mailings— If the demand and awareness goes up, we'll do what we have to do to hire more students.

The Chair: Thank you very much, Mr. Shepherd.

Mr. Garrard, Mr. Sunderland and Mr. Paterson, we want to thank you very much for taking the time to be here today and to explain the first step program. I'm sure that the MPs here will take the opportunity to promote it and other things through the ten percenters and householders and will try to spread the word in the different caucuses that this is out there for their information and access.

And who knows? Maybe you'll even follow up on Mr. Jones' suggestion—which isn't a bad idea considering how huge some of our ridings are—on finding locations, even locations in municipal offices.

Again, thank you very much. We hope it's very successful.

Mr. Timothy Garrard: Thank you.

The Chair: The meeting is now adjourned.