INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 6, 1998

• 1530

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I call our meeting to order. Pursuant to Standing Order 108(2), this is a study on information technology preparedness for the year 2000.

We have two groups of witnesses appearing before us today. For the first hour we will hear from Statistics Canada, with Dr. Fellegi, the Chief Statistician of Canada; and his assistant, Mr. Jamie Brunet, year 2000 survey manager.

I will turn it over to you, Doctor, to begin your presentation. We look forward to your comments, and as soon as you are finished, we will ask questions.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Madam Chair, before we hear from our witness, I would like to ask a question on an entirely different matter. When I read the papers this morning, I found out how Mr. Manley and Mr. Massé had reacted to our report. My office did not receive a letter on the subject until this afternoon. It seems to me that we parliamentarians should have received this letter the day before, as soon as you got it, rather than find out about it in this morning's English newspapers.

[English]

The Chair: Madame Lalonde, it was tabled in the House yesterday afternoon, so it was available publicly yesterday before it was ever in the newspaper. I apologize if you didn't receive it in your office, but it's my understanding that a copy was circulated to all committee members yesterday afternoon at the same time as it was tabled in the House.

The Clerk of the Committee: Not at the same time.

The Chair: Well, shortly thereafter.

[Translation]

Ms. Francine Lalonde: I didn't receive it in my office until this afternoon.

[English]

The Chair: Then we'll have to try to improve on that. I do apologize. Minister Manley did want us to have it as soon as it was tabled, and he did table it formally in the House yesterday afternoon. So I apologize.

[Translation]

Ms. Francine Lalonde: Thank you, Madam Chair.

[English]

The Chair: I apologize, Doctor. Would you like to begin?

Dr. Ivan P. Fellegi (Chief Statistician of Canada): Thank you very much.

[Translation]

I would like to point out that I appeared here as a witness a few months ago. My colleagues and I had indicated at that time that a second survey was underway and you expressed your interest in being informed of the results. I will therefore talk to you today about the highlights and answer your questions.

[English]

We have prepared some slides, which are available on your desks, and I'll go through them by page number. The slides themselves are a little more complete than I'll cover in my comments. I'll skip a few of them, but they're available for questions, and I'll be glad to answer them.

If you turn to page 2, the overall highlights are presented there, comparing the results of Canadian industries. I should have mentioned that's what I'm talking about: the preparedness of Canadian industry for the year 2000 problem.

That first table highlights the change from October 1997, which was the effective date of the first survey, to May 1998, which was the date of the second survey. You can see there was a generalized improvement.

I'd like to ask you to read the rows from the bottom up rather than from the top down. It's just somehow more logical to me. If you look at “Not aware of the problem”, basically that issue has been eliminated. Only about 1% are not aware. It's essentially negligible.

So the task force and the government and the media and all the awareness-generation have worked. Nobody can say they are not aware. Well, “nobody” is an exaggeration, but just about everybody is aware of the problem. So that's great.

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The second line up from the bottom is “Aware of the problem, but taking no action”. That has improved, but there are still 29% who are aware but don't plan to do anything about it.

For those two together, there is an improvement of 25%—17% and 8%. That's distributed, however, and that's the bad news here. The same 25% improvement is distributed in the first two rows. Most of that improvement went to those firms planning to have an informal approach to the year 2000 rather than a formal approach. So two-thirds of that improvement represents firms not planning a very formal assessment of their state of preparedness, but some kind of informal approach. That's on that first overall highlight.

If you turn to page 3, we break that down into small, medium, and large. You have to keep in mind that of course in terms of numbers, the small firms dominate. There are many more small firms, so when you look at the overall numbers and frequencies of proportions, they are usually dominated by the small firms. If you are interested in large firms, you really have to break it out separately, and that's what I'm doing in the next slide.

If you look at it going from small to medium to large, the proportion having a formal plan increases quite significantly from the small going to the medium and from the medium going to the large: 15%, 37%, and 67%. That's the second column I'm talking about, the May results.

So the first message here is, the larger the business, the more likely it is to have a formal plan—not too surprising. But even among the largest, 6% plan taking no action at the moment, formal or informal. That's the downside. If you say that 6% is creating a potential problem, if you add the 27% of large firms that don't have a formal plan, that makes it 33% with a potential problem. And if you add the ones that have a formal plan but are planning to have their formal plan completed only in the second half of 1999, which is possibly a problem also, that's roughly another 8%.

So up to about 40% of the large firms have a potential problem. Either they don't have a plan, formal or informal; or they only have an informal plan, and we don't know how thorough that is; or if they have a formal plan, it's planned to be finished only in the second half of 1999, which, if they run out of time, may represent a problem. So there is a 40% large firm potential problem area.

[Translation]

The next slide indicates that 18% of the businesses have a formal plan and that 53% of employees work in a business that has a formal plan. This graph therefore shows that those businesses that do have formal plans are, generally speaking, big businesses as opposed to small businesses.

The next table represents businesses taking formal or informal action by sector. The table is subdivided according to activity sector and degree of preparedness. There are four points to note. There is a general improvement compared to October, and significant improvement, 25% or more, for each sector with some type of plan, be it formal or informal.

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The primary sector, with only 58% of its businesses having taken either formal or informal action, is the weakest sector. The three sectors that follow, namely, trade and other services, manufacturing, transportation, communications and utilities, are more or less equivalent. The degree of preparedness is much greater in the finance and insurance sector, and therefore this is the sector that is in the best position to make the transition to the year 2000.

I will now turn to page 7, which gives you a breakdown, by sector, of medium-sized businesses with formal plans. Those businesses with a formal plan are the most serious ones. Unfortunately, it must be noted that scarcely 14% of the medium-sized businesses in the primary sector had a formal plan in May. The percentage for the other sectors, including finance and insurance, was much higher, with approximately 40% of these businesses having a plan, which is not really very high.

Page 9 pertains to large businesses, defined as having 250 employees or more. Once again, we can see that businesses in the finance and insurance sector are the best prepared. I would like to provide you with some data that is not shown on this table. The second last sector, transportation, communications and utilities, was grouped together under the same heading during the October survey, but in May, we studied these sectors separately and noted that there was a big difference between the transportation sector and the utility sector. Ninety five per cent of the large utilities have a formal plan. It is both very important and very reassuring to note that the utilities are prepared to this extent. However, only 65% of large businesses in the transportation sector have a formal plan.

On page 9, we can see that one third of the large businesses have not yet investigated the preparedness of their partners. This point concerns me. There has, however, been some improvement from October to May, particularly in the large business sector.

[English]

Page 10 has the percentage of all businesses that are investigating their partners by sector. Primary industries are really quite weak in that respect. Finance and insurance stand out again as the strongest, but even then, less than half of finance and insurance businesses are investigating their partners. This chart includes all businesses, though, so it's dominated by small businesses.

By “partners”, we mean their suppliers, their bankers, their collaborators—partners of whatever sort.

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When we go to large businesses that are looking at their partners—and that's an important question of course, because the vulnerability doesn't occur just within the walls of the enterprise, but in relation to their own partners—the situation is a lot more positive. All the sectors are more or less in the same stage, except finance and insurance, which is up to 88%. They really stand out.

Again, however, one can say the cup is 88% full or 12% empty. It's somewhat troubling that 12% of large finance and insurance businesses are not, or at least not yet, investigating the state of preparedness of their partners. Given the interconnectedness of that sector, that may be troubling.

Page 12 I find somewhat ironic. Optimism is running rampant. What it shows is that when we ask the question, “Do you believe your firm could be sued due to the year 2000 disruption?”, only about 20% think they are liable to be sued. But when we ask how likely it is that legal problems will arise—“Do you believe any firm could be sued due to the year 2000 disruption?”—three-quarters of them say, “Yes, of course, but not me. Somebody else.” So there is a degree of Alice there: “I'm all right, Jack. The others are in trouble.”

The next slide shows the degree of awareness of potential litigation by size of business. Awareness isn't the problem. Large firms are more aware, but all the sectors are pretty well aware that legal issues are very much on the table—not for them, but they are on the table.

I'll skip pages 14 and 15 and talk about page 16.

We are turning to the assessment of firms in terms of what they think about their preparedness now, at this moment. Are they ready now? What we find is that as you go from small to medium to large, the degree of likelihood that the firms themselves attach to their being prepared at this moment—as of May, that is—declines.

This may possibly be realism—the large businesses have more complex systems and therefore fewer of them were ready as of May 1998—or it may be that the large businesses are more realistic about their assessment and the small businesses underestimate. A larger proportion of them might say they are ready without really being quite sure about it. We don't know how to interpret that.

I'll skip page 17.

Page 18 is again a bit of a troubling point. It shows the proportion of large businesses that are ready now; those that expect to be ready in either the last half of 1998, the first half of 1999, or the last half of 1999; and those that don't know. I am now talking about large firms.

Of large firms, 3% don't know when they will be ready. That's maybe not too bad, but another 15% expect to be ready only in the last half of 1999, 12% of which are setting formal plans and 3% of which have informal plans.

So as many as 18% either don't know or expect to be ready late in the cycle. I'm just drawing that to your attention.

In terms of an overall summary, I understand you have an interest in what can be said about sectors that are stronger or weaker and regions that are stronger or weaker.

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In terms of a sectoral analysis, the small and medium firms in the primary sector are less likely to have taken either formal or informal steps than are the other sectors, so that's a particular problem.

When we come to the large firms in the primary sector, though, they have a state of planning—not preparedness yet, but a state of planning—that is quite similar to the other sectors. So there isn't a difference when one looks at large firms separately. Small and medium firms in the primary sector are a potential problem.

Finance and insurance firms are most likely to be ready, whatever breakdown we look at—by size, region, or whatever.

The large firms in the public utilities sector, which is another clearly sensitive area, show later timetables than other large firms—and I'll elaborate on that in the next slide—but they have the highest levels of formal planning.

Let me elaborate on the large utilities. If you turn to the next page, which is number 20, you'll see that only 16% of large utilities said they expect to complete their preparations in 1998. That compares to 42% for all large businesses, so they are later than the others. Maybe they have a more complex task; we don't really know. But at any rate, their own assessment is that they are later.

Of the large utilities, 24% do not expect to finish until the last half of 1999. That could be troubling, because if there are delays, then clearly you are into contingency planning for a quarter of the large public utilities. These are not small ones.

However, on the reassuring side, they may be more realistic than other sectors, because as many as 95% of the large utilities actually have a formal plan. I'm giving you the full picture, and we can all draw our own conclusions from it, but that's what the survey shows.

In terms of regions, we looked at it backwards and forwards, and we really can't tell you anything useful. The sample wasn't designed initially to provide regional breakdowns, and in fact everything is blurred by sampling errors. Basically the regions are similar. The differences are by sector and by size, not by region. That's as far as we can go in giving you regional conclusions.

Finally, I'd just mention that another survey is planned for spring 1999. Clearly that survey will have to be different from the previous two. There's not much point in finding out what kinds of plans they have to prepare themselves in time. We are in discussion with the various stakeholders to focus more on what testing they have done, what contingency plans they have, and how they would cope, as opposed to just degree of preparedness.

That's the presentation. Of course I'll be happy to answer any questions if I know the answers to them.

The Chair: Thank you very much, Doctor. We're going to begin questions with Mr. Jaffer.

Mr. Rahim Jaffer (Edmonton—Strathcona, Ref.): Thank you, Doctor, for your presentation.

I was looking over the chart on page 6. In the statistics comparing large business preparedness to small business preparedness, there's obviously a deficiency when it comes to small business preparedness. One of the reasons mentioned is lack of resources, and that's a problem attributed to smaller business. Would you say that is the prime reason a lot of the smaller businesses, compared to large businesses, are not ready for Y2K—because of a lack of resources?

Dr. Ivan Fellegi: It doesn't appear to be the case. If you look at that page, we show both May and October, and in May, actually, the proportion saying there are no resources dropped to less than 2% of small businesses. So that clearly isn't the main reason.

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The main reason seems to be either their assessment that Y2K is not an issue in their business, which may well be the case, or that they are not worried enough yet, they think there is enough time. That is possibly more a kind of fool's paradise.

But then again, it also may be realistic, because if it's a really small business and they expect that they will replace their PCs before the year 2000, and if it's a canned software that they use and they'll make sure that whatever new software they buy will be Y2K-compliant, it may be that they really do have the time to address the issue before it becomes a burning problem for them.

Mr. Rahim Jaffer: Okay.

Along with that, obviously some small businesses have made it a priority. We see that in the statistics, and there are certain reasons. It would be useful if you could paint a clearer picture so that we could take some of the information that some of these small businesses are using as to why they're preparing and share it with other businesses that in fact are not making it a priority.

On that level, can we take anything from the reasons you gathered from some of the other small businesses to try to help the other ones that have been lagging behind to come on board, or to make it more apparent that it's a burning issue with common small businesses in their areas?

Dr. Ivan Fellegi: I'll ask my colleague, Jamie, to also comment on this afterwards, but my sense is that, first of all, awareness is no longer an issue. Small business has become just as aware of the problem as big business; they at least know there is a year 2000 problem that they need to worry about.

Secondly, they are probably much more short term-oriented. Very often the business is running on a shoestring and they just don't have the planning horizon and the resources—and I don't mean just the resources to spend the money, but the human resources, the attention, the managerial investment it would take—to look out a year and a half, as of May. Their time horizon tends to be much shorter.

Thirdly, there are probably major sectoral differences. We didn't provide you with any information on small business by sector, but we can. We do have that data by sector and we can do that. I suspect there are very substantial sectoral differences within the small business group—by industry, that is. Depending on their circumstances and on what business they are in, they are more likely in some areas than in others.

Jamie, do you want to add something to that?

Mr. Jamie Brunet (Year 2000 Survey Manager, Statistics Canada): Yes.

We did include in the survey questions as to what kinds of systems the businesses used, to get an idea of the technology intensiveness of the business. It's certainly true that the technology intensiveness declines for the businesses that say they are in that no-action category.

Mostly they say they have a PC. Some of them say they use custom-developed software and some say they use a network computer, but in general they mostly say they have a PC. They very rarely say they have systems that are embedded in process control technology, but the issue there is, do they really know where that technology is and have they identified it? So I agree with Dr. Fellegi that it does really depend on the kind of business you're talking about.

As for information you could share with these businesses, we asked businesses that hadn't taken steps why they hadn't taken steps. It was an open-ended question, and then we analyzed their answers. That's what you're looking at here.

• 1600

For the businesses that had taken steps, we didn't ask them why they had taken steps. There were no equivalent open-ended questions.

I would suggest that the best thing would be... You have a whole series of questions coming out of the survey on those firms as to what they're doing and how they're doing it, and these are the results we're presenting here. Then there's some more detail in the final report.

Dr. Ivan Fellegi: By the way, we are working very closely with the CFIB, Catherine Swift's organization, and they have full access to this; in fact they have for some time. She's actually a member of Mr. Manley's task force, so she has full access to this information, and she and her staff of course are analyzing it and will try to get appropriate messages out to small business.

Mr. Rahim Jaffer: I have one final short question.

There's obviously a change for the better when we compare the statistics from October 1997 to those of May 1998. In a quick summary, to what would you attribute that change, especially when it comes to the businesses that don't have as many resources as larger businesses? What has had the effect of getting these businesses to start to change? Through your research, what would you say have been some of the bigger factors?

Dr. Ivan Fellegi: Well, we don't really know, but my personal guess is that it's the awareness-generation that has been going on in a variety of quarters and from a variety of sources. You really have to be on a different planet if you aren't aware at this point that there is a problem, and if you are a responsible businessman, you at least begin to ask questions: “Am I at risk and what do I need to do to avoid that risk?”

So my guess is it's essentially that awareness issue and the fact that the message isn't just that there is a problem, but that this is a potentially serious problem, and you'd better look into it if you want to survive.

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

[Translation]

Mr. Bellemare, please.

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

[English]

I had a flash, an idea in my mind, listening to you in horror. It's as if we are operating an ambulance service with only one ambulance. The ambulance has broken down, we've had a call, and we go and say to the mechanic working on—or, excuse me, tinkering with—the ambulance, “We have one hour to go and pick up that patient. Within an hour, this person dies. They are doing something to him right now, but we have special equipment and we have to be there within the hour.” We're at the point now of having a discussion with the mechanic, who's saying he's not paid well enough, he doesn't know if the gas station will be open, he expects that everything is going to be okay and that his bank is going to give him enough money to continue fixing the damn ambulance, and as for all the contingency plans, he doesn't even know what you're talking about.

That situation is really similar to this. In your spring stats, should you not concentrate on, for example, public utilities? With public utilities, we are in a massive grid system—one is the eastern seaboard and one is the western seaboard of North America—and if one breaks down, there's a cascading effect; there's a domino effect. And of course this isn't a question of just your lights turning out; it's all your activities turning out.

You have to remember, we had a wake-up call this morning that it's goddamned cold out there. On January 1 it could be 30 below, and it could be, when do you fix it?

So should not your questions be, one, “Are you compliant? If not, when is your projected compliance date?”, and two, “Do you have a contingency plan in place? If not, when is it going to be in place? Have you checked to see if your partners are compliant, and how is that done?” You don't want any fast-talking business answer, like “Oh, sure”, with a tap on the shoulder. You want to make sure it's verifiable.

On liability insurance, how do we check? If they really think they're not going to be sued—that there's going to be no litigation—then they must be awfully well covered by something. Maybe the question ought to be asked, “Are you covered by liability insurance?” And I don't mean a blanket insurance; I mean a specific-case insurance, Y2K coverage. Are you covered?

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Can those questions be posed, or have you already made up your questions? At what status is the mechanic now, still tinkering under my ambulance?

Dr. Ivan Fellegi: Well, we are working with all the stakeholders. We are not pulling the strings on what needs to be done as a result of the spring survey. I'm talking about the 1999 spring survey, or early 1999 survey.

There are two different issues. One is, what information do we need in early 1999 that will still be useful in early 1999? Some of those questions would probably qualify, and indeed that is the general orientation of the survey in the spring.

As I mentioned, we are not planning a repeat in early 1999 of the October 1997 or the May 1998 survey, because the same information in spring 1999 wouldn't be useful any more. We will be focusing on contingency planning, degree of preparedness, how much testing has been done, how solid the assessments are—the kinds of questions you have indicated. That's one area: What information would be useful to whoever can still take additional action at that time?

The second question is, quite apart from additional information, what do we want to do, as Canadian society or decision-makers, about particular sectors? In that case it's not a question of statistical surveying; it's a question of a census of all the utilities over a certain size. And when I say “census”, I don't mean a census in the sense of a statistical operation, but going to every single one of them and asking: “Where are you? What do we need to do if you aren't there yet, or if it doesn't look like you will get there in time?” Because indeed the year 2000 will roll around in January, and I'm very much aware that's a winter month all right, with all the implications.

So indeed there may be a two-pronged kind of approach—I'm not controlling it, but that would make sense—with information collection on the one hand and quite a separate track for particular sectors, a one-on-one interaction with the large utilities, maybe large transportation companies, large—

Mr. Eugène Bellemare: To divide that up, for example, into communications, telephone, and electricity, are you going to concentrate on those and separate them, rather than putting them all together? Because the trucks could be all working on time and ready, but maybe Bell Canada isn't, and it ought to be known. Or maybe Bell Canada is the best or the most prepared and it's dragging the group percentage of everyone else up. We want to know if it's the public utilities that are dragging their feet.

That's why my question is, are you going to not concentrate on a large sector, but start dividing that particularly important sector of communications, transportation, and public utilities into three different sub-areas?

Dr. Ivan Fellegi: We can do that if that information—

Mr. Eugène Bellemare: Are you going to do it?

Dr. Ivan Fellegi: We will do it if the information can be used by somebody. We are an agent to collect information. Somebody else has to use the information. So we need to know that somebody else will in fact use that kind of information.

Mr. Eugène Bellemare: We will.

Dr. Ivan Fellegi: Well, if you will, let it be known, and we can do the survey that way.

Mr. Eugène Bellemare: You know it now.

The Chair: Thank you, Mr. Bellemare.

Thank you very much, Dr. Fellegi.

[Translation]

Mr. Dubé, would you like to ask a question?

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Yes. Thank you, Madam Chair.

Thank you for your presentation. If I have enough time, I would like to ask you three questions. You said that 1% of the businesses still hadn't heard about the year 2000 bug. I thought you said—please correct me if I'm wrong—that your survey did not focus on those businesses with five employees or less. Do you know how many businesses have five employees or less?

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Mr. Ivan Fellegi: I can't give you any precise figures, but I do know that it is a very high number.

Mr. Jamie Brunet: We're talking about nearly 75% of the businesses.

Mr. Ivan Fellegi: But that represents a much smaller proportion of the measured activities.

Mr. Antoine Dubé: But if we are not even aware of their existence, it is very possible that these businesses know even less about the year 2000 bug. The findings of your survey lead me to believe that the smaller the business, the less ready it is.

Mr. Ivan Fellegi: That's right.

Mr. Antoine Dubé: We can therefore assume that very, very small businesses, those with five employees or less, are even less prepared than small businesses.

Mr. Ivan Fellegi: Absolutely. That is a very reasonable conclusion.

Mr. Antoine Dubé: I believe you said that the large businesses were better prepared than the others to deal with the year 2000 problem. On the second last page of your summary, you indicated that in May, 70% of all businesses, including those in the primary sectors, had not yet contacted their clients or suppliers. Do you believe that it is not sufficient to be ready on an individual basis, that we must also be ready on a collective basis, particularly when it comes to networks that communicate with each other? Isn't this a serious problem?

Mr. Ivan Fellegi: That is one of the most troubling observations that I made.

Mr. Antoine Dubé: We know that the primary sector involves resources and these are then turned over to the secondary sector, where they are processed. Finally, the goods are turned over to the services sector, which is the tertiary sector. But if the primary sector is less well equipped than the others to deal with the year 2000 problem, the consequences will be very serious. While the other two sectors may be ready, if we don't have any primary goods because of the year 2000 problem, we'll all have very serious problems at every level. Over the next few months, shouldn't we be giving priority to the primary sector?

Mr. Ivan Fellegi: No doubt, but it is important to understand, as I tried to point out, that when you separate the large businesses in the primary sector, their degree of preparation is similar to that of the other sectors. It is the small- and medium- sized businesses in the primary sector that are the least well prepared.

Mr. Antoine Dubé: People working in the health field, officials and representatives from the Canadian Health Association, are going to appear before us today. Needless to say, the subject of health is very specialized and important since we're talking about life. Your survey does not appear to deal with these services.

Mr. Ivan Fellegi: You're right. This survey was conducted at the request of a client, who paid for the costs. The terms were set by the working group established by Mr. Manley. The mandate of this working group was to review the degree of preparedness of industrial businesses in the private sector.

The survey that we will be conducting next year is once again a survey commissioned by a client. We do not establish the specifications, but we do ensure that a professional survey is conducted; we concern ourselves with the professional aspect of the survey. Design is controlled by the client. We do foresee, however, that the public sector will be well covered.

Mr. Antoine Dubé: Next time.

Mr. Ivan Fellegi: Yes, next time.

Mr. Antoine Dubé: Thank you.

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

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[English]

Mr. Lastewka, please.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair.

I want to concentrate on a couple of items here. Going back to about a year and a half ago, we were concerned, as a committee, that the message get out there and that people understand there was work to be done. What I see you reporting is, except for something around 1%, the message is out there; they know they have to do something. Now the improvement has to be in the area of formalizing, getting things done, and so forth.

I was very surprised with the report on the actions of the large companies. I would have thought that more formal work would have been done and that more work would have been done on the suppliers for the large companies.

We had talked before at this committee about the idea that if we had the large companies concentrating and working on and following up on many small companies, they would be helping the process. I'm finding out that's not the case. The large companies are not following up.

Dr. Ivan Fellegi: I wouldn't say it's not the case. Perhaps it's not the case to the degree that would be desirable. Certainly the large firms are way ahead of the medium and small firms.

Mr. Walt Lastewka: Is it a true premise to think that if more of the large companies had formal plans and were following up on their suppliers and their integrated work suppliers, the message of urgency to get this done ahead of time, and not in the last quarter or the last month, would get out there? And should we therefore, when we do the next survey, be concentrating more on the large companies, to get the details about whether they're following through on their suppliers and so forth in their integrated chain?

Dr. Ivan Fellegi: I think it would be, not just from the survey point of view, but for whatever other action is taken between now and the next survey. I'm not talking as the Chief Statistician now, but as somebody involved in this issue; that certainly strikes me as something very intelligent to do.

Indeed, whatever way one approaches it—in terms of overall economic impact or in terms of the cascading effect of the partners—my guess is that if the large firms were fully ready, not just themselves, but in terms of their partners, that would take care of a very large chunk of the economy.

Mr. Walt Lastewka: One of the questions that's not answered here is on the demographics of the large and small companies across the country. Have some areas of the country progressed at a faster or slower rate than others? Can you give us an idea of the demographics?

Dr. Ivan Fellegi: Well, in terms of the regional breakdown, we looked at it, and we can't find significant differences by region. The differences tend to be more associated with the sector you are in and the size of the firm you own, but not particularly with the region in which you happen to be located.

Mr. Walt Lastewka: On the subject of the utilities and those companies that supply utilities to various other companies, we talked about the importance of the DND group having contingency plans in various areas of the country where things might not have progressed fast enough and they will not be meeting... DND will require information so that they can do their proper contingency plans. What discussions go on between your department and DND in getting ready contingency plans?

Dr. Ivan Fellegi: When it comes to contingency planning, the discussion shouldn't take place with Stats Can, because we are not in the business. That just isn't the right thing for us to do, and we don't have that particular expertise.

In determining what particular firms are of great importance to any single federal department or any major sector, when it comes to contingency planning, it should be done with the major suppliers or partners. Who does DND depend on? They ought to get after them directly. That's certainly what we do, as a department.

• 1620

Mr. Walt Lastewka: No, don't get me wrong. If certain areas of the country will require, let's say, utilities, or if a security force is not ready, it will be DND's responsibility to have contingency plans to move into those demographic areas where—

Dr. Ivan Fellegi: I don't know what you mean.

Mr. Walt Lastewka:

[Inaudible—Editor].

Dr. Ivan Fellegi: Oh, I see what you mean. I'm sorry; I misunderstood your question. I thought you meant it in terms of DND's own—

Mr. Walt Lastewka: No, no, no. I'm talking beyond DND. DND has to help make sure the country is ready in safety, security, utilities, and so forth.

Dr. Ivan Fellegi: I don't know whether DND is among the client groups we will deal with in preparing for the next survey, but if it isn't, we certainly can include them.

Mr. Jamie Brunet: They're involved very closely in the discussions about the third survey.

Mr. Walt Lastewka: Okay. This next survey of course is very important, and my concern is that we have 15 months to go. You're going to do the survey in the spring. My request to you is that before the House recesses for summer next year, you give this industry committee your report, not in September or October.

It's important for parliamentarians, before they recess for the summer, to know the results of your report, and I would hope you could do your planning for your survey and the tabling of your report such that this committee would be able to ask you questions on your spring report, because all of us will probably have to do work during the next summer as a result of your report.

Dr. Ivan Fellegi: From the word go, we need about two months to actually carry out the survey, collect the data, process them, edit them, and turn around a report—and that's going flat out. So it depends on when the button is pushed as far as we are concerned. This is a request that should be made to Industry Canada, which is our main client. The survey should be given the go-ahead in time for us to come back before Parliament recesses. We need two months, and that's an irreducible minimum for us, to carry out a survey and process it.

Mr. Walt Lastewka: So we need you to commence that survey sometime in March, then, in order that we could have something for the first week of June, so that all parliamentarians can be aware of the situation across the country.

Dr. Ivan Fellegi: That's right.

Mr. Walt Lastewka: Thank you.

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

Dr. Fellegi, I just wanted to ask one quick question about page 20, the slide on large utilities. It says 95% have a formal plan, which implies that 5% don't. I'm assuming that's probably one large utility company that doesn't, or maybe two. This is causing me concern that there's some area in the country that doesn't have a plan, so that all the businesses' plans, all the best-laid plans, are going to fail if that utility fails in that area or that region.

Dr. Ivan Fellegi: You have to keep in mind that this is based on a relatively small sample. We didn't take a census of all the utilities and identify the few handfuls specifically, case by case. The whole survey sample size in May was, what, 2,000 firms?

Mr. Jamie Brunet: It was 2,700.

Dr. Ivan Fellegi: That's all sizes, all regions, all sectors. So by the time you take large utilities, I don't know what sample size it was, but it would be a relatively small number, and it's based on that relatively small sample that we estimated 95% of them do have a formal plan.

The Chair: So maybe what we should do as a committee, when we follow up with the utilities, is find out where the holes are, where the plans don't exist and where they do exist.

Dr. Ivan Fellegi: That's what I was trying to say in connection with Mr. Bellemare's question. There are two separate tracks. One is, what information do we need?

The Chair: Right.

Dr. Ivan Fellegi: And the other is, for particular very focused sectors and areas, what contingency plans do you want to make, dealing one on one with the designated firms that represent a particular potential for crisis?

The Chair: Thank you.

Mr. Jaffer, do you have more questions?

Mr. Rahim Jaffer: I just have one last question.

The Chair: Sure, go right ahead.

• 1625

Mr. Rahim Jaffer: Thank you.

Dr. Fellegi, maybe I wasn't too clear before, so I wanted to ask this specifically again. What do you think is the merit of producing information?

Speaking as a small business owner myself, I know often you wouldn't listen to what the government was recommending, but you'd listen to what your competitors were doing, and you'd want to respond to that.

I would like to know specifically what the merits would be of showing some of this information concerning the reasons small businesses are giving for why they are becoming year 2000-compliant, maybe for competitiveness or legal issues or whatever. Would there be merit in producing that type of information and distributing it to various businesses, so they can see the reasons their competition is becoming year 2000-compliant?

Dr. Ivan Fellegi: We don't have that information. As Jamie said, we only collected information on the wide question of when they don't have a plan, not when they do have a plan.

Mr. Rahim Jaffer: Is that line of questioning something Stats Can may be looking at in their future reports, or is that not the direction?

Dr. Ivan Fellegi: It could be included in the 1999 report, but it might not be very useful by then, because it might be too late.

Mr. Rahim Jaffer: Okay.

Dr. Ivan Fellegi: Do you want to add anything, Jamie?

Mr. Jamie Brunet: Well, again, the secretariat for Task Force Year 2000 at Industry Canada is coordinating discussions with us and these various departments that have a stake in this thing, such as the Department of National Defence, Health, the Department of Foreign Affairs, and others.

Everything is being reconsidered. They are starting from scratch, basically, with a new questionnaire. They'll probably keep some of the same questions that were asked in the last survey, but they'll also be adding new questions. The focus in those questions will be on providing information that will support contingency planning. It will be a last-minute assessment of where firms are and whether they're going to be ready or not, and if they're not, it will involve trying to identify the problem areas so that contingency plans can be put in place.

The Chair: Thank you.

Thank you very much, Mr. Jaffer.

Mr. Brunet and Dr. Fellegi, we want to thank you for being with us and going over the statistics in your presentation today. It definitely adds to the work this committee is doing in trying to monitor the year 2000 issue, and in light of the government's response yesterday, it helps us with our future direction as well. So we thank you very much for being with us.

We're just going to take a couple of minutes to allow our witnesses to exchange places, because we're now going to be meeting with Health Canada and the Canadian Healthcare Association. So we'll take a recess of a few minutes.

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• 1631

The Chair: I'm very pleased to welcome two groups before us this afternoon. We have Ms. Fruji Bull, the director general of the information services directorate of Health Canada; and Ms. Beth Pietersen, the acting director of the Medical Devices Bureau. From the Canadian Healthcare Association we have Ms. Sharon Baker, vice-president of corporate services; and Ms. Kathryn Tregunna, director of the policy department.

I'm going to propose that we begin with Health Canada and that Ms. Bull start.

Everyone should have a copy of Ms. Bull's statement amongst the papers in front of them. If you look carefully, you will see it.

Please go right ahead.

Ms. Fruji Bull (Director General, Information Services Directorate, Health Canada): Thank you, Madam Chair.

My name is Fruji Bull and I'm the director general of information management services for Health Canada. I have with me my colleague, Beth Pietersen, acting director of the Medical Devices Bureau of the therapeutic products program of the Health Protection Branch of our department.

I appeared before your committee on March 9 of this year to describe the state of preparedness of Health Canada for the year 2000, and I'm pleased to be invited to appear before your committee again today to provide an update on the status of Health Canada's progress in this area.

Since my statement to you last spring, a great deal has been achieved in identifying how the change of the millennium could affect our business and program delivery requirements. Our governance structure has evolved to ensure the year 2000 issue is being addressed by all levels of management. We have a very high level of senior management commitment to this issue.

I am pleased to report that much progress has been made in our efforts to renovate our program applications and administrative systems. For example, our Legacy systems have undergone repairs and are now undergoing a testing regime in a true year 2000 environment. In March I indicated that these systems would be compliant by the end of December, and I'm pleased to report that we are still on target to meet this date.

In addition, all branch information systems, in particular those designated mission-critical, are expected to be year 2000-ready by the end of the fiscal year.

Our desktop computing environment has been fully assessed, and testing of our PC hardware was completed in August. Repairs and replacements are being carried out as required. We are also identifying, upgrading, and replacing our network operating systems and software packages. All of this should be completed no later than December of this year.

As a custodian of laboratory facilities across the country, Health Canada has addressed the impact of year 2000 on these assets. We have been working closely with Public Works and Government Services Canada, our facilities managers, to maintain the integrity of our infrastructure, which relies on embedded technologies. Inventories of all our facilities have been completed and remediation has commenced. PWGSC will shortly be entering into the testing phase of Health Canada's custodial facilities. Risk assessments are currently being conducted to pave the way for contingency plans in the event that these systems cannot be ready on time.

The Health Protection Branch has been instrumental in addressing problems that could have an adverse impact on the instrumentation and other types of equipment in laboratories. The Medical Services Branch has completed its inventory phase of medical devices, facilities, and laboratory equipment in its first nations hospitals and remote clinics. The database created to manage this information is currently being sorted, and priorities are being set for action.

• 1635

As a regulatory department, Health Canada administers a variety of statutes and regulatory programs concerned with products and activities that pose risks to public health and safety. In the area of medical devices, where potential risks to Canadians have been identified due to the use of date-related embedded technology or computer systems, manufacturers and vendors of such devices were notified at the end of March of this year of Health Canada's concerns, and their responsibility to ensure these devices are year 2000-ready was outlined to them.

Follow-up plans are currently under way to contend with manufacturers and vendors who have not yet responded to our requests for compliance information. For example, in the case of medical devices, the option of publishing names of manufacturers and importers who did not respond and/or the option of revoking a manufacturer's authority to sell a medical device will be used if a company fails to respond to follow-up requests in a timely fashion.

In terms of our responsibilities as regulators of the blood supply, we are working closely with the Red Cross and the Canadian Blood Agency through the Bureau of Biologics and Radiopharmaceuticals in the therapeutic products program. A detailed action plan has been produced and is currently being implemented.

The cultivation of strong federal-provincial-territorial relations on the year 2000 issue is a priority for Health Canada. To address the need for enhanced information exchange initiatives among governments, the department has cooperated with the provincial and territorial governments in establishing the Year 2000 National Clearinghouse for Health—or CYNCH, as it's known—to promote the sharing of information on compliance initiatives. CYNCH is expected to be set up in its entirety this month. Health Canada has contributed resources to this initiative.

The therapeutic products program web site, which provides year 2000 compliance status information to users of medical devices, has been made available to the provinces, as well as a similar database established by DND in relation to that department's medical equipment and its compliance status.

Health Canada is confident that it will meet its compliance milestones in time for the new millennium. However, as a further safeguard, contingency plans are being prepared for our critical systems. These plans will be ready for actioning in the event that the need should arise for contingencies as we approach 2000.

Thank you for your attention. Beth Pietersen and I would be pleased to respond to any questions or issues you may wish to raise.

The Chair: Thank you very much, Ms. Bull.

Before we go to questions, I'd like to have the Canadian Healthcare Association make their presentation, and then we'll do the questions together, because some of them may be similar.

Ms. Tregunna, would you like to make your presentation? Thank you.

Ms. Kathryn Tregunna (Director, Policy Development, Canadian Healthcare Association): Thank you.

On behalf of the Canadian Healthcare Association and our provincial and territorial members, I'd like to thank you for the opportunity to reappear before this committee to discuss the preparedness of health care facilities and agencies for the year 2000.

Through our members, the Canadian Healthcare Association represents a broad continuum of care, including hospitals; long-term care facilities; home and community agencies; community health, public health, mental health, and addiction services; housing services; and professional and licensing bodies. More information about CHA is available in the information packages. I mention this broad range of health services because the year 2000 issue affects this full continuum of care, and all of them are interested in finding and addressing the issues.

In preparing for today's presentation, CHA consulted with all of our members and held teleconferences with four members that have dedicated year 2000 staff. These include associations in British Columbia, Ontario, New Brunswick, and Nova Scotia. Together we identified seven key actions that need to be taken to ensure that health care facilities and agencies can be ready for the year 2000. These specific recommendations are also included in the package.

As in our last appearance, Sharon Baker, the vice-president of corporate services at the Ontario Hospital Association, will present an overview of year 2000 preparedness for health care facilities and agencies across the country, drawing on her extensive knowledge of the situation for Ontario hospitals.

Ms. Sharon Baker (Vice-President, Corporate Services, Ontario Hospital Association): Thank you, Kathryn.

The Ontario Hospital Association appreciates the opportunity to appear before you today to represent approximately 200 hospitals in the province of Ontario, as well as the other provincial and territorial members of the Canadian Healthcare Association.

• 1640

Before I proceed, CHA would like to commend you on the important work your committee has been doing to keep awareness of this issue high and to encourage progress. We read your earlier report with interest and were pleased to see the weight you gave our earlier recommendations.

I am pleased to appear before you today to say that health care facilities and agencies are making progress against considerable odds. The scope of the problem has not decreased. If anything, the more that is done, the more we are aware of what is left to do.

In addition to year 2000 compliance management, which we are actively undergoing right now, trying to fix everything we can, health care facilities and agencies are now also ensuring that contingency and service continuity plans are created. To this end, the Ontario Hospital Association has developed and distributed a guide for this activity. Contingency planning is a key step in ensuring that patient safety will not be compromised during the period of the date rollover.

While much can be done at the individual organization and local community level, there must be extensive cooperation in preparing our provinces, our territories, and indeed our country for the transition to the new millennium.

On behalf of the hospitals of Ontario, I am participating in a provincial initiative, along with Bell Canada, Ontario Hydro, the Solicitor General's Office, and others, to share plans for ensuring that essential service providers are able to respond to unforeseen disruptions caused by year 2000 failures. CHA recommends to you today that this model be extended nationally and encourages Emergency Preparedness Canada and Health Canada's emergency services to take a leadership role in preparing the country for possible unforeseen events during the date rollover.

All of CHA's members are very concerned about year 2000 issues. As mentioned earlier, some have assigned staff to assist their members in their compliance efforts. The Health Association of British Columbia and the Ontario Hospital Association have created resources for their members, which they are sharing across the country. Examples of these have been given to the clerk of the committee. At the national level, CHA has continued to offer forums for members to discuss year 2000 issues and to share information and resources.

An example of provincial association leadership is OHA's continued involvement in providing much-needed tools, education, and information to our members. What we have created we have actively shared with other health care providers in Ontario, the rest of Canada, and in a few cases, other countries. Our 14 education sessions held to date have reached over 1,000 individuals and 200 organizations involved in health care.

To augment our tool kit, we have developed an education program, with sessions scheduled into January 2000. We are also actively engaged with our Ministry of Health in our province and the associations that represent the rest of the health care sector in Ontario. The level of cooperation, collaboration, and sharing is truly remarkable. We are all committed to ensuring that the year 2000 challenge does not compromise the safety of our patients and clients.

Leadership and progress are also being demonstrated at the organizational level. OHA has done two surveys since we last appeared before you, one in July on progress, and just this past September we did a survey on cost estimates. We are currently reassessing progress through another survey, and we would be happy to provide that data to you in November when it is complete. Our cost survey data should be complete within the next week or two, and we can provide that as well.

Our July survey, which had 82 hospitals reporting, indicated that very few hospitals had completed the remediation stage on their equipment and systems. Remediation was in progress at 26% of the responding hospitals, but the majority had not yet reached the remediation stage. Most of those were in either the inventory or the assessment stage.

I'm sure you will agree that while this is progress, the pace will have to pick up if we are to succeed. Hospitals and health care agencies face many barriers to success on this issue, and I would like to address those with you today and present what CHA and its members believe are possible solutions. If health care is to be provided without disruption over the date rollover, these must be addressed and addressed quickly.

As we indicated to you when last we met, the greatest challenge for health care facilities and agencies is the lack of information being provided by the manufacturers and distributors of medical devices and equipment. This is a worldwide challenge.

In a report issued last week, the General Accounting Office of the United States government indicated that the Veterans Health Association has dedicated a full year to obtaining vendor responses and has still only reached a response rate of 70% to 80%. The Food and Drug Administration in the U.S. has a response rate of 12% after a number of mailings.

• 1645

Health Canada has done reasonably well and has a response rate approaching 25%. We commend the leadership of Health Canada in this area. However, the slow response rate is definitely hindering progress.

Fortunately the information coming from these responses and from organizations that have begun or completed testing on medical devices and equipment indicates that the failure rate of equipment is actually relatively low, in the range of 7% to 10%, and the failures we are finding are relatively minor.

This leaves us, however, to spend significant time and human resource efforts looking for the needles in the haystack, and we cannot abandon this effort. The consequences of not finding the needles, even one, could be deadly.

I must be clear in stating that in the following recommendations, CHA is not asking that manufacturers be forced to have all the issues resolved immediately. We are simply asking—in fact we are pleading—for an open sharing of the current status of equipment.

A number of actions could be taken to improve this situation, and details of these recommendations, as Kathryn stated, are provided in your package. We're very pleased to hear in Health Canada's testimony of the initiatives they're undertaking.

Health Canada must be encouraged to use the full weight of its regulatory authority with medical device vendors, including, if necessary, the removal of licences, and it must indicate this intention clearly and quickly. Resources should be allocated to Health Canada to support this effort and to allow them to ensure the timely, accurate maintenance of their database.

Legislation must be enacted that would remove the legal impasses that currently exist. Organizations must be able to share information honestly and openly in an atmosphere of cooperation.

When last we appeared before you, I indicated that the scope of the year 2000 problem extends beyond computers to medical devices, facilities systems, telecommunications, and the supply chain in the hospital and health care industry. We chose to concentrate our remarks then, and to a large extent now, on medical devices, because of their obvious importance to patient care. However, we have been working in the other areas as well, and we are making progress.

One area where all health care providers can work together is to ensure the continued safety and supply of blood, blood products, and pharmaceuticals in the year 2000. Again CHA looks to Health Canada for leadership in this area, because of their regulatory authority over these areas.

CHA therefore recommends that Health Canada extend its focus beyond medical devices to address these areas that are critical to the health services infrastructure in this country and to provide information to health care providers.

One of the most critical activities in year 2000 compliance management is information-sharing. As I mentioned, the collaboration and cooperation among health care organizations, both nationally and internationally, has been commendable.

CHA understands that the provincial and territorial departments of health have formed an initiative for information-sharing, referred to by the previous speaker as CYNCH. We commend this effort and would recommend to those involved that they act quickly and that they build on and support initiatives already in place, such as those undertaken by Health Canada and our association.

The Canadian Healthcare Association would be pleased to offer advice and consultation to CYNCH through the provincial and territorial association staff, like me, who are working directly with providers in the field.

The final barrier CHA wishes to address today is the issue of funding. As I have mentioned, health care facilities and agencies have made progress against tremendous odds, not the least of which is the lack of available resources.

OHA has recently surveyed our members, and according to our most recent numbers, based on 109 responses, we estimate the total cost to the hospital system in Ontario to be somewhere between $400 million and $700 million over three years: the year just past, the year we're in, and the year to come. This comes at a time when approximately half the hospitals in Ontario are experiencing deficits, even before including these year 2000 costs.

Last February our provincial government pledged $300 million to the repair and replacement of medical devices, but no money has yet been released, nor has money been allocated for the other aspects of this issue.

Approximately 27 of those 109 hospitals have told us, in response to our survey, that they are currently delaying remediation efforts totalling almost $30 million, because they do not have the resources to apply. This is a critical indicator of a serious barrier to success. It must be addressed.

CHA is also gathering comparable funding information from other provinces and will share that when it is available.

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CHA recommends that the federal government pursue on an urgent basis agreements with the provinces and the territories that would dedicate federal money to health care facilities and agencies in this remediation effort. It is of paramount importance that this money be given as quickly as possible into the hands of the providers, where it can be applied directly to the problem.

In conclusion, let me reiterate that in Ontario and across Canada, health care facilities and agencies are addressing this challenge to the best of their abilities and are actively preparing their contingency plans. They are challenged by slow vendor responses, lack of funding, and lack of skilled resources.

We have provided you with recommendations that CHA and our provincial and territorial members believe are critical to facilitating success in this effort. So much of what health care organizations do depends on others. We cannot solve this problem alone.

I have worked in the support services divisions of corporations for many years. My experience has shown me that when infrastructure works, it is invisible, and when it doesn't, it takes centre stage. We are working to ensure that only the health care providers in this country are aware of the effort it has taken for a successful transition for health care to the new millennium. We hope it will be invisible to the citizens of Canada. We must all work together to ensure a successful, invisible transition to the new millennium for health care.

Thank you so much for this opportunity to present our recommendations to you. We look forward to your questions and further discussion.

The Chair: Thank you very much, Ms. Baker.

I want to thank both the witnesses for their presentations, and I'll now turn it over to questions.

Mr. Jaffer.

Mr. Rahim Jaffer: Could you clarify one thing? It's an open question. With regard specifically to the Y2K problem, obviously Health Canada has initiated a process, but who is the final authority in relation to the provinces when it comes to Y2K compliance? Is it Health Canada, or are other programs being done in various provinces when it comes to this?

I don't know if I'm making it clear.

Ms. Sharon Baker: Perhaps I could ask for clarification of what you mean when you say “authority”.

Mr. Rahim Jaffer: Are the provinces going to comply with what's set out by Health Canada, or do they have their own programs in place for dealing with the Y2K problem specifically, to your knowledge?

Ms. Beth Pietersen (Acting Director, Medical Devices Bureau, Health Canada): The federal government would regulate the manufacture and sale of medical devices in Canada. It doesn't matter what the provinces say. Provision of health care is a provincial responsibility, but our effort is to regulate the manufacturers and to provide information to the hospitals.

Ms. Sharon Baker: From our point of view, the legal advice that each health care facility and agency is getting in this country is that it is their individual responsibility to be compliant. Where associations such as ours or provincial governments are involved, it is being made clear that it's in a facilitating role, to assist in the process.

Ms. Kathryn Tregunna: Just to add to that, the legal advice across the country has been different for different facilities and agencies.

In New Brunswick they're working together under one umbrella, the hospital corporations, and they're looking at providing a reasonable level of care, as has been defined by their legal counsel. Whereas in Nova Scotia, each individual facility and regional health authority has been advised that they are individually legally responsible.

Mr. Rahim Jaffer: So then when it comes to equipment currently in the hospitals, it's a provincial responsibility to pay for getting those compliant with Y2K. That's what you're saying.

Ms. Sharon Baker: Well, our government allocated money in the last provincial budget, but not all of the provinces have. In some countries they're making it the responsibility of the individual organizations. So I don't believe the answer to that is entirely clear in every province.

Ms. Kathryn Tregunna: If I could add to that, the responsibility for funding health care in Canada is a federal government responsibility. The delivery of services is a provincial responsibility. Obviously the provincial governments are providing a large portion of the provincial budgets for health care now, but certainly to address the year 2000 issues, more funding will be available. As Sharon mentioned, in Ontario the hospitals are facing large deficits, and that's true across the country.

We have some preliminary information on how much money various provinces have committed to the year 2000 issue. Some have not committed any to date, and only one that we're aware of has actually flowed the money to the agencies to address the issue.

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Mr. Rahim Jaffer: In your opinion, representing especially the Ontario part, is the money going to become available? Is there the potential of pursuing some sort of cost-sharing plan, given the circumstances? Does it look as though it's going to happen?

Ms. Sharon Baker: As I indicated, the $300 million that has been allocated will be released at some point. My understanding is it will be $230 million for this fiscal year up to March, and then the balance in the following fiscal year.

The assessment on progress that we're doing right now, which I referred to, is in collaboration with the provincial government, and it's beyond hospitals to all health care facilities. I believe the results of that survey will allow the government the information it needs in order to release the funds. We're hoping that in November there will be some word on the release of those funds.

We do not have any word yet on any recognition beyond medical devices and funding for that, although I'm hopeful.

Mr. Rahim Jaffer: I have one last question. Are there any plans, from your perspective and from what you've heard from some of the provincial wings, to have audits done in hospitals in order to make sure the equipment is Y2K-compliant? Is there anything along those lines that you're aware of?

Ms. Sharon Baker: In Ontario most hospitals are planning to test at least their very high-risk equipment. They are not relying on vendor assurances. However, we are using Health Canada's information to allow us to not test when a vendor reports a non-compliance. That will save us time.

As for audits, the term most of the firms are using now is “review”, and it is a project review. It is not an actual redoing of the testing, if you will. It is a review to verify that a reasonable plan is in place and reasonable progress is being made. Some hospitals are doing that.

Ms. Kathryn Tregunna: In addition, we know from the Nova Scotia experience that the legal advice has been that even if you do get information from the vendor that a piece of equipment is Y2K-compliant, it is in your best interest to test. They have found in some cases that the test has shown that the equipment is not Y2K-compliant. So every hospital needs to go through the review process.

The Chair: Thank you, Mr. Jaffer.

Mr. Murray.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Madam Chairman.

Before I start questioning, I want to say something to the Healthcare Association reps here.

I notice the comment in your presentation that you teleconferenced and consulted with all your members. We often forget how much effort goes into presentations by witnesses when they come before our committee, and I just want to thank you and let you know we do appreciate all the effort that does go into talking to all your members across the country.

I was quite concerned about this question of cost as well. Do you know if committee meetings such as this are being held at the provincial level across the country to discuss the problem of Y2K and funding? It just strikes me that this is a very expensive problem that probably doesn't have an awful lot of political appeal. It's not like hepatitis C, for example; you don't see the victims there, and therefore there's not a demand to pay.

So are you presenting any nightmarish solutions at the provincial level to back up the need for this funding?

Ms. Sharon Baker: In Ontario we have been in discussions with our provincial government since March, I think it's fair to say, specifically on funding. Our government has now created an assistant deputy minister position for the year 2000 issue for the health sector. They have a separate group dealing with their internal issues.

That ADM has been in place since mid-August, and we've had quite a lot of discussion, both the Ontario Hospital Association and the other health care associations. The person filling that position is a former hospital CEO and understands the issues quite clearly.

As I indicated, I believe we will have some word on funding in November. We did write to our minister, I think it was in July, but have received no formal response yet. I'm hopeful. My worry is that if the money comes too late, we won't have time to spend it and the costs will have escalated.

All these issues I'm sure, as a committee, you're aware of and you've been hearing.

Mr. Ian Murray: As I think Ms. Tregunna mentioned:

The scope of the problem has not decreased. If anything, the more that is done, the more we are aware of what is left to do.

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I'm meddling in horror stories here, but when you're looking at these problems and they seem to be getting bigger as you delve deeper into the potential of this, what can you see happening that you perhaps didn't see a year ago when you were looking at this? Is it just overwhelming and there's so much that it's a question of being able to catch each little problem?

Ms. Kathryn Tregunna: Our members haven't given up yet. A major change that happened between the last time we appeared before you and now is that all of our members are now very concerned and have started the advocacy process with their government, as well as the education process and support process with their individual facilities and agencies.

The association and our members don't want to create that doomsday fear. We want to find some solutions and move forward.

In addition to Ontario, where an ADM has been appointed, in British Columbia our provincial association is working very closely with government, and in New Brunswick the government has provided resources for a secondment to happen for our provincial association, and they've set up a committee to look at this issue, with broad representation.

I should also mention that since we prepared this, the Newfoundland association has also just acquired a year 2000 staff person, who is, as I said, working on the advocacy with the government in terms of funding issues as well as trying to move the agencies through the compliance stages.

So we're very concerned about funding. We brought the issue of funding for Y2K up very tangentially at our recent appearance before the Standing Committee on Finance, when we were asked why we need $2.5 billion in the next federal budget. Part of that is to answer administrative issues that we're currently facing.

Mr. Ian Murray: I'll turn to the Health Canada representatives.

Talking about medical devices, Ms. Bull, you mentioned that you're looking at the option of publishing names of manufacturers and importers who do not respond in a timely manner. I gather no actual time limits have been set in which you demand that, say, by the end of this year or your fiscal year, you have the response. Are you contemplating doing something to toughen that up? How are you dealing with this to make sure they comply?

Ms. Fruji Bull: Since I have the program chair right here, I wonder if I might refer your question to her.

Ms. Beth Pietersen: We sent out the letters to all the manufacturers at the end of March, and as Sharon said, we've had about a 25% response rate, but we're following up on all those non-responders. I think we gave them two months to respond to the letter, and if they still haven't responded, we're following up.

We're planning to follow up with phone calls, because often the letter doesn't get to actually who you want it to. We're giving them a chance. We're setting another deadline for them. If they don't actually respond to us now, after this follow-up, we will issue a letter that states clearly that there are consequences, which will be publication of their name on the web site and the potential to withdraw their licence if it's still a product that's sold.

Mr. Ian Murray: So you have all the regulatory and legislative clout you need to deal with this?

Ms. Beth Pietersen: Right.

Ms. Sharon Baker: I would like to add to that. It's also important to recognize the situation in which the vendors are, and the legal advice they are probably receiving. Hence our recommendation about some means to change the possibilities for information-sharing, not necessarily to change whatever might be the potential liability of the actual functioning of this machine, but to encourage an atmosphere right now in which vendors and manufacturers can respond and feel they are not taking undue risk by doing so.

Mr. Ian Murray: Thanks.

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

[Translation]

Do you have a question, Mr. Dubé?

Mr. Antoine Dubé: Yes. In listening to the witnesses from the Canadian Healthcare Association, it is immediately clear that of your members, Ontario is the one that has done the most work. However, despite everything, the more people work on this, the more they worry. That is my understanding, and it is not meant as a criticism.

You may have a better idea of the scope of the problem than do the rest of the provinces. What concerns me is that if there are problems in the province that seems to be the most advanced in this respect, what must it be like in the other provinces?

• 1705

I think you must see to it that you make forceful recommendations. However, if I may say so, I find your approach a little too “soft”.

What can we do to speed things up? This is a serious problem. We are talking about people's health. Imagine all the lawsuits that could be filed by people whose health is endangered within days or weeks because of the year 2000 bug. I find your recommendations a little too soft or timid in light of this.

[English]

Ms. Sharon Baker: We believe the recommendations we have made are key to ensuring that the progress moves much faster. We are also undertaking activities at the provincial level, with help from our government, in order to increase progress.

Two of those in particular are to hire between 15 and 20 what we're dubbing roving coaches and assessors, who will go out into the field and assist hospitals with specific project barriers they are encountering. As well, we hope to come together as an industry and work together through one effort to deal with the supply chain issues.

I'm not sure that we're so much further ahead than are the other provinces. One of the things I do find in this work is that, coming to the table later, you do benefit from those who have gone before and you can move more quickly. We're hoping that our recommendations and the work of Health Canada will provide information that allows provinces and health care organizations within provinces that are starting now to achieve progress at a much faster pace.

[Translation]

Mr. Antoine Dubé: Let me take a more direct approach. The federal government made significant cuts in its transfers to the provinces, particularly in the area of health. Would you not agree that if only for the year 2000 issue, the federal government should, because the situation is urgent, quickly transfer the necessary funds to the provinces so that the problem can be solved in time? Would you agree with that? Earlier, you spoke about a figure of $2.5 billion. I am directing the question more to the Canadian Association, than to the Ontario group, but it is to both.

[English]

Ms. Sharon Baker: I would like to repeat, to be sure I understood your question. Did you ask whether we feel money should be transferred quickly from the federal government?

[Translation]

Mr. Antoine Dubé: As you know, in the last three or four years, the federal government has made significant cuts in transfers to the provinces, particularly in the area of health care. Would it not be right for you to recommend that the federal government now transfer to the provinces the money they require to solve the year 2000 problem? You mentioned a figure of $2.5 billion earlier. Could there not be a specific recommendation to this effect?

[English]

Ms. Sharon Baker: This is our recommendation number 4.

[Translation]

Mr. Antoine Dubé: Yes, but you don't state an amount.

[English]

Ms. Sharon Baker: Oh. We do not yet have a good handle on the amount. We have an estimate now in Ontario, based on the survey we have just done. We are able, from that survey, to derive averages per type of hospital, but that kind of work has not been done, to my knowledge, in other types of health care organizations, although I believe some work is happening in Nova Scotia. Therefore our recommendation suggests working closely with the provinces in order to come up with the amounts that should be transferred.

[Translation]

Mr. Antoine Dubé: I'm from Quebec. We have not yet spoken about the situation in Quebec. Are you familiar with it?

[English]

Ms. Sharon Baker: I have had some contact with Quebec, and as I understand it, the regional authorities there are working jointly. They have hired a large consulting firm to work with them. I cannot tell you what phase they are in right now, but their government person is meeting with our assistant deputy minister on a regular basis, and I believe some small amount of money has been budgeted in that province for year 2000.

[Translation]

Mr. Antoine Dubé: Another concern I have, and I would not want to become panicky, is that I think that if any area is likely to give rise to lawsuits from individuals, it is certainly this area.

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You recommend that we follow the example of the American Year 2000 Information and Readiness Disclosure Act.

In your answers earlier, Ms. Tregunna, you were saying that the legal opinions provinces are getting vary considerably. I think that that alone justifies some clarification on this matter, if only as regards interpretation. Otherwise, we are going to have problems later on.

[English]

Ms. Kathryn Tregunna: That certainly is the information we're receiving from our members, that they do not have consistent legal advice. People say if you get three lawyers in a room, you'll get three opinions, and that's being reflected in the legal advice they are receiving.

Ms. Sharon Baker: I'd like to add to that, if I may. Certainly I'm telling this committee nothing new when I say no lawyer has yet been through a date rollover. The advice we are getting is very conservative, and it does vary, even by organization.

We have been watching the situation in the U.S. to see if any attempts to limit liability are successful. The Connecticut Healthcare Association and the American Hospital Association brought forward that recommendation quite some time ago, but nothing has happened.

We are also concerned about the insurance situation for hospitals. I know you've had testimony from the insurance industry, although not on directors and officers, as I understood the testimony. We have not gotten yet from our insurers a clear statement of whether our boards will be covered for this issue.

I am of the opinion that with due diligence, year 2000 is an unforeseen event, as you've guarded against everything you could see coming. So that is an important issue and another risk for our industry.

[Translation]

The Chair: Thank you, Mr. Dubé.

[English]

Mr. Peric, please.

Mr. Janko Peric (Cambridge, Lib.): Thank you, Madam Chair.

Madam Bull, you mentioned in your statement a contingency plan for your critical systems. Could you be a little bit more specific? What do you consider critical systems in the health sector? And secondly, did you share with the regional health authorities your contingency plan for those critical systems?

Ms. Fruji Bull: In the Department of Health, the mission-critical systems that have been identified are those that are specifically related to the Health Protection Branch of our department, mainly to do with the medical devices, the blood systems, and all the other regulatory areas. As well, internally our financial system has been designated as such, and in that case, we are simply revising it. It will be ready by the year 2000.

In terms of contingency for the systems we have, there are many different ways to address that. That is the next step. We are currently doing the risk assessments to determine exactly where we would have to put in place a contingency. It could be replacing the equipment instead of trying to fix it, for instance. It could be determining whether the medical devices industry is going to be ready or whether we would have to revoke licences or publish names. It could be many things that we have to come to terms with once we've done the risk assessments on all the areas of our department, where we may have to actually have a plan in process for the next step.

We are currently in the process of doing those risk assessments, and we hope to be finished them by early spring and be ready.

Mr. Janko Peric: Thank you. That's all.

The Chair: Thank you, Mr. Peric.

Mr. Bellemare.

Mr. Eugène Bellemare: I must commend the Canadian Healthcare Association for their report.

You say there's been a commitment on the part of the Province of Ontario of $300 million to address this Y2K problem, and the hospitals haven't received a cent yet. Why is that?

Ms. Sharon Baker: Our government has not yet determined the criteria by which that money will be released.

Mr. Eugène Bellemare: What are they waiting for, do you think?

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Ms. Sharon Baker: I wish I knew. In fairness, I think their concern was that we were unable, until recently, to tell them how far we thought $300 million would go in addressing the problem. I believe there are still ways it could have been released.

Mr. Eugène Bellemare: At Queen's Park, do they have a clock like we have on Parliament Hill here?

Ms. Sharon Baker: To count down? They have a clock; I don't know if it's counting down.

Mr. Eugène Bellemare: To Health Canada, I was reading your report, and I was wondering something. Why is it that you didn't put the name of your organization on your report? I have reams of sheets and paper here, but when I got to this one, I had to ask my colleague here, who sent us that?

Ms. Fruji Bull: I'm very sorry. I had no idea it would come across without our name on it.

Mr. Eugène Bellemare: Okay. When will Health Canada be compliant?

Ms. Fruji Bull: Health Canada itself?

Mr. Eugène Bellemare: Yes.

Ms. Fruji Bull: We are hoping that by the end of December, our systems will be compliant. By the end of the fiscal year, all our branch-specific applications, all our hardware, and all the software we use internally will be compliant.

Mr. Eugène Bellemare: Do you find that reasonable?

Ms. Fruji Bull: Yes, because we are progressing—

Mr. Eugène Bellemare: I don't find it reasonable.

Ms. Fruji Bull: Why?

Mr. Eugène Bellemare: I'll pass on to my next question. Do you have contingency plans at this moment?

Ms. Fruji Bull: For these systems? Not yet, because—

Mr. Eugène Bellemare: I don't find that answer very good.

The Chair: Mr. Bellemare, let the witnesses answer, please. Try not to cut them off.

Mr. Eugène Bellemare: I only have a limited amount of time, and I have a few questions to ask.

The Chair: I know, but they have to answer as well.

Mr. Eugène Bellemare: I did get the answer, but I want to get on with the next question.

The Chair: Well...

Mr. Eugène Bellemare: My next question is this. On page 2, you state:

Follow-up plans are currently under way to contend with manufacturers and vendors who have not yet responded to our requests for compliance information.

That's follow-up plans. You're still in the planning stage?

You go on to say that, for example, in the case of medical devices, the options of publishing names and revoking a manufacturer's authority are there. Have you set a deadline? A while ago, I heard you talk about sending letters out and giving them two months to answer, and then you mentioned at another time to someone else that you sent those letters out in March. Therefore May is the deadline. Now we're in October; that's five months. What are you waiting for?

Ms. Beth Pietersen: Well, first of all, 1,400 letters went out. You're talking about a huge quantity here, and we are—

Mr. Eugène Bellemare: Do you do this by hand or by machine?

Ms. Beth Pietersen: We do it by machine.

We are not planning now; we are acting. Plans are complete and we're acting. It's a huge number of devices. Each manufacturer has multiple devices that all have to be followed up on. But we are in the process of acting, and we will be issuing final letters—

Mr. Eugène Bellemare: Your pace is too slow. You can't go up into the clock and turn it around so that it will accommodate you. There is a deadline.

On page 4 and page 6—

The Chair: Mr. Bellemare, make this your last question, please.

Mr. Eugène Bellemare: My last question?

The Chair: Yes, please.

Mr. Eugène Bellemare: I'll come back later. I'd like to be put on the list for later. If I miss a question here—

The Chair: There are going to be bells at 5.30.

Mr. Eugène Bellemare:

Health Canada must be encouraged to use the full weight of its regulatory authority with medical device vendors, including if necessary the removal of licences, and it must indicate this intention clearly and quickly.

This is what the Canadian Healthcare Association said, which is a follow-up on my idea. What's your response to that? It says “quickly”, by the way—“quickly”. So?

Ms. Beth Pietersen: We will follow up quickly when we have done risk assessments on a device. If we know it poses a risk, we will follow up quickly.

Mr. Eugène Bellemare: How many months are there left?

Ms. Beth Pietersen: Fifteen until the year 2000.

Mr. Eugène Bellemare: Yes, and if you keep on your letter-writing, which takes about seven or eight months in response time, we're in big, big doodoo.

The Chair: Mr. Bellemare, I think the witnesses have heard your sentiments and your concerns, and I'm sure they share them with you, but maybe not with the same intonation.

Mr. Eugène Bellemare: This is really important.

The Chair: Mr. Bellemare, I'm not disputing that. However, we do have to move on.

Mr. Jaffer.

Mr. Eugène Bellemare: Please, can I go on?

The Chair: No.

Mr. Jaffer, please.

Mr. Rahim Jaffer: Thank you.

This is an open question to all of our guests, but particularly, maybe Mrs. Bull would like answer it.

Obviously we've had problems with commitments of the government to health care funding; they've not lived up to their commitments in the past. From your own information in dealing with the government, how satisfied are you that they will live up to their commitments for their funding on this Y2K problem as it pertains to health care?

• 1720

Ms. Fruji Bull: Certainly the funding that has been provided for us within the government is there on the table, and we have drawn on it. It is there, and we are using it.

In terms of transfer moneys and moneys to go to other constituencies, that's really not an issue I can answer. That's a question of policy that the minister would have to work out with his colleagues.

Ms. Sharon Baker: From our point of view, my concern is that I'm not convinced that at our provincial level there's an understanding of the need for rapidity in releasing the funds, of the amount of work that follows the replacement of a medical device or an information system, or of the amount of human resource effort that's going into this initiative, in addition to the actual capital costs of replacement. As I said earlier, if the money flows too slowly, we will not have time to spend it; we will not get the fixes done.

Mr. Rahim Jaffer: That's good enough.

The Chair: Thank you, Mr. Jaffer.

I just wanted to, on behalf of the committee, talk about our interim report and the recommendations. It's been raised several times, most recently by Mr. Bellemare but also by others earlier during the conversation, that our recommendation number 10 in our interim report back in May was pretty definite. We thought that not only should the names of the manufacturers and importers of medical devices who didn't furnish the necessary year 2000 compliance information in a timely fashion be published, but you should begin regulatory and legal action against them.

Mr. Bellemare and others have expressed the concern for the timeline. We've heard evidence at committee, and throughout the summer a number of seminars took place, sponsored by the Canadian Bankers Association, where experts appeared. I know that in the seminars I attended, they used the example of pacemakers: one is not compliant; one we don't know about, because there's been no response; and two are fine.

I'm not sure how long you wait, but I'm going to raise a grave concern here in light of the conversation that's taking place today. There are waiting lists in many areas. I know that an individual in my riding has a pacemaker, had it kicked out of place in a water polo game, and was on a list for months to get a consultation and to get it fixed.

I'm concerned that the timeline is getting very short to deal with problems, in particular this problem that's been identified at the committee, that was part of public testimony, and that has been identified several times. There is this pacemaker out there, and I don't want to create fear amongst some who may have it or not have it, because I'm not even sure which one it is, but there are waiting lists.

What is going to be “a timely fashion”? I share Mr. Bellemare's sentiment and concern that we're in October, and I know waiting lists are six to eight months in my region. So you're running out of time to identify which ones are or are not compliant, and you're running out of time to allow the Hospital Association and the hospitals and the doctors in the area to deal with it, because they don't know whether they are or are not compliant.

Earlier today I spoke with a cardiac surgeon who is not aware of which one is or isn't. I'm concerned about who's going to be responsible. Because you do regulate these devices, you do have a responsibility to ensure that people know whether they are or are not ready.

I understand that you've done the letter-writing and that there are 1,400. However, we are trying to express our concerns. We know you share them, but there are waiting lists, and I don't know how you propose to deal with them. I'm very concerned that there could be some tragedy in the end, and someone is going to be responsible.

Ms. Fruji Bull: I can assure you that we are equally concerned.

We do have to follow a certain amount of due process here. We have every intention of being very quick in the next iteration of this letter-writing and identification. We also have to worry a little bit about the possibility that all sorts of devices may be non-compliant, and then we have to deal with those issues as well.

Ms. Beth Pietersen: I would just like to add that I assure you we are following up based on risk of the products. As we follow up on non-responders, products such as heart pacers, which are at higher risk than others, we are following up on and acting on quickly.

And as soon as a product is identified as non-compliant, we act on it. We don't wait to have all the non-compliant devices identified before we act. We are looking for the needle in the haystack, as Sharon said, every day.

• 1725

The Chair: And we know it's not going to be a perfect science in the end; we've been told by experts that there are no absolute guarantees. But I do appreciate the progress Health Canada has made and the steps you have taken. We do want to wish you well as you continue along the next phase in trying to identify and provide the information.

Ms. Baker and Ms. Tregunna, we thank you for your recommendations.

We are going to be issuing interim reports. That's the plan of this committee to keep along that timeline. We know you have a large undertaking and we thank you for being with us today.

Mr. Eugène Bellemare: Madam Chair—

The Chair: We have bells, Mr. Bellemare. We have a vote.

Mr. Eugène Bellemare: Can I get my—?

The Chair: No, we are done.

The meeting is now adjourned. Thanks very much.