INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 4, 1998

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[English]

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

Just so committee members know, we're going to have three different groups of witnesses today. We're going to begin with witnesses from the Treasury Board Secretariat. We're very pleased to have three witnesses from there. We have Linda Lizotte-MacPherson, chief information officer; Mr. Guy McKenzie, assistant secretary, year 2000 project office; and Mr. Jim Bimson, program director, year 2000 project office.

I understand you have a presentation you can make to the committee, and after that we'll ask questions.

Ms. Linda Lizotte-MacPherson (Chief Information Officer, Treasury Board Secretariat): Good afternoon, Madam Chair, and thank you. We're very pleased to be here this afternoon to discuss year 2000 progress. I want to assure you, as the new chief information officer, that year 2000 is really a top priority of mine.

Mr. Guy McKenzie is the lead of the Treasury Board Secretariat year 2000 project office. The role of the project office is to act as a single window for the federal government's year 2000 activities. Guy is responsible for managing all aspects of the office on a day-to-day basis.

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[Translation]

Finally, Jim Bimson is responsible for monitoring departmental progress, challenging departments and providing advice on the wide range of Year 2000 system issues.

[English]

This afternoon what I'd like to do is share with you how we're organized to meet the year 2000 challenge, our progress, and I'll conclude with our next steps. In particular, I will highlight the points that were raised by your committee in its May interim report on year 2000 and the October 5, 1998 response of the government to that report.

Let me start with how we're organized. Treasury Board's role, as you're probably aware, has recently been expanded to deal with year 2000 issues on behalf of cabinet, and we've been charged with the overall coordination of the government's activities related to year 2000. So the Treasury Board Secretariat leads the government-wide year 2000 action plan, and in addition we strategically intervene and we regularly challenge the results and progress of departments.

In collaboration with the departments and with the private sector, Industry Canada has been charged with ensuring that reasonable efforts are made to help the private sector meet the year 2000 challenge. In a similar fashion, as per recommendation 15 in your interim report, the Department of Foreign Affairs and International Trade will coordinate Canadian efforts with those under way elsewhere around the world.

[Translation]

The Department of National Defence has been charged with coordinating the government's national contingency planning and emergency preparedness, as put forward in Recommendation 18.

Notwithstanding these lead roles, all federal departments remain responsible for their own Year 2000 preparedness and for liaising with their stakeholders.

[English]

Clearly, we have a well-thought-out structure in place and over the last several months we've accomplished a great deal. We've intensified our efforts and we've put in place a stepped-up action plan across all departments. We reported on some of our work in our response to your detailed interim report, and I'd just like to review a few of our highlights today.

Let me start by saying we are progressing as planned, and Canada, as a country, now ranks third in terms of year 2000 preparedness just behind Holland and the United States. This is according to the Gartner Group.

In terms of the status of our government-wide mission critical functions, we were at a level of 64% readiness at the end of September 1998, and this is up significantly from the 43% that we reported last April. In fact, some departments are nearing completion. Others are not as far along, but all departments have an aggressive plan and all departments are meeting their plans.

We've made continued progress because of the strong political, departmental, and financial commitments, and these are all key components of our stepped-up action plan. I know you'll agree with me that year 2000 is far more than just a technical problem. It's everybody's problem. It's complex and cross-jurisdictional, and it's an issue that unfortunately knows no boundaries. As a result, it demands a very comprehensive approach with strong leadership, cooperation, solid planning, monitoring and adequate resources. The government's approach accommodates all of these areas.

We monitor the progress of departments on a monthly basis. Treasury Board ministers have asked for regular reports on the state of readiness of the government-wide mission-critical functions, and it's in fact these very reports that shape the intervention and the plans. All ministers and all deputy ministers are accountable for year 2000 in their respective departments, agencies, and crown corporations.

Within each department solid year 2000 project offices have been established and they have a good cross-section of resources, including people with business expertise, audit and technology capability. We are also cooperating extensively with various jurisdictions because much of the year 2000 challenge really falls within their purview. We have regular federal-provincial and territorial meetings.

Clearly, leadership, cooperation, and engagement are in place, so the next component of our comprehensive program is adequate funding. Financial commitment to address federal government needs is well entrenched. You may recall that the first estimate in the Braiter-Westcott report was $1 billion to $1.4 billion for government-wide mission-critical systems. We began by allocating $400 million in loans from the fiscal framework, as per recommendation 16 of your report. We have already exceeded that amount by about $40 million.

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Canada, along with the rest of the world, is discovering the complexity of embedded systems and interfaces, and as a result new funding pressures have emerged. New funding pressures have also emerged in support of an expanded horizontal mandate to support industry and private sector readiness and national contingency planning. The Treasury Board Secretariat is currently working with the Department of Finance and with other departments to assess these new funding pressures.

[Translation]

We also have an innovative procurement contract in place with a guarantee of $100 million. In return, seven information technology firms guarantee the availability of skilled people. Departments have participated actively, and we are pleased to report that the $100 million has been completely allocated. Given the increasing difficulty in securing skilled resources, this has proven to be a vehicle vital to our program.

[English]

Another key component of our stepped-up action plan is strategic intervention. And we've been making these strategic interventions, particularly in the area of embedded systems, electricity, risk management and contingency planning. Allow me to start with our interventions with respect to embedded systems.

The Treasury Board Secretariat has worked cooperatively with specialized departments to create centres of excellence. Public Works and Government Services Canada is creating a centre of excellence for embedded systems in government buildings, and the Canadian Food Inspection Agency is taking the lead in establishing resource centres for embedded systems in all government laboratories.

[Translation]

On October 30, we held a workshop on embedded systems to share best practices with senior federal and provincial officials with Year 2000 responsibilities.

[English]

As you underlined in your report, electricity is key to the provision of government services and it's a critical pillar of our economy. We fully support your recommendation that the government should ensure that updates, solutions, and best practices are shared quickly and are shared widely with the electrical and oil and gas industries.

And as a result of your recommendation 9, the Treasury Board Secretariat, in collaboration with Natural Resources Canada, organized a meeting on October 8 where the Canadian Electricity Association and three power utilities shared their state of readiness. And we will continue to monitor their progress. In fact, on December 16 we have a follow-up session with the federal, provincial, and territorial counterparts where the Canadian Electricity Association will table their second report. As well, gas companies and municipalities will be represented. I think this meeting is clearly an example of the importance we place on interfaces and interdependencies beyond the federal government.

As you know, our goal is to minimize the disruption of essential services to Canadians. Since risk assessment is key to the development of contingency plans, we held a risk management workshop in June. It was extremely successful. We expected about 120 participants and we had over 300. As a result, we had a follow-up session in October on contingency planning and we had over 400 public servants attend.

National contingency planning and emergency preparedness are now on the planning horizon. On October 6 the Prime Minister appointed a national year 2000 contingency planning coordinator. As a result, DND has created a national planning group to be headed by this coordinator. The group is actively involving Emergency Preparedness Canada in its operations, and the first thing to be undertaken is the national assessment, which will be coordinated by the national planning group.

We have an ambitious plan in place and we are on target with the goals we have set. We plan to have departmental contingency plans or business resumption plans in place for government-wide mission-critical functions by the end of December of this year. We recognize that there will likely be glitches, but our goal is to minimize disruption to Canadians.

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By June 30, 1999, departments are expected to have completed total live-environment testing. We also plan to continue to meet with other infrastructure service providers, including the oil and gas industry, to learn more about their state of readiness.

We will continue to work across jurisdictions on common issues and on interfaces. Although we are working very aggressively, the Treasury Board Secretariat will continue to intervene as required.

We recognize that there is no room to relax. We are confident, however, that the Government of Canada will minimize the disruption of essential services to Canadians through the turn of the century. We will continue to assist the Department of National Defence's contingency and emergency preparedness effort.

In summary, I'd like to reiterate that we have a comprehensive plan in place, and that plan is unfolding as expected. TBS' leadership has made a difference over the past few months, but the Treasury Board, cabinet and Parliament can only steer so far. An effective response to the year 2000 challenge ultimately depends on the engagement and action of individual departments and agencies.

Madam Chair, we would again like to thank the industry committee for its key work on the year 2000 challenge. We are now prepared to answer your questions. Thank you.

The Chair: Thank you very much for that presentation, Mrs. Lizotte-MacPherson.

We're now going to begin with questions, and we'll start with Mr. Lowther.

Mr. Eric Lowther (Calgary Centre, Ref.): Thank you, Madam Chair.

Thank you for the presentation. I was encouraged to see in your presentation that there have been some meetings with the electrical utilities as well as, as I understood it, the gas companies and municipalities. And I understand there are going to be follow-up meetings, according to your presentation, which is also encouraging.

You didn't give us any specifics of those meetings. Maybe you're not able to do so, but I guess I'm going to ask anyway. Is there any kind of light you can shed on those meetings? What state of comfort can these different utilities offer that we on the committee can pass on to our constituents?

Ms. Linda Lizotte-MacPherson: Madam Chair, in response to the honourable member's question, we did have a session on October 30 and the Canadian Electrical Association tabled the report. It was actually the North American report. They reported on the Canadian state of readiness. Overall, they were cautiously optimistic about the state of readiness of Canada. They felt confident that there would be minimal disruption. As a country, Canada is on par with or ahead of the U.S.A. in all categories.

I will also ask my colleague, Guy McKenzie, to elaborate.

Mr. Guy McKenzie (Assistant Secretary, Year 2000 Project Office, Treasury Board Secretariat): The process we have established is alluded to in the text. We're to meet with them on a regular basis The first meeting we had was on October 8. This is where they tabled their report. Their report is actually public, so anybody can have access to it. As Linda just stated, they had expressed what they called cautious optimism, but they were working along.

We also have regular contact with the telecommunications companies, and we do have contact with other utilities such as the natural gas firms, for instance.

We also regularly organize federal-provincial meetings with provincial colleagues. Last week, for instance, on October 30 we had a day dedicated to embedded systems. Provincial people were also there with us. The international community was also represented. We had people from the U.K. and other countries, as well as some municipalities.

So we try to look at it as holistically as possible. This file knows no jurisdiction. We must cut across.... We actually have a very good collegial approach with all these people; they share information.

Mr. Eric Lowther: I'm really encouraged to hear that there is a holistic approach taking place here. I could say it's overdue, but I'm glad to say that it's here.

With this holistic approach, do you foresee a day when the key utilities, the electricity, the gas utilities...? You know, we're talking January 1, the middle of winter in Canada. Those are two things people like to know they're going to have. I think that lines up with the report of this committee.

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Do you foresee a day when this association or the people you're meeting with could issue some sort of statement that would guide people on how much they should be concerned or prepared, or give them some sort of framework within which to work?

I know there are many Canadians who are wondering, how far do I have to go? Do I need to get the generator and all that? What are my chances of being without power and heat? No one really seems to have nailed that down. It seems these people would be in the best position to give them some sort of....

You say “moderate disruption” or “minor disruption”. What does that mean? That might mean something different to a power utility than to somebody living on the 12th floor of an apartment in my riding.

So do you think we'll have a day when they'll kind of give us some context there?

Ms. Linda Lizotte-MacPherson: Madam Chair, in response to the member's question, I think that's an excellent point. In fact there was some discussion at the meeting about the importance of communication. Our understanding is that over the coming months the association is developing their communications strategy. We can certainly bring forward your request to them, to be able to go public with a statement. But they recognize the need to try to manage behaviour, if you will, and the communication is an integral part of that. So it's something they're currently looking at.

Mr. Eric Lowther: I know my time is probably up, but could you clarify who “they” is exactly? Is that the Canadian Electrical Association, or is it somebody beyond that?

Ms. Linda Lizotte-MacPherson: That would be the Canadian Electrical Association.

Mr. Eric Lowther: Good, thank you very much.

The Chair: Thank you, Mr. Lowther.

Mr. Peric.

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

Madam, in your statement you say that Industry Canada has been charged with ensuring that reasonable efforts are made to call the private sector to meet the challenges of year 2000. Could you elaborate a little on this term “reasonable”? And according to your knowledge, where is that private sector? How much is the private sector aware of the year 2000 problems?

Ms. Linda Lizotte-MacPherson: Madam Chair, when we think about the private sector, we've really been dividing it into two categories: large business, and then the small and medium-sized enterprises.

Clearly the large business is ahead. They seem to be well on their way, and in fact through this committee have shown tremendous leadership in engaging Canadians and industry as a whole.

The challenge is more with the SMEs. But a lot of work has been done to encourage businesses to put in place formal action plans, in particular to make sure they are testing their systems and applications.

Task Force 2000 in fact has come up with comprehensive material. I just brought with me a few samples of things. These brochures and material have been distributed widely through some mass mailing campaigns, mail-outs, information seminars working with various organizations, and working very closely with the finance industry.

In addition, a tax incentive has been put in place, up to $50,000 for small and medium-sized businesses, to help defray the cost of year 2000.

Additionally, a year 2000.... It's called a first-step program. It's a one-day service where an individual comes in and helps small businesses identify their problems. There's actually a comprehensive binder we go through with them. This is an issue that's being headed up through Industry Canada.

There is also a series of rural seminars and tool kits that are available through community libraries and community access centres.

The Business Development Bank has also made available $50 million worth of loans to small businesses, with fairly lenient repayment structures.

In addition, a number of web sites have been set up by Industry Canada, Public Works and Government Services Canada, the Treasury Board Secretariat, making information available to businesses.

A 1-800 number has also been established by Industry Canada. It's a year 2000 information line.

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So there's clearly a lot that has gone on. In addition, this past week some of you may have in fact received this information package. It went out to all MPs and senators. It's really a package to help you with some of the information-sharing awareness within your constituencies.

So a comprehensive program is in place, but we recognize that, in particular with the small and medium-sized enterprises, there's still work to be done.

Mr. Janko Peric: Do you have any information on how small and medium-sized businesses reacted to this information that was provided from the government?

Ms. Linda Lizotte-MacPherson: Madam Chair, the information I have is more anecdotal. The feedback has been positive, but I couldn't tell you the direct cause and effect of the different avenues we've taken.

What we do know, from the last Statistics Canada survey, is there's been a marked improvement in terms of awareness and action on the part of small and medium-sized enterprises, but we still have a fair bit of work to be done.

Mr. Janko Peric: Like what?

Ms. Linda Lizotte-MacPherson: When I say a fair bit of work, it's in terms of ensuring that the small and medium-sized enterprises are engaged, that they all have action plans.

Thank you very much, Madam Chair.

[Translation]

The Chair: Ms. Lalonde, please.

Ms. Francine Lalonde (Mercier, BQ): Welcome to our committee. I saw that the same report had been submitted yesterday to the Public Accounts Committee, which has led to an article in today's Ottawa Citizen on this very report.

Our angle at the Industry Committee is to ensure that companies—particularly small business—and consumers can benefit from all the services that the federal government must provide to them. To that end, we want to see the necessary leadership within the public service, in the department and Treasury Board.

I will put a few questions to you. You stated that according to Braiter/Westcott, $1.4 billion has already been spent, and you said in May that you would allocate $400 million in loans because the departments are supposed to earmark the funds necessary for improvements in their own budgets. This had been discussed in the House, and we'd wondered whether that did not present significant problems. You say: "We have already exceeded that amount by over $40 million." That sentence tells us absolutely nothing about the additional needs which will arise, according to you. Can this difficulty in finding financing present problems when the time will come to renew the equipment?

Mr. Guy McKenzie: First of all, the source is still the same. We're still working on the basis of the Braiter/Westcott report, which had identified 43 essential missions for the government, and now we've arrived at 48. A few have been added. The financial needs that you've identified are those with which we worked at the outset: approximately $1.4 billion for system repair work and $400 million for loans. The extra $40 million was for loans. The departments somewhat exceeded the margin that we had provided for at the outset. Right now, together with the Department of Finance and the departments concerned, we are evaluating this additional margin that we require.

Why do we need an additional margin? That's what I will explain to you. At the beginning, we were talking mostly about technology information systems, whereas as a group, as I said earlier, in very collegial discussions with provinces and other levels of government, we realized that there was another challenge to be met: that of embedded systems. We obviously had to meet that challenge and it would arise everywhere. It had not necessarily been accounted for in the same way.

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Now, we're also working with the provinces on another extremely important subject: interfaces, that is, information that is shared by both levels of government, or even three levels of government in some instances. Right now, the sum of $1.4 billion that was mentioned is being re-evaluated in accordance with the needs of the departments and with the co-operation of those departments and the Department of Finance, to try to establish the new level of need as accurately as possible.

Are there any problems in the departments that take their money from their own funds rather than using loans? Up until now, we have not encountered any. It's simply that the departments must use their leeway when they have any, and then obtain loans. That has not created any problems.

Will the funds necessary to repair the essential systems be there? Obviously they will be there. We are currently evaluating financial needs jointly with the departments, but right now no work has been slowed down because of a lack of money.

Ms. Francine Lalonde: You write that a national group has been established and that the Prime Minister has appointed a coordinator. There must therefore be a name. Can you tell us about this national group? Was it established after consultation with the provinces?

Mr. Guy McKenzie: The name of the individual has been made public. It's Mr. Paul Thibault, who will join the Department of National Defence in the coming days.

We established two types of emergency plans within the departmental apparatus. Jim and I have had internal sessions on departmental emergency plans. The first time, we expected about 100 participants. We got 320. The second time, we expected 350 and we got more than 400.

Therefore, the departments are very interested in establishing emergency plans that are essential to their internal operations, which means finding ways that will allow them to have alternate ways of delivering services in the event that systems are not all ready, in order to minimize the impact on citizens.

With regard to the national planning group, which will be directed by Mr. Paul Thibault, that's at another level. These departmental emergency plans will certainly be part and parcel of a broader plan, but Paul and his team will work with the provinces—conversations have already begun—to conduct a proper risk assessment and establish an emergency plan accordingly. Mr. Thibault is working on that with General Alain Forand.

Ms. Francine Lalonde: I was referring to an article that appeared in the Ottawa Citizen. The headline was: "Defence fails to fix its own Y2K problem". I would not say that the headline was a bad one, on the contrary, but it's certainly wasn't very reassuring to the public and parliamentarians.

Let's just say that it seems to me that there's still an element of vagueness in the way you're implementing the program. One of the aspects that surprise me is that you're anticipating having actual tests next June whereas you've already prepared the emergency plans wherever there are essential services.

How can you make emergency plans if you haven't done actual testing? And above all, how can you be sure that you will be within the budgets and do real testing in June of next year? Isn't that placing yourself in a very difficult situation? If memory serves me, we heard that that was supposed to be done not in June 1999 but rather in June 1998 in order to be sure that everything's ready on time. At least that's what we heard.

Mr. Guy McKenzie: There are a vast number of sub-questions to your question. I will try to deal with them one by one. With regard to the Department of National Defence, it is our custom to always let the department concerned speak for itself. Its representives will certainly have an opportunity to appear here. I've been told that they would be witnesses eventually.

There's a significant difference between the operationalization of the military and its information systems. They will tell you about these differences themselves when the time comes.

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With regard to preparation and the way the plan operates, when we established the organization that we have right now, we met with each of the departments and we agreed on dates.

In the summer of 1998, each of the departments submitted a work plan with a view to the year 2000. In the fall, the risk analysis was done, and at the end of this calendar year, an emergency plan.

There are two situations that arise at the end of this calendar year. Either the repair work is finished, or if it is not finished, they submit an emergency plan accordingly. The agreed upon date is not vague. In June 1999, the real tests must be completed. They will not start in June 1999; they must be completed in June 1999. We allowed for a margin of six months, between June and the year 2000, to deal with problems that we may encounter during these tests.

[English]

This is final testing that must be done by June 1999.

[Translation]

That's the final test that must be done.

Ms. Francine Lalonde: I have a good question. I hope that the next questioner will follow up on it.

[English]

The Chair: Sorry.

Mr. Lastewka, please.

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

I want to refer to your graph in which you show the 48 essential services or systems having 64% of the work completed. I take it that's a figure across the board. I want to try to understand. You have 48 critical systems; some must be further ahead than others. When do we start saying that of the 48 critical systems, some are complete?

Ms. Linda Lizotte-MacPherson: Madam Chair, you're right, the 64% is an aggregate. Just on a point of clarification, they are 48 functions, and there are many subsystems included in there. Departments report in every 33 days on that, and we're using the Gartner Group scale to evaluate their performance. There are some that are categorized in one of three categories as a result of their state of readiness. I think Guy also wanted to add something.

Mr. Guy McKenzie: The 64%, if we explain it, comes from a process that is in fact quite detailed. Every month.... I, my colleague Jim, and all the people in our team have established a cycle of 33 days with the department, whereby we do discuss with them on a daily basis their state of readiness in every department, how they proceed, and so forth. That allowed us to collect data every month on all of those 48 systems. Each system then comes back with a different state of readiness, as you just said. The 64% is an aggregate number that shows all the information put together and is the average. Therefore, you certainly have systems that are much more advanced than others, which is normal too. This is what the 64% represents, and this is what we now report monthly to the Treasury Board ministers.

Mr. Walt Lastewka: Are we not getting ourselves into a position where sooner or later we'll be able to say that we've tested all 48 critical systems—and I understand there are subsystems, but you've identified them as critical functions—that we've gone as far as we can go, and that one is done? Is that an unfair question to ask?

Ms. Linda Lizotte-MacPherson: No, that is not an unfair question. I'm sorry, I think I may have misunderstood the question you asked.

We will not be able to say categorically that systems are ready until they have gone through the complete live-environment testing, which is targeted for June 1999. There is a distinction in testing within your department: it's a self-contained environment. That's what departments have been asked to complete by the end of December. The next step in the process is then taking those departments, putting them in a production environment, and making sure the linkages with provinces or other jurisdictions or departments are also working. So there's a time dependency there.

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At this point, even though a number of them have gone through testing, we can't say they're completely ready until they've gone through the full live testing.

Mr. Walt Lastewka: Live testing will not begin until June 1999?

Ms. Linda Lizotte-MacPherson: No, the live testing will begin in January 1999 and will go through to the end of June 1999. That's the target completion.

Mr. Walt Lastewka: So is it safe to say—let's pick the middle of March—that we would have some mission-critical function systems behind us, that they would be ready?

Ms. Linda Lizotte-MacPherson: Yes, absolutely. There will be some that will be ready.

Mr. Walt Lastewka: All right, so that scorekeeping will start with the live total system review, starting in January 1999.

Ms. Linda Lizotte-MacPherson: Perhaps I could ask Jim to elaborate a little on the scoring, if you will.

Mr. Jim Bimson (Program Director, Year 2000 Project Office, Treasury Board Secretariat): The whole method we're using to track is based on a methodology that was developed by a group called the Gartner Group, which is an internationally recognized body. They take the phases of year 2000 readiness and assign a weight to them. So awareness is one stage, repair is another stage, and so on, right through to implementation.

Most departments are in the penultimate stage now. In fact they're testing, and there are some subsystems that are in fact ready and are already operating. As time rolls on, we will begin to see some of them being declared completely ready, and so on, and we hope by June 1999 they're all tested within the full environment.

They're working against a plan, and the way we judge their rate of progress is how they are proceeding against their own plan. So we're tracking, as Ms. MacPherson said, on a monthly basis.

In parallel with that, to make absolutely sure that services aren't disrupted, we've asked them all to do risk assessments, and these will divulge to us those functions that may be at some risk of not being completely year 2000 ready by the end of this year, and then go into this live testing.

Consequently, we'll ask them to develop “work-arounds” or other ways to deliver the service if indeed they're not completely year 2000 ready. The idea is to have this belt-and-braces approach so that when we hit the millennium day, the services will continue to operate, and while there will certainly probably be some glitches, they won't be of a catastrophic nature. They'll be manageable, and we'll be able to deal with them.

So it's sort of a rolling plan that's going on, which we're tracking against monthly for the government-wide mission critical.

The Chair: This is your last question, please, Mr. Lastewka.

Mr. Walt Lastewka: When I heard you earlier, you talked about the departments tying in with your provincial counterparts and trying to integrate all the way down to wherever, how far the system goes.

My concern is in the health care area, where Health Canada was required to provide a lot of information to hospitals, and then hospitals had to go and do what they had to do. There are 200 hospitals in Ontario that haven't money to do their year 2000.

One of the reasons we always ask you to come here is to give us an overview of where the government stands, because then when we are reviewing industry, we can understand it better. I know all the people around this table are concerned that hospitals and provinces...first, they had to receive all the information from the federal government, and my understanding is that has been completed or is very close to completion. The next step is whether they're ready or whether they have money to be ready. Can you respond to that?

Ms. Linda Lizotte-MacPherson: There is extensive cooperation among the federal, provincial, and territorial levels in terms of sharing of information.

A national clearing house has been established. It's funded at the federal level. Health Canada has established that, and that includes information on medical devices, compliant equipment, and so forth.

Additionally, Internet sites have been set up so hospitals and nursing homes have complete access to the information. A mailing was also sent out to all hospitals and all nursing homes, making them aware of the year 2000 problem and also letting them know that this information was available to them.

Health Canada, at the federal level, is taking the lead in terms of populating the database. They have also written to Canadian manufacturers and importers asking for their state of readiness. Those who are not compliant...they could post that information on the Internet.

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Additionally, through our regular federal-provincial-territorial meetings with year 2000 leads, as well as the CIO council, health care continues to be a key item on the agenda, particularly because of the embedded systems. It was one of the key themes of our recent workshop, so I think there's good cooperation in terms of information dissemination across the jurisdictions.

With respect to your second question regarding the finances, to my knowledge, no decision has been taken on any financial arrangement. That's really a political decision outside of our control.

The Chair: Thank you, Mr. Lastewka.

Mr. Jones.

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

Is it possible for us to get a list of the 48 mission-critical applications? Also, where are they in the completion process? It would also be very helpful if we got a copy of the Gartner Group methodology ranking report. Finally, what type of money have you spent internally on these applications, and what is the internal head count that is allocated to this?

Ms. Linda Lizotte-MacPherson: Madam Chair, in response to the honourable member's question, we can certainly provide you with the mission-critical systems included in an appendix to the Braiter-Westcott report. We can provide you with a copy of that report, as well as the Gartner Group breakdown, as you requested.

In terms of the resourcing levels, there are about 8,500 employees working on year 2000 at the federal level, along with about 3,000 contractors. Those numbers do not include staffing levels that will be required for Emergency Preparedness Canada.

Mr. Jim Jones: The other thing that would be nice to know is what applications you're not addressing for the year 2000 problem. Could you provide us with a list of the applications you're going to do after 2000, since your concern right now is the mission-critical items?

Are these 8,500 people you're talking about, along with the additional 3,000 contractors, over and above the $1.4 billion that you've estimated, or are they included in there? Are you including the head count of your existing staff in the $1.4 billion?

Mr. Guy McKenzie: About the number of mission-critical systems that we are monitoring versus the other systems, we should say that we have information on every one of them. We do monitor them differently, however, in the sense that with the Braiter-Westcott report and the identification of the mission-critical systems, this is where we are focusing our efforts right now. We monitor those monthly in order to minimize the disruption of services. Every month, we do have very detailed information about that.

The rest of the other systems are still being taken care of by the departments, and they are reporting on a different basis, that being quarterly. The interaction between us and them is then of a different nature. We are not as detailed, because there is only so much we can do.

So we focus on mission-critical systems for 48, but all the other systems are being taken care of.

Jim can answer that too, if he wants.

Mr. Jim Bimson: There are two categories of mission-critical systems. The government-wide ones are the ones that we monitor monthly. There are also ones that we call “department mission-critical”. Departments are in fact fixing those; as Mr. McKenzie said, we track them on a quarterly basis.

Fundamentally, the position that has been taken is that all of the systems that are critical to ongoing operations will have to be ready for 2000. The reason for the designation of government-wide mission-critical systems, as opposed to those at the departmental and other levels, is that this is a useful way of designating that and is a useful way of allocating scarce resources in the event that one has to make a trade-off and decide what function continues and what doesn't. But it doesn't mean we're not working on all of them.

Ms. Linda Lizotte-MacPherson: I have one other point of clarification. A government-wide mission-critical system or function is one that could potentially affect the health, safety, security and economic well-being of Canadians. Those were really the four key criteria that we used to determine whether it was government-wide mission-critical or department mission-critical.

• 1620

Mr. Jim Jones: You mentioned that there's a $100 million commitment to something like seven outside approved vendors. Are those 3,000 contractors included under those seven outside approved vendors?

Ms. Linda Lizotte-MacPherson: Madam Chair, yes, that would be correct.

Mr. Jim Jones: So the only help you're getting is the equivalent of $100 million from the outside.

Ms. Linda Lizotte-MacPherson: Madam Chair, no, that is one contracting vehicle. It's an innovative one, but there are also other contracting vehicles that departments have in place or had in place prior to.

Mr. Jim Jones: This is the last question I have. It seems like you've taken on a lot of responsibility here, not only internally but externally. What is the status of all the interfaces with other countries, based on intercountry or interdependent systems like banking, stock markets, telecommunication systems, customs, airline systems?

Ms. Linda Lizotte-MacPherson: Madam Chair, in terms of international readiness, I believe it's something the next group will be speaking about as part of their mandate.

Just as a point of clarification as well, in terms of responsibility, all departments are responsible and accountable for ensuring that their department systems are ready then. Additionally, four departments have been provided with an expanded mandate, and the role of Treasury Board is coordination all across the government. Coordination doesn't imply that we have responsibility. The individual departments are responsible for ensuring that their agencies and crown corporations are ready.

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

Mrs. Barnes.

Mrs. Sue Barnes (London West, Lib.): Thank you, Madam Chair.

You've outlined your four key departments. I'm a former member of the public accounts committee. Having seen you there, I just want to understand whether you think there is a problem inside the Department of National Defence at this point in time. If so, what is the problem?

Ms. Linda Lizotte-MacPherson: Madam Chair, we are actually confident not only in the Department of National Defence but in all of the departments. Each department has a different plan, and all departments are on track to meet their plan. In some instances there's a slower uptake simply because of the complexity or perhaps the number of embedded systems, but that is recognized as part of their plan. In addition, as part of their planning process DND has been very rigorous in terms of truly identifying their priorities and looking at triage.

Mrs. Sue Barnes: In your report today, you've talked about having a stepped-up action plan for strategic intervention. I would like you to give the committee one example, say in relation to defence.

Mr. Guy McKenzie: I will give you a specific example of strategic intervention.

As I said earlier to another member, the embedded system was certainly an issue we were facing as a government right after really addressing the issue of information technology. We therefore initiated a dialogue with all departments during the course of the summer. We realized that even in the world of embedded systems, you could have different categories. For instance, laboratories certainly were a broad category, as were buildings and facilities. Therefore, we split the group. Under the auspices of the Canadian Food Inspection Agency, we now have a centre of excellence where all the departments who have laboratories can share good practices, can exchange information, and can work together to not repeat the same work fundamentally. That includes Health Canada, Natural Resources, the RCMP and other departments who have laboratories.

We did the same thing with Public Works and Government Services Canada. They're now establishing six centres of excellence of that nature across the country for all government buildings and facilities. This is being done in order to address the other category of embedded systems that we find in buildings, such as elevators, security systems or other different devices.

So those are the kinds of interventions that we take at the horizontal level. We are initiating dialogue with a department, and are making sure that necessary money is there and action is taken afterwards.

The Chair: Mrs. Barnes.

Mrs. Sue Barnes: I think I've asked enough questions over the last couple of years. I'll give my time to anybody else who would like it.

The Chair: Mr. Shepherd.

• 1625

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

I know you said 8,500 staffers were working on this problem. Are they full-time, or are they just people who take part of their job description and do work in this area?

Ms. Linda Lizotte-MacPherson: Madam Chair, it would be a combination. Some people would be part-time, but the majority are full-time. The number also includes information technology individuals, as well as people who are on the business side. Audit capabilities are included in there as well, so they are generally integrated teams.

Mr. Alex Shepherd: Do you have an estimate of the number of person-hours it's going to take to accomplish this task?

Ms. Linda Lizotte-MacPherson: Madam Chair, at the government-wide level, we are not tracking the level of effort in terms of hours. I can assure you, though, that each individual department has a comprehensive plan—probably the size of this binder—in which they have it broken down by person-hours, detailed task plans and timelines.

Mr. Alex Shepherd: But when you're monitoring the individual departments, you must need some kind of guideline to assure that you need x number of hours. You only have so many hours available; therefore, you may have a shortage of person-hours, which means you have to employ more people. You may need to get those resources either inside the government or by contracting them out.

Ms. Linda Lizotte-MacPherson: Madam Chair, the honourable member is right on that. It is clearly something the departments do. If they are encountering any roadblocks—for example, issues around being able to recruit staff—and if it's a common horizontal issue, we would provide assistance. For example, in terms of recruiting, we have worked with the Public Service Commission and have put in place streamlined recruiting processes so that they can turn over quickly.

In instances in which departments need additional assistance, we also have a call to action. I believe Mr. McKenzie can also speak about a few instances in which we have actually assisted a department in securing additional resources.

Mr. Guy McKenzie: The human resources right now are certainly sufficient. The $100 million contract that we referred to is certainly not a ceiling, it is just a base guarantee. If departments do encounter problems, they can actually access more contractuals. At this point, though, we don't seem to have any human resources problems.

Maybe Jim can elaborate on this, because his group is dealing with the departments on a daily basis.

Mr. Alex Shepherd: We know this issue is about human resources, capital resources, and physical resources such as software and hardware. People are telling us the fiscal resources and likely the human resources certainly do not exist to solve it both in industry and in government. That makes it surprising to me that you say we have no shortage of human resources, that we have all the human resources we need to solve this problem, and that you're not experiencing any shortage problems.

Ms. Linda Lizotte-MacPherson: Madam Chair, we are not experiencing any shortage. In fact I could say there is some excess capacity in the consulting community if we need to draw upon it, but that has not been the case.

The Chair: Last question, Mr. Shepherd.

Mr. Alex Shepherd: Is the Gartner methodology consistent with that of other governments? Has the U.S. government used that methodology as well?

Ms. Linda Lizotte-MacPherson: Madam Chair, I believe the U.S. government uses it as well, but the Gartner Group is considered to be the de facto industry standard.

The Chair: Thank you, Mr. Shepherd.

We have two other groups of witnesses that we are scheduled to meet with today in order to continue to talk about this more in a global sense and in terms of how we interact. Unless committee members object.... Mr. Bellemare is going to object, as is Mr. Jones. We will continue for a few minutes more then, but only a few.

Mr. Jones, you had a pertinent question.

Mr. Jim Jones: I have a quick question. In your experience, have you found in your year 2000 project that vendors are still putting out hardware, software, and embedded chips that are not year 2000 compliant?

Mr. Jim Bimson: There have been a few instances in which departments have purchased lots of microcomputers that were certified to be year 2000 compliant but failed on testing. As a result, we're being very careful about all purchases, and new things are tested as they come in. But there are indeed instances in which they're still not—-

Mr. Jim Jones: So that's causing even more work?

Mr. Jim Bimson: Yes, it's quite a labour-intensive task.

• 1630

Ms. Linda Lizotte-MacPherson: Well, Madam Chair, I wouldn't necessarily say it's causing more work, but I think it just raises the sensitivity around the need to ensure vendor compliance.

Mr. Jim Jones: From your standpoint it might be nice, because you have the resources. But from the small-business side, if this is coming out, they're assuming they're buying good products, and yet they're still putting out problems, which is a very serious problem.

The Chair: Okay.

Mr. Bellemare, briefly.

[Translation]

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

[English]

I apologize for being late. I read your report very quickly. It's the kind of report I would have liked to have seen last year. It talks about our being sensitive, our being alerted, our being this and that. It looks like prose that a high school student wrote. I hope I'm not offending you, because you're a professional.

What I would like to get is a timeline activity calendar. You cannot possibly answer me today, but I'm going to give you in my two or three minutes the questions I have. I want you to answer them and send those answers to the committee.

You can't possibly write those questions down. The clerk will tell you.

I would like this committee to have a timeline activity calendar about your mission-critical systems regarding your date-tentative programs. I would like to know....

The Chair: Mr. Jones already asked that earlier, Mr. Bellemare.

Mr. Eugène Bellemare: May I continue?

The Chair: Yes.

Mr. Eugène Bellemare: I would like you to, on this calendar, identify all those date-tentative areas: what you have tested and at what date; what you have retested and at what date; what you have audited and at what date; and what contingency plan you have in place and at what date.

Also in health, since you're responsible for a variety of departments, Health Canada wrote in March. They gave a two-month notice to get an answer from the producers or manufacturers of medical devices, to see if the medical devices were going to be year 2000 ready. This department has not yet gotten an answer. Two months they gave them. It's now eight months. I want to know why the manufacturers that have not answered are not put now on the list you're making up to indicate which manufacturers cannot produce specific medical devices.

This is the end of my questions.

The Chair: Ms. Lizotte-MacPherson, do you have a response to all of that?

Ms. Linda Lizotte-MacPherson: Yes, Madam Chair.

We can certainly provide you with a copy of Treasury Board Secretariat's work plan. This is the work plan we are following. In terms of the specifics you're asking for, I would suggest you follow up with the individual departments to get their detailed project plans in binders detailing what they have done.

With respect to your question regarding health, my understanding is that Health Canada will be appearing before this committee. Perhaps this would be a question you would want to raise with them.

The Chair: Just to clarify Treasury Board's activity, Ms. MacPherson, you may or may not be aware that Health Canada has already appeared before us this fall. They told us they had not received responses yet. They only had a 25% response rate, and the committee is very concerned. So I raise this with you.

Madam Lalonde will have something different, hopefully.

Madam Lalonde, briefly.

[Translation]

Ms. Francine Lalonde: During all the hearings, we were told that when the embedded systems were tested, they sometimes didn't restart. If a chip has not been properly identified, the system does not restart. You will not have completed the real tests before June 1999. Won't that be far too late? If there are systems that don't restart, you will have to get other ones, and we run the risk of being confronted with major problems. I'm eager to see this list. I'm extremely worried that completion is not scheduled before June 1999.

Mr. Guy McKenzie: Mr. Bimson can complete my answer. Tests will not start in June 1999; they must be finished by then. It doesn't take a single day to conduct a test. Tests are ongoing.

• 1635

Every time specific tests are conducted, verifications are made. Therefore, it is quite unlikely that we will encounter major problems such as "it won't restart". The tests are done as sections of the system are repaired, and it does not involve a single day of testing. Moreover, we will have a six-month period between June 1999 and the year 2000.

[English]

Do you want to complete, Jim?

Mr. Jim Bimson: In fact some of the subsystems are already live, and the whole process has started, so it's a continuum that will end on June 30. What will remain at the end of June will be just the very final few functions.

So the process is a continuous one. It's not one that just happens on a particular date and it's over. It goes on for a period of time.

The Chair: For both embedded chips and IT systems?

Mr. Jim Bimson: This is for all systems, because the key point is we want to make sure once things have been fixed they run for a period of time in a live environment to make sure all the problems have been ironed out. Typically, the testing one does on a system finds most of the problems, but it's not until you get into the real world that you get everything shaken down. This is the period of time we're talking about between now and the end of June, so we have the assurance, and so that getting into the millennium we've had a happy year of completely or relatively trouble-free operation of all of these changes.

As I say, it's a continuum. The closer you get to the date, the surer you are everything is going to be okay.

The Chair: Thank you.

Thank you very much, Madam Lalonde.

I want to thank the Treasury Board Secretariat for being here today. We appreciate your discussions with us. The committee will be continuing to monitor the year 2000 progress.

I would like to raise one concern. On the last page of your presentation, you say you are confident the Government of Canada will minimize disruption of essential services to Canadians through the turn of the century. I hope it's more than essential services that will be resolved, and that things will function normally, completely and continuously. Any disruption to business that may not be seen as an essential service will cause our economy great problems. And then there are all of our financial systems and the financial projections of the government. So we thank you for your diligence and we look forward to meeting with you again.

We're going to suspend for three minutes while we change witnesses. We have two groups joining us now.

• 1638

• 1642

The Chair: We're going to reconvene.

We're very pleased now to have with us, from the Department of Foreign Affairs and International Trade, Ms. Nancy Stiles, director general, Year 2000 Coordinating Secretariat. We also have, from the Canadian International Development Agency, Mr. John Robinson, vice-president, policy branch; and Mr. Gerry Kenney, senior telecom and information specialist, policy branch.

I have in front of me one written presentation. I'm assuming, Ms. Stiles, you will be doing yours verbally.

Ms. Nancy Stiles (Director General, Year 2000 Coordinating Secretariat, Department of Foreign Affairs and International Trade): I have a presentation.

The Chair: Okay, then we'll start with you.

Ms. Nancy Stiles: Thank you, Madam Chair.

In 1996 the Department of Foreign Affairs and International Trade began the task of ensuring that our own mission-critical systems—that is, those departmental assets critical to our program and service delivery—would remain operational through the millennial transition period. We are well advanced in this process, and that work continues under the direction of the department's chief information officer. That's not what I'm here to talk about today.

In February of this year the department identified those business lines potentially most at risk from Y2K failures in systems located in and controlled by other countries. Five areas were identified: threats to international trade; threats to Canadian exporters; threats to Canadian travellers and Canadian residents abroad; threats to international security; and threats to our missions abroad.

In the summer the government put in place mechanisms to ensure Canada's preparedness for the Y2K challenge. In this context, the department was given the additional responsibility of coordinating all the international aspects of Canada's response to the Y2K challenge. This responsibility expands the department's role of protecting Canadian interests abroad to include significant coordination responsibilities across all domestic government departments with foreign governments and regional and multilateral organizations.

• 1645

An important element of this responsibility is to raise international awareness of the Y2K challenge. Canadian concerns about the relative lack of international awareness of the Y2K issue stem from the fact that most other countries lag behind Canada in Y2K preparedness. The countries most advanced in their Y2K preparations are the United States, the United Kingdom, Canada, the Netherlands, Sweden and Australia.

So much for the background. I would now like to tell you what the department has done.

First, the department recognized relatively quickly that addressing these problems was a sizeable task that would cut across all areas of the department's work and would require considerable resources. The department therefore decided to establish a dedicated unit, the Year 2000 Coordinating Secretariat, to carry out these high-priority, time-sensitive responsibilities.

Second, the department developed action plans for each of the five identified areas of risk, as well as for the international coordination function. Each action plan involves assessing in detail the risk to Canadian interests, reducing them where possible, and ensuring that appropriate contingency plans are in place to deal with those risks that cannot be reduced to an acceptable degree.

These risk assessments and contingency plans are critical for our ability to advise Canadian travellers and Canadian business interests of potential risks in advance, and to minimize disruptions to the Canadian economy and Canada's security environment.

The action plan for threats to international trade involves the detailed assessment of the threats to the Canadian economy from Y2K failures outside Canada. It has four phases, the first of which has just been completed.

Phase one consisted of planning and scoping the overall study. Important elements of this phase were the identification of a hierarchy of risks and the development of a methodology using international trade flow data and country risk data to identify the highest potential risks.

The second phase, which we are just beginning and will take about three months to complete, involves identification of the most significant potential threat. This will involve more detailed country risk analyses, trade flow and capital flow analyses.

Phase three, which will be carried out between February and June 1999, will involve the detailed investigation of the year 2000 compliance status of each of the potential threats identified in phase two, the owners' remediation plans and the credibility of those plans.

Tracking of the owners' progress will be initiated and trigger points will be established to initiate warnings or action if targets are not met. Risks affecting critical Canadian infrastructure will be a priority.

The final phase will involve the negotiation and invocation of a contingency plan. This will take place between July and December 1999. Tracking will continue through this period.

Where trigger points established in phase three are reached, negotiations will be initiated in an attempt to agree on means to keep goods flowing, even if systems fail. Where such negotiations fail or are not feasible, warnings will be issued to other government departments and relevant Canadian organizations to implement their contingency plans.

The department's action plan for threats to exporters will focus on prevention. This will involve compiling information on risks to exporters and mounting a strategy to communicate risks and precautionary measures. The economic risks assessment, which I've already described, will constitute the major source of the information to be compiled for the benefit of exporters. Analysts will review that information, determine what is of interest to particular segments of the exporting community, and disseminate it.

The communications campaign will involve both direct advertising and working through existing departmental and provincial channels to the exporting community.

The two key elements of the action plan to address possible threats to Canadian travellers and residents abroad are first, to give the best possible advice to Canadians ahead of time and second, to be prepared to assist those Canadians who are caught up in other countries' problems during the transition period.

• 1650

Since our major allies will also face the same problems in the same countries at the same time, it makes sense to work cooperatively as much as possible. In October the department hosted a meeting of the heads of consular services of Canada, the United States, the United Kingdom, Australia and New Zealand. It was agreed that we would share information collected on specific year 2000 risks in other countries, that our respected diplomatic missions would work together on risk assessment and contingency planning, and that we would be consistent in the advice we provided to the travelling public.

At that meeting it was agreed that Canada would take the lead on drafting the text for a common initial message to travellers, which each country would disseminate early in 1999. Throughout 1999, the messaging will become more and more specific as the threats to travellers in specific countries become better understood. It was also agreed at that meeting that Canada would draft common risk assessment guidelines to be used by our own and our partners' missions in collecting this information.

The initial travel advisory will be followed in April 1999 with the distribution of 1.5 million copies of a companion booklet to Bon Voyage, But..., which I'm sure most of you have seen when you renewed your passport or travelled abroad. It's an advisory book to Canadians travelling abroad, of things to avoid, things to do to ensure their own safety, and so on. This companion booklet will contain significant and up-to-date Y2K information.

To assist Canadian travellers who run into problems during the critical transition period, we will be adding supplementary consular staff to key missions and to our headquarters response team. We will also provide additional support to honorary consuls, including emergency satellite communication facilities. All missions will have consular contingency plans in place by July 1999.

The services at Canadian embassies, consulates and trade offices abroad will be crucial to Canada's ability to assist affected Canadian travellers and businesses, to defend Canadian interests, and to respond as required in the face of any international year 2000 crises. It will be imperative to keep those missions operational, despite possible failures in host country telecommunications, financial services, transportation and electric power, therefore all Canadian embassies and consulates are being required to prepare a contingency plan to ensure their continued operation.

A template is currently being developed for distribution to the missions by the end of December 1998. It will cover as many rifts and solutions as possible, along with a series of objective risk assessment criteria, which would apply to a wide variety of services. Missions will be required to complete their individual plans by July 1999.

With respect to the action plans for threats to international security, we are already collecting and assessing information, in cooperation with other government departments, such as DND, and our allies, on possible Y2K-related threats to our security environment. This information will be fed into other risk assessments, such as that of DND's national planning group, as well as our own contingency plans for minimizing threats to the Canadian economy, Canadian travellers and exporters, and our missions abroad.

That brings me to the department's special responsibility in regard to international coordination. It is obviously in Canada's interest to utilize all available bilateral and multilateral fora to encourage Y2K awareness and action. With this in mind, we have tasked all our embassies and consulates abroad to inform other governments of Canada's commitment to ensuring its own Y2K preparedness and of the importance we place on other countries ensuring that their systems will be Y2K compliant.

Our action plan for international coordination includes initiatives to boost international awareness of the Y2K issue, in the form of contributions to key international organizations, such as the OECD.

Thank you very much. I would pleased to answer any questions you might have.

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

I'm going to proceed to Mr. Robinson's presentation first, before we go to questions. Mr. Robinson.

Mr. John Robinson (Vice-President, Policy Branch, Canadian International Development Agency): Thank you, Madam Chair.

[Translation]

I will make my comments in English, but I'm perfectly prepared to answer questions in French.

[English]

CIDA is aware of and concerned about the critical nature of the year 2000 problem, and we are aware of it on two separate but interrelated fronts: the issue of Y2K and our own internal systems, and the issue of the impact of Y2K on developing and transition countries. And by transition countries we mean the countries of the former Soviet Union and central and eastern Europe. We have been working concurrently on both these fronts.

• 1655

I would like to speak of the five different elements of Y2K and CIDA. These are the following: our internal informatic systems, our programs and projects in developing and transition countries, our response to direct requests for assistance to cope with the Y2K problem, our relations with the World Bank and other international organizations, and our relations with our Canadian partners.

On our internal technology situation, we instituted something called the Phoenix Project in 1997 to update all of our informatic system. Within Phoenix CIDA is ensuring Y2K compliance of its system, with an overall readiness currently estimated at 80% and growing.

We have one agency mission-critical system, which is called the Aid Information System. It is deemed to be approximately 97% compliant at this point. Action is currently under way to convert and test AIDIS to achieve full compliance by December of this year. The compliant version is scheduled to be in operation before April 1 of next year.

High-priority financial transactions have been successfully tested in the year 2000 compliant environment. Testing has also been successfully carried out by partners and users.

This and other ongoing work we believe will enable us to efficiently continue delivering our aid programs to developing countries with minimal disruption as far as our own systems are concerned. Of course, we need also to be concerned about other issues, such as readiness of developing and transition countries' systems.

With respect to CIDA's programs and projects in developing countries and in transition countries, in June of this year we instituted an examination of all our aid programs and projects, beginning from 1986. This examination was completed last month. Results indicate that out of 391 bilateral projects examined, because of their sensitivity to Y2K, two belong in a high-risk category, which implies possible loss of life and property damage, and 39 belong in the medium-risk category, which implies irrevocable harm to development interests.

One of the two high-risk projects is in India, a project that provides operational control and protection equipment in a hydroelectric dam project, which could result in unintentional sluice gate openings due to Y2K problems. In this case, the executing agency for CIDA is checking with the many suppliers of equipment to this project to confirm or change the high-risk category and to manage the situation as and if necessary.

In Kenya, a project developed to assist remote communities in increasing their income included the provision of a small aircraft whose operating and navigational systems may not be Y2K compliant. The Canadian partner implementing this project is having the plane's system checked for compliance. Obviously, if it is not found compliant we will take steps to rectify the situation.

Just so you will have an idea of the second category of medium risk, some examples are the following.

In China, a management and monitoring system for the ongoing evaluation of ten hydroelectric dams would not cause a critical problem at the turn of the millennium, but could be a problem in the longer term. The project is currently under review by CIDA in conjunction with the executing agency.

In India, a management project with the state electricity board could have problems in the long run only, and is being corrected by providing new computers that are Y2K compliant.

And thirdly, in west Africa and in Kenya, HIV-AIDS projects are highly dependent on databases and information systems for tracking epidemiological information, performance monitoring, and so forth. The systems provided may not be Y2K compliant. We are verifying this with the executing agency. If necessary, the systems will be replaced. Similar activity will be taking place with the other projects we have identified.

CIDA's response.... So far we have received two formal requests for assistance to cope with Y2K problems from developing and transition countries, both in transition countries in this case, Russia and the Ukraine. In the case of Russia, we have responded by allocating $100,000 for a regional seminar to be held in cooperation with the World Bank. In the case of the Ukraine, a Canadian consultant has been provided for on-site assessment of the situation. Informally, however, we are aware of interest in many other countries for assistance, although we have not had direct approaches, and we have instructed our programs to begin to have a more direct dialogue in this issue with the countries involved.

• 1700

In a broader international context, CIDA has been in close contact with the World Bank on the Y2K issue since early this year. The information development program of the World Bank has already put on 14 awareness-raising seminars involving 115 countries. There are four more seminars planned, including the one in Russia I just mentioned. We are also considering other activities with the information development program.

We have also been monitoring the Y2K programs of a number of international organizations, such as the International Telecommunication Union, the International Civil Aviation Organization, and IATA. These organizations are putting on a number of regional seminars throughout the world for their member organizations to raise awareness of Y2K issues and to urge them to develop contingency plans. We are ready to pursue joint action with them to expand these activities, particularly with a focus on contingency planning.

We have also been working with our Canadian partners to ensure that they will be compliant and will be able to operate effectively in the year 2000. We have conducted a survey with our partners with two objectives in mind: first, consciousness-raising with them; and second, getting a better handle on the situation in those partners.

Out of that survey we have found that 86% of the organizations are aware of the issues and risks, and 75% have set up Y2K mitigation projects. Of these 22% have not started, 61%, are underway and 13% have been completed. So there is a long way to go.

Of these groups, 41% have developed contingency plans in the event of Y2K failures, 24% of the organizations say they know the level of Y2K preparedness of their developing country partners, and 59% have said they intend to inform their partners and CIDA of their Y2K efforts in progress.

I might just add that I've come today from a meeting. We are having an annual meeting with the voluntary sector, at which most of our partners are present. Again, we have taken the occasion of this meeting to talk to people about the importance of the Y2K problem, and particularly with the partners who work with CIDA being compliant with the system so that we can continue to interchange as we do on a regular basis.

Finally, we are examining what further action we might take on Y2K, both in a responsive mode, and perhaps more proactively, with international organizations. As we have ensured that all our own business activities become compliant, we will be able to further focus our energies and resources on helping our partners here and abroad.

I look forward to answering your questions. Thank you.

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

I'm now going to turn to questions beginning with Madam Lalonde, s'il vous plaît.

[Translation]

Ms. Francine Lalonde: Good day, Madam. I would have liked to see a document. It would have been helpful to jog my memory. Our days are very long.

What is the basis of your statement that the United States and the United Kingdom are better prepared than other countries? What are the criteria and what is the source of your information?

[English]

The Chair: Ms. Stiles.

Ms. Nancy Stiles: Madam Chair, there's a variety of sources of information, including the Gartner Group and another group called Global 2000. That is a group of financial institutions operating multilaterally in international organizations and companies.

The countries I cited are generally recognized as being most advanced. I think that a ranking—to say somebody is one or somebody is three—isn't particularly helpful. But the countries I cited are among the countries that seem to have done the most work on it, have paid the most attention, those whose companies seem most actively engaged in getting ready for this.

By contrast, for example, continental Europe seems very preoccupied with the introduction of the Euro, and seems to be giving that a higher priority than Y2K.

• 1705

[Translation]

Ms. Francine Lalonde: Does the fact that you know that a country is readier than others allow you to provide information to companies here who export or import?

[English]

Ms. Nancy Stiles: This is obviously very much an evolving situation. As I explained, the economic risk assessment we are doing will involve a very careful analysis of both trade flow data and country risk data. That will bring together a focus on those countries and those trade flows, both imports and exports, that are the highest threat potentially to Canada.

So in terms of the economic impact on Canada, the highest risks will obviously come potentially from the countries with which we have the most intense economic relations.

In one sense you could say, well, the state of preparedness of some very small country, thousands of miles away, with which we have virtually no trade and in which there is no investment both ways, would have relatively little economic effect on us.

So the whole point of this economic risk assessment is to try to focus on identifying what could potentially hurt us the most. Then once we have that list of the highest-priority risks, we would verify directly the Y2K preparedness of that sector in the United States, for example, or that infrastructure in the U.K., and so on.

At the end of the second phase of that process, I would expect to have a list of about 40 or 50 things. Then we would need to assign teams, or hire people in the countries concerned whom we could trust, to go and check directly, and make an assessment of the Y2K readiness of that piece of infrastructure or that industry.

Now, clearly we cannot assess the Y2K readiness of every industry in every country in the whole world. So as I said earlier, we have to identify the ones that could hurt us the most if they are not Y2K ready.

[Translation]

Ms. Francine Lalonde: Conversely, how can you guarantee to other countries that our own large corporations or small and medium-sized businesses are ready for the year 2000?

[English]

Ms. Nancy Stiles: I don't think I can, or anybody can, and I don't even think that's my responsibility—for the Government of Canada to guarantee to other countries that some particular sector in Canada is ready.

About two weeks ago I attended a working group meeting on this issue. At that meeting a representative from the British cabinet office made a very interesting point. I think it is pertinent here. She said we are starting to get to the point where everybody is asking for guarantees. What is important to understand from this issue is that there will be no guarantees. Nobody will be able to provide 100% guarantees, and that brings us around....

We'll do the best we can in terms of fixing systems. We'll get the best information we can about the Y2K readiness of the other systems built outside the country that we think will affect us the most. We'll make a judgment about the credibility of that information, and make our contingency plans accordingly. But there will be no guarantees. And for the government and the whole country that will be the hardest thing to communicate to the Canadian public in the right way.

• 1710

The Chair: Thank you.

Mr. Shepherd, please.

Mr. Alex Shepherd: I don't have to tell you that our biggest trading partner is the United States. Somebody once made a comment that of the Fortune 500 companies in the United States, over half are non-compliant. Is that true?

Ms. Nancy Stiles: I don't know.

Mr. Alex Shepherd: You don't know?

Ms. Nancy Stiles: I don't know the individual compliance status of that list of companies in the United States.

Mr. Alex Shepherd: I'm not trying to give you a hard time, but didn't you tell me that you were trying to assess the risks to trade for Canada with the United States? If I were trading with these Fortune 500 companies, I would think my government should be able to tell me the risk that's involved.

Ms. Nancy Stiles: I didn't say I'd never be able to tell you. I said I can't tell you now.

In my presentation I explained that we're doing this risk assessment, trying to identify which will be the highest risk to Canada, to Canadian trade and economic interests. We're at the stage now, just beginning phase two. Through the analysis of much more detailed trade, statistical capital flows analysis and country risk analysis, by the end of January we will arrive with the list of what I hope will be 40 or 50 of the highest risks, and then we will go and check those directly.

The country risk part of that will be to have an initial conclusion at the end of January about the overall status of Y2K readiness of the United States economic infrastructural things.

Mr. Alex Shepherd: On filing of those public companies, the Securities and Exchange Commission in the United States requires a documentation list as to how they're being compatible with Y2K. Is that something you'd look at?

Ms. Nancy Stiles: Not yet.

Mr. Alex Shepherd: We could all go out and look at it on the Internet. I don't know what exactly it is that you're doing, I guess, to protect Canadian industry, to make them aware of the problem in trading across international boundaries.

Ms. Nancy Stiles: Madam Chair, I think I've answered that question to the extent that I can. I have explained that we're doing a major risk assessment; the risk assessment is not done yet. When that risk assessment is done, that's the basis on which we'll have to take particular action to advise Canadian industry of preventative action they can take.

At this time I would expect—and certainly your committee made this clear in your last report—that the principal onus for any individual company is to find out for themselves about the Y2K readiness of their vendors and suppliers.

Mr. Alex Shepherd: Well, how do you define yourself in this role? If I were going to start shipping into the United States, and I had two or three companies I was going to ship to.... You don't see yourself as giving them any advice as to whether there's a certain degree of risk association with that? That's not your function?

Ms. Nancy Stiles: Yes, indeed.

When I was describing our action plan for advice to exporters, for assistance to exporters, I said that the information we will get from our risk assessment will be the principal source of information for our action plan for dealing with threats to exporters.

We will be analysing all those, and probably through the summer of 1999 onwards will be giving specific advice to companies and sectors about where we think there are problems. But it's premature to do that now. It's premature to complete the assessment, and it's premature to start giving the advice. This is very much an evolving situation in terms of readiness.

• 1715

Mr. Alex Shepherd: I hear what you're saying, but the impression you've given me is that on December 31, 1999, you're still going to be studying this assessment system.

Ms. Nancy Stiles: Absolutely not. I said very specifically that our economic risk assessment, including the phase for going out and specifically checking the Y2K readiness of those elements deemed to be of most risk to Canada, would be completed by June 1999. The remaining six months would be used to either try to negotiate alternative measures to deal with those risks, or to advise other government departments and relevant Canadian organizations of those risks and advise them to invoke their own contingency plans against those risks.

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

Mr. Jones.

Mr. Jim Jones: Thank you.

Who is coordinating? Are you coordinating or giving feedback to us on the status of the banking systems around the world, and the stock market systems, telecommunication systems, customs systems, airline systems and police systems, all of those?

Ms. Nancy Stiles: My group is certainly at the beginning of the process of trying to collect the information about the readiness status of key global infrastructural systems. Most of that information will be available, to the extent it's available anywhere, from the multilateral regulatory organizations that have been set up for this purpose. For example, ICAO, IATA, the International Telecommunications Union, the International Atomic Energy Agency—all these organizations are working on making these kinds of assessments and so on.

Mr. Jim Jones: You identified a whole bunch of systems or things that you're tracking. What would be nice is the matrix of the countries and the readiness of all of those systems by those countries, especially also ranking them by.... You're doing it from an economic standpoint, so you're doing it from the trade that Canada does with those countries, but it would be nice to know what those countries.... Or the other side is that the Gartner Group or the Global 2000 group are probably doing all this right now for a fee. Right?

Ms. Nancy Stiles: As you've probably already discovered, there's a proliferation of web sites with information on this stuff, which is growing exponentially. So there's a lot of information that's out there, but there's also a lot of information that isn't correct out there.

Mr. Jim Jones: I'm more concerned about, and I didn't write down all the things—

Ms. Nancy Stiles: Sure.

Mr. Jim Jones: You said there are 29 or 40 different things about which you're tracking readiness in those countries. It would be nice to know that we know what are those 29 or 40 different readiness concerns, and how the U.S., China, or Japan compare in all these. This is whatever you're determining in terms of mission-critical interfaces with other countries.

Ms. Nancy Stiles: I would say we would be able by June of next year to do that. Again, just as in Canada it's an evolving situation in readiness, it's an evolving situation in readiness in all these countries. At what point do you decide you have to make your decision about readiness on a company, a country, a system, and you're going to conclude that they won't be ready, so you have to start putting a contingency plan or alternative plan in place as a priority? Our judgment on that is six months into 1999.

• 1720

Just to clarify another point, when I said a list of 30 or 40 items or areas we would see as potentially the most threatening to Canada, I didn't mean 40 systems in 20 countries. I meant a list that would say that out of the 40 or 50 systems or sectors internationally that could potentially cause the most damage to Canada if they weren't Y2K ready, these are the following. The car industry in the United States might be number one, who knows. If they're not ready, the damage to the Canadian economy will be thus-and-so, therefore we need to know if they're ready—that kind of thing.

One of the trickiest and most difficult parts of this, and I think it was Mr. Shepherd who said it, is you're going to be studying until doomsday, or into 2000. Indeed, one of the most difficult challenges here is to define what you can reasonably assess within the time remaining, and then do something about it.

So this first phase we've just completed in a way was the most critical phase because we spent two months trying to—and I think we've succeeded—define how we conduct this exercise to arrive at a list of those things outside the country that could damage us the most, in terms of our economic relationships. Some things will necessarily be excluded, because we cannot investigate everything.

The Chair: Thank you.

Mr. Jim Jones: I have one last quick question.

The Chair: Okay, briefly.

Mr. Jim Jones: What world body is responsible for coordinating the world? Is it the World Trade Organization? Somebody has to be taking responsibility for that. It's no good if we see nations fail on this. We have the IMF to bail out financially strapped countries. There should be somebody that—

Ms. Nancy Stiles: The answer to that is particular international organizations are taking responsibility in areas within their mandates.

The International Civil Aviation Organization and the International Air Transport Association are taking responsibility within that area. The International Telecommunications Union is taking responsibility within that area. The Bank for International Settlements, which is a group of the world's central banks, is taking responsibility within that area. But no one body has set itself up to be responsible for making sure the world is fixed on January 1, 2000. It would be very nice if there were something like that, I agree.

The Chair: Thank you, Ms. Stiles.

In fact it wasn't one country that got us into this situation; it was a lot of technological advances owned by a lot of the private sector that have reached this point and they're now trying to solve it. I think everyone's working at it together and will keep doing that.

Mr. Bellemare, please.

Mr. Eugène Bellemare: Let's go back to foreign affairs and forget about the others for a while. At the foreign affairs department, how compliant are you?

Ms. Nancy Stiles: Do you mean the percentage of compliancy?

Mr. Eugène Bellemare: Yes.

Ms. Nancy Stiles: As I said, that comes under the responsibility of the chief information officer.

Mr. Eugène Bellemare: Forget that, just give me the—

Ms. Nancy Stiles: I'm sorry, that is completely under the responsibility of the chief information officer, and I did not come prepared to testify in detail on that. I'm sorry if I misunderstood the request from the committee.

Mr. Eugène Bellemare: All right. We don't know.

Ms. Nancy Stiles: External affairs knows. It's just that I am not—

Mr. Eugène Bellemare: Can we get that information?

Ms. Nancy Stiles: Absolutely.

Mr. Eugène Bellemare: Would you mail it to the committee?

Ms. Nancy Stiles: Certainly.

Mr. Eugène Bellemare: Okay. Do you have a status action plan at foreign affairs? Are you aware of their plan? I'm not asking for the details now.

• 1725

The Chair: Mr. Bellemare, to clarify, Ms. Stiles is here to discuss what they're doing. This committee has been looking at this issue with regard to small and medium-sized businesses, consumer protection, and how to ensure our economy continues and the consumers have the elements they need to continue after January 1, 2000.

We're not doing a department-by-department study. That is being looked at by the public accounts committee as well as by all the individual committees. So please try to phrase your questions so Ms. Stiles can answer in the realm of what she's here to talk about.

Mr. Eugène Bellemare: If I'm going to send a police officer to arrest someone because I think they have done something wrong, or I know they have done something wrong, I want to know if the police officer has a car to go in first. I know public accounts is checking into this, but I'm just asking if you are aware whether foreign affairs has a compliance status action plan.

Ms. Nancy Stiles: Absolutely, Mr. Chairman.

Mr. Eugène Bellemare: May we have a copy of that sent to the committee?

Ms. Nancy Stiles: I will ask the chief information officer of external affairs to provide the information you've requested. I can read out to you in detail—

Mr. Eugène Bellemare: That's fine, thank you. My next question—

Ms. Nancy Stiles: —the latest report from the chief information officer.

The Chair: Please let her finish.

Mr. Eugène Bellemare: Yes, but in the meantime time is flying by. This is a very good example—

The Chair: I understand that.

Mr. Eugène Bellemare: —of the kind of difficulty or problem we're going to get into if we just keep talking and talking and giving such adjectives, adverbs, and whatever.

The Chair: Mr. Bellemare, I'm not disagreeing. I believe Ms. Stiles should know—

Mr. Eugène Bellemare: I want to ask my questions. I have my five minutes—

The Chair: Yes, but you have to allow for the answer—

Mr. Eugène Bellemare: —and if my questions are good, all the better. If they're no good, it's not for you to judge.

The Chair: I'm not judging; I'm asking you to allow the witness to answer.

Mr. Eugène Bellemare: I would like to ask my questions, please.

The Chair: Mr. Bellemare.

Mr. Eugène Bellemare: Each industry must have the responsibility of checking where the crucial businesses are in each of the countries. Are they doing that?

Ms. Nancy Stiles: I'll answer that in several ways. First, as I said, each of our missions will have to do a mission contingency plan to ensure they'll be able to operate. We're preparing a template for how they should go about doing that. We are sending them that. They will have it by December and will be required to complete it by June.

In terms of information about the country's overall state of readiness at a more business and political level, we have tasked all of our embassies, globally, to provide us with continuing assessments of that.

Moreover, Canada, as a member of the G-8, has participated with the G-8 in an exercise to collect country risk information. There has been one round of questionnaires to quite a few countries internationally that have been managed under the U.K. presidency of the G-8.

Again, this is an evolving story, just as it is in Canada, in terms of the readiness of other countries.

Mr. Eugène Bellemare: Are you aware of any continent that is absolutely not with it at all? They may think this is a North American plot just to develop financial....

Ms. Nancy Stiles: By inference, you can see there was a very short list of countries that I indicated seem to be most prepared, and that was Canada, U.S., U.K., Netherlands, Sweden, and Australia.

If Canada is one of the most prepared, and this committee has expressed a lot of concern about the state of preparedness of Canada, I think you can draw conclusions about the rest of the world. I don't want to sit here and make a list of countries that are sort of bad, bad, really bad, or hopeless in terms of readiness.

One of the really interesting or unique things about this problem as a global issue is developing countries in a sense have less of a problem than industrialized countries because they are less computerized. There are fewer systems that are dependent. So in some countries there may be just one or two key things that really need to be addressed, and the rest of the main business of the country will be able to go on.

• 1730

As a group, I think probably the countries that are most problematic are what I'd call industrializing countries. It's the middle set of countries that aren't the poorest but have been well enough off to really start getting into the computer world, but they might not have the best equipment or they have old equipment, and the proportion in numbers of people they have who are specialists in these areas is much less than in our country, and so on. So probably that group of countries, that kind of country, are going to be ones we are going to have to look at very carefully.

I should also tell you that as a first cut, there are 19 countries we're focusing on, and those countries together comprise the 15 largest exporters to Canada and the 15 largest importers from Canada. So our largest trading partners—

Mr. Eugène Bellemare: Are you keeping status reports on them?

Ms. Nancy Stiles: As I said, those are the countries we are focusing our real analysis on. They're the ones you would expect: United States, Japan, U.K., Germany, France, Brazil....

Mr. Eugène Bellemare: You referred to contingency plans being applied between July and September 1999. Do you find that reasonable, knowing that bankruptcies could occur, great difficulties could occur, even problems towards health and safety of people?

Ms. Nancy Stiles: Sorry, you are talking about using the last six months of 1999 to either negotiate mitigating measures or advise other government departments and other concerned organizations to invoke their contingency plans.

As I said earlier, I think the difficulty is where you make the balance between now we've given enough time to reach a judgment about Y2K readiness somewhere so that we can then say we don't think they're going to be ready or we don't think they have a high prospect of being ready, so we have to negotiate something else, or we conclude we cannot negotiate something else and advise people. Again, it's a balance between raising all kinds of false concerns and problems and giving companies and citizens time to react.

The Chair: This is your last question.

Mr. Eugène Bellemare: I don't want to get into CIDA at all, but it seems—

Ms. Nancy Stiles: He can answer questions, too.

Mr. Eugène Bellemare: You talk about your Canadian partners being 13% completed as far as Y2K compliance is concerned. I'm not sure what you mean exactly as a definition; however, I'm looking at the legal aspect, the litigation aspect.

If your partners don't deliver or effect your projects, have you looked into litigation, and have you given notice?

Mr. John Robinson: I don't actually know if we've given notice. I will check with our legal advisers and let the committee know. But we are certainly looking into the question of legal liability and where it begins and ends. It is not certain how much liability a partner would have for an activity in a developing country where the system there, for instance, did not function, as opposed to what their system would be.

Mr. Eugène Bellemare: I'm sorry—

Mr. John Robinson: You're talking about their own systems.

Mr. Eugène Bellemare: May I clarify that question?

If a company in Canada.... You provided, let's say, $1 million to a specific country for a specific project. Usually 90% or 95% of those moneys are spent in Canada to a provider in Canada that goes into that country to do this project. Have you given that particular company or all of these companies legal notice that if they are not compliant, firstly, there will be litigation, and secondly, they're going to be scratched off the CIDA list of goodies from now on?

• 1735

Mr. John Robinson: As I say, I don't know whether actual legal notice has been given. I will find out and pass that information to the chairman for the committee.

Legal action would be taken, and we do take legal action against companies, if they do not deliver the product that they are contracted to us to deliver. We won't know whether non-compliancy disables them from delivering our programs until we reach that situation. I'm not a lawyer, so I can't tell you what would be the appropriate action to take in a legal sense, but we will report back on that. But you can't assume, just because a company is not compliant with Y2K, that will mean they can't deliver what they've undertaken to do for CIDA.

The Chair: Thank you, Mr. Bellemare.

[Translation]

Ms. Lalonde, do you have any other questions?

Ms. Francine Lalonde: In French! Thank you, Madam Chair.

I have a question for Mr. Robinson. On a whole other subject, I'd like to hear your views on what you anticipate regarding the effect of the Y2K bug in countries with which CIDA does business. Will the rich recover better than the poor, or could it all even out in the end?

Mr. John Robinson: I think we can look at this issue in two ways. As Ms. Stiles just said, the richest countries are those that will probably have the most problems since they have a great deal of technology. These are the countries of greatest concern but for us, as a development agency, they are less important since we are oriented toward the poorest countries.

In the poorest countries, as Nancy said, there are fewer worries, except in some areas such as telecommunications, airports and transportation, and perhaps also banking. In all these countries, I think the impact will be far more significant for wealthier individuals, as you said, simply because the poor don't have access to technology. So for them directly, there will not be a great impact. The impact will be felt mainly in any breakdown of health care, education or transportation systems. That's why we're trying to see whether there wouldn't be something to be done with these countries to try to improve their systems before the year 2000 arrives.

Ms. Francine Lalonde: Do you have special programs for this?

Mr. John Robinson: Not for the moment. We are currently engaged in talks with several international organizations, including the World Bank. As I said in my opening remarks, for each of our major programs in these countries, we're trying to determine whether there aren't other things that need to be done.

Ms. Francine Lalonde: Do other rich countries share this concern?

Mr. John Robinson: Yes, but to a far lesser degree, since normally, they don't have major CIDA programs. It is our impression that these countries have far greater access to other sources of assistance, be it the private sector or international financial institutions.

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

[English]

Madame Jennings, please.

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

I'd like to thank you both for your presentation. I learned a lot.

Ms. Stiles, I have one question for you. And, Mr. Robinson, I have one question for you.

Ms. Stiles, imagine that I'm an entrepreneur. I have a company here. I'm looking at getting into the export business. I've already begun looking out and I've identified a couple of potential markets. I also import in order to produce my product.

Who do I go to if I want to determine, first, that my supplier, who claims that he's Y2K ready, is in fact Y2K ready; and who do I go to to determine that those individuals to whom I want to sell, or those countries, are in fact more or less prepared, that they're not going to end up destroying my company and putting it down the drain? Who do I go to? I'm still trying to figure out how it works.

Ms. Nancy Stiles: On the first one, I think you've captured in a nutshell one of the biggest problems for all governments, all businesses, all organizations around the world on this: who do you believe? When we officially ask our good friends and allies in another government that is very close to us if this is part of their system ready and can we rely on it and they say yes, do we believe it?

• 1740

The answer to the first question is that there isn't going to be anybody in the Government of Canada who is going to be able to guarantee to you as a small-business person that your vendor in country x is or isn't Y2K compliant.

On the second issue, our whole network of trade commissioners abroad, in cooperation with Industry Canada offices across Canada that give advice to existing and potential exporters, will through the course of 1999 be able to give you advice on that, and that will be particularly more available as we get farther on in 1999. My precautionary advice to a small-business person right now is if you're going to purchase from abroad over the next 14 months, get it in by October or November 1999. Don't—

Ms. Marlene Jennings: Okay. There's a window, and try to get it in before.

Ms. Nancy Stiles: There's a window. If you want a sort of cover-all-your-bases option—

Ms. Marlene Jennings: Stockpile.

Ms. Nancy Stiles: Not stockpile, but if sometime over the next three months you would need a quantity of something, plan your purchases. If I were in business, I would be extremely careful about the timing of my plans for purchases and sales during the period October 1999 to March 2000, because I don't think there are any guarantees. Anything the government or anybody in the government will tell you is all based on a risk analysis, which is not a guarantee.

Ms. Marlene Jennings: Thank you, Ms. Stiles. I appreciate that.

Mr. Robinson, I'm going to continue a little bit with what my colleague Mr. Bellemare spoke about, and that's the issue of the Canadian partners. I have to say that I was really dismayed with your report in terms of the Y2K readiness of the Canadian partners, and I'm wondering if you're as dismayed as I am. It's all very well and good to say that the fact they may not be ready doesn't mean they won't be able to meet their contractual obligations, but I have a sense there will be contractual obligations that won't be met if they're not ready. I'd like to know what, if anything, CIDA is attempting to do to encourage, to incite, to force, to twist arms, whatever, so that our Canadian partners begin to put more emphasis on ensuring that they are Y2K ready, or if they cannot be, that they have serious contingency plans.

Mr. John Robinson: I think the answer to that is that we have been spending quite a lot of time with our partners, particularly the non-governmental organization partners, to emphasize to them the importance of this issue. As we've been developing our own internal process of refining our informatics system, we have been holding a steady dialogue with them about the implications of that for their own capacity to be able to communicate with us. That is one of the mechanisms we've been using to try to ensure that not only are they aware of the issue but also they're beginning to do something about it. I don't think I can answer you much more than that at this point.

Ms. Marlene Jennings: How optimistic are you that say by June 1999 you will have a relative sense of security about the Canadian partners?

• 1745

Mr. John Robinson: I think I would say a relative degree of optimism, and probably people on this committee would have a better view on that from their sense of the broad Canadian constituency you've dealt with.

The difficulty for us, again particularly in non-governmental organizations but perhaps also with small and medium-sized enterprises, is that we can't know what each individual organization is doing. We can exhort them and we can offer to be helpful to them, but in the end we have to wait and see what they're doing.

That's where, then, the question Mr. Bellemare raised comes into play. I should have read my brief a little more carefully, but if I could, Madam Chairman, I will quote what is perhaps a partial answer to Mr. Bellemare's question. “All contracts for the procurement of goods and services now contain warranty clauses related to year 2000 compliance”—which, I take it, means that's a kind of legal notification and that companies that are found to be non-compliant are therefore subject to legal action as a result of that.

The Chair: Thank you very much, Madam Jennings.

Mr. Jones, please.

Mr. Jim Jones: There's something you said, Nancy, that I'm not sure I agree with. That's when you said that other countries, especially the developing countries, might not have anything to worry about because they don't have the same level of penetration of computers.

One of the things I'd just like to make you aware of is that when the secondary computer and equipment market went out of North America, they went to a lot of these countries. This equipment probably can't even be fixed for the year 2000, and if they haven't addressed their problem today, chances are they can't even get a replacement for it in time. That really concerns me, especially in the eastern bloc countries, where I know a lot of mainframes from the secondary and mid-range equipment market were sent from the U.S., and probably hospital devices, telephone systems, all of that.

So I am really concerned. If they haven't replaced everything by now or are not on the way to replacing them, we're going to have a lot of problems, and the lights could be out in a lot of parts of the world.

Ms. Nancy Stiles: I don't disagree with you. I was talking about the degree of the problems. Usually, when you talk about a global scourge or a global problem such as hunger, it's always the very poorest countries that are the most and worst affected or have the biggest problem to solve, and unusually and uniquely, because of the degree of computerization in the most-developed countries, they have the biggest problem to solve. People say the United States is among the most advanced, but they also have a bigger problem to deal with than anybody else in terms of Y2K remediation. They have more things to fix.

That being said, I don't disagree that there are an awful lot of countries out there that have a lot of old equipment that either can't be fixed or they don't have the people to fix them, and they're going to have problems during this transition period. I don't disagree with you on that.

How much of a problem it will cause Canada and Canadian business and the Canadian economy is another issue.

Mr. Jim Jones: What did the Asian flu cost us? They're all interrelated.

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

I have just one question, Ms. Stiles. How much have we committed to foreign aid for fixing the year 2000 problem for other countries, or have we committed anything?

Mr. Robinson, I'm not sure if it's through CIDA or if it's through direct aid.

Mr. John Robinson: Foreign aid is what we do. There will be other things the department does. We don't yet have an envelope committed to it. One of the things we're doing is looking at what other actions we should now be taking. We have, I think, up until now probably spent in the order of $1 million, not much more.

• 1750

The Chair: Perhaps I should rephrase it. My understanding is that there was a request made about six weeks ago by South Africa with regard to its airports. Was it South Africa? There was a country that was looking specifically for funding or contributions because their airports aren't going to be ready. I'm just wondering whether the Canadian government is contributing in any fashion. I don't know if that falls under you or another department, but—

Mr. John Robinson: Normally, if it's a request for development cooperation, it would be us. I don't know the answer to the specific South African question. What you raise is a more general issue, because many of our programs will be doing activities that are supportive of Y2K. Probably what we should try to do—we can do this relatively easily—is make an inventory of that and provide you with that information.

The Chair: In particular, I raised this issue because although a lot of developing countries may not be technologically advanced overall, their airports are. My understanding is they don't have the funding to fix that, and that's one of these places that's going to affect every single country in the world. We do a lot of trade and development, and although the projects themselves may not be problematic, getting people to and from those projects could possibly become problematic.

Mr. John Robinson: Right. I think that's correct. One of the points I mentioned was that we're starting to have discussions with organizations like IATA and ICAO to see where the real requirements are and what we can do. I don't think we can wait any longer for approaches from people. We'll have to be more proactive about looking at some of these issues.

I would just say on this that when I looked at the figures that were given to me about what we had done, I was very concerned about the fact that the program we had for airports when I was the vice-president of the Americas branch in the Caribbean didn't appear. I couldn't understand why it didn't appear.

I'm told that because of the rapidity of the change in the technology, much of the informatic equipment that had been provided in the past had already been replaced. This may be expressed in a lot of the areas you're concerned about. I think at this point, as Nancy said, we just don't have a good enough handle on where the real issues are.

The Chair: For your information, we have had the different air industries before us. We've been told there are two airlines already that have announced they won't be flying on that day because they're going to be retesting. I'm just not sure how far some of these other countries are going or what they're doing. Although things may have been replaced, the issue is test, test, test. If testing isn't perfect, then replacement may not be enough.

Mr. John Robinson: Your point is taken.

The Chair: That being said, I want to thank the witnesses for being with us today. I want to apologize for us going over our time. We do appreciate it very much.

I will remind committee members that we're meeting at 8.30 tomorrow morning. Thank you.

The meeting is adjourned.