FINA Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Wednesday, May 14, 2003

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1535

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.))

Hon. Elinor Caplan (Minister of National Revenue)

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1540

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1545

The Vice-Chair (Mr. Nick Discepola)

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance)

Ms. Elinor Caplan

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1550

Mr. Rahim Jaffer

Ms. Elinor Caplan

Mr. Rahim Jaffer

Ms. Elinor Caplan

Mr. François Guimont (Deputy Commissioner, Canada Customs and Revenue Agency)

Mr. Rahim Jaffer

Mr. François Guimont

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1555

Mr. Rahim Jaffer

The Vice-Chair (Mr. Nick Discepola)

Mr. Rahim Jaffer

Ms. Elinor Caplan

Mr. Stephen Rigby (Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency)

The Vice-Chair (Mr. Nick Discepola)

Mr. Shawn Murphy (Hillsborough, Lib.)

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1600

Ms. Elinor Caplan

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1605

The Vice-Chair (Mr. Nick Discepola)

Mr. Shawn Murphy

Ms. Elinor Caplan

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1610

The Vice-Chair (Mr. Nick Discepola)

Ms. Elinor Caplan

The Vice-Chair (Mr. Nick Discepola)

Ms. Pauline Picard (Drummond, BQ)

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1615

Ms. Elinor Caplan

Mr. Denis Lefebvre (Assistant Commissioner, Customs Branch, Canada Customs and Revenue Agency)

Ms. Elinor Caplan

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1620

Ms. Pauline Picard

Ms. Elinor Caplan

Mr. Denis Lefebvre

The Vice-Chair (Mr. Nick Discepola)

Ms. Maria Minna (Beaches—East York, Lib.)

Ms. Elinor Caplan

Ms. Maria Minna

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1625

Ms. Elinor Caplan

The Vice-Chair (Mr. Nick Discepola)

The Vice-Chair (Mr. Nick Discepola)

Ms. Elinor Caplan

Ms. Maria Minna

Ms. Elinor Caplan

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1635

Mr. Stephen Rigby

Ms. Elinor Caplan

Mr. Stephen Rigby

Ms. Elinor Caplan

Ms. Maria Minna

Ms. Elinor Caplan

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1640

The Vice-Chair (Mr. Nick Discepola)

Ms. Elinor Caplan

The Vice-Chair (Mr. Nick Discepola)

Mr. Rick Casson (Lethbridge, Canadian Alliance)

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1645

Ms. Elinor Caplan

Mr. Denis Lefebvre

The Vice-Chair (Mr. Nick Discepola)

Mr. Rick Casson

Ms. Elinor Caplan

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1650

The Vice-Chair (Mr. Nick Discepola)

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Ms. Elinor Caplan

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1655

The Vice-Chair (Mr. Nick Discepola)

Ms. Sophia Leung

Ms. Elinor Caplan

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1700

Ms. Sophia Leung

Ms. Elinor Caplan

The Vice-Chair (Mr. Nick Discepola)

Hon. Jim Peterson (Willowdale, Lib.)

Ms. Elinor Caplan

Ms. Pauline Picard

Ms. Elinor Caplan

Mr. Jim Peterson

Ms. Elinor Caplan

Mr. Jim Peterson

Ms. Elinor Caplan

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1705

The Vice-Chair (Mr. Nick Discepola)

Mr. Rahim Jaffer

Ms. Elinor Caplan

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1710

Mr. Denis Lefebvre

Ms. Elinor Caplan

Mr. Rahim Jaffer

Ms. Elinor Caplan

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1715

The Vice-Chair (Mr. Nick Discepola)

Ms. Elinor Caplan

Mr. Denis Lefebvre

The Vice-Chair (Mr. Nick Discepola)

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CANADA

Standing Committee on Finance

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NUMBER 058

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Wednesday, May 14, 2003

[Recorded by Electronic Apparatus]

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[Translation]

    The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Pursuant to standing order 81(5) and the order of reference of Wednesday, February 26, 2003, study of the main estimates for the fiscal year ending March 31, 2004, including votes 1, 5 and 10 under Canada Customs and Revenue Agency.

    Today we have the pleasure of welcoming the honourable Elinor Caplan, Minister of National Revenue. Ms. Caplan, I would ask you to make your presentation, after which we will move on to questions. Take your time. I would also ask you to introduce your deputy ministers and the other witnesses who are with you.

    Thank you very much and welcome.

    Hon. Elinor Caplan (Minister of National Revenue): Thank you very much, Mr. Chairman.

    Thank you for giving me this opportunity to bring you up-to-date on the activities at the Canada Customs and Revenue Agency.

[English]

    It's a pleasure to introduce the deputy commissioner, François Guimont. Also at the table with me are Monsieur Denis Lefebvre, who is the head of customs, and our chief financial officer, Mr. Stephen Rigby.

    If there are questions for our other officials, I will introduce them as they come to take their place.

    The agency's 2003-04 main estimates of $3,662.300,000 reflect an increase of $298.5 million, or 8.9% over last year's main estimates of $3,363,800,000, in the amount the agency is seeking from Parliament.

    Since my appearance before this committee last May, the CCRA has made significant progress on many fronts. Let me say, Mr. Chair, I believe we have a record of achievement. Let me start by updating you on some of the customs programs speeding up the flow of low-risk legitimate trade, while detecting high-risk individuals and illegal contraband. Thanks to our thousands of customs employees, these programs strike a balance between security and facilitation.

    We meet with both our American counterparts and industry regularly to continue the development of a smart border. After all, cross-border trade is worth $2 billion a day. It is pretty clear that we need to build bridges, not barriers.

    FAST and NEXUS are examples of security programs streamlining border crossings for low-risk commercial shipments and travellers, while enhancing security. Applicants undergo thorough security checks and are pre-screened as secure, low-risk program members in both countries.

    Free and Secure Trade, or FAST, allows commercial shipments to clear customs before they arrive at the border. Already, 13 major importers, 200 carriers, and over 10,000 drivers have applied to the FAST program.

    NEXUS is tailored for frequent low-risk travellers; and more than 39,000 are already pre-participants. In fact, I saw our most recent note yesterday, showing that just over 40,000 have been approved in the program, and we're processing some 49,000 applications.

    Advanced Passenger Information, or API, is now in place at airports for sharing information on potentially high-risk individuals. It includes the pilot testing of joint passenger analysis units, made up of officials from Canada and the United States. Currently operating in Vancouver and Miami, these pilot projects are now beginning their evaluation phase.

    We are becoming more technologically advanced in our operations. For example, we us large-scale gamma ray machines to detect contraband, weapons, and other potentially dangerous goods. This is done without opening containers and exposing employees to their contents.

    One of the things I am particularly proud of, Mr. Chair and committee members, is the CCRA's government online achievements. Turning to our services, we are all proud of our government's online achievements, but as you may know, Canada was recently rated number one in e-government by Accenture. The CCRA was cited in the study as a leader in e-government innovations and innovative practices. We are in fact a leader in the Government of Canada, and therefore around the world.

    We've attempted to create a continuous improvement environment. For example, CCRA continually finds ways to improve our online services and to make them more accessible to Canadians. This year we added new features to the EFILE online program for tax professionals. Now up to 60 returns can be transmitted at once. As well, a program function has been added that provides immediate notification of outstanding balances and other important client information.

    As part of our small business information centre, we launched a website for smaller and medium-size importers, with the information and tools they need to comply with customs commercial processes.

    As an aside, the scientific research and experimental development program continued to support industrial research and development in the last year. It provided $1.5 billion annually in investment tax credits to Canadian innovators.

    Looking ahead, it is reasonable to expect further enhancements to border management.

    Now that I've outlined where we've been, I'd like to take a moment to map out where we are going.

    The CANPASS-Air program is being implemented at Vancouver International Airport, and then the plan is to roll it out to seven other major Canadian airports later this year. Next, using iris recognition technology, the CANPASS-Air will speed up customs clearance for low-risk, pre-approved travellers. I remind you that CANPASS-Air is one way into Canada. NEXUS-Air is a two-way program, and our hope is to pilot it in Vancouver, going two way between Canada and the United States.

    Next April, a 24-hour advance notification rule for marine importation will be implemented. It will require ocean carriers and marine forwarders to submit data to customs 24 hours prior to loading in a foreign port. We also have plans to purchase devices to detect radiation inside marine containers before they are opened or inspected.

    We're also committed to enhancing and ensuring the integrity of the tax system, which is part of our mission. On the revenue side, a main priority of the Canada Customs and Revenue Agency is to ensure the integrity of the tax system. When it comes to complying with Canada's tax laws, the vast majority of Canadians voluntarily file their taxes each year. However, there are those who attempt to defraud the government through evading tax, by participating in the underground economy or in illegal tax schemes.

    An example of our efforts to combat the underground economy is our partnership with the Canadian Home Builders' Association, called the Get it in Writing campaign. It informs consumers about the risks involved in hiring contractors for residential construction without a legal contract. Should the job be botched or done improperly, these individuals would have no recourse unless they have a contract. That's the message we're giving them, in partnership with the industry. We plan to add more resources and other professionals to our already strong compliance team. In fact, Mr. Chair and members, Canada has one of the best records of compliance of any of the countries in the world.

    We will soon be implementing a national standard for reviewing newly created GST accounts within five days of registration. This will assure that the information supplied is validated promptly, and that follow-up action can be taken where necessary.

    We will continue to pursue cases of non-compliance in court to ensure that all Canadians pay their fair share—but I also say that we don't want anyone to pay more than his or her fair share. That's why so many Canadians are so pleased to receive tax rebates if they've overpaid during the year in the filing of their taxes.

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    In conclusion and in summary, a lot of progress has been made in the development of our smart and secure border. The CCRA will continue to work cooperatively with the United States and our many stakeholders.

    On the revenue side, I am pleased to report that our services to Canadians are continually improving. I especially want to underline once again our success with government online. The response to our advertising campaign, which I think you all had a chance to see on TV, was excellent. This year, close to 9 million tax returns were filed online.

    The CCRA and its dedicated employees are committed to running programs as efficiently and effectively as possible. We're also committed to being transparent and accountable to Canadians through working cooperatively with the Auditor General and reporting annually to Parliament.

    I'd like to take a moment and tell you what our mission statement is. Our mission is to promote compliance with Canada's tax, trade, and border legislation and regulations through communication, quality service, and responsible enforcement, thereby contributing to the economy and social well-being of Canadians.

    I'd be pleased to answer any questions that committee members might have.

    Merci beaucoup.

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    The Vice-Chair (Mr. Nick Discepola): Thank you, Minister Caplan.

    Colleagues, we have ample time, therefore I'll start with 10-minute rounds.

    Mr. Jaffer.

    Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Mr. Chairman.

    I'd like to thank the minister and representatives from CCRA for being here today. I won't commend the minister too much, but to begin with, I'll say I know she was here just recently on the GST fraud issue, so we appreciate her ability to come before this committee.

    I also want to congratulate CCRA for their turnaround time on the EFILE program, because I'm getting a lot of positive feedback from constituents who have filed their taxes using the electronic process and have received their tax refunds quite quickly.

    So I appreciate those two positive points.

    One thing I'd like to follow up on right away, if I may, is that in your brief, Minister, you talk about CCRA becoming more technologically advanced in its operations. That's evident from the EFILE process and a few other areas, but one of the things I am still concerned about, especially looking over the estimates, is that, as you know, there's still a challenge at some of our border crossings in regard to having technology available to their customs agents. They sometimes don't have access to proper computer equipment, and there have been calls for our border technology to be upgraded.

    Under the capital purchases, I believe there's a figure listed of just over $23 million for customs operations. I'd like to know how much of that $23 million is going towards an immediate upgrade of the computer equipment, because in light of that deficiency at the borders, I think we still have a big concern as to how that's coming out.

    Ms. Elinor Caplan: Actually, in my speech in Cornwall--and we now refer to the Cornwall commitment, which has been put on our website, and our managers, at their regular meetings, receive information on the progress we're making--one of the commitments I made was to connect the unconnected ports. You've heard the discussions about the need for broadband capacity. Part of the problem we have had is that some remote ports do not have access to the kind of infrastructure that would allow them to be connected easily. So we have developed a plan, and that plan is rolling out, because we do have a commitment.

    As far as the total resources are concerned, I can tell you--and I made this commitment at Cornwall as well--that the resources will be made available to meet all the commitments in the Cornwall plan, in the Cornwall commitment.

    Let me turn, however, to some examples in our fact sheet here of the kinds of equipment we have already ordered in the past year. These were one-time expenditures. Perhaps I can give you some examples of what we are deploying in expectation of having our borders equipped with the lastest state-of-the-art technology.

    We've ordered 11 state-of-the-art mobile gamma ray scanners. These inspect entire marine containers, as well as rail shipments, at seaports and airports as well as land borders.

    We are doing the research. Technical research has been completed, and we're signing a contract to have three gamma ray pallet scanners. Where I say the research has been done, that's why these are seen as state-of-the-art. They're going to be located at major marine ports.

    We have doubled the number of low-energy baggage and cargo X-ray systems to over 60 units. They have been purchased, and they're being delivered now into the field.

    Since 2001, we have purchased and implemented an additional 42 ion scanner systems. As you know, these detect both narcotics and explosives. Our total inventory now is about 90 systems that are in place and deployed. We have 30--

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    Mr. Rahim Jaffer: Are you targeting certain areas where that equipment will go? Is that the process you're going to be following?

    Ms. Elinor Caplan: We recognize that we need certain equipment in certain places. That's why I mentioned connecting the unconnected--first, because it's our goal to have all the ports connected, and we will need to put in upgrades to infrastructure to be able to do that in some ports. But depending on what the volumes are at the ports....

    For example, the 39 hand-held ion mobility spectrometers are going to be used at air and marine ports. They will not be at the land borders. We have other things there.

    One of the low-tech but still very important technologies used is the detector dog service. If you've never seen them, I really recommend a visit. Call in advance so you don't interrupt the normal work. They can arrange for you to come without disrupting anything. They'll do a demonstration for you of the technology. But the dogs are really spectacular to see--how they do it. We've had a 25% increase in the detector dog service since 2001.

    We've invested $1.5 million in over 200 hand-held inspection tools. These include fibrescopes, density meters, and a sophisticated pole camera.

    CCRA has issued over 300 pieces of equipment such as radiation dosimeters. Those measure the amount of radiation that anyone might come into contact with. I saw these the first time when I was in Vancouver, when we were pilot testing the VACIS machine.

    All our officers, both for their own protection but also to let us know whether or not there were any radiation leaks, were wearing the dosimeters at that time. We recognized that because of the concern about dirty bombs or things that might be hidden in containers in other places, these kinds of radiation dosimeters, hand-held meters, can help to detect without having to actually open the container, or a car or a truck.

    We've also purchased some very sophisticated radiation detection equipment to place on vehicles, cranes, and railway lines at seaports. These help to detect illicit shipments of radiation.

    Further--and I think this is important to note--we've invested $1.1 million in our laboratories to focus on developing and testing technology so we can detect traces of chemical and biological weapons.

    Most people don't know about the laboratories we have, and most people don't know it was Canada Customs that actually produced, through its own research and development, the ion spectrometer. It is the one little bit of revenue that we receive directly, because we hold the original patent on the ion spectrometers, which are now deployed around the world.

    Mr. Rahim Jaffer: So all the equipment you've talked about that CCRA has made a commitment to, are those what the capital purchases would amount to, that $23 million over the last little while? I'm curious as to how much of that in fact is going into that infrastructure and what was listed in the estimates.

    Ms. Elinor Caplan: I'm going to ask our deputy commissioner to give you the details on the numbers.

    Mr. François Guimont (Deputy Commissioner, Canada Customs and Revenue Agency): Thanks, Minister.

    Mr. Chairman, if I get in trouble, I'll look to my colleague Monsieur Lefebvre.

    The $23 million specifically in the estimates is essentially for investments that we have to do continuously--that's why it's a straight line--in refurbishing office equipment and offices for our customs inspectors. So it's capital investment, essentially. That's what it boils down to.

    The minister's examples are tied to programs for which we received specific dollars. Some of those programs are ongoing, so we're still in the process of acquiring equipment, deploying it, and training our people. In other cases, the equipment has been acquired and is simply operational.

    Mr. Rahim Jaffer: Ultimately, just so I know, then, do those computer upgrades that the minister alluded to and some of the other things that are happening fall under other programs or under the capital purchases part?

    Mr. François Guimont: No, that would be a different track.

    Essentially, in this case, in what we call the follow-up to the Cornwall commitments, job hazard analysis, we are going to be following a Treasury Board track, which is a standard track for departments and agencies. So we're going to be putting together a business case, as is normally the case, and the minister will be going to the Treasury Board to present the case and hopefully will be successful in getting those resources.

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    Mr. Rahim Jaffer: Do I still have some time?

    The Vice-Chair (Mr. Nick Discepola): Yes, you have one minute left.

    Mr. Rahim Jaffer: Just trying to start down this road--and I appreciate that response--as we all know, recently when you appeared before the committee, Minister, you talked about a change in reporting for the GST fraud issue and the way it will be reported in the public accounts.

    From what I found, the estimates did not properly reflect the estimated loss that the government will absorb due to GST fraud. Now that you've made that change, as a department and as a minister, in the reporting in the public accounts, can you give us an estimate of what GST fraud will have accounted to in the past fiscal year and where it may be going in the coming fiscal year, as to what Canadians would be expecting?

    I notice your report also talked about adding more auditors, collectors, and professionals. How much of that in fact is going to be dealing with that issue of fraud, and can you give us any numbers future...?

    Ms. Elinor Caplan: I thought we made a very lengthy and complete presentation before the public accounts committee. I was very pleased that the Auditor General reported, at that time, that she supported our plan and that she felt it would bring the kind of information before the committee on a regular basis so that they could have meaningful information and watch the trend over time.

    I do have with me a copy of the deck that was presented. I think it is on the record. And I would point out again that, as I stated at the committee then, the total GST fraud as a percentage of collection is 0.012%.

    Now I'm going to ask our assistant commissioner, chief financial officer Mr. Rigby, who made the presentation along with me on the numbers at the public accounts committee, to respond to your questions, because we are implementing a new way of reporting. We want to be as forthcoming and to give committee members factual information that will, in the context of all of our programs, not just the GST, help them to understand what a good compliance record we do have.

    Mr. Stephen Rigby (Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency): Mr. Chair, I would like to say that what you see before you here in terms of the estimates is part of the estimates presentation. And as we said before the public accounts committee, our reporting will be in the second part, which is the fall departmental performance report. So the figures we gave to public accounts, the figures that the minister has just referred to, I think, are illustrative of the kinds of numbers that you're going to see in our fall performance report. In terms of giving you an updated number now, we're just starting to work on that as we get ready for the fall reporting.

    The Vice-Chair (Mr. Nick Discepola): Thank you very much.

    Mr. Murphy, for 10 minutes.

    Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

    I want to echo the comments made by my friend Mr. Jaffer on the department, Madam Minister. As a member of Parliament, you get a lot of different calls and criticisms of some department, but CCRA is certainly well down the list as far as complaints that we get in my office go, anyway. So I'd ask you to pass on the congratulations to the many people who work in your department.

    There's one area I want to pursue, and that's the whole underground economy that's out there. It may be a little off the topic that we're discussing today, but I view it as relevant. I've done some work on this, and there are some statistics; the Fraser Institute did some work a couple of years ago. No matter whose numbers you accept, in my view, the numbers are very substantial. And we have whole industries, such as the home renovation, construction, day care, domestic help, and automobile repair industries, that seem to be quite notorious for a certain amount of underground economy going on out there. There seems to be developing an unhealthy degree of social acceptance.

    Even if I, as a member of Parliament, go and get a quote to get my steps repaired, people will tell me the price is $379, but they'll do it for $250 cash. I sense that some of them honestly think that if they get cash they really don't have to report it and they don't have to remit taxes. It's a very unhealthy acceptance of this type of behaviour.

    I don't think it would be fair to come down heavily on certain people, on some lady for keeping kids at her home for the last 10 years and getting cash and not reporting it. And there are some public education programs out there. I know that, but they don't seem to be sinking in.

    I guess my own view would be a very strong area of public education...because we have modified public behaviour before. Drinking and driving is one example that comes to mind, which 25 years ago was certainly much more socially acceptable than it is now.

    So my question is, do you have any accurate statistics, Madam Minister, that would indicate the extent of the problem? And do you have any accurate statistics on how much revenue the Government of Canada is losing by virtue of the underground economy? Does your agency have a strategy to try to combat this degree of social acceptance that's out there, to deal with the underground economy? And is there anything you can share with us on this whole issue?

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    Ms. Elinor Caplan: I think you've described the problem extremely well. Of course, because this is not reported, there are all kinds of figures, all kinds of estimates. I think to ask for accurate reporting is impossible.

    However, I think everyone recognizes that the underground economy creates an unlevel playing field for those who do comply. As I said in my opening statement, our goal is to see that everyone pays their fair share, that no one pays more than their fair share. We know that in certain sectors, and you've identified some, those who are paying their fair share are disadvantaged.

    Therefore, we've undertaken a seven-point action plan. If you give me a couple of minutes, I will tell you what the seven points are.

    Public education, as you mentioned, is a very important component of that, but so is--and this is point one--working cooperatively with other federal departments, as well as with the provinces and the territories, because it's the sort of issue that often spans governments at every level. There's a different level of awareness. We know there are certain practices or policies that can have an impact one way or the other. So cooperation among levels of government and among ministries and departments of governments is a very important way we share the information we have and develop the strategies to work together cooperatively.

    I discussed this when I met with my counterparts across the country, because this is an area where we want to be able to work together. Effectively what we're doing is trying to support those people who do comply by insisting on strategies to identify those who are not complying and by working together to implement those strategies.

    I mentioned the get-it-in-writing campaign. That's just one example that I'm particularly pleased with, because we are trying to build partnerships with key industry groups and professional associations, as they're often the ones who give advice. This is point two. The industry associations usually represent, I would say, those who do comply. They help us to deliver public education programs to their members about how non-compliance can affect the whole industry, it can give everyone a bad name, and quite honestly, it can subject more in that industry to audits.

    If you ask your constituents, no one calls up and says, please come and audit me. I don't think we have many calls from anyone asking us to send the auditors in.

    So working with organizations, building partnerships, identifying key industry groups and professional associations is a very important part of our strategy in public education, because it's not just information directly from CCRA, from the tax department, or, as they sometimes call us, Revenue Canada. It's hearing it from their own professional associations, delivered in a way that let's them know why it's in their interest to not engage in underground, illegal activities.

    We also encourage voluntary compliance through communication, education, and information initiatives, and this is point three. That's not just with professional organizations and key industries, but that's with the public generally. That's what the get-it-in-writing campaign is about. We're letting the people who are buying the product or the service know how they'll be disadvantaged if they happen to hire someone, and then they have no recourse if the work is shoddy, if there's a problem with it after the fact. It can often cost them much more than if they buy it from a legitimate contractor who gives them a proper bill, who guarantees their work, and they can then get the proper recourse.

    I will mention again that people don't call us to ask us to send in the auditors, but in fact we do, and this is point four. We carry out enforcement actions, which include the identification of non-filers and non-registrants. What that means is that we're on the lookout all the time for people who are conducting businesses under the table or as part of the underground economy.

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    As part of that—point five—we've set up special audit teams that focus on sectors where the underground activity is active and prevalent. We're aware of it, and these special audit teams actually go out and target, so that it becomes a deterrent. People know we are active.

    Part of the deterrent—point number six in our seven-point plan—is increasing the visibility of enforcement and other compliance activities, including the publicization of tax evasion.

    One of the things I mentioned when I was before the public accounts committee is that when we are successful in a prosecution, we put out a press release. We encourage the media. We encourage the associations. It is at that point public information, and if the public knows there is a fine, a penalty, potentially a jail term, and that there is a big cost to your reputation as well because that information will be made public, we think it's an important deterrent.

    The last point, point number seven, is improving the reporting of information to CCRA, working to enhance the effectiveness of the penalties for non-compliance, and improving audit and investigative techniques. And yes, we get tips and we act on those tips.

    So we have a plan. It's not perfect, but it is, I think, effective. If anyone has suggestions based on advice you have from constituents, we're always happy to have that advice, because while we can't quantify it, we know that the underground activity hurts us all.

    The Vice-Chair (Mr. Nick Discepola): Thank you, Minister.

    This is your last question, Mr. Murphy.

    Mr. Shawn Murphy: If there is one point—and perhaps it's more a comment than a question—it comes back to my comment about the social acceptability of this type of practice. I honestly think the government has to somehow make it socially unacceptable.

    The people who are doing this are not people who would go down to the corner grocery store and shoplift a quart of milk. They would consider that socially unacceptable. But they will sell a good or do a service and not report it to the Government of Canada, and they feel that is socially acceptable. In fact, some of them, I think, feel it is legal.

    I really think the seven-point strategy you outlined, which I guess I was aware of to a certain extent, is nibbling around the edges. I really sense that you have to get right into the heads of people to try—I don't know how you could do it—to make this behaviour socially unacceptable to the same level as stealing or shoplifting. Again, that's perhaps not a question, but it's a comment.

    Ms. Elinor Caplan: Perhaps the fact that we're televising these committee hearings will give people an opportunity to hear how important it is that everyone pay their fair share and not let others be disadvantaged, and that it is serious. That will help to get the word out.

    Truthfully, we don't have a lot of money for advertising. The one little ad at tax time that I referred to was very well received. We ran it for a very short period of time to encourage e-filing. People are logging on to our website and phoning our call centres. We've done a very good job of getting the information out about how to contact us. But on how to change social behaviour, to be honest, we would like as much advice as you can give us about things that won't cost a lot of money.

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    The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Murphy.

    Ms. Elinor Caplan: Before you go on to the next question, there was one point I'd really be remiss not to address, Mr. Chair, because I think it's been addressed by both of the previous speakers. I want to respond to it because I'm very proud of the fact that the number of complaints we've been getting from members' offices and from the public generally has been decreasing in both the customs and the revenue areas.

    The other activity we engage in is getting benefits out to people. We've been delivering the benefit programs more and more on behalf of government. Those would be the sorts of complaints you'd get: “I didn't get my cheque; it didn't arrive. What happened?”—that kind of thing.

    We've worked very hard over the last three years as an agency to be innovative and to improve client service. We know the overwhelming majority of Canadians comply with their tax laws and the customs laws, and rather than treating everyone as though they are a potential evader, we have been treating people as clients. It's been a huge culture change for our organization, and I'm very proud of the men and the women who work for the Canada Customs and Revenue Agency. The proof is the fact that you've mentioned it here today.

    I want to give you an example. Five years ago, fewer than 20% of the calls to our call centre were answered on the first attempt. Last year, I think we had about 32 million phone calls to our call centre; that's more than the population of Canada. I joke and say someone's calling us more than once, but in fact we know we're on the speed dial for a lot of professionals and for individuals who have a lot of dealings with our department and agency.

    The average Canadian who calls us once or twice gets through today 90% of the time on the first try. I've had people stop me to say how much the service has improved, how much they appreciate getting the answer, and how pleasant our people are on the telephones.

    So I want to thank you for pointing it out. I do want to say, however—and this is no joke, although everybody laughs when I say it—that we still have 10% who are not getting through and who are not satisfied. That, last year, represented 3.2 million people who are calling me directly or calling you. That's why we want continuous improvement, because even though we're at 90% we want to keep doing better to get information to people in different ways so they don't have to phone us—so they can get it right off the website.

    If you have ideas or suggestions of things we could post on the website, which more and more people have access to, or information to MPs' offices that we could provide for you so we could improve service to your constituents, let us know.

    CCRA used to be number two on the complaint list of members of Parliament, and we're really proud we can say—I don't think we're in the top two or three anymore—we're getting down, and that's great.

    The Vice-Chair (Mr. Nick Discepola): Thank you, Minister.

[Translation]

    Ms. Picard, please.

    Ms. Pauline Picard (Drummond, BQ): Thank you, Mr. Chairman.

    Good afternoon, Minister Caplan. It is a great pleasure to welcome you to our committee. I would also like to welcome the people who are with you. I would like to congratulate you on this great improvement. Ninety per cent is certainly a noteworthy percentage.

    As for accelerated processing or the systems like CANPASS and NEXUS, there is widespread belief that those security systems will be installed at the land borders or in airports, but there is never any mention of ports. I looked at the notes we received to see whether I could find information on the ports. We all know there is often fraud, that there are stowaways. What has been done to improve the situation at ports?

º  (1615)  

[English]

    Ms. Elinor Caplan: This is a very good question, because when we talk about our borders, we have airports, we have land borders, and we have large ports. We also have small pleasure boats along the St. Lawrence River and on some of the rivers that cross our borders.

    I visited one place that had a long name I can never remember. It starts with an M. It has a huge, long name to it. Somebody will remind me. I was there, I visited, and I saw that we had a telephone where people who came could pick up the phone and check in.

    The NEXUS and FAST programs are unique because they are two-way programs. If you qualify for a FAST program as a driver—and FAST is for commercial traffic; it's the driver who has to be cleared under the FAST program—that individual may also have a NEXUS card when he travels as an individual in his own car. If you qualify for a NEXUS card, it's good at any one of our land border crossings. CANPASS-Air and hopefully NEXUS-Air represent the airport.

    At the seaports, we have a very good record of meeting the goal of increasing security for the huge cargo containers. Last year I think Canada received about 2.7 million containers that came in through the large ports of Vancouver, Montreal, and Halifax. That's where we've installed the very significant high-tech equipment to identify those cargo containers.

    One of the unique things as well involves the targeting units, where we receive advance information. I visited in Halifax a joint targeting unit, where American targeters—and we have Canadians at Newark and Seattle—are here sharing information, identifying the cargo containers that need to be further inspected. That's what we're using the big machines for.

    In the summer, we have pleasure boaters who want to be able to go back and forth. That's been a big challenge for us. I'm going to ask Mr. Lefebvre to talk about the marine program on the St. Lawrence and other small lakes and rivers, such as Lake Ontario and others. I'm from Ontario, which is why I mention that. We have a number of challenges to identify and give access without creating a big hassle. But security is the most important feature for us, and so the marine program has been redesigned as well.

    Monsieur Lefebvre.

[Translation]

    Mr. Denis Lefebvre (Assistant Commissioner, Customs Branch, Canada Customs and Revenue Agency): The minister basically answered you question, I think, with regards to small boats like those on the St. Lawrence River. We are working with the Americans to set up programs that will facilitate matters for pre-authorized travellers. We want to extend the NEXUS system to include small craft users. So we presented the project at our last meeting in Halifax with the Americans, so that they would not have to travel 20 miles upstream or downstream to reach the customs office before going on to their final destination.

    We are working on expanding these programs to also include ports. The marine industry also includes cruise boats, Madam Minister. We are working with the cruise boat industry to see whether they could give us passenger information in advance so that we could conduct our risk analysis prior to the ship's arrival, thereby facilitating disembarkation.

[English]

    Ms. Elinor Caplan: What is important to understand is how multi-faceted, and therefore complex, the situation is regarding the different modes of entering Canada. It could be by land, sea, or air, or casually by the person who travels back and forth across the border by car, or in the summertime by boat.

    Along with our American colleagues and as part of the smart border initiative--and even before that--we have looked to identify programs that would do two very important things: first, give us the confidence that people were obeying our laws, that we were secure, because safety and security is the top priority; and second, as Mr. Lefebvre said, do it in a way that doesn't create a big hassle for people who have to declare.

    What we've identified in all of our programs is that there are certain people we know, in whom we have confidence, whose records we've checked for criminality or security, people who have a completely clear customs record, who have never falsified a customs declaration. We know by giving those people a program such as the former CANPASS, which is now a two-way program we're moving to with NEXUS, we can then focus our resources and our attention on the people we don't know. These programs have to operate 24 hours a day.

    I've described it this way: we try to make the haystacks smaller, because looking for those terrorists or bad people is like looking for a needle in a haystack. Of the people crossing the Canada-U.S. border, 99% do so in a proper and lawful way. That's the statistic. Our border functions 99% safely; however, we're looking for that small fraction. Therefore, by removing all of those people we have confidence in, whom we trust, whom we know, that's risk management; that's the foundation of the programs of the smart border initiative. Many of those programs were tested by Canada Customs long before 9/11.

º  (1620)  

[Translation]

    Ms. Pauline Picard: I am asking for specific information because many people are worried. Summer is approaching and many people have a sail boat or motor boat and want to travel around the lakes in Quebec. They will also cross the border to go to the United States for a day trip or a weekend. What exactly will happen when they get to the American border? I would like you to give me that information.

    Will there also be patrol boats that will approach their boat? Will they have to show their passport or identity papers? Is that what will happen?

[English]

    Ms. Elinor Caplan: We do have a program for marine, as we've had in the past year, where people apply in advance. But there are checks--both customs and police boats--so people can be stopped. I'm going to ask Denis to talk about how to apply. Most people who have boats know how to apply.

    Denis, do you want to give us that information?

[Translation]

    Mr. Denis Lefebvre: Last year, the year following September 11, the program was tightened up. We used more resources to check people and the Americans did the same. Last summer, things ran fairly smoothly for the entire season. It is a little more awkward to file customs reports, but we still have the CANPASS program, to which low risk passengers can subscribe.

    There again, we spoke to the Americans about the problem at our last meeting in Halifax. Next year, we would like the members of the NEXUS program to be able to have the same privileges for their small boats as they do for their car. But for the upcoming season, we expect the situation to be very similar to last year's, where basically everything ran fairly smoothly.

    The Vice-Chair (Mr. Nick Discepola): Thank you, Ms. Picard.

    Ms. Minna, please.

[English]

    Ms. Maria Minna (Beaches—East York, Lib.): Thank you, Mr. Chairman.

    Minister, thank you. It's good to see things are working well. I should say that in my riding the two things that keep us the busiest are Immigration and Rev Canada, as my office still calls it--although we have an excellent contact who does fantastic work with us and really cuts down the time we spend--

    Ms. Elinor Caplan: Are you talking about complaints or requests for information?

    Ms. Maria Minna: No, it's usually people running into problems with their stuff. It just happens to be one of the busiest areas. But we have excellent help, so it really shortens the time we spend dealing with constituents and it makes them very happy most of the time. Sometimes you just can't help them because it's their problem. That happens too. But most often we have great help.

    I want to take us to the issue of reallocation, which was part of the last budget, and I know all departments are having to look at their bottom lines and what have you.

    In the 2003-04 report on plans and priorities, the CCRA remarked that the funds available for core operations were actually decreasing when you considered the unfunded pressures you have already as well as the requirement to invest in other areas and other initiatives that are expected of you. When I look at the chart of the funding, I notice the budget for 2002 is actually higher than the budget for 2003-04. It goes up a bit somewhat in 2005-06, but actually, the full-time equivalents of staff remain fairly constant throughout that process.

    So I'm left wondering a number of things. First, how will the impact of the reallocation affect your ability to do the job, especially given the increased rate of volumes and commitments regarding border security and all of the additional commitments you've made with respect to security and so on? I won't go into naming all the different programs. Also, will the agency be able to meet its increased workload and fulfill its responsibilities with virtually the same number of people, at least from what I could tell from the table?

    I guess what I'm saying is, before the budget, or before the request to look for savings, you're saying your core program is tight... [Technical difficulty--Editor] Given that, how is this affecting the kinds of initiatives and the priorities you've identified?

º  (1625)  

    Ms. Elinor Caplan: There are a number of things we're doing to ensure good stewardship and management of the resources we have. As you know, in previous years we actually received a significant increase to allow us to hire additional auditors and so forth. But at the present time--

    The Vice-Chair (Mr. Nick Discepola): Just a moment, please. We're having technical problems and I'd like to straighten them out before we continue, so we'll suspend for the time being.

º  (1627)  

---

º  (1631)  

    The Vice-Chair (Mr. Nick Discepola): [Technical difficulty--Editor]

    Ms. Elinor Caplan: If you subscribe to a continuous improvement environment, then it's appropriate to look at everything you do to see if there are ways of doing it more effectively, more efficiently, and more cost-effectively. We've undertaken 18 reviews inside the agency now so we can respond to the budget requirements of reallocation toward higher priorities, but also to ensure that every penny we spend is giving us the very best result for the taxpayers of Canada.

    So we'll be able to meet our commitments and have the resources available for the customs side. Some of those items are under discussion right now with Treasury Board. There are always discussions when there are priorities that have been established, but we've recognized that with a budget the size of ours, we must review on a continuing basis and identify areas where we can do things--using technology sometimes--more efficiently or effectively.

    The shift, for example, to e-commerce--EFILE, NETFILE --is just now starting to show results. It took us a few years, but given the numbers of filings that are coming in, the less paper there is to deal with.... That's one of the ways we're dealing with the volume challenges you identified.

    Ms. Maria Minna: I'm looking down the road to your 2005-06, and you're projecting the full-time equivalency to stay pretty well relatively stable. I was just wondering, given that there are no changes in that, if you're going to be able to meet the workload, with all the additional demands we put on the department, and at the same time look for savings, as we say, or reallocations.

    Ms. Elinor Caplan: Yes, in fact I would say that is an example of the human resource challenge in general of government. The workforce is aging, people are retiring. We have identified areas in which, because of technology, jobs change. As an organization we've called ourselves a learning organization, where every one of our employees is encouraged to achieve their own potential, to develop learning plans. So as technology changes jobs, our people will be ready to see this as an opportunity to take another job that is available, because jobs will change in this environment where we're able to do things better by using new technologies, on the tax side as well as on the customs side.

    We expect the labour force will stay fairly stable, yet we will be hiring additional auditors. That's not a contradiction. It means we will see jobs shift and change, and as people retire, others will have opportunities because they've prepared by learning new skills to take on those additional responsibilities.

    I'm going to ask Assistant Commissioner Rigby if he wants to add anything to that.

º  (1635)  

    Mr. Stephen Rigby: I think in essence, Minister, you've summed it up quite well.

    Our estimates indicate that our budget and FTE count will stay relatively flat over time. As the minister said, our expectation is that we will not only reallocate from within our fiscal budget, but we'll also move people around within our program. As electronic commerce and other things begin to take hold, we think we can probably transfer resources around there.

    The other thing I would note is that we are constantly challenged to look at the balance between our ongoing programs and reinvesting in new things that are going to give us a payoff in future years. The kinds of reviews the minister is referring to basically underscore our commitment to always look at the $3.5 billion and to see whether or not we can find money at any given time to invest in technological things, and process changes, etc., that will give us a payoff in a couple of years. That's always a rolling agenda for us.

    We are constantly in discussions with our friends, the Treasury Board and the Department of Finance, etc., on specific issues that come up and are presented to us from a program point of view. So the fact that our estimates are displayed in the way they now are may not represent reality as we go along. As an example, we're now discussing issues around customs that may or may not result in changes to our budget.

    With our friends at the Treasury Board, we are in constant discussions to make sure that as our volume of business changes, we are adequately acknowledged or compensated for it. We don't have an automatic change switch on our budget, so as our volumes change, we have to go back to make a business case to the Treasury Board to get compensated for those changes.

    Those are the kinds of discussions we have on an ongoing basis, which will probably result in some changes to the figures you see here.

    Ms. Elinor Caplan: The one change that I found particularly interesting--and I think this is how you support innovation in a government department--is that we made a business case a few years ago for a mechanism to improve, and we said, if you give us this resource, we'll be able to save money and pay you back.

    You might be interested in how that worked. It's a very dynamic organization, one that embraces innovation, and when we make a business case, we actually live up to the commitment we've made.

    Do you want to add to that?

    Mr. Stephen Rigby: A couple of years ago, in consultation with the CCRA, the Treasury Board conducted a fairly lengthy analysis of us. It resulted in some fairly substantial budgetary changes for us, compensating us for the workload increases I just referred to—but also in the areas of auditors and collectors, etc. In exchange for that, the Treasury Board expected that the investments we were going to make in some of these areas would result in savings. Those savings are in fact occurring.

    Ms. Elinor Caplan: So over time we're actually returning several tens of millions of dollars to the government centre, acknowledging the fact that the kinds of investments we've made have borne dividends for us. With that good track record, we've then been able to go back to make a case for the next initiative, or to say we accomplished that but we are seeing volume pressures, and so forth, and we are then able to get an additional allocation. But I would say that we have a pretty good reputation with the Treasury Board for doing what we say we're going to be able to do.

    Ms. Maria Minna: I raised that because in the 2003-04 report on plans and priorities you do talk about some challenges. I just wanted to know how they were going.

    I just have one last, very quick question.

    With respect to our borders, we're sometimes more concerned about our economics. And since September 11, the Americans have rightly had a major concern about security.

    How has our relationship gone with the homeland security put in place on the other side? I'm not saying we're not interested in security; obviously we are, and we have been working very hard on it. But because of their experience, on a personal level I think there's more sensitivity to some degree about security. How has homeland security changed the relationship with us?

    Ms. Elinor Caplan: Canada Customs and Revenue Agency, but particularly Canada Customs, has had an excellent working relationship with U.S. Customs for a long time, predating the horrific events of September 11. CIC, Canada Immigration, and INS, before the establishment of the Department of Homeland Security, had an excellent relationship. Department to department, I think historically we've worked together extremely well; the Department of Foreign Affairs and the Department of State, the RCMP and FBI.

    However, what we've learned through the discussions of the Smart Border Accord, and what I think made the issue extremely important for all of us, is that we recognized that by taking a risk management approach, working together, having joint programs that focused on security, the result was that because you've taken out all of those that you know, you've actually been able to speed up the low-risk, secure, regular cargo going back and forth between our countries. So along with national security interests, both countries benefit because of our mutual independence and our economic security interests.

    I was in Washington State a couple of years ago and met with people in Bellingham who said, you know, we rely on the Canadians who come here as much you rely on Americans. So it's a mutually interdependent relationship. We both want to know that our border is secure and that it works well for both our national security and of course defence interests, but also for our economic security interests.

    The most interesting thing is that the program that predated September 1.... And I never liked the name of it from the day I arrived. I said to Denis, why do we call it customs self-assessment? Nobody understands what it is, and nobody is looking at it, and you're all doing it by yourselves. But it was pre-September 11, and at that time the focus was on facilitation.

    But that program was a security program, because companies had to provide all kinds of information and enhanced security to satisfy us that we could have confidence in them before they could qualify for CSA. And the interesting thing is that CSA became the foundation for the FAST program. With some changes due to the lessons learned from that program, the FAST program is founded on those same principles--using technology, having confidence in the drivers who have been precleared. They have no criminal records, they've all been cleared and there are no security concerns. And the companies have put in place the security measures at their companies. We have confidence in who they are, we know that they're giving us the information we need, and it's bearing results. I would say there's more confidence among both Canadians and Americans in the way our border is functioning because of these programs.

    What we've learned is that these security programs can help us do things more efficiently. That's the by-product of a proper risk management system.

º  (1640)  

    The Vice-Chair (Mr. Nick Discepola): Thank you.

    Ms. Elinor Caplan: So security goes hand in hand with efficiency.

    The Vice-Chair (Mr. Nick Discepola): Thank you, Madame Minna.

    Mr. Casson, please.

    Mr. Rick Casson (Lethbridge, Canadian Alliance): Thank you, Mr. Chairman and Madam Minister.

    I want to touch on an issue I think you're aware of. I think post-September 11 there were some two dozen or so airports, smaller airports across Canada, that lost their airport-of-entry status. There's an instance in my riding, and I know it reflects across Canada, because these airports are indeed spread right across from coast to coast. It's a critical issue to be able to have these flights land in these smaller cities because the industries that have been created there have relied on this in the past and they need the ability to do that again.

    We did some research and we talked to some of the other communities involved, besides Lethbridge, about what they were told about the criteria that were used to pick and choose which airports would stay open and which airports would be closed, and we couldn't come to any solid figures on what they were. So I'd like to ask that, what the criteria were. We heard issues of volumes and flight criteria, but we weren't able to find them. And what is being done to re-establish some of these airports as airports of entry?

º  (1645)  

    Ms. Elinor Caplan: I'm certainly aware of the importance of airports to local communities. I can tell you I had a very long and full discussion not only with Senator Fairbairn but also with the delegation that came from Lethbridge.

    What I've discovered in the time I've been here with CCRA is that each and every one of our crossings and airports has some unique features to them. So when you talk about criteria, it's important for you to know we do have criteria, that they do relate to volume and they also relate to other things as well. For example, we know that if we had in-transit travellers who are passing through where our experience shows there are a lot of gun shipments, or people carrying guns, we know that may require greater attention from our officers. We've tried to establish criteria that will give the local communities the information they need to have on what is possible in the short, medium, and longer terms.

    At the same time, because we want to be as fair as we can be, we talk about other options such as limited coverage and cost recovery options, which many communities have embraced or where they have employers or industries that want to contribute to helping support that. But the reality is that for us, with limited resources, we have to set priorities on the cost-effectiveness and the ability to serve communities across the country.

    I wish I could say we anticipate having available resources in the future, but unfortunately I think it's unrealistic to expect that. But we will continue to work community by community, case by case, to look for ways to help have the best possible service, given the specific needs.

    I will ask Denis if he has anything he wants to add to that.

    Mr. Denis Lefebvre: I think you've covered it, Minister.

    The Vice-Chair (Mr. Nick Discepola): Maybe you can ask both questions and then the minister can respond.

    Mr. Rick Casson: Madam Minister, I'd like maybe a little further clarification. Are you saying, then, that these 24 airports that have lost their airport-of-entry status are not going to get it back, or if they do, it's going to be in some different form? How can we have it in a half manner?

    Ms. Elinor Caplan: I think that's a good way of approaching it, because there are other ways of providing service. We provide some airports with CANPASS-Air service. That's not a full port of entry, but for businesses that qualify for the CANPASS program, some charter flights, that kind of thing, CANPASS-Air is a real option and will serve those communities quite well.

    We have the issue I mentioned a few minutes ago about the option of cost recovery for limited time periods. That is possible in certain communities if they know they need the service for a certain number of hours a day only to meet the needs of incoming flights to that airport.

    What we do, and that's why I say it's case by case, is have certain criteria, and if you meet those criteria, then you can become a port-of-entry airport. If you don't meet all of the criteria and the concerns we have about being able to support the desire, then we look at other options. The communities make business cases and they come forward with their proposals, and if we can't do everything they would like us to do as quickly as they'd like us to be able to do it, then we say, can we discuss a cost-recovery option that will respond to your immediate needs while you get your volumes up to be able to reach the point where you could then have a full-service operation 24/7, which is what a port-of-entry status gives a community?

    So it's not all or nothing. I think that is the point here. There are options that can be explored with the community to try to provide an acceptable level of service at a reasonable cost to the community until they have the growth to meet the criteria for full port-of-entry status.

º  (1650)  

    The Vice-Chair (Mr. Nick Discepola): Thank you.

    I'd like to now ask Sophia Leung to ask her questions, please.

    Ms. Sophia Leung (Vancouver Kingsway, Lib.): It's so good to see you, Minister Caplan, and Denis, and welcome to Commissioner Guimond.

    As a former PS, I have learned a lot from all of you, and it's good also to hear about some of the new programs that you implemented and your accomplishments. I want to say there is still a lot of concern about the terrorists, the border, and especially I think in the west there's also another issue of concern, which is the illegal migrants who come by air or by ships, from the sea. I wonder if the new technology VACIS can detect the human body.

    Another thing is that a group of us are going, with the Canada-U.S. interparliamentary group, to go to a meeting to meet our counterpart for the U.S., and I'm sure they're going to raise a lot of concern and fear about the border, the terrorists. Maybe you can help me, Minister, as to how we're going to be able to precisely say that we definitely have the technology, and also the strategy, not to send the terrorists to them, from Canada to the U.S., and rather, that the reverse is true, that we actually have a more advanced technology with SMART.

    Would you like to answer that?

    Ms. Elinor Caplan: Yes. We know there are myths out there and that we need to be really clear about what we are doing, about the investment we have made in technology, but we must also be aware of the fact that there are some who want to believe what they read in the newspapers without checking the facts. We know it wasn't long ago that there actually was a hoax, a suggestion that five terrorists had been identified in Canada. It turned out to be a hoax. It wasn't true.

    I saw it all over CNN and it was it all over the news when it was first announced. The problem is that when it was discovered to be a hoax, they said it once, instead of repeating it over and over again. There are some people who don't know it was a hoax.

    Similarly, the events of 9/11 were very tragic, but all 19 of the suicide bombers, the hijackers, had valid U.S. travel documents. None of them came through Canada. Yet when I'm in the United States I find there are still people who believe the myth, the rumour, that in some way they came from Canada. It's unfortunate that there are these myths.

    But I can tell you that historically Canada Customs has had 40% more resources, people on the Canadian side of the border. We've enhanced that. Now, with technology, I'm pleased to say that we're working very cooperatively with the Americans, and when they brought out the National Guard, it was to increase their numbers to the same level as the Canadian resources until such time as they had an opportunity to recruit and train additional people on their side of the border. They've done that. The numbers are now similar.

    The question you ask on technology is an excellent one. I mentioned in my opening remarks mobile gamma ray scanning systems, also called VACIS. It's important to know that those machines...and I've seen them in operation, we have them now functioning at our ports. The mobile ones can be moved around, and they can be used in different locations. They are safe for people. We are able to identify people without harming them with this gamma ray radiation.

    I think it's important to know that when a container comes off a ship, if it's “VACISed”, we can identify people inside that container. It's a deterrent. People know we have this equipment. They know they can be caught.

    Our targeters are very good, but the equipment we're using does not pose a hazard to human health. I think that's something you should know. We work very closely with our partners at Immigration when it comes to targeting as well. Our customs officers who are on the front line look to identify people who are inadmissible to Canada, as well as goods that are inadmissible, and then we refer them to Immigration secondary, or Customs secondary, for further examination.

    They have information in their computer systems that we've had for many years. We also at our land borders have licence plate readings. The Americans don't have that on their side. The information in that database is the immigration database as well, and the police lookout list, the watch lists, can be incorporated, so when someone comes to a land border they have access to that information. We often identify someone trying to come in from the United States who the FBI are looking for, and we can turn them over to the Americans because we have the capability to put the FBI watch list in our database as well.

    We work very closely together. We have memorandum of understandings to share information. You've heard me speak about API and PNR. That's at the airports to identify people coming into Canada, to be able to share that information, so if someone poses a risk we will do everything we can to stop that person before they get on the plane.

º  (1655)  

    Advanced passenger information has been functioning now since October. For the passenger name recognition program, we worked very hard to put in place the guidelines and the criteria that achieve a balance of protection of privacy while at the same time giving us the ability to store the information for six years and share it properly with other departments and our American partners.

    The message is a clear one. The Canadian government—CCRA and our partners—working very closely with our American and international colleagues, have done everything we can, using excellent personnel and technology, to send the message out that our border is secure. We are always looking at ways that we can improve those systems, and we evaluate them at all times.

    That's why I mentioned that the joint passenger targeting unit is being evaluated now—the one that's in place in Vancouver and Miami—to ask, is this the very best way of doing things? Are there better ways we can use those resources to achieve the results?

    We recognize that nobody can do this by themselves. The ability to work together is really paying off.

    The Vice-Chair (Mr. Nick Discepola): I'm not trying to accelerate this, but I have three other questioners and I want to get them in.

    Sophia, very quickly, please.

    Ms. Sophia Leung: Very frequently I receive complaints from my constituents from West Vancouver. Frequently Asians fly in, but they feel sometimes there is an attitude problem with the officials at Canada Customs. In CCRA, do you have—I'm sure you do—an employment equity program? Can you mention also how, if such complaints come, we can handle them properly?

    Ms. Elinor Caplan: I'm very sensitive to those kinds of complaints, because I think it's important that everyone know that no matter what their race, colour, creed, or religion is, we do not do racial profiling. We do, however, expect everyone to obey our laws.

    CCRA is an exemplary employer when it comes to employment equity. Our workforce reflects the population, and in fact we've done extremely well in meeting the targets for underrepresented groups. We also engage in training for our employees so that they understand how important it is to treat everyone with respect. But from time to time, if we hear a complaint, we take appropriate action.

    I think you should know that we take those complaints extremely seriously. If someone has a complaint or a concern, they should get the name of the person. I sometimes will hear someone say, I was there and this happened, but when you ask who it was, they don't know.

»  (1700)  

    Ms. Sophia Leung: If they don't have a name, maybe they have a number. But if they don't have a name or a number, how are they going to identify the person?

    Ms. Elinor Caplan: They can ask for the supervisor right there and then at the airport. If people are going to come with a complaint, they have the right at any one of our ports of entry, if they feel they're not being properly and respectfully treated, to ask for the name of the person they're dealing with and to ask to see a supervisor.

    All of those incidents, which are few—they're very few—are properly investigated and appropriate action is taken. I can tell you that we are engaging in training of our staff so that they understand how important it is to treat everyone, regardless of their background, race, colour, or religion, with respect and dignity.

    The Vice-Chair (Mr. Nick Discepola): Thank you very much, Sophia.

    Mr. Peterson, please.

    Hon. Jim Peterson (Willowdale, Lib.): Thank you, Mr. Chair.

    Minister, last Sunday night at the Quebec border, over 100 weapons coming in from Connecticut, including submachine guns and grenades, were seized, and 324 charges have been laid. I want to ask you, have you or any of your officials been complimented on this wonderful seizure by any members of the opposition?

    Ms. Elinor Caplan: That's a very good question. I'm surprised you know about it, because it's good news, and you rarely get to read about good news in the newspapers. We send out media releases and we then monitor to see how many of them are actually reported on. We post them on our websites as well. I'm so pleased to see there was an article in the paper.

    In fact, you're right—

[Translation]

    Ms. Pauline Picard: In French as well?

    Ms. Elinor Caplan: Yes, in French as well.

[English]

    It was at Saint-Bernard-de-Lacolle. Our customs officers, who were very vigilant, identified vans with individuals. The number of submachine guns, grenade components, ammunition, and black powder that was recovered should give people confidence that our people are on the job. There were 324 charges laid.

    This isn't the first time, and this isn't the only place. In British Columbia about a month ago, backpacks were discovered to contain guns and money coming in from the United States. These were crossing in from the U.S. as well.

    Mr. Jim Peterson: [Inaudible—Editor] ...invest in Canada.

    An hon. member: And they're telling us we're the problem.

    Ms. Elinor Caplan: It's important for us to have the facts. This committee—

    Mr. Jim Peterson: That's foreign direct investment; we're encouraging it.

    Ms. Elinor Caplan: If you'd like, I could ask the department to prepare for the committee a list of the seizures of significant quantities, because not only do we have seized guns, but as a result of our vigilance, the number of drug seizures, the amount of contraband.... I'll give you a couple of examples.

    In November 2002, in Brampton, Ontario, 27,000 cartons of counterfeit Marlboro cigarettes that originated in China were seized. They were worth $1.4 million.

    In May, he mentioned two U.S. citizens trying to bring in 100 weapons, which included automatic handguns, revolvers, hunting rifles, silenced submachine guns, and military assault-type rifles. They were seized just this month.

    In March 2003, officers in Halifax seized 172 kilograms of cocaine worth $21.5 million. These were concealed in wooden night stands that had originated in Haiti. I actually met the young targeter. She had 12 years of experience and was so excited when I congratulated her personally for having identified the container to be “VACISed” by the new VACIS machine.

    In March 2003 at Pearson International Airport, 13.7 kilograms of heroin with an estimated street value of over $500 million was concealed inside a false compartment of a suitcase.

    These are just a few of the recent examples of the good work our customs officers have been doing to send out the message that we are doing our job and doing it well, and that contraband is not coming into Canada.

    By the way, I appreciate the fact that this has been raised at this committee, because our people rarely get compliments. We know how to deal with complaints; we're just not used to dealing with compliments. Thank you.

»  (1705)  

    The Vice-Chair (Mr. Nick Discepola): Thank you, Mr. Peterson.

    I'll turn to Mr. Jaffer for the last question, please.

    Mr. Rahim Jaffer: I'm glad that question was raised, or at least able to be addressed, because I wanted to also commend the work our customs agents do. Obviously, they are sometimes put in high-risk situations, and they have to deal with them in a way that sometimes they don't feel comfortable with.

    I wanted to share a brief letter I got recently. I seem to get three or four of these a day, sometimes. It's from one of your agents at CCRA. He wrote to me saying:

I was working today at my port at the U.S.-Canada border, when a California-plated vehicle with one occupant bolted into Canada. The driver had been refused entry. I immediately called the RCMP detail ten miles up the road and alerted them to the plate number and the description of the vehicle. Hours went by. Finally I called the RCMP dispatch and was connected to the constable. He told me he had been busy on a case and had passed the call to the nearest RCMP detachment 30 miles up the road.

In conclusion, the car was never stopped and is still in Canada. What was in that car, and who was the individual driving it? This is too often happening at the land borders. It has to be reported, and someone in charge had better take notice. We are the front line of our country's security, yet we are told to do our job with both our hands tied behind our backs, with no support from management, no weapons to defend ourselves and the public. Someone will get shot and die.

    This is the frustration of a number of customs agents at the border. As I've said, I can document them because I get three or four a day sometimes.

    I want to ask the minister, what does she say to them? Are there any plans to actually put an armed presence at some of these borders where these customs agents don't have the ability to protect themselves, let alone Canadians?

    Ms. Elinor Caplan: In fact, at the borders we have a very good relationship with the RCMP; in certain locations, with provincial police; and in others, with local law enforcement police forces. We consider that there is a very important partnership there when we need them. They're there for us.

    We conducted recently a job hazard analysis, which concluded that customs officers should not be armed. The Commissioner of the RCMP, Mr. Zaccardelli, confirmed that in a letter to me.

    I know there are some customs officers who, after spending some time with customs, decide they really want to be police officers, and they apply and are accepted by police forces. I can also tell you that we have no difficulty recruiting people who want to be customs officers, because the job is so interesting.

    You mentioned one particular incident that I think is an important one. The information I have from my officials--because all of these events are reported--is that because we have licence plate readers at our high-volume border crossings in Canada, we know the licence plate of any car that tries to run the border. As to our success rate in identifying those few--and I understand there really are just a few dozen people a year who try to run the border in a car--we get their licence plate, and usually they are apprehended by the police because we have that information.

    Going into the U.S., they don't have licence plate readers, and so they are looking at all kinds of other ways of trying to apprehend, and so forth. But the relationship we have with the police has been a very effective one.

    Denis, do you want to add anything to that?

»  (1710)  

    Mr. Denis Lefebvre: Following our meeting in Cornwall, the minister announced that all customs inspectors would receive use-of-force training. A lot of it is psychological and verbal, as to how to handle the difficult situations, and of course, the policy is always for them to disengage if the situation could be a risk to them, to the public, or to their colleagues.

    That training--which actually has been devised by the RCMP, and our trainers are trained by the RCMP--also has a physical component. They have the power of arrest. A fatality can always happen with or without weapons, but the fact of the matter is that we have a very, very good track record.

    Also, with the support of the minister--she announced it in Cornwall, and it was extremely well received by our customs inspectors--we are going to give, with proper training, batons and pepper spray to every customs inspector, because it's a defensive tool that can be used even in an enclosed environment.

    So by and large I think our customs officers have the tools to do their job safely.

    Ms. Elinor Caplan: The health and safety of our customs officers--in fact, all the employees at CCRA--is a top priority. We want to make sure that people are properly trained for the jobs they're doing, and this is something that I'm satisfied we're doing very well.

    I also know we monitor incidents. I've spoken with customs officers right across the country, and the overwhelming majority of those I've spoken to feel that they are well trained for the job they're doing and are quite satisfied with the support they receive, whether it's from the RCMP or local police, if they're needed.

    I actually witnessed the use-of-force training at one of the locations where we teach that, and I was told by the instructors that in fact it's always the preferred option to try to get the situation talked down, if you will.

    As to the actual number of occasions where customs officers have used hard force, I think the last time I saw the statistics it was fewer than 10 occasions since we first introduced use of force. What it tells me is they're well trained, they have the tools they need, and the job of the customs officer is one that is multi-faceted, because they can work either at an airport, at a marine location, or at a land border, and it's a very, very interesting job.

    Mr. Rahim Jaffer: Could I get a copy of those incident reports? That's something that might be interesting to see, so that it could maybe calm people's fears.

    The problem is, if there are these incidents that may be high risk involving customs agents.... I don't know if you measure the number, in fact, as you mention, Minister, where there may not be the technology to read the licence plates, in some of the more remote crossings. Unfortunately, that might be where some of the criminals would target and just blow through one of those border crossings, because obviously they know they don't have the ability to get through there.

    I wonder if you have something we could see on that.

    Ms. Elinor Caplan: I visited many of our smaller ports where we want to ensure they have the connection to the rest of the system. While they have computers, it's just that they don't have the broadband connection to be able to link in. That's why we're working toward connecting them all.

    But I asked the question when I was there, exactly as you've just said: do they feel that these smaller ports are vulnerable? What they told me most of the time when I was in these locations--and the Americans are just a few feet away, sometimes just down the road--is that they know 99% of the people because they're locals; they cross all the time. So at those smaller locations, with the kind of “we know who you are” pre-programs like NEXUS, and so forth, they say, this person coming, I know when his birthday is, I know how many kids he has, and this person crosses all the time. That's very unique to some of these small locations. So let me tell you, if somebody tries to cross there who they don't know, they stop them, because they're low volume in communities where they know everybody.

    I had one officer tell me that she and the Americans have a very good relationship, and they actually have a communications system. They can alert one another to someone they don't know who might be coming. They've developed very unique communication methods in some of these smaller locations.

    Another interesting thing I saw in one of our remote CANPASS locations is that we have sensors in the road in four CANPASS remote locations, I think, that connect to a video camera. When the sensor is tripped--you say we don't have licence plate readers--we have video cameras that actually record the car. It shows us the licence plate. If it's after hours, if they've run the border, we have that information.

    They know the cameras are there, and they know the sensors are there. So there are a lot of things going on. I think the person sitting here in Ottawa or someone who's not familiar with all the different methods we have in our different locations would be very surprised at the effectiveness of what we have done in some of these smaller, remote locations at our land borders that are very unique situations.

»  (1715)  

    The Vice-Chair (Mr. Nick Discepola): Thank you very much, Minister.

    Ms. Elinor Caplan: Denis was going to answer as well.

    Mr. Denis Lefebvre: Very recently, maybe about six months ago, at the national health and safety committee, where all the unions sit, including CEUDA, the customs union, we discussed this issue of incident reporting, because in the past we had disagreements. We had our list of incidents, and the union had a different list as reported to them by their members. So we agreed that we would develop a template that has been agreed to by the national health and safety committee. We have reminded all customs officers that if we want to have good incident reporting, they have to report the incidents. So we refreshed their memory.

    We have a template, and we are going to bring back to the national health and safety committee at every meeting, which is often, the monthly incident reports. We are going to discuss those incidents with the unions, and we are going to learn from this information and take appropriate measures to reduce the number of incidents.

[Translation]

    The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Lefebvre.

[English]

    Thank you, Minister. As usual, it's a pleasure to have you before this committee. You have always shown a great openness to coming and exchanging with us.

    Thank you, colleagues.

    The meeting is adjourned.