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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Wednesday, May 28, 2003

1540

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mr. Roy Cullen (Etobicoke North, Lib.)

The Chair

Mr. Charlie Penson (Peace River, Canadian Alliance)

The Chair

Mr. Charlie Penson

The Chair

Mr. Roy Cullen

Mr. Charlie Penson

The Chair

Mr. Roy Cullen

1545

1550

1555

The Chair

Mr. John Morgan (Executive Director, Financial Management and Accounting Policy Directorate, Treasury Board of Canada Secretariat)

Ms. Suzanne Shirreff (Senior Director, Cost Recovery Policy Division, Treasury Board of Canada Secretariat)

1600

1605

1610

1615

The Chair

Mr. Charlie Penson

Mr. Roy Cullen

Mr. Charlie Penson

1620

Mr. Roy Cullen

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

1625

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Ms. Suzanne Shirreff

Mr. Charlie Penson

Mr. Roy Cullen

The Chair

Ms. Pauline Picard (Drummond, BQ)

Ms. Suzanne Shirreff

Ms. Pauline Picard

Ms. Suzanne Shirreff

1630

Ms. Pauline Picard

Mr. Roy Cullen

Ms. Pauline Picard

Ms. Suzanne Shirreff

1635

Ms. Pauline Picard

Ms. Suzanne Shirreff

Ms. Pauline Picard

Ms. Suzanne Shirreff

Ms. Pauline Picard

The Chair

Mr. Tony Valeri (Stoney Creek, Lib.)

Ms. Suzanne Shirreff

Mr. Tony Valeri

1640

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

1645

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

The Chair

Ms. Suzanne Shirreff

Mr. Tony Valeri

1650

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

Ms. Suzanne Shirreff

Mr. Tony Valeri

The Chair

Mr. John Morgan

Mr. Tony Valeri

The Chair

Mr. Roy Cullen

1655

Mr. Tony Valeri

Mr. Roy Cullen

Mr. Tony Valeri

Mr. Roy Cullen

The Chair

Mr. Tony Valeri

1700

Ms. Suzanne Shirreff

The Chair

Mr. Roy Cullen

Mr. Tony Valeri

Mr. Roy Cullen

The Chair

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Ms. Suzanne Shirreff

1705

Mr. Tony Tirabassi

Ms. Suzanne Shirreff

The Chair

Mr. John Morgan

The Chair

Mr. Roy Cullen

1710

Mr. Tony Tirabassi

Mr. Roy Cullen

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

Mr. Roy Cullen

Ms. Judy Wasylycia-Leis

Mr. Roy Cullen

1715

Ms. Judy Wasylycia-Leis

Ms. Suzanne Shirreff

Mr. Roy Cullen

1720

Ms. Judy Wasylycia-Leis

Mr. Roy Cullen

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

Mr. John Morgan

Mr. Bryon Wilfert

Mr. John Morgan

1725

Mr. Bryon Wilfert

1730

Mr. John Morgan

The Chair

Mr. Roy Cullen

Mr. Bryon Wilfert

Ms. Suzanne Shirreff

Mr. Bryon Wilfert

Ms. Suzanne Shirreff

Mr. Bryon Wilfert

Ms. Suzanne Shirreff

Mr. Bryon Wilfert

The Chair

1735

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Ms. Suzanne Shirreff

The Chair

Mr. John Morgan

The Chair

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

1740

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

CANADA

Standing Committee on Finance

NUMBER 060

2nd SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, May 28, 2003

[Recorded by Electronic Apparatus]

¹ (1540)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day is Bill C-212, an act respecting user fees, and the proposed policy of the Treasury Board on external charging policy. We have with us the author of this private member's bill and proponent of it, Roy Cullen, member of the House of Commons from Etobicoke North.

Welcome, Roy. We've never seen you at committee before.

Mr. Roy Cullen (Etobicoke North, Lib.): Not at this end of the table--or not for a while, anyway.

The Chair: From the Treasury Board of Canada Secretariat we have John Morgan, who is the executive director, Financial Management and Accounting Policy Directorate. Welcome, sir. We also have Suzanne Shirreff, senior director, Cost Recovery Policy Division. Welcome to you both.

We'll go in order of the agenda. We'll let Mr. Cullen commence, and then after we'll hear from the Treasury Board.

Mr. Charlie Penson (Peace River, Canadian Alliance): Madam Chair, on a point of information, do you intend to study the amendments today as well?

The Chair: Just for our information, Mr. Cullen submitted his own amendments to his own bill back when he put this on the agenda. In other words, these were not amendments that had been put forward after the study of the bill. Technically, the bill has been referred to us with zero amendments on it. Mr. Cullen, for the sake of clarity, was letting the whole committee and the witnesses know what he intended to do with his own bill.

But as far as the work of the committee is concerned, you've been given them as an information item because he's circulated them to the clerk; therefore, he circulated them to the committee and the witnesses. But in actual fact, when you study the bill, the bill is as presented and referred to us by the House without the amendments, because those amendments have no validity until voted on at this committee. There may be other amendments when we get to the clause-by-clause.

I presume Mr. Cullen will address those issues. It was an informational circulation done just to let us know where he was coming from himself because there was no opportunity for him to narrow his bill after it had left the House.

Mr. Charlie Penson: Madam Chair, the reason I raise this is that it seems a bit of a strange process. We have a member moving a private member's bill, and now he wants to make some amendments. He must have had some second thoughts here along the way, so surely we need to know what those amendments are in order for us to consider this. If we are considering it based on his original bill and he intends to make a bunch of amendments, isn't that pertinent to the discussion this afternoon?

The Chair: I'll ask Mr. Cullen to address that.

Mr. Roy Cullen: What I plan to do is to discuss the amendments I'm proposing and to give the background. Then if there are questions that are redundant, we won't have to deal with them because I'll describe generally the amendments I've tabled. There may be others later from others, but I'm just going to describe in my remarks the general thrust of the amendments I've tabled so there's no confusion.

Mr. Charlie Penson: That would be helpful. Thank you.

The Chair: I just want to make clear to this committee that the bill the committee is studying is the bill as it was sent by the House without amendment. Mr. Cullen wants--and there's nothing to prevent him from doing so--to show where his own personal direction is with his own bill, what he'll do if he has his druthers and this committee sees fit to approve these amendments.

Mr. Cullen, the floor is yours.

Mr. Roy Cullen: Thank you, Madam Chair and members of the committee.

It's great to be back at the finance committee and at this end, and I'm very pleased to have this opportunity to describe my Bill C-212, an act respecting user fees.

The intent of this legislation is to bring greater transparency, accountability, and parliamentary oversight to federal government departments and agencies when they attempt to recover costs through user fees. Rather than take you through the specifics of my bill, which I am sure you have studied in ample detail, I would like to focus on the amendments because then maybe we won't debate things I am already proposing to change.

Second, I would like to discuss the process my bill will trigger with respect to user fees, whether new fees or increases in fees. Then I would like to discuss some of the alternatives to my bill that have been floated around. There may be others as well, but there are some I am aware of, and I'll give my comments on those.

¹ (1545)

[Translation]

First, I want to clarify that I support the government's goal of cost recovery through the imposition of user fees on private goods or exclusive services.

[English]

My bill legislates criteria that would apply to user fees, and Bill C-212 offers a role for parliamentarians in this process.

Before I expand on exactly what my bill does and the other proposals that are being discussed, I'd like to talk to you briefly about the amendments I have tabled. Some would say, it's your bill, so why are you amending it? Well, I am amending it because I have listened to you, I have listened to users, and I have listened to the government.

So I'd like to talk about those amendments. First of all, one amendment clarifies that my bill does not define which committee of the House of Commons a proposed user fee or user fee increase would be referred to; that was not totally clear from my bill. What my bill basically says is that it's really up to Parliament to assign the bill to whatever committee it sees fit.

I would think a logical place would be identified. For example, if it was a health-related user fee, it would go to the Standing Committee on Health. If it was a user fee relating to transportation, it could be referred to the Standing Committee on Transport. My bill does not mandate that all user fee proposals be sent to the committee on finance, which may be comforting to some of you.

Another amendment removes the reference to OECD countries when we benchmark user fees. I have eliminated the reference to OECD countries, and now my bill in my amendment talks about “major trading partners”. That's to facilitate the process and, in a sense, make it more relevant. There was some concern that reference to OECD countries made it too broad and that this would require a lot of time and effort because of comparing apples to oranges, so I've agreed in my amendment to deal with that. So when we benchmark user fees, it will be against major trading partners, where we are competitive or where these issues arise, depending on the product or service.

I have introduced an amendment that eliminates crown corporations from the application and the scope of the bill, given that crown corporations already have an existing commercial orientation.

I have also tabled an amendment that focuses my bill on federally regulated sectors where monopoly pricing is prevalent, and I will come back to that in a moment.

Another amendment provides additional clarity that a user fee is required only when a direct benefit or advantage is conferred upon an individual, including a corporation. If no such benefit is conferred, the good or service is really a public good or service and is funded from general taxation through the consolidated revenue fund. I propose this amendment because there are cases where user fees are being applied where there doesn't seem to be a private benefit or good.

In the context of the independent dispute resolution process that is described in my bill, the word “reasonable” has been inserted to eliminate frivolous complaints about user fees that would be subject to the independent dispute resolution process referred to in the bill.

I have introduced an amendment in response to the concerns of some colleagues that a requirement for a standing committee to review a proposed user fee or user fee increase usurps the authority of House of Commons committees. My amendment replaces the word “must” with “may”.

Given the concern of some that the bill interferes in the roles, responsibilities, and mandate of the executive branch of government, I have proposed an amendment to provide ministers and heads of other authorities the ability to introduce user fees, like the airport security fee introduced following the events of September 11, without prior reference to the House of Commons in the first instance where matters of national defence or national security or other emergencies are involved.

This same user fee, however, would be referred to the House of Commons within one year from the date of its implementation, at which time the normal application of this bill would apply. The House of Commons could then ratify the fee, propose changes to the fee, or reject the fee.

While this measure allows the executive branch to act in emergencies, any other new user fee or user fee increase should be part of an authority's planning process and subject to normal lead times for consultation and approval.

[Translation]

Now, I want to describe the process Bill C-212 will trigger when a federal government department or agency decides to introduce new user fees or increase already existing fees.

[English]

The way I see it, Madam Chair, the appropriate minister will table in the House of Commons a report that describes the fee, the benefit conferred on users, the costs associated with the fee, and all the other requirements laid out in Bill C-212. This will include how the fee compares with those in countries that are major trading partners; what form the consultation process with users took and how users are responding to the fee or fee increase; what competitiveness issues arise, if any; whether or not the independent dispute resolution process called for by my bill has been necessary, and if so, what conclusion the independent adjudicator arrived at; what performance standard the department or agency is committing itself to; and what their track record has been in meeting performance standards in the past.

The House of Commons would refer this user fee proposal to the relevant committee of the House. The committee might decide to review it and report back to the House. If the committee recommended changes to the fee proposal or rejection of the fee outright and if this was concurred in by the House of Commons, under this bill the department or agency could not implement the fee as presented.

I should say that this power is very similar to that of the Standing Joint Committee for the Scrutiny of Regulations in the case of regulatory matters. Our chair was on that committee, so she'd know better than most. But this committee has the power to initiate the revocation of a statutory instrument. Bill C-212 is asking for the same powers for parliamentarians in respect of user fees.

In a few minutes you will be hearing from the Treasury Board Secretariat with respect to their proposed external charging policies. I say “proposed” policies because they are draft policies now and they have not been agreed to by the government. I am not sure all that is going to be stuff that's straight ahead; perhaps the officials could speak to that.

If these proposals are accepted, however, there will be positive progress in improving policy in the areas of performance standard setting and in providing greater transparency and accountability. There appears also to be an improved emphasis on benefit/cost analysis.

Notwithstanding these developments, I still have major concerns that the new policy proposals will not necessarily lead to better results. Presumably that's what we are interested in around this table--results. I believe the policy is seriously lacking because it does not provide Parliament with any real role.

I believe the need for a greater role for parliamentarians in the setting of user fees is justified on three main counts. One, user fees, while not taxes per se, are very much like taxes. Second, user fees are priced by monopolies. Finally, the current system for establishing an increase in user fees is simply not working.

Now, some will argue for alternative ways and means for improving the user fee process. Let me briefly describe the ones I am aware of. Again, these are unofficial; I don't know exactly the state of play with any of these.

The government may be prepared to expand the use of the departmental performance reports and the reports on plans and priorities to enhance the role for parliamentarians in the pre-consultation, consultation, and approval and implementation phases of user fees. I applaud the government if they are prepared to do this, and I look forward to hearing the minister's views on this topic.

My bill goes further, however, in granting parliamentarians a veto power should fee proposals not meet the criteria spelled out in Bill C-212, in particular if the proposing department or agency has not demonstrated a serious commitment to meeting agreed-to performance standards.

Others may argue that the Standing Joint Committee for the Scrutiny of Regulations should review all user fee proposals. While I like the power that committee has to initiate the revocation of a statutory instrument, I don't believe that committee is the appropriate committee to deal with user fees. The issues associated with user fees are not legal ones, they are economic in nature and relate to program delivery and competitiveness. This requires a different set of skills from those of a committee that reviews matters of legality and procedural aspects of regulations, disregarding the merits of the policies they reflect.

Some others may argue that a committee of the cabinet, the Special Committee of Council, already scrutinizes user fees, and indeed it does. But if you talk to users, Madam Chair, they will tell you that while the work of that committee has added value and has resulted in an improved emphasis on performance standards when user fees are implemented, there is no real opportunity for that committee to demand accountability from departments and agencies should performance standards not subsequently be met.

¹ (1550)

In summary, Madam Chair, Bill C-212 potentially affects Canadians from coast to coast to coast because it applies to federal government departments, agencies, boards, and commissions that offer a good or service that is provided only by it and that have the power to fix a user fee or a cost recovery charge under the authority of an act of Parliament. Thus, individuals paying fees to visit a federal park, those passengers paying the air travellers security charge, individuals paying a fee to the Passport Office for a passport, or provincial or territorial authorities paying fees to the Canadian Coast Guard for ice breaking services would be affected by this bill.

With the federal park example, however, the amendment I have tabled would exempt materials like firewood in a federal park from Bill C-212 on the grounds that other options are available to park users.

¹ (1555)

[Translation]

I introduced this bill due to some frustration with how this issue was progressing.

In June 2000, in a report entitled Challenge for Change: A Study on Cost Recovery, the Standing Committee on Finance of the House of Commons recommended significant amendments to the policy on cost recovery and user fees; to date, however, progress has been tentative. In fact, there is a fear that the policy could head in the wrong direction.

[English]

In conclusion, Madam Chair and members of the committee, Bill C-212 will encourage companies to make investments and create jobs. It will demand more accountability and transparency from departments and agencies. It will protect citizens from monopoly pricing. Elected officials will play a more active role in the setting of user fees that generate some $4 billion in annual revenues.

I ask you, colleagues, to support the bill also. It will enhance our competitiveness as a nation and advance our country's innovation agenda.

Thank you very much, merci, and I am happy to take questions.

The Chair: Thank you.

Mr. Morgan, will you be starting your presentation?

Mr. John Morgan (Executive Director, Financial Management and Accounting Policy Directorate, Treasury Board of Canada Secretariat): Yes, and thank you, Madam Chair and members of the committee, for the opportunity to appear before this committee to discuss private member's Bill C-212, an act respecting user fees, and the draft Treasury Board policy on external charging.

With me today is Suzanne Shirreff, who is the senior director of the Cost Recovery Policy Division within the Treasury Board of Canada Secretariat. Before handing the floor over to Suzanne, I would like to make few general remarks.

I would like to acknowledge the impact this committee has had in elevating the profile of external charging. In particular, I would like to thank Mr. Cullen for his interest and work in the subject. This effort has been integral to the policy review, which now nears completion after three years of analysis and consultation. Your significant contribution has definitely helped shape the way federal external charging will be implemented in the future.

Of particular importance to us in the Treasury Board Secretariat has been the consistent support given by this committee to the fundamental principles of charging: equity, efficiency, and fairness. This support has been an important factor in the development of the present policy draft.

Our policy review was conducted in a comprehensive, open, and transparent manner. Consultations included all stakeholders, and internal and external advisory committees had frank and open discussions on both what works and what doesn't work under the current policy. Independent benchmarking of the practices of other jurisdictions also helped to ensure we could draw on the experiences of others.

Our prime objective has been clear from the start: to recommend the best possible policy for all Canadians. We believe our current draft is well on the way to achieving this objective, but it has not been easy. Balancing the many stakeholder expectations has been a challenge. Paying stakeholders have demanded improved performance and accountability. Canadians and the general taxpayer have sought a policy that protects the health and security of Canadians and respects the user-pay principle. Departments have expressed a strong desire for a practical and workable policy.

After our initial draft was issued over a year ago, a number of stakeholders expressed concern that we had not gone far enough, others that we had gone too far. Bill C-212 was introduced shortly thereafter. Following further rounds of consultation and an appearance before this committee, we recently released our second draft of the policy.

We believe we have come a long way since our initial draft, particularly in those areas dealing with performance standards, accountability, and transparency. In addition, we have strengthened requirements to ensure user charging is undertaken with a better understanding of the economic and overall government policy environment.

We believe the draft policy would go a long way to improving performance and ministerial accountability to Parliament. It reinforces existing legislative structures by significantly enhancing reporting to Parliament. Indeed, we believe the proposed policy will bring to life in a very tangible way those principles found in our new management framework, “Results for Canadians”. We believe it will help us set a new standard for management and service excellence, not only for those programs that are subject to user charging but for all the government's programs, and this is the way it should be. Performance, service, and accountability apply to all programs equally, whether a user charge is involved or not.

Thank you again for this opportunity. I would now like to turn the floor over to Suzanne, who will address some of the broad principles reflected in our policy.

Ms. Suzanne Shirreff (Senior Director, Cost Recovery Policy Division, Treasury Board of Canada Secretariat): Thank you, John.

External charging is a complex issue. Those who pay charges are very sensitive to the impact of charging, particularly in financing terms. In turn, Treasury Board Secretariat is very sensitive to the many concerns of the paying stakeholders over the course of the policy review and in preceding years as well.

These concerns touch on virtually all aspects of how charging is implemented, but in essence, five principal themes have emerged. In response, the policy has evolved in order for us to clarify and resolve specific concerns. The intent has been to address these five themes in the most appropriate and balanced fashion.

Theme number one is reporting to Parliament and the public. Instituting measures to improve reporting to Parliament on external charging is perhaps the bill's single strongest theme. In order to bring to life the commitments made in the draft policy's reporting requirements and be consistent with the statements in Budget 2003 regarding reporting on external charging, enhancements have been made to the annual vehicles by which departments report to Parliament, namely the departmental performance reports and the reports on plans and priorities.

Additional requirements have been added to require the disclosure of extensive information regarding external charging. Departments will be required to announce their planned fee initiatives and describe the underlying rationale and the intended consultation and review processes. They will further be required to report on revenues, costs, authorities, results of consultations and analysis, service standards and performance, and dispute management.

These are the reporting requirements that were always envisaged by the policy, and we are pleased to be able to implement them in advance of the policy's formal approval. Further, we also believe it to be strategic that the policy provisions afford the flexibility for additional reporting enhancements to be introduced as appropriate.

And finally, it should also be noted that the policy is positioned to ensure that external stakeholders are better informed on an evergreen basis by fostering communication through consultation and websites. The intent is to target effort where communication is most critical, that is, stakeholder consultations on at least an annual basis.

Theme number two is dealing with dispute management. Establishing an independent dispute management process is perhaps the second strongest theme of the bill. During the policy review several paying stakeholders stated they were unaware of the avenues available for complaints on charging. In response, the draft policy specifies the operational requirements for how departments handle disputes, including clear communication with stakeholders on this matter, making dispute management processes well known and accessible, and providing an appropriate formal structure within the department.

This clarity is very important, but it's also important to note that the policy review also confirmed that departments are generally very responsive to complaints, with most resolved early and informally at the program management level.

The best way to resolve disputes is by taking a proactive approach to the implementation of external charging so stakeholders are well informed and can see that their concerns are given due consideration. The draft policy aims at this objective through detailed requirements that stakeholder consultations occur not only when charges are proposed and introduced but also on an ongoing basis as a routine part of program management. In that spirit, the policy requirements for dispute management make it clear that ministers have an opportunity for involving stakeholders through the establishment of independent advisory boards that would provide recommendations to the minister.

To go beyond this would have the consequence of limiting the traditional concept of ministerial responsibility. Such a step goes beyond the limits of a policy's authority. It is our understanding that any action of this sort, such as establishing ombudsmen, tribunals, or independent advisory boards with decision-making powers to overrule ministers, can only be imposed by Parliament through enabling legislation.

Theme number three is service. Paying stakeholders have long made it clear that their primary concern is with service performance. They long have been concerned that service commitments are not always met, and this discredits the implementation of external charging.

º (1600)

In response to the comments of paying stakeholders, the current draft policy requires that through consultation departments establish service standards for all programs with external charges and that they consult on feasible options to be explored if the standards cannot be met. Fee reductions are mentioned as one of the options that, if feasible, could be adopted along with business re-engineering and alternate service delivery. The intent of this change is to see that the policy gives stakeholders and departments the flexibility to determine together in consultation the option that is best suited to their specific circumstances.

Recently discussion of the issue of service has focused on the need for departments to face consequences if service commitments are not met. Paying stakeholders have consistently stated that their primary concern is service. Therefore, punitive measures such as budget cuts or other resource constraints do not appear to be appropriate consequences. We believe that all stakeholders want us to avoid any boomerang effect that would undermine the goal of providing better service.

The consequences of the policy requirements regarding service and service standards should not be underestimated. The policy specifically requires departments to consult on service on an ongoing basis at least annually. This consultation opens the books on service commitments and the action to be taken if they are not met. As a consequence, this provides the sort of accountability and openness paying stakeholders have called for.

In going further on behalf of paying stakeholders we also risk an unbalanced approach to service. Consequences would also be felt by the general public, who also rely on government programs, particularly in the regulatory area.

With respect to theme number four, consistency of government-wide charging, from the outset of the policy review paying stakeholders were critical of apparent inconsistencies in how charges are established and managed. The perception was that the policy has permitted too much flexibility and too much variation in practice.

There is considerable merit in the notion that the government should strive for greater consistency in the management of external charging, and departments agreed during the policy review that the new policy should support this goal. Therefore, the draft policy provides much more detailed guidance in all aspects of external charging from consultation and dispute management to monitoring and reporting.

Paying stakeholders later raised a related concern: charging should be more consistent with other policy objectives, such as competitiveness. The current draft instructs departments in very clear terms to ensure that broad policy consistency is maintained, particularly when analyzing a charging proposal and when establishing prices.

In more recent months the apparent focus of concern on this issue has been with the international comparability of external charges. The bill would require comparison with our major trading partners. We appreciate that this change from the earlier draft of the bill, which stipulated comparison with all other OECD countries, would provide for a much more manageable and reasonable task. The draft policy is similarly flexible, requiring comparison to other jurisdictions for comparable activities under comparable circumstances.

We would caution against making this the predominant analytical issue for departments, who should be focusing foremost on service improvement and only then on the particular circumstances of their particular user base. While they must not overlook this issue, they should also not examine it to the neglect of all the others.

As it stands, the bill assumes that other countries' external charging data are readily available at a breadth and depth that would satisfy the bill's requirements. This assumption is not supported by our experience with our major trading partners. We are concerned that if comparisons are stymied due to a lack of other countries' data, this provision could become an insurmountable obstacle for departments.

With respect to theme number five, dealing with public and private benefit, all stakeholders expressed a great deal of frustration with the policy's attempt to use the concept of public and private benefit when setting the level of external charges. Paying stakeholders have long complained that departments should be more rigorous in using this concept. Departments have correctly complained that there is no usable methodology in the economic literature nor in common practice anywhere in the world. Indeed, this probably explains why no other country's policy uses this concept.

Other countries set charges through consideration of more practical and relevant concerns. Our policy review found in fact that those same bottom-line factors are what departments and paying stakeholders come down to in the crunch when charges are set.

º (1605)

Those factors are the ability of stakeholders to pay, the economic impact on the sector, the subsequent demand for the service charged, and the impact of charging on the government's other public policy objectives. The latest policy draft clearly lists these as the factors that must be considered when departments set the level of the charges. The intent is to eliminate the costly, frustrating, and futile exercise of working with this unworkable concept by moving straightaway to the concrete, relevant factors that have in fact always meant the most.

The result of this real-world dialogue will be clearer, stronger accountability on how charges are set. In this respect, the draft policy no longer attempts to base pricing on public and private benefit. There is no reason to believe that this change will lead to higher charges. However, it will lead to clearer and more accountable charges, charges established on the familiar, real-world factors actually used when departments and paying stakeholders discuss the level of the charges, just as it is done in every other country.

It has been suggested that this change puts regulatory charging open to question. It does not. If we believe in the principle of equity, then it remains true that charging for regulatory services is fairer than funding those programs solely through taxes.

Regulation holds industries responsible for their choice to enter into activities that pose risks for public health and safety. Charging for regulation ensures that they directly bear their fair share of the costs incurred by the government on the public's behalf.

Regulation builds and maintains consumer confidence and it moderates risks and liability. It also offers businesses the greatest opportunity for competitiveness, innovation, and prosperity. It does this by sustaining stable and secure economic performance. Clearly, there is private benefit in regulation, but we cannot recommend measuring the return from this abstract concept as the basis for setting external charges. The findings of the policy review have confirmed that paying stakeholders and departments have found this uniquely Canadian approach is unworkable.

In conclusion, as John mentioned, we would like to acknowledge the significance of this committee's work and input in this very complex issue. The statements of various stakeholders in previous appearances before this committee have strengthened our understanding of the issues and confirmed the findings of the policy review.

The President of the Treasury Board and the Treasury Board Secretariat understand and respect the concern that has led to the bill. Nevertheless, we remain convinced that a policy-based approach provides the best avenue to improving external charging for all stakeholders. It is for this reason we cannot support the bill.

Let me conclude by recognizing once again the valuable contribution of this committee in advancing the policy review. We are committed to amending the policy in a way that will foster accountability, openness, and transparency in response to your concerns. In that spirit, we would like to offer four final considerations for the committee as it advances with the review of this bill.

The first recommendation. The bill's provisions focus on institutional change, such as providing for additional committee review, creating independent tribunals, and an overhaul of the decision-making process related to external charges. How can the committee system be given more power without limiting ministerial responsibility, and how would this balance be restruck in moving forward with the implementation of this bill?

Parliament has already granted ministers the authority to set charges for selected programs in the departments. Will it be necessary to redraft that legislation? When and how would that be done? Will the institutional changes required by the bill entail significant costs at a time when all stakeholders instead call for investments to be made for service improvements? Will the new decision-making process slow a system already criticized for delays?

Second, the bill's provisions require annual tabling of departmental plans for committee review as well as detailed committee review of most aspects of program management when charges are introduced or amended. How will departments interpret the intent of this parliamentary scrutiny? Does it risk creating a freeze factor, where departments and ministers refrain from introducing charges only because of the cost and complexity of this new review and approval process? If so, decisions to charge would no longer be based on the fundamental principles of equity, efficiency, and fairness. How would the committee guard against such an interpretation?

º (1610)

Third, if passed into law, all of the bill's provisions, meaning all aspects of external charging, will be subject to legal challenge and therefore judicial review. By giving the final, definitive word to the judiciary, would the bill unilaterally limit ministerial responsibility? Would it ultimately reduce Parliament's oversight role? If ministers and departments are required to focus on satisfying legal requirements and defeating legal challenges, what impact will this have on the significance of committee recommendations and the primacy of parliamentary scrutiny? And in this authority framework, what role and what significance would be held by the tribunals proposed by the bill?

Fourth, the bill's provisions refer to international comparisons with Canada's major trading partners, but it is not at all certain that international comparisons will necessarily lead to reductions in charges. The bill ensures this work will be done in the high-profile arena of a parliamentary committee and will be subject to a publicly open test through legal challenge. Does this not risk triggering other topics of discussion relating to various international trade agreements and the impact on major trading partners who view our charges as too low?

Thank you again.

º (1615)

The Chair: We will go to questions, and you have up to 10 minutes, Mr. Penson.

Mr. Charlie Penson: Well, there you have it, Mr. Cullen; we don't need your bill. That's what it sounds like to me.

It seems to me this bill you've introduced, Mr. Cullen, is one that has just picked up on one Monte Solberg had about four years ago. We certainly heard from users about the need to review the practice of user fees. In our party we agree with the concept of user fees, but we think they have to be responsible, they have to be reflective of the actual cost of doing business, and we have to be able to adapt them quickly to changing circumstances.

Now, Mr. Cullen, you have listened to what the department officials had to say. What would you say in response? They basically told you that we don't need this, it can be done without the bill.

Mr. Roy Cullen: Yes, thank you, Mr. Penson.

It took a long time for them to say that as well. I was trying to respect the tradition of this committee, so I limited my remarks to under 10 minutes, but in my printed version I have elaborated on some of the points.

I think the problem is that you can have good policy, but if you don't have a way of making sure departments and agencies live up to that policy, then the policy looks good in the binder and makes everyone feel warm and cozy, but it doesn't accomplish results.

In the year 2000 this committee made a very far-reaching report and recommended a number of changes, and we are only now seeing some of that coming to light. We're not even sure if the government is going to adopt these measures because departments and agencies may not want this kind of interference even with the policy that's being proposed.

I agree that more transparency is good, and I think parliamentarians want more transparency, but if it's all after the fact, then it's not very useful. We can look at all these reports and that's wonderful, that's good, but if we can't effect change and get results, then I'm not sure it's that good.

There was reference to the independent dispute resolution process. While the new policy focuses more attention on that and improves the process, the internal appeal process is already there. It's been there for years. Users can always go to the department and complain and talk to whomever they want. The bottom line is that they get nowhere; there has been no effective change. My bill says that there has to be some independent way of doing that.

As to ministerial accountability, the official said that it goes beyond policy. Yes, it does go beyond policy. That's where the government could act, and that's what my bill essentially does. It says that there's policy but there's also a role for the Parliament of Canada.

Mr. Charlie Penson: Mr. Cullen, as an example, let me just give you a little scenario about the cost to business of supervision, of government regulations, that relates to Alberta in the severe downturn that took place in the housing industry in the early 1980s. This was at a time when there were no user fees involved. The housing industry, as a result of things like the National Energy Board's policy, took a terrible crash in Alberta. In the town I come from there wasn't one major builder who survived that crash; they all had to start over. In some places maybe 10% of the industry survived.

At the same time, they had all of the different inspectors from the provincial government who never got scaled down, so you had this tremendous bureaucracy there that didn't reflect the changing circumstances of an industry that was in very big trouble. You had gas inspectors and all kinds of inspectors trying to justify why they had their jobs, so they harassed the remaining 10% to death. Just imagine if the builders had had to pay the user fee on top of that.

These systems have to be responsive, and they have to be responsive quickly. That's the most important point we have here. It can't be a year after a report or after the fact, we have to have something that's reflective of the situation businesses find themselves in. How would you address that?

º (1620)

Mr. Roy Cullen: The officials have talked about service standards. The new policy says that you have to have a service standard. It's amazing it's taken this long to get there, but that's a good thing. The problem is that there is no really effective means of compliance if the service standards aren't being adhered to.

What my bill does is, it says that if you have a new user fee or a user fee increase, you're going to have to deal with a committee of the House on the performance standards you're setting, on whether they're reasonable, and on what your track record has been in the past in meeting performance standards you've publicly declared you're committed to. If the Commons committee feels that the department or agency is not making that commitment or living up to those commitments, it will recommend against the fee.

I think I need to clarify something. My bill doesn't say that you have to cut budgets. It just says that the committee will report back to the House and say that the fee as presented does not meet the criteria in this bill and that the fee shouldn't be implemented as presented. Then the minister or the agency would have to reflect on that, and if that was concurred on in the House, they would certainly have to reflect on that.

Mr. Charlie Penson: I'd like to ask Ms. Shirreff, in terms of the cost recovery programs you have in place now--I understand that you're going through a new process with this draft bill--how many independent dispute resolution systems do you have in place currently?

Ms. Suzanne Shirreff: The term “independent” is not used currently in the 1997 policy that is in place. The results of our policy review have revealed that each department has internal processes but that they're not well known to external stakeholders. Under the new policy we're proposing, they need to make those processes known to the external stakeholders.

We also strengthened the monitoring capacity by including an assistant deputy minister level, possibly a deputy minister. We also allow for the minister to establish an independent advisory panel that will provide recommendations to assist him in his decisions.

Mr. Charlie Penson: So the dispute panel is not independent of that program at the moment?

Ms. Suzanne Shirreff: It varies from department to department. This was the difficulty as we did the review, to find out exactly if they had processes in place. It was very varied and it was not well formalized--if I can call it this way--or publicized.

Mr. Charlie Penson: It would seem to me the businesses and people affected by that wouldn't be very happy that you have your own departments essentially deciding the dispute themselves. Shouldn't it be an independent panel that looks at it?

Ms. Suzanne Shirreff: To understand dispute and what it means, we have to realize there are many disputes that could come about after a fee was implemented. One could be administrative in nature, for example, where users won't quite understand the new regulations and what they mean. Others could be as simple as differences in interpreting a bill, for example. Others could be more complex, where maybe a small company says, I'm really impacted by this; therefore, I would like you to take a closer look.

Mr. Charlie Penson: Or they may say they're being overcharged for the service they get.

Ms. Suzanne Shirreff: That could be.

Mr. Charlie Penson: What would happen in that case?

Ms. Suzanne Shirreff: Depending on the nature of the dispute, it would involve different bodies inside the departments. For example--

Mr. Charlie Penson: You heard my example to Mr. Cullen. In a case like that it seems to me we need to have a pretty responsive system so the cost that's being charged to that user group bears some relationship to how they're doing economically. If the amount of business they're doing is only 10% of what they were doing three years ago, do you need the administration system there you had before? Doesn't it have to adapt quickly?

º (1625)

Ms. Suzanne Shirreff: I guess there are many different components here. The majority of the complaints so far have been administrative in nature. Then there's a different set of impacts that possibly require more specific study of the issue. Others have real concern about even the rationale for charging, and as you can appreciate, that would involve different individuals within the department. The majority start at the program level, and if need be, they are elevated higher in the department.

Mr. Charlie Penson: But we also heard that a lot of companies don't even realize they have the possibility of going to a dispute process.

Ms. Suzanne Shirreff: If it's not well advertised, they don't really know where they would be going, and this is--

Mr. Charlie Penson: Maybe that's why you're not hearing some of the concerns.

Ms. Suzanne Shirreff: I'm judging it by the results of the policy review, and what we've found out so far is that it's not well publicized. I guess there is an improvement, but we're looking into the proposed policy to better formalize that. That should be known. It should be part of the consultation process. It should be published.

Mr. Charlie Penson: Mr. Cullen, are you happy with that?

Mr. Roy Cullen: No. I just want to emphasize the point I made earlier, that with all the users I've ever talked to, if they think a fee is unjust, is not competitive, doesn't relate to costs, or is not providing a private benefit, they know which department to go to. But the problem is, they aren't able to effect any change.

Now, you could argue, maybe they don't have a very good case, but I think some of them do. Maybe publicizing the process would be better, but the users I deal with know precisely where to go if they have a problem with a fee.

The Chair: Madame Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): I would like to ask Mrs. Shirreff two questions.

In your statement you said:

All stakeholders expressed a great deal of frustration with the policy's attempts to use the concept of public benefit.... Paying stakeholders have long complained that departments should be more rigorous in using this concept. Departments have correctly complained that there is no usable methodology in the economic literature nor in common practice anywhere in the world.

I want to know how it was possible to proceed. There was neither documentation nor concept. How was it possible, in those circumstances, to establish standards?

Ms. Suzanne Shirreff: It was very difficult and very frustrating for some departments. Some tried to separate the public from the private. Ultimately, however, during the consultation process, it was impossible to resolve this in advance in order to deal with other matters such as economic issues or environmental assessments.

Many people argued that the government was getting involved in the regulations solely to benefit all Canadians and not the industry.

This is something that, given its great subjectivity, leads to inefficiency. It is extremely difficult to establish a system to determine, within each department and each program, what is public and what is private.

Ms. Pauline Picard: So, if I understand correctly, each department proceeded using its own interpretation and its own points of reference.

How is it possible, in that kind of situation, to ensure accountability to the general public? Was each public servant doing so individually?

Ms. Suzanne Shirreff: Yes. It is essential to remember that this is one of the elements included in the policy. Consideration is being given to many other elements, which are more important, given the clientele.

In the end, we must assess the impact. We must consider the total costs. We must consider the proposed services. These things are being reviewed, and comparisons with other countries are being done. Ultimately, it is a question of costs.

How can these costs be calculated? In my opinion, many programs need to be considered. It is logical; together, we must determine what is justifiable and reasonable and then proceed.

The proposed policy eliminates the distinction between private benefits and public benefits, which is very difficult to do. There is no model. As I said in my presentation, we are considering bottom line factors, the ability to pay, the demand for the services and the government's other objectives. That is how costs are determined.

º (1630)

Ms. Pauline Picard: Mr. Cullen, you are familiar with this problem. What changes do you propose to respond to the various users' complaints?

Mr. Roy Cullen: Thank you, Ms. Picard.

You have to understand that charges are being used simply to make comparisons between user fees in various countries, but that does not mean nothing is being done.

The committee is going to examine what is being done and see which countries have undertaken to do something. We are not unreasonable. It is possible that we will not be able to make direct comparisons, but in my view, we should not take the approach that the challenge is too great and that we should not do anything.

Clearly defining a private benefit or exclusive service is indeed a real challenge, but it is not acceptable not to rise to this challenge.

Ms. Pauline Picard: Ms. Shirreff, you said:

If passed into law, all of the bill's provisions—meaning all aspects of accountability to external stakeholders—will be subject to legal challenge and therefore judicial review.

By giving the final, definitive word to the judiciary, would the bill unilaterally limit ministerial responsibility?

I do not understand what you mean. Why would this bill be subject to legal challenge or judicial review?

Ms. Suzanne Shirreff: The bill eliminates the minister's decision-making power, since he is the one who now decides. The bill is first tabled in the House of Commons then reviewed by the committee, which can amend it, make recommendations and send it back to the House of Commons. Since we are talking about a bill, the courts could be involved.

We do not know who—the committee, the minister, Parliament or independent tribunals—will have the decision-making power and be accountable. It is not clear.

If I worked for industry and I was not satisfied at any given level, I would certainly go to court, since this would be my last recourse.

In conclusion, the objective is to grant more power at the parliamentary level, but if we are not careful we could end up promoting the opposite.

º (1635)

Ms. Pauline Picard: To whom are you accountable right now?

Ms. Suzanne Shirreff: Me?

Ms. Pauline Picard: Not you personally, but—

Ms. Suzanne Shirreff: First, let us be clear on Treasury Board policy.

The departments' accountability consists in ensuring implementation, which requires following the process. The policy is based on principles that are very generous, given that they currently cover roughly 400 different programs. We are talking about 400 completely different entities.

Moreover, they are being asked to conduct consultation and analysis and to find a way to handle complaints. They are also being required to establish their full costs and, basically, being given an opportunity to develop a system to bring all this together and a framework to identify and recover costs.

Therefore, the minister's accountability ends with the minister.

Ms. Pauline Picard: Thank you.

[English]

The Chair: Mr. Valeri, you have up to 10 minutes.

Mr. Tony Valeri (Stoney Creek, Lib.): I have a couple of questions, but I probably won't take 10 minutes.

First of all, has anyone put on the record how much actual revenue we are talking about when we talk about user fees?

Ms. Suzanne Shirreff: It's $4 billion annually.

Mr. Tony Valeri: I would suggest we're here because of inaction in response to a finance committee report going back to the year 2000 and because of frustration from the user group community. That frustration comes from an inability to penetrate and engage in any sort of dialogue that would lead to a resolution of difficulties they've had with the implementation of user fees and the performance standards put in place.

We're here because there's a big problem, and I think Mr. Cullen has done good work in highlighting that problem for parliamentarians. I want to thank you, Roy, for putting forward this bill and giving it focus.

My impression is--and I caught it in some of your remarks--that as you were surveying departments, you found that departments were handling things differently, whether it was through dispute resolution or whatever the process. The one thing we need to come out with at the end of this process, I think, is some sort of standardization in that the implementation of user fees follows a certain type of process that's easily understandable and that gives Parliament an ability to provide the oversight and the scrutiny. You've gone some way in doing that, but I think there's more that needs to be done.

We need to talk about the private versus public benefit, and I just want to spend a few minutes on that. If you go back to the cost recovery policy in 1996-97, there was a sense that the private benefit was coming from the improvement in the efficiency of the regulatory process. I'm talking about it now from the standpoint of the user, of somebody who's paying a user fee. They could see a private benefit by being able to get their product to market a lot faster than was the case prior to the payment of a fee. It's not a bad interpretation if somebody's thinking about a private benefit.

I grant you that the methodology to determine what is a private or a public benefit is very difficult to do. But just from a rational perspective, if I am a producer of something, getting my product through the regulatory process and approved quickly will accrue as a private benefit for me. There's lots of public benefit because you have safety concerns and all the other services we provide for the public at large through your regulatory approval process. But from a private benefit standpoint, I think immediate and efficient approval would accrue as a private benefit.

At least, that was how I understood it from the standpoint of users. That hasn't happened, so again, I think we have a big problem with this particular issue.

I just want to make a point about the dispute resolution mechanism, which I'm not sure exists in your policy document. I personally think there needs to be a dispute resolution mechanism in some fashion. Whether it's policy or whether it's through legislation, there needs to be a place for users to go to resolve a dispute. I'm not adverse to having something within departments similar to a banking ombudsman, which banks have, but where you are unable to resolve a dispute, you should be able to go to an external dispute resolution body.

I do not accept at this point--you'd have to convince me--that the matters are so complex we require specialists to deal with each and every one of them, that people who are rational cannot understand a rational argument and pass judgment in some way on a dispute. So I think we need an external dispute resolution mechanism.

º (1640)

I want to go to the department's document. On page 8 you offer four final considerations for the committee, and the first point you make is that the bill's provisions focus on institutional change. Can you tell me what provision of the bill provokes your concern or response in your first point? What provision in Bill C-212 makes you feel or suggests to you that there is institutional change?

Ms. Suzanne Shirreff: Well, the first one is basically subclause 4(2). If the tabling of proposals is all going to be done in Parliament, it changes the institutional situation that exists today because ministers have already been delegated powers to set fees. That's one of the elements.

Then if you go as well to “Resolution of the House”, you'll see “The House of Commons may pass a resolution approving, rejecting or amending the recommendation made by the Committee....” And in the one previous to that, where a committee reviews and makes a recommendation, again, the combination of all those things calls for institutional change in things that exist today within the ministerial powers that are given to certain ministers to do certain things. So it's in more than one clause.

Mr. Tony Valeri: If there is institutional change, what is the impact of that on the operation and implementation of user fees?

Ms. Suzanne Shirreff: The first thing from a policy perspective is, the policy cannot go there as the instrument to change that; if there are changes to ministerial powers, the policy is not the instrument for doing that. There would have to be enabling legislation. That's one of the points I see.

In terms of implementation, I guess the problem is removing all the authorities that exist presently. Then you would have to look at the bill. Is there enough here, again, for consistency on these same issues we're addressing? Is there enough in the bill for us to put this in place and proceed with implementation? Or under that would you need other instruments like, again, a policy? What would be the role for the Treasury Board Secretariat in terms of this new legislation? Who's going to be responsible for it?

Those are a few examples of questions that would arise.

º (1645)

Mr. Tony Valeri: Let's assume that the bill is now passed and is law. I wonder if you could walk me through how a user fee would be implemented. I'm not so much interested in the oversight aspects of Bill C-212. In fact, I tend to agree with a lot of what is in Bill C-212 in terms of the types of things departments would need to do in order to bring forward a user fee. What I want to focus on is the activity in the House. I just want a better understanding of how it would actually work if this piece of legislation was in fact enacted.

How does a user fee process work once you've gone through all of the reporting provisions that are required? Now we're talking about a resolution. What happens? What's your understanding of what happens?

I assume Mr. Cullen will then speak to that.

Ms. Suzanne Shirreff: That would be good because I have some questions around that as well.

Mr. Tony Valeri: That's why we're here.

Ms. Suzanne Shirreff: Basically, I don't think the preparatory work you would do would change. If your department is thinking of raising a fee, you'd probably look at all your pre-consultation. You'd ask, is there a rationale? Have I done my homework? Am I looking at the other jurisdictions? What are they doing? I would have an understanding of my full costs and would benchmark a little. Then I'd say, okay, I need to determine my process of consultation and go and get some more information out there with consultative bodies, both internal and external.

So I think the initial part does not change.

Mr. Tony Valeri: Except that under this bill the initial part would be subject to parliamentary oversight by committees.

Ms. Suzanne Shirreff: But when is the starting point? I'm not sure. If we use the mechanism we know today and follow what we've done more recently, we can say, let's improve the report on plans and priorities, and that becomes the trigger in Parliament. Things are starting to be thought of; there's a plan to raise a fee, for example. But then there's the whole process; I've seen some complex regulatory areas like marine fees, and it takes two or three years to put in place.

Your consultation is extensive. Your stakeholders are very diversified. The business is complex. Then you're dealing with all the competition, and that's a very good example because they deal in both international and domestic waters. You have many modes of transportation competing against each other. Then you have different types of ships that are there for different businesses, transporting different products, and they compete even amongst provinces, ridings, etc.

So that's a good example. It is very complex and it takes time.

Mr. Tony Valeri: And you don't have any difficulty with greater parliamentary oversight and scrutiny on that aspect of the process?

Ms. Suzanne Shirreff: Certainly not.

Mr. Tony Valeri: I want to know where you think there are problems, which leads me to the issue of, how is this dealt with in the House?

The Chair: I just want to say we are over your time, but no problem. I think this is an important area; we are trying to understand the bill. I am going to allow you to continue the answer, and then I'm going to allow Mr. Cullen to add also because I think we all have to understand this properly; this is an important issue. So please go ahead.

Ms. Suzanne Shirreff: So now let's say I have reached the stage of consultation where I am ready to put a proposal in front of Parliament, and I think that's the key element of where it starts: in the House. It is put to Parliament--and I'm not sure, so you can correct me--and at that stage it goes to a committee, although in the case of an emergency the House can go ahead and approve it first, and then it is moved to an appropriate committee.

What is unclear to me is, if it goes to a committee at that stage, what happens there? What does the minister who assesses the fee do in the meantime? We talk about, “may review” or may not review. Let's say the House has already approved it in the case of an emergency and now it's going to committee. Then let's say the committee says, well, we don't agree. But now it's already been voted in Parliament and therefore it's a piece of law. Does a recommendation of a committee undo that?

Mr. Tony Valeri: I want to back up.

You've done all your internal work, and according to the bill--and I'm looking for Mr. Cullen to speak to this--all of this work will now get tabled in a document to Parliament. After that tabling of the document, it's referred to a committee. The committee then reviews what you've done, the consultation you've done, the measurement you've gone through, the business impact test, all of that stuff that's in Bill C-212, and however it's going to be amended.

I want to understand, what happens after the committee completes its scrutiny? I think I know what happens procedurally, but I want to understand the impact of what happens.

You took marine fees as an example. How many marine fees are there?

º (1650)

Ms. Suzanne Shirreff: There are two major fees, one for marine navigation and one for ice breaking.

Mr. Tony Valeri: What would be the total number of user fees that exist in government today?

Ms. Suzanne Shirreff: There are thousands and thousands.

Mr. Tony Valeri: What would be your best estimate of the number of user fees you might amend or change or whatever per year?

Ms. Suzanne Shirreff: That would depend on the department.

Mr. Tony Valeri: Can you give me last year's and the one from year before.

Ms. Suzanne Shirreff: There have been very few in more recent years. One of the reasons, you can see, is because of the policy review; we're waiting for that.

But there's another reason here I think is extremely important, and we heard it during our policy review. There is a perception that there's very little political support for advancing fees. Meanwhile, many would like to look at a greater variety of programs where fees would fit within the scenario, advancing and exploring the idea of recovering costs for programs that would provide benefits to stakeholders. That was a finding from the policy review.

That being said, I would say there have been very few fee changes, maybe 12 or 15, according to my information. I am talking here generally. There are many small fees that have probably been established for many years and are set maybe by a formula that generally follows the inflation rate, but I am talking here about the regulatory-type fees.

Mr. Tony Valeri: It's not a fair argument to say that the House of Commons would be inundated with fee changes that would jam up procedure in the House?

The Chair: Mr. Morgan.

Mr. John Morgan: If I may, Madam Chair, it's difficult to forecast exactly what the impact might be, but certainly with the introduction of the revised policy, if it does go through Treasury Board, we would expect a much more rigorous review of all fees, not just where we're changing them but also with respect to performance standards and dispute resolution.

I suspect that with any new policy or with this bill there would be considerably more activity in this whole area, which could increase the volume overall, whether you're looking at expanding or reducing the application of the fee. If the processes are going to increase cost to departments in order to apply it, that may force a reassessment of the fee relative to costs.

Right now very few departments are at full cost recovery; for the most part it's a very marginal amount of the total cost currently being incurred.

Mr. Tony Valeri: Surely you're not suggesting that what you're being asked to do in this bill would be extraordinary. The idea that you would do comparisons with our trading partners if that information is available, the idea that you would do a business impact test, or the idea that you would measure and make every effort you can to ensure you do not make a manufacturer or producer uncompetitive, these are not extraordinary requests. Whether that would be adding to your costs or not or whether you would be passing on those costs, I think, is a pretty weak argument from my standpoint. I would want you to do all of those things to ensure we're not further inhibiting the performance of a Canadian company or a Canadian producer.

The Chair: I'll give Mr. Cullen a chance to comment.

Mr. Roy Cullen: Thank you.

I'm going to get into the process in a moment, but I just wanted to come back to another key point, and that is, I've accepted all along--and I think most colleagues understand--the need for user fees. I've never argued against the need for user fees. I think they're a very efficient economic instrument.

What we're talking about here is whether user fees confer a private good or benefit, whether there should be a process of evaluating how to implement the fee, whether you should have a benchmark, and what kind of consultation you should have. We've already seen examples of eliminating that definition, the requirement that it be related to a private good or benefit, and it sets a very dangerous precedent.

There's a policy called “new substance notification”, where you have a new chemical, a company comes in, they go through with all the molecules, and it costs them maybe $200,000. They get the product approved, but then all companies can access those molecules although they've paid the fee. So the question is, does that confer a private benefit? I don't think so, yet they've been asked to pay the fee.

I think it's a slippery slope if we start to say that defining what is private good and public good is difficult; therefore, we just ignore that definition.

º (1655)

Mr. Tony Valeri: Can you define it? Can you define a private benefit for us?

Mr. Roy Cullen: It's that in any particular case it has to confer a benefit or an advantage.

Mr. Tony Valeri: I understand that; defining it is the difficulty I'm having, and I think there should be a private benefit. Don't get me wrong.

Mr. Roy Cullen: No, I'm not suggesting it's a piece of cake to define a private benefit, but I think there are a myriad of examples. The example you use of drug approval is a good one. Now, if you're going into a park, you don't have to go into that park, but if you're getting a passport, well, there is some grey. I think it would be horrific if we just said, let's not define what is private or public.

Can I come back to that, because I think your more important question--well, not more important, but the one you asked and we spent some time on--is the process. First of all, if the new policy is adopted--and it hasn't been adopted yet--many of the criteria that are in my bill, I think, will be met. There will be the benchmarking and there will be a definition of the cost. I think there are some areas where there's not a complete overlap, one of them being that my bill calls for an independent dispute resolution process, but I think there's a lot of comparability.

The way I would see it, then, is that the minister responsible comes to the chamber and presents a report asking for a new user fee--let's call it a new one in this case. Attached to that report would be two or three pages on the competitiveness issues, two or three pages on the consultation process they use, and two or three pages on the benchmarks and all the criteria in the bill; that would be tabled.

Let's say, if it was a health-related issue, it would go to the House of Commons Standing Committee on Health; Parliament would decide that. Then the committee could decide to look at it or they could just decide not to look at it. They could invoke an internal process that says, if we don't respond in 30 days or whatever, it's deemed we have no problem with it.

Let's say they have some problem with it, they call in a few witnesses, they report back to the House, and they say the user fee as presented doesn't meet the criteria in the act. Moreover, the department has a horrible record with respect to meeting their performance standards, they've shown no commitment, and therefore the Commons committee recommends against this particular user fee in its current form.

Now, what would have to happen is--this is a procedural thing--there would be a concurrence motion in the House. The government might initiate a concurrence motion because they think the committee has erred in their judgment. So they'd bring it to the floor of the chamber and there'd be a vote. The chamber could override the recommendation of the committee or some member could introduce a concurrence motion and get the debate in the House, and there'd be a vote.

My bill says that if the House of Commons votes against that user fee, then the agency or the department cannot implement it, it's as simple as that; then it's back to the drawing boards.

The Chair: Thank you.

Tony, are you finished?

Mr. Tony Valeri: I just have one other question for the department.

In Australia, I believe, user fees are paid according to departmental performance, with standard wait and approval times and all that sort of thing. Do you have any information on how that has been working in Australia?

At the end of the day, I think, the difference between what Mr. Cullen is suggesting and what your policy will provide is this. If you don't meet a standard of performance, under Mr. Cullen's bill the committee will look at that and then put a motion in the House, which will vote on it, and you will be unable to bring forward a new fee if the House agrees with what the committee said. Your policy process does not provide--and I'll use the word--any such hammer. That's the distinction I see between Bill C-212 and what you're proposing.

In Australia user fees are paid according to departmental performance. Do you have any information with that experience in Australia you can share with the committee?

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Ms. Suzanne Shirreff: The information we have on Australia is very generic. We did a benchmarking study and Australia was part of it; we looked at the principal elements in order to compare their approach from a policy perspective. Of those in the international comparison, Australia was the only one that attempted to link the fee with service standards, but we did not get into the details much further than that.

The Chair: If you wish to provide this committee with any of that material, send it to the clerk afterwards and we'll circulate it.

Roy, you can make a short point.

Mr. Roy Cullen: Thank you.

I just want to make a short point about affecting machinery of government and the joint committee on the scrutiny of regs. We talk about ministers having authority and accountability, but if a minister brought forward regulations under an act, they went to the joint committee on the scrutiny of regs, and that committee reported to the House that those regulations were not consistent with the act, it would really jam it up big time.

In fact, they're the same kind of process. There would be a motion, the government might disagree with the scrutiny of regs committee, and it would introduce a motion to override that committee, but there'd be a vote. So I think on a machinery of government issue we already have that precedent.

Mr. Tony Valeri: Is the scrutiny of regs committee report binding on the government? Is the government unable to proceed because of the tabling of the scrutiny of regulations committee report?

Mr. Roy Cullen: Madam Chair, there are changes coming, and as I understand it, the changes proposed have the support of all the members of the committee. They're going to be adopted, and that will provide more clarity around that.

But as it stands now, the precedent in practical terms is that if the committee reports back to the House, then the government does not proceed with the regulation if the committee has reported it that way.

The Chair: Thank you.

I will go now to Mr. Tirabassi and we'll go back to our 10-minute rounds. This has been an aberration but I think it was useful for all of us.

Mr. Cullen, I intend to give you three or four minutes at the end if you do want to do a round or two.

Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you Madam Chair. I'd like to thank the department officials and certainly Mr. Cullen for bringing forward this entire issue.

I've been involved with this issue since the beginning of the year. Credit is owed to Mr. Cullen for bringing forward this bill, which has really created a lot of dialogue with the department officials, certainly with the minister, and with me, being brought into it as parliamentary secretary. As a result of your efforts we've seen the department move on several fronts.

If I understand the frustration of the stakeholders at least in part, it's that they want to get their elected representatives better informed as to what's really going on and in the end more directly involved in the setting of fees and the measuring of performance standards. I think that's the result of the very end process you talk about, Roy, in the House, correct? So I'm just wondering, if this is the effect and the impact parliamentarians can have now as a result of this policy and this bill, what has changed as far as parliamentarian input is concerned?

For instance, Ms. Shirreff, you have here a document you've circulated, “External Charging Framework for the Approval Process”, and the document appears to outline the various roles and responsibilities of all the players in this whole external charging process. Can you give the committee members a summary of the points where parliamentarians have a genuine opportunity to scrutinize and shape the decisions made in the process? What has changed from when we started this whole process four months ago to where we are now? It may have been longer than four months, but could you please give me that information.

Ms. Suzanne Shirreff: This table is one of the documents we circulated to the clerk. It basically depicts the fee approval process from its beginning to its implementation, that is, the opportunities in terms of how stakeholders and parliamentarians are involved throughout the process. In the initial, pre-consultation phase, for example, departments will include any plan as part of the report on plans on priorities, so you would see at the beginning some information to provide stakeholders and parliamentarians with lead time to consider the initiative and perhaps make some preliminary inquiries.

In the phase we call “Consultation” departments will be required to provide yearly updates in the reports on plans and priorities. They will give an update as to where they are in the status of the consultation. Notwithstanding that it might take a couple of years for the consultation process to be put in place, stakeholders and parliamentarians would have the opportunity to review and challenge the fee proposal all along.

The phase also includes the manner in which you would put the fee in place. Many of them are through the regulatory process, for example, so again it provides opportunities for senior public servants, ministers, and parliamentarians to follow through to the submission to Treasury Board and to the Special Committee of Council ministers.

As well, you have the publication of notification in the Canada Gazette, and a great many of them include an impact analysis that summarizes those same elements I'm talking about. Again, that would be fleshed out in that particular plans and priorities document, which parliamentarians and any stakeholders can, again, have access to in order to monitor the development.

In the final phase what you have is the publication in the Canada Gazette too. Again, that's available, and it would be identified and triggered in that document. If anyone is interested, they can get that documentation to have access to the information.

With that as well, once a year in the departmental performance report you would have the approved fee activity that would be identified. The disclosure would include information on revenues. You'd have information on what authorities those fees were put in place under, what the full cost is, what the process of consultation that was undertaken was, what form of analysis and benchmarking was undertaken, what the survey standards were, and what your performance result is, as well as some wording on dispute management.

I want to specify here that this is a process where everybody can go in, but aside from that, a departmental-level engagement of internal and external stakeholders is probably going on at the same time to establish advisory committees. That's aside from this process I have just described here.

I wanted to give an overview of where information comes out, where it's available, and what documentation there is from formal reports through the departmental reports on plans and priorities.

You are correct; we have looked at that over the last number of months, and it was submitted as part of Budget 2003. Actually, we just issued the departmental performance report guidelines last week, moving ahead in advance of this proposed policy.

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Mr. Tony Tirabassi: So what is being proposed here wasn't there before, everything you just spoke of?

Ms. Suzanne Shirreff: No. What I'm saying is, this process has always existed. It is available with the exception that we've made improvements to the reporting on plans and priorities and the performance reports.

The Chair: Mr. Morgan.

Mr. John Morgan: If I could, I'll just supplement that. That has been one of the greatest efficiencies of the process to date, dealing with the lack of awareness of parliamentarians as to what is actually going on in this area of user charging. We've put a tremendous focus on reporting to Parliament, not only through the reports on plans and priorities but in the fact that planned consultations on fee amendment are going to be undertaken to engage parliamentarians right at the outset of consultations.

But then, at the performance reporting level, what are the standards that are being achieved? What types of disputes are being encountered? How are these being resolved? By placing these before the presentation of existing parliamentary documents, we intend to get the engagement of parliamentarians. They would have the information before them and therefore be able to take action in terms of calling witnesses and ministers to account for their performance. It is using existing structures but in a much more effective way than has been the case.

The Chair: Mr. Cullen.

Mr. Roy Cullen: I just wanted to say that when a minister and a department are sitting around looking at user fees, I don't think it is something where they say, oh, my goodness, we need a new user fee, and we have to rush this through. If they do, then it's not a proper planning environment.

My bill says there might be emergencies such as security threats, but if you're doing your work properly, you're going to have lead time and you'll be able to get it to the committee.

The other thing, Mr. Tirabassi, is that you said, the users didn't come to me and say we have to get parliamentarians involved in this. They came to me and they said, the system isn't working. When I started to look at the bill, I thought, I agree with them. You can have the best policy in the world, but if the departments and agencies aren't following the policy and there's no real teeth, then it's not going to work.

The Special Committee of Council that was referred to has been in place for some time, and they've always been gazetted. I've talked to users who have seen the gazetting and have tried to engage the Special Committee of Council. Maybe they didn't have a good case. Although they've seen some results in the sense of having the performance standards built in at the front end, the problem is, once it gets through that Special Committee of Council, if the departments and agencies don't meet those performance standards, it's out of their hands.

There's no follow-up; realistically, there can't be. I'd just like to make the point that if there's proper management planning in place, they can bring this to the committee and the committee can have a look at it with appropriate lead time. It doesn't have to be an emergent situation.

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Mr. Tony Tirabassi: So let's say we've improved the pre-consultation, the consultation, and the implementation, and then we get to this part in the House. I have to say I do have concerns about this. In one way it's good. As a result of this issue I can see many of the user groups and stakeholders out there wanting to open up their particular areas to have a look at it.

Now we have something in place, whether it's the policy or your bill, and it's going to take more time, there's no doubt about it. I think it's going to create more activity in the House, and that should be a welcome thing, regardless of what the numbers have been in the past as to how many, 12 or 15.

Is this not new ground we're breaking, where we'd actually get into resolutions in the House on individual fees, taking certain things out of a report and trying to get concurrence, running the risk that it could be referred back to committee and cause further delays, which is exactly what we're trying to avoid? Help me out.

Mr. Roy Cullen: As I said earlier, we already have the precedent with the scrutiny of regs committee; the committee work is reported back to the House. You know, sometimes democracy is a little cumbersome. We've heard the numbers, and I don't think it's going to really jam up the committees. The committees will figure a way through this. They're going to say, we're only interested in fees of this type or variety. They're only going to be interested in looking at this kind of fee increase, and they'll find a way to deal with it.

In the finance committee we get a lot of routine stuff on orders in council. Frankly, I look at it and file it, but if there was a member of the committee who thought, hey, it's causing me concern, well, they'd raise it. I don't see the very big problem. The committee would look at the fee, and if they didn't like aspects of the fee after listening to stakeholders and the government and after the minister had had a chance to speak to it as well, the committee would make a judgment as to which case was more credible and report back to the House.

There are mechanisms also in the sense that if there's no report back, it's deemed reported. That can be done. I don't really see the huge jamming up in the system or the huge change.

The Chair: Ms. Judy Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Madam Chairperson.

I'm absolutely shocked. I thought a Liberal backbencher, a member of the government, who got a private member's bill through the House would have the blessing of government by the time it came to this stage in the process.

Mr. Roy Cullen: No, I don't think so.

Some hon. members: Oh, oh!

Ms. Judy Wasylycia-Leis: I thought that only happened to opposition members.

What was the vote in the House?

Mr. Roy Cullen: Actually, there was no vote. What happened is, there was concurrence to send it to committee. I'll leave others to judge the dynamics of all that, but that's what happened. There was no actual formal vote.

We've had good discussions back and forth, and I think there has been a lot of improvement in the policy. Where it jams up in the government is with this machinery of government issue. That's what you're going to hear, that this is a little cumbersome. Maybe they're going to say it's cumbersome a lot, I don't know. I'm just going to agree to disagree.

I've said from the outset that if the government has amendments, if it thinks the role of parliamentarians would be too cumbersome, if it thinks this would not be workable or practical and would cause huge problems for getting things done in government, I'm certainly prepared to look at amendments, but I haven't seen any.

So yes, it goes beyond policy, but the minister and the government are able to effect legislation. If the minister and the government had the will to implement legislation, they could, obviously.

I don't stop at the policy level. I think I'm a legislator, that's why I'm here.

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Ms. Judy Wasylycia-Leis: I may not entirely agree with this bill because it seems to me it is driven by those organizations that have to pay the user fees. Probably it's driven by the business sector, corporations who feel that they shouldn't be paying such a fee and that it's digging too much into their profits. I don't get the sense that this is necessarily coming from stakeholders who are concerned from the other angle of the ramifications, from a public policy point of view, about having a user fee.

For example, in the area of therapeutic drugs there's the whole question of the wisdom of having a cost recovery scheme when it can lead to such possibilities as conflict of interest, with large drug companies buying approval for a drug, and that's been raised many times before.

However, it seems to me that your bill does give a window of opportunity for members of Parliament to scrutinize an area that hasn't really been before Parliament before.

That's my question, I guess, to Suzanne Shirreff. How do parliamentarians now learn about proposed user fees or increases in existing user fees, and where do we have a chance to have some influence or input under the existing system?

Ms. Suzanne Shirreff: I guess this is where it is very weak and where we focused our energy for the new proposed policy. We talked about strengthening not only the openness but the transparency and about providing better reporting information. It's not very good, generally.

In reports on plans and priorities and departmental performance reports you would generally see that they would start to report some of their key initiatives, for example. Also, through a process more internal at Treasury Board Secretariat called the ARLU, the Annual Reference Level Updates document, every year we collected information from all the departments on revenues, but these were minimal.

We would ask them, for example, to tell us the aggregate level of fee activity, information that makes sense from a clientele point of view. We'd collect information, for example, on the revenue, and we would ask the department to remember the policy: you should keep making sure you retain the documentation with respect to consultation, service standards, etc. We would put that on the TBS website, and departments would retain their own documentation as well.

We feel that the recent amendments we've made to the DPR guidelines are a plus and go a long way to enhancing and triggering the right information from a parliamentarian's or a stakeholder's standpoint to have an overall picture of all the fees across government. Certainly, they go to consistency and being a lot more open in terms of all information that is relevant and that people want to see.

Mr. Roy Cullen: I was just going to say, Ms. Wasylycia-Leis, that I heard your comment in the House, and we tried to get other organizations. I have the support of a dentist's association, and there are a lot of downstream organizations that support the bill. We tried the Consumers' Association but we couldn't, for whatever reason, get them interested.

If I had listened to the business community only, I would have limited it to those areas that are regulated. My bill captures a fee to enter a Canadian park, it covers a passport, and it covers any user fee that affects citizens. Frankly, I can't understand why we couldn't get organizations like that more interested, because what it is saying is, if you are going to implement an increase in the fee for something like the MERX system....

The Canadian Federation of Independent Business, by the way, strongly supports my bill; that's small businesses across Canada. But if we can get the Consumers' Association in here, I'm prepared to stake my bill against their testimony. If they were to argue against my bill, I would be very surprised, but we just couldn't get them engaged. It is not just for business.

In fact, in my riding I have big companies that pay user fees to get drugs and chemicals approved, and they're happy to pay even a slightly higher fee if they can get their product to market in a competitive timeframe. When you think about it, if you are drug company and it takes you 700 days in Canada to get a drug approved, 500 days in the U.S., and 300 days in Europe, you can't be first mover in the market. Being first mover in the market is worth millions to them. They are prepared to pay a little more money if they can get performance, but they can't get any performance.

» (1720)

Ms. Judy Wasylycia-Leis: Now, I'm not talking about fees for parks and museums or passports. I'm talking about areas where I think we've crossed the line, where government has moved from an area where it has responsibility to an area where we've off-loaded and allowed the private sector to have free rein or complete control.

I think you'd have more support if you could convince me and others that this bill would allow for parliamentarians to have an objective review of areas like the drug area. That to me epitomizes where I think government has gone too far--that is, your government.

A lot of these changes came in the late eighties under Brian Mulroney, then really the whole agenda was accelerated under Jean Chrétien. This whole notion of cost recovery, building a lean, mean government, outsourcing, off-loading, privatizing, and deregulating is all part of this. In a way, you're paying a bit of a price for an agenda that went too far and is out of control.

Mr. Roy Cullen: Madam Chair, that's really the motivation behind my bill. Cost recovery and user fees were a good concept, but I think many agencies and departments have pushed beyond what is reasonable, and during program review resources shifted.

This is just a hypothesis. I haven't tested this out, but having worked in government, I know how these things work to some extent. In the area of user fees, they might move those resources out to deal with their public responsibilities and so not be able to meet their performance standards; that's why we need more teeth.

But I'll tell you one thing. If you don't pass this bill, the Treasury Board Secretariat is going to say, let's forget about talking about public versus private goods. There are going to be a lot more of what we consider public goods that are now going to be subject to user fees.

My bill says, you can only put in a user fee if there's a private benefit or advantage, and it makes that crystal clear. So departments or agencies will have to come forward and convince parliamentarians that this service or good provides a private benefit or advantage. Without that, it won't go anywhere.

The Chair: Mr. Wilfert, please.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chairman.

Can I ask Mr. Morgan, why do we have user fees?

Mr. John Morgan: User fees are in place to ensure that those who are deriving a benefit pay their fair share and that the general taxpayer isn't required to absorb the cost of providing government services, government goods, or other benefits to those who are getting a benefit from those items.

Mr. Bryon Wilfert: Do you believe that under the current system the users who are going to benefit from the system are getting their fair share, that they're getting a benefit under your present performance standards?

Mr. John Morgan: Users are receiving benefits in a variety of ways. In some cases we're looking at optional services, where they come to government requesting something; it's their choice to do so, and they derive a benefit directly from that service.

In cases of regulatory matters, they derive a benefit in terms of the fact that they are able to undertake activities in an area the government has decided requires some form of regulation to protect the overall public interest.

So there is a benefit. I think the performance in this area has not been as good as it should have been, especially in areas where we're looking at turnaround time to bring something to market. That's something the government does need to look at closely to balance that private benefit with the overall public good.

But I think as well--and sometimes we lose sight of this in the discussion of the question of user fees--all government programs should stand the test of increased performance and better accountability, not just where there's a user fee involved. I think we need to find mechanisms to ensure that this is occurring right across the system, that parliamentarians are aware of what those performance standards are and whether things are working or not.

This policy draft we have now is just one way we're trying to operationalize some of those key principles we've been talking about for many years.

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Mr. Bryon Wilfert: I have a great deal of difficulty, Madam Chair, with the fact that we charge a fee for something for which the service standards....

If I read this correctly, the Treasury Board Secretariat has said “Policy requires that stakeholder consultations include the discussion of what actions will be taken if service standards are not met.” Pretty vague. “Policy provides options”--options--“including business re-engineering, fee reductions and rebates.” Very nebulous. “New reporting guidelines require departments to report on performance achievements.”

You know, if you were selling a product and you advertised that it was going to do x and it didn't do x but did y, you'd probably get charged with false advertising.

In the departments I've looked at, we've done a lot of false advertising. We've suggested there is going to be a performance standard met in a certain number of days, and we haven't met it. In some cases we didn't have the courtesy even to tell the individual; it might have been six months later. Unacceptable.

In the Ministry of Finance we said we were going to basically reallocate $1 billion. In doing so we said, if you don't come through, each department, we're going to give you an internal tax. Where is the hammer? There needs to be a hammer. If you're going to say it's 60 days, it's 60 days. If it isn't 60 days, then you need to tell the individual user well in advance that you need additional information or you need this or that and you cannot make that 60 days. And there needs to be a clear mechanism as to how you would then be able to arrive at a reasonable extension.

We say fee equals service standards, but it doesn't really equal service standards because we are saying one thing and not delivering. You say you would negotiate, you would review, or you would look at other actions; I would want it far more prescriptive.

I'm a little concerned about Mr. Cullen's bill in terms of the number of things we might be asking a committee to review. If I believe my colleague Mr. Tirabassi, we might have a lot of these to look at.

I also think there needs to be some mechanism to put some heat under these departments to deliver. The one area I continue to hear about is service performance. The other area I hear about is that in many cases we unilaterally decide to raise a fee with little rationale.

Government is in fact a service; we are here to provide service to the public. I don't make quite the distinction Ms. Wasylycia-Leis does. I think that if there is a public benefit--and there are often public benefits in what's happening--you have a responsibility, and Treasury Board has to have a hammer.

And I don't really care. As I heard when we were doing our review with the finance department and with other departments, some people weren't really that keen. Why weren't they keen? Because this is about their pet projects. Well, in the end, they either played ball or an internal tax was going to be levied on them, and now Treasury Board's responsibility is to deal with that.

In my many years of municipal government it was the same situation, and Mr. Tirabassi is certainly well aware of it from his days. The fact is that it's a tax. I don't like taxes any better than anybody else, but if I'm going to get taxed, I expect to get something in return. There are too many people who have been going along for a free ride, in my view, and there are some departments--which I may list later--I've found to be worse than others.

What I would like from both you and Mr. Cullen is, I want to be assured that if we're going to charge x fee, there is a very prescriptive service standard. Also, I want to know what mechanisms are going to be in place if in fact you don't deliver.

It seems very wide open according to what I have in front of me. Under “External Stakeholder and/or Standing Committee Recommendation” it says “Failure to meet service standards should result in fee reductions.” It doesn't say “will result”, and under your response it's, well, we'll sit down and have a nice chat and a cup of tea. But basically there's no clarity for the user, and I think there needs to be.

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Mr. John Morgan: Madam Chair, at the outset one of the things we are making mandatory through the proposed policy is the requirement for extensive consultations with stakeholders on the setting of fees and performance standards and on the considerations in setting those fees. Whether there are considerations of economic competitiveness relative to overall government priorities, whether there's a trade-off in terms of increased performance and turnaround, whether there needs to be a higher fee, we've left that to individual departments to decide with their stakeholders. This is because of the vast complexity and variety of operations the government does undertake, but we do make it mandatory that these consultations do occur.

In terms of trying to ensure what happens if performance is not there, it's through the transparency in reporting to Parliament what the performance standards are, what the results have been relative to those performance standards, and if there are disputes, what types of disputes are occurring and how they've been resolved. It's through that mechanism as well that there will be this awareness of parliamentarians through their ability to engage departments and hold them to account for their performance.

We are trying through the policy to bring about a lot of these changes in terms of improved performance and accountability. But at the end of the day it's the minister who would be accountable for the department's activities.

The Chair: Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

The proposed new policy would demand or ask for better performance with respect to performance standards, but I don't think it has the teeth to actually effect change. That's why I have introduced my bill, because I'm very frustrated that this has been going on for such a long time.

I think involving parliamentarians would be a deterrent factor. If a department or agency comes forward with a proposal for a fee increase or a new fee, it's referred to a Commons committee, and if that department or agency has not had a very good track record with respect to honouring commitments on service performance, they'll have a rough ride at that committee. The committee could easily report back to Parliament that this department or agency has not really followed through on those commitments.

On a case-by-case basis, I think that would be the major effect in terms of deterrence. If the performance standard was not clear, was not competitive as laid out in the fee proposal, and was not achievable based on the evidence presented, then I think the fee would have a tough ride through the House of Commons.

Mr. Bryon Wilfert: Madam Chairman, I only had a cursory look at the Australian model, but can I just ask the department officials, why was there not more attention given to that examination? That seems to be much more prescriptive in terms of the fee versus service standard issue.

Ms. Suzanne Shirreff: The benchmarking study was done at a very early stage of the policy review; I think it was about two and a half years ago. Basically, it was to do a comparison with policies of other jurisdictions. We looked internationally as well as provincially, and we restricted ourselves more to principles based on the type of things we had in our policy. We did not look at the implementation, how well that was done, although there's a little bit in the report. Basically, those were our main areas of focus.

Certainly, we'll give copies to this committee for--

Mr. Bryon Wilfert: Can you do a sort of comparative analysis we could look at in terms of implementation issues?

Ms. Suzanne Shirreff: That would take a little while, but we could certainly--

Mr. Bryon Wilfert: I'm surprised you didn't do that, but anyway....

Ms. Suzanne Shirreff: There's a little bit in the report, but probably not to the degree you're trying to get at.

Mr. Bryon Wilfert: I would be really interested in it, and if there is not enough, I'll come back to you.

The Chair: Why don't you table what you have, and we'll circulate it to all members.

Part of the reason we're hearing witnesses on this bill now is that when a private member's bill gets referred to committee, it is automatically deemed passed if we don't deal with it within, I think, six months. With the summer break coming up, if this committee didn't hear witnesses now, something like October 3 would be the date we would have to report back to Parliament unless we went for an extension. As you know, this committee works on pre-budget in the fall, so it's important that we have this information.

Before I give the floor to Mr. Cullen to do a wrap here, perhaps you do not know, but when do you anticipate finalizing the policy you are working on right now with stakeholders, or is it for the minister to say as opposed to yourselves?

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Ms. Suzanne Shirreff: I can still give you some sort of information. We have been engaged to try to improve the reporting for the last number of months. We've also worked with parliamentarians in terms of better understanding Bill C-212 and advancing some of those issues. So the short answer is, we're still in consultation.

The Chair: But say we didn't have Mr. Cullen's bill in front of us. When could the public anticipate that your new program would be out there?

Ms. Suzanne Shirreff: The process would be, we would finalize the policy and move it for Treasury Board approval. That would be the process.

The Chair: One of the most interesting things I've heard today in the testimony was something former member Mr. Cullen referred to, the committee on scrutiny of regs. I know the regulation process requires three full-time workers working all the time just to bring the committee members, who meet every two weeks, up to date to work on a number, and some of those cases take one or two years to get through that system alone.

You're saying fee increases would not come before a committee as often as regulations do?

Ms. Suzanne Shirreff: Well, it depends on the authority. For a great majority of the fees that are currently in place, they introduced the fee using the regulatory process; you have to go through the process you just described.

The Chair: So there would be a duplication because they're using the regulatory process too on top of the fee process?

Ms. Suzanne Shirreff: It's the authority you would use to introduce your fees.

The Chair: Mr. Cullen, you may have missed that. The regulatory process the scrutiny of regs committee does is the way you introduce the fee process, so there would be a double scrutiny.

Ms. Suzanne Shirreff: That applies to a great majority of the fees in place; I would say 80%, closer to 90%.

So you follow your policy principles. In some cases the people who use the Financial Administration Act as the authority to introduce fees have to make a submission to Treasury Board; it's approved by Treasury Board.

As to the manner by which a user fee goes through the regulatory process, at the same time it goes through PCO review by officials, it goes through SCC; then it gets approval by governor in council, and then there are all the reviews by the SJC. Those are 90% of our cases.

The Chair: I want to ask you about something else Mr. Cullen raised. He referred to the fact that routinely, when orders in council go through PCO or wherever, they get flagged to committee members. We have a chance if we so wish to do a review on this. Is there anything that would prevent you from putting flagging to committees into your process, adding that in?

Ms. Suzanne Shirreff: Through the regulatory process?

The Chair: No, not the regulatory process. There would just be a notice to the committee who is involved that such-and-such a fee is proposed, so if the committee so wished, they could review.

Ms. Suzanne Shirreff: That's exactly what we're proposing would be in the reports on plans and priorities. The departments would tell you three years out, I'm planning this new fee or amended fee; this is what I'm looking for, and this is what I plan in terms of consultation.

The Chair: Does that go to the committee? As I understand you, that would be the oversight committee on that particular department.

Mr. John Morgan: That is correct. All of these annual reports are tabled in the House and referred automatically to the respective committees for each department.

The Chair: Thank you very much.

Now I would like Mr. Cullen to take a couple of minutes to add any other things he feels are necessary.

Mr. Roy Cullen: Thank you, Madam Chair.

I don't want to question the chair, but were you on the scrutiny of regs committee?

The Chair: Yes.

Mr. Roy Cullen: How many user fees did you look at?

The Chair: The way the scrutiny of regs works, the lawyers screen out all the things everybody's in agreement on. Everybody gets their documents, and there are lots, quite frankly.

There was one very contentious issue, I remember, that dragged out quite a bit just as I was leaving the committee, and it was a fee issue.

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Mr. Roy Cullen: The point I'm trying to make is, I'm just concerned because there's an impression left that there would be this big duplication. Now, the Parliament of Canada can decide where they want the user fee items to go, to either scrutiny of regs or a portfolio committee. My understanding is that the scrutiny of regs committee hasn't really spent a lot of time looking at a lot of user fees, maybe because they were all okay and they were going to agree with them.

The Chair: A lot of the stuff at a daily meeting of scrutiny of regs gets through because the people are satisfied. It's only the contentious issues we deal with.

Mr. Roy Cullen: Yes, but the criterion there is whether it is in accordance with an act of Parliament. You wouldn't actually ask, does this make any economic sense or is it competitive?

The Chair: I was possible for us to get into a dialogue and call witnesses, but quite frankly, what we were looking for was whether the regulation was outside the law, the jurisdiction. It's a totally different mandate.

Mr. Roy Cullen: It's limited, yes, so we shouldn't leave the impression that there are already committees looking at user fees.

The Chair: My point was more to volume.

Mr. Roy Cullen: In fairness, it's a moving target. We don't know exactly but I don't think the volume would be all that oppressive. If it were, I think committees would find a way to deal with that by exception reporting or saying, we're going to look at this type of fee or that type of fee.

Anyway, I'd like to thank you, Madam Chair, and all the members--or rather, the two or three members.

Some hon. members: Oh, oh!

The Chair: I'm non-voting.

Mr. Roy Cullen: I thank you for this opportunity.

My bill has really arisen, as I said earlier, because a certain sense of frustration.

My concern with the policy is, notwithstanding that some of the improvements are good improvements, without some teeth and without some accountabilities we could be back at this in two or three year's time, still looking for results in terms of user fees.

That's why my proposal gets parliamentarians involved. What happens is that there is more light shed on user fees, the debate is more public, and we have a chance to hear departments, agencies, and users on those areas that are more contentious.

Right now there are a lot of processes, but they're all internal. There are a lot of documents that come to our offices, they pile up in the in-basket, and frankly, a lot of this stuff we never look at.

My bill highlights user fees. It gives a committee a little more chance to look at something that might be contentious and to engage in a process. I think articulating things better in the planning and priorities documents would be a good thing. Right now the only solution I see is something that involves parliamentarians in a more proactive way.

One of the things I talked to my colleagues in the government about was a way to put more teeth in our dealings with those departments and agencies that aren't meeting the performance standards they've articulated. It could be either cutting the fee or flowing through some revenue from consolidated revenue--and indeed, that's where it is going--to the department or agency so they can meet the performance standard. If they are only meeting the performance standard 75% of the time, cut the fee by 25%.

Now, I'm told that this is a little complicated, and perhaps it is, but I think we need to work at a solution, either this or another one, where there are consequences if departments or agencies don't meet performance standards.

I look forward to the debate continuing over the next few days.

Thank you very much.

The Chair: Thank you, Mr. Cullen, and thank you, Mr. Morgan and Ms. Shirreff.

We're just trying to get confirmation on our witnesses for next week. We will have the notices out, hopefully, late tomorrow afternoon for next week's meetings, when we will continue this.

We are adjourned.