INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 26, 1998

• 0909

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Order.

Pursuant to Standing Order 108(2), we are doing a study on information technology preparedness for the year 2000.

We're very pleased to have with us this morning, from Task Force Year 2000, Mr. Jean Monty, president and chief executive officer, and Mr. Alain-F. Desfossés, the executive director. They've been in charge of Task Force Year 2000 and have been studying it from the private sector. As many here will recall, they were set up quite a while ago, over a year ago, reported back in February, and reported again in July. We're very pleased to have them here today.

• 0910

We tried to have a meeting a while back. Unfortunately, our schedule and Mr. Monty's schedule were difficult to bring together, but we're pleased to have him here today. He has some opening comments that will take about five minutes, and we'll go to questions immediately thereafter.

Mr. Monty, please.

Mr. Jean C. Monty (President and Chief Executive Officer, Task Force Year 2000): Thank you very much, Mrs. Chairperson.

[Translation]

First of all, I would like to apologize to Ms. Whelan and all other committee members for having cancelled my appearance before your committee several times, at the last minute. I know it was not a very nice thing to do, but I had problems meeting the deadlines established for me. So please accept my apologies, and thank you for welcoming me here this morning.

As Ms. Whelan has just pointed out, I am here with Alain Desfossés, who was the task force's executive director until the end of the study. I very much appreciate your giving me this time. I will be making a brief presentation, after which I will be happy to answer your questions.

[English]

Thanks largely to the visibility of Y2K, visibility that Y2K has garnered since the task force was created in September 1997, Canadian businesses have made considerable progress. I have no doubt that the committee's work has been instrumental in the private sector's improved state of preparedness as well, along with the good work of the Ministry of Industry in Canada, as well as a multitude of other economic and government elements.

A quick comparison of the two surveys carried out by Statistics Canada at our task force's request in October 1997 and May 1998 bears that out. I also suspect that the situation has further improved since last May, and hopefully we'll see that in the forthcoming Statistics Canada report.

Let me give you three points of information out of the two reports we have produced and following the two surveys from Statistics Canada.

Firstly, according to our last survey—that is, the May 1998 survey—70% of businesses were taking action, versus only 45% in October 1997. What's more, 94% of medium-sized and large enterprises were mobilizing on Y2K. This is significant, especially since these larger companies require so much more time for conversion. Their head start should make a significant difference.

Secondly, the percentage of large companies adopting a formal approach to Y2K also increased, from 48% to more than 67%, two-thirds. Again, this is significant. Experience has shown that without a formal plan, executives are more likely to underestimate the scope of the challenge.

Thirdly and lastly, companies taking action represent some 90% of employment in the survey population. I must say this finding was reassuring to the task force. It suggests that one-third of small companies have yet to act, but they are likely quite small, which means they probably will have time on their side, which is not necessarily the case for medium and large enterprises.

Despite the improvements, as we saw from these two Statistics Canada reports or surveys, the task force remained troubled by the following survey results: more than a third of large companies without a formal action plan were probably underestimating what remains to be done within a very limited time; their potential failure could seriously affect their partners, suppliers, intermediaries and customers; and since these companies are unlikely to finish testing before late 1999, their various business partners will be forced to implement expensive contingency plans. Although a very small percentage of embedded chips appear to be corrupted, their malfunction could nevertheless have dire consequences for the environment and employee safety.

It's also worth mentioning that one-quarter of large utilities say they won't be ready before July 1999. The communications sectors doesn't face the same issues, but it doesn't fare much better either, with more than a fifth following a similar schedule. I don't have to tell you that this puts every industry and public service at risk.

• 0915

All this explains why the task force decided to publish a second report, this one entitled The Eleventh Hour, along with a new set of recommendations. I believe this has been filed with the committee. This time we focused on contingency planning at both the company and national levels. While we hope these plans ultimately won't have to be implemented, they are nevertheless urgently needed. In fact some companies are already taking steps. Faced with their critical suppliers' lack of preparedness, these companies are starting to stockpile inventory. Not that many—only sporadic examples are available. They simply can't wait until June 1999 for testing results, or worse, until late 1999, when some companies say they'll be ready.

I think you'll agree that by and large, our recommendations reflected your committee's own set of recommendations, which were endorsed by the federal government last month. I must say I was pleased with the Prime Minister's decision to ask the Minister of Defence to start drawing up a national emergency plan. The minister's quick response was also impressive. I'm also reassured by the sheer scope of work provided by the various federal departments on this issue. I would certainly like to commend Minister Manley in particular for his leadership, and for his decision to have Statistics Canada carry out a third survey early in 1999 to help all of us, including this committee, to assess the situation.

I am equally pleased to see that the Minister of Foreign Affairs has appointed a senior civil servant to support our international efforts. The global summit held in London a few weeks ago was an important step towards the creation of an international information sharing mechanism. Indeed, the task force believes a similar mechanism focused on essential infrastructure service providers might also be needed—although I would say it definitely is also needed—in Canada. Of course this demands full provincial participation, since the provinces have important responsibilities over power and water, as well as safety and security. This is an area to which this committee could perhaps turn its attention.

If Canada is to develop effective emergency preparedness measures, every service provider will have to supply timely information on their state of preparedness. Since these industries are interdependent, each needs access to this basic information to develop its own contingency plan. As you can see, the obligation for transparency is essential as well as reciprocal.

This concludes my introductory remarks, Mrs. Chairperson. I would just like to finish by saying that I was pleased to see you had a few members of our organization here earlier this week. I believe they were in from Stentor, as well as Telesat and Teleglobe. I am led to believe they provided you with information that was satisfactory to this committee. However, I'm still open to answer questions regarding industry in general or the members of our group.

Thank you very much.

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

As some committee members have just arrived, I'll remind them that Mr. Monty was the chair of the Task Force Year 2000, the private sector group that was studying where small and medium-sized businesses were on this, and how to bring awareness to the issue in general to all business in Canada. They filed two reports, one in February, A Call for Action, and one in July entitled A Call for Action: The Eleventh Hour. You should have copies of The Eleventh Hour report in front of you. We've been trying to schedule a meeting with Mr. Monty since that time, so some of the information is perhaps a little dated. However, the questions and the issue are still very pertinent before us.

Madame Lalonde, I'd like to begin with you if you're ready. If not, I'll begin with Mr. Bellemare.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Madam Chair, after the discussion we had during a previous meeting, I should point out that we were able to hear the witness because I did get here on time.

Mr. Monty, I'm very disappointed—not because you are here this morning, but because we were unable to hear you earlier. Today, November 26, we have figures before us that were published in May, and in fact go back even further. So we do not really know what progress has been made since then, and frankly, testimony by representatives of a number of major public organizations—such as the army—was not too reassuring.

• 0920

I failed to understand why the task force was dissolved in July. All I could see is that you were about to accept a new appointment, and I wondered whether those two events were linked in any way. Given the importance and urgency of the recommendations you were formulating, dissolving the task force seems inconsistent, particularly in view of the situation elsewhere—including the United States—where it appears there could be a crisis and panic, and where the major corporations tend to be the same as the ones we have here.

Mr. Jean Monty: Thank you for your question. Though it did take some time before I was able to appear before this committee, we had already submitted our report. We should bear in mind that carrying out a survey every month is not in fact very useful. We had decided to carry out a survey in October, and another in May. We also recommended a third one in early 1999—in February and March—so that we could have the results by early June. Had I appeared before you two months ago, I would not have had better information for you, simply because the surveys (which Statistics Canada carries out so well) are only valid and useful if they are spaced far enough apart. So even though this information is not as recent as you might wish, it is still extremely useful, showing very positive trends in the action taken by businesses.

You also mentioned Canada, and how important this issue is. A number of very well-informed organizations, including the Gartner Group Inc., tell us that Canada and the United States are well ahead of other countries in their state of preparedness. This may not mean that we will be absolutely problem-free, but we can at least say that the work done today by Industry Canada, our task force and a vast number of associations genuinely demonstrates our leadership in this issue.

At the end of your question, you asked why our task force had been dissolved. Let me tell you a little about the task force. When it was first set up, we studied the issue in depth. Then, my colleagues and myself decided—with the agreement of everyone who supported us, including chief information officers—that the best way of tackling the issue would not be to ensure that our task force was given priority to manage it for Canada as a whole. On the basis of our experience in a variety of businesses, we quickly concluded that it would be impossible for us to manage all economic and government-related aspects of the issue for Canada as a whole. We preferred to talk about leadership, rather than ownership, and establish a wide-ranging process that was to monitor organizations and their state of preparedness. May I also point out that our task force was focussed specifically on the private sector; government organizations were therefore excluded by definition. Our mission was to help businesses formulate appropriate work plans, not focus on content. For example, our organization—BCE Inc.—plans to spend $600 million to ensure Y2K compliance, while each Canadian bank plans to spend some $100 million to that end.

We did not see—and I still do not see—how a national business task force could coordinate everyone's Y2K activities. We felt that the best approach would be to establish a very good communications program, and that is what we did. The last time we appeared before you, I believe we showed you that that work had been very well done. We gave your clerk a copy of our new video, which is to be shown across Canada. We focussed particularly on getting everyone on board who would come on board, including national associations, stock markets, the Canadian Bar Association and the Canadian Banking Association. That gave our efforts a great deal of momentum, as well as solid content. We posted Web sites, and did other things.

There was a reason for dissolving our task force. We felt that, if we continued to exist, others would begin to rely on us and fail to assume their own responsibilities for ensuring Y2K compliance. Some people were not doing their work, and leaving it to others to find solutions for them. This was not our responsibility.

• 0925

At the outset, we had agreed that, even if the government asked us to assume responsibility for those who did not shoulder it for themselves—which the government did not in fact do—we could never accept such a responsibility. Each economic stakeholder situation is so individual. So we consciously decided to withdraw from the scene over a year before the problem came up, so that we could force people to assume their individual responsibilities.

The Chair: Ms. Lalonde, one last question please.

Ms. Francine Lalonde: Mr. Monty, I have been here since the very beginning of the process. You reminded us of things I have read and also heard you say. To your knowledge, what has been done since July? You say that you showed leadership, and felt you had to stop there so that others would assume their responsibilities. However, for Canadians and parliamentarians, surely the measures that are being taken now are important, are they not?

Mr. Jean Monty: I believe that is your committee's role, Ms. Lalonde, and not mine.

Ms. Francine Lalonde: I understand.

Mr. Jean Monty: Thank you.

Ms. Francine Lalonde: It seems we did not really need to invite you to appear before us, Mr. Monty, except for the pleasure of your company.

Mr. Jean Monty: So if I may be excused right away, I will leave right now. I would be happy to do so.

Ms. Francine Lalonde: No, that won't be necessary.

[English]

The Chair: Madame Lalonde, I think you should be aware that in The Eleventh Hour, the report that was done by Mr. Monty, they turned the role very much back to this committee and asked us to continue to follow up on our work. That's our goal. Part of the mandate and responsibility of this committee is to deal with small and medium-sized business. I believe the work that Task Force Year 2000 has done has indeed complemented the work of this committee, and we've been able to work based on their recommendations and the evidence they've brought forward. The idea is to work together, not to work at odds here. I hope you'll take a look at that report again and will see that it was very much referred back to this committee, and that they did follow a number of our recommendations as well.

That being said, Mr. Lastewka, did you have any questions?

Mr. Walt Lastewka (St. Catharines, Lib.): Yes, I have one question before I have to leave to go back to the House.

In the first report there was a recommendation that said it was very important for firms to make sure a senior executive, a decision-maker, is involved in the year 2000 problem. I notice there's an absence of any such remark in this report. Many times when we heard from witnesses we could tell very quickly whether there was a senior executive involved to make things happen in that business, or whether somebody was struggling to get decision-making powers, funds approval and so forth. Based on your experiences in your committee and in your work, could you comment on whether there are enough senior executives involved to make things happen, or are we still lingering at a lower level and struggling to get approvals?

Mr. Jean Monty: I think that's totally behind us now. For all the organizations that I assist and that are in our group, or the boards on which I sit, the boards of directors—let alone as a senior management team for those I'm participating in on an ongoing basis—periodically have reports at the senior level, with a senior executive totally identified on this topic. My experience has been that this is not an issue any more in large enterprises. In the smaller ones I suspect it would be, but I just don't have more information to give you on the very small organizations around the country.

The amounts of money that are being spent here are such that no organization in their own right would let this issue be dealt with too low in an enterprise. Don't forget, it's not only the amount, it's also the changing of priorities. What most of us are doing, particularly in one organization whose board of directors I sit on and which will remain nameless— They have actually decided that as of March of next year, they will delay any more work on systems. This very large organization in the country is doing this in order to make sure the testing that has to be done on this issue will be done as a priority. No more new adjustments to information systems will be taken care of or will be handled after March 1999, in order to get the testing done properly. This is at the highest levels in all of the large organizations, including the boards of directors, in my opinion—at least based on the information I have with the companies I'm associated with.

• 0930

Mr. Walt Lastewka: I asked that question because I know your advertising in the large business magazines targeted directors, executives, seniors, presidents, CEOs, to make sure the responsibility was in the proper place.

Mr. Jean Monty: As far as I'm concerned, it is. The accountants are seeing to it, the lawyers are seeing to it, and the stock exchanges are seeing to it. By going around to all of these key regulatory bodies, as well as to the associations I referred to—the bar, the bankers, the accountants, the stock exchanges—they've all taken this issue by the horns as a result of what we did in the first report, and they're going around preaching this gospel to all of their constituencies. You're seeing action being taken, and significant sums are being invested to get this issue handled properly in the country.

So I think this is being handled, and senior executives are involved.

Mr. Walt Lastewka: When you made your recommendation 6, which referred to this committee and Statistics Canada, I guess it behoved us to make sure the message was loud and clear for small and medium-sized businesses. That's the area that is probably taken a little bit lightly until you meet face to face with the presidents or senior members of a small business, when it all of a sudden hits home.

Mr. Jean Monty: I think Catherine Swift of the CFIB is also doing very good work. She was on our task force, and the Canadian Federation of Independent Business is doing very good work in this area. The CFIB has done its own surveys. It has used some of our material and some of the material it created itself, as well as some of the material created by some of the participants in our task force—such as IBM in terms of the process to go through when a small organization has only a few PCs. The CFIB has distributed this material. This group represents small economic agents, small businesses, and has done very good work in this area.

Mr. Walt Lastewka: Thank you.

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

Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): I find your time with us extremely pleasant, Mr. Monty. I'm one of your admirers, and have faithfully followed your career's development in the newspapers. Your task force has done some extraordinary work, and I have read each report twice.

When private sector representatives appear before us, they always give us different answers. They seem to be saying:

[English]

Don't worry, be happy.

[Translation]

We'll get there.

[English]

You should be aware the committee is doing good work, congratulations, pat on the back.

[Translation]

They treat us like eighth-grade kids who get elected to Parliament and hear about these issues for the very first time. What can we do to target and define future problems?

For example, let's say that people in charge of wastewater treatment in Ottawa, Montreal or Toronto appeared before this committee. They could say anything. We could ask them anything, and they would tell us that everything was just fine, but since you are an expert on the issue, what questions do you think we should be asking?

Mr. Jean Monty: All organizations use a different process to solve the problem. In your example, the people responsible for wastewater treatment should certainly be looking at integrated chips. The process must be properly checked, and the clocks in each of these chips must be checked and adjusted if necessary.

Our task force made available to boards of directors a series of standard questions they should ask. I don't know whether you had a chance to see the list—it was compiled by the Canadian Institute of Chartered Accountants, and helps people determine the types of questions they should be asking. Though I cannot speak on behalf of public institutions and organizations, I can say that we asked boards of directors to give us a report showing what they had achieved, and listing everything that still had to be checked.

• 0935

We also asked them to describe their established work plan. For example, in our company, we use red, yellow and green colour codes to indicate the estimated risks for each inventoried item. We also asked them to compare the dates on which they expected to have updated all computer codes in their various systems. For example, in our company, we know that 92% of codes in all systems are now Y2K compliant. We're almost completely in the green zone, though there are still some yellow areas—that is, areas where work is not quite complete. However, we have managed to eliminate all red areas identified at the outset from the inventory. Our board of directors is asking computer system heads to submit a report every three months. Senior managers in each of our units submit a report individually before meeting with the board.

At the end of the process, we ask two very important questions: first, have you succeeded in ensuring that all systems will operate properly individually, and secondly—this is even more important—do you plan to check whether they can operate well together, in an integrated fashion? Confirming that a system operates well on its own does not necessarily mean that it will operate properly with the other systems, that have also been modified. Let's take an everyday example—a pay system has to operate efficiently in conjunction with a financial system.

All these stages should be gone through. The board of directors of every major corporation I know is currently doing regular reviews, probably every quarter. The review process allows us to consider all issues in a timely manner, and establish an assessment structure. These are the stages we suggested in our first report. Most people are applying the process, because it is fairly logical.

Now, how could your committee review these issues within industry, or with a particular sector? It is quite difficult to appear before a parliamentary committee and give the latest information, make ourselves vulnerable, as it were, because things don't always happen exactly as we want with this sort of thing. For example, our company made a minor mistake: on a Web site, we posted the dates on which we expected several of our products to be Y2K compliant. We were right in 80% of cases, but we were off on 10 to 20% of cases. A number of clients have told us that we'll never be Y2K compliant. That was three months ago, but we still had 15 months to go. We worried our clients without meaning to. We had lots of time, and we should not have made promises. In the last three months, all those outstanding problems were dealt with.

Just as you do, a company like ours has a responsibility to ensure it is Y2K compliant in due time, but without getting people worried. When we know we will achieve our objective, and we know we still have lots of time in which to do it, there is no point in coming before a committee of the House and setting out all the milestones still before us. We know everything will be settled in time. If we had a serious problem—we won't, because we will be spending $600 million to solve any problems when they arise—you will of course know about it by next June at the latest. The June survey by Statistics Canada will perhaps be the most important of all. The results will probably be out by early June, and in the light of the survey conducted at the end of the first quarter, they will show your committee what serious problems they should be aware of. Perhaps your committee should ask Statistics Canada to carry out a survey that will provide you with more relevant or specific information than the information gathered during the first two surveys. But please be careful: if you do that, please ensure that you specify any answers will be treated confidentially by government. Please ensure you make it clear they will not be disseminated to the public. You don't want to start a panic. You just want to make sure that core areas, like those you mentioned, do not have problems no one knows about, and will be Y2K compliant in time.

We who represent industry have an interest in making sure the process works well. There are ongoing communications between ourselves and the department responsible for public works, as well as other institutions with whom we work regularly, such as the utility company we get our power from. Our people maintain ongoing communications with these organizations, but we have of course no power over them. You have some power over them, even though the provinces are involved as well.

• 0940

I would perhaps recommend that you work with Statistics Canada to obtain more specific information. You might also consider the suggestion I made in my opening remarks—establishing a mechanism for information-sharing among industries. There is no such mechanism as yet, but we could perhaps establish a Web site managed by Industry Canada, on which various industries might post information voluntarily. This may be a useful source of information; we would know various industries' views on Y2K compliance. I apologize for giving you such a long answer.

[English]

The Chair: One last question, Mr. Bellmare.

Mr. Eugène Bellemare: My last question is from the consumer's point of view. Hollywood is presently preparing three films, which will create, I am sure, panic in some quarters. We can see scenarios, and the ice storm last winter gave us a good sample, of what could happen with the Y2K breakdown if this occurs, because of the interrelationship, the integrated chips: Bell breaking down; if you call the police, it doesn't work; the lights are off; emergency machines don't work; the hospitals have breakdowns. It could go on cascading. How do we handle this as a committee?

Mr. Jean Monty: I'm so pleased to see that the Prime Minister has asked the Minister of Defence to work on emergency preparedness. I don't know if the Minister of Defence is open to that, and I don't know the rules of your committee, Madam Chair, but I suspect it would be useful for you at some point, in camera or otherwise, to meet with the Minister of Defence or his representative, or the public servant who has been asked to do this work, to really review the sort of preparedness plan that has been put together mainly related to critical elements of the infrastructure. I think you know these elements as well as I do, but it is very difficult for me, in the private sector, to have that information—I just don't have it. That's why the Minister of Defence and his colleagues will have that information in due time, and they will have a plan you might want to review with them.

The Chair: Mr. Monty, actually we met briefly with them last week. They are in the process of developing contingency plans that won't be ready in more detail until the spring. They also do have a person working with each province dedicated to that province now. So they are in the throes of being—

Mr. Jean Monty: I think they are better persons to ask than somebody like me.

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

[Translation]

Ms. Lalonde, do you have another question? No.

[English]

I have Mr. Shepherd and then Mr. Keyes. Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): As you were giving your presentation, I think you were trying to allude to what this committee's function could be as we go forward. You were talking about the model of a global summit, that somehow we could put a similar type of model in place domestically. I was just trying to think how that would come to fruition. I presume you would take the key sectors. You talked about power and water, safety, security, those people we identify in those sectors, and we would have a continuous monthly meeting where these people come together. Would you visualize some kind of report card system that may be—

Mr. Jean Monty: I had in mind something a little simpler than that. I alluded to the summit in London where they talked about setting up a global information-sharing mechanism. My recommendation, or my comment, was more related to the information-sharing mechanism than the summit. The idea here is to ask if it would be wise—and I believe it would be appropriate—to set up, probably through Industry Canada, which already has a very good web site called SOS 2000, something where you expand that web site to voluntarily suggest to industry and infrastructure elements of the economy to put information on that web site.

By the way, you are familiar with good Samaritan legislation that was passed in the United States, where they have relieved of liability people who would put that sort of information in the public domain on a voluntary basis. The same thing could be done in Canada. It is more complicated for Canada, we are told by the Canadian Bar Association, because of the legal requirements to go by province on this issue and also the time delays. I'm not sure you could put good Samaritan legislation in Canada related to the information, but certainly our organization would have no problem putting on that web site of Industry Canada what we're telling our shareholders we're doing about this issue.

• 0945

I would suggest it's something that could be done on a voluntary basis. You'd have to publicize the issue. You'd have to say you're suggesting and asking— Requiring is a strong word if you don't have legislation to do so, but as you build the web site, those companies that wouldn't provide information would find themselves a little bit on the outside looking in, so there'd be a moral suasion effect to this.

The value of that—to me, anyway—would be that instead of having people inside our own corporation— And we're lucky we have an organization that demands this sort of thing because of our size and the public posture we have, but smaller companies don't. They have to search out for who is doing what and how will the others be prepared compared to us. And it would be useful to go to inter-industry groups. There are information mechanisms now in place for the energy industry and health.

What others are there, Alain?

Mr. Alain F. Desfossés (Executive Director, Task Force Year 2000): Electric.

Mr. Jean Monty: Electric companies.

The issue is how about having information-sharing between industries, as opposed to within industries? That's what I'm alluding to here, where Canada could expand the SOS 2000 web site of Industry Canada and request on a voluntary basis more information to be submitted that would be transparent to everybody, where everybody would have access to it through that web site.

Mr. Alex Shepherd: I heard what you were talking about, the question of panic and undue pessimism about this. I wonder whether in fact it would be useful to have some kind of a report card mechanism—you may tell me that this is not a realistic goal—as we approach the year 2000. I often wonder whether the offset of panic can be worse than the actual disaster. I don't know which is more problematic, I suppose.

Getting back to the idea of report cards, certain people are going to start questioning whether they're going to get power on January 1. I think it would be nice to know, for instance—I live in Ontario—that the Province of Ontario would actually start giving some signals that it is progressing, that it is achieving some kind of goal. I understand the importance of it being a voluntary kind of thing, but I wonder whether in fact it couldn't envision some kind of a report card system, maybe getting tougher and tougher just to report to us as the year 2000 draws nearer.

Ms. Jean Monty: One of the things Alain and I were discussing earlier this morning, and I say this with caution, is after the next Statistics Canada report or survey, if we find that it's really problematic by sector you may want to suggest to Statistics Canada that they do it by sector and sub-sector so that you have better information. We did a little bit of that in our second survey, and it was very useful. They were very open to help us in this respect.

If we find after the third report survey that you still are not satisfied, the one thing you could do after that is really force a much more direct survey by company on a private basis by Stats Can to report back to this committee and then you would take action. At this stage it would be very difficult for those companies that you would identify, because publicly they'd have a hell of a black eye. But if you feel after the third report—and you'll probably have the chief statistician's report to you on the report some time in late May or early June—that you find some really strong deficiencies, you might want to do that.

The other thing we didn't do in the last report, or at least we didn't do as well as could be done in the next one, is we didn't go after the public infrastructure. It was basically private industry. You might ask the chief statistician to address the public sector by province. But there again you should do it with caution. It might be that the report is given back to you in private, as opposed to being public, and you deal with the issues of transparency and public panic and all of these issues that are dealt with by people like you and me.

These are suggestions I'm making. Take them with a grain of salt. They are things you might want to consider.

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

Mr. Keyes.

Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Madam Chairman.

Mr. Monty, here we are in the age of high tech, speedy and efficient communications, etc., a whole new world that we've involved ourselves in today. Yet ironically, it appears that we don't seem to be able to communicate the problem—it's facing crisis proportions, from some of the details you put in your report—to the private and public sectors.

• 0950

I was sitting back and thinking about asking you about the role of your organization in feeding Statistics Canada. You're making a lot of suggestions here about what Statistics Canada should be asking, how they should be asking it, etc. Are you coordinating at all with Statistics Canada? Are you supplying them with suggestions?

Mr. Jean Monty: No. As I said to Madame Lalonde a moment ago, we decided after the second report that the best thing we could do in order to not have any organization rely on us to find the solution— Some smaller organizations—

Mr. Stan Keyes: I'm not speaking about relying on you; I'm just asking if you're informing Statistics Canada of your ideas on what they should be addressing.

Mr. Jean Monty: No, I'm not.

Mr. Stan Keyes: All right. That sounds like a communications breakdown to me.

Then I wondered why we were getting mired in whether we know or don't know whether the private sector or business is ready for Y2K. We'll put out surveys, etc., in January or February. Statistics Canada has reported to us that they won't be able to provide us with the information, private or otherwise, for five or six months, because they—

Mr. Jean Monty: No, it's two months.

Mr. Stan Keyes: Well, they said it would be five months when they were here. I was shocked. They said that if they get it done in January or February, they won't have it for us until May.

Mr. Jean Monty: Well, they've been able to do it for us in two months. Is that correct, Alain?

Mr. Stan Keyes: Well, you're paying more for the service. Let's saw it off and call it three months.

Then once we receive that information, they'll say the information is probably outdated. You can get caught up in this cycle of having to know. But then, by the time we know, all those numbers are different anyway. So how much do we really know?

Mr. Jean Monty: The silver lining in what you're saying—

Mr. Stan Keyes: Isn't what we're really attempting to achieve communicating to the private and public sectors the importance of ensuring that they're ready for Y2K? And if that's the case, why are we taking the time, resources, cash, government tax money, and all the rest of it, to find who is and who isn't ready? Instead, we should be devoting those kinds of resources to— I'm just speaking openly; I'm not trying to badger you on this thing.

Mr. Jean Monty: No, that's fine.

Mr. Stan Keyes: We should create a web site, say, that we all agree on that's simple, straightforward, to the point, and illustrating the importance of being ready. Then we can take that and either buy time on ISPs across the country or ask the ISPs—they will also be directly affected—to set up their start-up web site so that the first thing one will see on that screen is this information page that says you've got to be ready. It'll be on every computer, whether it's sitting in my daughter's room or at Bell Canada.

Mr. Jean Monty: On the information side, permit me to remind you that we now have 99% awareness in private industry in Canada. So the information is there. There's now total awareness. And 66% of large and medium-sized firms have formal plans to get this done.

Mr. Stan Keyes: Isn't there a difference between awareness and what has a direct impact on you?

Mr. Jean Monty: That's the point. The issue is that some companies are not yet doing the formal work, but there are significantly more doing it. As the numbers in my notes exemplify, 45% of companies were doing formal work, and now it's 66%. I'm sure that when the next survey comes up you'll be at more than 90%. You'll cover 95% to 96% of the employment base of the country, which in effect will be covered by these enterprises.

So the work is being done. That's the silver lining I was starting to mention in answering your question. From the work you're doing, the work we've done, the videos we've sent, the information we've sent around, the heightening of awareness, and the action being taken, Canada is leading the field in this thing on a global basis.

Mr. Stan Keyes: Nobody's questioning that.

Mr. Jean Monty: The issue for me is that if this had not been done, you wouldn't have had the work. Say we had started our work by saying that rather than communicate, we will devise a universal testing system for the country. There were comments like that. It was said that we will do that. That's our responsibility to the task force. We were convinced with the work we did in our own enterprises, whether it was me, Cleghorn of the Royal Bank, or whomever on the task force—there were a dozen of us—that we were not capable of doing that, let alone have the Government of Canada trying to do that.

• 0955

The government itself is going to spend a couple of billion dollars doing it. So we thought—I remain convinced of this—that the best way to do it is to suggest a process or approach like what you saw in our first report, and communicate like hell. When you say the government spent millions, don't forget that my company, which is in private industry, spent $2 million of our own money on this. I'm doing this for free. This is a joint effort within private industry. Industry Canada, our task force, paid the other half. So the money was spent on communicating, but it was very little. The overall budget of the task force, including the communications program, was $6 million or $7 million, right?

Mr. Alain Desfossés: It was $6 million.

Mr. Jean Monty: It was $6 million. The money is being spent on dealing with the issue, not on communicating. We've done enough communication. We're going to do a little more—

Mr. Stan Keyes: I don't know how we drifted off on all this, Madam Chair, but my intention is not to—

The Chair: Just to highlight this for you, there are many web sites out there right now. Different provinces do have web sites telling people where they're at. There's the SOS 2000 web site right now from the federal government on the industry. Maybe as a committee we should take a look at what sites are there. The researcher could prepare a list of what web sites are there.

Mr. Jean Monty: In fact, Madam Chair, SOS 2000 is excellent. It should be used by everybody.

The Chair: It's a very good site.

Mr. Keyes, I apologize, but we have to move on. I want to ask a question before the meeting ends.

Mr. Stan Keyes: I'm sorry.

The Chair: Mr. Monty, I want to take this to a slightly different level. I think it's going to be interesting, because we have the Alliance of Manufacturers and Exporters Canada following you. They're in one of your recommendations from your July report. We do appreciate the work you've done.

We're trying to take it to another level because this committee also has a responsibility to consumers. As we approach the holiday season, we're very concerned that consumers are going to be out there buying electronic goods as gifts that are not Y2K compatible. But the business sector is still selling these goods. I don't want to say they're selling them in a fraudulent manner, but obviously many companies must know whether they and their goods are Y2K compatible or not. So as a very important person in a large organization that will be selling a lot of consumer goods this year, is there a responsibility to the customer?

Mr. Jean Monty: Definitely.

The Chair: Do you know if your goods that you'll be selling this holiday season are Y2K compatible?

Mr. Jean Monty: Our organization is definitely conscious of that. We feel a responsibility to get that done. In our second report we made a recommendation that the better business bureaus and the Consumers' Association of Canada work on this issue by themselves through their organizations, which are, again, much more widespread than ours.

For instance, in our company we don't trust many people on this, so we do the testing of the products we receive. We embed our own products. We don't trust the compliance statements of the manufacturers. Now, we're a large company, and it's our responsibility to do that. But it's difficult for the ultimate consumer to do that.

I wouldn't suggest for a second that you set up a testing site in the country for all products being sold. But there is something that can be done through the better business bureaus and the Consumers' Association of Canada, as well as Alliance of Manufacturers and Exporters Canada, which will be coming later on, as you say. That's the place where you work on this issue. But we're told that there are products that are not compliant being sold today, which I find unbelievable. Hopefully none of those are ours, because we're very diligent on that.

The Chair: I guess that's my concern. The members of the task force are obviously more aware than those of some other businesses. But again, when it comes right down to it, at some point you sell consumer goods. I know there are a lot of consumers out there who still don't think this affects them. So when you bring it down to a simple level of what electronic goods you have in your house, 10% to 30% that have an embedded chip will be affected. If your microwave doesn't work, is it a big deal? Maybe not. If your VCR doesn't work, is it a big deal? Maybe not. Remember that it's a holiday for a few days. You've got your kids at home. You decide if that's an inconvenience you want to live with. I don't know.

I think when Catherine Swift appeared before us as the president of the Canadian Federation of Independent Business, they had done all their system work or were well along on their systems. They stopped, took a step back, and looked at their elevators and security systems; they found they had a problem.

So I think that as the awareness is there, there are things people are still overlooking. We're going to continue as a committee to try to bring that awareness there. But I really do hope that in the private sector there's a responsibility as well to the consumer. I hope everyone does their share. You can continue to impress this upon the members of the task force and those you know in business who ultimately have a responsibility to the consumer buying these goods.

• 1000

The intention of this committee is to let consumers know, as they're doing their holiday shopping, to be Y2K aware. Because they're going to be buying electronic goods, such as telephones. The fact is that if the hydro goes off, your telephone still works, provided it's not hooked to hydro. A lot of new telephones are hooked to the hydro—

Mr. Jean Monty: You're right; PBXs are hooked to the hydro.

The Chair: —so I guess some people are going to want to have individual old phones in their house. If you keep your old phone around then you'll probably be okay, because you can just plug it in and it'll work and it won't need any electrical work.

But that being said, when we started this we had about 800 days to go to January 1, 2000. The clerk has just informed me that we have 400 days today. It's quickly dwindling. I do appreciate, as I know many members of this committee do, the work the private sector task force has done. You're a very busy person. You have enormous responsibilities for a large number of companies, and we know you've taken a lot of your free time, as have many of the members of the organization, as well as put your own dollars into this, to ensure that Canadian companies and Canadian consumers are aware. We definitely do appreciate it.

If you had a chance to look at some of the witnesses coming before us the rest of today and over the next couple of weeks, you would see that many of your recommendations will be coming up for discussion throughout, and the debate continues. But we do appreciate your work.

Mr. Jean Monty: Thank you very much for your time.

Let me leave you with one aspect that I feel comforts me: the cascading effect that's now occurring on this issue. I don't want to leave you with the smoozy feeling that everything is good, but take an organization like Nortel or Bell Canada. We have 5,000 to 10,000 suppliers among ourselves, probably 9,000. We're going through all those suppliers. There's a cascading effect of what they sell and what we sell, and many are criss-crossing; suppliers are not only supplying to us. So when you have all of the companies, the large enterprises in the country and the Government of Canada doing this work, the cascading effect going through the system is immense.

We are actually going to get some suppliers off our list of supply because they are not providing compliant products. So as this occurs, and you're doing your work through the national associations and the different groups of infrastructure industries, I think this thing is going to be dealt with in Canada. Our fear is probably the international side as the biggest weakness we have in the country.

Thank you for your time; I appreciate the availability.

The Chair: Thank you very much, Mr. Monty. We appreciate your being here.

We're going to take a five-minute break.

• 1002

• 1010

The Chair: We will resume the meeting.

We have before us the Alliance of Manufacturers and Exporters of Canada. The Retail Council of Canada unfortunately is unable to be with us today. They just cancelled as of this morning, so we'll try to reschedule them at a later date.

I don't mean to put the Alliance of Manufacturers and Exporters on the hot seat by themselves, but we have Mr. Jayson Myers, senior vice-president and chief economist, and Mr. Matthew Wilson, the policy analyst.

I will turn it over to you to begin.

Mr. Jayson Myers (Senior Vice-President and Chief Economist, Alliance of Manufacturers and Exporters Canada): Thank you very much. We're very pleased to be here to discuss with you what we think is an extremely important matter, not only for manufacturers and exporters, but for the Canadian economy.

We're on the hot seat for more than one reason. Our 3,500 members across the country represent all sectors of the Canadian economy, including manufacturing industries, software services and financial services, but we're on the hot seat here today because our members and their 7,000 affiliates also account for approximately 80% of Canada's industrial production, 90% of Canada's exports, and about 95% of Canada's R and D effort.

The activities of our members are pretty representative of the current status of Canadian industry and what is going on in the field of Y2K compliance. There are certainly some challenges ahead for Canadian companies and we'd like to speak to those challenges today.

One point I'd like to make is that information technology today pervades almost every aspect of manufacturing and exporting businesses. We're looking not only at information systems, computer systems used for the communication and storage of information, but also at embedded systems where information technologies are becoming more and more important in design systems in communicating between computer systems and machinery on the shop floor and automated equipment being used in manufacturing and processing establishments.

We're also looking at the importance of information technology in communication channels in downstream supply chain management, as well as upstream supply chain management. That means manufacturers today have to be aware of the implications of the Y2K problem, not only with respect to what is going on in the front office and on the shop floor, but what their suppliers are doing and their ability to guarantee that their customers are Y2K compliant and they are Y2K compliant in providing services for their customers. The other aspect is liability, which is becoming much more of an issue across the industrial community.

The problem of Y2K really touches every aspect of manufacturing business, and this problem is not simply contained within Canada itself. Manufacturers today export 65% of their total production outside of the country, with 55% of the total production being exported into or through the United States. They're also purchasing 60% of all the goods and services they use in production from sources outside of Canada, again largely from the United States, although that's not always the case. Imports are also coming in from Europe, Asia and Latin America.

So from our point of view, we will not be able to manage this problem if we simply look at it from a Canadian perspective. It is an international problem, and that certainly presents a lot of challenges to the manufacturing and exporting community in Canada.

• 1015

In the summer of this year we conduced our annual management issue survey of our members, and 542 companies responded. We asked them to provide us with a status report of their efforts to become Y2K compliant. We've provided the results in our brief. They show that 87% of the 542 respondents said they had completed an inventory of communication and computer equipment on the shop floor and in their management information systems. But only 58% of those surveyed said they had also completed a formal plan to deal with this problem, and 41% said they were working on an informal plan or taking informal steps to deal with this issue.

When we looked more closely, the responses really raised a range of concerns about the readiness of companies to deal with the Y2K problem. A majority of plans for compliance are simply to upgrade or replace mainframe computer systems or desktop and laptop systems. So there's a very strong focus on the front office systems.

Only 36% of companies surveyed said they had plans in place to upgrade or replace embedded systems on the shop floor. Only 48% of respondents said they had completed an assessment of supplier or customer capabilities, and only 34% had completed a risk management plan to deal with potential problems following the change in the millennium. A fewer number had any plan in place to deal with potential liabilities arising from a Y2K problem. So the status I have to report in terms of manufacturing is that a considerable amount of work has yet to be done across the sector on this issue.

There are a number of outstanding issues. We've been working with our members on this issue now for about a year and a half, seriously trying to communicate to them the importance of the issue, and working with them in providing services to help them upgrade their information systems. But I have to report there are real challenges here in our efforts, and real challenges outside in the manufacturing community.

First, there's still a wide range and a considerable amount of disinterest in this problem. The end of the millennium is coming. I don't know how many days are left, but there is still quite a bit of disinterest that this is going to be a serious problem. That's certainly something that provides a communication challenge not only to our association, but also to government.

Second, manufacturers and exporters are having problems dealing with the allocation of time, effort and particularly money, in dealing with upgrading their technology. The upgrades, reviews and system monitoring that has to take place in order to upgrade technologies are expensive, particularly for small companies, in terms of the resources that have to be invested in this process, but they're also expensive in terms of time and effort.

No company is dealing with this problem as the only problem out there on the business horizon. They're also dealing with tremendous challenges from competitors, challenges to upgrade technologies anyway, challenges to simply keep the bottom line in the black, and challenges in the future in terms of what expectations will be for equipment and technology upgrades on issues like climate change and energy efficiency.

So this is not a singular problem that has to be looked at, and many companies are really struggling to allocate sufficient resources to deal with this problem. It may be a much more severe problem and it may force many companies out of business fairly quickly, but as of yet there are resource limitations that companies face in dealing with these problems, and I think that's a serious challenge.

On the other hand, we have to recognize that companies that take quick action here will gain considerable competitive advantage in the world economy. Companies that are able to show they are Y2K compliant, that are Y2K compliant and can continue to serve their customers into 2000 will probably gain market share in competition with companies that are not compliant or cannot show their customers they are compliant. So there is a considerable opportunity here for Canadian companies that have action plans and are taking early action.

• 1020

I think there's another challenge, in that companies are not considering the wide range of implications that Y2K compliance or non-compliance might have. There is a focus on upgrading technology. There is little attention being paid to some of the wider issues, such as health and safety issues, environmental issues, liability issues even, or, in the long term, the whole management of technology and the implications of dealing with the Y2K problem in terms of a quality plan or a business plan.

The focus has tended to be fairly narrow, I think it's fair to say, particularly among small companies. It really looks at upgrading technology, and that makes it a little bit more difficult for smaller companies in particular to deal with the full range of implications Y2K non-compliance might have.

There's a fourth problem in the provision of inventories of parts and products. Many companies are providing inventories of what they produce right now with a guarantee these are Y2K compliant. It's more difficult to find inventories of parts or products that were produced sometime ago that would allow companies to do an assessment as to whether or not those parts and products are Y2K compliant. It's a problem not only in terms of a company's relationship with its customers in trying to guarantee Y2K compliance of its products, but also from the point of view of trying to look at embedded systems and existing technologies and to assess whether or not they are actually Y2K compliant. In many cases these inventories simply are not being provided or simply do not exist.

Finally, I think companies are facing a problem in the overall way of approaching this issue. As I was mentioning before, the focus tends to be very narrow, and yet when companies are looking at making major investments and investing a tremendous amount in terms of cost in technology upgrades and technology assessment, then it has to be part of a company's technology plan, management plan, business plan, and quality plan. I don't think many companies are looking at Y2K compliance in that respect. I think that's a challenge companies will have to face.

The alliance provides a number of services for our members to help them upgrade their technology and address this problem.

First of all, we're working to increase the awareness of companies about the implications of Y2K non-compliance and some of the problems companies might be facing in becoming compliant. Building awareness is a key issue here.

Second, we're assisting our members to develop product inventories.

Third, we're working with them to address some of the operational and business challenges they might be facing.

Fourth, we're entering into a number of partnerships with service providers in order to work with smaller manufacturers and exporters in particular to help them to do an assessment of existing technology and to upgrade their systems.

Fifth, we're working with Industry Canada in particular to ensure that there's good communication on what the federal and provincial governments and our members are doing.

I just wanted to touch very briefly on our view of what government can do to assist companies and to really play an instrumental role as far as industry is concerned in the issue of Y2K compliance.

First of all and most importantly, I think government should look at its own systems and make sure they're Y2K compliant. Certainly any regulating department such as Revenue Canada is on the hot seat here as well. It's vital that the government's information systems and lines of communication that interface with industry are Y2K compliant. That may help to drive Y2K compliance through industry itself.

• 1025

Second, I think, and I mentioned this before, there's a vital role in providing information, building awareness, and heightening the profile of this problem and of all of the implications companies could be facing, particularly in the form of liabilities.

Third, I think governments are working closely with industry associations and with the private sector with a particular focus of heightening awareness and helping facilitate technology upgrades, particularly with smaller companies.

Fourth, we recognize that the government has introduced a tax credit for the replacement of computers to help make small companies Y2K compliant. It's important to realize, though, that from the point of view of manufacturing, in many cases we're looking at a complete replacement of existing technology, not just computer systems, and that the cost involved in that is much higher than just simply the cost of computer replacement. Also, in order to facilitate the turnover of existing information technologies, existing capital, we have to be looking more than ever at measures that would help to facilitate investment in technology in general. Companies are not looking at Y2K replacement on its own, but as part of an overall technology replacement. It's important to recognize that from the point of view of manufacturers, the pick-up on the use of the existing tax credit measures may not be that great and that the leverage government might gain from that may not be that great for that reason.

I think the government can play a role in building Y2K standards into public procurement contracts.

Finally, I think the government should be very sensitive to the actions of other countries, such as the current legislation limiting liabilities for U.S. companies that has been recently introduced in the U.S. Congress. As I was saying before, the Y2K compliance issue is going to play a major part in determining international competitiveness for Canadian companies. Our public sector approach certainly encourages upgrades, but in our approach to containing the damage of the Y2K non-compliance as well as to the issue of liabilities, we have to look at where other countries are going, particularly our major competitors in the G-7, such as the United States, so that there is not a dissimilar treatment of companies between Canada and our major competitors.

That, Madam Chair, is the summary from industry on the hot seat here. I conclude by saying there is a real problem in many companies, and I think taking this issue on is important. There's no doubt that over the coming year companies will be looking at this as being a more and more important issue, but we certainly would have liked to have seen this issue taken much more seriously by industry than it is right now. A major challenge facing us all is to heighten the awareness of the problems and the liabilities companies might face.

The Chair: Thank you very much, Mr. Myers, for your opening comments.

Mr. Jayson Myers: Thank you.

The Chair: I will now turn to questions. Madam Lalonde.

[Translation]

Ms. Francine Lalonde: Thank you, Madam Chair. Is the Alliance of Manufacturers and Exporters of Canada a major Canadian association with a chapter in Quebec? It is? In that case, I'm surprised that you did not give me a copy of your brief in French, as required by the Official Languages Act, if only out of respect for your Quebec members. If you were a minor and insignificant association, I wouldn't even mention this. But you have considerable means, and a very large membership.

That said, after this lecture—

Mr. Eugène Bellemare: Point of order, please. The Official Languages Act protects the public, and stipulates that a member of the public can address the government in the language of his or her choice. Though I support your preference for documents to be submitted in French also, I should point out that some witnesses do this simply out of goodwill. You should not cite the Official Languages Act in support of your view.

Ms. Francine Lalonde: Very well, I withdraw the reference to the Official Languages Act, but I do maintain everything else I said.

• 1030

Mr. Eugène Bellemare: Yes.

[English]

The Chair: Just to clarify further, for the benefit of our witnesses, I think they should be aware that they have the right to submit in the language of their choice, Madam Lalonde.

[Translation]

Ms. Francine Lalonde: Certainly.

[English]

The Chair: Although you would prefer to have it in both official languages, they are under no obligation whatsoever to do that.

[Translation]

Ms. Francine Lalonde: Yes, I did say that, but I also specified that I hoped they would do so out of respect. Those are the precise words I used. I also emphasized that they have a large number of members in Quebec.

Having said that, I would like to congratulate you on the content of your document. We have received a number of reports like this that were rather ho-hum, if I may say so, whereas yours is right to the point and you don't hesitate to spell out the problems. Although your report was not translated into French, I must admit that I think it is very good. I must tell you, however, that it also worries me.

Five hundred forty-two members answered the survey that you conducted last summer. How many forms were sent out?

[English]

Mr. Jayson Myers: The 542 came from across the country. I think it's fairly representative of our membership and of industry as a whole.

[Translation]

Ms. Francine Lalonde: Was it a scientific survey?

Mr. Jayson Myers: Yes.

Ms. Francine Lalonde: Therefore you have a representative sample.

Mr. Jayson Myers: Yes; 7,000 questionnaires were sent out and we received 542 responses.

Ms. Francine Lalonde: That represents a little less than 10%.

Mr. Jayson Myers: In Quebec, the response rate was 25%.

Ms. Francine Lalonde: I don't doubt it. Did your survey ask the members whether they had developed a formal plan that called for a complete testing of their system by June?

[English]

Mr. Jayson Myers: We didn't really get into too much detail in terms of the substance of their plans. We were concerned more about the overall planning process, whether there was a formal planning process or whether they were taking informal ad hoc steps.

One of the problems in surveying companies on this issue is certainly that you're touching on some very critical aspects of their business, and it is often difficult to find that they will respond to a question if you get into too much detail about what they are doing.

Our impressions overall come from not only the survey but from work we are doing with a number of companies, helping manufacturing and exporting companies upgrade their embedded systems, working on the plant floor, as well as looking at their management information systems. So our impressions here of the state of the industry in terms of the more detailed aspects of development come from a number of the service companies we're working with here. We did not ask for or get into too much detail in the survey.

[Translation]

Ms. Francine Lalonde: So you asked them whether they had a formal plan, but not whether they had set a deadline. Fifty percent of the less than 10% who responded told you that they had a formal plan.

Mr. Jayson Myers: Yes.

Ms. Francine Lalonde: But they did not provide any details. What I find most disturbing, and perhaps you do as well, is that only 36% of the companies said that they had plans to replace the embedded chips in their systems. Did you come to the conclusion that many companies are not even aware of the issue of embedded chips?

• 1035

[English]

Mr. Jayson Myers: I think that's a serious problem. Especially among smaller companies, the focus seems to be on their management information systems and not so much on the integrated systems in production or in the processes. To some extent, it is a question of awareness, I think.

Certainly the larger companies are the companies that have plans in place and that have done a full inspection. It tends to be the smaller companies that have not. Either they're not aware of the problem or perhaps they feel the problem is fairly limited, in that the degree of automation in their companies may not be as great.

[Translation]

Ms. Francine Lalonde: Finally, only 35% of the companies had a contingency plan.

Mr. Jayson Myers: Yes.

Ms. Francine Lalonde: I have read the rest of your document and I have heard you. It would seem to me that the solutions envisaged are not quite commensurate with the problem. With respect to embedded chips and production, companies might find themselves unable to operate, and this would have all sorts of consequences. It was said earlier that a web site might be a solution. I know that many companies in my riding are not even connected to the Internet. Therefore, all the web sites in the world would not reach them.

I will repeat that I found your presentation extremely interesting, and I'm sure that there will be consequences for us. We'll have to talk about this again.

There is a subject that you didn't mention, namely product guarantees. A little while ago, after Mr. Monty's intervention, I asked whether BCE was going to guarantee that its products were Y2K compliant. He told me that no company will be giving guarantees. However, that works both ways. The companies that buy systems and process them may also find themselves in a situation where they don't know what their intake and output will be. So there may be another problem there.

[English]

Mr. Jayson Myers: I don't know if that's as much of a problem as an opportunity for companies that are producing systems. If they can offer some form of a guarantee or warranty on the products, it's certainly a great way of showing that their products are Y2K compatible and of gaining that competitive advantage I spoke about before.

I think in the information technology sector and in the automation sector, where companies are engaged in integrating information technology in equipment, which is becoming a much more important part of manufacturing processes, many of these companies are offering guarantees to their customers. They have to be today, simply because many of their larger customers are looking at this.

Again, it comes down to the provision of product lists. When it comes to manufacturing companies looking at their suppliers and looking for some guarantee being offered by their suppliers, often this doesn't exist. The problem is not so much the new equipment coming in— And maybe there's a faith here on the part of companies that they can simply replace; they're waiting for the end of the year, but are going to be replacing their information systems with new computers. That may be the case as well.

I think the problem for many companies is looking at the embedded systems, the capital in place that has been there for years, and not really knowing what is or what is not Y2K compliant. That's really where the expense is being incurred now.

[Translation]

The Chair: Thank you, Ms. Lalonde.

• 1040

[English]

Mr. Jayson Myers: I'd like to say that I certainly apologize for not presenting the brief in the two official languages. It's not because we take the importance of our many members in Quebec lightly at all; it's simply that with time pressures we thought getting the content in there and not having the time for translation— We wanted to make sure we had a brief here that we could present. My apologies for not doing it in the two official languages.

The Chair: Thank you, Mr. Myers.

Mr. Murray, please.

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

Thanks, Mr. Myers, for a very helpful presentation.

You anticipated my first question, which has to do with competitive advantage. It struck me that Canadian businesses have spent millions of dollars individually and billions collectively on trying to address this problem. You mentioned that as individual businesses, that could be a competitive advantage for them when they're exporting.

My question really relates to Canada as a whole. Do you see a role— ? Nobody can guarantee that any one manufacturer's products are year 2000 ready; no government body is going to do that. But do you see a potential for Canada to recover some of those investments by making it well known around the world that Canada essentially leads the pack in terms of being prepared?

Mr. Jayson Myers: I think there is a really significant advantage that Canadian companies could gain from that.

The problem in here in doing the technology upgrades and finding the cost for a review of systems is simply one of money, to a large extent. Across the industry today we are looking at prices that are declining. I think it's the case that very few companies have the luxury today of being able to pass on costs in terms of higher prices. These reviews of systems are simply overhead for companies. It's something that has to be done to keep in business. They're costs the companies have to take on. Somehow they have to absorb those costs at the expense of other activities that might be more productive and value-added. There is a cost being incurred in the short term with the promise of a long-term gain. Many companies are in a position to make that gain.

We have a very close network of contacts with industry associations around the world, particularly in Asia and Latin America. I can assure you that in these associations and the members they represent there is a concern about this problem. But certainly Canadian and American industry are leading the world in their efforts to comply with the Y2K problem or make their equipment Y2K compliant.

It would be very difficult for government or any public body to offer a guarantee, but certainly in the marketplace I think a lot of Canadian companies are looking at this, at offering a guarantee for their products. It may be a case of Canadian companies still being in business and still having a productive capacity and being able to service their customers after the turn of the date that is going to give them a significant advantage. I think that's why early action is important.

Mr. Ian Murray: Early on in our discussion of this problem we were first alerted to the problem of embedded technology, particularly in the manufacturing process. You've already touched on this. We were told that many of these lines operate seven days a week, 365 days a year, and companies are therefore loath to shut them down, because they can't afford to. I don't imagine you get to the shop floor very often in your job, but are you aware of whether manufacturing companies have actually gone to that extent of shutting down whole manufacturing lines and tearing them apart and looking for the embedded technology?

Mr. Jayson Myers: Yes, they have. That's exactly right, this is not just an investment in the cost of consultants coming in; this is an investment in lost production. Companies are trying to manage that. It's not that machinery and equipment are not always operating; there is down time for retooling and for maintenance and so forth. I think most companies try to manage it as well as possible in that down time. But it is a significant cost.

• 1045

And yes, if you're going to do this job well, then production systems usually do have to be shut down for a considerable period of time and at considerable cost to companies. So that too is why companies looking at Y2K compliance have to integrate this into a business and production plan. It's not something where you just go and switch off a piece of machinery and expect to do this very quickly and come back. It really does have to be built into production schedules.

Right now, for some industries, that's fairly easy to do, because there is considerable down time. With that, and next year with an economy slowing down, orders slowing down, there may be more time to do that. But in other areas, where companies are working right out, it's difficult. There are still many, many sectors that cannot meet orders and are very loath to shut down processes. That is a problem, and it's simply lost revenue for them.

The Chair: Thank you.

Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare: Thank you, Madam Chair.

[English]

On the interrelationship that exists between Asia, Europe, and Latin America with our manufacturers, you speak with Europeans—I have had the opportunity of speaking with some members of their parliament lately—and they focus on the Eurodollar. NATO problems, for example, are secondary. It gives me the impression that the manufacturers may have the same kind of orientation.

What risk do we have in Canada if we deal with the European manufacturers?

Mr. Jayson Myers: I think you're right. I also have the impression on the part of European industry that there's a recognition of the problem, but the full extent of the problem and the liabilities that companies might incur has not yet sunk in. There is not a concerted effort to deal with this problem. But I think that is a very general condition that exists even here in Canada.

We're now looking ahead into the next millennium. Companies are facing pressures from their customers to redesign processes, to introduce new products to innovate. They're facing pressures to rebuild and replace their capital in order to gain energy efficiency improvements, looking at the climate change issue. There's the Y2K issue. There's the issue of the Euro being introduced in Europe, and that's certainly changing information systems and everything.

I think the Y2K issue is a part of a larger transformation of capital and equipment and technology that European companies are undertaking, and North American companies are as well. To some extent, the problem may be dealt with in a replacement of that, especially the information technologies, but that's not going to get to the embedded systems on the factory floor, and it's not going to get to the supply systems, and so forth.

But I have similar concerns. I don't think European industry is as advanced as many North American companies are in dealing with this problem.

Mr. Eugène Bellemare: It's in huge printing shops. We have printing equipment that's made in Germany, France, and England, and we have machinery that creates plates and stuff so that we in turn can produce. They sometimes have robotics, and robotics have embedded chips. How pervasive is this in our manufacturers in Canada?

Mr. Jayson Myers: Extremely.

Mr. Eugène Bellemare: How do we correct that? How is it being corrected?

Mr. Jayson Myers: That gets to some of the difficulties. I think the larger companies are taking measures—not all of them, of course, but the degree of automation pervades almost every aspect of manufacturing now.

• 1050

I laugh sometimes when I hear the OECD refer to certain sectors in manufacturing as labour-intensive versus technology-intensive companies, and then refer to paper or chemicals, or distilling, for that matter, as labour-intensive.

I do get on the shop floor from time to time. I was out in Lethbridge, Alberta, and I had a tour through Gilbey's distillery. It's one of the biggest integrated distilleries in North America. I spent a little bit of time in the warehouse, and you only need to spend a little bit of time in their warehouse to come out feeling fairly good.

With their system, there are two people working the entire process from the time you get the grain off the rail cars to the time the liquor is being distilled. This distillery does something like 300,000 litres of alcohol a day or in a single process—two people, and they were working on simply monitoring computer flows. Very few people would say distilling is a knowledge-intensive business. They would certainly be wrong. It is an extremely automated business. There are embedded chips throughout that process, and a day's time to shut that process down costs them the equivalent of whatever 300,000 litres of alcohol is on the market.

So it really is a very significant problem for companies. I think one of our concerns is how do you manage that problem? The equipment does shut down from time to time, but how do you manage the replacement of the technology, the inspection of the technology, the upgrading, in a maintenance plan so that the shutdown isn't prolonged and the damage to business is minimal?

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

[Translation]

Ms. Lalonde, do you have another question?

Ms. Francine Lalonde: What is the most useful thing you think this committee could do? Once again, the issues are related, and the impression we're getting is not what we had previously. We need the full picture.

[English]

Mr. Jayson Myers: I think the most important thing that can be done is to heighten the awareness of not only the technological problem, but the business problems that companies have to deal with, as well as heighten the awareness of the implications in terms of the liabilities that companies may face if they're not Y2K compliant.

I think it is more and more a question of awareness, especially for small companies, and of taking this matter seriously, and of taking steps, building that plan. The thing that really stands out from our survey is that while 58% say they have a formal plan in place, that means 42% don't.

Ms. Francine Lalonde: Of those who answered.

Mr. Jayson Myers: That's right.

So number one is to make sure the full implications of Y2K non-compliance are clear. Going beyond that, in terms of trying to assist companies and making these investments, developing business plans, to some extent that's the business of companies themselves, and if they're not making these investments, then sooner or later they may be simply forced to shut down their production or they're going to be losing contracts with their customers. That is probably the most significant thing that can change behaviour across companies. But I would say, number one, build awareness and make sure companies know of the liabilities involved.

[Translation]

Ms. Francine Lalonde: For that, they would need to know that all the embedded chips in their system might fail. How can they be convinced? This spring, I sent a letter to all companies in my riding. I finished by saying that being ready would be the best way that they could become market leaders. They told me that they were pleased that I had done that, and that they were not alarmed. However, when it comes to embedded systems, the managers may not be fully aware of the situation. How can we make this credible?

[English]

Mr. Jayson Myers: There again, I think it may be in dealing with many of these matters and how technology is being integrated.

• 1055

We've been focusing on the problem of the embedded systems on the shop floor, on the use of computer technology and the growing importance of technology. I think the other problem here is that we also have to recognize that companies are extremely dependent on supply chains, on transportation systems, on communications systems, on energy systems, and everything else to make sure they remain in business. All of that has to be there. Again, I think to focus on the infrastructure is extremely important.

[Translation]

The Chair: Thank you, Ms. Lalonde.

[English]

Mr. Lastewka, did you have a brief question before we move on?

Mr. Walt Lastewka: Thank you, Madam Chair. I'll try to combine things.

When we had the large automotive companies, large communications companies, and other large corporations here, they talked about their plans for all their suppliers. When we asked what they would do if their suppliers weren't moving the way they should be to be Y2K compliant, their answer was that the suppliers are going to be cut off. Is that message clear in your association? Are your members aware of that? Have you had any feedback on that yet?

Mr. Jayson Myers: It's certainly becoming much more of an issue.

One of the projects we're working on is with the larger companies, the original equipment manufacturers, to ensure that this message does go down the supply chain. Not all companies are aware of it, and not all companies are necessarily taking it seriously. What works best is not just the threat coming down the supply chain, but actually some assistance coming down as well. You see this in a lot of major corporations that are assisting their suppliers to become Y2K compliant, but that's again a major cost that those corporations have to incur.

I think it's an extremely effective way of passing on the message, but you still have a lot of small companies that are not necessarily tied suppliers to any larger company. In providing technology and products onto the market, some of those smaller companies may play integral roles in the overall ability of even the largest companies to comply.

Mr. Walt Lastewka: We started this a couple of years ago. A number of times when we had associations here we found that the associations were being very light with their members as far as communicating was concerned because they didn't want to provoke panic. But when we checked back with their members, they said they really haven't received much from the associations. It became a question of who's on first and who's on second.

The CFIB group has been doing work with its members, and has ongoing report cards to make sure their work is done. Are you doing ongoing report cards?

Mr. Jayson Myers: We're working with a number of service companies to assist our members in doing this. We're certainly writing a lot and communicating a lot about the implications, about what could happen if companies are not Y2K compliant.

An idea like report cards sounds good, but it's pretty superficial when it really gets down to what companies are doing. If companies are engaged in this issue, I think what they really need is a good inventory of the steps they must take, spelling out all the implications for them on the shop floor or throughout their business, throughout the supply chain and so forth. We've stayed away from things like simplified report cards. Apart from building awareness, we've focused more on alerting companies of where the implications of this problem may arise and on helping them to deal with those problems.

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

I want to extend our appreciation to Mr. Myers and Mr. Wilson for taking the time to be with us. We hope you will continue to contact your members to ensure they are ready. Your survey results reflect a small number of all of your members, but there are a lot more out there.

I would ask members not to leave the table. We're going to start immediately with our next group of witnesses. We have four groups with us, and I'm going to start immediately after they switch with the ones who have just finished.

• 1100

• 1102

The Chair: We're very pleased to have the aviation group with us to continue our discussion on the year 2000 problem. I want to welcome them all here. We have Canadian Airlines International Limited, NAV CANADA, Air Canada, and the Air Transport Association of Canada here, and we have received a brief from each one. I know they've all been told by the clerk to keep their comments to five minutes or less at the beginning, and I'll warn them that I will cut them off in mid-sentence if they go longer.

We can all read, so you can summarize what's in front of us. However, if you choose to read your brief, I will stop you if you go longer than five minutes. I throw that warning out there. It's not to be not nice, but to let you know we're under time constraints. There are going to be a lot of questions, because we consider this to be one of our very critical industries.

I will begin in the order in which you're listed as witnesses on the agenda in front of me. Listed first is Canadian Airlines, followed by NAV CANADA, Air Canada, and finally the Air Transport Association of Canada.

Mr. Clifford J. Mackay (President and Chief Executive Officer, Air Transport Association of Canada): Madam Chair?

The Chair: Yes, Mr. Mackay.

Mr. Clifford Mackay: If I could impose on you, we've talked among ourselves, and in order for you to get the story we'd suggest that the order be the Air Transport Association first, then Air Canada, then Canadian Airlines, and then NAV CANADA.

The Chair: Okay, we'll change it around, and we'll begin with you, Mr. Mackay.

Mr. Clifford Mackay: Thank you, Madam Chair.

You have a brief, so I wouldn't propose to read it, particularly in view of your comments. Instead, let me highlight a few things.

This is our second appearance before the committee as a group. We said to you last time that we had a very aggressive plan that we were in the process of implementing. What I want to do today is give you a very brief status report on how we're doing.

The first thing I want to say is that safety continues to be the paramount issue. I just cannot reinforce that enough with committee members.

Mr. Eugène Bellemare: What's the paramount issue?

Mr. Clifford Mackay: Safety. This industry will not fly if we do not believe it's safe to do so.

To give you a sense of the level of effort that's going on in Canada, our members are spending well over $100 million to ensure that their systems are Y2K compliant. In support of that, we are spending well over $1 million as an association, which is frankly almost as large as our total budget as an association for a year. Internationally, the figure quoted is $1.6 billion, and I can tell you that number is likely to go up substantially. I wouldn't be surprised if it exceeds $2 billion in terms of the level of effort that is going into Y2K compliance around the world.

• 1105

Just to tell you very briefly what we have accomplished in the last four or five months, all of our companies—and you'll hear from them individually in a few cases—have a very aggressive program of inventorying, assessing, and renovating. I won't speak about the individual cases, because those member companies will give you some background. As an industry, however, we have developed a worldwide database that will allow our companies to assess the state of Y2K readiness of almost all of their suppliers—and certainly all of their important suppliers—on everything from the supplier of air navigation services, to the supplier of airport services, to the aircraft manufacturers, to the caterers, to the reservation services suppliers, to the ticketing systems, to the whole works.

This is a gargantuan task. I'm happy to report that it is now complete in North America, that it's well on its way to being complete in Europe, and that a lot of effort is going into completing it for the rest of the world.

In terms of our initial task of getting the data together so that our members can make assessments when they do their decisions on which routes to fly and when, etc., we are approaching the end of that process. In the next three to six months we will be shifting our efforts to three areas now that we are confident that we have the data available, generally speaking. One you will also hear about from my colleagues, I'm sure, is to test, test, retest, and test again. Everyone will be doing that, because you can never test enough. In particular, we're interested in an area called end-to-end testing. This is when we start to string together the systems—for example, the communications system from the ground to the aircraft and back to the ground, and all of the ancillary interfaces that are involved in all of that. You need to test for a system level; you don't need to test just the individual pieces of it. There will be a lot of that kind of work going on.

The second area we will be shifting our emphasis to is contingency planning. We believe strongly that no matter how hard we work and no matter how confident we are, we have to understand and we have to mediate and renovate the problems associated with Y2K. You can never be 100%, so you must do good contingency planning. That's going to be one of our major efforts in the next number of months.

Thirdly, and certainly not least, we will be focusing on public communications and awareness. There are an enormous number of misconceptions out there with regard to the air transportation industry and its state of readiness, and we believe we have a strong responsibility to make sure the public understands the facts in this context.

So those are our future efforts. Just to give you an update very briefly, in North America we have physically visited 158 airports in the U.S. and 15 in Canada, all of the majors. In the U.S., there are another 500 airports that are being surveyed, and we have another 53 in Canada. The clerk has the kit that we use for smaller airports. It's something we send directly to the airports to help them, and we also run training programs to help them to assess and understand the nature of their Y2K problems. This of course is not an issue with large airports, as they have the expertise, but that expertise is sometimes lacking at smaller airports. We have therefore developed training programs at our own expense, and we are making them available.

Let me just close, Madam Chair, by raising two issues with you that we believe the committee could perhaps look at in order to help us.

As our systems are renovated and become Y2K compliant, one of the things we're very concerned about is that they not be recontaminated because of a change arising from something else. We would then have to redo the software and would not be quite as sure that we got it all right again, so we'd have to go back yet again.

You know that we're heavily regulated. As an industry, one of our concerns is that regulatory change in the next year may prompt change in our information systems. I'm not just talking about Transport Canada, because these regulations come from a myriad of different departments and agencies. We would be very pleased if the committee looked into what can be done to minimize this sort of thing.

The second thing I want to raise with you is information exchange. The industry around the world, along with airports and others, has been extremely cooperative in putting information into the database that we have, but it has done so based on very clearly defined rules. We are obligated to protect that data from use by unauthorized persons.

• 1110

One of the things we are now getting is numerous requests—not just in Canada, but all over the world—from various government agencies to access the data for various legitimate reasons. We do not oppose that, but we're very concerned. We need good protection on how that data gets used and who in fact can access it.

In the United States they have actually passed a law that gives a lot of protection to the industry and to the other participants in the database. We would encourage the committee to look at protections similar to the U.S. protections in Canada so that we in fact can share the data in a very efficient way.

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

We are now going to turn to Air Canada. We have Mr. Jean-Paul Bourgeois, the director of enterprise systems. I understand Janice Robinson is going to speak. Ms. Robinson.

Ms. Janice Robinson (Year 2000 Project Director, Air Canada): Thank you.

I welcome the opportunity of updating the committee and reviewing very briefly the activities that have been ongoing at Air Canada for the last six or seven months, since we last spoke to you in April.

Like most organizations, Air Canada has been addressing Y2K preparedness on two dimensions. I'm happy to say that the IT preparations that have been ongoing for the last two and a half years within the organization are actually nearing completion.

We have approximately 190 applications covering 20 millions lines of code, which we have been working on converting and certifying for Y2K readiness over the last 18 months. This was approximately a 30,000 man-day effort, and the team averaged 100 dedicated people. We're now 90% complete. All of the mission-critical applications of the organization have been certified and are now back in production. There are some subsequent implementations that will happen over the last few months, but in that area we're very confident.

There has also been a lot of effort going into the certification and the upgrade of our main data centres and all of the hardware and software system components that we utilize around the world. The main data centres in Dorval and in Winnipeg will be completely upgraded and ready for Y2K by the end of next month, by the end of December.

We have some upgrades to do in our telecommunications networks, for both voice and data, in the first quarter of the year. One of the reasons that's a little bit behind the mainframe area is because we are awaiting subsequent upgrades from system software suppliers, which are due within the next few weeks.

We've also done an assessment of approximately 9,000 desktop PCs throughout North America and Europe. We'll be rolling out upgrades of system software to those PCs over the next few trimesters. However, none of those system software upgrades are mission-critical or vital to our continued operation.

As Mr. Mackay mentioned, like most organizations, we are now shifting into preparation for what we call end-to-end integrated testing. We're establishing independent physical environments, which will be hooked together. They will be built in Vancouver, Winnipeg, Toronto, and in two sites in Montreal. In that environment, from February to April we will be testing all of the mission-critical applications and components of the organization. We will be including in those integrated tests our major business partners, the Star Alliance carriers, our regional airlines, as well as some of the international telecommunications firms that are necessary, as Mr. Mackay said, for things like air-to-ground communications and flight plan exchange.

On the business compliance side of the project, we've made a lot of progress in these last six months, but this will be a continued area of intense activity throughout 1999.

We have finished an inventory of all our critical suppliers. They number close to 5,000. Approximately 1,600 of those are being handled by the ATA IATA program out of the central office in Washington. The correspondence and the data collection are being handled through there. The rest of them we have corresponded with personally. We had some issues regarding the replies we were getting from suppliers. It was taking a long time, and certain organizations were reluctant to give us written confirmation of their plans and their milestones. Since then we have added additional staff to the central project office and we anticipate completing at least the first go-round of the collection of all that information by the end of December.

• 1115

However, due to the fact that we do not want to depend on just the questionnaire results, we are planning to do on-site audits of approximately 60 vital suppliers in the first quarter of the year. We will be using a branch representative and a member of our central project office in visiting with these suppliers to review their project milestones and also the test results. For example, if we're concerned about a parts supplier, we'll review what they did for testing for their MRP system. If it's an avionics manufacturer, we'll look at the testing they performed on the embedded systems.

Whether we're talking about IT hardware or about applications or about business processes and suppliers, we're very concerned, as Mr. Mackay said, about clean management in 1999 and keeping all the areas of our business compliant that have already been certified.

One of the other big areas we will be emphasizing, as he said, in 1999 is business continuance planning. In the aviation industry, as you can imagine, there are a lot of contingency plans already in place. There are a lot of emergency response measures that are already documented, tested, and implemented. We will be building upon those plans, so it's more of the same thing. However, we are sure we will not have complete control over some of the infrastructure components, such as telecommunications, hydro, and potentially foreign organizations in foreign countries. Therefore, we need to make sure we can continue to operate should there be any failures in those areas.

The other priority for the year will very definitely be communications. We've started a communication plan internally within the organization to make sure the front-line employees who have contact with the public will be able to answer thoroughly and with accuracy any queries that come from the general public, whether they be checking in at an airline counter or calling in to a call centre to make reservations. We'll be working with the industry programs, also, for common communication.

Thank you.

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

I am now going to turn to Canadian Airlines International Ltd., Mr. Scott Bradley.

Mr. Scott Bradley (Director, Government Affairs, Canadian Airlines International Ltd.): Good morning.

We're going to try to give a general snapshot of Canadian Airlines this morning and just basically give you a picture of where we've come from and where we're planning to go in the next 13 months.

To be straightforward, we were probably about four or six months behind the industry at this time last year when we put together plans to put together a Y2K team, a project team. In doing so, we outlined a pretty ambitious objective of getting to October 31 of this year with a full inventory of where we needed to go and who we were working with, who our suppliers were, who our vendors were. That job is now complete. It was completed on schedule and we are very much on track. In fact we're almost a little bit ahead of schedule in terms of where we want to be. We're very pleased that we've been successful in doing so.

To give you an idea of the scope, we've identified about 11,000 suppliers and over 35,000 inventory items we've got to identify and certify over the next 13 months. As part of those inventory items, we've been able to split it down to three major areas, the first being those systems and hardware that are supported by American Airlines. The primary systems we use are SABRE, and that's with American Airlines in terms of our flight and passenger enhancements. Those systems have been tested extensively. In fact 98% of the tasks we've run through in the business tests we've done have been completed and completed successfully. There are 2% of the tasks, seven subsystems, that are now time-lined for completion in the first quarter of 1999.

So in terms of passenger enhancements and basically phase one of our business testing, we've been able to do that in terms of our partnership with American Airlines and the SABRE systems and in fact have benefited from the work they've been doing since 1996. They are in fact probably the industry leader in the world in terms of getting out in front of the Y2K project. That's been one of the factors that's allowed us to move rapidly in terms of being complete at Canadian Airlines.

The second area of the project has been those systems that are supported by Canadian Airlines in our hardware and software systems. That testing has not yet started. The inventory is complete. As a result, we've identified issues we need to correct. For instance, we will be purchasing 3,000 computers over the next six months, at a cost of $7 million, primarily in reservation and operating systems. We've been able to identify areas we're going to have to correct over the next 13 months.

The third area is with our external vendors and suppliers. From that we've been able to break down essentially a pretty critical assessment on those relationships with our external vendors and suppliers. There are about 11,000 total inventory items that relate directly to external vendors and suppliers. About 10% of those we've identified as critical, flight-critical or mission-critical, ones that from a safety perspective we feel we have to focus on.

• 1120

What we've also found is in dealing with these groups—primarily it's with our airline partners, with Boeing, with Airbus, with airports, with air transportation associations—we really have met with much success in dealing with these people. Similarly, the focus in the industry and in airline manufacturers has been on safety as well. In dealing with the Boeings of the world and the Airbuses of the world and the Bombardiers of the world, they've been very forthcoming and very much working in partnership with us to try to come to solutions and ensure that our flight-critical issues are dealt with. Most of them have been dealt with, and those issues that arise will be corrected over the next 13 months. That's probably the most encouraging thing we've encountered.

On the non-flight-critical or non-mission-critical issues, just to give you a perspective, about 10,000 of the inventory items we've identified we've deemed as non-mission-critical. Those things, if they fail, will certainly be a hassle to us, but will not pose a major safety risk. We've not met with as much success in trying to contact these vendors and certify all these individuals and all these companies. We've tried to do these contacts by correspondence. As a comparison, most of our contacts with our 10% mission-critical have been done by telephone. Our contacts with our other vendors and suppliers have been done by correspondence.

We've had about a 28% success rate in responses from these vendors. The challenge we're now facing, going on a critical list rating these from one to seven— We're starting to call these people, because we're getting a better success rate when we make direct contact by phone or verbal communication to try to get some answers from our other vendors and suppliers.

The Chair: Thank you, Mr. Bradley.

Mr. Scott Bradley: Thanks, Susan.

The Chair: I apologize; we have to move on.

I'm going to turn it over to NAV CANADA, Mr. David Honkanen.

Mr. David Honkanen (Year 2000 Project Manager, NAV CANADA): Thank you, and good morning, Ms. Chairperson. I'm pleased to be here today to update you and your colleagues on NAV CANADA's year 2000 activities. I think you'll agree that we've made significant strides since we last addressed the committee back in April, and I certainly welcome any questions you may have.

As you know, the role of NAV CANADA is to manage the safe and efficient movement of air traffic through Canadian domestic air space as well as international air space that falls under Canadian control. We provide air traffic control, flight information services, weather briefings, airport advisory service, as well as air navigation approach aids.

In order for us to maintain the high level of service our customers demand, we must rely heavily on computers and other automated tools. Dates, including hour and minute information, play a significant role in many of our computers' decision-making processes. For example, many of the tasks related to the pre-flight planning stage, statistics-gathering, and billing rely on accurate calendar dates. NAV CANADA has long been aware of the potential risk for these systems to fail on January 1, 2000 and beyond if we don't take the proper action to replace, update, or change them.

Safety has always been our number one priority; it's a cornerstone of our corporate culture. Every decision, program, operation initiative, and objective we undertake considers safety first and foremost. Since our ongoing mission is to operate the safest and most efficient air navigation system in the world, we are taking every step necessary to ensure that all of our critical operating systems are ready well before we reach the millennium. In fact, we intend to beat that date by at least eight months. Our self-imposed deadline is April 1999. I'm happy to report that we are in an excellent position to meet this deadline. All of the systems that could be affected in the year 2000 are now ready for certification, including all of our mission-critical systems.

In 1996, shortly after taking over the air navigation system from Transport Canada, we began working on the Y2K challenge. Since March of this year we've had a full-time dedicated Y2K project office, with an operating budget of $10 million. We have completed a comprehensive process to assess, modify, test, and certify all aspects of our air navigation system. The deadline is April 1999.

• 1125

In early 1997, to help us achieve this very aggressive objective, we hired two consulting firms specializing in Y2K issues, the MITRE Corporation and KPMG. Their role was to develop an action plan that the Y2K project office could use to assess all systems and ensure that they would comply with Y2K standards. This “total systems” approach has allowed us to identify and test a variety of potential problems and solutions.

In September 1997, we began step one, which was the assessment. Through this we were able to identify all the systems we needed to test initially to determine if there were any problems. We tested at our test-bed laboratory early in 1998 and determined that none of our systems would crash. But there were problems, and I would like to report that we have fixed those problems.

We achieved our first major milestone in this year when we concluded the assessment of all of our operational and business systems. We have 350 systems to assess, to potentially renovate, and we will test all of them.

Of these, we deemed 16 to be software intensive and they're mission critical. If these weren't properly modified, we potentially could send incorrect information to controllers and flight service station specialists on January 1, 2000. This became our first priority.

It was also at this time we began contacting all of our suppliers. We sent out 124 surveys. We've contacted and received responses back from 74. We're well on track to receive all of our responses by the end of this year.

The Chair: Thank you very much, Mr. Honkanen. We appreciate that.

Mr. Mayfield, we'll begin with you if you're ready to ask questions.

Mr. Philip Mayfield (Cariboo—Chilcotin, Ref.): How long would you like me to take?

The Chair: You get five minutes.

Mr. Philip Mayfield: Thank you very much. I'll try to be brief.

I'd like to just begin by saying—and I hope you won't take too much of my time for this—I'm very pleased to be back with members of the industry committee. It was a good time for me when I served here. I'm with the public accounts committee now, and in that committee we're attempting to monitor the government departments' progress in Y2K compliance. It's been frustrating there because a lot of people can't understand how important space for two little digits can be.

The framework the federal government has used in going through this has been following from awareness, inventory, scoping, design, repair, testing, and implementation. The idea was that this would all be done a year in advance so that there would be a year of testing. Now we're well behind in that.

I want to say how pleased I am to be with industry people and listen to you as you describe your progress with this. If I can begin with you, Mr. Honkanen, in thinking about this framework the federal government is using, how far along would you say you are towards implementation? I heard you say you're going to begin the testing phase of this on April 1. Is that correct?

Mr. David Honkanen: April 1999 is when we are finished.

Mr. Philip Mayfield: Is that finished testing?

Mr. David Honkanen: We have completed all of our testing, which includes end-to-end testing of all our mission-critical operations.

Mr. Philip Mayfield: So you feel you're pretty well ready to go on this then, I would think.

In some of my reading—and I do read some literature from your industry—it seems as though the navigation system in the United States, for example, perhaps will not be ready by the year 2000. Is that a concern of yours?

Mr. David Honkanen: We border on four air navigation service providers. The FAA is one, a major one. We're also with the U.K., Iceland, and Portugal. We've met with all of those program offices and we have taken steps to initiate end-to-end testing for all our cross-border interfaces. That's well on track. So from our perspective, we are certainly seeing that we are progressing well forward to assure that our communication with our neighbouring providers will be there.

Mr. Philip Mayfield: And your providers will be ready as well. Is that what you're saying?

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Mr. David Honkanen: They all have comprehensive programs. We've met with them. We feel confident that certainly Canadian air space will be safe, and together we'll be performing end-to-end testing to ensure our joint operations are also year 2000 compliant.

Mr. Philip Mayfield: I appreciate the comments that have been made about safety, that nothing will be done to jeopardize safety in any area of your industry. This is perhaps not a terribly complicated problem we have, but it's a very deep-seated problem and one that's hard to see from top to bottom. I'm wondering what contingency plans the industry—and I'd like to address this to the airlines, and to air transport and to NAV CANADA—has in this very complex problem we're facing?

Mr. Clifford Mackay: Maybe I'll start and then turn it over.

I think Janice mentioned earlier—and I think you have to understand this—that we live in a world where we routinely have to adjust our systems. I have contingency plans and emergency plans every time there's a snow storm, every time there's some sort of a weather problem.

So a bit of good news to start off: we do know how to do this because we do it all the time and we have very good experience in doing it.

The particular issue here, of course, is our ability to predict what may or may not go wrong, and this is why we're spending so much time trying to understand our systems from every point of view and understand all the interfaces that go on, not just amongst the industry itself but also into the telecommunications providers, the power systems providers, and the connections into the rest of the world.

I'll stop there and let others talk about the details of the plans, but the essence of it will be that we will have a system whereby if something happens that in any way raises the question of whether flight safety is compromised, that triggers a series of events whereby you can then make decisions as to whether or not you operate.

Perhaps Janice or Scott want to mention something.

Ms. Janice Robinson: As far as the contingency plans that we're building right now are concerned, I agree it's an extension on the existing— Our premise is that under normal circumstances we may have one or two external factors that we cannot control; therefore, we need the plans.

In the case of year 2000, there may be multiple, non-foreseeable external factors impacting us at once, so it means our communications system has to be much better set up. We are looking at setting up what we call a command centre both in Montreal at headquarters and at our flight operations centre in Toronto, similar to what we had during the ice storm and also during the recent pilots' strike.

It's not that we're uncomfortable with our internal preparedness, but we're very concerned about extended infrastructure failures such as hydro and telecommunications and things of that nature.

We're also looking at supplementary staffing issues. For example, if we depend at an airport on a local area network for our terminals for check-in and for gate management, and the terminals go down at that airport, then we have to go to manual processes. We need more people on call.

If any of the travel agencies have difficulties, maybe not even internally but with pockets of telecommunications difficulties, we'll get more calls into our own call centres. We need more people on the phones. We're also looking at staffing issues, training issues, and those things.

The Chair: Thank you.

Mr. Bradley.

Mr. Scott Bradley: Similarly, without seeming redundant, you build on the points you discover through your testing of your own systems in terms of identifying the problems that may happen both within our control and outside of our control and have the scenarios in place as best as you can possibly guess what they could be for January 1. That is all the product of good solid communications within the company.

The Chair: Thank you.

Thank you very much, Mr. Mayfield.

Mr. Murray, please.

Mr. Ian Murray: Thank you, Madam Chairman. I'm sure all our witnesses are pleased to represent the one industry that is top of mind to most people when they think of the year 2000 problem.

We've had expert witnesses over the last year or so who have told us that they will not be on an aircraft anywhere in the world come January 1, 2000. I know you've outlined all the work you've been doing to be prepared.

I'm not sure who to address this question to. Perhaps Mr. Mackay would be a good person to start with.

Is there any way of, say, taking a virtual flight that's taking off from Toronto and landing at Heathrow without actually flying? Is there some equipment you can take onboard a plane that's making a trip to see if navigation systems and everything else work, rather than just waiting for January 1?

• 1135

Mr. Clifford Mackay: The answer is yes, there is, but there are always practical limits on how much you can test.

What we can't do is shut down the worldwide aviation system for 48 hours while we test it. So there is a limit. But within that kind of extreme, there are many testing techniques that can be used to address exactly those questions.

Dave, you may want to comment, because you are running test beds on that kind of a world right now.

Mr. David Honkanen: Yes, we are testing with our air navigation service partners, primarily the FAA, the U.K., Iceland, and Portugal, to ensure that our transfer of information will not be affected by the year 2000 problem at all. In fact, I plan to be on a plane going from Toronto to Heathrow at the stroke of midnight.

Mr. Ian Murray: You'll probably have lots of room to wander around.

Will there be a list of, say, airports that will be out of service—I'm not sure what the term would be—come December 1999?

Mr. Clifford Mackay: I can't answer that question in a definitive way. The decision to do that or not do that rests primarily with the regulators, which are governments. I know there is discussion going on in Transport Canada and the FAA and other safety regulators around the world as to precisely how to address that question.

I can tell you, though, from the work we've done to date—and there was the question about the FAA earlier—that our level of confidence in North America is increasing very strongly. We have great difficulty in seeing that we're going to have that kind of problem in North America in just about anywhere I can think of. I'm not sure I could make that same statement worldwide, but I think I can make it with some confidence in North America, and as we continue to track along, I think my confidence is just going to increase.

Mr. Ian Murray: Are there any critical dates to be aware of other than January 1, 2000, looking beyond January 1?

Ms. Janice Robinson: Maybe I'll take that.

Actually, when we certify our applications, depending on the application, we certify anywhere from 8 to 12 different dates. For some avionics components, there was the issue of the satellite communications, which is in August 1999, and that has already been addressed. We look at September 9 and December 31, 1999, January 1, February 28 and 29, March 1, and December 31, 2000, and January 1, 2001. So there's a lot of different issues there.

Mr. Ian Murray: Thank you very much.

The Chair: Thank you.

Mr. Shepherd.

Mr. Alex Shepherd: We talk about information sharing, so obviously the two airlines must have similar suppliers. Do you sit down together from time to time and compare your supplier lists and who's behaving and who's not?

Ms. Janice Robinson: Actually, one of the ways we're working together very intensively is through the combined ATA, IATA, and ATAC programs, which are worldwide. We have meetings. There's an ATA meeting every week, an ATAC meeting every month, and IATA meetings every second month. However, the common supplier issue is the exact reason or the raison d'être behind this industry program, because rather than have 165 carriers that fly into Heathrow all validating Heathrow, the industry program is doing it for us, and we are all assisting them in the airports and the ATS or air traffic control areas where we are the prime carrier. So obviously we're doing more work in Canada than we would be in other places of the world, but we're all working together very extensively.

Mr. Alex Shepherd: Do you have a system now where you actually blacklist some suppliers because you know they're not compliant?

Mr. Clifford Mackay: The answer is no. If in fact, though, there is a particular supplier that is of concern to our members, that's certainly highlighted, and the individual companies then, frankly, use their own means of persuasion to deal with that supplier. But as an industry association collecting the data, we don't do that directly; that's done by individual companies.

Mr. Alex Shepherd: Let me clarify what you're saying. Are you saying you still have non-compliant suppliers from whom you are buying products?

Mr. Clifford Mackay: I can tell you that in all the critical suppliers—let's take, for example, the big three Scott mentioned: Airbus, Boeing, and Bombardier, who are by far and away the largest suppliers to our industry of aircraft. There are no compliance issues with regard to those aircraft manufacturers.

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Mr. Alex Shepherd: You talked about the regulatory burden. I presume you're proposing to us as a recommendation that there be no regulatory changes or a moratorium on regulations between now and sometime in 2000.

Mr. Clifford Mackay: I'm not sure we would go that far, but we would want the government to examine any regulatory changes from this point of view, and if the change results in a need for industries and others to change their information systems, we would like you to look very carefully at whether or not that change can be postponed. Every time you go into a computerized system and start changing the software, particularly after you've certified that system to be ready to go Y2K, you introduce another element of risk, and unless it's really necessary, we would prefer not to do that.

Mr. Alex Shepherd: Do you anticipate changes? Are there changes in the works right now that—

Mr. Clifford Mackay: The answer is yes, there are changes in human rights and labour legislation that will impact us. There are potential changes on the flight safety side and other sides. At any one point in time we as an industry association are engaged in anywhere from 30 to 50 or 60 consultative processes on particular regulatory changes.

Mr. Alex Shepherd: But have you defined that some of those regulatory changes would have an adverse effect on the Y2K issue?

Mr. Clifford Mackay: Some of them may result in us having to change some of our systems. It's not just our industry. I think this is more generic with regard to other industries as well, but because we're so highly regulated, it probably affects us more than others. We would simply want the government to be sensitive about this. I don't think we're advocating a complete moratorium on regulatory change, but we would like the government to be sensitive to this particular element of it.

The Chair: Thank you.

Thank you very much, Mr. Shepherd.

Mr. Mackay, we'd like to make you aware that Bill C-54, which affects privacy in electronic documents, is before this committee, and we appreciate your comments on that.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Like a number of my colleagues, I take a plane each week; I tell myself it's a little like having an operation, which has only happened to me twice. I have no choice but to hope for the best. Once you get on, the thing takes off.

I have confidence in the major air carriers and in NAV CANADA. According to the testimony that we have heard, they would seem to be making intense preparations. I'm quite reassured in this regard. However, I am worried about the smaller carriers, for example, the regional carriers, the people who provide charter aircraft, the carriers who may have one, two or three planes, and, also individuals who own aircraft. Who is ensuring that they are getting prepared?

Mr. Jean-Paul Bourgeois (Director, Enterprise Systems, Air Canada): I can reply for Air Canada's regional carriers. The regional carriers are participating in that program. We are monitoring them just as closely. We are providing certification and following exactly the same steps for the regional carriers. The same things apply to our regional carriers as to Air Canada.

I will let Mr. Mackay answer with respect to the other carriers.

[English]

Mr. Scott Bradley: Similarly, with Canadian Regional, Inter-Canadien, Conair, and Ontario Regional, with regard to programs with our suppliers, obviously, for any person flying on a Canadian Airlines or a Canadian Airlines affiliated flight, we have the same concerns for safety, and we have been working with our regional partners to ensure that they are fully compliant. If we can provide any assistance, we do so.

Mr. Clifford Mackay: With the smaller companies, we as an association have been working directly through our committee structures. We've focused really on three things: awareness, which is number one; and helping companies to understand how they can assess their Y2K issues. In many cases smaller companies don't have the internal expertise. We've been providing training packages and other kinds of assistance to help them do that. If there is a particular problem, then we try to help them find the right people to fix it.

The good news about the very small operators and also about very small airports, because I think it's in the same sort of category, is that they are nowhere near as automated or computer reliant as larger organizations are, so the nature of the problem is not as intense. For example, small aircraft simply don't have the embedded computer systems in them. They operate basically on electromechanical-type systems, so you don't have the kinds of problems you have with the big modern jets, where they're fly-by-wire and you have a lot of computers and embedded software. You're right to raise the concerns here, and we're working on it, but it is not as intense a problem from a safety point of view.

• 1145

But we are worried about the business impact, frankly. A lot of our smaller members operate on very small margins, and if they lose a week or two of business because their computer doesn't do their accounting system correctly or they're not able to do their bookings right, that's a very serious matter, and we're trying to help them avoid that problem.

[Translation]

Mr. Antoine Dubé: Cars have embedded chips. There must be similar systems in small aircraft. We often think of data systems, but there are also those elements. I know a little how things go at the Quebec City airport; there are visual flights, etc. If they lose their communications with NAV CANADA because of their system, because of the chips or other things—I'm thinking of the worst case, here—and they no longer have any contact with anyone, things could get very difficult.

[English]

Mr. Clifford Mackay: You're now talking about the ability to control aircraft and whatnot. In that particular case I can assure you that all aircraft that will operate in controlled air space will have compliant radio communication systems on board. David, you may want to comment on that.

That becomes one of the issues we are working on, to make sure the communication systems work. If they don't work, then the aircraft may be denied the right to use that area. That's the ultimate safety check, that you must be compliant or you may not be able to operate in that airspace.

The Chair: Mr. Honkanen.

Mr. David Honkanen: I agree. The communication between the pilot and the controller is critical and crucial, so we're ensuring that all the components that comprise that path are certified. We perform exhaustive testing. We have one philosophy at NAV CANADA, which is test, test, and we're going to test some more, because, as I said before, safety is of paramount concern.

[Translation]

Mr. Antoine Dubé: For each aircraft?

[English]

The Chair: Thank you.

Mr. Mackay.

Mr. Clifford Mackay: The responsibility to test the plane is with the owner of the plane, but the owners will know exactly what they need to do.

You mentioned private pilots. That's not an area we directly deal with, but I can tell you that COPA, which is the association that represents them, is concerned and is dealing with their members in the same way we are.

[Translation]

Mr. Antoine Dubé: They are working with you.

Mr. Clifford Mackay: Yes.

Mr. Antoine Dubé: That's fine.

[English]

The Chair: Mr. Lastewka.

Mr. Walt Lastewka: Thank you, Madam Chair.

You bring to light an item we've talked about a number of times, that is, making sure there are no departments coming through with new regulations and so forth that could affect your systems that already have been verified. I would like to hear a little bit more about how we ourselves could do a good check.

This committee, as Mr. Mayfield said, has been involved with it for a number of years, and we're very conscious of it. We have a bill going through, and we are very conscious that we must have implementation beyond the year 2000 and so forth. But I'm not sure that other departments and other regulation-making bodies understand that. Have you sent out a notification on that so that people understand they could come back and be affected? Have you sent out a warning on that?

Mr. Clifford Mackay: We haven't sent out what I would call a warning, but we have raised the matter with key regulators in our world, which is particularly Transport Canada, and they are sensitive to it. I'm not sure all other government departments are, though. One of the things we've considered doing is writing to the Y2K coordinating group, which to my understanding is still headed by Mr. Alain Desfossés in Industry Canada, and asking them to take this up on our behalf. But we haven't yet sent that letter.

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Mr. Walt Lastewka: Madam Chair, we have to approach this in every way possible. I know you and this committee have been communicating to try to give some breathing time on regulation changes that could affect not only your industry but other industries, and we need to continue with that.

You mentioned the good Samaritan law that was approved in the U.S. We've had the Canadian Bar Association and people here who have said—and I guess there have been conflicting reports on it—we have due diligence and so forth in our laws that would cover that. I take it from your remarks you don't believe the Canadian legal system covers that at all.

Mr. Clifford Mackay: I wouldn't say it doesn't cover it at all, but one of the big challenges we have had as an industry is to get by some of those fears that if we share this information it will come back to haunt us some day in the future. I will say publicly here that our industry has done an amazingly commendable job of sharing data and information on matters that are sometimes quite sensitive in terms of their operations. We would like to be able to continue in that spirit.

If we continue to get advice quite routinely from various legal departments, we run risks in doing that, regardless of the due diligence laws that may exist. Anything we can do to reduce that risk and improve the ability to share information significantly improves our ability to deal with Y2K collectively. That's why we commend you on looking at some of those approaches the U.S. have taken.

For example, we have a Freedom of Information Act in Canada. If we were to share all of our information on our database with government agencies, I could not tell you, because I don't know the answer, whether or not that information would then be subject to freedom of information.

Mr. Walt Lastewka: I would like to reinforce—and I know one of my colleagues talked in jest about flying on January 1—the publicity to gain the confidence of the Canadian people. You mentioned you're going to start a publicity campaign. It can't start too early, because some people are trying to put in their own thoughts rather than understanding what's really going on. I appreciate the fact you're going to do that publicity. When will that start?

Mr. Clifford Mackay: It's starting today. We will be putting a press release out on our testimony today, and that will continue. Last week at our annual general meeting, Y2K was the central point. NAV CANADA had a meeting just the other day that involved a lot of players in Toronto, and we intend to continue in every way possible to get the information out.

Mr. Walt Lastewka: Our responsibility is to build confidence and not panic.

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

Mr. Mayfield.

Mr. Philip Mayfield: In talking about the other airlines or international partners, you mentioned the United States, Iceland, and Great Britain, but what about Europe? What about the amount of money you have put into Asia? Are those markets secure for you, as we look at this problem here? Are there problems with those other areas of the world that we have not covered in our discussions this morning?

Mr. Clifford Mackay: I'll reply very briefly and then ask both Scott and Janice to comment.

IATA is covering the rest of the world in terms of the things we're talking about. In Europe and Asia there are very sophisticated programs underway. All of the major airports and airlines are working on the matters, but frankly they're not as far along as we are. Primarily that's because they've been pretty preoccupied with some major economic problems they've had in the last year or so. But there's growing confidence they're getting on with the issue.

I can't say that about the lesser-developed world. At the ICAO meetings just a few weeks ago in Montreal, there was a plea to the lesser-developed countries to get on with this. Many of them expressed sympathy, but indicated they had some resource problems. So I think there are pockets of the world where there are issues.

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The Chair: Mr. Bradley, would you like to comment?

Mr. Scott Bradley: Certainly for airport and air traffic issues, our reliance has been more on IATA and ATAC. We use our alliance partners and our one-world partners, particularly, for example, Cathay Pacific in Hong Kong and the routes they service in Asia. We are working with them, Qantas, British Airways, and American Airlines, and using the resources of those airlines as well in countries they fly to assist us on passenger enhancements and issues we can identify that may affect simply the passenger traffic issues, not safety issues.

Mr. Philip Mayfield: I'd like to ask you—

The Chair: No, there are two other people who wish to reply to your first question, so let's finish.

Mr. Philip Mayfield: But the questions haven't been answered quite completely.

I want to know, with those smaller countries or areas that are problematic, if that means there will be a reduction in services to those areas.

Mr. Clifford Mackay: All I can say is that possibility exists. The decision will have to be made when we get closer to the time and can assess whether or not we feel there's a safety problem. But it is a reality. There will be decisions made as we get closer to it.

The Chair: Ms. Robinson and then Mr. Honkanen.

Ms. Janice Robinson: Along that line, when the IATA program was put together in early 1998 it was the intention of the group—and that includes all the international carriers—to do initial assessments and subsequent monthly data collections from airports and ATSs, but we would more or less complete the program by the second quarter of 1999.

At the next IATA meeting, which is scheduled in Geneva in the second week of December, we will be looking at a possible beefing up of the program, an extension of the program throughout 1999 and the first quarter of 2000, not only to handle communication issues and contingency planning with ICAO, but more to do the subsequent follow-up with the other areas of the world. We have reason to believe now that we cannot judge in the first and second quarters whether every area will be safe and ready and will not give us any difficulties. This is an ongoing issue that has to be addressed every month and continually right up to the millennium.

The Chair: Thank you.

Mr. Honkanen.

Mr. David Honkanen: With the airlines and airports, the air navigation service suppliers, it's the responsibility of ICAO, the International Civil Aviation Organization, to ensure all the member states that provide air navigation services are ready by 2000. I'm pleased to announce that NAV CANADA is participating in the ICAO year 2000 working group committee to help achieve this.

The Chair: Thank you.

Mr. Bellemare, you had one question.

Mr. Eugène Bellemare: The question of safety has been addressed, but glitches haven't been addressed. I think the comfort level, as far as the safety of our system and the big companies goes, has gone up quite a bit.

However, the general population, who are not frequent flyers, may take flights to go on holidays to southern destinations—and the charter carriers are not here today. That makes me worry to the point that I'm not planning to go south on a charter flight with these private carriers over the period of holidays from the end of 1999 to the beginning of 2000. One reason is safety, but the other reason is major glitches.

You haven't talked about glitches you could have at airports. One example is gate problems, and we see them today. In Ottawa we know an airplane can wait 45 minutes on the tarmac for a gate to open because of glitches. Hydro communications and water and sewage problems affect you in one way or another. They have not been addressed by you.

The Chair: Mr. Bellemare, please limit your question.

Mr. Eugène Bellemare: How are the charter flights for private transporters being looked at for these southern destinations?

Mr. Clifford Mackay: Let me address the safety question first and be as emphatic as I possibly can be. The major charter companies in this country, and there are four of them, are an integrated part of the program we've been talking about here. The only reason they're not here today is there's only so much room at the table.

• 1200

There is absolutely no difference in their Y2K programs and what they're doing and all of the things that are going on from what you've heard here today, sir, so safety is not an issue. There is no distinction to be made between the scheduled carriers and the charter carriers in that context.

In regard to the second part of your question on glitches, we are worried about glitches. I can't give you a guarantee that there won't be glitches. There are glitches today, but we're obviously going to try to make sure the glitches that occur at that period of time aren't Y2K glitches. They may be a snowstorm, or they may be the fact that, unfortunately, four airplanes are lined up and you have to wait to take off, and that sort of thing, but hopefully they won't be Y2K glitches.

With regard to southern travel, at that time of year, of course, many Canadians like to vacation in Mexico and the Caribbean and those areas. We have specifically targeted those areas, with IATA and ATA, which are our partners, to ensure that those airports and the air nav services and other things that are critical in that part of the world are well renovated and are audited properly and are looked after. That part of the program is coming along at the same pace as the rest of North America, so we don't believe we'll have those sorts of issues.

Among some of the questions we are starting to ask, to which we don't have answers, are these. How are the hotel reservation systems doing? That's important when you go on a vacation. I can't answer that question yet, but I can tell you that our members are starting to work with others to try to find out answers.

With regard to basic infrastructure, the same issue applies everywhere, and I would agree with you. In those areas of the south, for example, Puerto Rico, where the U.S. has some direct interface, I think our confidence level is reasonably good, but I can't tell you that's true across all the vacation areas to which Canadians like to go in the wintertime, and this is another issue we're going to be looking into. But I can give you strong reassurances that safety is not an issue with the Canadian charter industry.

The Chair: Thank you very much.

I want to thank you all for being with us today, and I also want to thank you for keeping your opening comments brief.

As you can see, we're already over our time, and we could go on a lot longer with questions, but I want also to commend NAV CANADA for the year 2000 solutions day that you held recently and for the fact that all the airlines, Canadian and Air Canada, are trying to make people aware. I know there were articles yesterday in the west on different concerns that have been raised in the industry, and we're very concerned, obviously, not only about being able to fly in a timely fashion in Canada, but about safety, as you are—and internationally. We know there are several countries that don't have the resources available.

I also want to commend you on this kit. Coming from a smaller community, I think this is great.

We appreciate your being here, and we look forward to meeting with you again in the spring. Hopefully by then we'll have a lot more problems resolved.

Thank you very much.

We're going to take five minutes as we change witnesses.

• 1203

• 1207

The Chair: We'll resume our meeting.

I'm very pleased to have representation from the west and the east. We have, from the Government of Alberta, Mr. George Samoil, chief information officer. From the Government of New Brunswick, we have Ms. Lori MacMullen, chief information officer, and Mr. Gary Andrews, director of the year 2000 program management office.

We have opening statements, I believe, from both representatives. I would ask you to try to keep your opening statements to five minutes. That would be great.

I'll begin with the way they're listed, if that's okay. Unless you have a different arrangement, I'll begin with Mr. Samoil, if that's okay. Was that the plan?

Mr. George Samoil (Chief Information Officer, Government of Alberta): I think we flipped a coin. We agreed that my colleague from New Brunswick could proceed.

The Chair: Okay. We'll let the east coast start first. We'll let Ms. MacMullen start first.

Ms. Lori MacMullen (Chief Information Officer, Corporate Information Management Services, Supply and Services, Government of New Brunswick): Thank you. Good afternoon. I'm pleased to be with you to discuss the Government of New Brunswick's approach to the year 2000 issue and to provide an overview of our activities and status to date.

As the chair pointed out, my name is Lori MacMullen. I'm the chief information officer for the Government of New Brunswick. I have with me, as well, Gary Andrews, who is the director responsible for our year 2000 program management office, which is located in the supply and services department.

The role of the year 2000 program management office is to act as a window for the Government of New Brunswick's year 2000 activities. I rely on Gary to manage all aspects of the year 2000 program on a day-to-day basis and to work closely with all departments. I provide what we refer to as prompt access to executive support for Gary to resolve any and all issues.

Gary and I, and the year 2000 issue in general—

The Chair: Excuse me, but you can't read that quickly for the translation.

Ms. Lori MacMullen: Okay.

The Chair: We don't have a copy of what you're reading either.

Ms. Lori MacMullen: No, you have a copy of the report, but not my speaking notes.

The Chair: So you're either going to have to talk off the cuff or read more slowly. Okay?

Ms. Lori MacMullen: I'll slow down.

Gary and I, and the year 2000 issue in general, have the committed support of our deputy minister, our steering committee of deputy ministers, as well as our board of management.

The mission of the Government of New Brunswick's year 2000 program is to ensure that there will be no interruption of any mission-critical government business processes as a result of the year 2000 problem. We're committed to protecting the public health and safety of our citizens, as well as ensuring against a significant impact on government operations.

• 1210

The Government of New Brunswick's corporate year 2000 program management office has been charged with the overall coordination of our government's activities related to the year 2000 problem. It provides overall leadership for achieving year 2000 compliance in the New Brunswick government for all issues, including automated applications, technology infrastructure, embedded systems, and other non-information technology issues, such as our supply chain.

It's also charged with ensuring there is a thorough understanding of the year 2000 issues in government, with our suppliers and partners, and in the private sector in general. We also provide a year 2000 advice and knowledge repository for all departments in the Government of New Brunswick. We support and coordinate all year 2000 projects. We monitor and report on a regular basis on the year 2000 compliance status of all of our government programs.

The Government of New Brunswick's year 2000 initiative has been in place since 1995. The operational issues related to the year 2000 program have been assigned to us in corporate information management services. The year 2000 economic impact issues have been assigned to the economic development, tourism, and culture department.

In 1996, we implemented the year 2000 program management office to address these issues. An initial assessment of our year 2000 problems relating to applications and technology was completed in December 1996.

During 1997, departments began their repair and replace efforts on all of their essential applications and technology infrastructure. In late 1997, we began to identify and address our issues with respect to embedded systems, including heating systems, security systems, health care systems, and our supply chain, which is our critical suppliers of products and services, including our power utility and our telephone company.

During 1998, we increased our reporting and implemented a top-level monitoring mechanism to ensure that we addressed our continued awareness, action, and immediate resolution for all year 2000 problems.

As of today, departments have made good progress in addressing their large, mission-critical applications. A number have already been completed, and the remainder are in progress and on schedule.

Departments report that the remainder of the government's mission-critical applications will be repaired, replaced, or supported by a contingency plan prior to November 1999. Our technology infrastructure has the same status. It has all been replaced or repaired, or it will have a contingency plan prior to November 1999.

As for our embedded systems, we have completed three assessment projects. We currently have seven more underway to assess the impact of embedded systems on our government buildings. Our findings to date indicate that we are not expecting to experience any major problems due to embedded systems.

All departments and the program management office are now working diligently on identifying our supply chain issues and getting them addressed.

Our municipalities and housing department is responsible for dealing with municipalities. The department has made municipalities aware of the problem. It has worked in conjunction with the program management office to ensure that the municipalities have all the information they require. It has clarified that each of the municipalities must work diligently to address their problems and ultimately be responsible for the issue.

The year 2000 program management office participates in all year 2000 workshops with other provinces and the federal government to facilitate information exchange and best practices, and to ensure that we are all working toward that same goal. We have also participated with individual provinces on specific issues.

In the area of health care, our health and community services department is responsible for dealing with our eight regional hospital corporations. The department made the regional hospital corporations aware of the problem, provided information sessions for all of the corporations, clarified their responsibility and accountability relative to the issue, and together with the regional hospital corporations established a single, separate year 2000 program management office to support the regional hospital corporations and to address health care issues. They also work very closely with the federal-provincial year 2000 program management office, which has been established.

With respect to industry, our economic development, tourism, and culture department is responsible for dealing with that sector in the province. The department has made all large businesses aware of the problem. They've made small businesses aware of the year 2000 issue by participating in a Y2K package for small businesses. We provide year 2000 awareness sessions and information through our 180 community access centres across the province. We established a web site that's targeted at small business. We distribute pamphlets and information brochures through all of our government contacts, as well as through our New Brunswick electric power accounts, to all businesses.

We provide a year 2000 solution-provider database, which contains information on all solution providers in New Brunswick that are targeted at small business. As well, we have encouraged all government departments, such as fisheries and agriculture, to promote awareness in their newsletters and their contacts with stakeholder groups.

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In the area of contingency planning we are working closely with the emergency measures organization in our province as well as the RCMP, the Department of National Defence, the Coast Guard, and Emergency Preparedness Canada to begin our contingency planning process and to ensure that we do have a contingency plan in place. We also deal heavily with the Gartner Group, and they've published a year 2000 research note on individual preparedness that is available on the Province of New Brunswick's year 2000 web page. We have been given permission by the Gartner Group to give the committee one copy of this research note if they're interested in having it. It's one of the best we've seen to give information to individuals on what they should be thinking about relative to the year 2000 problem.

From a top level support process, all departments have assigned a year 2000 coordinator. Presentations and information sessions have been held with all deputy ministers as well as all departmental coordinators. Presentations are made on a regular basis to any and all stakeholder groups who request our presence or who we feel we need to communicate with. Ongoing communication at all levels and between all parties is critical to our success in addressing and preparing for our year 2000 issues. In addition to the information sessions described above, the year 2000 program management office meets weekly with all departmental year 2000 coordinators. It also holds monthly workshops to address specific issues such as embedded systems, contingency planning, and supply chain issues.

On a monthly basis we are required to meet with the board of management and present a verbal report on the issues covered during that month, and any outstanding or critical issues would have to be addressed. We are also required to submit on a quarterly basis written reports on the status of the year 2000 program for the New Brunswick government.

A top level monitoring and verification process is in place to meet best practice and least risk and to demonstrate due diligence.

The New Brunswick government's board of management directed that a deputy ministers' steering committee be mandated to monitor the ongoing progress of the year 2000 initiative. Each department represented by its deputy minister must report to this committee on its status and when it will reach operational sustainability. Departments will be requested to report back periodically for updates. Although the PMO is providing much direction and much information sharing, and our deputy minister is supporting our initiatives, all deputy ministers are ultimately accountable for year 2000 in their respective departments, agencies, and crown corporations.

The Government of New Brunswick is fully aware of its year 2000 issues and is working diligently on all these issues to ensure that there will be no interruption of mission-critical government business processes.

The year 2000 program management office's leadership, advice, and guidance have made a difference. The top level monitoring of our deputy ministers' steering committee and the board of management will help to ensure that the Government of New Brunswick continues to address its year 2000 issues in a timely and effective manner. However, the ultimate responsibility lies with the individual departments and depends on the engagement and action of individual departments and agencies.

Thank you.

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

I'll now turn it over to Mr. Samoil.

Mr. George Samoil: Thank you very much, Madam Chairman.

Alberta is pretty much everything you heard from the New Brunswick report, except we don't have any fisheries and of course they don't have any cattle.

Ms. Lori MacMullen: A few.

Mr. George Samoil: In any case, good afternoon, ladies and gentlemen. The Government of Alberta has been formally involved in addressing the issue of year 2000 computer compliance since 1996 through the efforts of the Department of Public Works, Supply and Services and the Office of the Chief Information Officer along with all Government of Alberta departments. One of the first initiatives in 1996, following consultation with senior management in the government, was the implementation of a cross-government year 2000 project office comprised of a number of full-time staff who are situated in the Department of Public Works, Supply and Services. This project team assists all 17 government departments through the development of a project methodology for departments to follow for their year 2000 plans, in addition to common tasks such as information on vendor compliance and a consolidated list of potential year 2000 service providers available to the departments.

This project methodology included identifying all systems within the government that potentially had year 2000 concerns and classifying them into one of four areas from most critical to least critical. The four definitions we have implemented are: mission critical, mission important, process critical, and process important. Project milestones have been identified as targets for departments to meet in achieving year 2000 compliance, and by March 31, 1999, we anticipate all of the critical systems in government will be year 2000 compliant, either through repair, replacement or retirement of that system. This project milestone will also allow time for testing prior to January 1, 2000.

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In 1997 the Government of Alberta requested the Gartner Group, a leading information technology consultant and research firm, to review our year 2000 project plan to ensure we were addressing all the important issues surrounding year 2000. I am pleased to advise that the analysis by the Gartner Group was very favourable and in fact identified some of our procedures as “best in class” based on comparisons with other jurisdictions at that time.

I should emphasize, though, that this is the formal year 2000 process and that over the past number of years the Alberta government has gone through a major restructuring of all departments. Through the amalgamation of several departments, information systems were replaced and the year 2000 was taken into consideration at the time of these system amalgamations. As well, the introduction of PeopleSoft applications into the Government of Alberta has resulted in over 400 different human resources and financial software applications being consolidated by that implementation into one standard application. Again, this has addressed many of our year 2000 issues.

Interfaces with other governments have been identified as a priority item to ensure year 2000 compliance. Alberta government departments have so far identified 14 systems in 7 departments that interface with the federal government. Progress in achieving compliance is reviewed on a regular basis. These systems are in the areas of education, seniors' benefits, social services, weather, health, justice, and taxation. Most of these interfaces involve statistical information forwarded from Alberta to the federal government. In addition, Alberta has at least three systems that interface with other provinces, the most critical of which are in the health sector.

Senior management in government is regularly apprised of the progress of the government's critical systems. Regular updates are provided to each deputy minister and chief information officer for the respective department. Currently over 75% of our critical systems are expected to achieve year 2000 compliance within the next few months—again, our target date of March 31, 1999. Attention will continue to be focused on any of the systems or applications that may be falling behind in this process in the remaining months leading to January 1, 2000.

Embedded chips, microprocessors, remain a high priority for the government, particularly as they relate to the health care sector. The Government of Alberta has allocated $170 million to address year 2000 compliance of all medical equipment and systems. Currently every regional health authority in Alberta has a year 2000 project underway, with the assistance of a central year 2000 health secretariat office in Alberta Health. Although to date only a limited number of year 2000 problems have been found during the review of health equipment, the testing requirements are substantial and require much time and effort.

Contingency planning is another important component underway both within government departments and with key stakeholder organizations. Each department, as part of its year 2000 plan, has been requested to identify contingency plans should its critical systems fail or malfunction on January 1, 2000.

The Office of the CIO and Alberta Disaster Services are also concerned with the potential of year 2000 problems for Alberta citizens. Municipalities currently have emergency preparedness plans in place, which are regularly updated. These plans can be initiated as a result of many sorts of disasters, such as floods, fires or tornadoes. The year 2000 is another potential emergency situation that must be considered.

At an October 6, 1998, meeting in Edmonton, the Office of the CIO and Alberta Disaster Services facilitated a meeting of over 60 senior representatives from key public and private sector organizations, all of whom are committed to an open exchange of information about the potential impacts of Y2K on essential services. A working group has been established by Alberta Disaster Services to analyse potential emergency consequences, based on input from these sectors, to ensure that appropriate measures are in place to address those consequences. I would also like to note that, from the federal side, Emergency Preparedness Canada, Transport Canada, and National Defence representatives attended that meeting and are participating in the working group.

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The meeting was an important step toward identifying the Y2K compliance status of essential services such as electricity, gas, water, telecommunications, and emergency services, and ensuring that existing municipal and provincial disaster plans addressed the potential consequences of the year 2000 problem. Alberta Disaster Services is currently developing a provincial government Y2K consequence management plan. In addition, its Y2K emergency preparedness municipal planning guide will help municipalities to determine the compliance of their systems, services, and facilities and to prepare consequence management plans.

As co-chair of the federal-provincial-territorial year 2000 working group, along with Guy McKenzie, I'm pleased to advise that meetings were held in January and September 1998. Our next meeting is scheduled for December 16 of this year and will focus on contingency planning within governments and with industry players in the power, water, and natural gas sectors.

In conclusion, the Government of Alberta has been proactive in addressing the year 2000 computer issue. However, we must remember that our success will be directly linked to the success of others in Alberta, in Canada, and indeed to partners around the world in addressing this challenge.

Thank you very much.

The Chair: Thank you very much.

We're now going to begin with questions from Mr. Mayfield.

Mr. Philip Mayfield: Thank you very much.

I want to say how much I appreciate your being here. It's good to listen to provincial government representatives talk about this problem.

I'm one of the people who sits on the public accounts committee, and we've been listening to the federal departments. It's been quite an experience, and I'm amazed there was not more concern about the seriousness of this problem earlier on. We're now hearing that they're working hard to catch up, but not everything is going to be done by January 1, 2000, at least not in the federal government departments.

One of the things that concerns me is found not only within the government, but in the lack of leadership that has been given in terms of advising our constituents of the seriousness of this problem. The banks have a way of doing this. They say to their customers that if they're not compliant, then they probably won't get the money they need from the bank.

I'm wondering what leadership your governments are providing to address the seriousness of the problem in the minds of your people, particularly small business people who depend upon their customers and suppliers to keep going.

Mr. George Samoil: One of the roles we have played through the public sector CIO council and so on was participation on the Industry Canada task force in an advisory role through the office of the federal CIO. At that time, is was made abundantly clear that Industry Canada was taking a strong leadership role with industry players in terms of small business associations and so on, and with larger business associations. They wanted to take the lead to get that message out, and that was a message that we accepted. We didn't want to be duplicating efforts across every province. We didn't want to be doing the same thing over and over again.

It was very clearly stated that Industry Canada was taking that role to make sure industry in Canada—small, medium-sized and large-scale enterprises—would be getting a coordinated message as a result of the Jean Monty task force and its work. The evidence we've seen is that they have certainly followed through in terms of their advertising campaigns and the distribution of materials across the country, including all of the provinces.

Mr. Philip Mayfield: In August of this year, I was at a conference of the territorial, provincial, and federal governments. One official there said he really felt this whole Y2K problem was a red herring to make more money for Bill Gates. I was really astounded at that. It concerns me that there are people, high officials, who would say something like that.

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So I asked that question because I think it is important. In my own area, it has been really tough to get people to pay attention when you talk about Y2K.

One area that really does concern me is the whole medical field, because it's building so quickly. I was pleased to hear particularly Alberta talk about the emphasis you've put upon your medical system and, I presume, the technology in that. Do you have key people who are monitoring the progress within the system and are reporting through to the deputy minister so that you are aware there is going to be compliance from top to bottom?

Mr. George Samoil: Absolutely. Like virtually all the other jurisdictions I'm aware of, we've formed central project offices to provide the expertise to the regional hospital authorities and so on, to provide them with the background information they need—the strategic planning, the templates for their work—and also to maintain that back-and-forth information sharing to find out what they are doing, how they are doing it, and how they are progressing on time. So that is taking place, yes. There's no question about that.

The Chair: Do you wish to reply to that?

Ms. Lori MacMullen: The question relative to industry especially in New Brunswick, where 70% of our business is small and medium-sized enterprises— we have also worked with Industry Canada. As I mentioned, we have used the Can2K program, as well as any number of other facilities that Industry Canada provided to us, to get information out to and support for our small businesses. We augmented it with additional information and additional work from our Department of Economic Development, Tourism and Culture through our 180 community access sites.

If you think about the size of New Brunswick, the fact is that there are 180 communities with community access sites that small businesses can walk into to get all the information they need. They can get actual help in addressing the year 2000 issue through the program. We've augmented what Industry Canada has done, and we are working with the small businesses to try to keep them aware of and in tune with all the issues they have to address.

Again, many of our industries are home based. They may have computers and don't realize their accounting system is not going to work or don't realize their communications might not work. We have to work hard at making sure they are kept aware.

On the health care side, in much the same way as Alberta and probably a lot of the other provinces, the Department of Health and Community Services provides a year 2000 program management office for our eight regional hospital corporations, which in turn work with Health Canada so that we do keep the information flowing right from the top to the bottom. Everybody knows the issues they are facing, the equipment they have tested, where the problem may or may not exist, and what they have to do. Our health care corporations are just in the process of identifying the specific issues they have to address, and they are putting a cost to it. However, I'm not in the same position as Alberta. I can't quote the exact amount we will be investing in the health care system and in health equipment.

Mr. Philip Mayfield: Do you have key people who are accountable and who hold other people accountable in this area?

Ms. Lori MacMullen: Yes, we do, very much so.

Gary, do you want to add to the industry issue?

Mr. Gary Andrews (Director, Year 2000 Program Management Office, Corporate Information Management Service, Supply and Services, Government of New Brunswick): I'd like to add to the industry thing. My name is Gary Andrews.

ED and T, through one of its areas, was one of the principal developers of the Can2K package. We were on the issue early, generally, in letting small and medium-sized businesses know. ED and T stepped up its efforts, increased its efforts, after a visit from Jean Monty's task force. After its first report to all provinces, that task force went around and mentioned that there was a concern about small and medium-sized businesses. Of course, as my colleague Lori mentioned, that includes most of the vast majority of businesses in New Brunswick, so they stepped up their efforts to get the message out.

The department has continued with more programs, including some recent ones in which they were trying to contact every possible person—even one-person businesses run out of single houses—in any small business to make sure they're aware of the year 2000 problems, to make sure they're aware which solutions providers could work on for them, generally. I have fielded a phone call myself from someone who has a one-person business being run out of the house. That person was asking about this product, about that product, and so on.

The word is getting out there, but I guess it is possible for a small business, if its workers don't listen to the radio, read any newspapers or—

Mr. Philip Mayfield: Do you have the support of the chambers of commerce in getting the word out?

Mr. Gary Andrews: Yes.

Mr. Philip Mayfield: What about other local organizations like that?

Mr. Gary Andrews: Yes. For example, the Saint John Board of Trade had someone come in to talk to all its members on year 2000 issues. ED and T has had folks out talking to chambers of commerce. We'll essentially speak anywhere they'll allow us in the doors.

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Mr. Philip Mayfield: Thanks a lot.

The Chair: Thank you, Mr. Mayfield.

Mr. Lastewka.

Mr. Walt Lastewka: Thank you, Madam Chair. It's nice to hear comments that the work is getting through from the Jean Monty task force and so forth.

I'd just like to get a better understanding of something, Mr. Samoil. You mentioned that you will have 75% of your critical systems compliant within the next months. What is your target date for the other 25%?

Mr. George Samoil: Ideally, we wanted them all there on March 31, 1999, but there are certain realities that you encounter once you start drilling into this work. Our goal is to have more than 75% by March 31—and I'm just giving you the status as it stands today. If we have 80% to 90% done by March 31, I'll be pretty happy, and we will still have until January 1, 2000, to keep working on the rest.

Mr. Walt Lastewka: Ms. MacMullen, I understand the hospital situation in Alberta. You said New Brunswick has eight regional hospitals, if I understood you correctly.

Ms. Lori MacMullen: We have eight regional hospital corporations that run each region, although there may be a number of hospitals or health care facilities within each region.

Mr. Walt Lastewka: Have they been forwarded the money they need to implement their work?

Ms. Lori MacMullen: No, they have not identified the exact amount they need to do their work. They are in the process of doing that now. Our board has shown full support, though, from the point of view that money will not be an issue. It's a matter of them identifying what it is they need, and then it will go to our board of management and that discussion will ensue.

Mr. Walt Lastewka: I know from previous discussion with Alberta that they've done their work, they have their money, and they're now implementing. They seem to be in the forefront of making things happen in the hospital regions of Alberta. Am I correct on that?

Ms. Lori MacMullen: We're using everything they're doing, so yes. In the health care field, with a lot of the testing that goes on for the equipment, we don't need to duplicate that effort. The information is being shared across the country, so if anybody has tested something, we will use that information. We then augment with things that are different in our province.

Mr. Walt Lastewka: I understand that, and I think the cooperation that's going on is absolutely excellent. But I'll give you a situation that I heard just a week or so ago. In the province of Ontario, they've done their work, they're ready to do this thing, but there's no money being passed down. That's why I asked the question.

Ms. Lori MacMullen: I can't comment on Ontario. In our case, I know the health care corporations are in the process of putting their precise numbers together. There was an estimate given when we were going through our budget process, but I do not want to quote it because it was a high-level estimate. They are now refining that number, and they are to be back to our board of management by calendar year-end.

Mr. Walt Lastewka: Thank you, Madam Chair.

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

[Translation]

Mr. Dubé, do you have any questions?

Mr. Antoine Dubé: You spoke of meetings among all the governments of Canada. You have mentioned dates. I would like to know how satisfied you were with these meetings.

[English]

Ms. Lori MacMullen: Personally, I don't attend the meetings. My colleague does as the director of the year 2000 program management office. I'll speak first on behalf of the public sector CIO council that is also meeting on a regular basis.

As CIOs, we recognize that the year 2000 problem is a significant issue for all of us, and we spend time discussing the issue. The key advantage I get out of it is the sharing of information. This is very much a jurisdictional issue, and we cannot act together. We can share information and work together to ensure that our common issues are identified, but it is a jurisdictional issue. The value is basically a sharing of information.

I would like Gary to comment on exactly what's going on for the program management office.

Mr. Gary Andrews: I've been very satisfied with the meetings. I've been one of the ones who has attended all these meetings, and I intend to continue attending them. I was the first person in the Government of New Brunswick's year 2000 program. I have been with it from the start, and I intend to see it through. I've often jokingly said I'm the chief target for the Government of New Brunswick if something goes wrong when we cross the millennium threshold.

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The meetings have worked out fine. They provide me with information that I find exceedingly useful. They provide me with exactly who to contact when I want to get more information, when I want to find out what this province thinks of this particular strategy, this particular product, and what they have found on this and what they have found on that. They have fielded questions from other provinces when they've called, and they have called other provinces. So the meetings have been well worth the investment of my time and our money, and I would like them to continue. I think George and Guy have done an excellent job.

The Chair: Mr. Samoil.

Mr. George Samoil: Thank you.

The meetings are extremely useful from this standpoint. Like all of you around this table, all of us at the provincial level that are involved in addressing this problem crave information. None of us in any of our jurisdictions can do it on our own, so when we hear of some good work being done in this province, they are gracious enough to share it with us in Alberta, and Alberta shares with them. For that reason, that is the true value of that committee.

But I would add to that. In satisfying that craving for information around that table with the year 2000 coordinators and so on, we take that information back and disseminate it amongst our different ministries, our municipal governments, our business sector, and so on.

Having looked through the previous example of materials on the web site for this committee, I would say that you are sitting on an incredible wealth of information from your expert witnesses that have been here to date. You have information we haven't been able to get.

Having heard the gentlemen who were here before us, speaking the way they were speaking, and looking at the list of witnesses you've had in other hearings and so on, I would like to share with you that the Chamber of Commerce in a small rural community called Wetaskiwin, an hour south of Edmonton, invited me to come and speak to them on Tuesday morning about the year 2000. At 7 a.m. 150 people showed up to find out information on year 2000. It's not so much that they want to know what to do about their home computer, their office computer, or their fax machine. They want information about the airlines, the natural gas companies, the electrical producers, and the federal government processes, the bigger issues that are going to affect them, as they see it, on a day-to-day basis. They think they can develop their contingency plans for their own little operation, and they are working on it, and that's good. But they don't have the information you have, and they don't have the information we have from this committee. So that's the value of those things.

Ms. Lori MacMullen: One of the other advantages I failed to mention was the ability of us as a CIO group and of our year 2000 program management office to have the same themes and the same messages going out.

One of the things we are fearful of and that none of us need is panic. I heard there was a discussion of that in the presentation before us. We are concerned about misinformation getting out to the common citizen on the street.

So one of the other big advantages to us getting together on a regular basis—and this has happened over the last, probably, six to eight months—is coming up with some common messages and keeping the awareness and intensity up without hitting the panic button. That's a big challenge with the media, the citizens, and even with our colleagues in our own jurisdictions. So that's one of the other big advantages to us getting together on a regular basis at all levels, so that some of the common themes and messages are getting out.

The Chair: Thank you.

Mr. Dubé.

[Translation]

Mr. Antoine Dubé: In order to save time, I will ask two different questions at the same time.

Following these meetings, at this stage, do you have any recommendations to make to the federal government? If so, could you tell me who they address in the federal government? Could you specify whether it is the Department of Industry or another department?

The second concern of some people, particularly of governments, is with people who will make claims. If there are incidents, what will happen?

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Was this issue raised by the various governments? If so, what was the conclusion? Do the governments intend to do something in this regard?

[English]

The Chair: Ms MacMullen.

Ms. Lori MacMullen: On the first part of your question, as to who we would make recommendations to, Linda Lizotte-MacPherson sits on the public sector CIO council, the federal CIO. As well, when we discuss the year 2000 issue, she brings along Guy McKenzie. We have made recommendations back through their offices. We had some issues around information sharing and what was going on at Health Canada, so we got the information through Treasury Board and through Linda's office. We would probably deal directly with Industry Canada if we needed to. We've dealt with them directly in the past. We would go one way or another depending on how we needed to get it put forward.

On the second part of your question relative to people who may make claims, one of the things we've started and one of the things we have foremost in our mind is the whole process of due diligence and the ability to prove as a government that we did everything reasonable to address this issue while we were going through this over the last three years. The whole need to be able to prove due diligence at the other end is how we are addressing it. There has been some concern expressed at our political level as to whether we are really just sort of protecting ourselves from that sort of thing. My response is no. As senior civil servants and as a professional civil service, we have to do that, protect the citizens from unfair claims or whatever. As a government, there is so much we have to do, and in order to do that we have to prove risk management due diligence.

The Chair: Mr. Samoil, did you wish to reply?

Mr. George Samoil: I'll do mine in reverse. I'll just add on to Lori's comments on the liability side. We are not looking at passing legislation or anything of that nature, even though you may have heard rumours in certain jurisdictions.

Our focus is to work on the problem. Our focus is to solve the problem. If groups come to us and say they need this legislative protection, we say work on the issue, solve the issue; that's the best protection you can possibly have. So we're not spending a lot of time focusing on that liability side. That's not to say it's not an issue out there, but we've got work to do, and we'll let the lawyers worry about these other issues.

You made reference to potential recommendations. It's difficult for us to make strong recommendations. We look at the work that has been done by Industry Canada and the Jean Monty task force. Essentially, they have done their surveys, identified what the problem is and how widespread it is, and provided a template for businesses to work on that problem. It's very important and very good work.

The federal government, through the federal CIO office, has shared a lot of information on the internal status of government ministries, which has been very beneficial to the provinces.

The piece that might be missing is the type of information you are gathering, as I referred to earlier, on the status of the real work being done in these different companies, which is going to be very beneficial. I don't know what to say to an individual who says, Mr. Samoil, should I book my airline flights for January 2000? I have no idea. I have no information on that. Perhaps we will be able to benefit from the expert testimony you're receiving on that.

The Chair: Thank you.

Thank you very much, Mr. Dubé.

Mr. Bellemare, please.

[Translation]

Mr. Eugène Bellemare: Thank you, Ms. Whelan.

[English]

To the representatives from New Brunswick, you mentioned that you'll be Y2K ready or you'll have contingency plans ready prior to November 1999. That's very close to the goalpost, but there might not be a touchdown there. Aren't you sort of squeezing your luck to the limit by being so close to the Y2K date line?

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Ms. Lori MacMullen: In my opinion, no, we're not, because of the contingency plan piece. We hope to have all the applications or—I'll flip it around—all our mission-critical business processes identified and an action plan, either a repair action plan or a replace action plan, and if all else fails, a contingency plan, documented, understood, and ready to kick into action if need be. Our intention is not to have to have that contingency plan, but by November 1999, if—

Mr. Eugène Bellemare: You mean not to need it.

Ms. Lori MacMullen: Not to need it, exactly.

If we have the contingency plan, then I don't feel that November 1999 is an issue, because we have a couple of months to ensure that the contingency plan is sufficient, to have it available and hopefully continue not to need it.

Mr. Eugène Bellemare: One concern you've indicated—at least you gave me that concern—was regarding medical devices in hospitals.

Ms. Lori MacMullen: Right.

Mr. Eugène Bellemare: You say you're waiting for the hospitals to provide you with their needs so that you can provide them with, I suspect, their funding.

Ms. Lori MacMullen: Right.

Mr. Eugène Bellemare: Again, isn't that a little late?

Ms. Lori MacMullen: I don't believe so. Again, it's the medical equipment, and it's mostly the medical equipment with embedded chips, microprocessing systems, that they have to look at.

Again, it's strictly my opinion that in most of those cases it will be a matter of money to replace the equipment, whereas the work we've been doing up until now has been a matter of manpower and time to change the applications.

Mr. Eugène Bellemare: But if the supply isn't there because you've been tardy, you've been waiting and waiting for the information, and then when it's time to order, everything you're ordering is on back order because all the hospitals in North America are looking for equipment, doesn't that frighten you?

Ms. Lori MacMullen: No, not yet.

Mr. Eugène Bellemare: You don't have any relatives in hospital that are attached to—

Ms. Lori MacMullen: No, but I have confidence in our hospital corporations that they're going to be able to identify the issues by the end of this calendar year and we're going to be able to address them.

Mr. Eugène Bellemare: Is your level of confidence high enough to give guarantees to your constituents?

Ms. Lori MacMullen: No.

Mr. Eugène Bellemare: You can't give guarantees.

Ms. Lori MacMullen: I can't give guarantees on any of the year 2000 issues. Nobody can.

Mr. Eugène Bellemare: In Alberta, how are you fixed for money for the hospitals? You went over that a while ago. Did they get their money, and have they fixed their medical devices?

Mr. George Samoil: The majority of the money that has been allocated under that program has been committed. The groups have identified—

Mr. Eugène Bellemare: Excuse me, I have a question of vocabulary here: committed allocations?

Mr. George Samoil: When a regional health—

Mr. Eugène Bellemare: How about “spent”? Could you use the word “spent”? It would give me a signal that it's not on paper, but actually some organization has money in hand.

Mr. George Samoil: In government parlance, when it's committed to that particular regional health authority, it's out the door and that's where it's going and that's where it's spent.

Mr. Eugène Bellemare: That's good.

Have you had any feedback from the hospitals regarding their medical devices?

Mr. George Samoil: Absolutely. The process, which you may have heard over time, has involved this whole organization across the country, with Health Canada and the different provincial jurisdictions collaborating to put their health information together as it relates to compliance of medical devices. Alberta has participated with all of the other provinces in that regard, sharing that information in common databanks. CYNCH, the Canadian Year 2000 National Clearing House, is operational. The information is there, and the databases.

The role of each of our provinces, through the public sector CIO council working with our individual health chief information officers, has been to keep that agenda on the national level to make sure that project happened. The result of it is that it was established a number of months ago.

Mr. Eugène Bellemare: May I ask New Brunswick— I don't mean to be mean or offensive here, but why the big disparity between New Brunswick and Alberta when it comes to funding hospitals for medical devices?

Ms. Lori MacMullen: I don't believe there is a disparity, since I haven't given a number. I don't know where you're sensing there's a disparity, other than our timing.

Mr. Eugène Bellemare: They've given the money, $170 million.

Ms. Lori MacMullen: Yes.

Mr. Eugène Bellemare: If it's not spent, it's being spent.

Ms. Lori MacMullen: It's committed.

Mr. Eugène Bellemare: In your case, you're asking for data at this point.

• 1255

Ms. Lori MacMullen: We're asking for numbers. The estimated cost to address our year 2000 issue in medical devices by the end of the calendar year is the target, so they will know what their problem is. They have to put a cost on replacing the equipment, repairing the equipment, or whatever. It's a budget issue at this point. That's not a budget problem; it's a budget number, an estimate.

Mr. Eugène Bellemare: For people who know other people in hospitals on medical devices, that's not reassuring. You're going in the right direction, but—

Ms. Lori MacMullen: Right.

Mr. Gary Andrews: The hospitals are working with the Department of Health to make sure they will have addressed their issues, and they are confident that they will address their issues. At this point in time, hospitals have indicated, through public articles—not through any reporting, but through public articles—that they are making plans and have made commitments for those devices that they need the quickest or the earliest. For example, in a Daily Gleaner article two weeks ago, one hospital indicated there was a device they were going to have a problem with in January, I believe, of next year, and they're going to make sure they've addressed that issue.

I do not see a hospital not addressing a health care issue because of money, where a patient is at risk. I don't see that happening in Newfoundland, P.E.I., or New Brunswick. I really don't see that happening anywhere, that a hospital would not address the seriousness of it.

The Chair: Mr. Bellemare, this is your last question.

Mr. Eugène Bellemare: This is your wish, but you're not giving guarantees.

Mr. Gary Andrews: That's correct.

Mr. Eugène Bellemare: My last question is on the good Samaritan law in the United States that protects the sharing of information between one another in the private sector. It was discussed that we should possibly have that in Canada. The problem is that the Canadian Bar Association and the Minister of Industry have informed us that protecting consumers is a provincial matter. Is New Brunswick, and Alberta in this case today, looking at some kind of good Samaritan law because—

The Chair: Mr. Samoil already said no. In fact, they've told their people to fix it. This has already been discussed.

Mr. Eugène Bellemare: May I continue in that vein?

A lot of your companies are manufacturing companies and they deal with the United States. Because of the NAFTA, they are liable through these inter-contracts with the U.S. and Mexico and now Chile—Chile is about to be on. They're exposed because they've signed contracts with U.S. companies. They are not protected if there's not a good Samaritan law in the jurisdiction. The jurisdiction happens to be the provincial jurisdiction in this case. I heard your answer, but obviously I'm not satisfied with the answer. I'm relating a concern I have here, that we're passing the ball back and forth. Do you have comments?

Mr. George Samoil: Sure, I would take that ball and pass it a little further. The appropriate people would be on the intergovernmental affairs side, the economic development side, Justice, that type of thing. Those are the people to raise those issues with. I can't comment on those. We're not experts in corporate litigation or protection of contracts or any of those things. So I think those would be the best people to discuss that with.

The Chair: Thank you.

I have Mr. Mayfield for one question and then Mr. Lastewka.

Mr. Mayfield.

Mr. Philip Mayfield: Thank you, Madam Chair.

I'm very interested in the question you asked, but just to go a bit farther on this whole broad area, everybody's in this. We talk about the good Samaritan, so that honest mistakes are not taken advantage of, but perhaps just stepping back a little bit, looking at the network, the electrical grids, the transportation systems, gas and oil, what kind of cooperation is there between the provinces in supporting one another? For example, if there is a major glitch that affects one particular health care system, are the other provinces talking to one another so there can be a filling in of the gaps if something like this happens, whether it's in transportation, health, or communications—across the whole board?

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Mr. George Samoil: Province to province, obviously, we do that through our year 2000 committee in conjunction with the federal government, the public sector CIO council, and the chief information officers from each of the provinces, addressing those issues. Then you start crossing over onto the industry side. Then you start addressing issues from the North American Electric Reliability Council, the Canadian equivalent, the Canadian Petroleum Producers Association, and those types of groups who are working collaboratively amongst themselves.

This is why I go back to what I talked about earlier, this craving for information. You talk about good Samaritan legislation and contracts with American companies and so on. Who best in Canada is there to provide us with the information we need than a group like this, which can provide us with the information on the testimony you've received from all of these expert witnesses and at the same time be able to give us assurance? Without a good Samaritan piece of legislation on a piece of paper, where you sign off and say, you know what, these issues are all year 2000 compliant, you don't have to worry about this, this, and this, based on the expert testimony and witnesses you've had—if you can give that to us, you're going to make our job so much easier. We don't have to worry about liability legislation.

Tell me that the airlines are not going to have any problems and put it in writing and send it to us so that we can pass it out and say this has been reviewed and studied. It's the same with the electrical, the gas, and so on. We don't have that capability individually as provinces, but perhaps you do with the type of work you've been doing.

The Chair: I have Mr. Lastewka, then Mr. Dubé. One question each, please.

Mr. Walt Lastewka: I just wanted to reassure the witnesses that our concern on health care— we're continuing to ask questions because of the wide differential, it seems, from province to province. Some are implementing, some are 75% to 85% done, some haven't received money, some are still doing inventory. We felt this change almost six or seven months ago, where we really needed to ask questions in those areas, because there was a Health Canada issue with the hospitals and so forth. That's the reason we've continued to ask questions.

I hope at your next provincial meetings there's a good comparison of who is where and what can be done to help those who are lagging behind, whoever they are. I think our interest for Canadians is that our health care system and hospitals across the country are in good shape for Y2K.

Ms. Lori MacMullen: And I appreciate where the questions and the concerns are coming from.

I have a couple of points I would like to make. When you say there's a vast difference in where the provinces are relative to these things, there's also a vast difference in the impact. We have eight regional hospitals. Chances are, we may have a one-of-a-kind piece of equipment in the province and Alberta might have 25. So their issue and problem is a lot bigger than ours. That's why I do express some confidence in the fact that we will still be okay. Our citizens will still have the health care they need.

On the money side, there was a question about whether I would guarantee that that money would be there. I'm not an elected official. I am not a minister of finance. I do not vote appropriation; therefore, no, I cannot guarantee any money. What I can guarantee is they will have the best professional advice and information they need to make those decisions.

What I am getting from our board of management is complete confidence in the fact that there will be money there. They know there's a problem, they know there's an issue, and they know that health care is critical. Public health and safety is our mission-critical identifier, and therefore they are ready to put the money on the table as soon as we know exactly how much it is they need to put on the table.

There is an issue because of the health care corporations being a separate entity from our Department of Health. They appropriate the money. We have to ensure that they are all being treated fairly and they do know exactly what it is they need and that money is available to them.

Again, I have complete confidence that there will not be a patient in a hospital or a medical care facility in the province of New Brunswick whose life and/or care will be in any way implicated by the year 2000 issue.

The Chair: Thank you, Mr. Lastewka.

Mr. Dubé,

[Translation]

one question, please.

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Mr. Antoine Dubé: It's both a question and a comment. I'm very satisfied with your respective testimonies. I think it's very useful. I'm particularly interested in Mr. Samoil's suggestion about getting access to the information that we have received here from the various witnesses who appeared before us. Could people have access to documents such as this one by E-mail or some other way? Does that already exist?

[English]

The Chair: Documents of what we're doing here?

[Translation]

Mr. Antoine Dubé: Yes, the committee transcripts for example.

[English]

The Chair: All of the discussions that take place at this committee are available right now through the House of Commons Internet site. The testimony today will be posted on the web as soon as it's available, and if anyone wants any of the documents that are presented at the committee, the clerk has them and can reproduce them for people who request them, if they want to go further into what's said at the committee. I think both Mr. Samoil and Ms. MacMullen have been following and looking at what we've done and have seen our interim report. As Mr. Samoil said, we are able to call certain witnesses that they don't have access to and try to get some information. They do have that ability, yes.

[Translation]

Mr. Antoine Dubé: Fine. You didn't know that?

[English]

Mr. George Samoil: I knew that. What I'm suggesting is we go beyond that. It's one thing to have it, but if most Canadians are not aware that it's there, it doesn't do much good. It's a treasury of information— to get a summary of the status out to the general public. I know the restrictions of committee budgets and so on, but perhaps it's something Industry Canada might be able to adopt and say, we're going to publish this information, in the same way they did with the Jean Monty report and so on.

The Chair: Okay.

[Translation]

Mr. Antoine Dubé: I understand better.

I would like to say one last thing. In the somewhat special spirit of a person from our distinct society in Quebec, I would say that when people from a province appear before a committee of the federal Parliament, I don't see that as a matter of accountability, but rather as people coming to the committee to share information. To my mind, your testimony has allowed you to reach this goal. Thank you.

[English]

The Chair: Thank you.

I want to thank you both for being here.

I just have one quick comment. Mr. Lastewka and others have mentioned that we have spent a lot of time on the medical sector. We do realize there is a federal factor in you getting ready in the hospitals, because we regulate medical devices. We have met with Health Canada and felt that the timeliness of their response in letting you know and posting on the web which medical devices are ready or not ready has not been as good as it could be.

There was one comment, Ms. MacMullen, that you made—and I know you're not doing the testing yourself. Although the province tells you one device is okay, you still have to test it. I have spoken with hospitals in Ontario. They've been told this device is okay. They've had three and have tested two. Of the three, two are fine and one is not, because they may have a different embedded chip within the device itself. So we raised that.

I appreciate your comments, Mr. Samoil and Ms. MacMullen, on the work of this committee. We will try our best to continue to ensure that information is out there and that that's possible.

Mr. Andrews, do you have a comment?

Mr. Gary Andrews: You have an interest in the Gartner report.

The Chair: Yes.

Mr. Gary Andrews: I have permission, and it's included in writing, to give it to you, because it's a document they charge for. I couldn't copy it and bring it up. It is the only published material we have seen from someone who is not an isolationist that suggests that you live somewhere with two years of food and enough guns to protect it. It's the only information we have seen on individual preparedness from the typical citizen, whether in Canada or the U.S.

The Chair: Thank you very much. We'll circulate it amongst committee members.

We've referred to the Gartner Group several times in our committee and we have several of the reports they've done. So I appreciate that very much. We'll definitely have the researchers have a good look at it, and all of us will get a copy of it and review it.

I thank you both again for being here from the east and the west. Unfortunately, we originally thought we would have Quebec with us. They were unable to come. And Ontario couldn't come at the last minute when we knew Quebec was unable to come. So we have a perspective from the east and the west; unfortunately, we didn't have the centre perspective. We know you have challenges ahead of you, and we have asked the premiers to look at it at their conference. They assured us there is an inter-working group, but they were too busy to look at it in August.

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However, we're pleased, Mr. Samoil, that there is an inter-working group between the feds and the provinces. We tried to bring it to that level at their table in August, and unfortunately they didn't have the time at that time to discuss it. Hopefully, as we get closer, it will reach the premiers' level at their table as well.

I thank you both again for being here with us today.

We have our next group of witnesses; we have two witnesses. We're just going to take five minutes. Please, don't leave, Mr. Dubé and Mr. Bellemare. I have to take five minutes and I'll be right back.

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The Chair: I'd like to resume our hearing.

[Translation]

Mr. Bellemare, are you ready?

Mr. Eugène Bellemare: Yes, Madam.

[English]

The Chair: I'm very pleased to welcome our next two witnesses here. I apologize for the slight delay.

We have Jeff Atkinson, the communications coordinator and parliamentary liaison for the Canadian Federation of Agriculture, and Mr. Dan Paszkowski, vice-president of economic affairs for the Mining Association of Canada.

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I propose we begin with Mr. Atkinson. I see your report is quite lengthy. Are you planning to read it?

Mr. Jeff Atkinson (Communications Coordinator and Parliamentary Liaison, Canadian Federation of Agriculture): That's my presentation. I'm planning to read it through quickly. I'm a quick reader.

The Chair: Well, we have simultaneous translation, so you can't read too fast. We'll let you go and see how long it takes.

Mr. Jeff Atkinson: First of all, I'd like to apologize for the French not being prepared for my written submission. It's due to be in around 4 p.m. I'll put the French into the documents and deliver them to committee members' offices tomorrow, as soon as they're ready.

The year 2000 computer bug is an issue that CFA has been following since the early half of this year. Over the summer we worked with the Canadian Farm Business Management Council to produce Y2K information materials targeted to individual farmers and farm managers. We produced a booklet entitled “ Time to Act: the Year 2000 Computer Bug and Agriculture”. I've distributed copies in both English and French to the members of the committee.

We also created a web site where people can download a copy of the booklet and access information more specific to their own farming operations. The web site also includes industry contacts so people can find out the information they need as they work through their own Y2K projects.

This booklet became available last month in very limited quantities and was the first of its kind on the planet. It has since attracted the attention of the American Farm Bureau as well as the Australian Farmers' Union. That's right, it's the first of its kind anywhere in the world that speaks directly to the people responsible for managing not only Canada's farms, but the world's farms. I'm not here to blow CFA's horn, saying we were the first ones to get something like this out, but that fact should indicate where Canada's primary agricultural producers sit in terms of Y2K preparedness: they're just getting started.

Canadian farmers form the foundation of the agriculture and agri-food industry, as it's officially called. In 1997 the industry created one out of every seven jobs in the country. It contributed $80 billion to the national economy and was responsible for 30% of Canada's balance of trade. Farming, like most of the other primary industries, also represents one of the pillars that supports life in rural Canada. With respect to those numbers, primary producers represent approximately 25% of the total employment within the agriculture and agri-food industry and roughly the same percentage of the contribution to the national economy in terms of dollars.

The trickle-down approach the year 2000 commission and the Government of Canada have taken to address the year 2000 issue, starting with government and the sectors critical to the operation of a national modern economy and moving into industry first at the top and then through various professional associations and industry groups, is working. Within the agriculture and agri-food industry, government agencies such as the Canadian Wheat Board have been leading the way and working through those parts of the industries they touch as they approach full year 2000 preparedness.

The processing industries, according to our experience at CFA, are also well on their way to being ready for 2000. The same can be said of the national marketing agencies, such as the Chicken Farmers of Canada, which has had a Y2K plan in effect since October 1997.

The government's approach to industry awareness and preparedness has tended toward a system where larger enterprises and industries that are highly interrelated are more likely to be aware of the year 2000 computer bug, as well as more likely to have formal plans in place to deal with it. This is evident from both of Statistics Canada's reports on the preparedness of Canadian business, the most recent of which was released in early October.

While the Statistics Canada surveys of Canadian business, both the original conducted in October 1997 and the follow-up conducted in May of this year, were not designed to capture any representative information about farming operations, they demonstrated a trend toward a higher degree of unpreparedness—no formal plan in place to be prepared before the date turnover—among small primary industries, and that's where farms would land.

With respect to the Statistics Canada survey, I've included a note in the presentation on the criteria Stats Canada used to produce its sample population. Companies listed in the business register operating with five or more employees would capture at best 30% of the country's farming operations, mostly in the horticultural sector or the larger feed lots. Industries such as dairy would have been excluded almost entirely from the sample, and dairy is an industry that is at risk of experiencing Y2K problems.

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To our knowledge there is no scientific data available on the level of Y2K awareness or preparedness among the country's agricultural producers. If the information exists, it's industry specific—the individual dairies or operations are polling their suppliers—ad hoc or anecdotal. Our experience has been that while awareness of Y2K issues is high among Canadian farmers and farm managers, it is only now being translated into any formal or informal action.

What's needed to increase awareness of the need for action among Canadian farmers? This is a question we asked ourselves last spring when we were planning our information project. We asked ourselves “What do farmers and farm managers need to know”? At that time there was absolutely no information anywhere about the year 2000 computer problem that put it into a farming context. The whole issue of embedded chips, while the subject of much activity at the mid and upper levels of the agriculture and agri-food industry, was a mystery to most farmers. Desktop computers and the software they use were easy to get across, but milking machines, feeding systems, and environmental controls for temperature, humidity, and air quality came as a complete surprise to most, at first blush.

This is actually similar to the other great gap that exists today among consumers and home owners—the so-called general population. They know there's a problem. They've in all likelihood seen the industry/business-oriented messages that are out there—the great iceberg floating across their TV screens—but they've yet to put the problem within the context of their daily lives. Will the microwave oven work? Will the phone work? What about my CO₂ protector? Will the van start? The list goes on.

While it's safe to say farmers operating within any of Canada's supply-managed commodities of poultry, eggs, and milk have a higher chance of being prepared for the date change on January 1, 2000, this should not be taken for granted. While the year 2000 compliance of egg hatcheries is very much an issue of ensuring a supply of young birds to poultry producers, it very much rests on the ability of the individual farmer and farm manager to ensure their operation is ready. That's the only way Canada's farms, all 276,000 of them, will be in full production in 2000. Chicken and dairy producers have a highly interrelated industry behind them, pushing them toward being prepared, but this is not the case for commodities such as hogs, greenhouse flowers or aquaculture.

The government needs to shift away from its general industry/business-focused Y2K efforts and toward more targeted information campaigns. This is certainly true for farmers, who seem to have fallen through the cracks of the current strategy simply because of the nature of the agriculture industry itself.

I want to make a quick reference to something I've entitled “the rural factor”. It should be painfully obvious to everyone that agriculture happens in rural Canada, but one of the unfortunate realities of living and operating a business in rural and remote areas is that if—and I stress the “if”, noting that representatives from these industries will be making presentations later today—there are power failures, the pumps at the local gas station fail or there are disruptions in telephone services, they will last longer than similar disruptions in populated areas. The same rules should be applied to any need for replacement equipment. It will take longer to get there, and it will probably cost more to ship as well as import any expertise needed to perform the repair.

The need for contingency planning is higher in rural areas due to the realities of distance and population concentration. This is one feature CFA has been careful to stress in its awareness efforts, because even the most compliant of embedded chips needs a power source to function properly.

The concentration of year 2000 expertise in urban and industrial areas as opposed to rural communities is also of concern to CFA. Like most professional services, rural Canada and farmers have very limited access to the kind of outside expertise both Task Force Year 2000 and the Conference Board of Canada have advised business leaders to seek out in order to perform an assessment of their firms' or farms' vulnerability to the Y2K bug and in the development of priorities and strategies for managing the path to year 2000 preparedness.

What do farmers need to help them be prepared for 2000? First, farmers and farm managers need more farm-specific information about the impact Y2K can have on their operations and the steps they can take to eliminate as much of the risk associated with that impact as possible. Our project is the beginning of that. Again, distribution is limited, and we're relying on our member organizations to get the message out.

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Second, farmers and farm managers need greater access to the expertise required to fully assess the risks they face on their own operations and to develop Y2K action plans to become prepared for the date rollover.

Third, farmers, farm managers, and their families, many of whom live on the farms they own and operate, need to know that disruptions of essential services in rural and remote areas are being given due consideration by both government and the industries responsible for their delivery. The knowledge of higher risk, if it exists, is key to contingency planning.

Finally, farmers and farm managers need more financial options available to them than the 100% capital cost allowance for the replacement of non-compliant equipment. Contingency preparation measures, such as the purchase of safe generators or backup heating systems, should also be eligible for the 100% write-off, as should all or part of the professional fees required to hire outside expertise for the purposes of risk assessment and equipment repair, replacement, and testing.

In conclusion, Canadian farmers, like the rest of the industry, can and must prepare for the problems associated with the year 2000 computer bug. Awareness is the first step, and the industry is actively involved in that effort.

However, with barely more than a year to go before January 1, 2000, any assistance in ensuring that the foundation of our agriculture and agri-food industry—our food industry—is prepared for a productive season the following year would be welcomed.

Thank you.

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

We're now going to turn to Mr. Dan Paszkowski before we go to questions. Again, try to shorten it up a bit. I'd appreciate it. But we'll let you do it at your speed.

Mr. Dan Paszkowski (Vice-President, Economic Affairs, Mining Association of Canada): Sure. I'll go very quickly.

I'd like to start off, Madam Chair, by apologizing for the first line in my submission, which starts off with “Mr. Chairman”. I wrote this on a plane while coming back from Saskatoon.

The Chair: Actually, according to the rules of procedure, I am a chairman. So go right ahead.

Mr. Dan Paszkowski: Anyway, thank you very much for inviting me here to provide an overview of the Canadian mining industry's year 2000 state of preparedness.

Our association represents the Canadian mining industry. It's comprised of companies engaged in mineral exploration, mining, smelting, and refining. Our member companies account for the majority of Canada's output of metals and major industrial materials. We basically represent the largest multinational mining companies in Canada.

With roughly 400 days remaining until the turn of the century, your review of Canada's sectoral state of preparedness is very timely. I saw an interesting snippet from one of our members just this morning. I'll read it to you:

The company is making every effort to ensure that whatever the headaches its staff wake up to on January 1, 2000, they won't be related to information systems.

I think this is reflective of what our industry is doing these days.

The Canadian mining industry has worked, and continues to work, toward the implementation of programs aimed at managing year 2000 issues. Where deficiencies have been found, both internal and external resources have been allocated to address the problem. Failure to take the necessary steps to prepare for the new millennium risks not only the economic health of our companies and their shareholders, but the health and safety of mining employees, the environment, operational facilities, and business relationships.

My presentation today will focus on three areas: an overview of Canada's mining industry, MAC's role in addressing the year 2000 problem, and mining industry preparedness.

I wanted to provide a bit of an overview of our industry just to identify the connectedness of the mining industry to other sectors of the Canadian economy. We're located in every region and sector of the Canadian economy. If we just look around this room, you'll quickly realize how important the minerals and metals industry is in our everyday lives. From an economic perspective, mining and mineral processing contribute $26.2 billion, or 3.8%, of our nation's GDP. We're one of the largest exporters of minerals and metals. Some 80% of our production goes to the export market. We represent 15% of domestic exports and 26% of the 1997 trade surplus. We employ roughly 368,000 people.

Interestingly enough, minerals and metals transport represents 56% of annual rail freight revenue and 61% of port volumes. So from a competitiveness perspective, the mineral industry is key to the competitiveness of the agricultural sector, forest sector, or any sector that sells its goods to the export market. Our industry generates roughly $650 million in direct demand for goods and services for every $1 billion in output, with further demand generated by additional multiplier effects.

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To put that in perspective, I recently did a survey of some of our members. One member represents roughly $900 million in purchases of Canadian equipment and supplies. The other two I surveyed were $250 million and $500 million. So if you take three companies, you're looking at $1.65 billion in Canadian purchases of equipment and supplies. From a connectedness perspective, I think that puts some perspective on the importance of the Y2K problem to the mining industry, and more so to its suppliers and the services from which it purchases.

These are just a few examples of the economic importance of our industry. But once again, I think they're very reflective of the Y2K problem.

From an association perspective, for the past 24 months, we've played an active role in informing our members about the importance of year 2000 preparedness by emphasizing the seriousness of the issue, the extent of financial and legal ramifications, and the need for devoted senior management attention to address the problem.

In addition, the Canadian mining industry was also encouraged by John Willson, the president and CEO of Placer Dome, to address the risks of the year 2000 problem. Mr. Willson was appointed by the Minister of Industry to sit on the year 2000 task force. He played a fundamental role as a champion for the mining industry on the year 2000 task force. In effect, he was very pivotal in promoting and encouraging senior management in all companies across Canada to advance their Y2K preparations on a timely basis. I think he played a major role in terms of the state of preparedness of the mining industry.

Our role as an association has primarily been one of facilitation. In this regard, our association has initiated the following actions.

We've prepared Y2K articles for mining publications. We've shared information through our weekly newsletter almost on a weekly basis to keep it at the top of the minds of our board of directors. We've discussed the year 2000 problem at quarterly board meetings. We've invited guest speakers, such as the president and CEO of Petro-Canada, to speak about the year 2000 problem and its state of preparedness at our annual general meeting. We've established a year 2000 icon on our web site to facilitate information-sharing and best practices.

As well, we've issued letters to major suppliers, such as the Canadian Electricity Association and Canadian association of mining equipment suppliers, to facilitate the sharing of year 2000 preparedness plans. As well, we've conducted a year 2000 survey of our MAC members with regard to their Y2K preparedness.

The mining industry has identified the Y2K problem as a business risk. As consumers of some of the most sophisticated high-tech equipment in the world, such as computers, satellite GPS, robotics, remote control systems, etc., our exposure is significant yet varied. While it's fairly straightforward to identify payroll or inventory processes, it's much more difficult to address the thousands of items that have the potential to fail.

While many of our newer mines face a lower level of risk, older operations are a challenge since they utilize a wide range of different systems of different ages, requiring more resources to achieve final compliance.

A great number of our members have commented on the embedded chips. In fact, when I do go into a number of different operations, it's an eye-opening experience to identify the different levels of embedded chips that operate one piece of machinery.

The potential failure of mining systems on January 1, 2000, means more than the disruption of production and a negative impact on revenue. Among the most serious implications of the year 2000 challenge is the potential threat to the health and safety of workers. For example, consider the brakes on the hoisting system that transports the miners underground and brings them back up to the surface, the gas-monitoring equipment and its potential for failure, and the process-control failures that could result in damage to the environment. These three examples identify the potential for negative consequences, potential litigation, and contravening federal statutes and regulations.

In fact, we recently received information from Environment Canada that informed Canadians that failure to become year 2000 compliant will not be an acceptable defence for being in contravention. That would apply to the Canadian Environmental Protection Act, the Fisheries Act, etc.

This is a serious issue requiring serious attention. Members of MAC have stepped up to that challenge with many companies in the second year of their Y2K programs and have made significant progress to date.

In preparation for today's presentation, MAC conducted a survey to assess the state of readiness of our membership. The conclusions that follow were based on a representative sample that included various-sized companies operating in most regions of Canada. What we learned was that 100% of those surveyed indicated a Y2K project team in place, 100% have developed a written Y2K plan, 100% have indicated that their Y2K program reports to a vice-president or higher, and 100% provide Y2K reports to the board of directors on a quarterly basis.

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At the end of the third quarter of 1998, an average of 90% of organizations had completed their inventory stage, with an average projected completion date of December 1998. By inventory I mean the stage where you ensure that all your electronic equipment used within your firm will be reviewed and be Y2000 ready.

At the end of the third quarter of 1998, an average 63% of organizations had completed the implementation stage. That would be the replacement of systems and equipment identified as unready but essential, with an average completion date of March 1999.

At the end of the third quarter of 1998, an average of 42% of organizations had completed their remediation testing phase to ensure Y2000 readiness, with an average projected completion date once again of March 1999.

I have included some additional survey information, consisting of about five or six additional points, if there's time for me to raise those. Additional information I've found was that 85% of the respondents have a plan for Y2K staffing and training, 57% of the respondents have started planning special operating procedures, while 30% have a plan and they're testing their plans. The remaining 13% had not yet started that phase of testing.

Eighty-six percent of responding organizations have a plan for Y2K readiness of suppliers and customers, while the remaining 14% have started planning; 43% of responding organizations have a contingency plan to deal with unforeseen Y2K problems that arise, while 57% will complete their contingency plans in early 1999.

Once again, 43% have a contingency plan to deal with failures of critical business or operating systems. The remaining 57% are currently planning for completion in early 1999. Forty-three percent have a contingency plan to deal with failure of key suppliers. The remaining 57% are preparing such a plan, and it will be completed in early 1999.

In conclusion, the average anticipated Y2K ready date for the representative sample was March-April 1999. Overall, we believe this survey provides a reasonable representation of MAC member preparedness.

Our ability to influence the behaviour of external organizations is very limited. Despite our advanced state of preparedness, several mining companies remain concerned with external dependencies—electricity, telecommunications, transport logistics, and financial institutions being four key major suppliers to the industry. Will they be prepared? How will they impact our operations? These are legitimate questions with no absolute answers. Consequently, this remains an issue, which many are currently addressing in the development of their contingency plans. At the end of the day the year 2000 cannot be postponed, and our industry realizes that.

This brings me to the end of my presentation, and I'd be happy to answer any questions.

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

I want to thank you both for very thorough, excellent presentations. We haven't heard from the natural resources or agricultural sectors to date, and we're very pleased to see that things are starting to happen in the agricultural sector and that things are at the stage they're at in the mining sector.

I'll now turn it over to Mr. Dubé for questions.

[Translation]

Mr. Antoine Dubé: Your presentations were very interesting. Both of you work in the area of natural resources, albeit in quite different sectors.

First of all, I would like to congratulate the representatives of the Canadian Federation of Agriculture on their publication. I have read it, and I found it to be very practical. As a farmer's son, I was able to appreciate it particularly. People don't always realize just how computerized farming has become these days.

The representatives from the Mining Association of Canada gave us a very good overview of their status. They conducted a survey to gather data, and I was surprised to see just how far their quantitative analysis went.

Since both of you work in areas of provincial jurisdiction, although agriculture is also a federal area of jurisdiction, could you describe the relations that members of your respective associations have with the provincial governments? Do your provincial departments seem to be concerned about the year 2000 bug? If they seem to be concerned, what have they done to help you? If not, what problems have you encountered?

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[English]

Mr. Jeff Atkinson: A number of the provincial departments of agriculture recently made year 2000 information available on-line. I'm not aware of any provincial general information campaigns or advertising campaigns in agricultural newspapers, for example, or radio ads that deal specifically with the farming community. At the provincial level our members have received the information from us, and they are incorporating that into any information they're providing to their members.

It's at the same point across the country. When it comes to preparedness, agriculture just seems to be lagging a little bit behind. The Department of Agriculture and Agri-Food is preparing an agriculture-specific awareness campaign in the near future, and we will be helping them deliver that across the country in such a way that it reaches more farmers. That's the point we're at. With regard to the agricultural sector, the government hasn't been as active as it has been with the key financial and business sectors. We weren't identified as one of the first pillars in the strategy. But we're moving, and we'll just have to move a little quicker.

Mr. Dan Paszkowski: We represent members from the federal perspective. There are provincial mining associations in each of the provinces, so I couldn't answer as to what the provincial departments of natural resources, etc., might be doing to address the Y2K problem with our members in the provinces in which they are located.

One of the biggest information gaps is with regard to the utilities in each of the provinces and what state of preparedness they are at. That has a big impact on our ability to operate on January 1, 2000. We have received information from the national association, which basically was a survey similar to the one I provided. That gives some level of comfort, but what our members are looking for is information from each of the provincial utilities as to their state of preparedness and whether or not they will be prepared. Telecommunications is extremely important as well. Communications is important in the mining industry, but the interconnectedness of telecommunications to run all the computer networks, etc., that is backward linked to the utilities is also crucial.

So in those two circumstances there could be a role for the provinces, but there is a lack of information in general regarding the most significant areas. Obviously, we have as well thousands of suppliers from the small, medium- and large-sized businesses, but when it comes down to the big issues, there is a fundamental lack of information, which our members are currently craving.

[Translation]

The Chair: Mr. Dubé.

Mr. Antoine Dubé: Early in the year, we in Quebec and eastern Ontario went through the ice storm. Pretty much everyone was caught short, and the worse problem was the power outages. I remember all the efforts everyone was making to get generators. Such problems can happen at any time, including the turn of the millennium. Have you made plans for getting emergency equipment?

[English]

Mr. Jeff Atkinson: What I addressed in the presentation is that, as Dan mentioned, the information with regard to utilities isn't available. Hopefully, you'll find out more about that later on this afternoon. I know that some of our members' members who have been actively involved in preparing Y2K projects have received their letters from electricity utilities and gas utilities, and “we cannot guarantee” is usually how the paragraph starts, which isn't very comforting for them.

• 1350

Again, that was why we included the recommendation, because agriculture exists in those rural areas. Most people can remember the images from the ice storm, seeing the generators and seeing that equipment. Hopefully their generators are being tested to make sure they function properly, as well.

That's part of the plan. In a rural area, contingency is important and ensuring that the backup systems exist in case the power goes out. As I've mentioned, if the power goes in the middle of Glengarry County, chances are it's not going to come back on as quickly as it would if it went out in the middle of Orleans. That's just one of the realities.

So generators and contingency equipment are necessary to back up heating systems in the event that you lose your power or your heating system fails as a result of loss of gas pressure along the line. This is something that's completely out of people's control, but if you lose your heating system in a large hog operation, you're out of business within hours.

[Translation]

Mr. Antoine Dubé: I wouldn't mind telling you about one of my own experiences. At one point, we didn't have any electricity, and everyone at home had gone off for a wedding. I was stuck milking 40 cows by hand twice a day. It took me the whole day. I mention that just to stress just how important it is to have electricity.

I'm sure that Mr. Bellemare has some other good questions.

[English]

The Chair: Mr. Bellemare.

Mr. Eugène Bellemare: Congratulations on this book on agriculture. This is well done, and I intend to put it on my web site.

I've published a booklet on Y2K, which I will share with you later.

Are you perchance from the Orleans area?

Mr. Jeff Atkinson: No, I'm not.

Mr. Eugène Bellemare: You mentioned Orleans; that is why I ask.

Mr. Jeff Atkinson: I know you represent the area.

Mr. Eugène Bellemare: On your comments regarding hydro, they seem to be telling us, don't worry, be happy, and they always preface that by saying “but we cannot guarantee anything”.

They're coming here a little later this afternoon, and I understand there's going to be an all-day seminar of all the integrated public utility groups on December 16.

Madam Chairman, that's one meeting I'd like to attend, and I think maybe some of us should join in.

The Chair: I'm not sure if we can, Mr. Bellemare, but we'll find out.

Mr. Eugène Bellemare: I'll ask them this afternoon when they come in. I will have the opportunity from the chair.

You mention on page 3 that the project teams are in place: 100% have developed written Y2K plans; 100% this and that. You don't mention what percentage of Y2K testing you've been through, though.

Mr. Dan Paszkowski: On the following page I mention the remediation testing at the third quarter of 1998, whereby 42% of organizations had completed their remediation testing phase to ensure year 2000 readiness, with an average projected completion date for testing being March 1999.

Mr. Eugène Bellemare: A compliance date when?

Mr. Dan Paszkowski: That's March 1999 to complete testing, and on average, the survey identified that March or April 1999 would be the date by which the majority would be year 2000 compliant. That is an average. I have some members being compliant before that, some members who have completed their testing already, but I'm providing you with an average from the survey I conducted, which I think is pretty representative of our membership.

Mr. Eugène Bellemare: What is your greatest concern in the last quarter of 1999?

Mr. Dan Paszkowski: I think it would be the contingency planning. As I mentioned earlier, we are dependent to a large extent on our suppliers, suppliers being the persons who deliver the nuts and bolts, or suppliers being the utilities, and we have to prepare contingency plans to be able to address that particular problem.

Unlike the automobile industry, we don't have any requirements for any on-time deliveries of particular nuts and bolts; however, we do have a demand for electricity, for natural gas, for propane, to be delivered on time.

• 1355

As was mentioned earlier by the member, the ice storm provided a fairly significant threat and eye opener to a number of mining companies in Quebec. They have developed contingency plans with additional generation capacity to address part of that concern: are we going to face a brownout, or are we going to face an extended brownout? All those issues are of significant concern, because in a smelting operation, if you shut down your source of energy, you could potentially freeze the whole operation, which could result in significant down time and significant costs to bring up.

So I should think our main concern would be the contingency planning. Again, in relationship to the preparedness, that is the last thing you have to deal with and it is the area where there is some information lacking. So it's an area of the greatest concern to us.

Mr. Eugène Bellemare: In public health and safety, where are your concerns regarding your own field of operation?

Mr. Dan Paszkowski: I'd say probably the biggest concern in health and safety would be the monitoring of equipment. For example, under provincial or federal regulations you are only allowed to emit a certain particular amount of gas to ensure human safety. If you're operating in a closed environment and you have a computerized monitoring system to ensure that only so many parts per million of a particular gas could be emitted, and there is the potential for more, a big concern would be that the embedded chips in those monitoring systems are working. If they don't work, there's a risk that, number one, as we were discussing a bit earlier, you could have a reading that everything appears to be okay; or the controller could turn around and the monitor could show that the PPMs have gone above the acceptable level, but the alarm didn't go off. There's a significant risk to health and safety there in terms of the hoisting system, if the brakes go because the embedded chip didn't work or the computer didn't work to identify that. There's a significant risk if there are people in there.

Mr. Eugène Bellemare: Do you feel you can have contingency plans in place on time to address all of those issues—and I underline, all of those issues?

Mr. Dan Paszkowski: Yes, we believe we can address those issues. I don't think anybody could be 100% sure. However, you do test the particular monitor once, you test it twice, you test it three times to ensure that it will be in compliance.

Our hopes are that we will be successful. Our board of directors is ultimately liable. Significant litigation could take place. We have to be comfortable not only with our product from its operation at the plant level, but that our suppliers are providing us with a product that is also year 2000 compliant.

Again, given the number of suppliers we have to deal with and given the number of questionnaires that are floating around there—not the questionnaires to our members, but the letters we have to send out— You can go right down to the hotel to make sure that if one of our employees is in transit from Australia to Canada he's going to have some place to stay. It gets down to that basic level.

Even in terms of doing this survey, the amount of people power that's required just to respond to the amount of questionnaires that are going out there is phenomenal. There is no single source of information you can go to in order to ensure that a product is going to be year 2000 compliant, and I believe that's causing a drag on the system.

The Chair: Thank you.

Mr. Bellemare, your last question, please.

Mr. Eugène Bellemare: Mr. Dubé, the Bloc representative on this committee, underlined to us that both your areas of expertise, mining and agriculture, were provincial domains to a great extent, and he gave us a couple of exceptions. I would like to know if at the provincial level there is an organization or a committee like this that has been calling upon you to give an update as to where you're at and what are your concerns. Would you mind telling me if all the provinces are doing that, or if none is doing it, or—and I will go on for Mr. Dubé—if Quebec is doing it?

• 1400

Mr. Jeff Atkinson: I'm not aware of any provincial projects like that. What I'm aware of is that most of the departments of agriculture have established information resources for people so that they can get the information they need—contact information for equipment suppliers, information about how Y2K will impact on a certain industry. It provides the means of doing an assessment, but there's no body that's examining where the industry is and how it's progressing and pushing it along. That doesn't exist.

The Chair: Mr. Paszkowski.

Mr. Dan Paszkowski: I haven't personally heard of any provincial department that is doing something similar to this or sharing information with the mining industry. This is the only government forum that I have heard of.

The Chair: Thank you.

We're going to have to suspend for Question Period, but I just wanted to alert you to something.

As we talk about contingency plans in particular in the agricultural sector, we want to have them in place and we want you to have them in place, but we also don't want people to use them unless they need to. We've been told, for example, by a couple of people who have been here from the energy sector, the electrical sector, hydro in particular—and I'm sure it will come up again this afternoon—that if people all of a sudden don't use their power, there becomes extra power in the system and they end up with a power surge that they have to get rid of or disperse, which causes more problems for different hydro companies that are out there.

So although we want contingency plans in place, as you talk to your members— Particularly in the agricultural sector, where they do have a lot of different pieces of equipment that are ongoing—and I would think in the mining sector you are running 24 hours on electricity—you don't want somebody to switch off the electricity to a generator on December 31 in preparation for 2000, because that will cause major problems in the electrical system, in the hydro system.

I just raise that so you are aware of it. I don't know if you've been in discussions with your local hydro operators, but maybe you could reply, Mr. Paszkowski.

Mr. Dan Paszkowski: In quick reply, the cost attached to shutting down your systems is phenomenal. We will continue to operate through midnight, January 1, 2000. At the stroke of midnight, I don't believe we're going to be having anybody in the cage going underground. I think they are probably going to want to do some additional testing at that point in time, but I don't believe anybody will shut down. We will have the contingency plans in place and the additional generators in place in case something negative happens in terms of utilities. But I completely agree with what you just said.

The Chair: Thank you.

Mr. Atkinson.

Mr. Jeff Atkinson: We'll be letting them know that disruptions in hydroelectricity or natural gas can happen over a period of time, so that the contingency measures are to be there just in case it happens at the beginning of February or it kicks into place on January 4 instead. I can't envisage a lot of farmers being outside on January 1 at two in the morning putting more gas into that generator and pumping gas into their barn rather than— If the electricity is on, they are probably going to leave it on. But there is a risk that people will just switch it off or turn off all the power and reboot everything in the hopes that will avoid a problem and create a surge, and we'll incorporate that into our information to them: just keep it and use it if you need it.

The Chair: I just raise that because it was raised at the committee last week. We hadn't really thought about that fact, as we all talk about preparing for January 1, 2000, and being home with the lights off and the candles. But they said the worst thing you can do is turn all your power off, because it is going to create an additional problem in the system that they'll have to get rid of.

I know you have a major undertaking, Mr. Atkinson, in letting the farming community know. I represent an area that has a huge greenhouse operation, with twenty acres under glass. At a Canadian Bankers Association meeting where they gave out Y2K information in June, one of the operators was there and he hadn't even thought about it. Yet if that flap doesn't open or close in the right amount of time on January 1, 2000, you and I both know what's going to happen to twenty acres under glass.

Mr. Paszkowski, I hope those in the mining industry, in my area too, will all be safe. Obviously safety will be first, wherever you send your employees on January 1, 2000.

Thank you both for being here. We're going to suspend until 3:30 p.m.

• 1404

• 1541

The Vice-Chairman (Mr. Eugène Bellemare (Carleton—Gloucester, Lib.)): We now have a representative from the opposition, and so we should begin. This part of the meeting will last until 5 p.m. I'm sure it's going to be very energetic.

To the presenters, as much as possible, would you not read your text. You've provided us with the texts. Perhaps you could make a presentation that would be between three and five minutes, and make it succinct and to the point.

We are very much aware of Y2K; we don't need to hear your resumé. Sometimes people come in for the first time, and they go through all of this. It's very time-consuming, and there's no meat, as it were, on which to create discussion or questions if you don't go to the point.

We have, from the Atomic Energy Control Board, Mr. Asmis—when you make your presentation, I will let you introduce your colleagues—from Ontario Hydro, Mr. Bill Imms; from the Canadian Electricity Association, Francis Bradley; and from Nova Scotia Power Inc., Ann Petley-Jones.

[Translation]

I would also like to welcome Mr. Jacques Bédard from Hydro- Québec and his colleague Pierre Chênevert.

[English]

From Ottawa Hydro, we have Peter Liu; and from Natural Resources Canada, Dan Whelan.

We'll start with Mr. Asmis.

Mr. G.J. Kurt Asmis (Director, Safety Evaluation Division (Engineering), Directorate of Reactor Regulation, Atomic Energy Control Board): Thank you, Mr. Chairman and members of the committee.

I'm representing the Atomic Energy Control Board. With me are Mr. Namir Anani, the head of the instrumentation control electrical group; and Mr. Tom Schaubel and Mr. Byron House, control engineers in the ICE Group.

We have prepared a brief for the committee, which I think has been distributed to you. This is an update of a submission we made to you on April 21, 1998, but there are three points I would like to underline in this brief.

First, the Atomic Energy Control Board regulates nuclear power electrical generating stations. For the year 2000 issues, we are requiring from our licensees assurances that these issues cannot affect the safe operation of the plants. The primary focus of our activities, however, is on nuclear safety. We're certainly interested in the reliable production of the plants and the reliable distribution of electric power, but only insofar as to minimize the challenges to the safe operation of the nuclear plants themselves. Reliable electrical power production and distribution to the consumers against any year 2000 threats is not our primary focus.

Second, for the year 2000 issues, we have a strategy in place that requires the most important systems to be examined, corrected and tested first. The time line attached to that strategy has three dates. The first date required that the systems most important to safety, what we call the special safety systems, be ready by October 1, 1998. The special safety systems are the ones that shut the reactor down, provide continued cooling to the fuel, and provide containment and continued monitoring and control.

By the end of the year, the next level of systems—these are key process systems that could challenge a safety system, such as the station computers and the fuelling machine computers—will be ready.

• 1545

Then by June 30 of next year, we require that all other systems—computerized processes, instruments, engineering tools, databases—that are important for the continued operation of the plants be ready.

The third point I would like to mention is that nuclear power reactor licensees, Ontario Hydro, Hydro-Québec and New Brunswick Power, are treating the Y2K issues seriously. They have successfully met the AECB first deadline of October 1, 1998, and have demonstrated that Canadian nuclear power reactors can carry out the essential safety functions for Y2K-related issues. The next date within the AECB time line is December 31, 1998, and all indications are that this date will also be met.

I'll stop here. My colleagues and I are prepared to answer your questions.

The Vice-Chairman (Mr. Eugène Bellemare): We'll now hear from Ontario Hydro, Mr. Bill Imms.

Mr. W.K. (Bill) Imms (Director, External Liaison, Year 2000 Corporate Program Management Office, Ontario Hydro): Thank you.

Ontario Hydro has an extensive year 2000 program, which at its peak requires the efforts of 620 people, which is 2.5% of the entire workforce of Ontario Hydro. The budget is $125 million. The program has six major stages to it, and this afternoon I will apprise you of our progress on each of the stages.

The first stage is asset inventory assessment and re-verification. This is developing a reliable and complete inventory of every date-sensitive digital asset that might theoretically be at risk from Y2K. This process is 100% complete. We have inventoried every asset in our systems that has a potential date liability, and we have verified that.

The second stage is the remediation, testing and certification of these assets. This is a process of determining if there is a year 2000 problem and what has to be done to fix the assets so that it can reliably operate through the century changeover.

Our program has now completed the certification process of 84% of the critical systems that are in our inventory. Our inventory contains thousands of items, and approximately 1,800 of them are classified as critical. The definition for “critical” is that their failure to perform could compromise our ability to safely generate, transmit and distribute electricity in accordance with all governance. Of those systems, 84% have been certified through the end of November, and our target is to reach 100% certification by the end of December.

The third stage in our methodology is business process risk assessment and contingency planning. This is to identify all resources, both internal and external, that are needed for the successful continuity of our business operations. This information is used to develop contingency plans or enhance existing plans, and to develop scenarios for both “more probable” and “credible worst-case” contingencies. This process is well under way. The business units of Ontario Hydro have been conducting workshops to identify all potential threats, and they have a target of producing a contingency plan document by the end of 1998.

The next stage in our process is integration and interoperability testing, and our process requires thorough testing up to the highest level of integration feasible by the engineering science involved. We are also cooperating with the Northeastern Power Coordinating Council, which is one of ten councils within the North American Electric Reliability Council, to conduct integrated tests.

Although we are some months ahead of some of the American NERC member utilities in our remediation efforts, we are conducting these interoperability tests according to the NERC schedule.

Our program also requires that our generation and transmission stations be time-shifted wherever possible, coincident with the best practice in industry. We have watched with interest as some other utilities have already time-shifted some of their generating stations. Recently we have conducted complete time-shift testing of our Niagara Falls hydroelectric station and our Lakeview coal station, and they have in effect already run in the 21st century. Our three nuclear stations have been challenged to develop plans to do similar tests in the near future. The scale of our operations makes this a very demanding exercise and we fully support the effort.

Coincident with integration and interoperability testing and contingency planning, we are conducting emergency preparedness planning. We are reviewing all our disaster response and emergency preparedness procedures. Working jointly with other participants such as Emergency Measures Ontario, we will be upgrading all existing procedures to identify any additional threats that are unique to Y2K and that must be planned for. Although we do not anticipate any widespread power problems, our process is to be prudent and always plan for the worst.

• 1550

The final stage in our program is to adopt a precautionary posture. As the quality and reliability of the information we have concerning the Y2K event improves over the period of 1999, we will use this information to refine our operating posture to put our systems in the state of lowest possible risk for the actual changeover. This might involve various strategies, such as manning stations that are normally not manned, ensuring that people are available either on site or on call, equipping them with two-way radios, maintaining excess inventories, and any number of activities. Exactly what we will do will become clearer as our information becomes better. When we have good information regarding all of this information, we will develop the posture of lowest risk.

To reiterate, on our target for reaching operational sustainability, which is to certify 100% of our critical systems as year 2000 ready, we now stand at 84% and are pushing toward 100% by the end of this year. Our target for year 2000 readiness includes the deployment of all assets into service, and the studies of impacts on internal systems and business processes, external relationships and emergency preparedness. These are all under way, and we are all working toward an objective of being totally year 2000 ready by June 30, 1999.

Ontario Hydro has in place an effective and well-resourced program designed to root out the Y2K problem wherever it may threaten our operations.

In the report to the Department of Energy on September 17, NERC stated that the impact of Y2K on electrical systems is far less than at first feared. This confirms the findings of Ontario Hydro to date with respect to the effort we have already conducted. No one can realistically give an absolute guarantee there will be no problem, however minor, with the power supply due to the millennium bug, but at Ontario Hydro we are doing everything possible to strengthen public confidence in the reliability of their power supply. We are confident that we can demonstrate that our efforts to eradicate Y2K problems have met or exceeded best practices of industry and can withstand the strictest scrutiny of due diligence.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much.

Now we'll hear, from the Canadian Electricity Association, Francis Bradley.

Mr. Francis Bradley (Vice-President, Corporate Resources, Canadian Electricity Association): Thank you, Mr. Chair.

On behalf of the Canadian Electricity Association, thank you for giving us the opportunity to discuss with you the state of Y2K readiness of the Canadian electricity industry.

I will review some of the major points in the brief CEA submitted to give you an industry-wide perspective. We're fortunate, as well, to be joined today by representatives of some Canadian electric utility companies, who will be able to provide you with details about their individual companies' Y2K efforts.

[Translation]

Electricity is the lifeblood of modern society. Without a reliable supply of electricity, the Y2K problems in other industries become secondary, especially if all those computers and electronic devices that society depends on everyday don't have any electricity to run them.

North American society expects and fully depends on electricity service reliability that meets the highest standards in the world.

[English]

Electricity is the original and ultimate example of just-in-time manufacturing. It cannot be stockpiled in large quantities like other commodities. At the instant someone turns on a light or their PC, the additional electricity required must be immediately available from a generating station, which may be hundreds of kilometres away.

[Translation]

With the interdependencies apparent in our interconnected systems, the Canadian Electricity Association has merged its readiness assessment activities with those of the North American Electric Reliability Council (NERC) and urges other interested parties to use the results from this process rather than launch separate and duplicative assessment reviews.

[English]

The report “Preparing the Electrical Power Systems of North America for Transition to the Year 2000: A Status Report and Work Plan”, was released in September 1998. The Canadian readiness report, “Preparing Canada's Power Systems for the Transition to the Year 2000”, was released at the beginning of October 1998.

[Translation]

While the North American report reflected information provided by utilities representing three quarters of total North American generating capacity, 88% of Canada's total generating capacity responded to the survey.

• 1555

[English]

Results to date show minimal impacts on overall North American electric utility operations. The risks appear to be manageable. With good planning and preparation, electric systems should be able to provide continuous electricity service. To ensure this, however, requires thorough testing, remediation, contingency planning, and preparedness.

[Translation]

In terms of nearly all aspects of their activities, Canadian companies are ahead of North America-wide averages and are meeting or are ahead of the schedule that has been set for North America in this regard.

[English]

As companies complete their testing and remediation, the focus will turn to contingency planning. At a local level through the individual companies and nationally through the association, discussions have been launched with other providers of infrastructure service to ensure that contingency plans are developed in a coordinated fashion.

[Translation]

The next readiness review, both North American and Canadian, will be released in January 1999. We are continuing to work with NERC to ensure that the review is as complete as possible.

[English]

As soon as the results of this next review are available, we'll communicate the results to officials in government and to other stakeholders. We're committed to ensuring a better understanding of the state of readiness of the Canadian electricity industry and of the Y2K activities of Canadian utility companies.

The Vice-Chairman (Mr. Eugène Bellemare): Would you include us in your delivery?

Mr. Francis Bradley: Absolutely.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you. Our next witness will be Ms. Ann Petley-Jones, from Nova Scotia Power Inc.

Ms. Ann Petley-Jones (Chief Information Officer, Nova Scotia Power Inc.): Thank you.

[English]

Mr. Chair and members of the committee, thank you very much for this opportunity to join you this afternoon regarding Y2K issues.

I'd like to share with you our current status, some of the risk mitigation strategies we have adopted, and some conclusions we have drawn.

At the end of October 1998 we are on schedule for the completion of our first major program milestone. We will have all mission-critical systems year 2000 compliant by December 1998. The rest will be compliant in June 1999.

We completed the operational testing of all of our power plants last summer. This testing was successful, with no unforeseen or unexpected year 2000 issues arising. We expect to complete the operational testing of our transmission and distribution systems by early December 1998. Contingency plans have been developed for all critical areas of our operation.

To minimize our risk further, we have decided to begin operating our plants in the year 2000 mode now. Wherever possible, we will not wait until the millennium arrives to have our systems roll into the year 2000. In a controlled and staggered manner, we will have as many systems as possible operating in the future state. This strategy is particularly appropriate for our power generation plants. It allows us to take the risk of a rollover to the millennium in small, manageable portions on a timetable of our choosing.

To date, we have six of our generating units in four plants operating in the millennium in production. Our intention is to proceed with this process until all of our plants are operating in this future state by mid-1999. We will not return them to current time until some point in 2003.

In effect, two of our plants are already past the millennium with no problems whatsoever. These units are not just year 2000 compliant; they are fully operating in the mode. This is a strategy that could be effective throughout the industry to spread the risk between now and the year 2000.

We are taking the challenges of our year 2000 readiness very seriously. We have committed both the resources and the expertise necessary to address this issue, as we would any threat that may impede our ability to provide safe, reliable power to our customers.

Year 2000 readiness is a top priority for Nova Scotia Power. The scope of our program includes all of the necessary steps to remediate and certify all components of technology that could be impacted by a year 2000 problem, to identify and address all business risks that may arise as a result of the year 2000, including everything from the acquisition of our fuel supplies through to the impacts on our investment portfolios.

• 1600

We have prepared and are testing contingency plans throughout our company, and we'll also participate in full testing in conjunction with the NPCC. We are ensuring the maximum level of year 2000 preparedness, and we are working with both public and private sector organizations. As just one example, our president was a member of the federal government year 2000 industry task force.

Nova Scotia Power's year 2000 readiness activities began in 1996, with an assessment that was completed in the summer of 1996 that identified the scope of that problem. Later that same year, we established a company-wide year 2000 program to address the scope just previously discussed. The approach to this program included getting commitment to this effort across the company, utilizing our very best resources; contracting with external year 2000 experts in the area of utility expertise from Canada, the U.S., and the U.K.; and working with the top information technology companies and with the big six accounting firms.

We have been employing the best practices for year 2000 projects. We have been building a foundation on a strong risk management focus. Our year 2000 program is fully in place, it is fully staffed, and it is fully funded for the life of the program.

I'd happily take questions.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much, Madam. We will now move on to Mr. Jacques Bédard from Hydro-Québec.

Mr. Jacques Bédard (Chief, Year 2000 Project, Hydro-Québec): Thank you for this opportunity to present our situation to you. With me today is Mr. Pierre Chênevert, who is the head of the informatics unit of Hydro-Québec's TransÉnergie division.

Obviously, Hydro-Québec takes the year 2000 bug problem very seriously and has implemented a program that will allow the utility to make a smooth transition to the year 2000 without any repercussions for its customers, or only very minor problems at the most.

One mustn't lose sight of the fact that 97% of Hydro-Québec's electricity comes from hydroelectric plants, which is not necessarily the case in other Canadian provinces.

The total budget for our year 2000 project is $61 million. We are planning to assign 300 people to this project, 200 of whom were assigned in 1998, to carry out the conversion and certification of all products deemed critical to Hydro-Québec's operations so that the utility can fulfil its mandate, which is to deliver electricity to its customers.

During our inventory, we assessed 4,000 products or systems and identified the conversions and certifications that we had to do for products and systems that are critical to Hydro-Québec's mandate. By the end of October 1998, we had completed 77% of our conversion and certification program, and some products are already being used within our network.

Hydro-Québec is also preparing a risk analysis and an emergency plan to minimize risks at the turn of the millennium and to ensure that if there were any problems at that time, the utility would have all the tools it could need to minimize the impact of such problems on the population. To this end, Hydro-Québec is working with its suppliers and partners to certify products, carry out trials and share information. We are also working closely with the industry, the NERC, and the Canadian Electricity Association.

By the end of June 1999, Hydro-Québec should have completely finished its year 2000 certification program; all its products and facilities should be compliant and ready for December 31, 1999.

Of course, like most companies, Hydro-Québec follows best practices and complies with the recommendations of the SOS 2000 program. Senior management is involved in the project on an ongoing, constant basis.

• 1605

Our internal audit units carry out two audits a year to ensure that Hydro-Québec is implementing its program as scheduled in compliance with the aims set out. So far we have met our timetable. Our aim is to fully complete conversions and certifications by the end of 1998. There will only be a few components left to deal with in 1999, that is, those requiring us to bring the power stations' activities to a stop for appropriate changes and corrective measures. Only 80 of the 80,000 systems and components will have to wait until the period between January and June of 1999 for action and all that is required to be done is implementation. These components will already have been certified by the end of 1998.

Within the context of this program Hydro-Québec is working in co-operation with the Quebec government to ensure appropriate public security measures will be in place for the year 2000 to avoid any problems and, should problems occur, to be ready to deal with them.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Bédard. We'll now hear from Mr. Peter Liu from Ottawa Hydro.

[English]

Mr. Peter Liu (Director, Management Information Systems, Ottawa Hydro): Thank you, Mr. Chair.

I have five points to make.

Point number one, our Y2K project is still targeted for July 1999 and is currently 72% complete. The internal business systems are 90% complete, and we have completed an internal hardware certification program.

Point number two, an audit of our telephone system confirmed that we are Y2K compliant; however, we are reliant on Bell Canada to provide public telephone network services to our building.

Point number three, we have conducted a transmission/distribution interface investigation with Ontario Hydro, and no problems were detected.

Point number four, we are currently working with the Canadian Electricity Association to establish basic guidelines that all utilities can use to convey Y2K information to the public in a consistent manner.

And the last point, Ottawa Hydro is establishing a contingency plan to assist our community in the event of the failure of outside processes, such as telephone services and generated power. In addition to this, Ottawa Hydro has offered and will offer the resources of our organization, such as staff, vehicles, radio systems, and so on, to local and federal agencies to assist their contingency planning efforts in any way we can.

Thank you.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Liu. We will now hear from the representative of Natural Resources Canada, Mr. Dan Whelan.

Mr. Dan Whelan (Director General, Energy Resources Branch, Energy Sector, Department of Natural Resources): Thank you, Mr. Chairman.

[English]

I have provided a statement, but I will just pick out a few highlights that address how our department and our minister are dealing with the problems of Y2K external to the federal government. In doing that, I'll refer to a recommendation that this committee came up with in its report, Computers and the Year 2000 Problem—Where is Canada Now, which advised the federal and provincial energy ministers to work together on the Y2K problem.

In fact, our minister has raised Y2K issues with his provincial colleagues twice now. At a meeting of the Council of Energy Ministers in Calgary this June, he first raised the problem with his colleagues. That was followed up at the Halifax meeting of the CEM in October, where all ministers discussed Y2K and endorsed an approach that is being followed by the energy industry, which you're hearing about from the associations today.

I should note that in commenting on our department's activities, I'll be covering both the electricity and oil and gas sectors, but hopefully I can save time by not having to address the next session of this committee that immediately follows.

At that October meeting as well, ministers heard a progress report from the Canadian Electricity Association, along the lines of what you've just heard this afternoon. Ministers are going to get an update on the petroleum industry's efforts at their next meeting.

• 1610

Natural Resources Canada is also working with industry associations to provide information to the newly formed national planning group in terms of its efforts for risk assessment and contingency planning activities for the country as a whole.

Canada is fortunate in having a number of strong national energy associations. I must say, it's a much less complicated situation than in the United States, and therefore those associations are in a good position to assess the efforts of their members to be ready to meet the Y2K problem.

In terms of providing the information from those associations and their member companies to the government, Natural Resources Canada leads an energy working group where we try to pull together the efforts of all federal departments to facilitate the flow of Y2K information to key federal government departments, and, probably even more importantly, to try to minimize the burden on industry of receiving multiple requests for reports from government departments. That certainly occurs, but we have found a great deal of cooperation on the part of all government departments to try to reduce that as much as possible and to have a simple, consistent flow of information coming in.

Our efforts extend beyond Canada as well. We have had a regular series of discussions with our colleagues in the United States. Early on we realized the importance of that because of the integrated nature of the electricity grid in North America and the importance of oil and gas trade between our two countries. We first raised this issue with our American colleagues in June at a regular bilateral energy meeting and flagged for them the importance of Canada to their energy supply situation. I'm not sure if they thought about it at the time, but they quickly realized how important that is. We've now been meeting with the U.S. Department of Energy, which is coordinating the U.S. government's efforts on electricity, and the Federal Energy Regulatory Commission, the FERC, which is looking at oil and gas. In fact, some of my colleagues and I from the department were just down in Washington a couple of weeks ago on those discussions, and they will be continuing.

I'll stop there with that quick overview, Mr. Chairman.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much.

[Translation]

We'll now start our question period.

Mr. Dubé.

Mr. Antoine Dubé: I'll be speaking on behalf of all the opposition parties. Your presentations are extremely important. Although we've heard from many witnesses, the areas in which you are active are the ones that give rise to the greatest concern.

This morning we heard representatives from the Mining Association of Canada and the Canadian Federation of Agriculture. Whatever the sector, any problem involving electricity does have immediate consequences for everyone, including hospitals. We must not underestimate the seriousness of the year 2000 bug, particularly if computer systems shut down. Of course, short breakdowns may not cause a great deal of suffering, but if they last any length of time, they will cause a lot of problems. As many of you noted, I realize that you are not in a position to give us any absolute guarantee.

I'd like you to tell us a bit more about contingency plans. Have the priorities been clearly identified and, if so, what are they? The ice storm crisis is still not too far behind us. People in rural areas tell us that because they are farther away from the big centres, they are often the last to have their service restored. Sometimes they end up losing animals and have to try to make do with generators. I think it would be a good thing to remember the kind of difficulties that they faced in this situation when priorities are decided. What emergency measures would be taken in those circumstances?

If we have any time left, I'd also like to discuss your relations with your respective provincial governments. The representatives of Hydro-Québec did raise this matter but there were few details given by the others. Do the provincial governments require any follow-up from you as far as your plans are concerned?

• 1615

I realize that my questions are rather broad-ranging.

The Vice-Chairman (Mr. Eugène Bellemare): Who would like to answer?

Mr. Asmis.

[English]

Mr. Kurt Asmis: From a nuclear safety point of view, I'd like to assure you that what you might call a contingency plan, we call design basis events. To give you an example in terms of nuclear safety, I won't say we're ahead of it, but certainly nuclear safety has always done contingency planning and in fact has turned contingency plans into design bases.

I'll give you an example: earthquakes. All the five nuclear sites have requirements to protect the nuclear safety against earthquakes, and that design basis event assumes a disruption to all the external services, and the plants will be able to island themselves and be able to continue their safety functions.

So the effects are the same, I think, as what you were saying about the ice storm. The cause is different; the cause now is Y2K. So these are design bases. These really severe events that these plants are designed for will have to be checked against a cause and see what changes there will be.

For example, under earthquakes, now it's assumed that most plants will have enough fuel supply for something like three to eight days. If Y2K is the cause and not earthquakes, you're going to have to look at it differently. How long can a Y2K event disrupt fuel deliveries, and so on? So you may say the stations now will require not three days or eight days supply of fuel, but maybe two weeks. That certainly will be looked at and in place before June 30, 1999.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Asmis. Ms. Jones.

Ms. Ann Petley-Jones: Thank you, Mr. Chairman.

[English]

I would like to speak in response to your question. This is exactly why we are moving our production facilities into Y2K production mode. We began the testing in our power plants by taking each unit off line, moving the clocks forward into a year 2000 mode, and running that unit for several hours or several days. We began that process in the summer of 1997. We completed the testing of all our generating production facilities, in year 2000 mode, by the summer of this year.

My role at Nova Scotia Power is the following: I'm the chief information officer, and as a result, year 2000 reports to me.

Once we had completed our full tests of each of our turbines and each of our units in full test year 2000 mode, by moving those clocks forward and operating them, then I and two other colleagues on the executive team took the decision that we would, on our own time scale and on an orderly basis, one unit at a time, move those units into full year 2000 production. We have approximately half of our generating capacity now operating—not in a test, but operating—in full year 2000 mode.

Our transmission and distribution is in the process of having the final tests over the next number of weeks, and then in the early part of 1999 we will move our transmission and distribution systems into full year 2000 production mode.

In addition to that, we have developed full contingency plans, everything from additional fuel supplies to additional transmission and distribution inventory, through an analysis of our pension and investment portfolios that began in March of this year to determine if the investments that we have are ones in which we have confidence.

In addition to that, we are working with other members in the Canadian Electricity Association, with NERC in the U.S., with NPCC, with the provincial government. We have held information sessions with the Nova Scotia Association of Hospital Organizations, with the Union of Nova Scotia Municipalities. We are working in concert with local, provincial, and federal officials, because despite the fact that it is our intention to have—and we will have—by the first quarter of next year all of our generating, transmission, and distribution systems in full year 2000 production mode, and that we are expecting the best because we've already tested, we are preparing for the worst because we take our responsibilities to our customers very seriously, and we are a vital part of the infrastructure in Nova Scotia.

• 1620

Thank you very much.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Ms. Petley-Jones.

Mr. Imms.

[English]

Mr. Bill Imms: Thank you.

Mr. Chairman and honourable members, I'm accompanied today by the chair of our contingency planning working group, Mr. Stuart Brindley, who is eminently qualified to answer this question, and with your permission, I would ask him to approach the table at this time.

Mr. Stuart J. Brindley (Manager, Y2K Operations, Central Market Operations, Ontario Hydro): Thank you.

It's an excellent question. Let me first of all draw a distinction between how we define contingency planning versus emergency preparedness. We figure that one of the best ways of making sure contingencies are in place and that we avoid even having to invoke emergency preparedness is by having those good solid contingency plans ready in advance.

Bill Imms, when he did his overview of where we're at on the Ontario Hydro scene with regard to Y2K renovation, made it clear that our target—and we're on target—is to have those systems remediated, complete, and in service by the middle of next year. That in fact is the starting point for making sure that the lights just don't go out.

Now having said that, we are also embarking on some significant exercises and measures to revitalize our emergency preparedness response initiative. We learned some lessons here in Ontario from the ice storm in January, and we fully intend to shore those up and make sure there are processes in place province-wide so that if in fact we do get into that situation, we don't leave people in the cold anywhere nearly like what happened earlier this year.

I am actively involved as well. In fact, one of the ways we're addressing the Y2K issue within Ontario is to make sure we not only cooperate and participate in the North American-wide initiative through NERC but also in fact are leading it. I'm on the Y2K steering group with NERC, so that we can make sure our reliance on the interconnected grid across North America in fact sustains and stays viable right through the year 2000.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Thank you. We now turn the floor over to Mr. Ian Murray.

[English]

Mr. Ian Murray: Thanks, Mr. Chairman.

Thanks to all of you for being here this afternoon.

While I was reading through all your briefs and listening to your presentations, I was reminded of a current political slogan, j'ai confiance, and it seems everybody is quite confident of their ability to deal with this problem. But it's only a relatively short time ago that most utilities or businesses started looking at what they were facing.

I had the impression while listening to you that you went through a fairly methodical checking of all of your systems and found that everything is fixable. I was wondering if any of you had an experience like that of, say, a doctor operating on somebody who he thinks has a minor problem, but when he opens him up, he finds out that he's full of cancer, and he has to sew him back up and walk away. It seems as if you didn't come across any insurmountable problems.

Are there no really tough problems? Is this something where you take a rather methodical approach and work your way through and feel you can conquer any potential problems? Are you telling us that essentially you're confident we will manage to live through this without any major disruptions, or do you still find that there are some areas where you might have cause for concern? Would you comment on that, please.

Mr. Bill Imms: Thank you, Mr. Murray.

Speaking on behalf of the electricity industry, we exchange information on our programs very rapidly and in a very timely manner through many different forums. Generally speaking, the summary that NERC came up with in its Department of Energy report on September 17 is that the nature of the technologies with which the electricity supply has been constructed render it less vulnerable to Y2K failure than perhaps other industries. It's a generational asset that has been developed over the last 70, 80, or 90 years.

• 1625

There's a lot of technology that's purely analogue or mechanical. Most of our hydroelectric plants don't really have any date-sensitive computer technology. Our fossil plants have a lower amount of date-sensitive technology than nuclear plants do, for example. But there's still a relatively small amount of technology.

In looking at our transmission and distribution assets, we find systems that can be compromised by Y2K problems, but we find a very low incidence of problems that can actually disrupt the electron flow. Most of the failures in the assets we have tested have been of such a variety that they would cause us business problems. We have time-of-use metering systems, and this gives us a business problem in terms of not being able to bill for the energy used. We have power quality monitoring systems, which observe the electron flow across the power grid, and they report on that. Some of those systems are compromised by Y2K problems, but, again, they do not disrupt the electron flow.

As an industry we are moving beyond the state of cautious optimism to a state closer to just regular optimism, simply because neither we nor our fellow utilities are really finding great numbers. The numbers that are typically bandied about are that 1% to 2% of all process control systems that are examined have some sort of problem with them, and that covers the gamut from one that will actually disrupt service to one that is merely cosmetic or trivial.

This exercise is absolutely important. Due diligence is the key driving parameter for us. Everybody relies on electricity. We are fully cognizant of that, and as a result, we are examining every single system and every dependency we have, both internal and external, looking for that vulnerability. We haven't yet seen any evidence that there is any really significant vulnerability, so we are somewhat more than cautiously optimistic at this point.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Bradley.

Mr. Francis Bradley: Thank you, Mr. Chair.

I thought your analogy of the doctor and the patient was a very good one. I would look at it a little bit differently. Prior to September, anybody's view of the state of preparedness of the electricity industry was based on opinion and not on fact. The doctor didn't yet have the test results back. In September we had the publication of the first comprehensive report on the state of readiness of the electricity business in North America, and in October we had the release of the Canadian report. Prior to that, anybody's assessment of the overall state of readiness of the electrical utilities on this continent was not based on any comprehensive study or any comprehensive piece of research. That's one of the things that has changed over the recent past. We are now, as Mr. Imms put it, guardedly optimistic, but it is as a result of the study that has been done.

The other point is that while it has been only recently that the issue of Y2K and electric utilities has come to the forefront of public consciousness and that as a result people are beginning to pay attention to it, a number of the companies are in fact in the third year of the Y2K program, as some of the people at this table will attest to. So this isn't something we've only begun addressing because the media has come across it over the last couple of months and that we only now are feeling confident about. We're feeling confident about it because we now have a North American picture and because people have been expending a great deal of effort on Y2K over the past three years. We've just been doing it quietly and in the trenches.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Asmis.

Mr. Kurt Asmis: In the nuclear safety area, we have this date of October 1, which is very specific on the systems that had to be looked at, and they have checked out okay. That was an extensive check, not just opinions, of software that has been tested almost to the byte level. So that's good news.

But the search continues. We're looking for illusive things in order to get nuclear safety to the level we demand from our licensees. The search really has to be exhaustive. In terms of communications, we are calling for a worldwide, or at least OECD-wide, conference in February, which will actually be held in Ottawa, to exchange ideas and lessons learned while there's still time to do it. So I think that's a major Canadian step to support the OECD in this effort. It's to make sure we've learned lessons from, say, Sweden or Belgium, and so on.

• 1630

Mr. Ian Murray: I was struck by something in Mr. Liu's paper from Ottawa Hydro. It mentions that:

We have conducted an audit of all systems and processes used by the utility for the delivery of electrical power to our customers and have determined the operation and control of our distribution system is not dependent upon any microprocessor or software functions.

In other words, is this essentially what Mr. Imms was saying, such that Ottawa Hydro doesn't— ? Maybe you have analog equipment or older equipment, so you're not dependent on any, as you say, microprocessor or software functions.

Before you answer, I noticed that your Y2K project is currently 72% complete. So if you don't have any of these problems with your distribution system or your operations control, then why are you at 72% in your Y2K project? Why aren't you at 100% if you've determined you don't have any problems in terms of distributing electricity?

Mr. Peter Liu: Thank you, Mr. Murray.

This is perhaps the time I should introduce my colleague, Mr. Ed Muldoon. He's our director of engineering operations. I'll let him try to answer this question for me.

Mr. Ed Muldoon (Director, Engineering Operations, Ottawa Hydro): Thank you very much.

I'm the poles, wires, and transformer guy at Ottawa Hydro. I'll go out on a limb, but not really, figuratively. If you live in the city of Ottawa, the instant we turn into the new millennium, your lights will be on, assuming the supply is from us.

Inside the distribution system, the devices are not microprocessor controlled or embedded; they're hard wires, hard transformers, circuit breakers, cables, and that kind of stuff. The control system that oversees what's going on does not exert any sort of a discretionary decision-making process. It's there. It watches what happens. But it doesn't do anything without some sort of human intervention.

On the supply side, as for the integrity of the Ontario Hydro grid, I have absolutely no concern about that whatsoever. I'm very, very confident this will be working. As such, the distribution system is essentially bulletproof. The cables that come into this building go through a variety of duct systems, underground systems, and so on. They are susceptible to dig-ins and that kind of things, but they're not susceptible to a microprocessor deciding that it's not going to work any more.

The number that Peter refers to is the internal process of looking at the business processes that are in fact computer-driven. So that's where this number comes from.

On the electrical side, on the hard electrical poles, wires, and transformer side, we are 100%, totally, completely, unequivocally confident.

Mr. Ian Murray: In a nutshell, people may not receive their bills on time or at all, but they'll still get power.

Mr. Ed Muldoon: You got it.

Mr. Ian Murray: Mr. Chairman, I don't know if you'd like me to continue.

The Vice-Chairman (Mr. Eugène Bellemare): You can go after. Your times is up.

[Translation]

Mr. Dubé.

Mr. Antoine Dubé: We could question you for hours and hours. I'm convinced that with the help of the people providing you with technical assistance, you are far better informed than we are with respect to everything relating to hardware.

I'm still concerned with what took place last year during the ice storm. I'm not necessarily expecting you to do more, but if we imagine the other kinds of incidents that might take place— I know that in Quebec municipalities do have emergency plans. But there haven't been too many incidents yet. There may be a plan on paper, but when something actually takes place, you need people, shelter, etc. And you are large companies.

In addition to any internal problems, it seems to me that the governments, both federal and provincial— Right now, we, the MPs, are asking you to account for yourselves. I see you are almost all up to date, that you are well coordinated and you give me the impression of being reliable. Personally, I am confident.

• 1635

The thing I'm most worried about is a possible panic reaction. What can we do to reassure people and convince them that things will work? I'd like to switch roles here and ask you what you think the federal government should do in dealing with this problem.

You've been asked lots of questions but I'd like to hear your comments on this particular point. What would you like the federal government to do?

[English]

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Bradley.

Mr. Francis Bradley: Thank you, Mr. Chairman.

I think there were a couple of excellent points that the member brought forward. The whole question of the need to communicate in order to avoid panic is one that's becoming a significant concern for my member companies as they have moved through the process of doing their internal assessments and inventories, remediating their problems, and moving into contingency planning. As you indicated in the schedule, the work is going to be completed likely by June of next year, in most cases.

What will be left—this is precisely the point you raised—is the whole question of communicating with a public in panic. I would submit that it's greater than the problem that faces a single company, or indeed, an individual industry. There's the whole question of making sure the public understands that the actual nature of the risk of Y2K is something of concern to all Canadians. Therefore, it's something that should be addressed directly by the federal government and industries collectively, and not on an individual basis.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Whelan.

Mr. Dan Whelan: Thank you, Mr. Chairman.

I'd like to say a few comments as a member, an official, of the federal government. I agree with what Mr. Bradley just said about Monsieur Dubé's point being a really important one. In many ways, I think what you're doing goes well beyond the electricity sector per se.

Not only do major concerns relate to the need to communicate to assuage populations from panicking, but there's also the impact of one sector upon another. No sector is isolated. I think everyone agrees that the electricity sector is critical, but even the electricity sector depends on other sectors for its functioning.

I don't know, Mr. Chairman, but I would assume that you have already had an opportunity to talk with the newly formed national planning group, NPG, set up under the Department of National Defence under Mr. Paul Thibault. We recently had a presentation by Mr. Thibault in our department. He came over to meet with us; in fact, he's enlisted our services, as I mentioned. My intervention was that we, as representing the energy sector, will work with the NPG in its work on risk assessment and contingency plans. While I don't want to speak for that group, my understanding of Mr. Thibault's presentation was that this group has been formed for precisely the concerns that Monsieur Dubé has raised.

What about public communication? What may be necessary for the federal government to communicate at a given point? What about the interactions at a very high level between different sectors and between large corporations, as Mr. Dubé suggested?

So that's the group that has been put in place—it was formally announced just recently—to deal with those questions that go beyond any individual sector.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

Mr. Lowther is next.

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

I'd like to follow up on a question from my colleague Mr. Dubé. It's interesting that the last comments made by Mr. Whelan were that the NPG is tasked with the job of communicating to avoid panic. Yet when they were here, one of the things they told us was that they were not in a position whereby they were going to communicate anything. They were waiting for all the different players to feed it to them. They didn't think they could really say too much of anything. So it doesn't give me a whole bunch of comfort to know that we're waiting for the NPG.

But here's what does give me some comfort. I think I heard in response to Mr. Murray's questions that one of the individuals here—I apologize that I'm not sure which one said it—said we would definitely have power, but we might not have a bill. If that's the extent of the problem, then I'm feeling a lot better.

• 1640

But the power situation here—I'm concerned that we're waiting for the national planning group. I would encourage you individuals to not wait for some message from on high if you can assure the people you serve. I think particularly the Canadian Electricity Association has some obligation here for their own industry to give people some sort of comfort. I have people in my own riding who are out buying generators, and it's not all due to the power brownouts in Alberta; a lot of it is due to a fear of the year 2000 situation. They're wondering, is this a legitimate thing to do?

Yet I'm hearing here today that, gee, we can guarantee you're going to have power. There's a disconnect here in the communication. What I'm really driving at here—my point—is, is there a reluctance to say publicly in a brochure that you're going to have power on the morning of the year 2000 and put it out to your people, “Relax, you're going to have it”, for fear of some legal liabilities you may incur? If those legal liabilities could be dealt with in a way similar to what the Americans have done, if you're aware of that recent bit of legislation—I'm not saying exactly the same, but something along those lines—would that move you to expedite some sort of a more positive message to people? All the negative voices are out there singing loud and clear, but it seems we have very few positive voices. I'm wondering if it's the legal liability roadblock that's stopping the positive voices.

The Vice-Chairman (Mr. Eugène Bellemare): Madam Jones.

Ms. Ann Petley-Jones: That's a very good question and a very good suggestion. As an investor-owned utility, obviously we're very aware of the legal aspects. However, we're also very cognizant of our responsibilities to our customers. As a result, we've had a very strong communications plan that's been ongoing for more than a year, where we have been communicating with our customers, with our suppliers. We have been working directly with our largest customers. We've been speaking at the request of groups, but speaking with organizations such as the Nova Scotia Association of Hospital Organizations. We've been sending out brochures in the mail.

Mr. Eric Lowther: May I interrupt, Ms. Jones?

Ms. Ann Petley-Jones: Yes, of course you may.

Mr. Eric Lowther: I know everybody's doing this, but a lot of times in the messages they're saying, “We're aware of the problem, it's our number one priority, we're working on it like crazy”, but nowhere in the message is there anything to assure the power customer that it's going to be there. The message is that it's a big problem. There's no “Relax, we have it under control” messages coming out. Are you communicating that in all this material you're sending out?

Ms. Ann Petley-Jones: We are, but without guarantees, and for two reasons. First of all, there is the legal aspect you raised, and second, notwithstanding the fact that many of our systems are already in production, we are talking about the future and no one can give a guarantee regarding the future. So we are sharing our status, we are sharing our test methodologies, we are sharing our test results on an as is, where is basis with any of our colleagues. We are sharing that with our major customers with whom we need to be very integrated, because it is an immediate demand and supply situation.

Mr. Eric Lowther: Do you feel constrained by legal liabilities?

Ms. Ann Petley-Jones: Yes. We do not say “guarantee”; we do not say “all” or “ever”. We say whatever we can up to that state. We would be very concerned about using absolute declarative statements such as that.

Mr. Eric Lowther: Is that any different from any other time, though?

Ms. Ann Petley-Jones: Who can guarantee anything in the future really? We are making very strong statements, but you are raising a very good point. I think that is an area in which the federal government could assist these efforts, because you're absolutely right, there are thousands of very good people in many government and private organizations, and no one feels they can say the “always” and the “ever” and the “guarantee” words. So it would be very helpful.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Bradley.

• 1645

Mr. Francis Bradley: Mr. Chairman, just a point about the legislation you referred to that passed in the United States. I believe you were referring to the good Samaritan law that was signed last month. That piece of legislation is intended to facilitate the exchange of information among organizations and companies to address Y2K issues. It does not and will not result in companies being able to give guarantees to the public about service. It only addresses the liability with respect to exchanging information among entities.

Mr. Eric Lowther: True. My question, though, was something like that would allow you—and I'm not saying a guarantee—to be more bold with the positive statements, something that says it's not misleading, with the best of intentions; it can be demonstrated that it was substantiated by your testing or whatever, and based on that you made a reasonable assertion that could be placed in the public— There was no misleading intent, or that kind of thing, and therefore you would not be held liable if that could be demonstrated—that kind of thing. I think that is needed today. We need that, because the positive voices aren't there.

Even for those who share information across disciplines, I still think we need this kind of legislation, but I would be interested in hearing from you. I'm hearing from some of the people who are in your association that before they can even share information, there's a great litany of non-disclosure and legalese before they can come to the table, for goodness' sake. All of this is holding up progress on solving the real issue. If we could get that stuff out of the way, it would move a lot faster, wouldn't it?

The Vice-Chairman (Mr. Eugène Bellemare): The word from the Canadian Bar Association to us is that we tend to operate on due diligence law. We also learned that this would be a provincial domain. There is a vacuum at the moment, and vacuums do permit us, on occasion, to jump in and do things. But the good Samaritan law is addressed to the consumer level, and we would have to ask the provinces to institute their laws. This is notwithstanding the fact that all companies dealing with United States companies are liable for lawsuits according to contracts, if they read their contracts properly.

At this point, I'm going to take advantage of my position as chair. I think my colleagues would be surprised, if not disappointed, if I did not ask questions. Some of you will have to set yourselves as timekeepers.

For the hydro groups, do I have it right that you generate electricity, you have transmission lines, and then supply? At the local level they distribute.

Mr. Bill Imms: Yes, Mr. Chair. Ontario Hydro generates 85% of the power that's used in the province. We also operate the grid that transmits all our own power, plus the power that is generated directly by municipal utilities or customers or independent power producers. We distribute that power along generally high-tension lines. We either hand it off to a municipal utility such as Toronto Hydro, which has its own distribution equipment to deliver the power to the end consumer, or we deliver it directly to the consumer in the more remote areas of the province. There are 275 municipal utilities in Ontario and about 90 of them actually have their own distribution equipment. The rest of them are mostly administrative organizations that just get power from us.

The Vice-Chairman (Mr. Eugène Bellemare): There's a question in the communities as to your intent in dividing up Ontario Hydro into three parts and doing that by next July. That is about six months prior to the Y2K bang. Is there a real concern in that?

Mr. Bill Imms: Mr. Bellemare, it's not our intent. It was the Ontario government's Bill 35 that divided Ontario Hydro into three parts. They followed the pattern that was set by deregulation of the electricity sector in other jurisdictions as well in spinning off a generating company, a transmission and distribution company, and an independent market operator. They do have a target. Actually, the bill was passed October 30, and the target we are working towards is to have the new companies in operation by April 1, 1999.

• 1650

In terms of Y2K, this has given us a tremendous challenge in conducting all of the necessary Y2K examinations and putting all the assets back in service at the same time the company is undergoing the largest de-merger, if you will, in Canadian corporate history. It has been a tremendous issue for us to deal with.

The Vice-Chairman (Mr. Eugène Bellemare): There would be concerns among major purchasers, smelting companies, for example, communications companies, that if there is a problem, litigation-wise, who do you sue? Ontario Hydro—that's the former Ontario Hydro—or the new companies?

Mr. Bill Imms: Under the legislation, Mr. Bellemare, the liabilities of Ontario Hydro accrue to all successor corporations. So they all have the liabilities that Ontario Hydro currently holds.

The Vice-Chairman (Mr. Eugène Bellemare): So whoever wants to buy any parts of your system should read the motto “buyer beware”.

Mr. Bill Imms: Caveat emptor.

The Vice-Chairman (Mr. Eugène Bellemare): Yes.

I understand all the groups involved with electricity are going to have a forum, an energy group seminar or meeting, and I believe it's on December 16. Am I right?

Mr. Dan Whelan: Mr. Chairman, that's one of the sessions we've organized for debriefing federal government officials as well as federal and provincial CIOs. We held a session in October, where the Canadian Electricity Association and Ontario Hydro and others made presentations. If we're referring to the same meeting, we're organizing one in December where the oil and gas industry can come in and give a briefing to officials.

The Vice-Chairman (Mr. Eugène Bellemare): Will the electricity people be there too?

Mr. Dan Whelan: No, they've come in and given us their first presentation. It was timed to represent just after the joint NERC-CEA report, which has been referred to, was produced. This will be the first presentation by the oil and gas industry, and then we anticipate subsequent follow-ups by both electricity and oil and gas through 1999.

The Vice-Chairman (Mr. Eugène Bellemare): Would it be beneficial to any member here to be an observer at that meeting?

Mr. Dan Whelan: You would certainly be welcome.

The Vice-Chairman (Mr. Eugène Bellemare): Send us an invitation, please.

What about the other group? Do you have anything going on like that with electricity?

Mr. Francis Bradley: Yes, Mr. Chairman, we are going to be participating in the second part of the federal-provincial chief information officers' meeting. We have received an invitation and we'll be making a presentation to them in December as well. At that presentation, we will be presenting preliminary results from our second North American and Canadian assessment of the state of readiness. While the report isn't going to be published until January, we will have two preliminary results that we will present to the federal and provincial chief information officers at that time.

The Vice-Chairman (Mr. Eugène Bellemare): To Ontario Hydro and Hydro-Québec, what percentage of your overall Y2K project is oriented toward the generating or transmission aspect as opposed to the business orientation? Ontario,

[Translation]

and then the province of Quebec.

[English]

Mr. Bill Imms: The majority of our system is towards the operational systems and not the business information systems. Because of the merger—

The Vice-Chairman (Mr. Eugène Bellemare): Majority would mean what kind of percentage? Sixty percent?

Mr. Bill Imms: No, more than that; more like 75%. Because of the simultaneous de-merger of Ontario Hydro, we were acquiring a lot of new business information systems and we were monitoring the progress of implementing those systems. Those systems have all now been implemented. Our billing and inventory control and financial systems are all in place now for the new companies. So what remains is all the operational systems.

The Vice-Chairman (Mr. Eugène Bellemare): Hydro-Québec.

[Translation]

Mr. Jacques Bédard: At Hydro-Québec, the percentage of our systems related to the hydroelectric function, namely production, transport, distribution and telecommunications, regulating the transport network is approximately 60%.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): There is the possibility or potential for brownouts. We've seen brownouts.

[Translation]

I think that there were some "brownouts" in Vermont and New York in the U.S. about 20 years ago because of a power breakdown in one of the stations in the far north. Is there any chance that the year 2000 bug could provoke something similar?

• 1655

Mr. Jacques Bédard: I'd like to ask Mr. Pierre Chênevert to answer your question, Mr. Chairman.

Mr. Pierre Chênevert (Head, TransÉnergie Informatics Unit, Hydro-Québec): The situation has greatly changed since the general blackouts. You are referring to the 1980s when there were blackouts in Quebec and even before then, causing problems for the American companies connected to us.

Over the past several years, Quebec's involvement in NPCC, the organization that is part of NERC that coordinates the entire North American network, resulted in Hydro-Québec complying with all the requirements of this organization. That means that the Hydro-Québec network along with the northeastern U.S. utility companies can continue to operate without problems should there be some type of failure in the Hydro-Québec network. There are control apparatus in place at the present time to prevent a recurrence of this type of incidents.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): A switch in procedures.

May I have the indulgence of my committee colleagues to continue for a couple more questions, or are my six minutes up?

Mr. Eric Lowther: I just wanted you to ask one question, Mr. Chairman, that you missed and that could be combined with what you asked before. I was wondering if the emergency preparedness group that we saw here was also part of that December 15 meeting. Are they included there?

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Whelan.

Mr. Dan Whelan: This meeting involves Treasury Board and Natural Resources inviting companies to come in and debrief CIOs. The national planning group is receiving its information. They have asked us to take over the activities they had been doing within DND originally in terms of amassing information from the electricity and oil and gas industries, and provide that directly to them. Certainly people from the NPG, now that they are in place, may well participate in the meeting on the 15th, but there will also be a more formal system of providing information to that group, and that's something we are going to be meeting with the associations over the next month to work out how to facilitate that information.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Murray.

Mr. Ian Murray: Thanks. I have a question about maybe a reverse problem, and it may not be a problem at all, or it may not be a problem because January 1 is a statutory holiday.

I think Mr. Bradley mentioned that electricity production is the ultimate just-in-time business. Let's suppose that all of your hydro-generating facilities were up and running, transmission was fine, but you had a number of companies— For example, say the big automotive manufacturers shut down because of some problem in their plants, and all of a sudden in, say, the Toronto area you had maybe GM and Ford shut down completely because of some unforeseen problem, and you've got this just-in-time production of electricity. Would this cause you serious problems that might impact on the rest of the population, or would you be able to handle that quite easily?

Mr. Bill Imms: Our system is designed to withstand the loss of up to 10% of the normal load, and we have system studies under way to hypothesize what the effect would be if there was a loss that was greater than that in the scenario you are describing, Mr. Murray.

The contingency working group that Mr. Brindley heads up is looking at that sort of scenario. One of the things he has told me is that this could be a self-fulfilling prophesy. If people's fears and companies' fears that there will be power problems cause them to take some sort of extraordinary measures, that in itself could create instabilities in our system and could be a threat to us. We're developing precautionary scenarios based on some sort of worst case hypotheses. So your point is well taken.

Mr. Francis Bradley: By the same token, Mr. Murray, I would point out two things. First, recognizing that there likely will not be a lot of very significant load on the system on New Year's Eve or on New Year's Day or the day after, because it will be a Friday night and we will be sitting right on top of a weekend, that lessens the likelihood of a very significant load coming off. It is part of the risk assessments the companies are doing.

The other point I would make refers to the question the chair asked earlier with respect to brownouts. That is an example of the degree to which the system and the grid are far more robust and become more robust every day.

• 1700

We were talking about some occurrences 15 to 20 years ago that resulted in significant problems, but if you look at the experience of just 10 months ago, during the ice storm, where a significant portion of Quebec and eastern Ontario were knocked out, it did not result in the collapse of the eastern grid. The eastern grid did not collapse as a result of the ice storm. We did not have devastation down to New York, as we had in 1960, for instance, when there was a problem.

So the grid is more robust today than it was 15 years ago. It's more robust today than it was a year ago as a result of actions that have been taken by Ontario Hydro, Hydro-Québec and others, but that is the nature of the electricity system. While it is very complex and there are a lot interconnections, those interconnections are strengthened and the system is made more robust every single day. And that has been occurring on a daily basis for nearly a hundred years.

Mr. Ian Murray: Okay. Thanks a lot.

The Vice-Chairman (Mr. Eugène Bellemare): On the grid system, are Ontario and Quebec part of the same grid system?

Mr. Bill Imms: Yes, we're part of the eastern interconnection of NERC.

The Vice-Chairman (Mr. Eugène Bellemare): And New Brunswick and Nova Scotia?

Ms. Ann Petley-Jones: We are part of the same system.

The Vice-Chairman (Mr. Eugène Bellemare): So from what you're saying, Mr. Bradley, in terms of the person out on the street worrying about the Y2K—and we're soon going to be attacked by Hollywood with movies that will scare the hell out everyone who is not aware of anything but all of a sudden will see crashes of all sorts on TV and on film—the case of the domino effect will come to everyone's mind. Are you assuring us that you have ways and means of counteracting this domino effect?

Mr. Bill Imms: I'd like to ask Mr. Brindley to answer that question.

Mr. Stuart Brindley: The short answer is yes. Francis just mentioned that over the past 20 years the interconnected power system has grown substantially. And the reason it has is in fact because of the kinds of things that happened 20 years ago. The system is much more solid, much more robust, than it ever has been, and the possibility of cascading failures so that all of North America is out is extremely remote.

At the same time, the nature of the transmission business and how it's operated is essentially one of planning for contingencies. And it's important that actions be taken within each interconnected control area to make sure that when a contingency does occur then the other interconnected control areas take postures to prevent the next ones from occurring. So in fact, if islanding has to happen, if parts of the grid have to be isolated to maintain the integrity of the rest of the grid, that's how it's designed and that's how it will be.

The Vice-Chairman (Mr. Eugène Bellemare): I'd ask all the witnesses, when you get to the auditing stage, who is going to do the auditing for your own systems? Is it going to be done in-house or are you going to have someone from the exterior coming in, an agency, an organization of some kind, an outside auditor?

Ontario.

Mr. Bill Imms: At Ontario Hydro, we have two external companies that are doing the quality assurance on the certification of all of our assets, and we've also engaged one of the big six consulting firms to conduct a fully independent audit of our entire program. That's under way right now, and the report is expected in February. So we're using extensively external expertise to reassure ourselves that our program can withstand any sort of due diligence concern.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): Hydro-Québec.

Mr. Jacques Bédard: In Hydro-Québec we have an internal audit service that comes under the board of directors.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): Nova Scotia.

Ms. Ann Petley-Jones: Yes. We've used over the past year and more a variety of outside organizations. We've used big six accounting firms; we've used the top technology companies; we have used embedded chip experts from the U.K., from the U.S. and from Canada; and we have shared our test methodologies, our test scenarios and our test results with a large number of electric utility organizations.

• 1705

The Vice-Chairman (Mr. Eugène Bellemare): My final point, before we pass on to the next group, is

[Translation]

a question dealing with public security measures.

[English]

The question has been touched on this afternoon just slightly; this morning it was dealt with, and on other days. I remember Alberta and another province have a military liaison from the National Defence headquarters stationed in-house, at the emergency measures group. Do you have someone from DND? If there is a breakdown and you need assistance, obviously the military will be asked to come in to help, just like in the ice storm. I'm wondering if you've looked into this.

[Translation]

We'll start with Hydro-Québec.

Mr. Jacques Bédard: A meeting has already taken place with the government of Quebec bringing together Quebec public security, Civil Protection Canada, the army, the RCMP, the provincial police, the Montreal police, the Red Cross and Hydro-Québec. There were also the information services.

There is a desire to coordinate the development of an overall emergency plan for the entire province of Quebec. The Quebec department of public security will be responsible for coordination. The plan deals with public communications along with the implementation of emergency plans to coordinate the activities of the different services likely to be required in such an event.

Big cities are a particular problem. In the night of December 31 to January 1, we will have to be particularly careful because there will be lots of people in the streets, in parties, in hotels, stadiums, theatres, in all sorts of public places downtown. We will have to work together with the municipal police and the authorities responsible for security in municipalities.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): Ontario Hydro, the same thing?

Mr. Bill Imms: We've had some initial contact with the Ontario representatives of the Department of National Defence, and we've been working with Emergency Measures Ontario. As well, we've developed a new emergency planning framework with the Ontario analogs of the organizations that my colleague from Hydro Québec has mentioned; the OPP, and the fire and ambulance services. We've had contacts with all of them and we are working together towards the implementation of a new and more dynamic emergency preparedness framework in Ontario.

The Vice-Chairman (Mr. Eugène Bellemare): Anyone else?

Mr. Francis Bradley: I would note, Mr. Chairman, that at the national level—and it was noted in the brief we presented—we are looking at coordinating at a national level, particularly with respect to emergency measures and contingency planning, and have been in discussions with a variety of government departments, National Defence, and representatives from not only electric utilities but the telecommunications industry, other energy associations, transportation, municipalities, and the financial services sector. While it's happening at a local level with the utility companies themselves, it is also happening at the national level with National Defence, other government departments, and other associations.

The Vice-Chairman (Mr. Eugène Bellemare): With this, I would bring to an end this part of the session.

I would like to thank you sincerely for your forthrightness, your frankness and your openness and patience with us in coming here and assisting us in trying to promote more than awareness but a “get up and go” situation across the country. For that, for all the communities of Canada, we would like to thank you.

We'll have a three-minute break.

• 1709

• 1717

The Vice-Chairman (Mr. Eugène Bellemare): We will resume our meeting.

Our next group is composed of the Canadian Gas Association, George Barnhart, director, and John Klenavic, federal affairs consultant; the National Energy Board, John McCarthy, business leader, operations; and the Canadian Association of Petroleum Producers, Greg Stringham, vice-president, markets and fiscal policy.

Dan Whelan, from Natural Resources Canada, will be sitting in. He sat in on the last session. He's had an opportunity to be asked questions and to answer a lot of questions. This time around he'll be a resource person for anyone who would need or require information from him.

The first person to make a presentation will be Greg Stringham.

[Translation]

Mr. Stringham, please.

[English]

By the way, we've received your report. So perhaps you'd like to summarize the highlights in a succinct and your usual interesting way, and from there, it should provoke some questions.

Mr. Greg Stringham (Vice-President, Markets and Fiscal Policy, Canadian Association of Petroleum Producers): Absolutely, my pleasure.

You have in front of you a summary of our report, because we did submit some things to you previously. What I've tried to do with this is give you an update as to what we've done since we appeared here in May and had talked to you previously. So I'll go through that very quickly, and then I'll pass it on to the others to talk.

Let me refresh in your mind that the Canadian Association of Petroleum Producers represents the upstream industry—and what I have in front of you is a little diagram to help you understand what the upstream and the downstream is.

We really explore for, develop, and produce the oil and gas in Canada. We represent about 170 companies that do that, which is about 95% of the oil and gas production. So we come here with that image today.

• 1720

One of the things I wanted to highlight for you is that we have embarked on a wellhead-to-burnertip study, particularly on the gas side. I'll focus on that one to begin with.

The diagram I have provided for you today kind of illustrates a point we tried to make last time in May. That is, when it comes to the natural gas system, one of the things that I think was not well understood the last time we presented is the number of storage facilities and redundancy in the system as you move across Canada into the different markets. That is something we wanted to emphasize here: that there is storage in the market supply area, there is storage in the market area, there is storage in the east and in the west that allows the system to be flexible.

We are in the process of testing each one of these systems as we go through our companies and working with other associations like the CGA and the Canadian Energy Pipeline Association as well to make sure that this goes all the way from the wellhead to the burnertip. We can come back and talk about that. I just wanted to make sure you understood that the infrastructure is slightly different from what you've heard on the electrical side, because there is redundancy built in different segments as you move through the process on the natural gas side. I just thought it was important to point that out as we went forward. It's not all one linked system.

In fact what I have with me, and I won't bring it up now, is if you look at just the trans-Canada pipeline system that George may refer to later, it's not just one pipe that goes across Canada. There are actually four or five in parallel that are side by side as it goes forward. So there's a redundancy built into this system.

The other thing that I think is important to point out is that we at CAPP continue to focus on trying to make sure our members are going through the phases of their Y2K analysis, which deals with the analysis, the risk assessment, the testing and correction, and then moving on to the contingency planning phase.

We forwarded to this committee a survey that we did with our members earlier this year, back in July. I wanted to highlight that for you here as well, and also point out to you that we are also focusing on the interfaces with a number of different areas.

We have found in the analysis that's come so far from our members that we are very interdependent, as you have heard, with the power industry, the telecom industry, and the transportation industry. So we have been working since May with those industries to make sure that those interdependencies are well understood, tested, and that the conversations are happening that are necessary.

For example, we have dealt also with governments. The Alberta Energy Board has come and appeared with us, the National Energy Board, Alberta Department of Energy, Saskatchewan Energy and Mines, Alberta Power, TransAlta Utilities, and the list goes on of about 20 different companies and associations we have met with since May to continue this process going forward.

The survey that I've included in your package points out another very important point that I think needs to be emphasized. That is, we represent about 170 companies, but if you look at the large and medium-sized companies, they represent about 80% of our production. So there are about 40 or 50 companies there. And when I say large and medium, those are companies with more than about 50 employees. They represent about 80% of the production that's coming on stream of oil and gas. The interesting thing there is that there is a very high compliance with the factors of the testing and the contingency planning that's going forward.

The interesting thing here was that we had about a 98% response rate to our survey. We sent out the survey and then we wanted to follow that up with phone calls and personal contact to make sure we knew we had covered off our entire membership. In looking at those, we found that a very high percentage, in fact 100% of them, have a formal action plan in place and are working on it. The lowest one that was on there was about an 80% grouping that was working on their contingency plans, and that was earlier this year. Since then it's a chronological step that they're moving through the process. They'll be moving to their contingency planning in the beginning of 1999.

The key target date for many of our oil and gas producing companies is December 31, 1998. They are working very hard to meet their year-end targets to have their testing done and to be able to report back on that to their own corporate plans. So we will be doing another survey early in spring, once they have gone through that key target date to be able to assess not only where they've come to, but where they're at on their contingency planning side of things. So I've got those results in there.

I've also put in the results of the small companies survey. When we sent this off to the committee, Madam Whelan sent back a letter saying that it was very nice of us to send this, but one of the things that jumped out to her was that only 67% of the small companies saw this as being a very important issue to them.

What I want to point out here is that these smaller companies represent only 6% of the production in Canada. The interesting thing about them is they may produce some oil and gas, but they don't necessarily operate that. They may be businesses with two or three employees who have an office, but all of the oil and gas is produced by another operator company. Several companies do get together in our business to operate one well or one battery of wells or one gas plant, and they will designate one operator. That's usually one of the larger companies, and the smaller companies are therefore more involved in the business aspects, but not necessarily in the operational day-to-day aspects that would be affected by Y2K and other things. So I point that out about the small companies as well.

• 1725

The last one I wanted to take you through before I pass this on is really what we've been doing since then and what we are doing now to try to make sure this Y2K issue is addressed. Our members are focusing now, as I mentioned, on contingency planning, and they're looking at that to ensure they know what would happen if there were nothing there. So if they have no services at all, they need to be able to plan how they're going to deal with that.

One of the key features that came out since our last meeting was that the human resources side is really key. Because many of the technical operation things have a manual override where it requires personnel to come in and actually manually operate the machinery, they can do that. But they have to make sure they have the human resources on call to be able to do that. So as part of their contingency planning they are doing that.

There were some interesting comments made, because our industry, particularly on the upstream side—and I'll let the downstream address it themselves—is very cognizant of the emergency response planning side of things. On a cold winter's day, they may have a gas plant that goes down because of temperature, or they may have a localized power outage. These things are quite frequent in our industry in the upstream, and so they deal with it on a regular basis. They have in plan their generators that can come on; they have in plan an emergency response on how to deal with that. And because they come from such a diverse supply area, if this is localized, they have already put in place what they can do for emergency response.

The question they're now looking at is, if it's more than just localized, what are the emergency responses they have, is it a full shutdown, how fast can they bring it back up, and those kinds of things.

Another interesting point that came out of our discussions with our members is that many of the embedded chip problems and issues that we're dealing with are dealt with globally, and therefore we can learn. Because this will happen earlier in other parts of the world, there will be international companies that can learn from their North Sea experiences, from Algeria, and we will be able to learn as it comes across the country. And so they're prepared for those kinds of surprises.

So these are the steps we're going through. I can take you through more of the detail of what the industry is doing and what CAPP is doing to try to ensure that once they've tested all these things, they continue on with what we call “clean management”, to ensure that something with a Y2K problem doesn't slip in after they've already gone through that testing phase.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much, Mr. Stringham.

We'll now pass on to the Canadian Gas Association. We'll have George Barnhart or Mr. Klenavic.

Mr. John Klenavic (Federal Affairs Consultant, Canadian Gas Association): Thank you, Mr. Chairman. I'm John Klenavic, with the Canadian Gas Association. George Barnhart is vice-president of information systems with SaskEnergy and chair of our year 2000 task force.

Before he updates you, I'll just mention briefly that our association takes the downstream portion of Mr. Stringham's model. We include in the association the major transmission companies in Canada, such as Trans-Canada PipeLines, West Coast Energy and the local distribution companies in each province. In Ontario that includes Enbridge Consumers Gas and Union Gas, and in Quebec, Gaz Métropolitain.

We also include in the association 125 manufacturers of equipment and appliances that either serve the industry or are used by our customers, right down to the water heaters and home furnaces. And we have other marketers and direct energy suppliers among our members who are interested in the gas association.

We formed a task force that covers all of the gas pipelines in Canada, even though they're not all our members, and all of the gas distribution utilities in Canada. As I mentioned, George Barnhart heads that task force, and I'll turn it over to him.

Mr. George Barnhart (Director, Canadian Gas Association): Mr. Chairman, we have provided the committee with our original position paper and we have summarized and highlighted in that paper the updates since that time. I'll just skip to the summary points, recognizing the time, and deal with those through questions.

I'd like to reiterate again that the membership of CGA, the pipeline and distribution companies, appreciate the seriousness and the consequences of the year 2000 issue. It's a top priority business issue, and each member is addressing the year 2000 within its own organization.

• 1730

As an industry, we continue to focus on the safe and reliable movement of natural gas, and our efforts have focused on these core business activities. All our members have a formal plan, as Mr. Stringham points out. Certainly indicated by the size of our companies— they have been very active at it for a number of years. However, one of our issues there has not been the steps in the remediation efforts but perhaps the quality and assuring ourselves, really, that the programs we're undertaking are of the utmost and highest quality.

Our task force, in conjunction with our internal audit function, some external audit functions, consultants from industry, and our own Y2K experts within our companies, developed a comprehensive assessment framework to assess the whole process of remediation of the Y2K problem and issue. It is to ensure that all aspects of planning and preparedness were addressed and to provide a mechanism for us to monitor progress as time has gone by.

Regarding timing, December 1998 remains a major milestone for our industry for completion of the efforts especially surrounding our core activities. We know from survey activity that there will be remediation and implementation efforts into the second quarter of 1999; however, many of these activities address minor and non-core activities or finalized remediation efforts that have been under way for some time.

To give an example of that, within my company, our testing last summer resulted in 18% of our electrical correcters, or electronic measurement devices—again, nothing that would prevent the flow of natural gas, but that certainly impacts us in terms of billing and our cashflows—being deemed to be non-complaint and a problem. We ordered compliant devices and are in the process of changing those. However, we recognize that those will have to be retested again in the first quarter of 1999.

While we do not have concerns, we will not respond that our work is complete until the final tests are in fact complete. We have participated in a number of surveys, and will continue to do so, with NRCan and DND to apprise them of the status of that and assess whether there have been any changes.

All companies have reported that they have expended more time and effort, as part of the due diligence process, on internal remediation than was originally planned a couple of years ago, and it's primarily due to the additional diligence in testing and not really, in our belief, to any slippage or delays of these remediation efforts.

On a positive note, as Mr. Stringham has also referred to, our finding has been that the embedded chip issue has not been as prevalent in our industry as was perhaps originally thought, and that has been borne out with test results. Notwithstanding unexpected results from our internal assessments and survey, the focus of our task force in our industry is increasingly shifting now to business continuity and contingency planning. The task force recognizes that the natural gas industry is world-class in emergency response and the types of issues that Mr. Stringham has referred to, and it has dealt with many widespread incidents in its long history. The challenge is, how do we enhance that to deal with and address the unique problems that the year 200 raises?

A business continuity and contingency planning working committee has been established, with two mandates. One is to develop a framework and again a quality assurance type of assessment for our industry to deal with business continuity and contingency planning around year 2000, and the second is to address contingency planning from a national perspective. The gas industry is somewhat unique in the fact of the supply chain and the flow from east to west.

To date, the working committee has established a national mandate and a preliminary framework document to determine the final assumptions as well as threatened business impact assessments for the year 2000. So we are well along the way in terms of our contingency planning, not only within the individual companies but across the industry. This December our committee will meet to develop an industry contingency strategy as well to update documents and review some of the assessments made to date.

• 1735

In conclusion, I'd like to thank the committee for their support of our recommendations that we made last April. The first recommendation for good Samaritan legislation, as was passed through the United States, has certainly provided us with benefits in dealing with a lot of our U.S. counterparts and suppliers and customers. But we have been advised that it is a matter for provincial jurisdiction. The concern remains and is being pursued by our membership regionally. However, the Canadian Gas Association requests the standing committee's support to encourage enactment of this provincial legislation.

Secondly, the CGA appreciates the standing committee's efforts to successfully expand the 1998 budget initiative to include incentives for small business critical to our industry and to address the embedded chip issue. That has received significant support amongst the small businesses that we deal with.

Thirdly, further to our recommendation that all levels of government work in partnership with industry to ensure community preparedness, we've noted and welcomed an increased level of activity and coordination with federal organizations such as DND and NRCan. We remain concerned, however, that improvement has been slower in some provincial and municipal jurisdictions.

Lastly, in preparing a national contingency plan, the CGA companies recognize that unprecedented contingencies may be required that cross provincial as well as national boundaries. While we're at the initial stages of our planning development as well as discussions with provincial and federal agencies, we request the standing committee's support in enabling a national prioritization of products.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much, Mr. Barnhart.

We will now go to the National Energy Board, with John McCarthy.

Mr. John McCarthy (Business Leader, Operations, National Energy Board): Thank you, Mr. Chairman. Thank you, members.

Just to give you an update of where the National Energy Board has moved since our last meeting in April, we have now done two surveys of our federally regulated pipelines. The federally regulated pipelines tend to be the major transmission pipelines connecting the provinces and are the major arteries going west to east, and also serving the Vancouver area on the west coast.

The two surveys have indicated that certainly all of those federally regulated pipelines are aware of the problem and have plans in place. We will continue to be surveying. In fact, in the way forward we see that we will go with a bit more of a standardized survey. We were a little bit ahead of the wave with respect to surveying as far as Y2K goes, and there have been other tools developed. We don't want to duplicate. We think we can fit our information needs as a regulator in with those of other groups, and we will work with NRCan and industry associations to try to harmonize that and minimize any kind of duplication in that area.

The other thing we have moved towards is that although the major pipeline companies have plans in place and they've been quite open in sharing their plans with us, we have requested that they get some sort of third-party verification or audit of those plans. We're going to be fairly flexible with respect to how that is. We understand that most of those major players—and these are major corporations—already have some of this audit and verification done, so it wouldn't be very difficult for them to comply. But again, it satisfies us that experts have looked at these plans and are comfortable with the way the companies are moving forward.

With respect to communications with other agencies, we've been active in talking with the regulatory community federally and provincially. We've had a number of discussions with our provincial counterparts, sharing information primarily, and will continue to do that. We're working again with our federal counterparts, NRCan—Natural Resources Canada—to ensure that we have good and consistent communication on the issue.

In summary, we don't see any issues at this point in time, but we continue to monitor. We're fairly comfortable with the way industry is proceeding so far.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much, Mr. McCarthy.

We'll now go to the members for questions. Madame Girard-Bujold.

[Translation]

Ms. Jocelyne Girard-Bujold (Jonquière, BQ): I have a number of questions. The first few are to Mr. Stringham. You point out that you have an action plan, and that your facilities includes storage in a variety of areas, allowing the system to be flexible. I believe that is what you just said.

• 1740

You also say that there is redundancy in the system, that about five or six pipelines run across Canada, and that you are currently carrying out studies to take corrective measures. You state that all these considerations make the system flexible.

If you were to have a Y2K-related problem, how many winter consumption days would you have in storage? How long would it take you to correct problems occurring as we move into the year 2000?

These are the two questions that came to mind as I heard your introductory statement.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): Did you get those questions?

Mr. Greg Stringham: I did get the questions, thank you.

Let me respond to the first question, the one dealing with the areas of storage. Let me deal with natural gas specifically.

On the issue of natural gas storage, there are different storage caverns and reservoirs across the country, so exactly how many days' coverage there would be will all depend on what outage there is. It's very hard to say there is exactly these many days' coverage. It depends on what the outages are.

There is storage in western Canada, there is storage across the country, and there is a lot of storage in eastern Canada. There is also storage in the northern United States that Canadians could have access to. So it all depends on where that situation is. I don't have an exact number of days I can give you. It's not like there is a tank you can just draw from; it is a connected series of pipelines and storage caverns that allow that redundancy, and that actually meet not only market needs but also safety needs.

So there isn't a specific day I can give on that. But I can certainly provide information on what the size of those storage facilities are.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Klenavic.

Mr. John Klenavic: Mr. Chairman, I might add that our association looks at this every year because of the possibility of extreme cold temperatures, and basically we reconfirm each year that we have enough gas in the system to supply a cold snap of something like 10 to 14 days in Montreal, Toronto, and Calgary simultaneously, and we would still be able to operate. I'm not sure whether it's 10 days or 14 days, but it's something like that.

This is to give us assurance that we have enough supply. That basically is the big threat, if we were to have three simultaneous cold spells in the major areas where gas in consumed. In practice, we understand that has never actually occurred, that two is the most you get at once. One part of the country is warmer.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

[Translation]

Ms. Girard-Bujold, do you have another question?

Ms. Jocelyne Girard-Bujold: I did ask a second question.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): I don't believe he answered the second question.

[Translation]

Ms. Jocelyne Girard-Bujold: I asked you how long it would take to deal with any problems associated with going into the year 2000. If you were to find problems occurring as we move into the year 2000, would you have enough in your stockpiles to get you through until they were corrected?

And even if you have done everything, do you have specific plans? According to your figures, and according to all the information you have obtained from your customers and small businesses, will your stockpiles keep you going long enough to solve any Y2K-related problems, if these were serious? I'm talking about the millennium bug.

You have told us that you have an action plan, that you are moving forward, and that according to your timeframes you will ready well before the year 2000. So I assume you are well aware of what's going on.

However, what happens if you forgot something? What happens if you find a bug in one of your embedded chips or elsewhere? Do you have enough stockpiles to get you through until the problem is solved?

[English]

Mr. Greg Stringham: The short answer to that question is yes. What we have in place right now is a plan to test all those well in advance, as you mentioned in your question, so we will have the assurance before we go into it that all of those things are working well.

If there is something that comes up unexpectedly, that's very similar to what's been referred to here as the other unexpected natures that come up in the national gas business today. So if there's a very cold day and a gas plant goes down today, there isn't a response plan that is timed to try to bring that on very quickly.

• 1745

You must realize that there are probably 600 gas plants in western Canada. If one goes down, then there would be really no effect at all on the natural gas supply in the country. So there is that kind of supply diversity as well.

Yes, we hope to have tested everything before that and to have contingency plans for each one of those kinds of gas plants or oil-producing facilities. We hope to be able to respond very quickly if there is one that's overlooked. If it's only one, then it will not have an impact at all on the overall supply of oil and natural gas for Canada.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you.

Mr. Murray.

Mr. Ian Murray: Thank you, Mr. Chairman, and thanks to all of you for joining us this afternoon.

It's good that you're following the experts on electrical transmission, because it's a natural follow-on. We're talking now about the transmission, for example, of natural gas. And I have to confess that I'm no expert when it comes to how you manage the flow of gas across the country.

We heard from the electricity producers that much of their equipment is analog based. It's potentially old-fashioned and it doesn't necessarily depend on microprocessors and software. Their main concern seemed to be for things like billing. And I gather you're also concerned about being able to bill.

Could you explain to us how the gas is transmitted? I understand it's by pipeline, but what I'm getting at is whether you rely on electricity along the way to keep pumping it across the country.

I'm also interested in this business of caverns where you store it. Are you literally talking about naturally formed caverns where non-pressurized natural gas is sitting?

Mr. Greg Stringham: Let me deal with the upstream and then have George deal with the downstream.

On the upstream side of things, let me just take natural gas and not oil for the example. Natural gas will be produced from a well and taken through a small pipeline into a processing plant. That processing plant relies on power and telecommunications, but it does have some manual override features as well where personnel could come in and operate that in the event that something was found. That's why I talked about the human resources.

From there it goes into a provincial gathering pipeline system like the NOVA system. It's not just one pipeline; there's a web of pipelines that come together so if there's a problem on one element the others can still continue to flow.

At that point in time there are located throughout western Canada underground storage caverns. They're depleted natural gas reservoirs. They pump the gas back into these reservoirs to store it for winter periods or for whatever is required. And those are also located in other areas across Canada. There are storage areas in eastern Canada as well as in the U.S., where they store this gas mostly for climate changes. They put it in in the summer and then pull it out in the wintertime. This also could be used for any other upset that happens in the natural gas system.

The different segments all the way across from the natural gas well up into the transmission pipeline, where we shift jurisdictions here to the downstream, all depend on both telecommunications and power. They also have in them this embedded chip— and other issues that we're testing and going through. As was mentioned—

Mr. Ian Murray: Excuse me. Telecommunications: that's when somebody at one end of the line literally calls somebody and says, “Hey, we have a problem here. Do something at that end.” Is that what you mean by telecommunications?

Mr. Greg Stringham: That's one aspect, but there are also some remote control facilities that would not necessarily be manned on a normal basis, but the telecommunications would then allow them to control those facilities. In that context, that's what we rely on and that's why we've been working very closely with the interdependencies of those groups to ensure we've done what we can.

If you go right back to the upstream again, to the wells and to the batteries that are sometimes remotely connected, they are also used to having occasional power outages. Somebody will knock down a power line or something will happen. Those plants will go down and they have emergency procedures that deal with this well today.

So those same kinds of procedures that are in place are being tested with the Y2K area to make sure they work, but there are already emergency response plans in there.

Mr. George Barnhart: Yes, Mr. Murray, it's very much the same with the transmission and distribution portion of the industry. It's largely a mechanical process, fundamentally. You utilize turbines to compress the natural gas and to pressurize it to push it down the pipelines. That whole component really has no reliance in itself on technologies.

As Mr. Stringham says, where there really is an impact on technology is with the remote control operations or with those types of things that really have enhanced that whole process over a number of years.

• 1750

On both the transmission and distribution sides there is a reliance on telecommunications, largely for communications among our employees and to deal with emergency response. We have dealt with interruptions in those types of services in the past and have contingencies around them as well, dealing with the entire emergency response organization we've been a part of.

We're certainly working with both the other utilities, electric and telecom, by region, but we're also discussing with them how those contingency plans would be enacted.

Mr. Ian Murray: Are there any potential dangers to the public?

The Vice-Chairman (Mr. Eugène Bellemare): This is your last question.

Mr. Ian Murray: Okay. Say there's a break in a natural gas pipeline. When you talk about contingency planning, it sounds to me as if you've pretty well experienced, in the normal course of your business, any contingency you feel could arise as a result of the Y2K problem. But is there any potential danger to the public that could be one aspect of this we're not aware of?

Mr. Greg Stringham: What we've been focusing on in the upstream side of things is making sure health, environment and safety are dealt with first and tested to make sure all those systems are working. So that has been our first area of focus. You're right that those are already in place for other reasons, but we're going through the testing nonetheless to make sure that's the case.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much.

Mr. Lowther.

Mr. Eric Lowther: Thank you.

I'm sorry I had to step out. I apologize to the witnesses. I may have missed some of the ground that's been covered. If so, you can say so and it'll be caught in the record.

To Mr. Stringham, it's interesting to note we had you and Mr. Barnhart here before, and in that conversation I recall it was sort of “We're aware of the problem, we're doing inventory and trying to figure out how big it is”, and now it's much more definitive almost a year later. So that's a good sign.

Do you have any estimate across your association here of the cost to get Y2K ready? Has any kind of number been thrown around within the association on the Y2K readiness cost?

Mr. Greg Stringham: From the upstream industry we haven't gathered the cost data at this time. George mentioned a few things about the cost being higher than expected, but I don't have a number right now.

Mr. George Barnhart: We're currently in the process of surveying our members to get that latest information, which will be available in early December.

Mr. Eric Lowther: Within the producers' association, of all the things left to do, what's the top priority right now?

Mr. Greg Stringham: I think there are two top priorities. The first, now that we're in the process of testing and doing everything for ourselves, is to make sure these other interfaces are dealt with. That's what we're focusing on right now with telecom power and the transportation downstream, and making sure the interfaces are all working—our suppliers and everything else.

The second highest priority associated with what we're focusing on is to make sure our members continue to be aware that once they've put something in place they shouldn't buy something underneath or put something else in to replace it, and make sure that doesn't sneak back into the system.

Mr. Eric Lowther: Maybe Mr. Murray asked this, but of those interdependencies you have outside your own sphere of control, what is the most critical one? I know there are telecommunications and power, but what is the most critical one you cannot run without?

Mr. Greg Stringham: From our perspective it would be power.

Mr. George Barnhart: From ours it's the employees.

Mr. Eric Lowther: By “employees” do you mean safety?

Mr. George Barnhart: All of our emergency response plans—all of our contingency plans, backup plans, manual operations, all those types of things—rely on our employees being on site and available. If anything disrupts them from coming to work or being available to operate, that would be our single biggest concern.

Mr. Eric Lowther: Finally, Mr. Barnhart, you have a recommendation in your handout here—it may have been touched on already, I don't know—that talks about legal liabilities. You're the first group I've seen that is actually recommending some sort of good Samaritan legislation, as per the U.S. What do you see as the benefit of something like that to the whole Y2K program? If that were in place across all industries, what do you think it would really do for us?

• 1755

Mr. George Barnhart: I think it would do two things. It would change the atmosphere. We have seen that in dealings with our U.S. counterparts and American companies. In terms of the attitude, the disclosure of information is far more forthcoming.

It would also assist in terms of the flow of information. Certainly one of our priorities right now is to communicate with all of our stakeholder groups—our customers, the general public, our suppliers—as well as the associates we've been dealing with for a number of years now.

Mr. Eric Lowther: Thank you very much.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Lowther.

Paddy Torsney.

Ms. Paddy Torsney (Burlington, Lib.): Thank you.

I'm wondering if you have involved your local ham radio operators, through your various associations and across the country. Can you tell us about their involvement?

Mr. George Barnhart: We've initiated that. It's interesting that within my own company one of the members on our committee is a ham operator. We have had discussions within the other major pipeline and distribution companies that this would certainly be a part of our contingency plan for communications across the companies.

Ms. Paddy Torsney: Any others?

Mr. Greg Stringham: From the producing sector, the ham radio has not been used as part of the emergency response, but it may be on the list of priorities as they go down. Right now it's been replaced by other things, but it's certainly something that could be used. They're still in place and certainly were used in earlier days in the industry.

Ms. Paddy Torsney: I guess there's an opportunity on both a very large site as well as through the system of communicating. Whether the telephone system is working or not, you can get going.

Along that line there is a wonderful Canadian product, the wind-up radio. In terms of getting information, it seems to bypass all of the usual breakdowns, if there are electricity problems or whatever else. It would be another way to make sure people have an opportunity to at least hear instructions or communications, assuming something can be broadcast from somewhere.

You look like you're interested in that one.

Mr. George Barnhart: Communication to the public in the event of any kind of an incident is always so critical. That's the kind of public communication we would like to see.

Ms. Paddy Torsney: So you want them to buy—

Mr. George Barnhart: We would like to see that type of thing and mechanisms set up with the emergency measures organizations that facilitate the dissemination of information through those types of mechanisms.

Ms. Paddy Torsney: You know the radios I'm referring to.

Mr. George Barnhart: Yes.

The Vice-Chairman (Mr. Eugène Bellemare): Thanks, Madam Torsney.

[Translation]

Ms. Girard-Bujold.

Ms. Jocelyne Girard-Bujold: Gentlemen, you tell us that your action plans go into early 2000. You tell us that in these plans you have tried to anticipate every technical problem that might arise. You also point out that embedded chips may pose—

However, above and beyond all that, you know full well that the millennium bug is making people panic somewhat. As soon as we mention the year 2000, people say how worrying it all is, that anything could happen to computers. At the moment, we are hearing all kinds of things.

Do you have any plans to reassure your customers and consumers by providing information on what you have done and what you plan to do? Do you plan to tell them you are well aware of the problems, that there may of course be a millennium bug, but that you have done this and that to solve the problem, and that there should not be any difficulty?

So what have you done, or what do you plan to do, to reassure consumers and your customers?

[English]

Mr. Greg Stringham: From the Canadian Association of Petroleum Producers' perspective, the first thing we did was establish an Internet website that made all of the information on all of the activities—the messages we are delivering to this committee and others—publicly available so they could have access to it. That was the very first thing we established as part of our communications strategy.

In particular, the survey information we provided to you is information we have made available to the public, as well as our downstream associations that are closer to the customer, so we can tell people what our status is at any particular time. Those are the two real initiatives we have in place.

We are now just embarking on a third initiative with Natural Resources Canada to make sure this communication happens at government levels. We've done it provincially, and now we're going to speak on December 15 to this meeting of government officials regarding the situation we're in, what we've done, and what we plan on doing.

• 1800

But then we need to take it one step further, once we get into 1999 and have the new information sent into us, to make sure the public is fully aware of that. So we would then be cooperating with the other associations to make sure the information is passed down closest to the customer who has these questions that you validly raise. Mr. Lowther mentioned at the break how people are concerned about this. So it's a key issue, and that's what we're doing on it.

The Vice-Chairman (Mr. Eugène Bellemare): Mr. Murray.

Mr. Ian Murray: I have just one very quick question. Are there any electric utilities that rely on natural gas to produce their electricity? If so, where are they? Are they in western Canada?

Mr. Greg Stringham: There are a very small number in western Canada, and some are spread out across the country, most of them in eastern Canada. But the vast majority of the power produced in Canada is not coming from natural gas. There are some, though, and they're located in different places throughout Canada.

Mr. Ian Murray: Do you have any more specifics on it?

Mr. George Barnhart: Certainly. Natural gas is also used in terms of even the coal-fired plants within Saskatchewan to initially ignite the coal. So there's certainly natural gas used in terms of the generation of power.

Those discussions have gone on with the power companies. Those customers are considered to have a very major and significant priority.

Mr. Ian Murray: So would Ontario Hydro, for example, also use natural gas to ignite the coal where they have coal-fired generating stations?

Mr. George Barnhart: Yes, I believe they would.

Mr. John Klenavic: Natural gas supplies between 3% and 4%, roughly, of the total electricity in the country. So the problem is at about that level.

The other area where there is generation is in non-utility co-generation. Some companies have plants—I think there's one in North Bay—that supply industrial facilities primarily. We're very happy to have other companies that would like to go to co-generation also.

Mr. Ian Murray: Okay, thanks for that.

[Translation]

The Vice-Chairman (Mr. Eugène Bellemare): First, a short question for Mr. Lowther, followed by Ms. Girard-Bujold. Since this is Ms. Girard-Bujold's first visit to the committee, we will let her have the last question before we adjourn.

[English]

Mr. Eric Lowther: To Mr. Klenavic, Mr. McCarthy, and Mr. Stringham, I'm going to read a recommendation from Mr. Barnhart. I'd like your comments, pro or con, on this recommendation:

Increasingly, companies are becoming aware that the exchange of information, concerns and experiences, assessment of business risk, and some remediation efforts create exposure to litigation and legal liability. Ironically, organizations best prepared to assist others have the highest risk.

RECOMMENDATION: Recognizing the unprecedented circumstances of the millennium problem, `Good Samaritan' legislation should be passed to reduce the risk of lawsuits for small, medium, and large enterprises who are conscientiously trying to work towards a solution.

Mr. Klenavic.

Mr. John Klenavic: Yes, I certainly support that. As for the type of situation it was designed for, as I mentioned, the Canadian Gas Association has a task force that's trying to cover all of the distribution companies in Canada, but not all of them are actually on the task force. For instance, Kingston runs its own public utilities commission. It has its own, if you like, small gas company.

The large companies in that region—it could be Enbridge Consumers Gas or Union Gas—are acquiring the expertise and dealing with this problem. The difficulty is if that experience and what they've learned is passed on to the Kingston utilities commission in good faith, and then something goes wrong in Kingston. Do they come back to Enbridge or Union with a lawsuit?

That's the type of situation we would like to avoid. The industry itself is working around that through agreements and understandings, exchanging best practices, and so on.

Mr. Eric Lowther: And expensive legalese, perhaps.

Mr. John Klenavic. Yes.

Mr. Eric Lowther: Thank you, Mr. Klenavic. So you're for it.

Mr. Stringham.

Mr. Greg Stringham: Yes, we would support that as well. Let me give you a couple of examples very quickly.

Our own committee at the Canadian Association of Petroleum Producers had to develop a legal agreement that allowed people to exchange this information to try to deal with this issue of liability. So it is an issue to us. The industry, however, is starting to work through it, even though it is difficult and it is an obstacle. For example, there is an industry database now. People can submit information that's important to everyone on certain parts of the machinery and equipment, but they submit it on good faith and say you have to test it yourselves. So they are moving around it, but we would support it.

• 1805

Mr. Eric Lowther: Thank you.

Mr. McCarthy.

Mr. John McCarthy: Our interests are really to support and promote safety and environmental protection. Anything that goes towards that end would be a good goal.

The keys to this problem are communication, people being frank and open with respect to problems, challenges and successes that they've had, and sharing those experiences. I'm not sure whether this is the particular recipe for success, but anything that would help that goal would be good, in my opinion.

Mr. Eric Lowther: Any comments, Mr. Whelan?

Mr. Dan Whelan: I agree that anything that would help communication in this area would be useful. I think the chairman actually was helpful earlier this afternoon in pointing out that the committee has the advantage of speaking to a number of groups around the country. You've heard from the Canadian Bar Association, which advised you that this is a matter of provincial domain. In terms of the federal government's position on this, I can't give you a formal reaction.

Mr. Eric Lowther: I don't think the recommendation necessarily insisted that it be at the federal level. My concern is that somebody does this. We haven't even gotten into who at this point. Anyway, thank you.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Lowther.

[Translation]

Ms. Girard-Bujold.

Ms. Jocelyne Girard-Bujold: Thank you for your kindness, Mr. Chairman.

Gentlemen, a few moments ago, you stated that Gaz Métropolitain was a natural gas distributor in Quebec. You also pointed out that each company distributing gas must provide you with a Y2K-compliance action plan. Does each company, such as Gaz Métropolitain, have a deadline by which the plan must be submitted? Did you give them a deadline by which the plans had to be ready? Which organization do they report to? Hydro-Québec said just now that they reported to the Ministère de la sécurité publique, which in Quebec would be planning and coordinating all aspects should there be problems. Do all these plans have to be submitted to you by a certain date?

[English]

Mr. George Barnhart: Perhaps I could address that in a number of ways. Gaz Métropolitain is certainly part of our membership, and is a very active member in terms of developing the plans. They are very much a leading organization in terms of their existing emergency response and business continuity plans that deal with, if you will, normal day-to-day situations that can arise at any time. We have certainly spent a lot of time with Gaz Métropolitain in studying their response to the ice storm in Quebec in terms of how they dealt both with it and with any unforeseen issues that may have come out of it, and we commend them on their efforts in that regard.

As an industry, we're starting to leverage a lot of those plans and are starting to address them from a Y2K standpoint, in two parts. One part is the development, if you will, of sharing information amongst all of the utilities, not only with Gaz Métropolitain but Union Gas and, in my case, SaskEnergy, in terms of developing a framework that's across the industry and can apply to the year 2000 problem. Work is well along on that. Our intent would be to have it completed by the end of the first quarter. That really does not provide a contingency plan for each company, but it does provide them with a framework or a standard. Again, our concern there is that we have the utmost level of quality in terms of the planning that we can provide.

I guess the third step comes really in terms of dealing with other organizations and outside agencies. Within each region, we'll certainly be dealing with the local emergency measures organizations as they exist within a particular jurisdiction. Nationally, we'll be dealing with Mr. Whelan and NRCan and, through them, the Department of National Defence, to address a national contingency plan. That's really where our industry would like to be: at a point where we can address contingency within the natural gas industry, right from wellhead to hospital, and right across Canada.

• 1810

[Translation]

Ms. Jocelyne Girard-Bujold: Thank you.

[English]

The Vice-Chairman (Mr. Eugène Bellemare): Finally, this morning we had people here from agri-food and the rural districts. They say they lack a great deal of information. They really feel left in the dark, left out in the field somewhere, and they feel there's no information forthcoming. They're wondering what is going to happen at the family unit level. Should they buy themselves a generator? Should they do this? Should they store up a supply of cans of food for forever and a day? Should they build a great big cabana with all this stuff in it and get ready? They lack information—and I think Madame Girard-Bujold touched on that subject a bit.

I suppose you send bills to people, like everyone else does. When you do that, of course, you don't have to spend an extra stamp, but you can create a sort of comfort zone with information. In a way, you can remove the possible panic situation that people will feel as we get closer and closer to 2000. Do you intend to inform the individual customers? I am sure you don't have to inform the major customers. They will call you. They will be banging on your door asking for information yesterday, and you'll provide it. To some, you'll provide it before they even ask because you want to keep their business. But for the very small individual players at the family unit level, what will you be doing?

Mr. Greg Stringham: From the point of view of the producers' association, we agree with what you said in spades. We talked to Mr. Lowther about this earlier as well. There are a lot of negative comments coming out on this, and not an awful lot of positive reinforcement.

As a producing association, we actually pass the gas on. We don't have a direct interface with the customers. But what we can do is work with government agencies, such as Natural Resources Canada, and the regulators to let them know what we are doing, and we can also let the people who actually deliver the gas and oil to the end user have the information so that they can provide it to those users. That's what our plan would be at this point in time.

As we move further down the road and get more and more information, there may be a need for heightened awareness from the producing side of things. We would work together jointly with these groups that actually have the interface with the customers, to try to make sure the information gets out as much as possible.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you very much.

This brings to a close the meeting with your group. I thank you very much for your patience and your information.

I would also like to thank especially the staff for being so good. We've been here since 9 a.m. If the MPs were here at 9 a.m., it means staff were probably here at 8 a.m. It's now 6:15 p.m., and they'll probably be here for awhile yet. So for the staff, it's been a long day, and I again thank you very much.

To our witnesses, merci beaucoup. And to my colleagues, of course, thank you for your patience.

The meeting is adjourned.