AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 4, 2000

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[English]

The Chair (Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)): Members, seeing that we have a quorum to hear witnesses, we'll begin the meeting.

First of all, I apologize for my lateness. This is only the third meeting I've attended so far today.

Today we're going to continue a study of the Auditor General's report, and we have a number of witnesses, as you can see: Sheila Fraser, deputy auditor general, audit operations; Neil Maxwell; and from the Department of Agriculture and Agri-Food, Dr. Brian Morrissey and Howard Migie.

I understand Ms. Fraser will give her presentation and then we'll have rounds of questions.

Welcome, and thank you for coming.

Ms. Sheila Fraser (Deputy Auditor General, Audit Operations, Office of the Auditor General of Canada): Thank you, Mr. Chairman.

We thank you for this opportunity to discuss two recent audits in Agriculture and Agri-Food Canada concerning the Canadian Adaptation and Rural Development Fund and intellectual property in research.

As you mentioned, I have with me today Neil Maxwell, who is the principal responsible for our audit work at Agriculture and Agri-Food Canada, as well as several other colleagues in the room available for questions.

The subjects of these two audits are seemingly very different, dealing on the one hand with a funding program and on the other with the management of intellectual property. But the issues we addressed show a common challenge for Agriculture and Agri-Food Canada, because both activities rely on decentralized decision-making. How should the department effectively govern and manage activities across the broad Canadian geography and still provide for local flexibility and judgment?

[Translation]

Let me begin my comments with the Canadian Adaptation and Rural Development Fund or, as it is widely known, CARD. This is an important element of the Department's efforts to help the agriculture and agri-food industry adapt to a greatly changed business environment. We decided to examine the provincial component of the CARD program because it represented an interesting experiment in government program delivery - the Department decided to delegate extensive decision-making authority to industry councils, which decide where funding should be directed to best serve the adaptation needs of each province.

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One question was central to our work: Has the Department struck a reasonable balance between giving industry councils the freedom to make the best decisions while still respecting the public purpose of the funds? We found that, for the most part, the Department had developed an adequate framework of controls. We identified a number of good practices that allow the Department to influence and monitor the councils without placing undue control on their actions. These include: involvement of a federal, non-voting ex-officio member of provincial councils; eligibility requirements whereby councils are to incorporate the objectives, principles, guidelines and criteria of the government into the council by-laws; and a requirement for councils to report annually on the performance of funded projects - information that is collected in a national project database.

We also highlighted areas of concern that the Department needs to resolve: the need to provide additional guidance to the councils and to provide a better means for councils to share experience; the need for a better way to ensure that parliamentarians and the public have access to performance information collected by the program; the need to consider and formalize a long-term strategy for its relationship with councils; and the need to regularly assess the capabilities of the councils.

CARD was one of seven delegated arrangements also examined in Chapter 23 of the November 1999 report "Involving Others in Governing: Accountability at Risk". That chapter identified a number of general concerns about such arrangements, some of which also apply to CARD. For example, CARD has not specifically required councils to set up citizen redress mechanisms.

[English]

In response to our audit of CARD, the department noted it was proud of the program, it welcomed the report's recommendations, and it was committed to addressing them.

While the CARD audit looked at management issues surrounding the involvement of others in federal programs, the intellectual property audit dealt with issues within the research branch of the department. Our objective was to assess the quality of its management of intellectual property. We did not look at other aspects of management in the research branch, nor at the appropriateness of the various elements of its research program, including biotechnology research.

Federal research has been crucial to agriculture in Canada. In our report we refer to Marquis wheat and the Shepody potato as examples of success stories that have come out of federal labs across Canada over the past hundred years. Today the budget of the research branch is around $250 million. To conduct its research, it acquires the intellectual property of others, including patented research technologies and protected plant breeds, and in turn produces its own intellectual property.

One of our main findings is that the branch's freedom to pursue its mandate could be threatened by the use of intellectual property developed elsewhere for which it has yet to obtain licensing rights. Should it encounter significant obstacles to obtaining those rights, the branch may have to alter, postpone, or abandon current research initiatives. The branch currently uses about a hundred technologies that have been patented by others. It appears it makes significant use of these technologies in its research programs, but at the time of our audit, the research branch did not know the full extent of their use.

A second finding is that there is uncertainty within the branch about how best to make decisions when a discovery is made. In these cases research centres must decide whether to publish the discovery or to protect it and then license it to others.

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The past ten years have seen the introduction of the Plant Breeders Rights Act and the entry of a great many new players into agricultural research. Advances are coming rapidly, and whereas the department once gave away research products, there is now a competitive market for agricultural intellectual property. The department needs to take clear action if it is going to deal with this competitive market and preserve the role of the research branch in Canadian agriculture.

We concluded a decision-making framework is needed to guide staff across Canada in decisions about intellectual property—for example, in deciding which research products should be legally protected and how best to acquire the intellectual property of others. This guidance needs to be clear but still allow appropriate flexibility.

The department responded to our report by saying it welcomed our suggestions for improvement and intends to act on them.

It is also worth noting the department is not alone in facing intellectual property challenges. Despite commitments made in 1996 to review its intellectual property policy, the federal government still does not have a comprehensive approach to intellectual property across departments. Work is underway on a number of components of such an approach, but the government has yet to pull these together to set clear expectations for how departments should manage intellectual property.

Mr. Chairman, we would now be pleased to answer any questions you may have.

The Chair: Thank you.

We'll go to Dr. Morrissey and then Mr. Migie, and then we'll go to rounds of questioning.

Welcome, Dr. Morrissey.

[Translation]

Dr. Brian Morrissey (Assistant Deputy Minister, Research Directorate, Agriculture and Agri-Food Canada): Thank you, Mr. Chairman, ladies and gentlemen.

[English]

The department is pleased that the Office of the Auditor General recognizes that the management of intellectual property is a rapidly changing field. Agriculture and Agri-Food Canada and the research branch have been continually working to address these changes as they've developed over the last decade.

In the research branch, intellectual property means proprietary information and technical information, including scientific and technical discoveries, which are transferable and which may or may not be protected under the law. Until recently there was very little need to protect intellectual property stemming from publicly funded agricultural research. However, as in other knowledge-based sectors, protected technologies have become a valued commodity in the agrifood sector.

Intellectual property protection has allowed the research branch to work in partnership with the agrifood sector to ensure the branch's research results are relevant and are transferred and used by the sector.

The branch carries out research and development that in most cases requires additional commercial investment before it can be used successfully by the agrifood sector. We believe companies will be more willing to invest time and money in further research and development when it's clear the technology at stake is legally protected and therefore there is a privileged and restricted right to access.

In other cases our research and development results are in market-ready technologies such as plant varieties. These are usually licensed to the Canadian seed industry in a manner that provides the maximum benefit to the Canadian agrifood sector and the Canadian taxpayer.

In some instances we require access to intellectual property owned and protected by others in order to carry out our work. For example, genetic markers are used to follow plant characteristics in our plant breeding programs. It may be more cost-effective for us to access privately developed markers than to develop ones ourselves.

While intellectual property management is a small aspect of our work, it's essential to the success of the collaborative research carried out within our matching investment partnership program. Our partners need to know their investment and the resulting technologies can be protected long enough to gain market access.

The audit recommends that the branch develop and implement an overall approach to managing its intellectual property. It recommends that this approach should be appropriately communicated to staff and should support the development of a more entrepreneurial culture. Implementation should include the development of a decision framework for branch staff, a statement of management expectations against which to measure performance, and use of appropriate information systems.

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The branch has begun work to update its intellectual property management framework in response to the recommendations of the Auditor General. Our technology management manual is currently being updated into a research branch intellectual property policy. An intellectual property information system is being installed across the branch that will track intellectual property from its first identification through our collaborative research projects and licences. It will allow us to better manage our patent work and ensure that we have an inventory of our intellectual property.

The branch continues to retain two lawyers to guide the development of all contractual arrangements with our partners. They ensure that all our legal frameworks are up to date and acknowledge the requirements of both this government and the business world. These frameworks are available to staff across the branch via a departmental intranet information system that also includes guidelines for their usage and updates on intellectual property law.

Intellectual property and technology transfer training courses are currently being provided to scientists and commercialization officers across the branch.

In conclusion, Mr. Chairman, the research branch focus is on the development of technologies that will find acceptance with clients, that will generate wealth for Canadians, and that will make the Canadian agrifood industry more stable, more self-reliant, and more competitive.

Today, all new research projects have a cost estimate and a study outline that describes the expected value of the results, the new technologies to be developed, and a technology transfer plan.

[Translation]

Thank you, Mr. Chairman.

[English]

The Chair: Thank you, Dr. Morrissey.

I will now go to Howard Migie.

Good morning, Howard.

Mr. Howard Migie (Director General, Adaptation and Grain Policy Directorate, Policy Branch, Agriculture and Agri-Food Canada): Thank you, Mr. Chairman, for this opportunity to discuss the Canadian adaptation in rural development, or CARD, governance arrangements.

[Translation]

In 1995, Agriculture and Agri-Food Canada introduced a strategy to assist the farming and rural sector to adapt to changes that were taking place. The industry has had to adapt to reductions in government subsidies, changes in technologies, growing concern about the environment, more competitive global markets, and the decline of the rural population, to name a few.

This strategy is designed to foster a growing, diversified, competitive sector and a healthy rural economy while creating programs that respond to the government's objectives of bringing the decision making closer to the industry. The nucleus of this strategy is the Canadian Adaptation and Rural Development Fund (CARD).

[English]

Since 1995 the federal government has been providing an average of $25 million per year to provincial and territorial industry-led councils. This represents a new way of doing business for AAFC. The traditional model for this type of program is to have department staff in the region administer the funds and make most of the decisions, with advice from industry and provincial officials.

The CARD model puts industry in the driver's seat, not just in administering the funds but, more importantly, in making the decisions. The CARD model encourages industry to take responsibility for its development, thus promoting self-reliance.

The challenge we face is to let go but also to ensure that the public interest is paramount in decision-making. How have we done this? First of all, all the councils adopt certain principles in their bylaws. For example, they have to operate within the mandate of the departments. All of their operations have to be consistent with Canada's international and domestic trade commitments.

Secondly, the department provides guidelines and tools to assist the councils. For example, one of our guidelines is that CARD funds will not be used as direct income support to individuals or firms. One of the primary tools that we have to assist councils is the performance-based management guide, which outlines various administrative and management procedures.

Thirdly, the department creates fora to share information and ideas on best practices with councils. For example, the next meeting of all of the council chairs is scheduled for June 22. We'll be providing guidance to them on such issues as public disclosure, public sector values, and we'll be addressing the issue of citizen complaints. These are issues that the Auditor General has just referred to.

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Fourthly, we provide advice on the management of administrative issues, not just on individual projects but more generally to the council. This is provided by a federal government employee who is an ex officio member of the council. Each council also provides a letter indicating their priorities, and the minister approves that letter. We provide grants to the councils in stages throughout the year.

Finally, in conjunction with the department and on behalf of the Auditor General, the Conference Board developed a list of features to assess the governance of the councils, and this will help us ensure high-quality management for the councils.

The CARD approach is a work in progress. We in the industry are learning together. We know there's room for improvement, but we're confident we're on the right path. The Auditor General suggested several areas for improvement, and that's what we're going to be working on this year through the discussions and particularly with the chairs of the councils.

I welcome the opportunity to respond to any questions members of the committee may have.

The Chair: Thank you, Mr. Migie.

Thanks again to Dr. Morrissey and Ms. Fraser.

It's time for questions, seven minutes each.

First of all, to Mr. Casson. Good morning.

Mr. Rick Casson (Lethbridge, Canadian Alliance): I'd like to address my first question perhaps to Mr. Morrissey. In the last statement in your presentation you indicate that there's a process that each research project goes through, a cost estimate, a study outline, an expected value of the results, the technologies developed, and the transfer of the technology. Can you just expand on that a little? Perhaps you can give an example of a project and how it's gone through. When you're doing research, the end result is not always known, and to quantify that must be a hard thing to do.

Dr. Brian Morrissey: That's a very good question.

It's perfectly true that looking towards the future, all of the estimates of costs and benefits really are guesses based on the past. You're quite right. In some cases it's virtually impossible to get figures, but we nonetheless go through the exercise so that we quantify at least the estimates we're making.

For example, the variables we have in our mind are the return on investment or the expected value from an investment, and the piece of research is a function of the benefits divided by the cost. So we try to come up with some estimate. For example, if we're breeding a new variety of wheat, will that take us 10 years to develop? In that case you discount the value of all your investments. At the end of 10 years you may have a new variety. We have an idea from past history how long a new variety will stand up before the next strain of rust comes up from the States. So you get an estimate of how quickly a new variety has been adopted into planting and how quickly it fades away, either as it's replaced by another variety or as disease comes along.

The other thing we look at is you now have an estimate of the benefits and you have an estimate of the costs. Even if you can't come up in dollar terms, you can put them on a scale of one to ten. We could have peer review. We could say, what's your estimate of benefits on a scale of one to ten on this project compared to the other ones we're looking at? We can almost always come up with hard figures on costs because, by laboratory, we know that in laboratory A a fully dressed scientist costs $200,000 a year, and in laboratory B, where there are greenhouses, animals, or more expensive things, it might be up to $300,000 or $400,000.

When I say “fully dressed”, I mean technicians, buildings, light, heat, all included. If it's one scientist for 10 years, at a third of a million dollars per year, you're looking at $3.3 million for your costs, non-discounted.

So you get an estimate of how big the market is. If it's wheat and it's, say, a $30 billion market and you might get a 1% increase in yield, then you're now getting close to at least estimates of numbers.

Having now an estimate of benefits and costs, which even in dollars runs a scale of one to ten, the other thing we look at is the probability of ever getting them. So we look at what the scientific probability is. Have we ever done this kind of work before? In breeding wheat we have, so the probability of success, say, of cleaning up fusarium in the west is fairly high. So you might give yourself a seven out of ten there. Then you look at what the probability of development is. Will somebody in the private sector take that and scale it up to a commercial scale? If you have a partner, you probably give yourself a 70% or 80% chance of success there.

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The last one we look at it is the chance of commercial success, if in fact it's a wheat variety, where it has to compete commercially. We look at who else is in the business of breeding wheat and what chance they might have of getting to market before us.

So even if all these variables are on a scale of one to ten, my experience with them has been that with the really poor programs, no matter how you adjust those numbers, you can't make them look good. With the really good programs, it doesn't matter what sensitivity testing you do, they come out looking pretty good. So it at least quantifies the estimates.

Mr. Rick Casson: The other issue is using research or intellectual property owned by others in your research. How do you go about acquiring or paying for it? Do you buy the patent? Just how does that work?

Dr. Brian Morrissey: As in any other line of life, it's a make or buy decision. For example, if we were looking at the probability of scientific success in developing a fusarium-resistant wheat, we might need a piece of technology that somebody else had. So we'd approach that company to license their patent to us. They would have a number of options. They could say no, in which case we would have no choice but to get out of that piece of business or try to develop what's called a work-around, to make a patent ourselves, to invent a new system that worked around the patent that was blocking us.

On the other hand, instead of saying no, they might agree to sell it to us, but they would only license it to us for that particular use for a certain period of time and charge us $4 million for it, which might price us out of the market. So we would be back to either getting out of that line of business or developing it ourselves. Those are exactly the processes we would go through.

One item that's worth mentioning is in most of the world, as far as I know, you can usually negotiate with a company to allow you to use patented R and D for research. But the moment you start to use it to produce a commercial product, they will come into the picture and exercise their patent rights.

The Chair: You have a couple of minutes.

Mr. Rick Casson: I have just a quick question for Mr. Migie. In your presentation you say the strategy is designed to foster a growing diversified competitive sector and a healthy rural economy—there are some rural economies that are very unhealthy at the moment—promoting self-reliance. You go through the process of projects that need to be approved and so on.

What kinds of projects do you approve or are underway to promote a healthy rural economy?

Mr. Howard Migie: In this case we're talking about the industry councils—the $25 million. The group around that table, which consists of the members of that council, will receive projects from others, and some of them will deal with the environment. If a council says the environment will be one of their priorities, they can decide to really give a push to environmental farm plans. They will provide funding, so the farmers in that province will be able to develop and get expertise and credit for environmental farm plants. That might be an example, with the funds they have.

Some of the councils in the Atlantic will put funding into projects that have more to do with getting the right facilities in place and keeping something going that's important to that industry. So it varies quite a bit by province.

Some of the councils will put an emphasis on processing, where they feel value-added is critical. They will find a way to help with either business plans or developing a project so it just gets over the hump. It might be research and development. The industry in that province will get together to form a council. They will agree to certain things in their bylaws and look at all of the projects that can come to them in a few given areas each year, given their funds. They are the ones who will pick which ones are most important for development in Saskatchewan and Alberta and decide what they want to give emphasis to. They will make those decisions to help push certain businesses in certain commodity areas, or, as I said, certain more social objectives, such as working in research or the environment.

The Chair: Thank you.

Mr. Desrochers.

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[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): First of all, I want to thank all of the witnesses who are here this morning - those representing the Office of the Auditor General as will as those invited here to shed some light on this subject for us. As everyone knows, a report contains a series of observations and findings and it is our job to try and improve things.

In paragraph 12.2 of the report, under Main Points, we note the following:

12.2 Particularly urgent is the risk to the Branch's continued ability to provide the agriculture sector with innovations. The risk stems from its significant use in research projects of intellectual property owned by others. Should it encounter significant obstacles to procuring the rights to use these proprietary technologies, the Branch may have to alter, postpone or abandon current research initiatives.

One issue that has been the focus of some heated debate in recent days is genetically modified organisms, or GMOs. Our political party is currently working on mandatory labeling provisions. We would like to know what Agriculture and Agri-Food Canada can do to reassure people about GMOs. Agriculture and health are closely linked. People need to be reassured about this issue which is much in the news not only here in Canada, but in the European Community, Japan and Korea as well.

Dr. Brian Morrissey: First of all, to answer your initial question, I would have to say that unrestricted access to innovations, if I can phrase it this way, is an important consideration. Two or three years ago, it seemed likely that genetically modified foods would become an important commodity on world markets. Technologies were patented and in the hands of the private sector. Therefore, two or three years ago, considerable uncertainty prevailed, not only here, but throughout the entire world. The fear was that public laboratories would not have access to the technology needed to develop new commodities for the marketplace of the future.

Several years ago, a debate on GMOs was launched, first in Europe and then later in North America. The whole issue of the marketing of products resulting from GMO technologies was called into question. As I see it, the pressure felt by our laboratories to access these technologies and their patents has eased considerably over the past several years. It is now easier to access these patents and to use these technologies for a same species, not for GMOs, but for other purposes.

Therefore, the stakes have changes in recent years.

Mr. Odina Desrochers: In so far as GMOs are concerned, what kind of time frame are we looking at?

Dr. Brian Morrissey: Time frame for what?

Mr. Odina Desrochers: For accessing this technology. You indicated that the situation has improved for public laboratories and so forth, but when is Agriculture Canada going to assume some leadership in an effort to uncover all of the implications associated with the use of GMOs?

For instance, if a farmer uses genetically modified seeds and five kilometres away, another farmer uses organic methods, it's likely, because of the winds, that the organic farm will be threatened. Considerable research has been done, much of it by the private sector. When can we expect to see a genuine arbitrator like Agriculture and Agri-Food Canada step into the fray, reassure the agricultural community and acknowledge all of the implications associated with the use of GMOs?

Dr. Brian Morrissey: If I understood you correctly, sir, there are two parts to your question. First, what government mechanisms are in place to prevent a "genetic" accident? Currently in Canada, the Canadian Food Inspection Agency imposes a number of requirements on researchers when they conduct tests to ensure that there is no unacceptable danger or risk of genetically modified seeds finding their way to neighbouring fields.

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In addition, I believe, although I'm not 100 per cent sure about it, that Environment Canada plays a role in approving the use of these seeds. Similar controls are in place to regulate seeds originating from a foreign country or foreign laboratory.

Considerable work has been done by INRA in France, an agency similar to ours, and by our own agency in Saskatoon to uncover facts required in the policy formulation process. This step always precedes the drafting of regulations. Therefore, some work is being done. However, I believe the Agency and Environment Canada also impose a number of regulations.

Mr. Odina Desrochers: I have one more question. Did you know that it is extremely difficult to get a rundown of the criteria and rules that apply to GMOs from the Canadian Food Inspection Agency? Right here and now, could I ask Agriculture and Agri-Food Canada to pressure the Agency into making this information more accessible?

You may say that members are always making rather negative comments, but we do so at the urging of our constituents. I know my colleague who represents Louis-Hébert requested this information under access to information legislation and got nowhere. As you know, farmers are now planting their crops. When can we expect more cooperation on the Agency's part?

Dr. Brian Morrissey: I will answer the question in two parts. I have nothing to do with the Agency and I can't order it to do anything. However, I would be happy to ask an Agency representative to get in touch with you, if that's okay with you.

Mr. Odina Desrochers: Provided that person has some answers for us, sir.

Thank you, Mr. Chairman.

[English]

The Chair: CFIA will be coming in the near future. Thank you.

Mr. Steckle, seven minutes.

Mr. Paul Steckle (Huron—Bruce, Lib.): I'd like to continue the questioning along the lines of patented technologies, our intellectual properties. We're in this whole frame of thinking these days about GMOs. We're in an international global market selling our products. Some countries have chosen to disassociate themselves from products that have something to do with genetically modified technologies. I'm not sure about the reasons; they're probably more political than otherwise.

Canada is an exporting country. We've developed Bt corn; we've developed Roundup Ready soybeans, where we can now actually grow crops with fewer chemicals than we could 10 years ago. Some would view that as modification, and something that is unacceptable by those countries particularly and those who oppose GMOs. I'm not coming here pro-GMO this morning, but I have to wonder, given the constant threat of farmers to try to stay on the land...

When you look at corn prices for seed, 30 years ago fairly common seed was selling at about $12 a bag, and you had about 120,000 seeds in that bag. Today, because of the cost of technology, corn seed is selling anywhere from $120 to $150 a bag for 80,000 seeds. When you consider that you're putting in 30,000 to an acre, you're getting about 2.5 acres out of a bag. Consider the cost per acre of just seed input today versus 30 years ago.

Corn prices today are still relative to what they were, at $2.90 to $3.75. They've gone as high as $4 or $5, but we really cannot depend on those kinds of prices for corn. We had $2 prices 30 years ago. Nothing is relative any more.

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How are we going to rationalize into the future that the cost of the technology is being reflected to the primary producer?

Then we have all these outside forces competing against us, for whatever reasons. Where do the farmers stand on this? Who owns the intellectual property? How many public dollars have we expended in generating new technologies that at one point or somewhere down the road become the property of Monsanto, as an example?

I don't know. There's a whole lot of things. This is a broad subject and I can't pinpoint one thing. I think the auditing department is looking at the agricultural department becoming more accountable for the way they conduct and handle these technical issues.

In the end, there's one payee, and that's the primary producer, and that really concerns me. I'm not suggesting there's exploitation of those people at the primary level, but let me tell you, in the example I've given, I can't think of anything that is more pronounced than the price of seed corn 30 years ago and the price of that seed corn today. Yet what we're getting for that product at the end...

Wheat is another example, but we won't go down that road.

Dr. Brian Morrissey: On the issue of acceptance of crops produced by this country, for example, GMO crops, my sense is that we in this country could decide to grow them or not grow them, and in that sense, we control both the domestic market and the export market. If we decide not to grow them, then there isn't any export market for them. If, on the other hand, we decide to grow them, then it's the export market that will decide if they want to accept them. So that piece of it is beyond our control. My sense is that for most agricultural crops, a significant portion is exported.

Assuming that we decide to produce them, a lot of the decision-making power then rests in the hands of export markets, and that isn't the case for a lot of the rest of the world. Countries like China, India, or Brazil can consume a lot of what they produce.

My second comment is on the cost of patenting. I think there is a cost to patenting, and there's a cost to buying the products that have been produced with patented knowledge, because the whole reason somebody would go into a patent is to get a monopoly for 20 years.

The whole world has changed in agricultural patenting. Up to 1980, you couldn't patent a living thing, so the world gave it away free. We gave ours to Israel, Israel gave to us, and so on. But in 1980, I believe it was the Exxon Corporation in the U.S. that patented a bacteria that could consume and transform oil, and that really changed the world.

Assuming that track continues, everybody then had to patent key pieces of technology, because if you didn't patent them, you lost the freedom to operate that we were just discussing a moment ago. You could be blocked out of producing the next generation of products. So it meant that you really had to patent your own intellectual property so that you would have the tools available to you to produce the next generation of products, or if you couldn't produce all those tools—and this isn't just GMOs but any kind of new biological technology—if you didn't have those tools, you would have no bargaining chips to trade with people who had a tool you needed; you might trade with them a tool that you had yourself.

So my sense is, whether I like it or not, we're in a world of patenting.

I've mentioned that if the world continues in this way, there are two reasons for that. One is that in the U.S. they have issued very broad patents. That often happens when a new area of technology is patented. Nobody really knows what should be patented or what shouldn't. My sense is that they've issued very broad patents and the courts are now challenging them. Competitors are challenging in the courts.

I think you'll see that what tends to happen in patenting is the broad patents of early days get challenged and become narrower and more focused as the patent offices and those applying for patents become more experienced at it.

Back in the 1900s, there was a huge wave of patenting, when Edison and others patented, and the citizenship in the United States turned against patents. They saw it as an abuse of monopoly powers. I think they accepted that there should be some monopoly powers in return for the investment, but the courts then reflected public sentiment, and for somewhere from the early 1900s up to 1980, in virtually all forms of patents, the courts threw out about two-thirds of the patent cases that came before them. So if you owned a patent and I challenged you, in two-thirds of the cases you would have lost.

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The second change that happened in 1980, in addition to patenting living things, was that the U.S. took out of the hands of regular courts the administration of patents and put it into a special appeals court. In that appeals court, only about one-third of the cases were lost.

So you had a convergence of things happening. You had living things suddenly patented in 1980 in the States, and you had a new court system that seemed to support patenting.

In addition to that, it really has nothing to do with us, but you had around 1980, again, I believe, the patenting of software, and in the last two years the patenting of business methods, like reverse option on the Internet.

All of this to say that we ourselves have moved in order to protect the Canadian position and keep some tools in our tool box. We've gone from a position 10 years ago where the AG would tell you we patented maybe one patent a year to about 10 to 20 patents per year in the last year or two, and we have had 55 applications in the last 12 months before the patent office. So my sense is, assuming the world continues to accept patents as being reasonable monopolies and not abusive monopolies, we're probably into a world where this is an additional cost for all of us.

The Chair: Thank you, Dr. Morrissey.

I think you're right in saying the world has changed. I think the difficulty all of us would have would be to convince a lot of primary producers that these changes that have been wrought really have made things better for them. That's the daunting challenge before all of us, especially right now in the grains industry. They're not doing very well.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thanks very much, Mr. Chairman.

I have a general question, perhaps to Ms. Fraser to begin.

You noted in your remarks that there were commitments made by the federal government overall in intellectual property dating back to 1996. In hindsight, would it not have been better for the government overall to have established some kind of a committee to deal with intellectual property rights affecting all the departments, so that every department that faces this challenge would have sat down rather than trying to do it piecemeal?

We're being told that the agriculture department has some work to do in this area, but they're not alone. I wonder if in hindsight that would have been a good recommendation, or in fact was such a recommendation made by your department?

Ms. Sheila Fraser: While we have not looked specifically at intellectual property across government, we are aware of several initiatives that have gone on. For instance, Industry Canada is looking at contracting policies. At Treasury Board, there's a 1991 policy that is under review. But we are of the opinion that, yes, there should be a government-wide policy. We would suspect that many departments are facing the same challenges as Agriculture Canada, and it would be very useful to have a government-wide policy.

Mr. Dick Proctor: Also, in your remarks you say there are significant obstacles within the Department of Agriculture, that they may have to alter, postpone, or abandon current research initiatives.

Then, Mr. Morrissey, you've indicated in your remarks, talking about genetic markers, that it may be more cost effective for us to access a privately developed marker.

Alter, postpone or abandon...is there a direction? Are you leaning in one way or another on this?

Dr. Brian Morrissey: My sense of that comment is it was made at a point in time when the world was evolving around intellectual property. As I mentioned, this was a new body of law in the U.S. It was even newer in other countries that came on and passed that law later. So we in Canada, and everybody around the world, private sector and governments, found ourselves in the position where we had been working on the assumption that knowledge in living things was free. We were using tools that for us had been around for a long time, and suddenly we found out somebody in the U.S. had a patent to that. So you find you've invested an amount of money in a piece of technology that now belongs to somebody else. It is in that context that I read the comments you have on paper.

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In this transition period there were things for which we had to decide either to negotiate a licence, if we could get it, or to drop, or to develop a work-around technology so that we could do it another way. But having gone through that once, I don't think we'll go through it a second time. That was simply a transition phase.

We're now in a position where, before we undertake each study, we sit down and say, do we have access to the intellectual property to do this, and if we don't have access to it, can we get it? If we can't, we don't do it. In some cases where we've come to that point that we don't do it, because we would be doing work for somebody else, we have consciously decided to try to develop a work-around, a patent of our own that would allow us to get around it.

So I think that's true for everybody at a point in time, but not true ongoing.

Mr. Dick Proctor: Right. Thank you.

Mr. Migie, I have finally a quick question for you. In your remarks you say CARD's objective is to “put industry in the driver's seat”, and then a couple of sentences later you say, “public interest is paramount”. Reflecting what the chairman said and what Mr. Steckle said, where are the rural folks in all of this? I appreciate that they're part of the public, but I see precious little reference to them or reflection of the trials and tribulations they're going through at the moment.

Mr. Howard Migie: There are two ways. The audit the Auditor General did was of the councils, which is $25 million from CARD. We have $60 million in total, and we do fund rural initiatives, which in this case are transferred directly to programs run by the rural secretariat and others.

But in addition, some of the councils have said they want to give priority to rural projects. Where they've done that, they'll pick either certain areas of their province or certain types of projects they'll give priority to. Most of the funds in the first four years were going to agricultural adjustments. Not that much went into rural.

It depends very much on the group that gets together in each province, which tends to represent all the agricultural industry, whether they will give the priority to rural for the councils. But we have the opportunity within the department, with respect to the rest of the funds, to give a higher priority to rural. The rural secretariat has been developing ideas and proposals, and they can still put in for more of the funds that are available.

The Chair: Thanks.

On those councils, Howard, how well represented are primary producers?

Mr. Howard Migie: Primary producers are very well represented. In the case of Quebec, they developed two councils, interestingly, one focused on processing and one focused solely on producers. In all the other provinces initially it was almost all producers. Now they've expanded somewhat to get at least some representation from processors on it. But they typically represent all the commodity organizations and the main producer groups in that province.

The Chair: I thought I heard you say they were dominated—though I don't think you used the word “dominated”—by the industry. When you use the word “industry”, do you include primary producers, Howard?

Mr. Howard Migie: Yes, I do. I'm sorry. That's what I meant when I said “the industry”. I really meant the producers' portion.

The Chair: Thank you.

Mrs. Ur, five minutes.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

Dr. Morrissey, the private sector and government departments conduct research. How do you divide up the workload so that there isn't any duplication and we're getting the best value for our dollars?

Dr. Brian Morrissey: That's the first question that comes up on every single research project we look at, so it's a very good question.

The first screen we look at, before we get to this return on investment and benefits and costs, is to see if it's any of our business to do it in the first place. We ask ourselves, what's the role of the state and what's the role of the private sector? We've simply gone into the political science literature and the economics literature and pulled out what are reasonably widely accepted definitions of the role of the state versus the role of the private sector.

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It's more than just this phrase, but a key phrase I keep in mind is, it's the role of the state to do things that have significant benefits for Canadians but that the private sector will not do by themselves. If the country needs something badly and the private sector, for whatever reason, has chosen not to do it, if it's going to be done at all, the state has to do it.

Mrs. Rose-Marie Ur: I find that interesting. If it's so badly needed by the country or by the nation, why wouldn't the private sector pick it up? It certainly would be economically beneficial to them to move in that direction, would it not?

Dr. Brian Morrissey: You've just answered the question.

Voices: Oh, oh!

Dr. Brian Morrissey: It's economically beneficial, but not necessarily to them. The problem is usually that they can't capture the profits. For example, if you take wheat breeding, Kurt Klein at the University of Lethbridge did a return-on-investment study for twenty years, retrospective, of wheat breeding. We do most of it in western Canada, so most of the costs are the crown's and most of the benefits are the crown's.

Dr. Klein found there were about $400 million a year in, exactly your point, economic benefits from the wheat breeding program—disease loss avoidance, yield gains—but the companies couldn't capture the benefits, simply because, as the AG mentioned in the report, about 70% of the crops planted on the prairies are grown from last year's bin material that I have in my bin on my farm. So you only sell it 30% of the time.

Mrs. Rose-Marie Ur: Right. I don't mean to be rude, but I have one more question for you and then I have a couple of others.

Do you have a concern that the private sector will dominate intellectual property in agricultural research? In the perception out there with consumers, and I guess maybe related back to GMOs, this is some of the battle we're already facing regarding GMOs in this respect.

Dr. Brian Morrissey: To me there are two separate questions there. If you'd bear with me, I'd separate them. One is the future of GMOs, and the other one is the future of patenting of living things, which includes GMOs, but it has a future whether or not GMOs are accepted by citizens.

My sense of GMOs is that regulatory agencies around the world will certainly decide on them for reasons of safety, purity, potency, and efficacy, from the human point of view and from the environmental point of view. Governments are going to decide on that, because we always have for new things, new threats. Whether or not they're acceptable to citizens because they like them or don't like them or they fear them or don't fear them, I think citizens will establish their values, and legislators like you around the world will decide on them.

In addition, markets will decide on them. For example, we're an exporting nation, and whether or not we want to do certain things in this country, export markets will decide whether or not they accept some of our exports.

On the second question of patenting, the future is simply unknown to me, but given that the U.S. has decided to patent living things and other countries are going that way—for example, the European Union patents living things—my sense of what's happening is the World Trade Organization is starting to bring together the patenting standards under the different parts of the world. For example, the European Union has a very good system, in the sense that they give a statutory right of challenge to anybody who has an interest in a given patent. That comes out for every patent. So you very often get a challenge, and you don't get broad or poorly based patents coming out that can hold up a whole sector for a couple of years.

The U.S. doesn't have that system. In fact I should perhaps answer for the member here. In the U.S. application system, as I understand it, I could apply for a U.S. patent, and nobody would know I'd applied until such time as the patent were approved. So we really could be caught. I mentioned it was only at this point in time a few years ago that we had to decide to get in or get out. We could again be caught on U.S. patents. We thought something was in the public domain and were using that tool, and four years later, a patent came out in the U.S., because it had been sitting in the system there, but you couldn't find out.

In the Canadian system, my understanding is you can find out, so you don't get caught in that way.

The Chair: Thank you.

Rose-Marie, we'll come back to your questions. You have a couple of others. We'll just come back to you.

We'll go to Mr. Casson right now.

Mr. Rick Casson: Thank you, Mr. Chairman.

Mr. Migie, you mentioned your budget is $60 million. Is that all provided to you from Agriculture? Where does that money come from?

Mr. Howard Migie: The funds have been approved by Parliament to the department, and it's all in the department budget.

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Mr. Rick Casson: It's all just allotted from the global budget of the department. It's not created from any of your projects returning to you.

Mr. Howard Migie: That's correct.

Mr. Rick Casson: The Auditor General's report indicates a number of areas where they think there are some concerns with reporting in your department. They noted additional guidance to the councils, a better way to ensure parliamentarians are made aware of what you're doing, long-term strategy, these types of things. You get into it a bit in your report—maybe I have to ask the Auditor General's office—but did you address these issues to the satisfaction of the Auditor General, or are you ongoing, or what's happening here, in your mind, I guess?

Mr. Howard Migie: I won't start with the latter part of the comment, but we have a regular annual meeting with the chairs of the councils, and for most of the items that's the forum where we will be putting forward proposals and discussing with the chairs of the councils ideas with respect to public access for projects, for example. This is now on the Internet internally, but it's not available to the general public. We want to make it available to the general public and also to find a way to make sure we're protecting privacy rights. So we're going to be working at those issues.

In terms of all of the comments that have been made in terms of public service values or in terms of improving reporting arrangements, we don't direct the councils. The private sector—they're getting grants from us and they're putting certain things in their bylaws, but we don't give them direction. We try to give them guidance, persuasion. They're looking for tools, because they do want to make good decisions, and we want to make sure the decisions are in the public interest. That's what we see as our responsibility, so that we—

The Chair: But you have to look at the results.

Mr. Howard Migie: We look at results. But we are also looking at a little bit more than results. We also want to make sure that there's due process and that they're following certain good practices.

So we're working at it, and we're going to take the report from the Auditor General, go through all of the points, and we're going to be talking to the council chairs and trying to encourage them to move in that direction as best we can.

Ms. Sheila Fraser: If I may add a remark on that, Mr. Chair, we have looked at the action plan that the department has developed for this. We are satisfied that they are addressing our concerns, and, as is our normal practice, we will be back in a couple of years to do a follow-up to see if progress has been made.

Mr. Rick Casson: Do you feel that rural communities are getting $60 million of value from the operation?

Ms. Sheila Fraser: We have looked at the governance arrangements and not at the funding programs per se.

Mr. Rick Casson: Mr. Chairman, do I still have some time?

The Chair: Yes, you have. You have a couple of minutes.

Mr. Rick Casson: Dr. Morrissey, getting back to GMOs, I know it's off the topic, but we talked about labelling and different ways of labelling food so that it says it either does contain GMOs or it doesn't. Is there a scientific way to take a product, without knowing its background or where it was produced, and determining whether it has any GMO component in it?

Dr. Brian Morrissey: The answer to that is in some cases yes and in some cases no, for two reasons. One is—

Mr. Rick Casson: That's a political answer. That's what we do.

Dr. Brian Morrissey: If, for example, you get a host seed and there's a technology known for testing, then you can test, and there are commercial companies that can do it. On the other hand, if you take something like canola oil, where the protein has all been removed and the DNA is protein, what you have is oil. If it has been well-extracted, you have nothing but oil, nothing to test for, absolutely nothing there.

Mr. Rick Casson: So if there is a product made from—I don't know what to say, a cookie. You cannot determine whether the flour was produced from a GMO seed, or you cannot tell if the chicken that produced the egg that made the cookie was fed corn that was produced from a genetically modified seed. I'm trying to figure out how this would be done.

Dr. Brian Morrissey: In that case it's very hard, because the protein could be denatured if you cooked it or there might not be any protein in it. It could be a canola oil with all the proteins removed.

Mr. Rick Casson: So a genetically modified organism only deals with protein?

Dr. Brian Morrissey: The genetic material is protein.

Mr. Rick Casson: Okay.

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Dr. Brian Morrissey: If you've taken the protein out, as in an oil—

Mr. Rick Casson: Then there's no...

Dr. Brian Morrissey: Some people would argue there's nothing to worry about because there's nothing there. Other people don't accept that argument.

The Chair: Thank you. We're out of time.

Just before we go to Mr. McCormick, Ms. Fraser, let me preface my remark by saying that I'm a strong supporter of the Auditor General's work. I think you people do outstanding work, but I do think that in some instances we have built the institution of the Auditor General into something a little larger than life. The Auditor General is not infallible the last time I checked, and yet when we hear criticisms and concerns expressed by the Auditor General I think it's just taken as a given, which I think is wrong, that whatever concern you have has to be absolutely spot-on, 100% correct, and that you ought not be challenged.

I suspect to some extent there are times when a department feels like saying “get lost”, in the sense that they can respectfully disagree with you and you're not always absolutely right on. Yes, you can find where the navy lost 10,000 cases of underwear or something like that. I'm not talking about that, but I think in areas of say—I'll use an example—CARD, there might in some instances just simply be a disagreement. It's not a matter of someone going off and wasting money; it's just a different approach. How do you respond to that type of comment?

Ms. Sheila Fraser: Thank you, Mr. Chair.

First of all, if we could discuss CARD, there is no disagreement between us and the department on CARD. The objective of our audit was not to look at the funding or how funding was being spent at all. It was part of a broader chapter on new governance arrangements, and we actually put this in as a good example of how the government can go into partnerships with industry, with the private sector, with provincial councils, and do something quite innovative and yet not have to control every single cheque that goes out the door. So we view this as a positive example.

As to our infallibility, I don't think we've ever said we were infallible, but we do spend, I must admit, a great deal of time and care in our audits to make sure our facts are correct. We bring in external advisers and experts on subjects to guide us to make sure we are being reasonable in our recommendations and in our identification of opportunities for improvement, and, yes, at times departments will agree with us and that is duly noted in our reports.

The Chair: I don't disagree with a word you're saying. I think you people do good work, but I have always recognized a streak in human nature that if we establish an institution that we think is important in government, which it is, there's a tendency on the part of human nature to put things up there on a pedestal, and we make it infallible or near infallible. That's not your fault and it's certainly not the Auditor General's fault. It's just something in human nature, and I just think to some extent we have to be a bit careful, that's all, in that we take these criticisms and concerns, which are always respectfully intended, for what they are. They are the work of another group of human beings, that's all.

I'll leave it at that, but we have the Auditor General's representatives come to this committee and other committees over and over again, and I think there is this tendency that whatever you say that is critical and of concern has to be right, that it's infallible. That's all I'm saying.

Ms. Sheila Fraser: Mr. Chair, we would not like to leave that as the perception you have. We do believe in the work we do. We do, as I said, spend a great deal of time trying to substantiate all the facts that we bring before committees, and we do spend a great deal of time with departments validating the facts. If there is a disagreement with departments, that is often flagged for committees, and in many cases it is given over to committees for resolution, actually.

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The Chair: Good point. Thanks.

Larry.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Mr. Chair, and thanks to the witnesses for being here.

I appreciate the fact that I'm allowed to make a comment on GMOs in my preamble here. I appreciate the comments and clarification of what a GMO is that were made by the previous questioner from Alberta. As our committee is going to be very involved, I'm sure, with the issues of labelling and where we go with this, I just want to perhaps remind all of us, including myself, that our first step could be and should be in education and research as to what and where we are. It's not that simple, whether the corn flakes are or are not...

I'm sure there are many challenges and facets in the Office of the Auditor General that are almost as vast as in Agriculture and Agri-Food. It makes me think about cost recovery, public good, private good, and intellectual property. In this case we're dealing with a department that deals with a unique and very special commodity. We all appreciate the Auditor General's office for enforcing good business practices and all that. I'm just wondering whether at any time in your auditing you do include that small measure of whatever because of the fact that the commodity of food is quite popular in this world. I don't know if that can allow you to look at anything in a different light, but I just thought I'd throw that question out.

Ms. Sheila Fraser: Thank you, Mr. Chair. This chapter on intellectual property grew out of the broader chapter we did on user fees, because it does go back to the issue of public good versus private good and how the government's policy on charging for, if you wish, private good is established.

We recognize the whole issue of intellectual property as being very complex and rapidly changing. It does present very serious challenges to the department, and we brought it forward because we think it is something the department needs to act on. But it's not only the department. The government as a whole needs to address this issue in the very rapidly changing and legalistic kind of world we're getting into, with more and more patents and more and more protection. How does the department and the government protect its own discoveries? How does it determine what is public good and what is private good? How does it determine when it should patent and license? We recognize that these are not easy subjects to deal with.

Mr. Larry McCormick: I feel confident that all of us also have concerns for the primary producer in all of these cases and the effects on the consumer. Canada has been known as the breadbasket to the world. I think other continents can and will provide more food, but there's certainly an opportunity there for us to continue, along with better commodity prices.

With regard to technology, which we call biotech, I'm not sure who coined it, but I like the phrase “nothing's original”. A few years ago technology was known as good science.

My question, Mr. Chair, is directed to the Ag Canada people. I'm going to ask this question on behalf of a gentleman who was known to wear a green hat in this town. He's still with us today. He'll never leave us. We can probably never do quite enough research for the right reasons for the agrifood industry. Again, I'm thinking about the primary producers, who seem to come up with the short end of the stick. Perhaps Howard or Dr. Morrissey can tell us if we are paying enough attention and using those dollars wisely to further research in agriculture and agrifood.

The Chair: Does anyone have a short answer? We're nearly out of time.

Dr. Brian Morrissey: I have a very quick answer. My sense is that in agricultural research Canada is positioned not far off the empirical standards suggested by the World Bank. They're suggesting that we should spend 2% to 3% of agriculture GDP on research, and we're somewhere in that range.

The Chair: Thanks, Dr. Morrissey.

Mr. Desrochers.

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[Translation]

Mr. Odina Desrochers: I'd like to begin by commenting briefly on the work of the Auditor General. As I said earlier, his report paints a picture of the current situation for us. Obviously, the powers that be try to focus on the sections of the report which cast them in a favourable light, while we, the opposition parties, try to focus on the negative observations and to make some positive criticisms. Not only am I satisfied with the job the Auditor General is doing, I would like to see his mandate broadened to allow him to inquire into all aspects of government spending. In recent years, we have seen various agencies or organizations try and operate beyond the reach of the AG. I think his mandate should be expanded so that any time public spending is involved, his office would have the right to review the situation.

Dr. Morrissey, you said that you wanted to leave producers free to choose whether or not to grow GMOs for the export market. What would you say if one day, EU countries, Japan and Korea, which have all begun to lobby for mandatory labeling, refused to buy Canadian-grown products? Wouldn't you agree that the longer the Canadian government holds off dealing with this issue, the more our producers run the risk of losing their share of the market? We abide by the rules of the markets, just as we comply with the rules set by the WTO. I explained the scientific side of the equation to you earlier. Suppose that tomorrow morning, the main countries to which we export our products start having doubts about our grain. What would you do if these countries refused to accept our products because we could not guarantee that they are free of GMOs? In my view, this matter warrants priority consideration.

My riding is very rural. This question has come up in my discussions with farmers. I agree that it won't be resolved anytime soon or without considerable effort, but things appear to be moving quickly on this front. A new round of talks will likely be held in the near future at the WTO. Therefore, what can Agriculture Canada do to reassure the industry at the present time?

[English]

The Chair: Let me say, Dr. Morrissey, that there are some hypothetical questions there, and I think a lot of them are policy related. I don't think you're compelled to answer them, but you answer however you like.

[Translation]

Dr. Brian Morrissey: Thank you, Mr. Chairman. I stated earlier that there are two stages to the decision-making process. First of all, Canadian lawmakers can come to the decision that they feel is best, and importing countries can then decide whether or not to buy our products.

As for the export market, whether we're dealing with GMOs or some other commodity feature, the letters of credit usually stipulate the requirements that must be met, failing which the products will not be allowed into the importing country and the bill will not be paid. It's my feeling that GMOs will be subject to similar requirements as spelled out in letters of credit and exporters will be aware of the situation before they actually export their products. It will all come down to a business decision at that point.

Thank you, Mr. Chairman.

[English]

The Chair: You have one minute.

[Translation]

Mr. Odina Desrochers: I understood the comment you made earlier, Mr. Chairman, but while we're on the subject of intellectual property, I think I can ask a question about exports. In any event, you were expressing your opinion. Often, our views differ when it comes to policy issues.

My next question is directed to the Director General of the Adaptation and Grain Policy Directorate. How do you feel about our export prospects? Do you think people will become concerned at some point about the possibility that they're getting a genetically modified product?

Mr. Howard Migie: The policy of the Canadian Wheat Board is that the customer is always right, even when that's not the case. This is very important to the Board.

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Why would we bother to produce a good that we wouldn't be able to market or for which we would get only a minimal return? As Dr. Morrissey said, before a final decision is made about GMOs, we need to do some research. We must also take into account what the customer wants. Buyers must have confidence in the product that they are purchasing. The decision ultimately rests with the industry and in this case, the Canadian Wheat Board represents one component of the industry.

The Chairman: Thank you.

[English]

Larry, do you have one more question?

Mr. Larry McCormick: Yes. I just wanted to know, Mr. Chair, whether the doctor could share or explain, for my benefit—I'm not trying to put him on the spot—the difference between biotechnology and GMO. What is a GMO and how long have we had GMOs?

Dr. Brian Morrissey: That's a tougher question than it sounds.

Mr. Larry McCormick: I realize that.

Dr. Brian Morrissey: Let me tell you the division that I make in my mind—and I wouldn't try to offer this to the table as the only interpretation. The one I find useful is that a genetically modified organism is one in which the genetic material in question has been taken from a foreign species and introduced into the species in question. So you've taken genes from a tomato and put them into wheat.

Biotechnology, other than that, is in two forms. There's the biotechnology that has been going on since the year dot, where you apply technology to biology. If I cut my hair with scissors, it's biotechnology. Scissors are technology; my hair is biology. Traditional breeding is a more sophisticated form.

Generally, when people are speaking of biotech, they're speaking of two pieces. One is the GMO, which is transgenic and moves from one species to another. The other subset is the modern biotech that uses the techniques that Crick and Watson made possible in the forties or fifties when they discovered the helical structure of DNA. What you would do there is take a gene from wheat in China that may be resistant to fusarium and introduce it into our commercial background wheat here. You now have a wheat-to-wheat transformation.

Mr. Larry McCormick: Thank you very much.

The Chair: Rose-Marie.

Mrs. Rose-Marie Ur: I have one last question, Mr. Chair.

I found it most interesting when the Auditor General reported that he felt that Agriculture and Agri-Food Canada had not developed a formal means of assessing the councils' capabilities. With that in mind, in the absence of that assessment method or tools, the Auditor General developed one to evaluate the councils' governance. Is that a normal practice for the Auditor General?

Ms. Sheila Fraser: Thank you, Mr. Chair.

Yes, we have done it on other occasions when there are no existing tools available to do assessments. This tool was developed in conjunction with the department, using the Conference Board of Canada. But we have developed other tools, for instance, the financial capability model. We published a chapter last year on attributes of research organizations. We will be doing one on museums. So for different things that come up in our work, we either will do it in-house or use a contractor to do it if there is nothing that exists.

Mrs. Rose-Marie Ur: Is this ad hoc, rather than an ongoing evaluation of the councils' governance? It was just an ad hoc one that you put together, was it not?

Ms. Sheila Fraser: This was one we put together for the purposes of this chapter, but it is available and I believe it will continue to be used. It could be used in a much broader way, too.

Mrs. Rose-Marie Ur: How often does this occur?

Ms. Sheila Fraser: The development of models? Very rarely. I would say once a year, perhaps, in the last—

Mrs. Rose-Marie Ur: Is that something we should be concerned about then?

Ms. Sheila Fraser: I would hope not, because I think it was done in collaboration with the department. There is a need for this kind of model. I personally view it as a positive experience that we were able to do this.

Mrs. Rose-Marie Ur: Would it not be part of the process, when you're setting up that kind of program, that it should be part of the framework—

Ms. Sheila Fraser: Yes.

Mrs. Rose-Marie Ur: —if you're a good business person?

Ms. Sheila Fraser: Yes.

Mrs. Rose-Marie Ur: Thank you.

The Chair: Thank you.

Yes, Howard.

Mr. Howard Migie: I would like to add one comment to that. In 1995, we were faced with a situation where the government was asking us to let go. That had occurred throughout the government in several places. We were looking for tools, because we didn't have in place the normal mechanisms we have when the government makes all the decisions and spends the money. Those tools have been developed over a number of years.

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In the case of the councils, we were trying to find out for ourselves the best way to look after the public interest and still let go. So for us it really was a learning experience, and it still is. And I think the government is across the board finding out that when we have the private sector taking a greater role dealing with some public issues, we're looking for better tools. So we were very anxious, and we still are. We want to look for better tools.

Mrs. Rose-Marie Ur: I can appreciate that, but as you have said that was in 1995. We're in the year 2000. It is a learning experience, and every day is a learning experience, but we really have to make sure of the bottom line on a program.

The Chair: Seeing no more questions, we'll bring this meeting to a close. I want to thank all of you. We appreciate your work and you're welcome back any time.

This meeting is over.