FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 4, 2001

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[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I call this meeting to order and welcome everyone here this afternoon.

As everyone knows, the order of the day is a study on cost recovery. It's basically a follow-up. As you probably remember, we issued this report, Challenge for Change: A Study of Cost Recovery, before the House was dissolved. But of course, this committee is really interested in finding out the type of progress our recommendations make, and for all those concerned, we will be on top of this issue until we are satisfied with the results. Everybody knows there is serious work to do on this, amongst other issues.

We will have an opportunity today to get an update on what type of developments have in fact occurred. We will begin with the Treasury Board Secretariat, Rodney Monette and David Hum. Welcome.

Mr. Rodney Monette (Assistant Secretary and Assistant Comptroller General, Financial Management Policy and Analysis Sector, Treasury Board Secretariat): Thank you, Mr. Chair.

I would like to thank the chair for the opportunity to provide this committee with an update on what has been happening with the cost-recovery policy review since your committee's report was released last June. Also joining me today is Mr. David Hum, acting director of the cost-recovery policy division.

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Cost-recovery programs have been in place in Canada for many decades. Charging for access to parks, for example, actually began around the time of Confederation. Today there are about 400 programs across the federal government that use cost recovery. Cost recovery is based on generally accepted economic and public policy principles.

As you are aware, we are at present conducting a review of the current cost-recovery policy. This fulfils a commitment to review the policy three years after it was last updated in 1997. The objectives of the review are to determine the extent to which the policy has been achieved, to determine where the policy can be improved, and to document best practices and lessons learned.

[Translation]

I would like to highlight that although the government's official response to your report was not tabled due to the general election being called, our report was given a great deal of consideration in developing the approach to our review. Key issues such as achievement of service standards, completion of impact assessments, determination of private benefits, as well as other concerns that were raised, are being explored in depth to determine the need for adjustments to the policy and our practices. We have listened and continue to listen to the challenges expressed by our stakeholders.

Having just highlighted a few of the challenges, may I also observe that the cost recovery policy has resulted in a number of improvements in government operations. For example, despite service standards not having been achieved in all cases, there has been a significant increase in the service orientation of cost recovery programs, and many have actually increased their service levels with cost recovery. Also, managers of cost recovery programs have become more aware of their costs and alternatives for cost reduction. One of the most important benefits that cost recovery managers attribute to this policy is that they now have a much closer relationship with their stakeholders and are much more in tune with their stakeholders's needs. The results of the policy review will therefore not only document lessons learned and aspects of the policy that need to be changed, but we will also be producing a best practices report to help share some of the positive applications of cost recovery.

[English]

As you may recall from our last appearance here, we are aiming for a balanced approach to conducting the review. Extensive interviews are being conducted with government managers and program stakeholders to ensure we have a comprehensive view of the policy experience since it was last revised. We have 17 departments and agencies participating in these interviews, from Agriculture Canada to Transport Canada, as well as a broad range of associated stakeholder groups, many of which are affiliated with the Business Coalition on Cost Recovery. Examples of external stakeholders include the Canadian Animal Health Institute, the Air Transport Association of Canada, and the Crop Protection Institute.

A significant amount of preparatory work was required prior to engaging departments and stakeholders in interviews. After the committee study was completed last summer, we established the necessary advisory bodies and held meetings to discuss our approach and ensure that all relevant issues would be adequately explored. We have an internal government advisory committee, comprised of assistant deputy minister representation from the 17 departments and agencies most involved with user charging. We also have established an expert advisory panel external to government, whose membership mirrors the expertise that supported the committee's study on cost recovery. The membership of this panel includes the Business Coalition on Cost Recovery, the Canadian Taxpayers Federation, two eminent economics professors in the area of public finance, two public policy experts, and most recently a representative from the Consumers Association of Canada.

We also receive support from a more hands-on assistant deputy minister practitioner group that has been established by Health Canada to deal with implementation issues associated with regulatory programs. Throughout the fall we prepared comprehensive interview and research guides to support our consultation and research. Once this groundwork was laid, interviews were scheduled.

A representative sample of 70 cost-recovery programs has been used for our interviews, although the sample is weighted in favour of regulatory programs, where many of the issues appear to reside. To date 33 extensive interviews with managers and practitioners from the 17 departments and agencies have been conducted, in addition to several stakeholder sessions. In total we've interviewed 75 people internal to government, and 50 external stakeholder sessions are planned over the next few weeks. Sessions usually take a few hours, and although a formal lengthy questionnaire was prepared, participants are clearly getting at the issues of importance to themselves, telling us up front what is on their minds. Once an interview is completed, the interview notes are sent back to the participant for confirmation, to ensure we accurately portray what they have said and we understand the messages they are sending. We feel this level of effort is necessary both to ensure the fairness of the process and to provide meaningful input for those directly involved with and effected by cost recovery. The interview phase will be drawing to a close in early May.

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[Translation]

Along with the interviews, we will also be reviewing available departmental program documentation on such elements as public/private benefits, service levels, impact assessments and the like. Program managers have a wealth of information that is valuable to us.

May I mention two specific studies we have commissioned. The first is a specific study on the issue of public/private benefits that will look at ways to make this key consideration more understandable and easy to implement. It will examine the best available methods for measuring private and public benefits.

The second is a benchmarking study on cost recovery policies in other provincial and international jurisdictions, such as the U.K., Sweden, France, the U.S.A., and several provinces. This Study will survey cost recovery and user charging approaches and experience in these domestic and international jurisdictions. It will include a comparison of charging policies and how they have been applied in a government-wide context, and it will identify best practices and other relevant experience that could help us improve our policy.

[English]

We are also inviting stakeholders participating in interview sessions to provide any additional quantitative or qualitative information they may have regarding their experience with cost recovery. This information will provide us with an understanding of how well service levels associated with cost-recovery programs have been achieved and the reasons for any underachievement, as well as what types of impact assessments are being performed and what stakeholders' expectations are regarding impact assessments.

I should also mention that we have initiated consultations with the Office of the Auditor General regarding their experience in the cost-recovery area, including where and how they feel the policy should be strengthened. We are confident that the information being gathered through the interviews, the documentation review, and various studies will allow us to understand the root causes of the issues that were raised by various stakeholders and your committee report and to appropriately address those issues and revisions to the policy.

Once we have completed the analysis of the results from the policy review, we will be providing an interim report on our findings. In addition to feedback on our findings, we hope to receive preliminary views on the ensuing policy development and consultation. We will be developing draft policy proposals and consulting with various stakeholders over the summer and early fall. We expect to seek Treasury Board approval for the revised policy shortly thereafter.

Mr. Chair, throughout this exercise we have remained committed to improving the policy and its implementation. This requires balancing the interests of taxpayers, citizens at large, business, and other stakeholders within the context of the public good. It means conducting a fair and balanced process. We are also committed to keeping an open mind on potential solutions to the issues that have been raised. This balancing of interests is an ongoing challenge. However, we are not alone in facing this challenge. Various governments around the world have adopted different approaches to cost recovery. Overall, Canada tends to be in the middle of the road relative to other countries, with cost-recovery and user-charging revenues comprising about 2% of total government revenues. OECD countries generally range between 1% and 3%.

It is our hope that as a result of the policy review, we expand the common ground and continue the open dialogue we have with our stakeholders. I think it would be terrific if, as a result of this review, we can move the file far enough along that Canada is the accepted leader in cost-recovery practices, as we are in so many other elements.

In conclusion, your committee has provided an important profile for the issues related to cost recovery, which will ultimately allow us to make a more compelling case for the required changes to the policy. The policy review is not a simple or easy process, but it will allow us to identify the root causes of the concerns of program stakeholders and government managers and make the right improvements.

Again, thank you for this opportunity. I would be happy to answer any questions and to receive any suggestions you might have. Thank you, Mr. Chair.

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

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We'll now move to Health Canada, Diane Gorman, Assistant Deputy Minister, Health Products and Food Branch; and Mr. Brian Glabb, Director, Office of Revenue and Costing Division, Corporate Services Branch.

Welcome.

[Translation]

Ms Diane Gorman (Assistant Deputy Minister, Health Products and Food Branch, Health Canada): Thank you Mr. Chairman and members of the Committee. Good afternoon and thank you for giving us the opportunity to take part in your study on cost recovery.

[English]

We understand you are interested in hearing about what Health Canada has undertaken in relationship to the management of cost recovery since the department appeared before you about eleven months ago. I will focus on new initiatives we have undertaken in addition to the ones mentioned last year.

We have also continued to pursue the key strategies we outlined last year; namely, looking at issues surrounding department policy on implementing cost recovery; supporting senior management with action-oriented committees; developing action plans to follow up on the phase four review of the therapeutic products program cost-recovery initiative; developing a virtual centre of cost recovery by means of a website, which Brian heads; and sharing information, building networks, and examining how best to meet the management challenges we have identified to date. The new initiatives I will describe this afternoon build on these last few themes.

Last year we listened to what our stakeholders had to say to you, the finance committee, about how Health Canada is implementing cost recovery, and we read your report with great care. We heard the concerns about Heath Canada's performance in meeting service delivery commitments. We recognize cost recovery as an important approach to responsible fiscal management and one of many factors in achieving our performance goals.

We know that for industry the acceptability of cost recovery is tied to the timely delivery of services. We also came to better understand the concerns of small business, where cost recovery has had perhaps unintended and sometimes disproportionate impacts on the part of our economy frequently credited as a key source of innovation, employment, and future growth, a sector supporting additional health product choices for consumers.

We saw how many of our colleagues share our concerns about how best to implement cost recovery, and that inconsistent approaches to cost recovery do exist within departments and agencies, and indeed across government. The new ways in which Health Canada is moving forward are built on these observations.

First, here is an overview of these initiatives. As a department, we saw that we did not have a consistent approach to small business issues. Treasury Board Secretariat was also keen that we address such issues, and thus we established a working group on small business. To support us in responding to the recommendations of this working group, we are setting up an internal committee on cost recovery to be comprised of all of our regulatory programs with cost recovery.

As you know from our presentation last year, we already had a working level committee handling many of our forward-looking initiatives to date. We have also sought to use some unique opportunities to move this file forward, one being the creation of the TBS review of cost recovery committee to look at policy. Rod has mentioned this committee and I serve on it as Health Canada's member.

Because Health Canada has long held the view that regulatory departments and agencies face particular challenges in implementing cost recovery, we took the initiative last year to establish the interdepartmental ADM working group on cost recovery. This group communicates its recommendations to the Treasury Board Secretariat and strives to develop a consensus within the community of regulatory departments about cost-recovery implementation issues.

Rod, representing the Treasury Board Secretariat, is a member of this committee. He has stated that the contributions of this working group will be reflected in the policy proposals flowing out of the Treasury Board Secretariat's current review.

I'll describe briefly our efforts to date in addressing the concerns of small business through our working group on small business. We designed a relatively small-scale and simple process, but one that we felt could effectively provide access to small businesses active in the health sector.

Our external members have broad networks. As you know, the Canadian Federation of Independent Businesses alone reaches more than 100,000 members, most of whom are small. The external members of our initiative are also members of the Business Coalition on Cost Recovery. Our internal members represented two major regulatory programs with experience with small business issues, and also our corporate services.

Both external and internal members were tasked with keeping in touch with their respective networks during the working group's discussions and deliberations, to ensure the working group had good information with which to work.

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The working group was established in September 2000, with the requirement to provide its recommendations by the end of March of this year. It has completed its work on time, and our departmental executive committee is going to consider its recommendations later this month. However, not to pre-empt that discussion, I will share with you the working group's key findings and recommendations to the department.

The working group's findings will probably not surprise you. You will see that the challenges for small business are primarily a function of limited staff and financial resources.

For us at Health Canada, working within the public sector involves a number of unique challenges, and accountability requirements to the many affected parties, and our performance can benefit from more direction and support from the Treasury Board. My colleague from Treasury Board Secretariat, Rod Monette, and I have talked about the need for Treasury Board Secretariat to increase its capacity in this area.

The recommendations, as you will see, while developed with small business in mind, will assist all businesses working with Health Canada. These recommendations also address many of the concerns captured by your report last year.

The recommendations the working group is making to our departmental executive committee in a few weeks are structured more as objectives for action plans, and thus the first recommendation proposes a mechanism to ensure effective implementation; that is, the health portfolio cost-recovery committee will be assigned responsibility for coordinating implementation of the working group's recommendations.

The second recommendation is for approval to explore ways and means of reducing the disproportionate impacts of fees on very small companies, on an immediate and temporary basis as well as on a long-term basis. Many of our regulatory programs are slated to examine their fee schedules in the next few years, but the working group wanted to ensure some relief in the interim period. As you know, developing long-term solutions takes time, in part due to the regulatory process requirements.

The third recommendation seeks to begin to address the concerns relating to the timely delivery of services. The working group recognized this as a complex issue, but this recommendation represents an important step toward improving performance.

The fourth recommendation looks at ensuring the availability of adequate dispute resolution options for small businesses, options that are affordable, neutral, and effective.

The next two recommendations are directed at supporting a more consistent approach across the department to building productive, long-term working relationships—that is, not only providing more and better options for problem solving, but better ways of exchanging information in recognition of the importance of ensuring everyone's time is well used and well directed.

The seventh recommendation calls for the examination of a number of legislative and regulatory issues that have long been problematic for small business, the impacts of which have been exacerbated by the introduction of cost recovery. At the same time, the working group urged us to look at support for effective and equitable compliance.

Small businesses who do comply with regulatory requirements by paying fees told us they want a level playing field with those competitors not actively meeting Canada's regulatory requirements.

Finally, the working group concluded that we need more support from Treasury Board. How departments and agencies work with small business is a government-wide issue, and Health Canada is committed to act consistently within practices adopted across the federal government. The working group recommends that Health Canada seek direction from the Treasury Board Secretariat concerning some specific matters—and Rod and I have discussed this. We're looking forward to working in collaboration with the Treasury Board Secretariat.

We're also participating in the Treasury Board Secretariat review of the cost-recovery policy in various ways, and I sit as a member of their committee. I mentioned this earlier, but we have also established a new interdepartmental working group on cost recovery at the assistant deputy minister level comprised of regulatory departments. This is helping us move forward by identifying other challenges.

Recently this group sponsored a study, and I would like to highlight some of the findings of this study. Treasury Board Secretariat, again, has made a commitment to consider these findings in their review.

The study looked at distinguishing between public and private benefits, approaches to dispute resolution, and incentives to effectiveness. Overall, the findings indicate significant systemic inconsistencies between departments, and even within departments. Many of these cost-recovery initiatives involve the same stakeholders, and it appears that there are unclear expectations on the part of stakeholders about the role of cost recovery in delivering services. We found that there are few financial incentives to introduce or to enhance cost recovery, such as reinvesting revenues earned in the programs that generate revenues. As user-fee revenues often represent only a marginal proportion of the cost of running programs, especially in regulatory departments, cost-recovery revenues play only a minor role in meeting our overall funding challenges.

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I would like to conclude with some comments on our big-picture look at cost recovery at Health Canada. We at Health Canada see that cost recovery is but one of many governance tools, and we have to ask ourselves how cost recovery can best serve us in meeting our paramount commitment to help the people of Canada maintain and improve their health. We also have to recognize that we are working in times when demands for departmental resources are increasing exponentially. Consider the activities relating to new gene therapies, genetically modified organisms, natural health products, innovations in biogenetics and biotechnologies. Even in established programs, we are finding that demands on existing resources are greater. Witness the increased numbers of submissions on pesticides and human drugs. These are not only more in number, but they are more scientifically complex.

Direction and assistance from the centre will be critical in assisting us to develop appropriate consistent approaches to cost recovery within the department. This is important in helping us work out how we can achieve one of the key goals of using cost recovery as a management tool, that is, to support an equitable distribution of the limited public funds dedicated to the health of Canadians.

Once again, I'd like to thank the committee for its ongoing work in the area of cost recovery and for your attention this afternoon.

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

We'll now hear from the Business Coalition on Cost Recovery, the co-chair and president of the Canadian Animal Health Institute, Jean Szkotnicki, and also the Canadian Federation of Independent Business, Mr. Garth Whyte and Mr. Jack Soule.

Welcome.

Mr. Garth Whyte (Member, Senior Vice-President, Canadian Federation of Independent Business): Thank you, Mr. Chairman.

I'm Garth Whyte and I'm senior vice-president for the Canadian Federation of Independent Business. I'm joined here by Jean Szkotnicki, president of the Canadian Animal Health Institute and co-chair of the Business Coalition on Cost Recovery, and by Jack Soule, who's from DuPont and is also a chair of the industry coordination group for CEPA and a key member of our coalition.

As members of the Business Coalition on Cost Recovery and on behalf of the Canadian Federation of Independent Business and the 100,000 small and medium-sized business owners we represent, I want to thank the committee for inviting us to appear before it once again to discuss their cost-recovery policy and its implementation. I think it's a key word that we discussed last time. I know Treasury Board is looking at policy, but our members are concerned about the implementation side as well.

As members of the Business Coalition on Cost Recovery, we want to commend the committee for following up on your June 2000 unanimous report, Challenge for Change: A Study of Cost Recovery. Today we want to talk about what the government has done, or more accurately what it has not done, on cost-recovery policies since then. But first I want to remind you about the Business Coalition on Cost Recovery—our history and our goals.

The Business Coalition on Cost Recovery was founded in 1998 and includes many of Canada's leading business organizations. Together we represent small, medium, and large enterprises in every sector of the economy and across the country. Collectively, our members generate more than $330 billion in economic activity and provide jobs for well over two million Canadians living in every community and neighbourhood in the country.

The coalition understands and accepts the need to pay reasonable fees for federal services, but when these fees were implemented, the government committed to making them fair, accountable, and transparent. As the committee highlighted in its report, “a sound cost-recovery policy requires effective oversight, funding and dispute resolution”. In our experience, the current cost-recovery policy does not reflect these basic commitments.

I'm going to break away from the text. Just for the benefit of our translators, I'm going to break away a little bit to talk about CFIB's concerns and then I will go back. Jean will talk about the coalition.

It's hard to believe that it was almost a year ago when we appeared before this committee to discuss this issue. CFIB made two presentations to this committee, which I've resubmitted to the clerk. At that time we said, and I quote, “government fees are a serious and growing concern among our members in the small business sector”. We also said “Many small business owners view federal fees as an unfair tax grab that does not reflect the value of the service provided”.

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We also said:

Many small businesses have been hurt by huge fee increases while other businesses find themselves paying increasing fees for services they don't need or want.

Finally, we said:

The government's cost-recovery program is broken and it's time to fix it. If left unchecked, government fees will continue to disproportionately hurt small businesses, which in turn impedes job creation and hinders Canada's overall productivity.

Ultimately, Canadian consumers are also hurt because higher fees and poor service lead to higher product prices and fewer products on the market. Everyone loses in the end.

We gave this committee results of a survey that showed that government fees and penalties have become a major impediment to improving a firm's productivity. More than one out of four of our members identified this issue as a priority to improve their firm's productivity. You have the graphs and the survey results before you.

We believe the above statements are as relevant today as they were when stated a year ago. In fact, I wouldn't hesitate to resubmit our past submissions because very little if anything has been done to fix this issue. The Treasury Board cost-recovery review is still ongoing. Last year, we said we had been waiting 18 months for a reply to our concerns.

There have, however, been two positive initiatives in this area. First, as Diane just mentioned, the Department of Health has formed a working committee comprised of department officials and private sector representatives—Jean and I are included in that working group—to look at the impacts of the department's cost-recovery policies on small business. This process, led by Brian Glabb, resulted in an excellent report with several recommendations to alleviate the burden on SMEs. The report will soon be presented to the department's senior management, who will hopefully endorse and implement those recommendations.

I think this process should be used as a model for other departments to follow. If it's implemented by Health Canada, I think it should be used as a model. Our members will be very happy.

The second positive initiative was this committee's report on cost recovery. Unfortunately, the government did not respond to the committee's recommendations because Parliament dissolved and there was an election. The Business Coalition on Cost Recovery and CFIB strongly endorsed all the recommendations in this report, and we urge the committee to resubmit it without additional changes.

I just want to point out that there are several reasons why you should resubmit this excellent report. First, it sets out several issues for Treasury Board to consider for its own review. Second, it recognized that more needs to be done beyond the Treasury Board review. We agree with this committee that cost-recovery policy should be reviewed by a federal committee process and that fee revenues should be published annually with publication in the budget. The report also makes important recommendations beyond cost-recovery budget review, such as establishing a red tape commission, which the majority of our CFIB members strongly support. Finally, this report had support from MPs from all federal parties, and it highlights the importance and urgency to deal with this issue.

We hope that resubmitting this report will lead to responses from the government that will result in quick action to benefit not only individual businesses but to improve Canadian businesses' overall productivity and Canada's economic growth in the future.

I'd like to pass over to Jean to elaborate on the Business Coalition's views.

Ms. Jean Szkotnicki (Co-Chair, President, Canadian Animal Health Institute, Business Coalition on Cost Recovery): Thank you, Garth.

Before starting, I would like to ask for the committee's indulgence in terms of time allocation. We believe as a coalition that it is important to review the situation since we last met, as well as to review the committee's recommendations one by one and provide our observations to you. This may take our presentation to about 15 minutes.

As Garth also said, the BCCR supports your report without reservation. We support all 12 of the recommendations, which we believe would go a long way towards addressing the issues of fairness, transparency, and accountability.

Right after the report was released, the BCCR approached Treasury Board to ask how they would address these recommendations in their cost-recovery review. We wanted to ensure the review provided ministers with concrete, actionable recommendations for change in the areas highlighted by the committee. We didn't want to just see a review. We wanted to see an action plan come out of the review.

We also told them we were extremely concerned with the approach they had proposed for the review. If you will remember at this committee's last meeting, it was not the Treasury Board policy that was at issue; it was implementation of the policy. We think there need to be tough questions asked rather than questions on policy. For example, rather than—as the Treasury Board is doing—directly asking businesses whether performance standards are being met, the department is polling on questions such as whether the cost-recovery program is meeting cost-recovery guidelines.

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As the committee pointed out, without comprehensive baseline data on the current state of cost recovery, it is impossible to have any meaningful success in the reform of Canada's cost-recovery program. Unfortunately, Treasury Board has decided that the review will not be dealing with the detail issues on implementation.

I am tabling two documents. The first is a six-page letter the BCCR sent to Rod Monette outlining our recommendations for the review, and the second is Treasury Board's two-page response.

We have one simple question: If Treasury Board does not know which cost-recovery programs are in compliance with the current policy, how can they make meaningful recommendations for reform?

As you can see, the BCCR is extremely doubtful the current Treasury Board review will bring any meaningful improvement to cost-recovery implementation. In fact, we think it may end up being a step backward. At the same time, it has been 10 months since your report was issued. I believe it is important to go over the individual recommendations and talk about what has or has not been done to address them.

Your first recommendation was that a committee of Parliament conduct a government-wide study of cost-recovery and user-charge policy to evaluate its benefits and costs. This should serve as a basis of any policy reforms.

We support this recommendation. The current Treasury Board review has forgotten about the issues of transparency, accountability, or fairness. We feel the need for a parliamentary review is even more pressing than before.

The second recommendation was that information on user charges should be made easily available to all interested parties. It should include the formula used to determine the user charge; an indication of whether it is a mandatory charge; the amount of revenue it generates; the performance promised by each user-charge program; and the estimated public-private benefit split of the fee as well as justification for the split.

We thought that finding this information would have been a key priority. In fact, we did not think Treasury Board could even recommend effective improvements without first understanding the current situation. One of our key recommendations to Treasury Board was that they conduct an analysis of the recommended data to provide a baseline to support the review. Treasury Board officials told us they had no intention of gathering the information recommended by the committee.

Recommendation 3 was that fee revenues should be released annually with the publication of the budget. This recommendation is still important, and we would ask that Treasury Board officials today commit to following through on this recommendation.

The fourth recommendation was that more central guidance is needed in implementation of the cost-recovery and charging policy. Specifically, stricter guidelines for determining public-private benefits should be put in place.

Again, this recommendation has not been followed up on. Specifically, Health Canada's therapeutic products program cost-recovery review failed to address this key issue. A further piece of that work, the TPP working group on medical devices cost recovery, is not even trying to address the issue of private-public benefits as part of its review. This issue is fundamental to the essence of cost-recovery policy, which states that there should be fees for a service.

Health Canada is not the only department having a hard time determining public-private benefit. Environment Canada is about to introduce fees for new substance notification reviews. These proposed fees would be charged to the first company submitting a new chemical substance to Environment Canada's domestic substance list. Once the chemical is added, any company is free to commercialize the substance without paying any charge.

It is hard to see how charging the first company to list and giving everyone else a free ride on the registration meets the current Treasury Board policy of charging only for a private benefit received. As part of their review, I asked Treasury Board to examine this issue and put in place clear, concise, binding guidelines for showing public-private benefit.

Recommendation 5 was that uniform standards should be established by Treasury Board and applied by all departments and agencies. Deviations from those standards must be justified by the departments and agencies.

Once again, this does not seem to be part of the Treasury Board review. As far as we know, Treasury Board has no intention of developing uniform standards. More importantly, there is no plan to monitor compliance with standards or seek justification for failure to meet them.

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Recommendation 6, an open, clear, and independent appeal process for those affected by user charges is essential to the well-functioning of any cost-recovery policy. The committee recommends that the government create a specific appeal process and set up a third-party ombudsman to deal with user-charge complaints.

This is clearly one of the committee's most important recommendations. In your hearings last year, you heard that while the current Treasury Board policy requires the availability of a dispute resolution mechanism, the board had no idea which departments or agencies did or did not have a system in place. Given that it is part of the current policy, the BCCR does not feel there is a need for a further study of the policy prior to the government taking any action to correct this deficiency.

It has been ten months since the committee's report. Our question is, quite simply, why has the government not proceeded with the establishment of an ombudsman, as in the committee's recommendation and their own policy?

Recommendation 7, all new user charges and changes to user charges should be subject to scrutiny by a parliamentary committee and adopted only if approved by the committee. This would aid accountability and ensure that only appropriate fees are implemented. Parliament should also re-examine existing charges to ensure that they are well designed and implemented.

Once again, the BCCR sees this as a fundamental recommendation. We believe there must be more accountability to Parliament for the levying of user fees. Again, we fail to see why there needs to be any further study before this recommendation is adopted. Therefore, we ask the Treasury Board to commit to this recommendation in principle.

Recommendation 8, the committee recommends that Treasury Board state explicitly what is required in business impact assessments and verify that they are being conducted by the departments. Wherever possible, international comparisons should be made.

Recommendation 9, the committee recommends that the government-wide review of user charges examine two things: first, how well user charges approximate efficient pricing, and second, whether cost recovery has resulted in underfunding, from general revenues, of cost-recovery sections and over-funding of others. It should address such issues as mandatory user charges, performance standards, and the treatment of public-private benefits, with the goal of making the policy more explicit in its requirements.

This recommendation is still valid. We asked Treasury Board to undertake this type of comprehensive review as a first step in identifying current problems with cost-recovery policy and implementation. However, as their response clearly indicates, Treasury Board will not be conducting a government-wide review.

Recommendation 10, where possible, fees should be reduced if service commitments are not met. This is another critical recommendation. The fundamental principle of cost recovery is a fee for service delivered. It is just common sense that if service commitments are not met, then the value of the service is diminished.

Treasury Board and individual departments have as yet done little to implement this commitment. Health Canada, in its phase four review of the therapeutic products program, specifically excluded performance issues from its review. The Bureau of Veterinary Drugs, my industry's main regulator, takes five times longer than their promised performance standard but still charges the same fees. In fact, if I submit a submission today and it meets all requirements, it does not even get picked up for three years for the actual review, and yet I have paid 50% of the fee.

Most importantly, Treasury Board has no concrete proposals for implementing this recommendation or even monitoring departments' compliance with performance standards. Most damning of all is the fact that Treasury Board has no idea how many agencies and departments are even meeting their service commitments. How can a meaningful review be conducted without this most basic information?

Recommendation 11 was that other enforcement mechanisms should also be considered—for instance, alternative service providers and the use of international standards. Again, we support this recommendation and have asked Treasury Board to include an analysis of it in their review. We ask Treasury Board and Health Canada to commit today to including an analysis of this issue in their ongoing work.

The 12th recommendation was that the government set up a red tape commission in order to evaluate and streamline regulations. Although clearly beyond the scope of the specific review of cost-recovery policy, this is nonetheless critical to promoting a favourable business climate. Again, we want to work with this committee to see this recommendation implemented.

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I will now turn it over to Jack Soule from DuPont for some final remarks from the coalition.

Mr. Jack Soule (Senior Research Scientist, Environmental Science Group, DuPont Canada Inc.; Business Coalition on Cost Recovery): Mr. Chair, the BCCR has been at the forefront of the call for cost-recovery reform. Like this committee, we believe an efficient, accountable, transparent cost-recovery policy is crucial for promoting investment, research and development, jobs, and innovative product availability in Canada.

We saw the committee's June 2000 report as a watershed for cost-recovery policy. We supported it wholeheartedly and committed ourselves to working cooperatively with government to implement its recommendations. Unfortunately, in the ten months since the report was issued we have become convinced that many departments have little interest in working with us. We are concerned that Treasury Board's long-promised review will ignore most of the issues raised in the report. Most departments, with the exception of Health Canada, have been slow to respond, and even Health Canada, while attempting to develop proposals to improve implementation, will not guarantee that individual agencies will follow up. The Bureau of Veterinary Drugs, for example, unilaterally decided not to participate in Health Canada's review of its therapeutic products program.

Of most concern to us is that many of the recommendations you made require no further study to be implemented. Cost-recovery policy already requires effective dispute resolution, yet the government is no closer to resolving this issue than when the committee first made its recommendations. Similarly, there is no evidence Treasury Board is even interested in monitoring compliance with service commitments, let alone enforcing a reduction in the fees when they are not met.

Despite these fundamental concerns, new cost-recovery programs, such as the substances notification program, continue to be introduced. It's time to get back to the basics. These are the core principles of the 1997 cost-recovery policy: equity, efficiency, accountability and service standards, partnership, cumulative impact, and mediator. As the finance committee understood, we are not asking anyone to reinvent the wheel. We just want the federal government to properly implement its own policies.

Mr. Chair, in closing we make the following requests. The government did not respond to the finance committee's report, because the last election eliminated the requirement for a response. We ask the committee to resubmit its report to Parliament, along with the request for a government response. Second, until the issues raised by the committee are resolved, we ask that a moratorium be placed on any new fees. We understand that this moratorium exists in some departments, but not others. Again we need consistency. Finally, as we have shown, it has been ten months since this report was issued and not one recommendation has been implemented across government. Businesses and consumers need action. Treasury Board and other departments must start implementing recommendations like the establishment of an independent ombudsman and a process for reducing fees when performance is not met. The time for studies is over. The time for action is now.

Thank you for your committee's ongoing interest and support on this issue. Jean, Garth, and I will be pleased to answer your questions.

The Chair: Thank you very much.

We'll now move to the Consumers' Association of Canada and Ms. Jennifer Hillard, vice-president, issues and policy. Welcome.

Ms. Jennifer Hillard (Vice-President, Issues and Policy, Consumers' Association of Canada): Thank you very much. I bring apologies from Jean Jones, our health chair, who appeared with me last time we came to this committee, and from our national president, Gail Lacombe from Quebec. Unfortunately, without Gail here, I am afraid I won't even be able to introduce this in French.

The Consumers' Association of Canada is a 53-year-old, independent, not-for-profit, volunteer-based organization with a national office in Ottawa and provincial and territorial branches. Our mandate is to inform and educate consumers on marketplace issues, to advocate for consumers with government and industry, and to work with government and industry to solve marketplace problems in beneficial ways. All our policies are based on specific issues framed within a set of general principles. Eight such principles come from the Consumers International organization, and these include the right to choice, safety, information, and a healthy environment.

We really thank you for the opportunity to respond to the report you brought out last fall and to follow up on the work we did on this issue in June last year.

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CAC believes that cost recovery was really increased during the last decade, as Canada struggled with problems of a mounting deficit and changing demographics. The Consumers' Association of Canada didn't oppose the concept of user fees, as our constituency, which is really the average Canadian consumer, was expressing concern about the national debt. However, we recognized that such a concept required careful implementation and posed some significant risks if not done well. Both the report of this committee, following last June's round table meetings, and the 2000 report of the Auditor General, in assessing the overall impacts of current cost-recovery programs, have identified some very negative impacts.

Cost recovery has been one measure to implement the integration of environmental, health, and social costs into the cost of doing business in Canada, a move towards sustainable development. It was also intended to create efficiencies and complement the service quality agenda of the government, a move towards thinking of Canadians as clients in the delivery of government services.

Systems referred to as cost recovery have been applied widely to varied consumer level services, such as passports, immigration documents, citizenship, and national park access. They've also been applied to the work related to approval of products and services to be distributed in Canada that could negatively affect Canadian society or the health and environment of Canadians. It's important that all these applications consider not just the cost of the service delivered, but the value of the product to Canadians. The Auditor General's report is eloquent on the topic of properly assessing the implementation cost of recovery programs.

CAC's position on this topic is little changed since we last made a presentation to this committee in June. No matter what sector one represents, there seems to be general dissatisfaction with the current system of cost-recovery programs. We believe that in many cases these measures went too far and have put health and the environment at risk by putting them up for sale. While we generally support the concept that business and industry should pay a fee for the privilege of operating in Canada, we have concerns that this puts them in a position of being a client and allows them to influence the regulators. The Tait task force expressed concern about the emphasis placed on new values as services to clients and customers, as opposed to traditional values that focused on respect for law and accountability. This is very much a concern and a perception with the Canadian public at large.

It has become clear from the last report of this committee and the Auditor General's report that the government objectives have not been met by the current cost-recovery policy, or at least by its implementation. The relationship between actual costs and fees levied is not clear, consistent, or transparent, which gives these programs the appearance of market-distorting taxes. The relationship between the need to regulate for the public good and the value to industry of licensing of products and services has not been properly assessed, and with that failure follows an inability to correctly determine the ratio of cost recovery against legitimate cost to taxpayers.

Cost recovery was supposed to provide part of the efficiency process. Downsizing and implementation of quality management objectives within government were also part of an attempt to improve efficiency. The combination of these should have produced better and most cost-effective government services for all Canadians. CAC has looked at the Auditor General's recent report on the implementation of the quality initiative within the federal government, and the results are somewhat disappointing. The 2000 report of the Auditor General also identifies the failure of cost-recovery programs to identify real needs and costs of programs so that they can be delivered more efficiently.

CAC believes there is a danger that the effectiveness of the regulatory process will deteriorate and standards may be lowered in order to meet the demands of those paying costs if we cannot better implement cost-recovery programs and improve government efficiency. CAC believes it is critical that the impact of the downsizing policy should be assessed at the same time as cost recovery and the implementation of quality management are examined.

We'd like to address the specific recommendations from the last report of this committee based on the June round table discussions, at which we also made a presentation.

If it's all right with the committee, we have printed the recommendations into our report, and I won't waste your time reading them out. I'll just summarize them and then give you our comments on them.

Recommendation 1 is to do with the upcoming Treasury Board review, suggesting it would not be broad enough in scope. CAC supports this recommendation, but we'd like to draw attention to the need for a careful definition of the term “benefits” and the need to determine to whom the benefits will accrue. The definition must, in this context, consider the value Canadians put on their government services, the reasonableness of covering part of the costs from taxation, and benefits that cannot be assessed in dollars.

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CAC is particularly concerned that the review examine the impacts on consumer health and protection and not limit its focus to the impact on business and competition.

Recommendation 2 deals with information on user charges being available to all parties. While CAC supports the concept of transparency in recommendation 2, we are not convinced that the government should be issuing a promised performance for each user-charge program. We believe considerable public debate needs to occur about what is reasonable in terms of performance promises made by government departments to industry.

Recognizing the need for timeliness, we cannot support the possibility that either cutting corners to meet promised timelines or responding as a private sector service provider to those being regulated is in the public interest. The case study of Health Canada's therapeutic products program presented in part III of this committee's report reinforces our rejection of these possibilities.

CAC believes that the transparency and accountability of any cost-recovery system is critical to its acceptability to all stakeholders. Business must recognize that the costs they pay are only a portion of the real cost; the rest is still borne by taxpayers. This must be clearly communicated to ensure that regulators are not pressured by those being regulated. It must be clear that they are not just service providers for the regulated. Their prime responsibility is to ensure that regulations are implemented to protect the health and safety of Canadians.

Recommendation 3 is on the publishing of fees. We do not have a problem with recommendation 3 provided that this is not implemented until all other parts of a good cost-recovery program are in place.

Recommendation 4 is on central guidance on implementation. CAC sees some merit in this recommendation. We believe guidelines for public-private benefits are the key to effective implementation of cost-recovery programs within the societal interest of all Canadians. We also believe this reflects the recommendations of the Auditor General's report.

Recommendation 5 is on the establishment of uniform standards. While we accept the concept of uniform standards, we're not convinced that Treasury Board is the correct place to establish such standards, except for those related directly to the dollar costs and benefits of these programs. We trust that, when established, these standards will include standards for accountability, fairness, and implementation in accordance with the recommendations of the 2000 report of the Auditor General.

Recommendation 6 is on the independent appeal process. CAC agrees with this recommendation but would suggest that in designing this process the work on redress mechanisms currently underway in Industry Canada's Office of Consumer Affairs be used to prevent reinventing the wheel. Redress systems must be available to all stakeholders.

Recommendation 7 deals with greater scrutiny by a parliamentary committee. We would support this recommendation, provided it included a built-in appeal mechanism available to all interested and affected parties, not just those with a financial stake in the outcome.

Recommendation 8 is to state explicitly what is required in business impact assessments. Again, CAC would question whether Treasury Board is the appropriate place to set standards for these impact assessments given that they should assess societal impacts as well as financial impacts. It is important, when making international comparisons, that these be made on the basis of social, environmental, and health protection, not just on the financial impacts of the system.

Recommendation 9 is the government-wide review of user charges. As with recommendation 4, we support the committee on this recommendation. We are also encouraged to see that it is recommended that this review be done on a government-wide basis. Such a review should serve to re-establish a fair balance between the contribution to the cost of regulation from applicants to the system and the public purse. We believe this is essential to the restoration of faith in the government's ability to regulate in the public interest.

Recommendation 10 was on fee reduction. Obviously, since we have a level of discomfort with government making service commitments, we would not offer wholehearted support to this recommendation. CAC is represented on many multi-stakeholder processes that relate to regulation, and we find that industry frequently demands fast and rigid turnaround times on approvals in return for cost recovery, which they see as a fee for service. They believe that cost recovery gives them the right to demand a certain level of service. This changes the whole regulator-regulated relationship to one of client and service provider, which is not acceptable. In order to maintain the credibility of the regulatory process, it is important that all stakeholders recognize that cost recovery is not a fee for service and that operating in Canada is a privilege not a right.

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Recommendation 11 is on other enforcement mechanisms and market-based regulations. While CAC is supportive in principle of exploring alternative approaches to regulation, we also believe that such alternatives are only effective if the government continues to play a significant role in the development of these other mechanisms and delivers the required ongoing scrutiny when they are implemented.

In order to maintain accountability to the people, it is critical, when applying alternative mechanisms, for the government to retain the big stick for use when such mechanisms fail. Market-based regulations are a carrot. The government cannot release the stick when implementing them.

Recommendation 12 is on the red tape commission. CAC would support this recommendation if the commission is also going to examine where regulations are appropriate and where not in the public interest.

Several points from the National Partnership for Reinventing Government, detailed in the last report of this committee, are particularly significant for CAC. Those are the points about creating grassroots partnerships, pushing plain language and compliance assistance tools, and building partnerships with the communities.

We then went into some of the specific case studies that you had in section 3 of your report. We particularly examined the comments on the Pest Management Regulatory Agency and the therapeutic products program, because we've had a measure of involvement in both of those over the last few years.

We have some concern for the bias of this analysis of both the PMRA and also the TPP seeing far too much reliance on the comments of industry and complaints about the cost of the system and delays in the process. There is very little reference to the value of our pesticide regulatory system or the TPP program for the protection of the health of Canadians and our environment.

With particular reference to the comments on the PMRA, Canada is a very large country with ecosystems that are often dissimilar to those in any other country. Extra studies are required for the Canadian environment, and we believe Canadian regulators must examine these studies.

There are also safeguards built into the Canadian system that are not required elsewhere. One of these is for the submission of worker health studies; another is for studies on the efficacy of products. While industry, including the agricultural sector, argues against the cost of having the regulators examine efficacy studies, CAC would not support subjecting our environment to absorbing many tons of agricultural chemicals that are not proven to deliver some benefits. We would be surprised if this committee believes these studies are a waste of money.

While we understand the concerns of smaller businesses and support the idea of prorating user fees against income, we would encourage this committee to be reasonable in addressing the continual cries from industries about the negative impacts of cost recovery on Canadian competitiveness.

CAC has questioned the time period over which the agricultural, chemical, and pharmaceutical industries expect to recoup registration fees and has found this to be unrealistically short. We would ask that in addressing the issue of Canadian competitiveness, consideration be given to comparing the period over which those paying cost-recovery fees expect to recoup these fees against the period over which they are given marketplace protection under patent rules or other similar legislation.

In summary, CAC believes there is an inherent danger in linking the provision of regulatory examination and oversight too closely to the cost of service and the portion of these costs that is recovered from those being regulated. We believe the greatest risk in trying to equate the prices charged with the actual cost of delivering the service is that it may expose regulators to excessive pressure from those being regulated.

A portion of regulatory cost should remain with the taxpayer. Taxes should provide the portion of the service costs that ensures Canadians of regulatory protection.

Thank you very much for your attention.

The Chair: Thank you, Ms. Hillard.

From the sound of the panellists, they're all in agreement with the state of affairs.

We'll move to the question and answer session.

Mr. Epp.

Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you.

Thank you to the presenters. It's good to have you here again.

I recall that at the time of our initial study of this initiative, most of the presenters were...if not overtly in favour of the cost-recovery policy, they didn't object to it strongly. From the industry people we heard from today, I think that position stands. Do you agree? Could you nod your heads favourably? If you have concerns, it has probably more to do with the lack of implementation than anything.

• 1635

I'd like to ask a few specific questions.

First of all, Mr. Monette, with respect to some of the accusations that have been sent to the Treasury Board, while these other people were presenting, you must have thought, hey, they're wrong there. Would you like to share any of those thoughts that came through your mind as they were talking? Then anything you missed that I'm thinking of, I will....

The Chair: Anything that would be admissible.

Mr. Monette.

Mr. Rodney Monette: Thank you, Mr. Chair.

Initially, Mr. Epp, I would like to say that we consider the views of all of our stakeholders very important. That goes for Jean and Garth, and all of the stakeholders, whether they be business or the Consumers' Association. So we have been listening to them.

Concerning the work we've been doing, I think I can honestly say we've had an honest, open process. I've invited as many stakeholders as possible to tell us their views. We're going through a significant amount of work to understand how different people feel about this work.

I'd be quite happy to go into any details, but as an overall comment, I think we're listening very carefully. We've listened to the committee report, and there are a number of issues where we think we can make some improvements. Overall, we're listening carefully, and we clearly do want to make some improvements.

The issue has come up as to whether we are looking just at the policy or at the implementation. I think both of those things go together. You can't really have a good policy unless there are ways of making it work, so we really have to look at both of those, which is what we're doing.

Mr. Ken Epp: Okay, thank you.

Mr. Garth Whyte: I'd like to respond, first off, that we know Rod, and he's a good guy. This is not an issue about being a good guy.

I think he knows who we are. We were here beside him. I think you'll remember what happened. We have 100,000 business owners as members. We work on one member, one vote. We were prepared to survey our members on issues.

I haven't met with Rod since the summer of 2000. We made a presentation to the full cost-recovery coalition. We're not invited to the advisory committee or anything about it. I believe the advisory committee has had one meeting for three hours on this issue.

When we last met, and I see it's reflected in the report, there was a sense of urgency to get on this. On the flip side, we were consulted to death, very positively but to death, by Health Canada in terms of what we can do and how we can work together. I only wish Treasury Board were doing the same.

I keep hearing about all the stakeholders. I consider us a fairly significant stakeholder, and we weren't approached at all. We still haven't been approached.

I'm not looking for work. It's a little late in the day for us now to get into this process; it's done, I suppose. But that's why we're looking to this committee to keep doing some of the things you're talking about.

Mr. Ken Epp: Mr. Whyte, is Treasury Board perhaps thinking that you are represented via Health Canada?

Mr. Garth Whyte: No. That's another question.

I think this is a multi-layered issue. Treasury Board addresses some of the issues, the department has to address some of its issues internally, and then there are the political issues and ultimate accountability, which we really have put a lot of stake in at the committee level.

I think there are three processes happening. The two stars in my mind have been this finance committee and Health Canada at least in trying to look at it.

But if I go back to our members and say, look, I have two great reports here, they are going to say, yeah, great, it still hasn't addressed the issue.

Mr. Ken Epp: Mr. Monette, since you're charged with basically implementing the cost-recovery policy of the government, could you venture a guess as to what percentage you've achieved? Are you 5% down the road, or 95%, or somewhere in between? Where are you?

Mr. Rodney Monette: Is that in terms of how much of the policy has been implemented?

Mr. Ken Epp: Yes.

Mr. Rodney Monette: We're still doing research with various departments, but based on the information I've seen so far, it would seem to me that most of the departments and agencies we've talked with comply to one extent or another with most elements of the policy. I'm not saying there can't be significant improvements made.

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Some of it is not always the way it seems. For example, one of the problems with the cost-recovery issue that has been identified is, do people know what the costs are, or do departments know what the costs are so that they can charge the right amount?

We've heard from a number of folks saying that departments don't always know what the costs are. Our research so far would indicate that most of the departments we work with actually use our costing guidelines, which leads me to believe the real issue might be communication on that particular element. So it's important that we understand what the real problems are. Some of it might be communication, where in fact on the surface it looks like something else. It's important to get to the bottom of it.

Mr. Ken Epp: One of the things we hear is that there's a lack of consistency from department to department. So the poor small business owner out there who's trying to make ends meet, meet his or her deadlines, get in the program, be there when the market is there, and so on, is being stymied.

I think one of the reasons they said they support this program is because they were eager to say, well, finally now we'll be funding this thing and we'll get some timely response from these guys so we can do our business.

So in a sense, yes, they said it is a greater tax. We heard that. One of the presenters today said this is a tax grab, in a way, yet when I asked him whether he agreed with it, he said yes. I think it's in the anticipation of getting something for their money, something they need that they've been asking for.

I'm not accusing you, but I'm asking a sincere question when I ask what percentage of the way you are along. We need to deal with this thing, and we need to deal with it rapidly. So I ask that question, and is there anything we can do about it?

This is a long preamble, but one of the problems in Canada when you look at our low dollar and everything is this issue of productivity. In this particular instance, it might be properly said that the implementation of this policy is a huge break on our level of potential productivity. So defend yourselves on that.

Mr. Rodney Monette: If I could comment first on the issue of consistency, because I think that's an important issue and one that we agree certainly needs to be looked at, I think as Treasury Board Secretariat we can show improved leadership on that by helping departments understand and see best practices that are being used in various departments.

But as a little bit of context, the cost-recovery policy covers a whole lot of cost-recovery areas. The regulatory issues we've been discussing here are about 17% of total cost recovery. Health Canada, for example, has about 2% of the total cost recovery of the Government of Canada. So there are many different types of cost recovery.

In our policy, one of our challenges—and I'd appreciate the views of the committee on this—is having, on the one hand, a general policy and principles that are appropriate for the whole Government of Canada, yet many different departments that have very different kinds of programs that need different approaches.

One of the concerns that has been raised is the issue of private-public benefits and how you determine what those benefits are. At Transport Canada, for example, they have a way of doing that that looks at their cost structure. At Canada Customs, as another example, they have a way of doing it that says for basic services there's no charge, but if you have a specialized kind of service, then you charge.

If you go to the folks who produce the hydrographic maps, they have another approach, which says that if I'm giving a map out to a member of the public who isn't using it to make a profit, you don't pay for that, but if I'm giving it to a business and the business is using that to generate profit, then you do pay for that.

These are various approaches that we are trying to understand through our discussions and our research. Our challenge will be to determine how they should apply generally, or conversely, are there specific areas of cost recovery that we need to zero in on? It's a bit of a balancing act, and our challenge at the end of the day is to make sure we're balancing all the interests of all the stakeholders in a way that is fair to everybody.

Mr. Ken Epp: Mr. Chairman, I have many more questions and would like to be put on the list for the second round. I would like to give others a chance now.

The Chair: Yes.

Mr. Monette, is this a priority of the minister?

Mr. Rodney Monette: Absolutely.

The Chair: It's right up there.

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Mr. Rodney Monette: Mr. Chair, if I may say, from my own view as a public servant, I'd like to think that in many areas we're leaders in policy. I would like it if my colleagues around the world came to us and said, you've got a really good way of doing things, we want to adopt your practices. I think we should strive for excellence on this, and I think we can.

The Chair: We won't have the time for you to respond to every statement made, particularly in the presentation of the Business Coalition on Cost Recovery. I would be interested in your point of view, if not orally, perhaps in writing to the committee, on what the coalition is actually stating and what your version of this reality is—in other words, a rebuttal for each point.

Mr. Rodney Monette: Yes. We have talked with the coalition about their concerns, Mr. Chair, and I think one of the things the coalition would like us to do is a far more in-depth study in departments, in other words, go in and actually look at costs and performance standards and be very hands-on in how we're actually extracting the information from departments. And then there are the kinds of guidance we would provide.

One of the counterbalances we have to be aware of when we do this is that departments have ministers who are responsible for those departments and they have program managers. There are about 400 cost-recovery programs, and those managers live in their programs every day, so they know better than we do how to manage their programs. So the way the Treasury Board Secretariat normally works with departments is that we provide them with guidelines and policy advice—and yes, we should be, I agree, providing them with direct assistance on various methodologies and how to implement. But at the end of the day, it's those managers in those departments and those ministers who are accountable.

So I think where the coalition would like to have seen us go a lot more deeply into departments and maybe feels we're going to miss the boat, because we're not going in deeply enough, we feel we are getting enough information through our research to make the kinds of adjustments that need to be made.

The Chair: This is a very involved process—lots of people are involved, and layers. For us to get some sort of change happening, when should this committee call you back and say to you, Mr. Monette, as you know what the issues are, can we have an update report on it, but with actual changes? Right now I think you're still exploring.

Mr. Rodney Monette: That's correct, Mr. Chairman.

The Chair: Right. So when do you think...?

Mr. Rodney Monette: Our intent is to look at various options for change through the summer and early fall. I would think that by the fall we will have some very specific proposals on improvements, and at that time we could give you a far more concise report on our findings and the kinds of changes we feel need to be made.

That said, there are certain things we know now we can improve. As I mentioned, in the area of improving our leadership and ensuring a sharing of best practices amongst departments, there are many things we know we can do to improve the current situation. Mr. Chairman, to answer your question specifically, I would say the fall would be the best time.

The Chair: I know there was an election call and unfortunately we weren't able to get a government response on this particular report. Were you getting ready to deliver a response?

Mr. Rodney Monette: Absolutely, Mr. Chairman.

The Chair: You were?

Mr. Rodney Monette: Yes.

The Chair: So can we get the documents you have available?

Mr. Rodney Monette: Mr. Chairman, I'm not sure what the protocol is respecting that. I would have to ask the people who know what the appropriate protocol is with respect to that.

The Chair: We could reissue this report and bring it back to the House. By the way, when you answer the criticisms of the Business Coalition on Cost Recovery, you're also addressing some of the issues of the report. We want to stay on top of this issue, which I think is very important. I'm just wondering if there's anything you can give us as a quasi-interim response to the report. If not, we'll reissue it, present it back to the House, and we'll wait.

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Mr. Rodney Monette: Well, Mr. Chairman, I'm sure my minister would want me to be fully open and transparent in terms of what we're doing. Again, I'm not quite sure what the parliamentary protocol is with respect to reports.

I can tell you that the issues of service levels, of costing, of dispute resolution—all of those issues are very critical to us. We know they are areas that we will need to have a look at.

The Chair: Okay.

Mr. Epp.

Mr. Ken Epp: Mr. Chairman, I was wondering about the wisdom of taking this report and putting the names of the current committee on it and just resubmitting it without any change at all. Would that help to speed things up? I guess I'm asking you or the parliamentary secretary, because I think you must probably agree that we need to address these issues.

If it's a matter of not having enough resources then we've got to get them in there and get this thing working. Even with respect to the cost recovery itself, one of the criticisms we've heard is that in anticipating revenue to the departments from cost recovery, the treasury has cut off some funds to departments, which instead of helping them be more efficient has even slowed them down further. So I would really strongly support doing what was suggested here—resubmit this thing. We don't have, from these witnesses at least, any cries for huge changes, but let's do it and get the ball rolling here.

The Chair: In fairness, Mr. Monette, when we asked for a government response, we were serious. We weren't doing it for fun.

Mr. Rodney Monette: Yes.

The Chair: So unless we can get a sense of at least an update on where you're at.... Your submission indicated a process, and I know it's going to be lengthy because these things take time, but we need to speed up. It's almost eleven months now—sorry ten months.

Mr. McCallum.

Mr. John McCallum (Markham, Lib.): Thank you.

My questions were in the same spirit. Perhaps I don't have to say very much because I wasn't on this committee when this report was done. I wasn't even in politics at the time. But having been here a couple of months, I have the impression that things move with a certain deliberate speed in Ottawa. I notice that the date of this report is June 2000 and that it says 150 days. So had there not been an election, that means it would be November/December 2000. And how many months did the election take?

I guess we have to go all the way back to the drawing board after the election, but I would have thought the people in the departments were not out electioneering and might have been working even when there was an election.

So I'm echoing the chairman's question in a different way. How come it takes so long when this report is now almost a year old?

The Chair: Mr. Monette.

Mr. Rodney Monette: Mr. Chair, Mr. McCallum, I can assure the committee that we took very seriously the issues that were raised in the report. We built those into the research we're doing now and the questions we're asking.

I'm personally very interested in understanding these issues. In fact, I've recently commissioned a study on private-public benefits that I think will be very helpful in that regard.

We also have a study looking at international benchmarks, but when we pulled together.... We know the committee is very interested in this issue and the recommendations you have prepared are recommendations that you would want us to look at. So we've taken you seriously, and we are looking at all of those issues.

Mr. John McCallum: One last point, if I may. Much as I don't always agree with Mr. Epp, I think what he said strikes me as a sensible idea, because I didn't hear anybody having grave reservations. So rather than go through the months that would be required to do a new report, we should just keep the one we have. Does that make sense?

The Chair: It sounds very sensible to me, and thanks for pointing out that Mr. Epp has done something right.

Mr. John McCallum: Sometimes.

The Chair: Most of the time.

Mr. Ken Epp: I'll take it from wherever it comes.

The Chair: Exactly.

Mr. Garth Whyte: Mr. Chair, I just want to bring something to the committee's attention. Rather than put all our eggs in Treasury Board's basket, we've talked over and over again that there are different levels of responsibility or accountability. For example, listing fees is part of the budget process. It's almost $4 billion worth of revenues. To me, that's a no-brainer, and that was recommended in this report. We shouldn't have to wait for a Treasury Board review to do the things that are in this report.

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There are times when a legitimate cost-recovery policy butts into another legitimate policy. I'll give you an example. Statistics Canada's mission is to inform Canadian citizens, business, and governments about the evolution of their society and their economy in high-quality national statistics. Yet there's a cost-recovery policy.

Small businesses fill out all sorts of forms. They don't get very much information about their sector, and then they have to pay for the privilege of getting that information. But more important, students.... There was a reporter who complained, after he received a reward, that most of our students are writing about the U.S. economy because they can get the information free online, but they can't write about the Canadian economy because they have to pay for it.

Now who deals with that? Would that be Treasury Board or would that be a committee process?

Then there is the cumulative impact of fees. Treasury Board says we're not looking at that. Well, who does look at that? That's where we get down to real decisions here on what we're talking about—the cumulative impact of fees. Are they worth it in some areas?

Those types of decisions are reflected in this report. They go beyond the scope of Treasury Board review. That's another reason for reintroducing this, I believe.

The Chair: Thank you, Mr. Whyte.

Mr. Cullen.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman.

I guess one of the issues we're wrestling with is that the committee needs to get a formal response from the government. That has to come, ultimately, from ministers as to whether the protocols require the report to be reissued. But at some point the ministers need to respond. Obviously Treasury Board has the lead, but it would seem to me that we'd need a coordinated response. For example, Mr. Whyte, you said there are some budgetary issues here. If we say fee revenues, I'm sure that means budgeted fee revenues. There would probably have to be some document that people would actually be interested in looking at—apart from yourself.

What I'm saying is that that might be a finance issue.

Mr. Garth Whyte: Yes. That's right.

Mr. Roy Cullen: There might be something from the user departments that has to be coordinated—whether it's reissuing the report to Parliament or whether it's a request to the ministers that they respond formally. I don't know the protocol, frankly. But I think that's something we need to deal with.

I find this somewhat frustrating, as I'm sure we all do. But I had a question. Mr. Monette, Mr. Whyte raised a question that he prefaced by saying the Business Coalition on Cost Recovery is a pretty serious stakeholder group on this matter, and I would agree with him.

He said there had been no communication, essentially, for some long period of time on this matter. I find that a little disturbing. I wonder whether you could comment. Would there be any rationale for it, or what's your explanation?

Mr. Rodney Monette: Well, Mr. Chair, Mr. Cullen, we have had communication. I did appear before the whole committee of the Business Coalition on Cost Recovery. I can't remember whether it was the end of September or October. It strikes me it was October. I know that was a few months ago, but I did personally go and meet with the whole group.

We have set up an external advisory panel. I think Jean and Garth said it's true, they have only met once. That was in December. But Jean was there and another individual from the BCCR. Our next meeting, I think, is in about two weeks. So our first meeting was to get their views on how we should proceed. This next meeting that we're having in a couple of weeks is to look at the results so far and to answer the questions they had in December. My staff met with the coalition.

I think, David, it was in January because they had some concerns with how we're proceeding.

Having said all that, Mr. Cullen, I can honestly say that I think the coalition has done a very good job of stating their views. We know what their concerns are. They've been very clear about that, so it's not a matter of having to go back to them and ask them what their concerns are. They've been quite clear on what they are.

Mr. Roy Cullen: I would just urge you now to keep that communication and dialogue going.

Mr. Rodney Monette: Yes.

Mr. Roy Cullen: It seems to me, looking at this, that it's a very complex problem. You have the issue of policy versus implementation, as one aspect. You have a communications issue. You have competing objectives.

Frankly, at the departmental level...Ms. Gorman, I appreciate the exercise you're working on now—looking at incentives, looking at performance, etc.—but when you mention incentives it conjures up.... Performance measures are always in the context of what your objectives are.

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The companies in my riding, like Bayer and BASF, tell me, and I take it to be the case, that if they're going forward they're quite prepared to pay a user fee based on proprietary services or products, but they expect performance and they expect delivery and they need to remain competitive.

At a personal level, I worked at the Treasury Board Secretariat many years ago in British Columbia. I know our message to the departments was to go out and recover costs because we needed to fight the deficit. Now we've become more sophisticated and at the federal level it's more than that.

I'm wondering, what are the sanctions Treasury Board can use? In other words, every year, or most recently, departments come forward to Treasury Board in terms of program integrity, in terms of all the A-based budgets, etc. I know at the triple-A level in British Columbia, if departments weren't performing in terms of cost recovery, we would say, that's fine, but this program integrity request is going on shelf B. Our objectives then were a little more crude. We wanted cost recovery because it got out of line. But you put together a more comprehensive policy. Why don't you use the sanctions you have to ensure compliance with those policies?

Mr. Rodney Monette: There are a number of avenues Treasury Board can take when in fact there's non-compliance with policy. Before I mention those, I would say at the outset, in responding to your question, Mr. Cullen, that at the end of the day the most effective environment I've experienced is when you have a voluntary compliance, so the managers in the departments see it the same way we do. So it's not a matter of telling somebody to do something; it's a matter of them wanting to do it because they think it's the right thing to do. That's always the point we try to get to, where we have agreement on what we're asking for so that people want to do the right thing.

To specifically answer your question about things we can do, Mr. Cullen, to ensure that departments are following our policies, we have audit and evaluation practices. In fact the President of the Treasury Board just recently announced some new improvements in our audit and evaluation. That's a very important way of doing things.

For example, if there is a policy that says you have to have the right way to do private-public benefit analysis, and if we set out an approach to do that, then the audit and evaluation folks would have a look at that and they would comment on it. There's also the Auditor General who looks at those things. They comment on that as well. That's another way. Also, through our program branch we try to stay in touch with the departments.

Mr. Roy Cullen: I can understand that if you can get a voluntary movement going it would be the preference, but then you'd have to ensure that your objectives are aligned.

Mr. Rodney Monette: Yes.

Mr. Roy Cullen: I'm a little confused on that because if I'm a department.... Maybe you could clarify the whole question. If I'm collecting user fees, do they go into the consolidated revenue fund or...? It seems to be a mixed bag.

Mr. Rodney Monette: Yes.

Mr. Roy Cullen: There are some departments that can actually access this revenue. So if I'm getting beat up a little bit in the budgetary process, maybe this is a way to recover some of that if I can get my hands on it. And I'm putting it in the vernacular.

It's hard to get everyone on the same page if we have a different set of objectives. Your objectives, at the policy level, might be to say, yes, we want cost recovery, but we want it to be fair and we want it to be transparent. I think this is your policy, and I'm hoping you're living up to it. We want it to be understood, we want it to be performance based, we want it to be...etc. We want departments to have processes by which they can measure against these norms, etc. In all cases, are you going to have departments or agencies aligned with that objective, or is it, in some cases, going to be a battle for you to achieve that?

Mr. Rodney Monette: Mr. Cullen, it's always a challenge when you're going through a policy change process to get as many people on side as you can. To a certain extent, that's one of the reasons why we've taken the time we have, because the various departments that operate under the cost-recovery policy have folks who have some very specific and often differing views on how we should proceed. Our challenge is to try to get everybody, through consultation, to the point where we're by and large on the same page on those things.

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You mentioned, Mr. Cullen, the incentives and you inquired about the amount of revenue that departments get to keep versus how much goes into the consolidated revenue fund. At the moment, on a government-wide level, they get to keep about two-thirds of it and about one-third goes into the consolidated revenue fund.

But you're right, that is an incentive. What we're finding out through our research is that there are many other incentives that people are referring to. One is they feel they're closer to their clients. They feel they better understand the needs of their particular stakeholders and clients. In a lot of cases, even though they haven't always met the service levels—and Jean and Garth have clearly said they have concerns around that, and there are legitimate concerns—they feel overall they're making improvements in those sorts of things.

But we have to balance that. As Jennifer has said, on the one hand you want to be concerned about meeting your standards. But on the other hand, would you want someone who's doing scientific research on an important issue to feel they're being rushed along when the science can only happen at a certain speed? That's a public good interest, and you have to balance those.

Mr. Roy Cullen: Thank you.

Mr. Rodney Monette: I'm sorry, Mr. Cullen, I don't know if I answered all the questions you had.

Mr. Roy Cullen: That was helpful.

Really it's a big management job that has many facets to it. The federal government is a huge organization. I think we need, Mr. Chairman, to somehow get a formal response through the ministers. We can't, I don't think, put the officials in a position where they're supplying information to the committee that may not have.... We need a formal response. It seems to me it's a formal report.

I think you're quite correct, Mr. Chairman. We need to keep on this; we need to keep advocating fair policies, transparent policies, policies that are implemented across government. I think it's an important exercise, and I look forward to seeing the government's response. I know that if there's a part of it that deals with finance, I'll make my commitment to push the answer along on that one to get an answer back to the committee.

The Chair: Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chairman. And thank you to all the presenters here today. It's like déjà vu all over again with all these presentations.

Mr. Chairman, in view of the importance of assessing the political will from the perspective of the President of the Treasury Board, I'd like to move a motion that the committee invite the President of the Treasury Board to appear before the committee in response to this report.

I would move that motion. I believe it is seconded by Mr. Cullen.

The Chair: With the major quorum you have....

Mr. Scott Brison: It's the only chance we have sometimes.

I think we should move my motion when we do have a quorum, seconded by Mr. Cullen. I think we're meeting on Monday next. I spoke with Mr. Epp and Madame Picard. I think it would be a constructive motion if we could get the feedback directly from the President of the Treasury Board on that.

I appreciate everybody's interventions here today, those from the public service and also from the private sector groups. I happen to think, as one of the people who was on the committee when this report was written, that it's a very good report. I'm very interested in what the response will ultimately be to this.

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I have one quick question, Mr. Chairman, to do with the notion of a regulatory budget. This idea has been debated at length in Congress, but it's also one my party proposed in its platform.

That was a very good platform, by the way, Mr. Chairman, and all four Canadians who read it really thought it was extraordinary!

The Chair: Oh, there were four?

Mr. Scott Brison: Yes, there were four.

Part of the platform suggested a regulatory budget, where once a year all new regulations would be included in the document. It would be debated by parliamentarians, with the costs of each regulation to be assessed and included in the budget. This would include the costs of implementation and enforcement, which are both government-borne costs.

But the third, and perhaps the most important cost, is the cost of compliance. That's the one we seldom take into account when we're looking at costs. And also through risk analysis...the risk analysis methodology is fairly sophisticated. We also have a benefit and try to quantify benefits. Some issues, particularly those in areas of public safety, are very difficult to quantify in terms of benefits. I would not be seen to be diminishing those, if you will, soft benefits or those that can't be quantified.

If we were to do this once a year, it would elevate the roles of individual members of Parliament and increase the levels of scrutiny of these new regulations. It would also provide a greater level of accountability on the genesis of some regulations. I'd appreciate your feedback.

The Chair: Who would like to go first? Mr. Whyte.

Mr. Garth Whyte: We strongly support that.

We were part of the Treasury Board's joint forum on paper burden reduction. We actually co-chaired it back in 1995. The presentation was in 1993. We were involved provincially across the country. There are different names, a regulatory budget, a calendar of regulatory events. It's important to have.

This is a positive thing. I don't see this as pointing fingers at anybody. If we know all the things we have, we could ask “Why are we doing this and then doing this? They're conflicting.” We don't know unless we put it together.

As Mr. Cullen pointed out, yes, I would read the document listing fees, but if Manitoba can list all its fees, why can't the federal government? If it's going to be almost $4 billion in revenues, shouldn't it be out there as an important list? It should be there.

Once we see all those things, we'd be able to say, “Wow, look at these conflicting regulations. Is this actually our policy, with these conflicting regulations?” It's very important, and it was very good that the committee tacked on the 12th recommendation to deal with this issue.

When we made our presentation, we put that forward to our members, and it's been there, number two or three on the list of issues, for a long time. It's a worthwhile proposal.

The Chair: Ms. Hillard.

Ms. Jennifer Hillard: I suspect it would also address our concerns about looking at where regulations were good and in the public interest and where other mechanisms might be better used.

I agree with you, it's very difficult to measure the soft issues. But I firmly believe if you can do an international benchmarking study on the financial issues, you can probably do an international benchmarking study on some of the health and environmental protection issues as well.

We should be balancing those all off. We shouldn't have this great weighty pile of documentation on finance and then a couple of little pieces from people down here saying “Gee, well maybe this is good for Canadians and we should think about it”, although I recognize this is the finance committee.

Mr. Scott Brison: Mr. Chair, I have an observation.

I can't think of too many issues where groups representing what some would see as divergent interests, consumers, on the one hand, and small businesses on the other—and I say some would see them as groups with divergent interests—have such a commonality of goals, in terms of...or at least the means, in this particular case. It's very rare for this committee to see the level of agreement we have here in terms of some of these general areas.

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The Chair: Mr. Monette.

Mr. Rodney Monette: Thank you, Mr. Chair, Mr. Brison. I'd like to comment on your observation.

We share the same ultimate objective—to ensure the best information is provided; that we're giving you the best information. My observations have more to do with determining the best way to do this.

For example, right now we have a report on plans and priorities coming before various committees, the RPP you may have heard it called. It used to be called the part III of the estimates a few years ago. Should that document contain the appropriate information? This would be one mechanism for doing that.

Another observation I offer as a point of consideration to the committee is this. During our research, a number of program managers expressed the concern that they can't change the rate structure quickly enough and can't respond to their client's needs because of this. On the one hand, you want to make sure you're balancing good, honest information coming forward at a good scrutiny process; yet, on the other hand, you want to make sure managers can respond to things, and they've said the system is sticky. Because of that, their clients are unhappy. They can't respond quickly enough.

So things build up. Then because they've built up, they have to make a big adjustment instead of a whole bunch of smaller ones, and the clients say “ Well, what's happened here?” And you tell them you're actually catching up on what you should have done a few months ago.

Some of these issues have to be balanced in considering this point, Mr. Chair.

The Chair: Mr. Brison.

Mr. Scott Brison: Thank you.

The Chair: Mr. Epp, followed by Mr. Cullen.

Mr. Ken Epp: Okay, I have one quick statement, Mr. Chairman.

In our next meeting, when we're making these motions, we should also move a motion to resubmit this report. That's my notice of motion on this. That's all I have to say.

I have other questions, but we have to go to vote soon.

The Chair: We have to vote at 5:30 p.m. and we have to be there.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Mr. Chairman.

I have a question. Maybe you don't want to answer it today, but just ponder it. Do you think it would be useful for this committee, or some committee of Parliament, to draft a bill dealing with cost recovery and user fees? This bill could provide legislated guidance on what is a public or a private good.

I know these are technical questions, but the draft bill could provide some philosophical stances on what is proprietary, what is non-proprietary, what is meant by performance standards, or service standards in a conceptual way, obviously in terms of legislation. Then, of course, this would be supported in the usual way, by regulation.

Could this committee write legislation like that? Would it be useful?

Ms. Jennifer Hillard: Can I respond to that?

The Chair: Anyone.

Ms. Jennifer Hillard: You'd probably need a very broad, sweeping piece of umbrella regulation with some very intricate regulations underneath it, which would probably take considerable time to develop. It may be exceedingly complex.

On the other hand, if it was done right, it would go a long way to helping restore some of the eroding public faith in government, because the public sees this cost-recovery stuff as popping up all over the place, with very little overarching government control and negatively impacting the good bits of regulation.

I can see many problems with doing it, but also some benefits from doing it right.

Mr. Garth Whyte: I would agree, Mr. Chairman.

If you get too prescriptive, you can restrict the policy. But what we're missing here is a structural process, and legislation can be very useful in putting one in place. In other words, if it's legislated that the committee should review policies in its area, or the committee should look at the overall impacts of the policy, if it's formally put in legislation, it has to be done.

Right now, what's slipping through the cracks is the review of implementation. We have a policy and we've all agreed with the principles of the policy. Our concern is over whether those principles are being adhered to and who's minding the shop.

That's where legislation can be useful.

The Chair: Mr. Monette.

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Mr. Rodney Monette: Mr. Chairman, I just wanted to assure the committee that irrespective of whether or not the government's response was tabled, we did very carefully incorporate the intent of your recommendations and issues into our review, and we will continue down that track looking at those particular issues.

The Chair: Thank you very much.

Our ultimate goal, at the end of the day, is to do what we can as a committee to improve, ultimately, the lives of Canadians, and the users in this case. We're going to have to stay on top of this issue because it's also part and parcel of our commitment to a productivity agenda. We've identified a number of issues that speak to improving the productivity of this country, which is, by the way, a challenge for all of us, and that is the reason why we're going to stay on top of it.

There seems to already be consensus vis-à-vis resubmitting the report. It gives you 150 days, I believe, to respond, so we'll have plenty of time throughout the summer and the fall to....

Mr. Rodney Monette: We will continue on with our work along those lines.

The Chair: I appreciate that. Thank you very much.

The meeting is adjourned.