PACC Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 1st SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, May 2, 2002

1535

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Ms. Sheila Fraser (Auditor General of Canada)

1540

The Chair

Ms. Sheila Fraser

The Chair

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

1545

The Chair

Ms. Val Meredith (South Surrey--White Rock--Langley, Canadian Alliance)

Mr. Denis Lefebvre

1550

Ms. Val Meredith

Mr. Denis Lefebvre

Ms. Val Meredith

Mr. Denis Lefebvre

The Chair

Ms. Sheila Fraser

Ms. Val Meredith

Mr. Denis Lefebvre

1555

Ms. Val Meredith

Mr. Denis Lefebvre

The Chair

Mr. Denis Lefebvre

Ms. Sheila Fraser

The Chair

Mr. Bachand (Saint-Jean)

1600

Mr. Denis Lefebvre

Mr. Claude Bachand

Mr. Denis Lefebvre

Mr. Bachand (Saint-Jean)

Mr. Denis Lefebvre

Mr. Claude Bachand

1605

Mr. Denis Lefebvre

The Chair

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Mr. Denis Lefebvre

1610

Ms. Sophia Leung

Mr. Denis Lefebvre

Ms. Sophia Leung

The Chair

Mr. Forseth

1615

Ms. Sheila Fraser

Mr. Paul Forseth

Ms. Sheila Fraser

Mr. Paul Forseth

The Chair

Mr. Paul Forseth

The Chair

Mr. Denis Lefebvre

The Chair

Mr. Gilles-A. Perron (Rivière-des-Mille-Îles, BQ)

1620

The Chair

Mr. Perron

The Chair

Mr. Gilles-A. Perron

Ms. Sheila Fraser

Mr. Gilles-A. Perron

Mr. Denis Lefebvre

1625

The Chair

Mr. Alex Shepherd (Durham, Lib.)

Mr. Denis Lefebvre

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

1630

Mr. Alex Shepherd

Mr. Denis Lefebvre

Mr. Alex Shepherd

The Chair

Mr. Denis Lefebvre

The Chair

Mr. Murphy

Mr. Denis Lefebvre

Mr. Shawn Murphy

Mr. Denis Lefebvre

Mr. Shawn Murphy

Mr. Denis Lefebvre

Mr. Shawn Murphy

Mr. Denis Lefebvre

1635

The Chair

Mr. Denis Lefebvre

Mr. Shawn Murphy

Mr. Denis Lefebvre

The Chair

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Mr. Denis Lefebvre

Ms. Val Meredith

Mr. Denis Lefebvre

1640

Ms. Val Meredith

Mr. Denis Lefebvre

Ms. Val Meredith

Mr. Mike Jordan (Director General, Trade Policy and Interpretation Directorate, Canada Customs and Revenue Agency)

Ms. Val Meredith

Mr. Mike Jordan

Ms. Val Meredith

Mr. Denis Lefebvre

The Chair

Mr. Ivan Grose (Oshawa, Lib.)

The Chair

Mr. Ivan Grose

1645

Mr. Denis Lefebvre

Mr. Ivan Grose

Mr. Denis Lefebvre

Mr. Ivan Grose

Mr. Denis Lefebvre

The Chair

Mr. Paul Forseth

1650

Mr. Denis Lefebvre

Mr. Paul Forseth

Mr. Denis Lefebvre

1655

The Chair

Mr. Denis Lefebvre

The Chair

Mr. Denis Lefebvre

The Chair

Mr. Denis Lefebvre

The Chair

Mr. Denis Lefebvre

The Chair

1700

Mr. Denis Lefebvre

The Chair

Ms. Sheila Fraser

The Chair

Ms. Val Meredith

The Chair

Mr. Paul Forseth

1705

Mr. Denis Lefebvre

The Chair

Mr. Denis Lefebvre

1710

The Chair

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

The Chair

Mr. Paul Forseth

Mr. Denis Lefebvre

1715

The Chair

Mr. Denis Lefebvre

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 052

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 2, 2002

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good afternoon, everybody. Today, pursuant to Standing Order 108(3)(e), we have before us consideration of chapter 8, “Canada Customs and Revenue Agency--Managing the Risks of Non-Compliance for Commercial Shipments Entering Canada”, of the December 2001 report of the Auditor General of Canada.

Our witnesses today are from the Office of the Auditor General, Ms. Sheila Fraser, the Auditor General of Canada; Mr. James Hood, principal of the office; and Ms. Lilian Goh, a director of the office. From Canada Customs and Revenue Agency we have Mr. Denis Lefebvre, assistant commissioner of customs branch; and Mr. Mike Jordan, director general, trade policy and interpretation directorate.

Without further ado, Ms. Fraser, we'll now get your opening statement.

Ms. Sheila Fraser (Auditor General of Canada): Mr. Chair, we thank you for this opportunity to discuss our report on how the Canada Customs and Revenue Agency manages the risk of non-compliance for commercial shipments entering Canada.

As you mentioned, joining me at the table are Jamie Hood and Lilian Goh, respectively, the principal and director responsible for this audit.

Our audit work for this report was completed before the tragic events of September 11 this past year. The weaknesses we found take on heightened importance in the current environment. We realize that the government has committed additional funds to improve border security and facilitation, but we have not looked at the plans for this additional spending to see how they would address the concerns raised in this audit. We do plan to follow up on how those funds are being used.

For commercial shipments entering Canada, the agency has three main customs-related activities. The first is preventing inadmissible people or illegal or restricted goods such as contaminated food, weapons, or illegal drugs from entering Canada. The second is making it easy for importers to bring legitimate goods into Canada, and finally, ensuring that importers follow Canada's trade laws and regulations for the goods they import.

[Translation]

Mr. Chairman, we found that the agency needs to improve its enforcement activities for commercial shipments at the border crossings to protect Canadians' health, safety and security. While the agency has worked hard over the past decade to improve its enforcement activities it still faces several challenges.

The agency is using a risk management approach to help it focus its efforts on high risks shipments, and we believe such an approach is appropriate. However, in order to be successful, they must have good information. We found that employees that identify or target high risk shipments lack important information. We also found that the agency does not regularly check that importers are accurately describing the goods they are bringing into Canada at the time of importation. The effective use of targets relies heavily on the assumption that the importers are providing accurate descriptions.

We were concerned that the agency was not collecting the information it needs so that it can state with assurance that its risk management strategy is working. In particular, Mr. Chairman, it does not have information to show whether its targeting activities are actually identifying high risk shipments, whether its resources are being used to examine high risk shipments, and whether it is doing an optimum number of examinations at each port of entry based on the risks at the port.

Canada's economy depends heavily on trade. In 2000, Canadian imports totalled $357 billion and exports totalled $412 billion. In the past eight years, the volume of commercial shipments entering Canada has increased dramatically, from 7 million a year to over 10 million today. An efficient process of the border is important in today's economy, because of the high volume of shipments and because many importers no longer maintain large inventories. A delay in receiving goods can shut down an assembly line.

We found that over the past decade, the agency has made it easier for importers to bring legitimate goods into Canada. Many commercial shipments now clear the border in less than five minutes under normal circumstances. Most delays at the border now occur because importers do not have their documentation ready when the shipment arrives or because traffic is congested due largely to overcrowded roads, bridges, and airports.

[English]

Mr. Chair, importers have to follow Canadian trade laws and regulations. For example, there are laws that determine whether goods are exempt from duties and laws that limit the quantity of certain imported goods such as textiles. We found that the agency has spent six years and a lot of effort trying to implement a new approach to its work in this area but has made little headway in assessing how well importers are following the rules.

In 1995 the agency introduced its new approach to compliance verification. In 1998 it assessed the 53 verifications completed since 1995 and reported high error rates in classifying goods, in valuing goods, and in reporting the correct country of origin. It has not done any further analysis since 1998 and cannot show whether compliance has improved or deteriorated since then.

Compliance verification officers told us that they encountered many problems trying to implement the new approach to compliance verification. These problems included insufficient training and guidance and a high turnover of managers. At the time of our audit the agency had made promising revisions to its approach but these had yet to be approved. Furthermore, there was no action plan to implement the new approach and show how the agency would address the problems identified by its officers.

As part of the risk-based processes for importers, the agency has recently introduced custom self-assessment. This represents a dramatic shift in the way the agency does business at highway border crossings. We noted in our audit that a well-functioning compliance verification regime is critical in this new environment. We were concerned that the agency was going ahead with custom self-assessment before solidly establishing its compliance verification regime.

Mr. Chair, we made 12 recommendations aimed at improving the agency's enforcement and compliance verification activities. We have attached a list of these recommendations as an appendix to this statement. While the agency has responded positively to our observations and recommendations, it did not provide us with an action plan at the close of our audit.

The committee may wish to discuss with the agency the specific steps it is taking to deal with the issues we raised and to obtain from it a plan that details how and when it will put these measures into action. The committee may also want to be kept informed about the status of their implementation.

And that, Mr. Chair, concludes my opening statement. We would be pleased to answer the committee's questions.

¹ (1540)

The Chair: Thank you, Ms. Fraser.

In your opening report you mentioned an appendix, which I think everybody has a copy of. I believe, if I am correct, they are just a summation of paragraphs 8.43, 8.63, 8.72, and 8.81 of your chapter 8 report. Am I correct?

Ms. Sheila Fraser: That is correct.

The Chair: It will be deposited with the clerk, so if anybody would like a copy at any time, the clerk will have it.

Now we're going to turn to the opening statement by Mr. Lefebvre. Again, I understand it's been distributed. There was an executive summary and a longer statement, and Mr. Lefebvre is going to read the executive summary. The full text will again be deposited with the clerk, so if anybody would like a copy of the full text they may get it by applying to him.

Mr. Lefebvre, please.

[Translation]

Mr. Denis Lefebvre (Assistant Commissioner, Customs Branch, Canada Customs and Revenue Agency): Thank you, Mr. Chairman.

In her report, the Auditor General recognizes that the CCRA has faced a lot of changes in its customs program over the past decade and has worked hard to improve its enforcement activities for commercial shipments. We use a risk management approach to determine which shipments present the greatest risk in order to focus on those shipments and facilitate the movement of others. The Office of the Auditor General reported that the CCRA needs to improve how we identify high risk shipments, how we analyze the results of activities, and that it needs to take steps to overcome the difficulties encountered in the past as it implements its new approach to verifying that importers are complying with customs trade laws and regulations.

On the whole, we agree with the recommendations of the Auditor General. A number of actions are already underway to improve our way of doing things, and we have ambitious plans to continue to do this.

Over the past few years, the CCRA has been exploring options for enhancing its current systems and forging links between its commercial and targeting systems. We constantly examine different sources of information, different technologies and interfaces, as well as potential mechanisms that will allow us to better relay information to our customs inspectors and targeters.

The CCRA has every reason to believe that its new approach to verifying importer compliance will be successful. Indeed, as the Auditor General stated in this very report, the modified approach to post-release compliance verification that the CCRA piloted in 2000 has had encouraging results. Training is the key to successful implementation and the CCRA is ensuring that verification officers in the field receive appropriate, timely and effective training. Several new courses have already been made available to verification officers to more fully meet their training needs. In the fall of 2001, the agency established a national working group on training to develop a comprehensive training curriculum and a long-term learning strategy for verification officers.

¹ (1545)

[English]

The CCRA is exploring enhancements to information systems that will enable more comprehensive capture and analysis of the results of post-release verification activities. It is also using the information it gathers on the results of verification activities to ensure their continued effectiveness and to set goals for the future.

The safety and security of Canadians has always been the agency's top priority, but it also has the responsibility of ensuring the continuing health of Canada's economy. Operating in a risk management environment, Customs processes significant volumes of travellers and commercial shipments and uses available resources and risk management techniques to get that job done. In order to succeed in such an environment, the agency must strike a balance between facilitating the movement of legitimate people and goods and concentrating efforts on high-risk people and goods.

We continually monitor compliance levels across the country and deploy efforts and resources to areas of highest risk. The CCRA has a comprehensive commercial and contraband targeting program that enables it to detect suspect individuals and commercial shipments. The agency is using leading-edge technology and upgrading its training and training requirements for customs officers so that they render optimum performance in today's increasingly complex customs environment.

In order to further support compliance efforts, we are introducing the administrative monetary penalty system, which we refer to as AMPS, which is a customs action plan initiative and which will secure compliance with customs legislation through the application of monetary penalties and warnings.

The first phase of AMPS has been implemented and we are issuing warnings as part of a transition period until October 2002. This means that clients will have time to assess the potential impact of AMPS on their customs activities and to bring their systems into full compliance.

In conclusion, I believe we are striking the right balance between facilitation and protection. I would be pleased to respond to your questions.

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

Ms. Meredith, on our first round, eight minutes, please.

Ms. Val Meredith (South Surrey--White Rock--Langley, Canadian Alliance): Thank you, Mr. Chair.

Thank you both for showing up and being prepared to answer our questions.

I want to deal with the concern of Ms. Fraser on the lack of knowledge, or the lack of information, that she feels, as I understand it, the CCRA receives in determining high risk, in determining those shipments that you need to be concerned about. Where do you get your information? Is it adequate, and is it shared broadly with the people who are in the intelligence community, that is, from CSIS, the RCMP, and any American counterparts? Do you receive information that allows you to assess risk, and how widely is it shared ?

Mr. Denis Lefebvre: Yes, we do receive information. Perhaps I can start by mentioning that for the information to be useful, we have to bring it to the front-line inspectors who are meeting, basically, 300,000 people a day and 40,000 shipments, I believe, a day. So we have good systems. We had good systems, but certainly now we have even better systems to bring integrated information. Again, some of this involves recent improvements, but we are trying to bring to all our customs officers, in an integrated way, information about the people who are going to come before them and for the shipments they are going to see.

¹ (1550)

Ms. Val Meredith: Do all of the major crossings have equipment now that interacts with the other immigration information systems--the RCMP information system, CSIS's information system, and your own? At all major crossings do you have a system that interacts with all of the others?

Mr. Denis Lefebvre: We are not perfect yet, but, yes, we have a customs system.

Ms. Val Meredith: I know that, but the customs system, as I understand, apart from CPIC, doesn't talk to the RCMP, or CSIS, or Immigration. So do you have a system in place, or are you planning a system, with links to all the various information systems so your front-end officers will have immediate access to the information they need to determine risk?

Mr. Denis Lefebvre: We have a system for bringing to the attention of the officers the higher risk. We have our own system. But we will put in the customs system information that comes from other police data banks or U.S. data banks. There are still some improvements needed, but, yes, we have access, and any police force that believes that someone may want to come into Canada, for instance, will give us the information and then it's part of our system. We do not necessarily give to every customs officer full access to all police data banks, but we do put in our systems the targets, information about the people we want to intercept or people we want to interdict.

The Chair: Ms. Fraser wants to say something now.

Ms. Sheila Fraser: I'd like to add perhaps two elements of response. One, when we were talking about information here, we were not dealing only with the security information, but we were dealing as well with the coordination between the Customs and Revenue Agency and other departments and governments, such as, for instance, the Food Inspection Agency. If you go back to the food and safety audit we looked at, there were difficulties in coordination because the customs agency handles, if you will, responsibilities for other agencies. Health is also another department.

Also, we did do an audit--and I realize things have maybe changed a lot since September 11--in 1999 on travellers, on people coming into Canada, and we had the same issues with information. One of the things we brought up then was that at the highway border crossings the licence plate readers didn't work 30% of the time. So there were issues there about how people at the front line could even access the information that was available to them.

Ms. Val Meredith: Dealing with the concept that you have to deal with the Food and Drugs Act, the agricultural act, the Immigration Act--there's a horrendous number of acts that you have to be watching for and enforcing--how much training do your people have in the agricultural act and on what is admissible and what isn't?

Another question I'd like to ask is, given the Auto Pact, why is there all of the checking in and checking out with the number of trucks that are going back and forth between Windsor and Detroit, carrying the same part back and forth, back and forth, in the assembly of cars? Why would you demand that kind of paperwork when there's not any duty to be paid on it?

Mr. Denis Lefebvre: We work at the corporate level, if you wish, with the Food Inspection Agency, the immigration department, and other agencies. Our officers are trained enough to ask the right questions, to see whether there are the right permits for food or dangerous goods, or whatnot.

Whenever something appears to be contrary to the Immigration Act or there is no permit for something, the food inspection people will take over. So while we are the primary officials for all these acts, statutes, and departments, we are supported at the secondary level for further examinations and questioning by people who are more specialized in the field.

So our people are sufficiently trained and supported in terms of policies and manuals to do the primary role. But if there is something that is not obviously in accordance with the laws and regulations--the permits are not in order, etc.--they will refer these people to the food inspection agencies, or others, who will take over.

¹ (1555)

Ms. Val Meredith: What about the paperwork for the Auto Pact?

Mr. Denis Lefebvre: On your second question, as of three days ago, the Big Three are all on the CSA, the customs self-assessment program. This is a very novel program to identify low risks and to ease the passage and reduce the costs of people who present low risks. We started to develop this two years ago in concert with the Big Three, the brokers, and the shippers, with every—

A voice: What are the Big Three?

Mr. Denis Lefebvre: I'm sorry, les trois grands de l'automobile, Ford, Daimler-Chrysler, et GM.

This moves us even further than what you are suggesting. It moves us from the transactional to the corporate level. We enter into an agreement, reviewing the ability of an importer so that we are satisfied they are trustworthy, that they have books and records to represent fully what they are importing. And we do the same thing for the carrier. We also verify the trustworthiness of the truck driver.

So since December 3, CSA is operational. Initially we had Daimler-Chrysler and Ford on it. GM and CAMI Automotive, which is part of GM, joined on April 28. So presently, they don't have to send any information in advance. The only thing the truck drivers have to do is to give us, through some means, identification of the importer, the carrier, and themselves. Then they go through.

At the end of the month, they send their reports as to what they have imported. They send us the GST, other taxes, and all of the information required. Then we send auditors to ensure they are compliant, through looking at their corporate books and records. We strongly believe this will increase compliance--although we do lesser transactional checking--because it's just a smarter system.

The Chair: Do you have a comment on that point, Ms. Fraser?

[Translation]

Mr. Denis Lefebvre: That's customs self-assessment. It's the trade version of NEXUS.

[English]

Ms. Sheila Fraser: I'd like to repeat perhaps, as we said in our opening statement, that this is quite a significant shift in the way the agency does work at the border. We are fully supportive of a risk assessment approach. You really do want to focus efforts on where you think the risks are highest, not on people who are not importing dangerous goods and stuff.

Our concerns--and I just raise them for the committee--are twofold. There does need to be a strong compliance verification system attached to that, to ensure that the system is working as one would expect. It's largely now GST that is being collected on these things.

The other concern we raised is that many of the problems at the border are not because of processing by customs people but because of the physical infrastructure leading to a border crossing, where people may not be able to have separate lanes, for instance. If you're on the Windsor Bridge, you're on the Windsor Bridge. So you're sort of caught in with all the rest of the traffic.

I think, though, there's been a move to try to make it more expeditious.

[Translation]

The Chair: Mr. Bachand, please, you have eight minutes.

Mr. Claude Bachand (Saint-Jean, BQ): Thank you, Mr. Chairman.

I would like to state that I am here this afternoon because the Lacolle border crossing point is very close to my riding. It's the largest point of entry into Quebec when coming from the United States and the third largest point of entry in Canada.

I listened very closely to our guests' presentation and I wish to congratulate them for their clarity. Two things caught my attention. First of all, Ms. Fraser pointed out amongst other things that the agency has three main areas of activity, the first being to prevent the entry into Canada of ineligible persons, illegal goods or restricted imports, such as contaminated food, etc.

After that, Mr. Lefebvre talked about the importance of more training for customs officers. I'm wondering how this fits in with the fact that in Quebec, 30 customs officers who had very, very good performance appraisals were let go recently. This was done as part of a pilot project, whereas these people had been warned at the outset that the fact that they filled in this document would not lead to any consequences for them. Yet, the agency jumped at the opportunity to fire some 30 customs officers who, I repeat, had good performance appraisal reports. They were fired on the basis of this pilot project.

I'd like to take this opportunity to ask a second question about entry point security. Mr. Lefebvre, how can ineligible persons be refused entry into Canada when there is currently a directive within the Canada Customs and Revenue Agency that states that if a customs officer at any time of the day, notices that an individual may be armed and dangerous, he or she must allow that person to pass and enter Canada as quickly as possible and then call the police?

It seems to me that what you've stated here before us does not square with the reality in the field.

º (1600)

Mr. Denis Lefebvre: Mr. Bachand, in your first question, you alluded to the fact that we fired 30 people in Quebec. I'm not aware this. Are you referring to the fact that there were term employees whose term was not renewed?

Mr. Claude Bachand: That's right.

Mr. Denis Lefebvre: That's somewhat different than a firing. I believe you're referring to the fact that we held a competition in Quebec to staff vacant customs officers' positions which were held by term employees at the time.

If memory serves me, and if we're talking about the same thing, we received some 1,000 applications for that competition. We held a very rigorous competition, using the best selection tools possible, to ensure that the best candidates were chosen based on merit.

I think it was fair that term employees who wanted to accede to the positions in that competition had to apply for the competition like all other candidates, like other Canadians who want a customs officer job. They were evaluated in accordance with objective criteria that had been established by competent individuals. At the end of the selection process, the results have to be accepted, and the people who were not selected did not receive an offer of employment whereas others did.

Mr. Claude Bachand: May I ask a supplementary question?

A large proportion of the people who work at customs are students. I'm told that they can constitute up to approximately 20% of the staff throughout the year and that this can rise to 50% in the summer. Given what you've just told me, there are students who failed this test—and incidentally, they're paid $14 an hour—and who were rehired later, even if they had failed the test, whereas term employees who were earning $24 an hour were not rehired. So there's still a flaw in your explanation.

Mr. Denis Lefebvre: To my knowledge, the students were rehired as students.

Mr. Claude Bachand:Yes, but they also failed the test.

Mr. Denis Lefebvre: They were rehired as students. Therefore, we don't necessarily see these people who failed as long-term employees with a future as customs officers. I think they continued to hold a temporary job as students, because we needed them for operational purposes, but when a competition was held to select customs officers for permanent positions, we came up with rules for selection and we followed these rules. For operational reasons, we may have decided to renew certain students in their temporary student jobs. That's possible.

Mr. Claude Bachand: You refer to long-term customs officers, but the Minister of Revenue compares them to bank tellers. Do you think that's an appropriate expression for long-term professionals who have to pass a major exam in order to be hired?

º (1605)

Mr. Denis Lefebvre: The Customs union, CEUDA, has lead a very led an aggressive campaign to have customs agents recognized as police officers. But we don't agree with that vision. Customs officers play a very important and varied role. As we said at the beginning, customs officers must implement dozens and dozens of laws, each more important than the other, at the border.

Let me give you the example of foot-and-mouth disease which, for nearly a year, represented a serious threat to Canadian cattle. I feel that Canadians greatly appreciated the fact that customs officers were extremely vigilant at every port of entry, throughout the post office and elsewhere during that time.

The threats which Canadians face are continually changing. We've had the threat of foot-and-mouth disease and the ebola virus. There's been the threat of anthrax and of terrorist attacks. Now, we are concerned with the threat of nuclear weapons. In our view, customs agents play a vital role in defending Canada. They are located at strategic points in our ports of entry to help protect all Canadians against these changing threats. They do not represent a police force, but nevertheless play an extremely important role.

I will answer both your questions at the same time, if you don't mind. The union has lobbied for customs officers to become a police force. Under that argument, they should carry weapons. But, given our experience, we don't believe that customs officers need to carry weapons to carry out their work. It's a matter of judgment. I'm not saying that there is never any risk, but it's a matter of judgment and balance.

To support its argument, the union claims that without weapons, they cannot do a good job. The minister simply stated that a weapon is not always the right answer in a given situation. She simply said that an armed confrontation is not always the solution. It's not a solution for customs officers; it is not necessarily a solution for police officers either and it is not a solution for other people, even if they work in another area where they may have to deal with cases of armed robbery or other such types of situations. So, drawing one's weapon and firing on people is not always the right solution. It was simply an example given by the minister, who nevertheless clearly recognizes that customs officers have a vital role to play.

[English]

The Chair: Merci, Monsieur Bachand.

Now we'll turn to Ms. Leung, please, for eight minutes.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.

I want to thank you both for your presentations, Mrs. Fraser and Mr. Lefebvre.

Mrs. Fraser expressed concerns regarding the customs self-assessment program, before you had really gone ahead with a fully established verification system. Mr. Lefebvre, would you like to comment on that? Perhaps you could give us some examples, maybe starting in Ontario.

The second part of my question concerns training for the officers. I think Mrs. Fraser addressed that very clearly. I'd like you to comment on that as well.

Mr. Denis Lefebvre: Thank you, Ms. Leung.

With customs self-assessment, you have to start somewhere when you introduce a new program. We have not built that program overnight. We have consulted to develop the design of the program. We consulted in a very structured way with every stakeholder for about a year and a half. Every stakeholder was invited to participate in the design, including other departments, who have requirements too.

It's a quantum leap moving from the old transactional way, where you look at every truck, person, and driver, to pre-approving the importer and carrier. So we have account managers. They look at the corporations and their compliance records as a whole, as opposed to necessarily having the same transaction-by-transaction attention. We believe this will pay off in the end.

Madam Fraser is not wrong. That's not what I'm saying. We also have to improve our verification program. We in customs call this the back end--especially for commercial. You also have the front end, when the truck or container comes and is released at the border. But the back end is where companies have to account for their goods. We are restructuring our back-end audit program, as a result of the change or evolution in the volume of goods coming in and the introduction of CSA.

So we now work in a totally different way. We still have some progress to make in our verification program, and we are continuing to make improvements.

As for the training of our officers, this of course is always a challenge. Again, we have two training groups at the border, for the back-end and front-end customs inspectors. We have a very good, state-of-the-art training program. It is about a year old, designed with the help of specialists who have experience in our area--customs employees and managers, and specialists in the field of training.

We have also identified quite a few needs for our verification officers. Before, verification officers in the customs world had little to do with books and records of companies. We were looking at the inventory records of the company for customs purposes. But now CSA is based on the records of the company. So we have developed a basic accounting training program for our auditors and verification officers. We have also developed other training to help us be better able to work with the books and records of companies. So it's changing, but we pay a lot of attention to the training of officers.

º (1610)

Ms. Sophia Leung: How does the U.S. side of the border respond to the CSA? Is the process very smooth, or have any difficulties been encountered?

Mr. Denis Lefebvre: Thank you.

We have, through time, developed this program. We have, of course, had dialogue with our U.S. colleagues to tell them what we are doing.

Of course, CSA is basically for trucks that are low risk. We currently have these four importers coming to Canada. But going to the United States, presently there is no similar program.

However, as part of our discussions on the 30-point plan, and the smart border accord, agreed to by Governor Ridge and Deputy Prime Minister Manley, we have engaged the U.S. in a dialogue. It's part of the 30-point plan for the Americans to join in a joint program for low-risk shipments. I can say we are making very good progress in that regard.

Ms. Sophia Leung: Thank you, Mr. Chair.

The Chair: Thank you, Ms. Leung.

Mr. Forseth, four minutes. We're now in the second round.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Thank you very much.

I want to address my comments to the Auditor General. Page 25, paragraph 8.73, says that the overall objective of the customs program is “to protect Canadian society....” Certainly that means people and immigration status as well as goods and so on. We know that customs of course administers the PIL, the primary inspection line. That recognition is certainly about looking at who comes across.

And in paragraph 3 of your opening statement the very first thing you say is “the Agency has three main customs-related activities”; and first in priority you list “preventing inadmissible people”. It's there.

Then I look in the back on pages 32, 33, and 34, which comprehensively list in your public document the acts Customs is supposed to look at from the Auditor General's point of view. I can't find a single reference there to CIC or immigration or citizenship, or anything like that at all.

Can you explain that? Is there a problem? Has there been an omission? Just how reliable is the document?

º (1615)

Ms. Sheila Fraser: This audit, Mr. Chair, only dealt with commercial shipments entering Canada. We did an audit in 1999 on travellers, on individuals, that would have covered the immigration issues. Obviously, we couldn't look at the whole customs activity in one audit, so we broke it out. This one is just on commercial shipments. There was a previous audit done in 1999 on travellers, individuals.

Mr. Paul Forseth: Okay. So perhaps in the title, then, “The Agency administers parts of other legislation for other government entities”, it could have been defined that the list is not complete. It sort of presents itself as the complete list, but you're saying it's not.

Ms. Sheila Fraser: We assumed people would have realized it was only for the commercial part. Anyway, point taken.

Mr. Paul Forseth: Okay, thank you.

I wanted to address a comment to our customs representatives today. Part of the documents talk about internal problems of communication within your own department. Val Meredith talked a little bit earlier about how, if you have communication problems with data bases and various computer systems within your organization, then what about your communications with CIC and other agencies?

Everyone is giving us feel-good messages. The Auditor General says, “Well, there are concerns”; and then you respond and say, “Well, yes, we agree with them all and we're working on them” or “We're considering this”. But I'm still left with an uneasy feeling that we're somehow being snowed with nice-sounding messages but a lack of real, concrete measures for dollar-for-value that say, yes, these are the benchmarks and the comparisons; this is exactly what we've done to raise our standards and comply with the public's expectation that we are protecting our frontiers.

The Chair: It that a question directed to Mr. Lefebvre?

Mr. Paul Forseth: Yes, indeed it is.

The Chair: Mr. Lefebvre.

Mr. Denis Lefebvre: We're not there in the absolute perfection we would like to have, with the total information in the hands of the front-line person who receives a traveller, but we have some very good tools. I'll give you one example.

At all our commercial airports, the passport of any traveller who disembarks must be read. If there is any intelligence anywhere, whether it's Immigration, the RCMP, CSIS, or anyone else, including the U.S., that believes the person may be coming into Canada, we can be told and an annotation will be made. When the person gets to our airport, we use this information, from whatever source, to intercept, interdict, examine, question, refer to immigration... we will do all of those things.

We have licence plate readers at our land border ports--and we've had them for some time. Any law agency that wants to make an annotation about the owner of a car with a certain licence plate, we can, if it's appropriate, put it in our systems and do the further checking if we think this person may be in breech of some law or needs to be examined as a higher risk.

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

Monsieur Perron, vous disposez de quatre minutes.

[Translation]

Mr. Gilles-A. Perron (Rivière-des-Mille-Îles, BQ): Mr. Chairman, before beginning my four-minute round, may I say something off the record which will only take five seconds?

º (1620)

[English]

The Chair: You can't make an off-the-record comment at committee. We're on the record and we are being broadcast, so we can't--

Mr. Gilles-A. Perron: Even so, I'll make my comment. When will the other picture be installed?

The Chair: Soon. For the others, there have been some changes in the landscape here in the last few months, and something seems to be missing. He's asking when it's going to show, and the answer is soon.

[Translation]

Mr. Gilles-A. Perron: Let's be serious.

For once, Ms. Fraser, I am in complete disagreement with your report. It's the first time this happens and hopefully it will be the last.

Why am I in disagreement? Because the report was completed before September 11, and I recall that Mr. Lefebvre came to see me in my office to sell me on Bill S-23, which was supposed to be a silver bullet. At the time, Mr. Cauchon—to name him—felt that the bill was completely innovative and an ingenious solution. Therefore, I'm not very comfortable with the fact that we are speaking to this issue which goes back to a time when things were different.

Since September 11, with the passage of Bill S-23, every problem has been solved. But are the problems which you are raising here today solved or not? I don't believe it, simply because a new system has been implemented.

Ms. Sheila Fraser: I agree, Mr. Chairman, that our audit was completed a certain time ago. The audit was probably finished in August and we are now in the month of May. I certainly hope that in future things will move along more quickly, but you have to understand that it takes at least a year for us to complete an audit. Furthermore, we cannot say anything until the new systems and laws have been implemented so that we can assess their impact. Only then can we review the matter and see where progress has been made.

I nevertheless agree that several concerns we raised in this report have not been addressed and have become more important in light of the events of September 11.

Mr. Gilles-A. Perron: I simply meant that I hope that you will do another complete audit of the Customs and Revenue Agency as soon as possible, bearing Bill S-23 in mind, since it was supposed to change everything.

I have a question for Mr. Lefebvre. About three weeks ago, the Minister of Revenue put out a press release stating that after the pilot project was completed, a program called NEXUS, which worked wonderfully, would be created and that it worked very well. I believe that, but I would like to know when the project will be implemented in other Canadian ports of entry, including Lacolle.

Mr. Denis Lefebvre: To begin, since you mentioned it, I will briefly speak to Bill S-23. Since April 2000, we have had a customs action plan. On and after September 11, 2001, we had to grapple with the following question: are we headed in the right direction?

We quickly concluded that the initiatives taken under Bill S-23 were on the right track, because they not only facilitate the situation, but also bolster security and help to make the system more intelligent. Indeed, Mr. Perron, we discussed the bill. It was passed by the House in October or November. This was after September 11 and I think everyone agreed that it was the right way to go.

As for NEXUS, let me repeat that the pilot project began before September 11. The pilot project took place in Sarnia and Port Huron. We suspended it temporarily after September 11 to assess the situation. But in the following months, especially in December, we held several discussions with the Americans and mutually concluded—because NEXUS works both ways—that the reserved lanes for pre-approved travellers did not represent much risk and that the pilot projects in Sarnia and Port Huron should be re-started in December.

The minister also announced that we would implement the system along the entire border. We will begin in British Columbia in June and are in the process of negotiating with the Americans with regard to implementing it in the other ports of entry. We are very keen on implementing NEXUS along the entire border, including at Lacolle and at every port of entry as soon as possible. We hope that by this fall other border crossings will have come on board and truly hope that NEXUS will be operational in every major port of entry by the start of 2003.

º (1625)

[English]

The Chair: Merci beaucoup, monsieur Perron.

Mr. Shepherd, please, four minutes.

Mr. Alex Shepherd (Durham, Lib.): Thank you. I want to go back to the issue of part-time customs officers.

I don't know if there's some union concern or something, but I've been approached by a number of customs officers who claim--in the Toronto area, in any case--that the part-timers are put beside the full-time people, and the general public can't...there's no difference between those uniforms for the people they meet. Consequently, there's a general feeling that the jobs they're doing are identical, yet the full-time officers are trained more efficiently, more effectively. They have more experience than the part-time officers. The part-time officers are sometimes university students. I guess that's what we're doing.

How do you undertake your function with some kind of uniform quality if there is this mix going on, if there is no way to distinguish a junior employee from a senior employee?

Mr. Denis Lefebvre: First I'll say that during the year we don't have that many students. We don't have a large percentage, just because they are students and we cannot recruit them. The vast majority of our students are during the summer.

We hire them for three purposes. It's a very good job for developing our youth, and we support the government program to encourage the development of our youth. It's also a very good recruitment tool for customs officers. The program has been in place for four or five decades now and it works very well. Also, it is used for operational reasons. In many areas the summer is the peak season, so we use it for operational reasons, there's no doubt about that.

All students receive three weeks of training initially, plus they have appropriate training if they are asked to do specialized tasks. They are supervised, monitored, and mentored on the job. With all of the support we give the students, we find the program has been working marvelously well for decades now. We think it's an excellent program that enables us to discharge our mandate, because the students are not left by themselves. They have the support required.

The Chair: I think Ms. Fraser has a comment here.

Ms. Sheila Fraser: I hate to disagree, but in our April 2000 audit on travellers coming into Canada, we looked at the training for students. Permanent staff receive 14 weeks of training. Term employees, at that point in time--this may have changed slightly--represented 12% of the total workforce, according to our statistics.

The Chair: Is that 12% on the front line or 12% of the total workforce?

Ms. Sheila Fraser: I think 12% of the workforce. I don't think it would be just the front line.

A three-week training course was developed by head office for students. We found in our audit that sometimes the training was shortened to two weeks because of operational needs at the borders. Time spent shadowing a customs officer varied anywhere from one day to one week, and we found cases where refresher training for returning students varied from none to two weeks.

So we did raise issues about the training that was given to students.

º (1630)

Mr. Alex Shepherd: The issue that's being raised by, I guess, some permanent full-time employees is that these students are not trained adequately and that they are in fact letting things get through that a normal officer would not.

Mr. Denis Lefebvre: That's not something we would agree with. I truly believe most of what we hear about students is led by a union drive that does not favourably see having students, because if you aim to become a police force and to highlight a certain part of your role, you have some advantage in getting rid of the students.

Frankly, we have reviewed the policy on students since the Auditor General's recommendations, because we do react to recommendations of the Auditor General. We have reviewed our policies. We've consulted with the union, which has disagreed with us, but we have reissued a fresh policy within the last couple of months, and we have reaffirmed the need for the three weeks of training and made sure that it is standardized across the country.

Mr. Alex Shepherd: Do you give an evaluation--presumably it would be after the fact--of goods and other things that are going through the system and try to evaluate whether it's a consistent process that you have across the border? Or in fact are those with less training prone to more errors? Do you have that kind of an evaluation system?

The Chair: Just a brief answer, Mr. Lefebvre, please.

Mr. Denis Lefebvre: I think our management on the ground in the various ports, who have the responsibility, will all say that students are very often there not just for their first year but for their four college or university years, and they become quite experienced. Also, they are very eager. Our management on the ground will support the fact that students do an excellent job.

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

Mr. Murphy, please, for four minutes.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman. I just have a couple of questions.

Mr. Lefebvre, this question may have been asked before, because I missed a question or two from Monsieur Bachand. I notice on the auditor's report that the recommendations basically have been agreed to. But what I'm looking for, as a member of this committee, is more of a critical path as to when you expect to have....

The recommendation is there; your response is there. You basically agree with the recommendation. You've kind of given a loose summary of what's being done. What I'd like to see is when things will be done, so that this committee and the government can measure when things will be done and how you're getting along.

Mr. Denis Lefebvre: The Auditor General concluded by saying that at the time of the report there were no specific detailed action plans with timetables to improve what she identified as in need of improvement. We will. We have started. At this point we do not have full action plans, but we will develop for each of our responses a full-fledged plan with timetables, because we know the Auditor General will come back to visit us in a year or two as a follow-up to this audit, and we basically want to have actioned and completed all the things we said we would do.

Mr. Shawn Murphy: Could you file that plan with this committee?

Mr. Denis Lefebvre: They are pretty detailed operational plans. I don't know if it would be very useful for this committee to share those with you.

Mr. Shawn Murphy: What I'd like to see is a summary... That's the problem I have when I read all the reports. We have the recommendations and we have your response, but there's absolutely no indication of when you expect to accomplish what you say you're going to accomplish.

Mr. Denis Lefebvre: Well--

Mr. Shawn Murphy: I know improvements have been made. I understand fully that you've been under tremendous pressures since September 11th. But it would still be nice to have a critical path.

Mr. Denis Lefebvre: We have some major pieces of re-engineering in place that will in part, I think, improve the situation to your satisfaction--and ours, to be frank--and the Auditor General's. This is our customs action plan. It is the 30-point smart border declaration by Deputy Prime Minister Manley and Governor Ridge. We now have a major compliance improvement plan in its third year, trying to bring all the programs together.

º (1635)

The Chair: I think what Mr. Murphy is saying is that it's been nine months since the Auditor General completed her report. What he is asking for--and I think the committee would agree--is an executive summary of the reaction to the Auditor General's report, particularly when these reactions and agreements to recommendations are being implemented. We're not looking for the detailed plans, just an executive summary. Would that be possible, Mr. Lefebvre?

Mr. Denis Lefebvre: Sure.

Mr. Shawn Murphy: From reports, and the evidence given here today, I take it that staff morale is not high in the department. Do you agree that staff morale is not high?

Mr. Denis Lefebvre: No, I would not agree with that. We hear a lot of noise. I think most of it is driven by the union.

I think customs officers reacted to September 11 very well. They went above and beyond what they needed to do. They took all possible additional steps to ensure that Canadians were comfortable with the way the border was managed. It has given them a lot of pride.

My sense is that our front-line officers feel good that their role has been recognized as important. They have seen themselves as very valuable. I think Canadians have also shown their appreciation. They feel very good about it.

The Chair: Nothing further, Mr. Lefebvre.

Thank you very much, Mr. Murphy.

Ms. Meredith, please, four minutes.

Ms. Val Meredith: Thank you, Mr. Chair. I have two areas.

I just want to support the student program. I cross the border on a fairly regular basis, and I have not noticed any inefficiencies on the part of the students as opposed to regular customs officers.

But I'd like to know whether the audit that was done looked at their performance, and the percentage of the students' finds. Did you check to see whether the students are finding contraband, or inadmissible items, as often as full-time or regular customs officers? Was their performance looked at? Were they performing at an acceptable rate?

Ms. Sheila Fraser: Mr. Chair, we did not look at that.

To my knowledge, that information does not exist. I don't believe the agency keeps information on particular types of officers, whether they are full-time or student officers.

In fact, one of the issues that we had was general information-gathering on compliance verification. But Mr. Lefebvre might wish to add more information.

Ms. Val Meredith: Wouldn't that be part of a performance report that should be done on employees?

Mr. Denis Lefebvre: We do not keep statistics by category of employee. But management on site are very close to the activities of all customs officers, whether part-time, full-time, or students.

I'm sure the rate of interventions, or referrals to immigration or secondary officials, will not vary statistically by category of employee.

Ms. Val Meredith: Thank you. I guess I had three issues.

The other one is that NEXUS is going to have a user fee. It will cost people to get into the pre-clearance program. Because this program is going to be shared with the United States, where does the money go? Who gets the money, and will it be applied to the equipment or to the administration? How are you going to account for the money collected from people who comply with the pre-clearance program?

Mr. Denis Lefebvre: Both the U.S. and we believe that the fee should not be prohibitive for people of modest means. If this program is to be a success, if it is to increase security, facilitation, and a better use of our infrastructure, we need to have a massive buy-in in that program. We believe the fees have to be modest to encourage very broad participation, because it makes for a smarter border.

º (1640)

Ms. Val Meredith: Where do these fees go? Do we get half, or...

Mr. Denis Lefebvre: In principle we would share the costs and revenues equally with the U.S.

Ms. Val Meredith: Thank you.

My last question regards agricultural products. In my riding there are vegetable growers, and there are always cases of anti-dumping issues or tariff and duty things coming up. Does the customs officer at the border have an opportunity to know when something should not be coming in and to refuse entry?

Mr. Denis Lefebvre: Mr. Jordan will reply to this question.

Mr. Mike Jordan (Director General, Trade Policy and Interpretation Directorate, Canada Customs and Revenue Agency): If you're dealing with anti-dumping measures and tariff measures...Denis referred to the back end of the process. If there's an anti-dumping finding or an anti-dumping duty in place, that's usually an after-the-fact issue, once the importer accounts for the goods. First, these findings are very well publicized. People know, for example, if there's an anti-dumping finding on a certain commodity because such things are published for the import trade.

Ms. Val Meredith: That may well be, but when you're talking about people who are growers and the market is being flooded by produce coming up from the States at a time when it shouldn't be, anti-dumping complaints take a long time in many places to come to any conclusion. That doesn't help the growers who are competing with stuff being dumped on their markets.

Is there anything in law? If you're protecting Canada and applying the trade regulations, duties, and tariffs, can they refuse entry of a product they know is being dumped?

Mr. Mike Jordan: No, you cannot refuse entry of an imported product that is being dumped. The dumping process is an international agreement Canada is a signatory to. In other words, there must be a complaint of injury in dumping, and there is a process that must be followed. We are bound, just as our neighbours to the south and other countries are.

Ms. Val Meredith: Does that also apply to dangerous goods such as nuclear waste material and toxic materials? Is it the same process, a behind-the-scenes kind of...

Mr. Denis Lefebvre: I think when it is a prohibited, regulated, or controlled material, it is a matter of the person coming to the border with those goods. They have to show the permit issued by their appropriate department. If they don't have the permit, we refuse entry until the appropriate department comes, takes over, and decides whether the person can receive a permit or not.

With respect to dumping, we impose a duty, let's say 20%, on imported tomatoes, windshields, or whatever. People can still bring those goods into the country, but they have to pay 20%. One thing we do is go and audit the books and records of the importer to make sure they are remitting the 20%.

I have not been in customs that long, but in the number of years I have been there, once we render a decision of dumping, normally the Canadian producers, who are the watchdogs of the imports...normally the importation stops. If it were to continue, the competing, producing group would alert us, and we would see whether there is some fraud. But we do audit the books.

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

Mr. Grose, you have four minutes.

Mr. Ivan Grose (Oshawa, Lib.): Thank you, Mr. Chair.

As you all know, I probably won't use the four minutes. I used to sit on this committee, but obviously I've deteriorated since then.

The Chair: Welcome back.

Mr. Ivan Grose: Thank you. You've had a happier time since I've been gone, have you not?

In any case, it's been testified that student officers are doing a good job, every bit as good as the job done by the regular staff. Even the questioners who have had experience with them say they're every bit as good, quite indistinguishable. Why is it we then train students for three weeks, but regular staff we have to train for 14 weeks? Are regular staff inferior people, slower learners? Why are we spending this time and money training them for 14 weeks if three weeks will do?

º (1645)

Mr. Denis Lefebvre: Our training used to be 14 weeks. We've reduced it to eight weeks, but we add modules. So if you go into marine, air, traffic, or commercial, you add two or three weeks, depending on the specialty you are in at the time. Over your career, if you move from one mode to another, we train you again in this new mode. I think it's just a better way to deliver the service.

Students, as I said, are supervised by fully trained, permanent customs officers. Also, they do not necessarily do the whole spectrum. They do a lot, but they do it with supervision, with others, and with proper support from managers and colleagues who are permanent officers.

Mr. Ivan Grose: If I were crossing the border, I wouldn't be able to tell if the person in the booth, all by themselves--I don't think there's room in the booth for two people--is a student or a full-time employee. I have a problem here. We have regular staff, who I assume after a couple of years, along with their training, would become smart--they'll have seen everything after awhile. Students don't do this, don't get this much experience. Why then do we trust them? You say they're getting close supervision. Are they really worth the money we're paying them if we're babysitting them?

Mr. Denis Lefebvre: Again, I think it would not be wise to have different colours of uniforms for students and part-time... When people come to a booth, they face a customs officer who can refer them to immigration, refer them to secondary...there is no choice in the matter. I don't think the traveler should know whether the person is a student or a permanent customs officer.

Again, there is a lot of breadth to the customs officer's role. As I mentioned, we are administering a large number of acts now. Officers are also enforcing drunken driving and other Criminal Code offences, which students don't do. So we give the students support for the breadth of responsibilities we give them.

Mr. Ivan Grose: In other words, if I came to the border crossing and I was drunk, and I happened to get a student--

Mr. Denis Lefebvre: They would get a customs officer pretty quickly.

Mr. Ivan Grose: Well, that's fine. That's what a regular customs officer would do.

Mr. Denis Lefebvre: Yes, but the customs officer will arrest you, and so on.

Mr. Ivan Grose: Thank you.

Thank you, Mr. Chair.

The Chair: I guess the moral of the story, Mr. Grose, is don't go to the border when one is drunk.

Mr. Forseth, please.

Mr. Paul Forseth: Thank you very much.

We all know that the primary front line in Canada is the CCRA, and the counterpart on the American side is INS. So there's a comparable and sometimes very close working relationship at some of our smaller borders. But the Immigration and Naturalization Service in the United States was voted to be dissolved by Congress, and they're now planning to build something new. That's my information. In fact, I believe there's quite a big shakeup going on down there. I'm wondering if we need the same kind of shakeup here in Canada.

When there's a major change, it's also a point of opportunity. I'll ask you, is there any involvement with CCRA in building a new, better animal down there? Of course, we are part of INS and what they do as a front line, and they are part of us. If they're doing a major shakeup to rebuild something new down there, are you pursuing that opportunity to build better links, build better cooperation, instead of the historical, informal relationships, and “wink-wink, nudge-nudge, if my supervisor doesn't see, I will have a coffee with my counterpart in the other part of the building or down the road”?

All these relationships with the front-line INS were built to accomplish a common objective, and they were very informal, from what I saw when I went to a variety of border crossings. Now that I've heard Congress is going to be dissolving the INS, it's an opportunity for getting involved on the ground floor of something new and with cooperation.

Can you tell us a little bit about that?

º (1650)

Mr. Denis Lefebvre: Well, I think the INS is still there and kicking. Any rumours of their demise are a little premature.

You're quite right, we've always had a good relationship with our friends to the south, whether it's INS or U.S. Customs. We in Canada Customs are mandated to do both immigration and customs work, whereas in the U.S., depending on the port, it can be customs or INS. At large ports you have both. At airports you have to go through both lines.

We believe our system is probably more efficient than dividing the work and having returning Canadians or visitors go through two selection processes.

Since September 11 we have, I can assure you, intensified as never before our discussions and our relations with our colleagues in U.S. Customs and the Immigration and Naturalization Service. As I mentioned earlier, the program is a fully joint program where every participant in the program is approved jointly by four agencies. It's the same thing for CSA, the customs self-assessment program. When we get into a commercially harmonized system the carriers will be approved jointly by the four agencies. We have intensified our relationship.

I also have to mention another initiative. Under the leadership of the RCMP, the budget, you may recall, approved some funds to create what we call IBETs, integrated border enforcement teams. All along the border there will be a number of them, perhaps around 14, and they will include Canada Customs, the Department of Citizenship and Immigration, the RCMP, and U.S. Customs, U.S. Immigration and Naturalization Service, U.S. Border Patrol, and also local police forces. Those IBETs will share intelligence among all those agencies. That partly answers the questions you had earlier about being better connected amongst all the enforcement agencies.

Mr. Paul Forseth: I've heard of all those things before. You're really saying there's nothing new, that perhaps this vote in Congress is still premature to see what the shakeup is going to be.

You mentioned NEXUS. Is the long-term plan that NEXUS is going to cover all of the truck drivers?

In the past the truck drivers have had their own special kind of clearance plan. If we look at the government's response to the immigration committee, they talked about not only NEXUS but also this EPPS system at airports, and it's not really clear that we're going to one single system. It looks like we're again going to have a variety of systems. That doesn't seem to make sense to me. Perhaps you can tell me about NEXUS and truck drivers and also the airport clearance.

Mr. Denis Lefebvre: NEXUS is for travellers, and we have decided that we would have a proximity card, which is a card that can be read while you stay in your vehicle. Your picture comes on the screen. The picture comes from the computer, not from the card, so it is very difficult to falsify that.

In customs, in every mode, the physical situation is different. On the air side, yes, we want kiosks, and our plan is to have the iris scan. In an airport you're not in a vehicle. It's easier to stop by a kiosk, wink in the iris scan, and be given a piece of paper with a code for the point person. In an airport, you have to pick up your baggage before you go to a point person, who decides whether you should be referred to secondary...or not. Because of that point person who is past the luggage, who is not present at the primary...we have to think of different practical ways to accelerate the process in a secure way for various modes. Sometimes they vary slightly.

It's the same thing for truck drivers. It would be very similar to NEXUS, the same combined verification with the Americans, and of course, if we do some checking for you for one mode, we will use that information for the other modes. It becomes quite easy. We try to avoid all duplication while accommodating the different configurations that are present for each mode.

º (1655)

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

I have a couple of questions of my own. You've talked about how you have been changing, modernizing, updating, and improving security after September 11. But when I take a look at the “Report on Plans and Priorities”, part III, 2002-2003 estimates, page 55, table 4.1, “Business Line Planned Spending”, it says at the bottom “The planned spending for fiscal 2002-2003 includes funding found in Budget Plan 2001 for Public Security and Anti-Terrorism initiatives.” I would have thought I would have seen an increase in spending because we're trying to bring in these public security and anti-terrorism initiatives. Yet the amount for IT, Customs, for 2001-2002 is $12.9 million, and it drops to $5.7 million for 2002-2003 and then stays flat at $5.6 million for 2003-2004 and 2004-2005. The major capital expenditures are $27 million last year, $23 million this year, $23 million next year, and $23 million the following year. So it's flat. There doesn't seem to be any real new spending for capital or IT in Customs. Do you have any comment on that, Mr. Lefebvre?

Mr. Denis Lefebvre: I'm sorry, but I do not have that document. I may not be able to make good sense of it.

The Chair: I'm just giving you the concept that there does not seem to be any serious attempt to invest in IT and major capital expenditures in Customs.

Mr. Denis Lefebvre: I will comment on that. In April 2000, when the action plan for Customs was approved, the government gave us $100 million over five years to implement our plan. A lot of the expenditures go to IT and training. When you make a quantum leap from where we were to where we're going, you need a lot of training.

In the December budget we received an additional $433 million over a period of six years. A lot of that will be spent up front. The minister announced about three weeks ago that we were spending $17 million right now on new technology. That's just ten pieces of equipment. Between December and March we have probably spent $10 million or $12 million on upgrading and expanding our stock of ion scans and other smaller equipment.

The Chair: But if the budget of last December had $430-odd million for increased security and anti-terrorism initiatives because of September 11, there must have been something in somebody's mind to say, conceptually, this is what we plan to do with the $430-odd million. The estimates came down in March, which is four months later, and I don't see this extra $430 million being spent. So if it's not in here, perhaps you could just write us a letter telling us where it's going to be spent. Would that be possible?

Mr. Denis Lefebvre: I will, certainly.

The Chair: Conceptually, the people who put the budget together came up with $430 million based on somebody's rational thinking that that's what they needed.

Mr. Denis Lefebvre: The amounts were given to us at our request. The essence of it is that we had confirmed that our direction was the right one but we needed to expand and accelerate. NEXUS, EPPS, and CSA are the main Customs plan initiatives that are accelerated, and the funds are all accounted for.

The Chair: I would have thought it would have shown up in part III, but I don't see it. So perhaps you could write us a letter pointing out just where that is.

Mr. Denis Lefebvre: Yes.

The Chair: We're moving to the performance report for March 31, 2001. As the Auditor General will confirm, I have always been asking for the self-analysis to be a real self-analysis and not just a fluffy statement of how good we are.

First, I would like to compliment CCRA on being honest and forthright. Of course, the fallout of being honest and forthright is that people start asking questions. But that's what it is all about. I don't want you to take these questions as meaning we don't want to do this again, because I do want to get the information.

This is on page 2-80:

The lack of a mature performance measurement framework does not mean that Customs is not well managed. We simply lack the quantitative evidence to confirm the qualitative evidence from our clients and partners, and management's judgment.

You say you just don't have the quantitative evidence to make the decision about whether or not you are well managed. I'd like to compliment you on being honest and forthright in saying that's how it is. I don't have a problem with that. In an organization that goes through $170-odd billion a year, we're always going to have issues where people are going to say “I dropped the ball a little bit here”. So, first of all, I compliment you on being honest.

My second point is, have you addressed the issue?

» (1700)

Mr. Denis Lefebvre: We are constantly addressing the issue, but now it has risen... the measurement of our activities and the results of compliance are a very high priority. We have a corporate exercise called the balance scorecard, where all the branches are called upon to create a better picture of our performance. We need to define our requirements to better manage quantitative and qualitative information. We also have to invest further in the systems to gather the information so we can show you what we do in a more concrete way.

I will say it's a very high priority for us. The speed with which we move to better inform ourselves, first and foremost, about how we do will only be tempered by the need to have the funds to support it in terms of data.

The Chair: Ms. Fraser.

Ms. Sheila Fraser: Mr. Chair, the committee may be interested in knowing that the agency is one of three agencies that produces a performance report on which we do an assessment of the performance report. We did it. The first one was on the report last year.

I would like to confirm what Mr. Lefebvre has said. The agency does take its performance report very seriously and has put a lot of work into it. I would go so far as to say we were impressed with the level of performance reporting they did in their first year. They made a very good start. I think performance measurement is always a challenge and will always need to be improved, but the agency is doing a good job in the area.

The Chair: Thank you for the comment. I didn't want to scare the agency away from being honest and forthright. I'd be more critical of a department that glossed over serious issues, where we later found out they deliberately glossed over serious issues so they didn't have to answer, and be accountable for, direct and forthright questions.

I'm glad the Auditor General is saying CCRA has made a serious and good attempt, the performance reports are well written, and you're prepared to write your own self-criticism.

On that point, I would act to congratulate you and ask you to take it back to your commissioner, saying this process of self-criticism causes you to be more efficient, more productive, and more focused on what you have to do, without waiting for the public accounts committee to come along and point it out for you. It's infinitely easier when you do it yourselves rather than wait for us to do it.

Ms. Meredith, do you have any other questions?

Ms. Val Meredith: I did, but I've lost my train of thought. I'll pass.

The Chair: Okay. This is twice in a week. The chair must be getting carried away.

Does anyone else have any other comments?

Mr. Forseth.

Mr. Paul Forseth: Basically, certainly there's a corporate desire to fulfil your mission statement and to do a good job. Wherever I've been, looking at front-line customs officers, they appear to be very dedicated and everyone is doing the best they can. Often it appears they're doing the best they can with what they have in available resources. The lagging problem that always comes up is personnel.

Obviously, you have projections of the number of people, the full-time equivalents, you need to meet your standards. I'm certainly sure you never get them.

What is your wish list for FTEs in order to meet you standards? What are you likely to be getting in the next fiscal cycle? Could you comment about staffing resources?

When we meet the front line, the frontier, we hear at various committees it's often not what's on a piece of paper. It's not a regulation. It's not a law. It's people assessing people, drawing on whatever variety of information, hunches, and feelings they have that there's something wrong with the box they're looking at. There's something fishy about the individual and what they're being presented with. It's people assessing people and protecting this country.

I want you to address the whole issue of the FTEs you need to fulfil your mandate.

» (1705)

Mr. Denis Lefebvre: Thank you. If I can be allowed to be boastful for just a short period of time here, I would like to say that you talk about standards, and there can be many standards; for instance, we have wait-time standards.

I think it is important to note that we have a very good record. We found out that in Canada, business people, people, politicians do not have much stomach for long lineups at the border coming into Canada. We have wait-time standards, and, by and large, I monitor this constantly.

I have reports from all ports whenever they exceed the time standards. We don't do it very often. We do it regularly at some places. For two hours on a Tuesday afternoon, three or five jumbo jets come at the same time, for a number of reasons, and the hall is full and people wait. It happens, and it happens for trucks and it happens at a number of bridges.

But we aim to staff our ports so that there are not undue delays. It's important for investments in Canada. The border has to be very fluid.

I would say that a couple of years back we were very strapped for resources because the government was in a downsizing mode. I think the influx of resources we've received for the action plan of $100 million, plus the $433 million we received as part of the aftermath of September 11, will enable us, across Canada, to staff our ports in a way that we can have the right balance of security and facilitation.

Also, we have been given--and I will provide the information because you've asked for it--about $100 million to buy equipment, over a period of six years. This includes maintenance and replacement, so it's not all capital expenditures. But I believe we're adequately funded at the present time.

The Chair: I have a question about full-time equivalents, Mr. Lefebvre, and, again, I'm looking at 4.1, Custom Services, on page 53 of your plans and priorities. In your forecast for 2001-2002 the total plan for full-time equivalents is 8,300 for 2001-2002; 8,400 for 2002-2003; dropping down to 8,174 for 2003-2004; and dropping again to 8,075, which is down another 100, for 2004-2005.

So your long-term trend for FTEs is downward. Am I correct in that?

Mr. Denis Lefebvre: We regularly receive some funding that is for a period of time. For instance, we received some funds for ASI, the anti-smuggling initiative, a few years back. But very often they have a sunset clause for those resources, whether they're for money laundering or for ASI, and that has sometimes been the cause, in other years, of the workforce shrinking from where it is now.

» (1710)

The Chair: Ms. Meredith.

Ms. Val Meredith: My question is for the Auditor General. When you were studying commercial traffic, did you tie in a study of the infrastructure, either from Government Services or Transportation? Were you able to connect, to look beyond just the one department's approach to it?

Ms. Sheila Fraser: We did not do that, Mr. Chair, in this audit. We did recognize that there were difficulties, just because of... Actually, I was even personally out in B.C. and saw the trucks lined up with all the other traffic, and the line going way back, but we didn't go into that. We didn't look at that in this audit.

Ms. Val Meredith: If in your audits you reach the point where you see an overlap of issues that create a problem, should you not maybe start looking at how Government Services, Transportation, and CCRA deal with a certain element? Is that possible in your--

Ms. Sheila Fraser: I think that's an excellent suggestion, except that it may not all be federal jurisdiction, so there could be issues that would be beyond the scope of our mandate, and in this one we would just specifically look to Customs.

Ms. Val Meredith: Thank you.

The Chair: Are we out of questions?

Mr. Paul Forseth: I would like a supplementary.

In relation to the number of FTEs and the trend, you're saying of course that the number is going to go down because the special programs for special projects are going to end.

I'm looking at the volume of trade, which is continuing to go up each year, and I'm wondering about the use of technology, which will perhaps alleviate some of the burden for personnel. But when you look at the trend, I'm questioning whether you really are going to have sufficient staff if we are going to continue to have an integrated economy and trade traffic. The value of it is only going to increase, the same as international travel has taken a dip but is going to greatly rise again.

Are you going to have the people, especially two years out? We also know that you may be into a retirement problem. Are you bringing on sufficient new people at the bottom end? Those are some of the concerns I have. I ask you, do you really have the projected plans to have the people you need to meet the standards you say you're going to meet?

Mr. Denis Lefebvre: I want to add something to the answer I gave Mr. Williams a while back. There is another element. The $100 million we received for the Customs action plan, supplemented by the $433 million we received in December, also for expansion and acceleration of our initiatives, is very much front-end loaded for project management expenditures. Some of those investments in technology and a number of resources that are going to work on the projects to move those initiatives ahead are to some extent more loaded in the front years than in the back years, and that may account for some fluctuation in the workforce.

As for the volume increase, when we launched the Customs action plan we did some analysis and we had projections, but September 11 has thrown some doubt onto the validity of our projections. We think we are in a temporary adjustment now after the 11th, but we agree with you that over time volume will continue to increase.

The investments in the Customs action plan we received from the government will in large part, in our view, offset the need to forever expand the blue line, or the PILs. So we think that NEXUS, where people will be processed in a safer manner but also much faster, will save some resources. We do greatly take the savings into account as we thought that this would allow us to cope with increased volume, and CSA, NEXUS, and EPPS are going to produce some savings. We will use those resources to deal with increased volume.

The baby boomer phenomenon you referred to is of course also a preoccupation for us, and we are developing some staffing plans to ensure that this will not hurt the program.

» (1715)

The Chair: Thank you, Mr. Forseth.

I have one final question before we wrap this us, and I refer to the 2001 Auditor General's report, section 8.34 and exhibit 8.5 of her chapter 8. This deals with the physical layout of the border at Windsor. She makes mention of the fact that the facility is located some distance from the Ambassador Bridge, and she says that unless officers escort a truck to the inspection facility, which rarely happens, the agency “cannot ensure the truck goes directly to the facility or that no one tampers with the shipment”.

We heard Ms. Meredith raise the point about it being fine to give these trucks fast-tracking authority, but if there is no fast track, they just get caught up in the lineup of trucks as well.

We heard recently about a duty-free place that, I think, is also in Windsor but is not on land owned by the government. Therefore, they can't put it out for public tender; they say something along the lines of, what's the point if we don't own the premises?

What are the plans for Windsor to redesign that border crossing so that fast tracking means fast tracking and so that we can have a competitive bid on the duty-free place and so on? Do we have any plans for that?

Mr. Denis Lefebvre: Not that we need to segment what we do too much, but at Customs we looked at the processes we have in place to process people in a safe manner but faster. I think our programs will achieve that.

You're quite right; once you create fast lanes, people will want to have access to those fast lanes. In places where you have a highway, it may be quite easy to add a bit of asphalt to extend the lines a few miles up from the customs port so people can have access and bypass the slow traffic to go through quite easily. In other places where there are bridges, it's a bit more complicated. You may need stop lights or to direct that traffic, or you may need to review your infrastructure.

We appreciate that, as the auditor mentioned, this is something that will have to be dealt with by the federal government, the provincial government, the municipalities, and on the U.S. side also. I'm sure it is being looked at. We at the CCRA want to be a partner. We have to be there to speak to how we are going to design our operations and the number of people we are capable of processing so that other people can evaluate the size of the infrastructure required to feed our capability to process people.

The Chair: That seems to be a very loose and open kind of answer there, Mr. Lefebvre, so I'm going to ask the Auditor General.

We want to ensure that our trade flows as freely as possible, given the normal and appropriate constraints. Mr. Lefebvre mentioned federal, provincial, municipal, U.S., and so on. Who should take the lead to get this bottleneck resolved? Is it the CCRA, or Public Works, or the federal or provincial governments who should be taking the lead on this? Do you have any comment?

Ms. Sheila Fraser: I say that would be a policy decision for government and...

The Chair: Perhaps the appropriate critic can put pressure on the appropriate minister.

Do you have some final comments, Ms. Fraser?

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

I think we would all agree that customs issues are important to this country, to the economy, and to the safety of Canadians. I am pleased to see that the agency has agreed with our recommendations and is committed to introducing measures that will act on them. I would just like to assure the committee that we will be coming back at some point in time to make sure those commitments have been lived up to.

The Chair: Thank you.

Based on your comments last week when you were presenting your estimates, you'll be having more routine reports where you talk about the follow-ups and so on and so forth. I'm just putting you on notice, Mr. Lefebvre, that the Auditor General is tightening up on this follow-up business, so look out and be prepared.

The meeting is adjourned.