Today is Thursday, June 10, 2010. Welcome to the 22nd meeting of the Standing Committee on Industry, Science and Technology.
We're here pursuant to Standing Order 81(5) to review the supplementary estimates (A) for 2010-11. We have a number of votes to review today. We're going to spend one hour in giving members of the committee a chance to review the estimates and then we'll take the vote just before 10 o'clock. At 10 o'clock, we'll switch up and move into the second item on the orders of the day, which is the review of .
Without further ado, we have in front of us today Richard Dicerni, the deputy minister, Department of Industry; Mr. Paul Boothe, the senior associate deputy minister; and Madam Kelly Gillis, the chief financial officer of the department.
Welcome to all three of you. It's delightful to have you here. Thank you for coming on such short notice.
We'll begin with Mr. McTeague.
That is something that we will examine in the fall,
the main estimates, the supplementary estimates (A),
in the spring,
and the supplementary estimates (B) in the autumn, and then the supplementary estimates (C), often around Christmastime.
So at the next opportunity, I will commit to you that we will invite the minister and any other people you wish to invite at that point.
It was Mr. Wallace who asked me to set this meeting. I did it, and I invited the three witnesses I thought were best. The next time, please suggest to me who you'd like to invite and I will invite them.
Are there any further questions for the witnesses?
To ACOA? You can ask the deputy minister about that right now. In fact, it's the first vote, so you can ask him about it. As I said before, though, while the votes fall under Industry Canada, it is a stand-alone agency, unlike FedNor, and he may not have the exact answers. The president of ACOA--I believe it's a woman--would be able to answer.
As I said before to other members, the next time we review either the main estimates or the supplementary estimates, if you wish to ask specific questions of specific agencies, let me know and I will ensure that those witnesses are invited.
This meeting has been called because has been pestering me--in a good way--to review the supplementary estimates each and every time. I commend him for that diligence. To that end, he was only interested in seeing the deputy minister, the chief financial officer, and the assistant deputy minister, so those were the witnesses I invited. But if other members wish to hear from other witnesses, you just have to let me know and let the clerk know and we will invite them.
So you can go ahead and ask about ACOA, but be forewarned that the deputy minister may not have the exact answers, as it's a very large department with a number of agencies.
Good morning, Mr. Chair and committee members.
As the president of the Petroleum Products Institute of Canada, I certainly want to thank you for the opportunity to be here today and to share the views of the institute on Bill . With me today is Monsieur Carol Montreuil. vice-president of the institute's eastern Canada division.
The Canadian Petroleum Products Institute is the national association representing the public policy interests of the downstream petroleum industry for all aspects of petroleum refining, distribution, transportation, and marketing for transportation, home energy, and industrial uses. Collectively, CPPI members operate 17 refineries across Canada, representing 80% of Canadian refining capacity, and supply some 10,000 branded stations with transportation fuels across the country.
CPPI members include Chevron Canada Limited, Husky Energy, Imperial Oil Limited, North Atlantic Refining, Parkland Income Fund, Shell Canada Products, Suncor Energy Products Inc., marketing under the brand name Petro-Canada, and Ultramar Ltd.
At the outset, I want to emphasize that CPPI and its members are committed to the principle that consumers should get what they pay for. CPPI members operate with the highest levels of integrity and have developed trust with their customers by providing full value for high-quality and reliable energy products.
CPPI members support the concept of mandatory periodic device inspections that are enabled by Bill . Having a two-year mandatory inspection cycle was a principal recommendation of Measurement Canada's 2004 retail petroleum trade sector review. CPPI was a participant in that multi-stakeholder consultation and endorsed the recommendations of the review.
I would also like to take this opportunity to reinforce some remarks made by Measurement Canada officials when they appeared before the committee last week. First, I would like to acknowledge that the retail petroleum sector has a very high compliance rate, which met Measurement Canada's standards: 94% for gasoline pumps over a 10-year period. In 2007, the compliance rate, as reported in the Canwest story referenced by Measurement Canada last week, was 97%. Clearly our goal is to get to 100%, but the mid- to high nineties--and certainly in comparison to the other sectors that were described last week--are very high.
Moreover, Measurement Canada officials confirmed that the calibration error threshold is low at 0.5%, which is really about one cup of fuel for a 50-litre fill-up. They also confirmed that there was no evidence to suggest that calibration errors are the result of intentional actions on the part of refuelers. I think this is an important point to make in the context of some of the public commentary on the issue at the time that Bill was first tabled.
The last point I would like to make refers to the title of Bill , the . Given that the act amends both the Electricity and Gas Inspection Act and the Weights and Measures Act and is applicable to a broad range of trade sectors, I would respectfully suggest that the committee consider recommending a change to the bill's name to better reflect this broad application.
I would conclude by reaffirming our position that our members are firmly committed to the concept and the principle that consumers should get what they pay for.
Thank you for your attention. Mr. Montreuil and I would be happy to take your questions.
Thank you very much, Mr. Chairman.
Just for those who may not be aware of our organization, the Consumers Council of Canada is an independent, not-for-profit organization. We were federally incorporated in 1994. Our goal is to bring a consumer voice to important local, regional, and national issues, and of course that's why I'm here.
The council works collaboratively with consumers, business, and government to solve marketplace problems. We aim to inform consumers, businesses, and governments alike about their rights, obligations, and responsibilities. Our volunteer board of directors consists of experts in the fields of consumer issues, consumer policy development, and business development.
The council provides informed opinion through its public interest network, which is a volunteer think tank of more than 400 thoughtful, engaged leaders from many different fields of expertise from across the country. As well, we have a network of young consumers, which is a virtual forum of more than 100 young professionals who keep the council in touch with their consumer demographic and able to better understand their needs.
We are arguably the most active multi-issue consumer group in Canada.
I will tell you that I live in Victoria, British Columbia, where unfortunately, our weather is just about the same as it is here right now, but I'm here in Ottawa attending another meeting so I was happy to be able to come to this presentation. Our offices are actually in Toronto, Ontario.
In general, the council approves of the government's intent to provide greater protection for Canadian consumers from inaccurate measurements at gas pumps and other metering devices.
I would agree with my colleagues that the short name of the bill doesn't encompass the broad scope of the actual bill. That was a good suggestion.
We like the four particular things that we pulled out, which are the administrative monetary penalties and increased maximum fines, the new fine for repeat offenders, the mandatory inspection frequencies, and the appointment of non-government inspectors trained to conduct these mandatory inspections.
Having said that we approve of all those things, we do have some comments to make.
First, on the administrative monetary penalties, proposed new subsection 29.11(3) sets a maximum penalty for a violation at $2,000. Our opinion is that this amount is not going to promote compliance with the act. The offence penalties under section 33 set a maximum from $20,000 to $50,000 and under section 32 from $10,000 to $20,000. These penalties represent real inducements for compliance. The $2,000 penalty, we would argue, does not.
The council questions the government's provision of the payment of “a lesser amount that may be paid as complete satisfaction of the penalty”. My assumption is that this means that if you pay it on time you don't have to pay as much. Quite frankly, I don't understand that idea at all. How does a reduction in the penalty provide increased protection against non-compliance? Perhaps someone can explain.
Furthermore, the council questions the provision of compliance agreements, which are an admission of guilt but which may result in a “reduction, in whole or in part, of the amount of the penalty...”. How does a reduction in the penalty provide increased protection against non-compliance?
Proposed section 29.28 allows the minister discretion as to making offences public under the act. It says the minister “may” make these public. This, in combination with revision of compliance agreements, seems to us to undermine the deterrent quality of the act. We would hope that the minister “will” make public those people who have been found guilty of an offence.
The council believes also that it is unrealistic to have, as the only recourse in a dispute, an appeal to the minister. Surely Weights and Measures Canada can establish a realistic dispute-resolution process. An appeal to the minister should be a last resort.
The council applauds the provision for an employer to be liable for a violation committed by an employee.
On the area of a new fine for repeat offences, we agree with proposed section 29.24, which establishes that a “violation that is continued on more than one day constitutes a separate violation in respect of each day” on which it is committed, and we wonder why there isn't an increased penalty, as there is in section 32.
Concerning mandatory inspections, if the intent is to conduct mandatory timetabled inspections, and not inspections conducted as a result of consumer complaints, then we support this requirement. Our concern is the provision of financial and human resources to carry out this function. It is our experience that government often makes consumer protection laws and regulations, but fails to provide the resources to ensure that protection. We would hope that the budget is going to be increased so that Measurement Canada can carry this out.
Finally, there is the appointment of non-government inspectors. We approve this concept of the appointment of non-government inspectors trained to carry out the mandatory inspection. Now, this may be my inability to read the legislation, but it appears there is confusion in the proposed act about who is an authorized inspector. Proposed subsection 26(5.1) seems to be in opposition to proposed subsection 29.12(1). Who is an authorized inspector under the act? In my reading of it, I could not determine who that person is going to be.
In concluding, then, we support this bill in the principles on which it's built. We believe the concerns we've raised need to be addressed to make this stronger consumer protection legislation.
Thank you very much, Mr. Chair.
Witnesses, thank you for being here today.
Like you, I had some doubt as to the motives of the legislation given the dearth of evidence that these issues were in fact taking place. That's not to suggest that consumers do not in fact have concerns about whether or not they're receiving the proper amount of fuel that they believe they're paying for.
I want to go to you, Monsieur Montreuil and Mr. Boag, and then to you, Ms. Huzar, as to the underlying concerns that this legislation may give rise to even further complications and does nothing to eradicate that perception.
I agree with you on the title. The title is misleading and I think is somewhat gratuitous. I was concerned that at the press conference the minister referred to retailers by demonizing them as “chisellers”—some of them, anyway—when the evidence may very well point to the fact that issues of impropriety or the perception of a lack of quantity the person believes they're purchasing may be the result of mechanical failure, of wear and tear, which I think is normal in any circumstance.
Mr. Boag and Mr. Montreuil, I'm wondering if you could ascertain from your members if they accept the standard Measurement Canada provides, of 100 millilitres for every 20 litres of fuel, as an acceptable tolerance. I say that because if I'm driving 's car, which might be fuelled up at 60 litres of fuel, it means that under the current tolerance levels a consumer may lose one-third of a litre of gasoline. At a dollar a litre, that's 30¢ to 40¢ a litre. I think that would continue to maintain the cynicism that the public correctly has.
Mr. Boag, do your members accept the 100-millilitre tolerance level? Or do they believe or do they operate on a lower tolerance level, both at the gas stations and the refineries?
When this issue first appeared with Glen McGregor's article, it was apparently a study by Measurement Canada, which neither Measurement Canada nor anyone has been willing to acknowledge took place.
Knowing how gasoline works when you remove it from the ground, I know that if it's not done in a proper way, it is liable and suspect, and possible errors can happen. Exposing gasoline that's at an ambient temperature in a tank to outside temperatures could have the effect of contracting or expanding it and therefore making the process of calibration certification a bit redundant and perhaps even useless, if not suspect.
I'm going to ask you, Ms. Huzar, in your opinion--and I won't ask you about calibration--is it conceivable that the government's position with respect to the penalties may have something to do with individuals who may have had one of their pumps malfunction not as a result of something they'd done deliberately, so that's why there's a difference in the fines, a difference between $2,000 and $20,000?
Has your organization considered that unwanted and unintended mechanical failure is captured by the legislation's saying there are circumstances that warrant a lower penalty or fine versus a higher mandatory, which your organization seems to support?
Madam, gentlemen, good day and welcome to the committee.
Fundamentally, the important thing here is to maintain the public's trust. When it comes to weights and measures, there are some things that are more or less important. If we're talking about a scale to weigh calf's liver, errors are less costly than if we were weighing gold.
I agree with you as far as the title of the bill is concerned. Again, it's a bit misleading. Consumers are, as we know, quite sensitive to any variations in gas prices. If, in addition to that, we're saying that there may be measurement discrepancies that hurt the consumer, well that makes the bill even more attractive. Conservatives excel when it comes to such things. For example, they called the minimum sentencing bill Sébastien's Law. When they wanted to bring in amendments to the Criminal Code, they tabled the Act to amend the Criminal Code (minimum sentence for offences involving trafficking of persons under the age of eighteen years); the short title of this bill is the Fairness at the Pumps Act. The bill should have been called the “Trust in Measurement Act“ and that would have covered all weights and measures systems, include electricity and gas.
All, or virtually all, industry and consumer representatives agree that appropriate fines should be imposed and that these should not be left to the minister's discretion. Everyone agrees that proper fines should be imposed.
I don't believe that gas retailers manipulate the system. Just imagine how much gas a retailer would have to sell in order to reap some kind of benefit, especially considering the fines that can be assessed. I doubt very much that a retailer would do that. However, we need to take steps to guard against negligence. It's possible that when inspections are done, the devices are used incorrectly. How do we determine if the individuals using the weights and measuring devices are in fact negligent? The regulations may be clear on that score, but overall, the potential annual discrepancy between the price paid by the consumer and the quantity received is pegged at $20 million. That's less than a 1 cent a litre variation in the price of gas at the pump. If I'm not mistaken, that's within the limit. I don't really see the problem. To my way of thinking, the problem isn't fraud, but primarily negligence.
The costs involved range from $50 to $200. What does the industry think about all of this? How has it reacted in general?
I think, though, that the intention of the act is to ensure compliance and to get higher compliance rates. Obviously if you get fined $2,000 the first time around for having a pump that's not measuring properly, and you haven't fixed it, and down the road you deliberately don't fix the pump and have all these pumps that are measuring inaccurately, of course you would then expect that there might be a case of fraud.
That's if you know your pumps weren't measuring properly and you didn't fix them over the course of time, but the idea of these lower penalties in that first case, as it was explained by the officials when they were here the other day, is that it's unreasonable to expect that we're going to go through months of criminal proceedings to attack a private retailer who simply didn't know he had a pump that wasn't measuring properly over two years but then eventually got fixed.
I think that's why we've seen less compliance or less conviction, I guess, on these things. It's because it's simply not practical, given the way the process works. This AMPs process will certainly see increased compliance, I think.
In terms of the compliance agreements, you were talking about admission of guilt possibly resulting in a reduction of the penalty amount, either in whole or in part. We might have a gas station with 16 pumps, for example, and maybe something is wrong within the system. They get an inspection done, and there's a problem. Something within the system identifies a problem that is affecting all of the pumps at the same time. Rather than fining that retailer for every single one of those pumps--whatever the penalty is, times 16--there might be a discussion around how the fine might be adjusted to affect the practical reality of that situation.
Does that seem like a reasonable approach? It would not be if there was a fraudulent, intentional manipulation of the pumps to the benefit of the retailer or to the detriment of the consumer, but it would be if a systematic problem was identified after a couple of years through a regular inspection process and the retailer immediately fixed that problem.
Does that seem to make sense?
I hope that doesn't come out of my time.
The Chair: Of course not.
Mr. Peter Julian: I appreciate that.
I'd like to come back to you, Ms. Huzar, and the concerns you have around the bill as it is. You've raised the issue about the size of the actual fine that could potentially be levied. You've also raised concerns, as I understand it, around the potential of appeals to the minister, and you raised concerns around the resources that might be allocated to ensure that this protection is put into place for consumers.
So would it be fair to say that your concern is that the government may not be really stepping forward? There's the bill itself, but there are all of the other necessary resources and the provision of a neutral third party to adjudicate appeals, as well as the size of the potential fine.
I understand Mr. Julian's point. Administrative monetary penalties are great for the government, but those who are aggrieved obviously don't get compensated if they're ripped off. The mechanism would be very difficult.
Chair, I noticed your intervention on what Measurement Canada had said about the $20 million. I'm a little baffled, because my reading of the 70 billion to 75 billion litres of fuel dispensed in Canada every year with a tolerance level of 100 millilitres on every 20 litres means there is a potential rip-off to the Canadian consumer annually of over $250 million a year, assuming a $1 per litre purchase price.
Mr. Boag, I want to ask a final question about your organization as to whether you're satisfied that Measurement Canada is in a position such that the inspectors who are calibrating are sufficient in number to be able to meet the demands of the legislation. We've spoken to Measurement Canada, and a briefing provided by Mr. Lake said this would be a two- or three-year process.
With a tolerance level of 100 millilitres of gasoline on every 20 litres, do you find that there is an acceptable prospect of your having inspectors who may not necessarily meet the test but who give a quick inspection, a quick okay to the pump, only to see the pump break down three months later so you're now subject to the full weight of the law...?