Good morning, members, and good morning to our witnesses. We're here at the 23rd meeting of the Standing Committee on Industry, Science and Technology.
I'd like to welcome our four witnesses in front of us today.
We're here pursuant to the order of reference of Thursday, May 13, 2010, to study Bill C-14, An Act to amend the Electricity and Gas Inspection Act and the Weights and Measures Act.
In front of us today we have Madame Marcotte, president and chief executive officer, Association québécoise des indépendants du pétrole. We also have Monsieur Blouin from the same organization.
We also have Mr. Harnois, from the same organization.
We also have Madame Savage from the Canadian Independent Petroleum Marketers Association.
We'll begin with Madame Marcotte.
The Association québécoise des indépendants du pétrole represents petroleum companies active in Quebec. They are involved in imports, distribution and retail sales of fuel, heating oil, and lubricants. Retail sales for petroleum companies in Quebec represent $1 billion a year.
We are aware of the government's concerns about the accuracy of measuring devices. The AQIP feels that it is normal and to be expected that consumers receive the amounts of fuel they are billed for. Therefore, the AQIP is not opposed to implementing the kinds of clauses that Bill contains. However, we have a hard time understanding why the bill has been called the Fairness at the Pumps Act. That implies that currently the amounts of fuel being measured at the pump are inaccurate.
Yet, when Measurement Canada began consultations on this in August 2008, we asked for a serious study to assess the situation regarding the accuracy of devices or meters used in measuring the fuel being sold. We were never told that this type of study had been undertaken. What we did notice was that the government seemed to be relying on an article in the Ottawa Citizen, which claimed that consumers were not receiving the amount of fuel they had paid for.
Fraud is a serious accusation and must be based on proof rather than a newspaper clipping. We are even more surprised about the direction this debate has taken given that in Quebec, there are regulations under which fuel retailers must ensure that—and I will quote from the regulation—“all fuel distributors with underground tanks must have meters which shall be calibrated at least once every two years”. This requirement is in section 141 of the Safety Code in Quebec's Building Act. In order, therefore, to avoid further red tape, we insist that the federal government refrain from adding regulations, given that the provincial government has already taken on this responsibility.
I would like to thank the committee for the opportunity to make this submission on behalf of CIPMA members regarding Bill C-14, an act to amend the Electricity and Gas Inspection Act and the Weights and Measures Act.
The Canadian Independent Petroleum Marketers Association represents the interests of independent fuel marketers, that is, the non-refiners, or non-majors, of our industry. CIPMA is a national, not-for-profit trade association, incorporated in Canada in 1996. Leadership for the association is a board of directors made up of owners and senior managers of the member companies.
CIPMA's member companies are the larger independent fuel marketers in Canada. Many are family owned, many are rural in their roots and emphasis, and most are national in scope. All are strong competitors and play a major role in the communities in which they operate.
I would like to name our members. They are, from west to east, PetroValue, based in Vancouver; Parkland Income Trust, based in Red Deer, Alberta; United Farmers of Alberta, or UFA, based in Calgary; Can-Op, of Thunder Bay, Ontario; McDougall Energy, based in Sault Ste. Marie, Ontario; Davis Fuels, of Burford, Ontario; Gales, of Niagara Falls; Pioneer Petroleums, of Burlington, Ontario; Canadian Tire Petroleum, based in Toronto; Max Convenience; Cango of Burlington; Niapen Oil, based in Stoney Creek; MacEwen Petroleum, of Maxville, Ontario; Mr. Gas, of Orleans; Norcan Petroleum Products, of Montreal; Olco Petroleum, based in Montreal; Wilson Fuel, based in Halifax, Nova Scotia; and Co-Op Atlantic, of Moncton, New Brunswick. Collectively, we sell approximately 14 billion litres of fuel products in Canada.
CIPMA members participated in all aspects of the downstream marketing and distribution industry. The majority of CIPMA member companies are in the business of gasoline retailing, and the majority have operations in more than two provinces. Collectively, CIPMA members supply 20% of Canada's approximate 12,500 retail gas stations.
CIPMA believes that consumers have the right to get what they pay for, and CIPMA supports and believes that the retailer is responsible for the accuracy of their measuring devices. We see these as the two fundamental principles behind the current Weights and Measures Act and behind Bill , and, again, CIPMA supports these fundamentals.
CIPMA has been active with Measurement Canada in their deliberations about pump accuracy since 2004. CIPMA provided input to this process formerly in 2008. At that time, we stated that the public has a right to be confident in their purchases at the gas pump and that CIPMA supports a mandatory inspection cycle of gasoline-dispensing devices. We reiterate that position here for this committee.
We support the objectives of Bill , and, combined with robust regulations, we believe it will succeed in meeting its objectives, namely, providing consumers with confidence in the trade measuring devices used for purchases.
It is important to note that Measurement Canada, in their earlier appearance at this committee, testified that contrary to press reports, fraud or deliberate tampering is not the root cause of pumps found to be out of calibration. Rather, pumps wear, and the more volume a gasoline metering device pumps, the more it wears. This is the primary reason for pumps going out of calibration.
Retailers know this, so they undertake regular inspections and recalibrations of their pumps, even though they are not required to do so under the current legislative regime. Most CIPMA retailers inspect their pumps every two years, and some as often as every year. This is to ensure integrity. Inspections and recalibrations are a fundamental and well-accepted practice in our industry, and this practice explains the high compliance rates of the gasoline retailing industry. At 94%, gasoline retailing has one of the highest compliance rates of all measurement trade sectors.
Summarizing these three points for a moment, fraud and tampering are not the causes of gasoline pumps going out of calibration. Gasoline retailers regularly inspect and calibrate their pumps today, and the gasoline sector has one of the highest compliance rates of all the trade measurement sectors.
We still support the intent of Bill , but given these three facts, we strongly recommend that the short name of the bill be changed. Since we are talking about accuracy, let's accurately name the bill. A more accurate name is the “consumer confidence in measurement act”, whether we're talking about gasoline, electricity, natural gas, salami, or green beans.
We are confident that together with properly crafted regulations, this bill will ensure consumer confidence in measurements. We look forward to working closely with Measurement Canada officials in the development of a fair regulatory regime for Bill C-14, soon to be known, we respectfully request, as the “consumer confidence in measurement act”.
Thank you. I'll be happy to answer your questions.
I'm going to turn my questions now to Ms. Savage from CIPMA.
Option consommateurs, on page 46 of its report, well before the Glen McGregor uncorroborated Measurement Canada view on faulty pumps, pointed out that a full 82% of Canadians, back in 2002, felt very confident or somewhat confident about the accuracy of gasoline pumps. Given that, and given what you've just told us about the prospect, the reality of wear and tear, which I've tried to explain to some of my colleagues here, certainly on the government side, how satisfactory or how relevant or pertinent is it for the government and Measurement Canada to boast inspections every two years when throughputs and volumes at some stations in Toronto and Montreal might exceed volumes that would in fact trigger the need for more frequent inspection and a more mandatory inspection, as opposed to this two-year catch-all? It seems to me that they obviously didn't look before they leapt. If you're going to have a station with 14 million or 15 million volume throughput every year, those pumps could wear, obviously depending on the number of pumps that are there.
Do you have any comment on that, Ms. Savage?
Excuse me, yes. It's .15.
It's between 50%, where you would expect it to be, versus 74% or 65%. So 50% points to the centre of the normal distribution.
The reason for that skew, in other words, the reason for there being more pumps favouring the retailer than the consumer in that data, is curious, and we do not understand the root cause of that skew. We have asked Measurement Canada for their assessment of whether the data is accurate--and they have confirmed it is--and their assessment of why the data is skewed, and they have not offered an explanation, either publicly or to me directly.
The most important thing about data is whether it's statistically representative. That's the first thing that all data has to be established and vetted for. So there are many possible sources of this variance, which is, in my view, not anything close to what has been represented in the press or by others as being a deliberate attempt to manipulate. For example, were those sites that were sampled indeed random, or did they come from customer complaints where there may have been a problem in the calibration? Was it very close to the inspection cycle? Was it two weeks before the inspector was due in and the pump may have worn to the point where it was at that level, versus being inspected halfway through the inspection cycle? Were there already suspicions about some of the retailers who were being assessed by Measurement Canada, and did they target specific retailers in their audits, in their so-called random assessments?
Pumps are mechanical devices. At least one of the popular kinds of pumps in Canada, the Gilbarco pump, wears in favour of the consumer, not in favour of the retailer. The other type of pump, Dresser Wayne, I'm not sure about. We haven't been able to gather that data, but there is a pump, the Tokheim pump, which is no longer being manufactured but is still in place. Those pumps wear in favour of the retailer.
So again, was the data statistically sound, in that was it representative?
Thank you very much, Mr. Chairman.
I would also like to welcome you to Ontario in the 1990s. What I see here is truly a repeat of what happened in this province in the 1990s. The current minister in the federal Conservative government was at the time a minister in the Ontario Conservative government, when some groups were targeted, including teachers and nurses. Once they decided they were going to do that, the government created a crisis. The Conservatives were elected and said that they would solve the problem.
When I see a word like “chisellers” in English, I start thinking that this is perhaps more than just politics. It is an attack against retailers to make an impact. It's not a mistake, it's not something that happened by chance. They have created a crisis, as they said at the time. Now it's been done and it's a thing of the past.
Ms. Marcotte, you mentioned that you were surprised that there hadn't been a study? There was a small report. Can you tell us a little more about what you were expecting in a report or a study. What should happen before a bill like this is considered?
Thanks again, Mr. Chair.
I guess I'll start by just referring to something Mr. Rota said. He talked about the dragon slayer and the dragon. The dragon, to me, is the $20 million more that consumers are paying for gas products they're not getting, according to Measurement Canada. To me, that is a problem that needs a solution. From our standpoint, that's what this is about.
I did get clarification from the Measurement Canada folks, Ms. Savage, that sampling is random. So when we're talking about twice as many of the inaccurate pumps being in favour of the retailers versus the consumers, that is based on a random sampling.
I go back to the conclusion that my constituents would come to and the concern they would have when they hear this. I don't know that the conclusion they're coming to is that people are taking screwdrivers and manipulating pumps. I think the more reasonable conclusion is that if a pump is inspected and it's to the benefit of the consumer, it gets fixed pretty quickly. But if it's out of whack to the benefit of the retailer--in some cases--the conclusion that some reasonable people might come to is that it doesn't get fixed quite as quickly.
That would be something that's been expressed to me as a concern anyway. I don't know if that's a concern you've heard or not.
In terms of the conversation around using the word “chiselling”, or whatever word that some people might have used—I think Anthony used that word—what we're talking about is that we want to make sure the vast majority of retailers who are following rules aren't affected by the few who would break the rules. We want to make sure that Canadian consumers are protected against unfairness at gas pumps and other measurement devices.
We know the cost of that is $20 million a year—a very significant cost.
When we talk about the importance of this legislation, we talk about the importance to consumers. But again, maybe the reason your retailers are in favour of this legislation is because they know it will protect the reputation of the majority of those retailers who are following the rules. Is that correct? Is that accurate?
Thank you, Mr. Chairman.
Ladies and gentlemen, good morning and welcome.
With respect to your concerns about the bill's title, if it's helpful, I would say that I also don't think it makes any sense. It means... How can I put it? It's precisely because the government cannot measure its own words that it chooses these types of titles.
I'm going to use an example to show you how the Conservative government works. When we were talking about minimum sentences and law and order, was created. This law made people emotional. Another act amending the Criminal Code referred to “”. That meant that the government, if we didn't agree on certain parts of it, could say, for example, that the Bloc Québécois was protecting pedophiles. So you can see how this government doesn't know how to measure its words.
Now, in terms of fairness at the pump, it should be pointed out that Bill deals with all weights and measures for electricity and gas, obviously. On the other hand, we also know that the federal government has to market its message. We know that it hasn't received good press over petroleum, with western petroleum companies and everything that's happening. Therefore, it's making the retailers shoulder the responsibility. I don't think that's the way to do things. The title of this legislation could simply have included words such as “fairness in measuring”, “accurate measuring” or something like that that involves all devices for weights and measures.
The government refers mainly to petroleum because it does not want to give more power to the Competition Bureau. You know, collusion is much more profitable than inaccurate instruments and differences of 0.5% at the pump. Neither do they want any sort of monitoring agency. They know that this affects many individuals and people who buy gas. So they come up with a pompous title for marketing purposes, simply because they're concerned with their image, it's obvious. They think they can improve their image by doing that.
That said, we know perfectly well, as Mr. Lake said earlier, that the government is surprised by that $20-million loss to the consumer. Obviously, that's not right. However, it's a relatively small amount compared to the $40 billion worth of gas sold every year in Canada. If retailers wanted to, rather than manipulate their instruments—this is what Mr. Lake is claiming—they could simply increase their costs by a tenth of a cent, or a cent, and that would easily cover it.
Generally speaking the Weights and Measures Act covers all measuring devices. What's important is that consumers can feel confident that when they buy something they're getting the right amount.
I do not believe that retailers are going to manipulate their pumps to get a price that will set them a few cents more. Not everyone sells 10 million litres annually. In any case I don't believe it. That would be rare. They should not be accused without any proof. Accusing them offsets to some degree everything the Conservatives have done on the other side. Twenty million dollars is a lot of money for Mr. Lake when the issue is pump adjustments, but $1 billion over three days doesn't appear to be a problem. We could pay for a lot of inspections with that money.
With respect to inspection costs, I've heard that they would vary between $50 and $200. How much are they now? How much does a retailer pay currently for inspection and calibration, approximately?
Thank you very much, Mr. Chairman.
And thank you to our witnesses for coming today. My family was in the gasoline retailing business when I was a boy, so this one hits a little closer to home. I understand a fair bit about this.
Over the years the industry has been characterized in a fairly negative light, much of which has to do with the public's perception about gasoline pricing, but also with this article in the Ottawa Citizen about the accuracy of the pumps.
Madam Savage, you mentioned that the pumps have wear and tear. Mr. Lake got into this as well, in questioning the accuracy of that in terms of the 74%--maybe it's 65%--but if there's wear and tear, you would think it would actually benefit the consumer.
Maybe you could address that a bit. If there's wear and tear on the device, you'd think it would be letting more gas out rather than restricting it more. Can you tell us your thoughts on that?
Maybe we can have the researchers bring back a real figure for us on that per year, around $20 million in taxation benefits the government would have received from that.
There has been a lot of to-do about the original article that appeared, and then the number and the volume of violations that took place, and still no charges were laid. One of the issues that we've been discussing recently in this hearing is the real effect... The repercussions will come later through regulations. But we'll play no role around that here. If there are retailers out there who are benefiting from manipulation at the pump, what would be the penalty figure that you would suggest would have a fair effect upon them to curb that behaviour?
And it's hypothetical. I think there's a problem, to some degree, but at the same time I'm looking for some type of fairness here in that. But if there were problems in the system... The problem if we let regulation deal with this is that we have no input whatsoever as members of Parliament. It can ebb and flow.
It could be nothing, so the whole Fairness at the Pumps Act—which is actually ironic. That's why I actually am really stunned at a flyer that's gone out with public money by a cabinet minister on this issue. It's not just a member of Parliament deciding to freelance on an issue and get out in front of even hearings at a committee. The actual cabinet of this government has decided on communications that they want to put forth before we even have a report tabled to the House or amendments to the bill. There could be a bias there—
Mr. Mike Lake: A point of order, Mr. Chair.
On a point of order, I want to clarify that a member of Parliament--you're right, it is not cabinet--has to authorize the franking of the material. They sign off on the expense, the development, and the messaging at the end of the day.
So Lisa Raitt, a cabinet minister, has decided that on this issue, before we have the witnesses come forth and the legislation once again tabled in the House of Commons. I want to make it clear that a cabinet minister--we don't know if others have done this, and we'll find out perhaps later on--has decided they want to use public money to influence debate within their riding on this issue. Perhaps it went to other ridings. We don't know; maybe we'll find out later.
I'm going to consider a point of privilege about this, because it affects my capability and my opinion when you have a cabinet minister doing this. They have a vote at the end of the day that's significantly different from that of regular members of Parliament like myself. When we try to sit at committees, where we're supposed to be--in the history of Parliament, at least--working on issues instead of partisanship, this is significant. It could have happened before, but I haven't seen this before. So to me it's fairly significant.
As far as those regulators, or those who perhaps are poor operators, do you think there's a fine level that would be appropriate to curb them or put them in order? Do you have confidence that it can be done through regulations versus legislation? Legislation means we decide here; regulations mean it can ebb and flow, depending on what the department says at that time. It goes to cabinet.
Thank you, guests, for coming here. I want to tell you that normally we really get along--really well.
Voices: Oh, oh!
Mr. Dave Van Kesteren: I want to make clarification on the tax part; I owe this to my good friend, Dan McTeague. It's probably more like 25%, because some of that tax is already taken at the refinery. That's just to get the facts straight.
I do want to say something else, too, just in line with what Mr. Lake said. The intent of the bill--I think, Ms. Savage, you laid that out very well--is consumer confidence.
You know, not to lay any charge here, it's human nature; I think it's probably safe to say that if the findings indicate that the leaning is toward the benefit of the retailer, that, to me, probably means that if you have a faulty pump, you're going to find out really quickly if it's costing you money. And if it's not, there is a tendency--we can turn a blind eye to this, but it's just human nature--to let this thing go.
I think what the bill says, and I think what the minister was saying at the same time, too, is that if you're allowing this to happen, we're going to catch you.
The other point, of course, is that this bill encompasses much more than gasoline, but gasoline is the thing that people tend to zero in on.
To drive my point home, I was thinking of an example of how this bill probably reflects other bills, and it's the Accountability Act. This is an act that basically has stripped the members of Parliament from being unduly influenced by any group.
I think we can all agree--Mr. McTeague, I'm sure, would certainly agree--that when we come to this committee, when we have the witnesses sitting in front of us, by and large we pretty much can see a clear vision as to where we're going to go.
Oftentimes we're accused by the other side of being on the banks' side, or big oil. Well, that's absolute nonsense. There was a time when a member of Parliament could be solely funded by one group. That was very dangerous. The Accountability Act says you can no longer take money from organizations. You can no longer take money from unions. You can only take money from people like your mom and your dad and your brother and your sister. They maybe will give you that top-notch amount, but for the most part it's $100 here and $100 there. We all have to struggle to get to that point where we can run a campaign.
The end result is that when we sit, especially in this committee, we get a pretty good idea of what has to be done--and it's to the benefit of the consumer. I just wanted to point that out.
I commend you, too, Ms. Savage, for pointing out that this is more about consumer confidence, just as the Accountability Act was about confidence for politicians. We can all go out to our ridings now and say, “You know what? I'm not influenced by this group or by that group. They have no bearing on what my decision is.”
So this is to your benefit. When I think about what needs to be done in Parliament and when I think about what acts need to be passed, I'm thinking about the benefit to the consumer. I think we've demonstrated that very well in this committee. For the most part, at the end of the day, we all have the benefit of our voters in mind.
I don't know if that really asks for a comment from you. I think you've pretty much laid out the facts. But doesn't this act--not to lay any charge or to condemn any retailer--guarantee, or at least give us some consumer confidence, that if there is a pump, the onus now will be, “I'd better get that thing fixed”?
Thank you very much, Mr. Chair.
Thank you to our witnesses for being here this morning.
We've spent a lot of time on the issue of ten percenters, which has been unfortunate, but I'll just quickly touch on this—I feel compelled to clear up any misperception that our witnesses may have been left with. The way the discussion has been framed, one might be led to believe that only government members of Parliament use this particular communications tool, and I want you to know that in fact members of Parliament from all parties across the House of Commons have access to and use this communications vehicle—just to clear up any misperceptions that may have been left.
Mr. Garneau may have touched on this already. I believe he addressed this question to you, Madam Savage. Perhaps I'll address the question to our delegation from Quebec.
You indicated that according to Quebec regulation, there are mandatory calibrations every two years. Are you aware of whether or not that regulation exists in any of the other nine provinces?
Again it comes back to the certification process that Measurement Canada undertakes today and will undertake to a greater degree under the new regime, so that inspectors are trained and certified in a very rigorous way.
Yes, on the surface there is a conflict between the person's doing the work and then inspecting the work. You could liken it to a home renovation. We have building inspectors, not the contractor, doing the inspections.
However, going back to the certification process, I think we have a very robust process here, such that inspectors who are suspected of doing or who do anything that's egregious—in other words, they are not inspecting the pump properly—would, if they were also the ones doing the work, be rooted out and not recertified, or in fact perhaps discharged.
On balance I would say that our conclusion on that is that we are aware of the situation, but we can accept the fact that the same individual will do both of those functions, as long as the oversight is in place.
I have questions for the witnesses first. Is that all right?
The Chair: Yes. Go ahead.
Hon. Dan McTeague: Chair and witnesses, I'm concerned that we've lost perspective of what really drives consumers and the concerns they have. In 2008, when this article was written, the real issue driving prices through the roof had a lot to do with derivative trading and speculation following the NYMEX between January of 2008 and somewhere around July 4, 2008, with the highest prices we had ever seen. At the time, this committee had spent one day--before the Prime Minister pulled the plug on the election, and I know Mr. Van Kesteren and Mr. Masse were there--in which we were able to ferret out or focus on the real driver of the cost of fuel to consumers.
Having said this, the concern I have heard expressed by some of you here is one that I think deserves more consideration. The government contents itself with the possibility of a $20 million penalty or hit to consumers; however, the half-percent tolerance by Measurement Canada that I referred to a little earlier, if I am to extrapolate that among the 45 million litres of gasoline and another 20 million of diesel, could potentially lead to a $200 million skew against consumers.
So rather than deal with the smoke and mirrors this legislation is providing, I'm wondering if you have any comment as to your concern about the absence of draft regulations. The devil truly is in the details, and I think Ms. Savage you referred to this. I'm not sure I'm comfortable as a member of Parliament giving a blank cheque without understanding the details. Have you had any consultation with Measurement Canada that gives you any relief from the possibility...that you know what is in those draft regulations? They really are the meat and substance of what we're talking about here.