Thank you, Mr. Chair. On behalf of John Walter, the chief executive officer of the Standards Council of Canada, I want to thank you for this invitation.
I will begin by outlining the role that SCC plays before turning to challenges and opportunities related to standardization in Canada.
SCC is a federal crown corporation. It was established by an act of Parliament in 1970. Our mission is to enhance Canada's competitiveness and well-being through standardization. Our organization is composed or 93 staff, and our strategic direction is guided by a 13-member governing council.
SCC is Canada's national accreditation body. What does that mean? It means that we accredit eight organizations that develop and maintain technical standards for Canada. We also accredit hundreds of organizations that test and certify products to relevant standards. Those are called conformity assessment bodies.
This is a crash course in standards development for you today. I hope you will bear with me with all of this terminology.
You will see the logos of these conformity assessment bodies on many products that you buy and use every day, from computers to hockey helmets. The CSA logo would be the one that most people recognize, but there are many other logos associated with the work we do.
SCC represents Canada in international and regional standardization forums, such as the International Organization for Standardization, or ISO, and there are others. We support more than 3,000 Canadian members representing various industry inspectors in hundreds if not thousands of standards development committees.
SCC also works with government to support the priorities that will bring the greatest benefit to Canada. On that front, governments around the world use standards to support public policy objectives. In Canada, a recent SCC search revealed more than 5,000 references to technical standards in federal, provincial, and territorial regulations. So regulators clearly are using standards to support their policy objectives.
Examples of such standards include the flammability of children's sleepwear, the safety of medical devices, the use and storage of explosives, and certification of organic foods. There is a chance that if you regulate and there are technical aspects to your regulation, you may need a standard in order to explain clearly to the regulatee what they need to do in order to comply with the regulation.
In the handout we distributed, you will see a couple of pie charts. You will see that SCC is a relatively small organization with a budget of approximately $21 million. A little bit less than half of our revenues come from federal government appropriations, and we generate the other half of the revenues from our accreditation services and from the sale of standards.
That is a kind of overview of SCC. Now turning to priorities, challenges, and opportunities, let me list the three priorities we are focusing on at SCC.
The first one is providing value for Canada. Our activities must add benefit to Canada before we pursue them. The second priority is entrenching our place as an international leader in standardization, in other words, becoming standards setters, wherever it makes sense to do so. The third one is related to fostering innovation.
If we turn to our key challenges, one of them is a shift to using more and more international standards as distinct from domestic standards. This is not unique to Canada; businesses and regulators around the world rely more and more on international standards. For example, only 39% of standards incorporated by reference in federal regulations have been developed in Canada; 61% have been developed elsewhere, such as in the United States, in Geneva, or in other countries in which international organizations are operating.
Our ability to develop and maintain domestic standards has been impacted by many factors, including a decrease in technical expertise in this country and the globalization of markets and supply chains.
Thousands of Canadians are participating in regional and international standardization activities to ensure these standards meet our needs. However, we need to do more to help Canadian innovators become standards makers internationally as opposed to standards takers if we want them to export their products abroad. That's a key challenge for us, and we aim to continue to pursue that line of thought and develop programs and activities to support our innovators in the global marketplace.
Another challenge is the use of different standards by different jurisdictions within Canada to ensure regulatory compliance. Canadian industry leaders have told us repeatedly that in order for them to be competitive, we need to move toward this concept of one standard, one test, and we need to align standards requirements among jurisdictions for them to be able to be competitive.
Let me turn briefly to opportunities, and they're linked to the challenges that I just outlined. We see many opportunities ahead. For example, we support the government's work to update the Agreement on Internal Trade to better align standards in regulations across Canada. We will continue our effort to improve coordination across jurisdictions by collaborating with provinces and territories to complete the first comprehensive inventory of standards referenced in all regulations, federal, provincial, territorial. This will allow jurisdictions to compare notes and will allow them to begin to align their standards when they are different from one jurisdiction to the other.
Moreover, we'll also continue to work with stakeholders to identify the standards, testing, and certification requirements that are the greatest impediment to internal trade. As there are thousands of standards and regulations, we should begin by focusing on the ones that are creating the greatest harm to make a difference with limited resources.
SCC is also committed to creating a more integrated standardization network across North America. Greater harmonization will increase the flow of goods across our borders, make supply chains more efficient, and improve market acceptance of innovative products and services.
Finally, maintaining our position as an international standardization leader can bring significant benefit to Canada. Our role in coordinating, aligning, and supporting the participation of Canadian experts on international standards development committees gives Canada a competitive advantage. It advances innovative ideas and knowledge that can transform our nation into a global standards maker in areas of strategic importance for the economy.
Mr. Chair, this concludes my opening remarks. Stephen and I are more than willing to answer any questions you may have on this complex system.
Thank you. There are two parts to this question.
I think the first priority for us is to make sure that we support members who want to participate internationally, because often an SME will find it difficult to play. There are some barriers to them, such as time and money. So we've established a participation program at SCC to help fund some of the activities of the mirror committees, the Canadian committees that participate internationally. We have $1 million set aside annually to support these organizations.
When it comes to the use of standards by SMEs, yes, we are providing as much information as we can on our website. We are expanding our virtual network of interested parties to share the information and showcase the benefits of standardization to these organizations.
One interesting aspect here is other member bodies like SCC are also seeing the same challenges, so we are encouraging our SMEs to visit the ISO website where they'll see a number of examples where standards make a difference to SMEs and help them to access global markets. We're doing the best we can with the limited resources we have to help them access the standards and benefit from them.
If you think about the electrical code, for example, the CSA maintains the Canadian electrical code, the CEC, and it's updated every three years. It's then incorporated by reference in provincial regulations, because the provinces are responsible for electrical safety.
In the U.S. there is a code, managed by the National Fire Protection Association, the NFPA. It's called the national electrical code. That code is also issued every three years.
We see differences between the U.S.-based code and the Canadian code, and we also see time lags between the changes that are made to the U.S. code and these changes coming to be accepted or implemented in the Canadian code. In some cases, this results in significant time lags for the incorporation or deployment of new technologies or ideas in Canada, because we're always one cycle late. In other cases, some people will say that they don't agree with this or that, which means that industry needs to certify products twice.
That's the reason we think it's important for us to seek industry input, so that the standards and codes that are not aligned and that create the biggest grief to these organizations are looked at. That way, we can come up with this concept of joint standards when it makes sense to do so.
Thank you very much, Mr. Chair, and welcome to our guests.
I noted a couple of items when I read through the report and listened to what you presented.
One of the key things you spoke about, of course, had to do with internal trade and some of the issues associated with it. I was on the agriculture committee in our last Parliament, and this was something we looked at in a lot of detail. Hopefully we'll be able to take some of the information that came from that study, so that we don't reinvent the wheel—we have to have new standards for that as well.
I think a critical aspect of it is to make sure we recognize that when 13 provinces and territories all have their own ideas as to how they should put things together, it is difficult for Canada to move ahead as a brand when moving into other countries. The work you have to do and of course the different incorporations by reference that are required in each of the governments make your task extremely difficult.
That, perhaps, is one of the things people look at when they try to deal with Canada, where do they go, and who is it that is going to set the bar, so that they know where it is. That's one of the important parts.
It was mentioned earlier—I believe Mr. Arya mentioned it—that you had the AG report. I was also on the public accounts committee when that was taking place. You have done a good job of trying to make sure you have dealt with all of the things that auditors general look at, which often are more a question of how you do things than whether or not something is wrong.
Mr. Masse and I had an opportunity last evening to present some awards at an eBay award ceremony. There were some amazing young women entrepreneurs talking about some of the things that are important, but what they see as a barrier is some regulations and standards issues.
One of those happens to be selling things across the border when there is a de minimis cost, which basically means that above $20 there has to be a tax on it. If it comes back from the U.S. into Canada, at the present time it is set at $200, and I believe the U.S. has just bumped that to $800. This makes it very difficult for them to move product across the line, and it puts our businesses at a disadvantage.
Is this something you would deal with, or should I be looking somewhere else on behalf of those individuals?
Well, we deal with voluntary standardization, and I think what you're referring to is basically a tariff that would be imposed on a product. We would not have any role to play there.
But just to support your statement, we've done a case study with the Canadian Institute of Plumbing and Heating to try to ascertain what the costs are associated with multiple certifications, if you have different standards in Canada and the U.S.
We took a very simple example of a water heater. We found that to sell a water heater in Canada, you need to certify your product more than once, sometimes three to four times. That results in an increased price for the water heater here in Canada, up to 2% to 4%, just because somebody forgot somewhere to update their old standard in their regulation.
That's the kind of work we want to pursue with the provinces, so that they know what the different requirements are between jurisdictions. Then we can have an enlightened conversation about the best way to approach this to align the standards and reduce costs for manufacturers, but ultimately for consumers.
There were a couple of items in the 2013-14 report in terms of a reduction in expenses on a couple of items, based on the “limited internal technical resource base, as well as difficulty” getting “external experts” to undertake studies, etc. Further down, on the next page, it's actually stated that expenses were “$2.1 million higher” than the year before, based on an increase in salaries and benefits. So we were unable to get the people to fulfill the mandate that you had given yourselves that year, yet we paid more money in salaries and benefits than we had expected, by roughly $2.1 million.
That, to me, is a concern in terms of how we're running an organization. I can't know what the outcome or the effect is if I don't have the latest information, if you will, in terms of annual reports.