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Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 15:32
Thank you.
Mr. Chair, I'm pleased to present our Spring 2015 Reports, which were tabled in the House of Commons yesterday.
I'm accompanied by Nancy Cheng, assistant auditor general; Joe Martire and Frank Barrett, principals; and André Côté, director.
We have presented seven audits that we completed since last fall. Some of the audits included in our Spring Reports were led by assistant auditors general Ronnie Campbell and Wendy Loschiuk, both of whom retired this past month. I want to take this opportunity to thank them for their contribution to the office. I would also like to acknowledge the contribution to the performance audit practice of Neil Maxwell, assistant auditor general, who will retire in June.
As you will see, some of the audits that we are talking about today highlight government activities that are not delivering their intended results for Canadians, and where there's a risk that the underlying issues could get worse if they're not addressed quickly.
First, let's look at our audit of antimicrobial resistance. Data shows that some drug-resistant infections are on the rise in Canada. Already, in hospitals alone about 18,000 Canadians contract resistant infections every year. We found that Health Canada and the Public Health Agency of Canada have not done enough to help contain the proliferation of drug-resistant organisms. Health Canada has not taken some important steps to protect the effectiveness of antimicrobials used for treating serious infections in humans.
Though the department requires a prescription for the human use of these drugs, prescriptions are not always required for their use in food animals. The imprudent use of antimicrobials in food animals can lead to the spread of drug-resistant organisms through the food chain. Health Canada is aware that there are gaps in the regulations that make it possible for farmers to import unlicensed antimicrobial drugs and active pharmaceutical ingredients for use in their own animals, but the department has not acted to strengthen the control over their importation.
We also found that the Public Health Agency of Canada is not collecting all of the surveillance information needed to understand the scope of antimicrobial resistance in Canada. In 1997, the federal government first articulated the need for a pan-Canadian strategy to address antimicrobial resistance. This was reiterated in 2009 and the agency acknowledged that stronger leadership was needed. However, there was no provincial or territorial consensus on what the Public Health Agency of Canada's role should be. There is currently no national strategy in place and in our view it will likely be many years before there is one.
Continuing on the topic of health, we also looked at what Health Canada has done to support first nations' access to health services in remote communities.
Health Canada has an objective of providing first nations individuals living in remote communities with access to health services that is comparable to that provided to other provincial residents living in similar locations. We found that the department has not achieved this objective.
In most cases, access to health care in these communities is initially provided through nurses deployed in nursing stations. We found deficiencies in the way nursing staff and stations are managed. For example, only one of 45 nurses included in our sample has completed all of Health Canada's mandatory training courses.
We also found that Health Canada had not addressed 26 of 30 health and safety or building code deficiencies present in the eight nursing stations we examined. Deficiencies ranged from malfunctioning heating and cooling systems to unsafe stairways, ramps, and doors. Health specialists cancelled visits to one community because they could not stay in the residence intended for their use due to issues with the septic system dating back more than two years.
In another audit we focused on whether the Canada Border Services Agency has managed its information technology investments to ensure its projects meet their objectives. The agency's current portfolio is made up of 30 information technology projects, with a budget of more than $1 billion.
In December 2013, the Canada Border Services Agency put in place a portfolio approach to strengthen the management of its information technology investments. We found this approach was comprehensive; however, a review of five projects against the new framework showed it was not being fully applied. For example, the information provided to senior committees tasked with overseeing the information technology project portfolio did not contain accurate financial information, project status information, or timelines. As a result, the agency faces significant challenges in managing these projects, sometimes resulting in duplication of effort or projects being delivered late.
Let's turn to our audit of tax-based expenditures. The total of tax-based expenditures accounts for billions of dollars annually. These expenditures are similar to direct program spending, we found that less information is provided to Parliament about tax-based expenditures than about direct program spending.
We found that Finance Canada does a good job of analyzing new tax measures and of monitoring existing ones. However, Finance Canada does not systematically evaluate tax-based expenditures to ensure that they continue to achieve the intended results.
We believe that Parliament needs comprehensive and consolidated information about tax-based expenditures to understand not only total government spending, but also what money spent through the tax system is accomplishing.
In our audit focusing on how the Correctional Service of Canada prepares non-aboriginal male offenders for safe re-entry into the community, we found that offenders are seeing more of their sentences in custody and spending less time under supervision in the community.
In 2013-14, about 1,500 offenders were released directly into the community from medium or maximum security penitentiaries without the full benefit of a gradual re-entry into society. Eighty per cent of offenders were incarcerated beyond the time that they first became eligible for parole even though many were considered to be at low risk to reoffend. We also found that in many cases offenders were not receiving correctional and rehabilitation programs prior to becoming eligible for release. Many offenders were not assigned to these programs while in custody, despite having histories of criminal associations or substance abuse.
Let's turn our attention to our audit focusing on the recurring reports that are required of federal organizations by the Treasury Board of Canada Secretariat, the Public Service Commission, or legislation. We found that, for the most part, reporting intended to support accountability, and transparency was serving its intended purposes. However, in our view, the efficiency and value of government reporting should be improved.
We also found that some Treasury Board of Canada Secretariat reporting requirements applied equally to all organizations, regardless of their size or mandate. For example, the Canadian Polar Commission—a small organization with 11 staff members—was required to prepare 25 annual or quarterly reports.
We also found that about half of departmental security plans, which were due by June 2012, had not been finalized at the time of our audit.
Our audit of the Office of the Ombudsman for the Department of National Defence and the Canadian Forces covered the period of February 2009 to August 2014, coinciding with the terms of two different ombudsmen. We found that, during the tenure of the first of these two ombudsmen, the office had in place inadequate controls for managing finances, contracts and human resources in compliance with government rules and policies.
In addition, existing controls were often overridden by management.
We also found that the first of the two ombudsmen and some senior managers did not respect the Values and Ethics Code. This resulted in grievances, complaints and high levels of sick leave and turnover. These issues, combined with a lack of standard procedures contributed to delays in processing investigations. After 2012, the workplace environment stabilized, and efforts to close long-standing files were successful.
National Defence's monitoring was insufficient to ensure that government rules and policies were being followed in the ombudsman's office, and the department did not fully address employee complaints about workplace issues filed from 2009 to 2013.
Since the ombudsman's office investigations are carried out independently from National Defence, but the office staff and budget reside with the department, the organizational relationship with National Defence is a complex one that needs to be better defined to ensure adequate monitoring in all areas.
In 2014, our office performed special examinations of the Canada Lands Company Limited and the Royal Canadian Mint. Though we did not identify any significant deficiencies, we did note some areas of concern relating to the Royal Canadian Mint's contracting practices and management of travel and hospitality expenses.
Of the seven audits we have reported on, some highlight government activities that are not delivering their intended results for Canadians, and there is a risk that the results could get worse. The national strategy to address antimicrobial resistance is one example. Almost 20 years after the government identified antimicrobial resistance to be a public health priority, there is still no national strategy in place.
Our audit of the Correctional Service of Canada is another example where it is evident that fewer offenders are getting the benefit of a full gradual release back into society.
We're concerned that the issues we're seeing today may be the symptoms of bigger problems in the future if they're not resolved quickly. It's important for departments to focus on addressing these issues promptly to avoid bigger problems, which will cost more to fix down the road in time, money, and effort.
Mr. Chair, that concludes my opening statement.
We will be happy to answer any questions you may have.
Thank you.
View Jay Aspin Profile
CPC (ON)
Thank you, Chair.
Welcome, Mr. Ferguson and your team, to our committee.
I'm going to focus on chapter 7, which is on the office of the ombudsman for the Department of National Defence and the Canadian forces.
In chapter 7 you concluded that the:
Office of the Ombudsman for the Department of National Defence and the Canadian Forces...had inadequate controls for financial management, contracting, and human resource management in carrying out its mandate....
In your remarks, on line 27, you state:
After 2012, the workplace environment stabilized, and efforts to close long-standing files were successful.
Can you speak to how these issues are being addressed under the current ombudsman?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:21
There still is a lack of clarity in terms of the line on the roles and responsibilities between National Defence and the office of the ombudsman. This issue is important because the ombudsman's office needs to have the independence to conduct its investigations. The investigations that it's doing are about complaints that members of the military, or their families, or civilian employees of National Defence have about the operations of the military or National Defence. The ombudsman's office is the way that those employees have to get their concerns dealt with, so the ombudsman's office needs to have independence to conduct those investigations.
On the other hand, all of the staff and the budget for the ombudsman's office come from National Defence, so National Defence has a responsibility to make sure that the hiring rules are respected, that the financial management rules are respected, and that values and ethics are respected. They have to do monitoring of the ombudsman's office to make sure those administrative rules and roles function properly.
You can see that, almost by definition, there's a push-pull between those two things, where National Defence has to monitor the ombudsman's office, but the ombudsman's office has to do independent inquiries into National Defence's activities.
We certainly did find that the problems were at their worst between 2009 and 2012. There were some actions that were taken in the latter part of 2012 into 2013 to try to resolve the issues. The investigations started to be completed on a more timely basis again, but there still are some places where the roles and responsibilities are not totally defined. It's important to make sure that the inquiries can be done independently but that there can also be appropriate oversight of the management and administration of the ombudsman's office.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:23
That's right, and I'm concerned that National Defence needs to find a way to monitor the administrative part of the office of the ombudsman, to make sure that the financial contracting and human resource rules are being followed and being respected, but not be doing it in a way that gives people the perception that National Defence is using that as a way, somehow, to perhaps impede the independence of the investigations.
It's a very complex relationship. Trying to protect, both respecting the rules but also respecting the independence of the investigations, needs to be sorted out.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:24
I think, again, we identified in the audit that in the latter part of 2012 we saw that things had started to improve, both in terms of investigations and in terms of what was happening in the workplace. I think, though, there is still some education that needs to be done and some systems and controls that need to be put in place to make sure there are good financial controls in the office of the ombudsman. That's why we've made the recommendations again that National Defence and the ombudsman's office have to sort out those roles and responsibilities. There's still some work to do there.
View Alain Giguère Profile
NDP (QC)
Thank you, Mr. Chair.
In the report on the ombudsman, it seems clear that, between 2010 and 2013, the service was not operational in terms of administration, or was at least limited in its ability to meet its commitments. If we look at all the points you put forward, the situation seemed to stem from a work environment that could be described as toxic.
How is it that a service could perform so poorly for three years without the Department of Defence or another entity telling the senior officials responsible for the bad conditions and work environment to remedy the situation quickly? The working conditions clearly deteriorated over those three years without the senior officials making any changes.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:50
I understand your question and I'm in the process of answering your question.
In paragraphs 7.71, 7.72, and 7.73, we talk about the fact that National Defence did in fact undertake some investigations. Some of those complaints were brought forward to them. They had to undertake some investigations into those, but they didn't do them appropriately. If those investigations into the complaints had been done appropriately, it could have perhaps prevented or fixed these types of problems earlier rather than when they were fixed. I think it was a case of just not having the right practices for dealing with the complaints in place.
View Alain Giguère Profile
NDP (QC)
Mr. Auditor General, it is especially troubling to see that the period during which that service was performing poorly coincided with the period when many female members of the Canadian Armed Forces complained about being sexually harassed on one or more occasions.
In paragraph 7.8, you say that you examined those activities.
Did you check which cases took the most time to be resolved and whether they were processed correctly? If poor working conditions resulted in unreasonably long processing times, was the quality of the processing of those files also affected?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:53
I don't have the information about the exact types of investigations that were being undertaken. Certainly when you look at the ministerial directives, we are saying that the office the ombudsman should try to resolve issues within 60 business days, but many of these—I think we identified 122—were taking more than two years to resolve. This situation was such that the investigations were just not getting done, and they are important investigations. This is an important service to members of the armed forces and civilian employees of National Defence.
Don Head
View Don Head Profile
Don Head
2015-02-17 9:27
Thanks. It's a really good question.
I think a couple of points are worth noting. There are sort of three types of individuals we need to deal with.
There are those individuals who come into the system and have literally no employment history or employment skills at all. In some cases, it's about giving them an assignment that gets them to get up on time, go to a certain place, stay there for the required number of hours, perform whatever tasks there are, and then repeat that. As you can appreciate, there's a segment of our population that does not have a work ethic, and trying to instill that is part of some of the tasks we have. For example, when we assign somebody to what we call “range cleaners”—cleaning on the ranges in the institutions—it's partly to address that issue.
We also have individuals who come in and have had an off-and-on employment history. It's about trying to find out what it is that's causing them to not keep a job when they've been in the community. Sometimes that's about upping their level of education. Sometimes it's about giving them a different set of skills that are more applicable in the community today. It's about trying to match those kinds of things.
Then we have other individuals who have had good employment histories, and some of those individuals are individuals we use in some of the higher-level shops that we have, for the productivity piece.
There is no question that we do not have exactly the same kinds of opportunities in every institution across the country, but we try to narrow down the needs that we are going to address for the short period of time we have. As you can appreciate, one of the challenges for individuals who have short sentences and are relatively young is that we're not going to change their lives overnight, so it's about trying to get them steered in the right direction.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:15
Thank you, Mr. Chairman.
I want to thank our guest today for coming and for answering our questions.
There are lots of questions with regard to this report. I'm going to start with section 6.35. In this section you mention that for some contribution agreements that were given out, paperwork was not completed or filed on time, and there was lack of adequate tracking. I know you have already spoken to some of these pieces but I'm using this as a segue into where I'm really going with this.
Where I'm going is from 6.35 to 6.53. In 6.53 it says that CanNor “has affirmed that values and ethics are important in the administration of grants and contributions.” Well, first of all we're looking at the ethics piece and we're also looking at the piece where much of the paperwork was not filed and there was an inadequate tracking system.
On the very day I think the report was released I also submitted through the order paper in the House of Commons a question on the number of contracts given by CanNor that were under $10,000 for the period of about a year that was ending in 2014. So it would have been around the same time that the rules around the ethics portion of this was being reaffirmed. What I noticed were several things.
First of all, I noticed there was a company that was given a contract for speech writing services. It was an Ottawa-based firm by the name of Don Cummer and Associates. This particular company has also been a long-time high-level donor to the Conservative Party of Canada in a number of election campaigns, not just one.
My question is in terms of looking at the values and the ethics and the administration of the grants and contributions of CanNor. How does it fit when those contracts are being awarded to long-time contributors to the Conservative Party?
Janet King
View Janet King Profile
Janet King
2014-12-04 16:18
I'm unable to speak to the specifics of the particular example that you provide but I can say that all contracts given by CanNor certainly follow the rules and procedures of contract implementation.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:18
Well, according to the findings that were written in the Auditor General's report there were a number of inadequacies that weren't followed within CanNor.
This is not the only example of the list that I recovered, where there have been long-time contributors to the Conservative Party who were given contracts by CanNor, contracts that were signed off, from what I understand, by the minister. In fact, one of those contracts was to a company called True North Properties Group and the company president was Mr. Birrell, who had directly donated to the minister's campaign.
So I'm not sure how the ethics piece measures up in CanNor if direct contracts and services can be given to all of these groups who are long-time donors to either the minister who is responsible or the Conservative Party.
Janet King
View Janet King Profile
Janet King
2014-12-04 16:19
Again, I would just like to note that with respect to any contracts provided by CanNor we routinely and consistently follow government contracting procedures. Most, if not all—I can check with my colleagues—of our contracts are done through standing offer, so groups that have been cleared to provide contracts.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:20
In the report it states the following:
The Agency has affirmed that values and ethics are important in the administration of grants and contributions. This is particularly so for the Agency because in small northern communities, there is a higher risk that an employee, family member, or friend of the employee may be able to benefit directly or indirectly from the funding provided. In 2013, the Agency issued its Values and Ethics Code of Conduct. We found the Code to be consistent with federal government requirements.
Someone should be able to tell me: is it an ethical practice of your agency and all other agencies in government that any company directly donating to the governing party and to the minister responsible in that agency would be contracted services?
Janet King
View Janet King Profile
Janet King
2014-12-04 16:21
Again, it is my view that, as long as government procedures and rules are followed, it would fall within our values and ethics.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2014-12-04 16:21
Thank you, Mr. Chairman.
Thank you to our witnesses for attending here this afternoon.
I have a line of questions I want to ask, but before I do that I just want to respond to my Liberal colleague's comments a little bit.
In 2006 our government passed the Federal Accountability Act that banned corporations and unions from making donations to any political party in an effort to get rid of the big money involved in politics. The member opposite here has directly stated that there was a company that donated to the Conservative Party, which is an inaccurate statement. It has to be an inaccurate statement, because companies—
Voices: [Inaudible]
Mr. Ted Falk: No. Companies—
View Alain Giguère Profile
NDP (QC)
Thank you, Mr. Chair.
My first question is a quick one for Mr. Ferguson.
I quickly re-read your document, but nowhere did I see that you had pointed out or observed a problem with misappropriation or ethics. Was that not part of your review of this agency?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:27
No, the types of things that we identified were not getting reports, not following up on what was spent, what was planned to be spent, and that sort of thing. The issues that we were raising were simply that the agency didn't have the information to really be able to monitor some of the grants that it gave out.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:37
Thank you. I have some more questions on section 6.53 regarding the ethics piece.
Mr. Ferguson, your report stated that a new values and ethics code of conduct had been developed. It also stated that this agency received application forms that were empty or missing lots of data, and that the agency determined those were acceptable and approved them. We know that now.
I also know, from information I've obtained through the House of Commons, that there were contracts with companies, the presidents of which were long-time donors to the Conservative Party. Under the values and ethics code of conduct, which you had reported on in this particular document, is this acceptable?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:38
Certainly we would expect the agency to follow the code of conduct and the rules on contracting. It's important to recognize as well that this audit was not an audit about the contracts that the organization put in place; it was an audit of the grants and contributions program.
In terms of the values and ethics code of conduct, through the audit we identified that in 2013 they were implementing this code of conduct. Certainly we identified what I would consider to be significant issues with the administration of some of the programs around grants and contributions, and we brought those forward. We also identified that in 2013 they started to put in place a management framework that included the values and ethics code of conduct. From that point of view, we were not satisfied with the way they were processing things, but we did find they were starting to make some steps towards improving that.
View Stephen Woodworth Profile
CPC (ON)
Thank you, Mr. Chair.
Mr. Ferguson, there is unfortunately a trend in some circles today, when policy cannot be criticized, to smear reputations and to insult the ethics of people in government. It is done with sly innuendo and rumour. Quite frankly—not that it matters to anybody else here—it disgusts me more so because the victims are unable to publicly defend themselves.
I'd like to ask you what I believe and hope is a categorical question, and for which I hope it's capable to have a yes-or-no answer. Having examined a number of projects of this agency, can you point me to any evidence in your report that demonstrates that any single one was conducted in a manner that violated the values and ethics code of conduct of this agency?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:54
We didn't audit specifically the value and ethics code. What I can say is that we did not see any evidence that concerned us that there was any wrongdoing in any of the files we looked at.
But I can't answer your specific question on whether all the attributes of the code of ethics were followed, because that wasn't a specific part of the audit.
View John McKay Profile
Lib. (ON)
Chair, you'll be interested in knowing that due to the efforts of the Ontario government, Toronto has not had a smog day in two years, largely attributable to the elimination of coal-fired generation. There are other reasons, but that's one of the reasons. I personally hope you continue to have an environment file.
My question is first to the folks on the Industrial Design Act. There's a section in the act that is a morality clause. You can't register something that's contrary to public morality or order. However, the Patent Act does not have a parallel clause. I wonder how those two concepts are going to be reconciled.
Denis Martel
View Denis Martel Profile
Denis Martel
2014-11-06 10:06
In answering this question I want to make sure that we understand what industrial design is. It's the registration of the visual features of a particular object. So it could be the shape of a bottle. It could be on shoes. For example, Nike has registered its design on running shoes. It's on the side, a particular pattern. So it has a visual appeal essentially.
The clause you're referring to in the bill is clause 104. Essentially it's a rework of a requirement that is in the current act, so it's not something that is being added; it's just a repackaging of the current requirements. I want to make clear that we're not doing this.
View John McKay Profile
Lib. (ON)
I'd dearly love to pursue that, because it seems to me that there's a huge contradiction there and I would think that any member of this committee would be interested in reconciling that contradiction so that we do actually put out a message in both pieces of legislation that matters pertaining to public morality are of serious concern, but the way we're rushed is the way we're rushed.
Agnès Lajoie
View Agnès Lajoie Profile
Agnès Lajoie
2014-11-06 10:09
If you'd allow me to mention, up until late 1989 the Patent Act had restrictions. There was restricted patenting of an invention that has an illicit object in view. At the time when we amended the Patent Act in 1989, the legislator decided to remove this requirement, which was, to the best of my knowledge, never used and never challenged in court.
Again, as my colleague was mentioning, the criteria for assessment that the patent office uses really focus on the technical and on the contributions of an invention, which are novelty, obviousness, and of course utility.
View Robert Chisholm Profile
NDP (NS)
Could you explain for me a little bit more about this business of public morality. What does that mean as it relates to this business?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 15:50
Under the GATT 1994, article XX sets out a number of reasons why a WTO member could impose an import ban or some similar measure, why they could ban the import of certain products. It's a list of six or eight different circumstances or situations. It deals with things like prison labour goods that are.... The first one on the list, article XX(a), concerns products that are injurious or inconsistent with public morality.
So the EU has cited this provision, article XX(a), as a legitimate basis for it to ban the import of seal products. So it has said, on the one hand they have an outright ban of such products, and on the other hand, they have, as I mentioned, established three exemptions from that ban. So products that are harvested by Inuit people, products that are harvested for marine mammal conservation reasons, or goods that are carried in by travellers through airports or whatever.
So the flow of goods from Greenland to the EU, as was mentioned, is allowed by virtue of the first exemption, that related to harvesting of seals by Inuit people. The entire Greenlandic seal harvest, not surprisingly, is done by Inuit people.
View Robert Sopuck Profile
CPC (MB)
I'm astonished to hear that. That is clearly stupid and malicious behaviour by the EU, meddling in the management of our natural resources. I find it absolutely appalling that they are going down this particular path.
In terms of the use of this ridiculous public moral concern clause, what are the possible precedents that have been set for the trade in other commodities?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:03
That is an important point. Actually, we are quite concerned about the possible precedent of the panel's findings in this regard. It was one of the grounds of our appeal of the panel's conclusion concerning the interpretation. Application of GATT article XX(a) was a particular concern. Specifically, we argued that the panel failed to support its conclusion that the seal regulation could be justified. It was shared by Norway, and as I said, a number of other third parties in the appeal.
Basically, the concern is that the panel, through its ruling in its report of last November, has set a very low threshold for the invocation of a public morals defence, creating the possibility that a broad range of issues could potentially be recast as moral issues, and potentially be justified under the exemption.
Beyond that, I can't point to specific products that we think might be vulnerable. It's more the precedent of a low bar, and other parties potentially citing that and saying they could do the same thing with something else.
Kevin Thompson
View Kevin Thompson Profile
Kevin Thompson
2014-04-07 16:09
To my knowledge, it's been invoked in at least one other case involving gambling laws in the United States. I believe it was Antigua that challenged a number of restrictions on cross-border gambling. The U.S. sought to justify those restrictions under the public morals defence. There is a fair amount of WTO jurisprudence under GATT article XX, the general exceptions, generally and specifically in relation to this idea of necessity.
In looking at the general exceptions, there are various components to the test. The first one is that you have to establish that the measure is there to protect something. Is it protecting public safety, protecting public morals, protecting human health, protecting animal welfare, or protecting the environment? There's this notion of protection.
The second step is this idea of necessity. Is the measure necessary in order to achieve that objective of protecting, in this case, public morals?
Then you have this third step, which falls within something called the chapeau where, nonetheless, one has to determine whether the measure has been applied arbitrarily or in an unjustified manner.
There's a significant amount of jurisprudence around the general exception test itself.
View Lawrence MacAulay Profile
Lib. (PE)
Thank you very much, and thank you for your determination to be here.
Public morality, and I know you've been talking about it, how is it established? If I understood correctly, you're dealing with conservation and cruelty. It is truly a fact that our seal herds are much higher, I believe, than they probably need to be. In fact, they're probably the biggest consumer of fish in the world today. They consume all other types of fish.
I was just looking at the sustainable management of the marine resources. How can they use public morality when we have the most humane seal hunt? I'd like you to elaborate on how the seal hunt is done in the EU and other places where they import the product into the EU.
What happens if they decide, under public morality, to put a camera in a butcher shop or where they cook the shellfish. Where are we going in the world with trade? Is this not a trade barrier?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:12
We made a number of arguments with respect to the question of public morality and animal welfare. We emphasized the relevance of comparing the standard applicable to the commercial seal hunt with other animal welfare standards, such as wildlife hunts in the EU, for example.
Certainly we recognize the WTO members have a right to establish their own standards for animal welfare, but they have to be based on factual information. They need to not be applied arbitrarily. It's important to look at other standards in similar situations, if a country wants to go down that road and try to justify a ban on the basis of animal welfare concerns.
We pointed out also there is a much less trade-restrictive way of going about this. We pointed out that other wildlife hunts in the EU as I said are, if anything, more of an offender in this area than the seal hunt. In particular we argued an alternative mechanism and a regime that would be less trade restrictive. The EU could have accepted a certification and labelling scheme, based on an accepted animal welfare standard.
We believe, and we argued before the panel and the appellate body, that the existing requirements to ensure a humane seal hunt in Canada are adequate and even more stringent, as I said, than the standards in other EU wildlife hunts such as the deer hunt. We also pointed out the EU applies a different standard to seals, an animal that's largely hunted outside its territory, that exceeds the standard they apply to hunts within their territory.
View Ryan Leef Profile
CPC (YT)
View Ryan Leef Profile
2014-04-07 16:26
It's perplexing, then, though, that there would be an argument that on moral grounds they're restricting this hunt, but they don't particularly care how the hunt is undertaken and whether it's humane or not humane. They don't care how people kill the seals as long as those people belong to a class of persons. In that sense alone, it's a discriminatory vein the EU is taking by saying that they appreciate the culture and value and their understanding of that, but it's very perplexing for them to say, “We're standing on a moral ground here, but we don't actually care how these seals are killed.”
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:26
It's certainly problematic, and it's also problematic because.... Well, the reality is that as Greenland avails themselves of this exemption, it's not in any way volume limited either, so—and we've argued this before the panel and the appellate body—essentially the effect of the ban has been to divert trade. It has diverted it away from Canada to places like Greenland, which somehow are able to qualify under an exemption that is not, in a de facto sense and maybe in other senses, available to Canada.
View Diane Finley Profile
CPC (ON)
Good morning.
Thank you for giving me this opportunity today.
I'm very pleased to be here today as Minister of Public Works and Government Services, and also as the minister responsible for Shared Services Canada to talk about my departments' main estimates and reports on plans and priorities for the 2014-15 fiscal year.
With me are Deputy Minister Michelle d'Auray and Chief Financial Officer Alex Lakroni from Public Works and Government Services Canada, as well as Liseanne Forand, who is the president of Shared Services Canada.
As you know, our government is focused on job creation, economic growth, and long-term prosperity for all Canadians, and both departments represented here today are primary service providers to Canada and within government, making sure we have effective and efficient operations in support of these goals.
As part of its broad mandate, Public Works and Government Services Canada serves many vital functions for the Government of Canada. Some of these roles include acting as the government’s principal treasurer, accountant, real property manager and central purchasing agent.
Of course, part of the central purchasing agent role involves procurement responsibility, including defence procurement, and I'll talk about that in a few more minutes.
Shared Services Canada, newly created in 2011 by our government, is working to standardize, consolidate, and streamline the Government of Canada's information technology services. Their mandate is to transform our existing systems, which are often costly and all too often outdated, into much more modern, reliable, and secure IT infrastructure to bring savings to Canadian taxpayers.
This morning I would like to provide some highlights on actions and progress being made by the two departments for which I'm responsible.
For the 2014-15 main estimates, PWGSC's net spending is anticipated to decrease by close to $197 million from the 2013-14 levels. As for Shared Services Canada, SSC's main estimates for 2014-15 show an increase of 5.4%, or $75.2 million.
This is largely due to the expansion of Shared Services Canada’s mandate and activities, and can be largely attributed to funding received from partner departments for new responsibilities for workplace technology devices. Partner departments are reducing their reference levels accordingly.
Looking to the year ahead, I am proud of several of our initiatives that will foster innovation, achieve additional cost savings for Canadian taxpayers and reduce red tape for small and medium-sized businesses.
In February Minister Nicholson and I announced Canada's new defence procurement strategy. This strategy represents a fundamental change in the government's approach to defence procurement, and its implementation will be a key priority for my department. Our new defence procurement strategy is designed to meet three objectives.
The first is to deliver the right equipment to the Canadian armed forces and the Canadian Coast Guard in a timely manner. The second is to leverage our purchase of defence equipment to create Canadian jobs, economic growth, and export opportunities. Third is to streamline our defence procurement processes while improving transparency and accountability.
Since that announcement we've already started to make progress. In fact the first projects under the strategy have already been announced. Those are the medium range radar and medium lift helicopter procurements. We're working with industry, as we committed to doing, on applying the new value proposition to these procurements.
Another way in which we are leveraging the government’s procurement to drive innovation and create opportunities for entrepreneurs, is through the Build in Canada Innovation Program. As you heard from my officials in December, BCIP, as we call it, allows the government to act as a first buyer, helping kick-start Canadian businesses by moving their home-grown innovations from the lab to the marketplace.
As we pledged, the build in Canada innovation program has been made permanent and now has an added military component. We're pleased to have received excellent feedback from entrepreneurs who now have greater opportunities to sell and export their innovative products while creating jobs for Canadian workers. The next call for proposals will be happening this spring.
We will also continue to work toward delivering on our government's commitment to preserve and rehabilitate our capital city's historic parliamentary precinct on time and on budget. Committee members may recall that this work is being carried out under a series of rolling five-year plans under an overarching long-term vision and plan.
On November 19, 2013, my officials appeared before this committee to provide an update on the status of renovations and the associated costs for the parliamentary precinct renovation project. I understand that at that time, committee members also made a site visit to West Block to see first-hand the cost and the complexity of the renovations there. Not only is this work crucial to ensuring that these buildings meet current construction standards and are able to fulfill their intended functions, but it also employs many skilled tradespeople.
For example, the rehabilitation of the Sir John A. Macdonald building, the former Bank of Montreal on Wellington Street, on its own will have generated around 600 jobs by the time the project is completed in 2015.
Public Works and Government Services Canada continues its major pension and pay transformation initiatives, which are replacing outdated legacy systems and centralizing service delivery for pension services in Shediac, New Brunswick, and pay services in Miramichi.
Together these transformation initiatives will enable the Government of Canada to save more than $100 million annually, starting in 2016-17. As well, Public Works is leveraging the new pension system to provide pension services for the RCMP and National Defence. These initiatives will further contribute to our government's plan to increase efficiencies and streamline our operations.
In the exercise of PWGSC's many functions, we strive to make the government more effective, more transparent, more modem and more accountable to Canadians. In keeping with this, we continue to work at further safeguarding the integrity of the public procurement process.
This is why on March 1, 2014, we further expanded the list of offences that make a company and individuals ineligible to bid on contracts. We also implemented measures that allow us to ban companies from accessing federal contracts if they have foreign convictions or make admissions of guilt in judicial proceedings. For all contracts with Public Works, subcontractors will now be bound by the same terms and conditions as the prime contractor.
Mr. Chair, now I would like to turn to Shared Services Canada.
Since its creation in 2011 it's already delivering results for Canadians in terms of savings, security, and service. SSC is building a modern and resilient IT platform that will help us meet Canadians' current and future service expectations while keeping their personal information protected and secure.
In launching the Canada cyber security strategy in 2012, our government sent a strong message that it takes security very seriously. Shared Services Canada continues to work closely with partner departments and agencies to strengthen the security of government systems—because there is simply no place for untrusted equipment and services in Government of Canada networks.
It's equally important that we make every effort to lower costs for taxpayers, another area where SSC is making its mark. By taking a government-wide approach, SSC continues to reduce duplication, increase efficiency, and cut costs. SSC has already generated $150 million in savings simply by getting better prices and reducing duplication and redundancy.
The 2014-15 report on plans and priorities underlines that we expect even better results in the future as the department realizes efficiencies in cost savings to the standardization, consolidation, and re-engineering of IT infrastructure services.
Let me provide you with a few details on this.
SSC is preparing to implement a new standardized, user friendly, and more secure e-mail system for the Government of Canada, replacing our 63 legacy systems with one. Consolidating e-mail systems to a common and more secure e-mail system will bring anticipated savings of over $50 million a year beginning in 2015-16. We've also established a first enterprise data centre which will be followed in 2014-15 by two additional government-wide data centres, eliminating up to 50 former facilities. Once the consolidation process is complete, we'll have moved from 485 data centres to seven, resulting in more savings, stronger security, and better service to Canadians.
SSC is also rationalizing the 3,000-plus overlapping and uncoordinated telecommunications networks that provide voice and data services. This will include eliminating costly Centrex telephone services and moving the government to a digital approach that takes advantage of such technologies as voice over Internet protocol, or VoIP, as an example. This will result in greater efficiencies and additional savings to taxpayers.
To further bring savings to taxpayers, SSC will be helping departments reduce their travel requirements by expanding the use of video-conferencing technologies and encouraging sharing of facilities among departments. In today's digital age, it just makes sense, not to mention that this initiative will generate about $7 million in annual savings.
Another way that Shared Services Canada is cutting costs is by consolidating and standardizing the procurement of workplace technology devices for federal employees, as mandated in budget 2013. By consolidating software contracts, Shared Services Canada will generate savings of $2.1 million in 2013-14 and $8.7 million starting next year and in future years.
Collectively, these measures are enhancing security and improving performance in service, while at the same time reducing costs and generating greater savings to taxpayers. I will continue to work to ensure that SSC's continued progress in modernizing the government's infrastructure will leave long-term benefits for Canadians.
Mr. Chair, I will conclude my remarks by saying that the Government of Canada is a large and complex organization, and whether in Public Works and Government Services or in Shared Services Canada, there will always be room for improvement. I see that both as a challenge and an opportunity. I'm also confident that these initiatives are contributing to the sound management of the resources entrusted to us and ensuring value and results for Canadian taxpayers.
Thank you, Mr. Chair.
I look forward to taking questions from members of the committee.
View Gerry Byrne Profile
Lib. (NL)
Madam d'Auray, I want to follow up on some of the minister's comments on the integrity provisions of procurement and government activity in procurement.
Foreign military sales are specifically exempt from the integrity provisions, as is the Koblenz office of Public Works and Government Services Canada.
That's a pretty glaring omission. Is there a reason for that?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 9:58
Mr. Chair, with regard to foreign military sales, because it is a direct government-to-government procurement, in fact we rely on the selling government for the purchase...and their review of their materiel.
With regard to the Koblenz office, that was an oversight on our part. In fact it has now been covered by the integrity framework.
Michelle d'Auray
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H.E. Michelle d'Auray
2014-03-27 9:59
I believe you are referring to the public interest exception. The only exceptions really that apply are when it is necessary to enter into a business with a supplier where no other supplier is available, or there is an emergency, there are national security issues, health and safety, or there would be economic harm. The exceptions are fairly well limited and defined. At that point, we are also, if we have to exercise the exception....
To your question, yes, it is at the assistant deputy minister level, but it is done with a governance committee, and the exceptions are rigorously assessed and applied. Then we also exercise some fairly stringent control in administrative measures. We essentially raise the level of delegation for approvals of invoices, and we extend a fairly robust monitoring process, as well as audit provisions.
View Pat Martin Profile
NDP (MB)
I'd like to use my time to follow up on what Mr. Byrne was talking about. I'm still not clear about just what kind of screening does take place and will take place to ensure that contractors working for the federal government are not only not convicted criminals but that they live up to a fairly high corporate social responsibility and reputation.
What about the existing contracts? I know SNC-Lavalin, their real property division, has a huge operations and maintenance contract, and I believe that contract is for $1 billion or more. They've been convicted even recently for shenanigans and monkey business offshore at least. Do existing contractors get screened after the fact in an example like that?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 10:08
Mr. Chair, there are two aspects. One of them is do we apply this rigorously to any new contract, and do we do an assessment on a contract-by-contract basis? We do.
The list of offences covered in fact was expanded as of March 1 of this year. One of the elements that we have added is a specific.... If you are unable to contract with us, the debarment period is now 6 to 10 years. One of the factors we found is that sometimes when companies bought each other out and one of the assets that they were acquiring would have had a prior conviction, but the company had actually changed all of its processes, it was no longer able to compete for contracts. We put in a limit of 10 years and then after those 10 years, there are still some measures that have to be put in place for us to be able to open the doors for contracting purposes. That said—
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 10:09
—with regard to a number of large contracts that we currently have, including, for example, the building maintenance contracts that we have with SNC-Lavalin, the company has voluntarily added to its existing contracts with us the terms of the integrity provisions that we have.
We have been working with a number of companies with which we have significant contracts or that span a long term to see if they would voluntarily adopt the integrity provisions. They're not compelled to do so, because obviously the contracts were signed before the integrity provisions were put in place in some instances. For any new contracts that we have with the company or any other company, as I mentioned earlier, we do the systematic review and check on a contract-by-contract basis.
View Gerry Byrne Profile
Lib. (NL)
Thank you, Mr. Chair.
Thank you very much to our witnesses.
Deputy Minister d'Auray, if you could provide the committee with some additional information about the new integrity measures for the tendering process, we'd be delighted to hear that.
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-11-28 16:06
We have had integrity measures for the procurement processes for some time, but the last set of changes we made were in July 2012, when we added a set of infractions where a bidder would be considered ineligible to do business with Public Works following a conviction.
I can give you a sense of what some of those offences would be: if they're found to be convicted of fraud against the government; frauds under the Financial Administration Act; payment of a contingency fee to a person to whom the Lobbying Act applies. There's a fairly extensive list of convictions that would render you ineligible to bid.
The other element that we will render ineligible is if you are found to be in collusion. If the Competition Bureau has found you to be in collusion but has given you a leniency provision, we will not consider the leniency provision. So you will also be banned or prevented from bidding and/or contracting with us.
We also have the provisions to terminate a contract or a real property transaction if in the course of a contract the company or its board of directors has been convicted of one of these offences. So it's not just prior to signing the contract, it's also during the duration.
There is no dollar threshold to this. It applies to every contract that is signed with Public Works.
Now, it does apply to procurements under the aegis of Public Works and Government Services Canada. It doesn't apply to other departments that have the authority to procure. We are now signing a memorandum of understanding with other departments that wish to use the provisions of our integrity framework and our validation and certification processes.
View Gerry Byrne Profile
Lib. (NL)
Thank you, Mr. Chair.
I want to follow up again on the issues of integrity measures and the public procurement.
Deputy Minister, I think we can both agree that there are some constraints to this process that should be identified, to prevent a false sense of security. Some of those constraints would be that convictions actually have to be against contractors who were engaged in contracts with the federal civil service, as opposed to relationships with private sector companies. They would actually have to have been convicted in a criminal court for a previous past dealing with the federal government.
Is that correct?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-11-28 16:41
Mr. Chair, that is not correct.
It's a list of infractions, some of which are against the government but others of which involve participation in activities of criminal organizations, income and excise tax evasion, and offences in relation to drug trafficking. I didn't read through the whole list of infractions and convictions but they are not just about prior business with the Government of Canada.
Chris MacDonald
View Chris MacDonald Profile
Chris MacDonald
2013-05-28 12:05
Thank you, Mr. Chair.
I'd like to thank the members of the committee for this chance to speak to you today. The Jim Pattison ethical leadership program and the Ted Rogers School of Management appreciate the opportunity.
I want to make clear at the outset that I do not represent any constituency or interests. I'm neither primarily a critic of business nor a defender; nor am I particularly attached to any industry or sector. I'm a philosopher by training and a professor of business ethics. It is from the point of view of someone concerned with understanding the role of ethics in business quite generally that I speak today.
The role of ethics in business is not to render business saintly, nor is it to cure all that is wrong in the world. Neither is it to be mere window dressing, mere pretty words, or platitudes mouthed to make us feel better. The role of ethics in business is to act as a moderating force, in an attempt to make sure that the net benefits of our economic activity are positive and that fundamental rights are respected along the way, to mutual benefit.
If business is, roughly speaking, the set of practices related to making things and providing services for others in return for money, then ethics is about finding reasonable limits on those practices. Ethics in business is, in other words, an attempt to civilize a rough but productive game. Just how to do that is seldom obvious.
With regard to the subject matter of today's meeting, I have three questions to pose, questions to which I will suggest answers. I will then have three recommendations to make.
First, do Canadian companies have an ethical obligation to go beyond the legal minimum required by the governments of the countries in which they operate?
The answer here is clearly yes. Adherence to the law is seldom enough to guarantee that a company or individual has met all relevant ethical obligations. Even in well-governed countries, the law protects only the most central of interests and is further limited by what is feasible to prohibit or to require. Ethics, embodied in a wide range of moral responsibilities, often goes much further and can offer guidance beyond what is feasible for even thoughtful and thorough regulations.
This is nowhere truer than in the world of commerce. In business, opportunities to take unfair advantage are common, and regulation can only go so far towards remedying this. Government cannot be everywhere, and if it could be, we wouldn't want it to be. So responsible companies seek to go beyond the letter of the law both because it's the right thing to do and to forestall being the target of additional, potentially burdensome regulations.
This responsibility to go beyond the dictates of the law is of special significance in developing countries with underdeveloped legal and regulatory systems. When operating at home, Canadian companies can, and with some justification, take the following stance: let government set the rules and we will play by them. In a country such as Canada, we have capable if imperfect regulatory agencies that enjoy the benefit of the finest in technical expertise on a broad and affluent tax base.
Other countries are not so lucky. In countries marked by a deficiency or absence of regulatory capacity, or in which governments are indifferent or even antagonistic to the well-being of their citizens, companies do not have the luxury of assuming the kind of moral division of labour that characterizes commercial life in industrialized democracies. Indeed, I think the burden of proof rightly rests on the shoulders of companies that do business in faraway places to assure themselves and Canadians that they are being particularly responsible in under-regulated contexts.
Here is my second question. Should Canadians expect companies operating in places like Bangladesh or China to adhere to Canadian labour standards?
The answer here is no. Perhaps no one really expects Canadian companies doing business in developing nations to implement fully Canadian or western European standards, but the point is worth making, nonetheless.
To be blunt, Canadian workers enjoy high pay and high labour standards because we can afford them. Other countries are not there yet, but the fact that their labour is cheaper is precisely what attracts foreign business and foreign investment to their shores. Insisting on Canadian standards for developing nations would be deadly both to national economies and ultimately to the employment prospects of the citizens of those nations.
But there are a few things that Canadians can rightly expect of Canadian companies operating abroad. First, they can reasonably expect Canadian companies to respect and to an extent to promote the fundamental human rights of those employed within their extended supply chains. No one should tolerate slavery or other forms of forced labour. No one should accept corporate practices that restrict freedom of association or freedom of expression or that involve collusion with despots. Human rights represent a line in the sand.
Second, Canadians also have the right to expect companies that fly the Canadian flag to behave in a way that reflects well upon Canada as a whole. While there is no obligation in business to be a saint, there is nothing wrong with wanting Canadian companies to be part of an upward trend rather than of a race to the bottom. Canadians have, in other words, the right to expect Canadian companies to take a leadership role where possible on the international stage.
My third question is as follows. Given the concerns shared by many Canadians over the regrettable working conditions and risks recently highlighted by the tragic events in Bangladesh, what's the best way for Canadians to contribute to the well-being of those in factories abroad?
It is to the credit of Canadian consumers that they show considerable concern for the lives and fates of workers in faraway places, but Canadians are divided on how best to act on their concerns. The most fundamental way in which Canadians can help, of course, is to buy goods made in countries in which the economy badly needs the help. The thing that will ultimately raise wages and safety standards in developing nations is competition driven by demand. This is why boycotts are unhelpful to the point of irresponsible, as I think are campaigns aimed at promoting the exclusive purchase of goods made in Canada.
The second way Canadians can help is through charitable donations, for instance donations to organizations that do humanitarian work, but especially to NGOs that can act as third-party verifiers and certifiers of corporate supply chain practices. Canadians can also usefully support organizations that work to promote greater education, and hence, productivity in developing nations. Greater productivity generally means higher income. Perhaps most fundamentally, Canadians can contribute to organizations that seek to promote good governance and to fight corruption, since corruption and poor governance are liable to play a crucial role in allowing labour conditions to deteriorate.
The final thing Canadians can do is to continue paying attention to this issue, and to continue encouraging Canadian institutions of all kinds to work towards making things better. The Canadian government, Canadian businesses, and Canadian NGOs all have a role to play in encouraging and offering guidance on the pursuit of incremental improvements in working conditions.
Lastly, I have three principles to put before you very briefly. I hope these will be recognized as flowing from what I've already said.
One, Canadian companies should adopt progressive standards for workplace health and safety wherever they operate and should expect the same from the companies with which they do business. They should look diligently for cost-effective ways to keep workers safe and well treated throughout their supply chains, and they should be transparent about the standards they adhere to, whether those standards are unilateral or the result of collective action. The Government of Canada should encourage and facilitate such behaviour.
Two, Canadian companies should respect and promote human rights. Where that cannot be done, Canadian companies must not operate. The Government of Canada should encourage and facilitate such a standard.
Three, Canadian companies should help to spread Canadian know-how in areas such as governance and anti-corruption, and should promote, wherever they go, both the ethical and commercial importance of the rule of law. The Government of Canada should encourage and facilitate that commitment.
In conclusion, improving the lives of workers in developing nations is not a straightforward task. Economic development is the key, and economic development cannot be legislated. Canada needs a balanced policy that encourages Canadian companies to invest in and do business with developing nations but to do so in ways that both respect human rights and make reasonable steps towards continuous improvement in working conditions.
I thank the committee again for this opportunity to speak.
D. Lorne Tyrrell
View D. Lorne Tyrrell Profile
D. Lorne Tyrrell
2013-05-23 17:06
I just have a brief comment. Another example of regulation is ethics approval for studies. Every hospital has to give an ethics approval. We have one Alberta health authority, and we should have one approval for ethics. Drug companies have moved clinical trials out of this country. It represents 3% of the world's sales, but we have such a problem with ethics and getting ethics approval in all the hospitals, by the time we get them, the studies are done. Many companies are not bothering to come to Canada any more because of the ethics issues not being well regulated. There are much better ways we could get that done.
View Ed Holder Profile
CPC (ON)
View Ed Holder Profile
2013-05-21 17:17
When he broached the issue of CETA to you, Mr. Buda, I was impressed that you said you're pretty happy with the progress of the dialogue relating to CETA that has gone on between our trade team and the provinces it is communicating with.
You made another comment that I thought was interesting. You talked about the unprecedented level of federal support. If you think about it, it really is true. Under this government, we made permanent the gas tax, we have doubled it, and now we've indexed it to the cost of living. I think those are reliable funds that municipalities can look forward to. So I appreciate your vote of confidence, but I'd like some clarification, if I may have it.
Mr. Thompson, you seem lonely over there. I'd like to bring you into the discussion, if I can.
We have heard in discussion here a lot of talk about the issue of union shops and non-union shops, from the standpoint of bargaining or being able to compete for work. We heard that there may or may not be a financial difference. Mr. Dijkema made it clear that he felt there was. Mr. Buda expressed caution.
Mr. Thompson, even if there were not one cent of financial difference between a union shop and a non-union shop, assuming that the skill levels were the same—and I think that's what we heard Mr. Dijkema say—on what grounds could you justify the FCM's taking the position that we discriminate against non-union workers?
I'm trying to understand the moral imperative there. I'm trying to ask the question: how could we imagine that we could say to folks, just because they don't belong to a union, they don't have the right to work? Can you help me understand that, please?
Adam Thompson
View Adam Thompson Profile
Adam Thompson
2013-05-21 17:19
Sure. As my colleague Mr. Buda said, municipalities are in the business of already providing the best value for tax dollars, and that comes with a predictable stream of investments that you can bank on and plan on.
From what we've heard from the members we've consulted with, the discussions at the council table rarely involve moral imperatives. Most of the time, municipalities are fully consumed with their primary business model, which is how to provide infrastructure to both create jobs and enable the private sector to flourish within their community.
View Ed Holder Profile
CPC (ON)
View Ed Holder Profile
2013-05-21 17:21
It's just the right thing to do.
Mr. Buda, you can chip in here. If someone has a view on doing the right thing.... Now, maybe I'm wrong, but it strikes me that whether I'm a union worker—and I have belonged to unions in the past in my part-time jobs as a kid growing up. When I worked full-time I did not work in a union environment. By the way, these are good, decent people whether they work in a union or don't work in a union; I don't particularly care.
But do you have a personal view? You already said earlier that your bosses are who they are, and I get that. Let's forget even the personal view. At what point do you—or do municipalities, more fairly—have the right to say to a person, even if they're legally allowed to do so through their provincial regulations, and I understand that as well, that just because of their union or non-union status that person does not have the right to work with you?
You'll notice that I haven't touched on any financial issues here. I'm just talking about the decent and right thing to do.
Let's even forget the words “moral imperative”. Those are big words. Let's just talk about the right thing to do, and tell me why you as a senior policy adviser to FCM wouldn't come back and say to these folks, “Sometimes we just have to do the right thing”?
Help me get that part, because I just don't.
Michael Buda
View Michael Buda Profile
Michael Buda
2013-05-21 17:22
Personally, I think that in an ideal world what you're suggesting should apply. I think the real world is incredibly complicated, and politics in fact is really deciding among a series of greys, not black and white.
I'll give you a very specific example. Obviously a portion of the municipal workforce, especially on the operational side, is unionized. That's just the way it is and has been—just as it is, in fact, at the federal government level. There are certainly cases in which collective bargaining agreements that have been negotiated with the municipal union have been negotiated with the understanding that some of their outsourced contracts are going to include closed tendering.
So hypothetically, if that were the case and you used it as a negotiating tactic to reduce the cost of your contract terms with the bargaining units of your operating unions, and the savings outweighed any potential increase in costs of your outsourced work, might that not be a trade-off that a politician sitting around a council table would have to take an interest in?
Doug Coyle
View Doug Coyle Profile
Doug Coyle
2013-04-16 16:27
It's a good question.
I didn't mention this earlier because I wasn't sure it would be coming up in the discussion today; I'm a member of the drugs for rare disease working group in Ontario. We have developed a completely new framework for making decisions about technologies for rare diseases, which is different from the framework that's made for common diseases, mainly for the reasons that you have suggested already today. Rare diseases are different for a number of reasons. They're different because we don't have as much natural history. We don't actually know what happens in these diseases. They're very heterogeneous. They're not homogenous, like some of these heart failures that have a fairly standard flow of patients. Rare diseases tend to be very, very different for individual patients.
We don't have the evidence for what's effective to the same degree. Because there are not enough patients to study, we don't know whether or not these new technologies work. As I mentioned already, these drugs and other technologies are very, very expensive: it's $500,000 per year for Soliris, which is supposed to be the most expensive drug in the world, and there are many other rare disease drugs that cost over $300,000 per year per patient.
We had a focused approach in Ontario to try to find a way to fund these drugs by giving them to those patients with rare diseases where we think they might work, and then following the patients to see whether or not they do work, and then denying care or taking therapy away when there's evidence that the drugs aren't working. There are approaches to take to do this.
However, the ethics you're looking at are very individualistic ethics. What's the right of the one patient with the rare disease? We have to take a more collective ethics approach as well. If we decide to fund a technology for which the benefits are not substantive compared with the $500,000 a year that it costs to purchase the drug, then we're denying health care to other individuals. The collective ethics say we should do what's best for society in general.
We have to weigh it all up. It's a very difficult to weigh up the demands of individual ethics versus collective ethics. Those are decisions that, I have to say, politicians have to make. They have to make those decisions, because they represent the society in general. We have to realize it is not simple. If we decide to fund these technologies, we are necessarily denying care to other patients with more common diseases.
View Dany Morin Profile
NDP (QC)
I agree with you, but I also wonder whether the government shouldn't endeavour to limit the marketing side of things.
Before becoming a health professional myself, I was a medical secretary in an office. I have respect for pharmaceutical representatives, but I did observe certain things regularly. For example, to learn more about a company's drug, doctors would be offered the training on cruise ships. Ethically speaking, as a politician, I wouldn't be comfortable accepting that kind of reward-based training.
Should the federal government do something about improper marketing tactics like that?
Marc-André Gagnon
View Marc-André Gagnon Profile
Marc-André Gagnon
2013-03-19 16:52
Something very simple could be done: address the culture of marketing-based medicine by favouring evidence-based medicine.
Adam Holbrook
View Adam Holbrook Profile
Adam Holbrook
2013-03-07 16:00
Madam Chair and committee, thank you very much for inviting me to speak on the evaluation and promotion of innovation.
You've heard from a number of eminent practitioners of innovation and innovation management in the health sector in Canada. As a researcher in innovation and the benefits of R and D programs, I would like to speak on a more theoretical basis perhaps, rather than speaking to the specific examples that have been raised so far.
Innovation is both on the one hand very easy, and on the other hand very hard, to measure and evaluate, regardless of whether we're talking about innovation in the health sector or other sectors. R and D is a subset of innovation. Much of this committee's interest has been focused on how Canada's health care system can be improved through innovation. But let's start with R and D.
R and D is of interest because it is an indicator of innovation. The OECD realized this 50 years ago and that's why we've been measuring R and D expenditures ever since. It's relatively easy to measure the resource inputs for R and D—funding and people—and it's usually possible to quantify the outcomes: academic papers, patents, licences, formalized intellectual property, and other economic benefits. I'll just ask you to bear in mind the simplified definition of R and D, and I'm quoting from the Income Tax Act: R and D is the ”systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis” to advance scientific knowledge or achieve technological advancement.
Okay. But what about innovation? Innovation is both more flexible, as I said, and also harder to define. According to Schumpeter, innovation can be in one or more of five separate areas: new products, new processes, new forms or methods of organization, production, or new sources of inputs.
While the first two, new products and processes, are the main scope of this committee's work, the other forms of innovation should be part of this discussion. But there are other views. Everett Rogers in his book, Diffusion of Innovations, wrote about the transmission of ideas. For Rogers, innovation is not a single, well-defined change like Schumpeter's catastrophic innovations, but a series of small changes, which add up over time to a significant change. Innovators take ideas developed by inventors, researchers perhaps, and communicate them to the individuals who actually implement them. Thus, there can be three separate players in the adoption of an innovation.
As I said, it's relatively easy to measure the effectiveness of some R and D, and thus the consequent innovations. In the health sector, R and D is usually formalized in patents and licences, codified knowledge that can be bought and sold. But there are even problems looking at this simple model, particularly in terms of evaluation. The knowledge from some research does not generate measurable benefits for decades. How far into the future do we try to measure the cost-benefit of research? Some research generates negative results. These are usually unsaleable. Yet the knowledge of what does not work is often as important as the knowledge of what does work. Furthermore, when a patent or a licence is bought by venture capitalists or whoever, the seller still retains the knowledge of what did not work. That's maybe one of the reasons why larger firms tend to purchase or acquire the firms, rather than simply trying to acquire individual pieces of intellectual property.
Arguably, most research, whether in universities, government, or industry, results in tacit knowledge, the knowledge that is retained in the heads of the researchers. Research is a lifelong learning process, and researchers accumulate knowledge even if periodically they have to divest themselves of specific pieces of knowledge to others who can exploit them, either commercially or non-commercially.
But innovation is trickier. How do you measure the improvement of a product or process? This can be done, but often, again, the benefits accrue over time, not the span of a single fiscal year. Sometimes, as with some research, there are clearly identifiable benefits, but innovation can be incremental with small changes accruing over years, which may or may not have measurable benefits in that period. How does one measure the small day-to-day changes in operating procedures in the hospital, at the end of which year might result in better health outcomes or lower costs? How do you identify which innovation was significant? More importantly, how do we know who was the innovator and reward them appropriately?
Following the Jenkins report, we were asked to carry out a study on knowledge transfer from university-based R and D to the productive sector. There were some interesting results. These are very preliminary, and they're not in any particular order of importance.
First, Canadian university IP, or intellectual property, policies are at best inconsistent. Given that there's no nationwide standard university IP policy, industry is often reluctant to involve universities in R and D projects, since they're uncertain as to what the IP requirements might be, or how long it will take to negotiate an acceptable IP arrangement.
There are many anomalies in these policies. For example, most universities have no policy regarding the IP rights of students, whether graduate or undergraduate students, yet students are an important part of the knowledge production process.
We didn't look at this as part of the study, but I will contrast the IP situation with ethics. There is a relatively consistent national policy on ethics, but even here, ethics approval by one university does not guarantee approval by other members of a research consortium. One of the things that bedevil all researchers, not just health researchers, is the need to get separate ethics approval from each university that's involved.
Another thing that came out of the study is the need for what we call “intermediary” institutions, for want of a better term. Other nations, such as Germany, have institutions that come between industry and the higher education sector, and act as a filtering mechanism. We have a couple in Canada that I can point to—MaRS, whose president you heard from earlier, and FPInnovations—but there are not nearly enough. In Germany there's a whole system, what we collectively call the Fraunhofer institutes, but in fact it is a system that goes under a number of different names. Yet we know that already the Fraunhofer institutes are expanding into Canada and that one institute has already set up in Ontario.
We need to recognize that the principal role of universities is to create human capital. The generation of knowledge for specific purposes should come from somewhere else, perhaps these intermediary institutions.
I don't have the figures for Canada, and indeed I don't believe they exist in Canada, but the Royal Society in the United Kingdom has data that show that less than one-half of 1% of all science Ph.D. graduates ever become tenure-track professors, but 17% of Ph.D. graduates become researchers in industry and 50% of Ph.D. graduates in science enter the workforce in other capacities that are unrelated to science.
The question I would like to leave with the committee is this: who are the innovators, and how do we foster innovation by encouraging innovators?
Innovators are frequently entrepreneurs, and entrepreneurs, by Schumpeterian definition, are innovators. But there are other types of innovators. There are social innovators, people who innovate not for profit but to improve the human condition, such as innovators in not-for-profit organizations.
There's also another category we need to encourage, and that's intrapreneurs, people who work in large organizations such as governments but who are unlikely to receive major economic recognition for their efforts.
Can we train innovators? Arguably, yes, but the average researcher, particularly the average health researcher, has such a long training period that adding to their required program of study would probably be counterproductive. Indeed, some researchers and inventors will never likely make good innovators or entrepreneurs. History is full of examples where inventors never acquired any recognition from their R and D, but where other individuals, innovators, saw the potential of their work and exploited it.
Most university tech-transfer programs struggle to generate enough revenue to maintain their programs. One of the thoughts I would leave you with is that the tech-transfer officer should be encouraged to seek out problems as well as to offer solutions. In other words, they should be pulling ideas in as well as trying to push ideas out. One of the participants in our project referred to this as encouraging R and D “enablers”, and thus, of course, innovation enablers.
What can the committee do? I would suggest it recommend that universities not be pressured to produce codified knowledge—that is, patents and licences—but be encouraged to produce the very best human capital for the nation.
I'd recommend that you consider means to recognize and reward social innovators and intrapreneurs.
I would recommend that universities adopt similar, but not necessarily identical, sets of IP policies, perhaps similar to the way the ethics approval system works but without the consequent need for approval by each institution in succession.
Finally, the policy-makers recommend that this should be a two-way street: encouraging a demand for R and D, as well as looking at the supply of R and D in the health sector, whether directly or through intermediary institutions.
Thank you.
Adam Holbrook
View Adam Holbrook Profile
Adam Holbrook
2013-03-07 16:14
Thank you.
Whose responsibility is it for trying to bring together the question of intellectual property?
This was really the same sort of question in relationship to ethics. Ethics is a mixture of social norms, cultural norms, and provincial and federal law. In the end, this was done by a tri-council committee, if I am correct, which issued a set of guidelines but did not impose an actual procedure on each of the universities. So all of the universities follow the tri-council guidelines, but each has its own particular spin on them.
I would argue the same thing should be true for intellectual property. Certainly most graduate students in the health sector—not just the health care sector—are funded one way or another through federal grants, either directly or indirectly, and one of the conditions of these grants, just as for ethics, is that there should be recognition of their intellectual property rights.
Duff Conacher
View Duff Conacher Profile
Duff Conacher
2013-02-06 15:31
Thank you very much for this opportunity to testify on one of the most important democratic good government laws that exists in any country, including in Canada, namely the Conflict of Interest Act. I welcome this opportunity, slightly overdue, for this five-year review of the act.
First, just to anticipate questions that I usually get when I appear before a committee, and so we don't have to spend time answering them later, I'm here as a representative of the Government Ethics Coalition. It's a coalition made up of just a bit more than 30 organizations from across the country. The total membership of the organizations is over three million Canadians. We've been working together as a coalition now for more than a decade pushing for changes both to ethics rules and lobbying rules. As some of you will likely remember, I was here almost exactly a year ago testifying on the Lobbying Act.
As with the Lobbying Act, I see that the committee and the government has a simple choice. We're recommending 30 changes to the act. You will not have received my brief. Essentially I took a bit longer with the brief because I wanted to review the Ethics Commissioner's report, which was not short. I just got the brief in to the clerk yesterday, but you will receive it soon. You'll see that I and the coalition address in the brief not just the act but also the MP's code and the senator's code and also related laws like the Lobbying Act because they are all interrelated in terms of setting standards and enforcement systems to ensure democratic ethical good government.
The simple choice in terms of the committee making recommendations and the government making changes is either to make what the coalition sets out as 30 much needed changes to the act and the codes and another 14 changes to the related laws, or leave loopholes open and enforcement weak and ineffective, which essentially allows for unethical decision-making and unethical relations mainly with lobbyists by everyone involved in federal politics. Even the Ethics Commissioner, who has been mostly, from our perspective, an ineffective lapdog for the past five and a half years, has made 75 recommendations for changes to the act, most of them to strengthen the act, a few to weaken it.
I think there's a general consensus that the act is a bad joke. The act and the MP and senator ethics rules are so full of loopholes they should really be called the “almost impossible to be in a conflict of interest rules”. Even worse, the rules don't apply to some cabinet appointees, some ministerial staff and advisers, nor do they apply to the staff and the advisers of MPs and senators. So there are lots of people in federal politics who have no ethics rules that they have to follow at all.
The Ethics Commissioner's recommendations, 75 of them, didn't even address the two biggest loopholes in the act. Because of these huge loopholes, which also exist in the MP's code and senator's code, the act and the codes do not apply to 99% of the decisions and actions of the people covered by the act and codes. You currently have a law and codes that only apply to 1% of what people do who are covered by those codes. I'll talk about that a bit further.
The ethics rules that federal politicians have imposed on public servants through the values and ethics code of the Treasury Board and the conflict of interest policy do not contain most of the loopholes and flaws that are in the rules for politicians and their staff and cabinet appointees, so they're much stronger. Also, the Prime Minister has set an accountability guide for ministers that does not contain these loopholes. The MP's code and the senator's code have principles and purpose sections that are unenforceable, but if they were made enforceable most of the loopholes and flaws would be actually closed and we'd have meaningful ethical standards that would apply to 100% of what people do, not 1%.
An overall easy fix to the act and the codes would be just to take these rules from the public servants' codes, which politicians have imposed on them, and impose them on yourselves. Make these enforceable rules. In other words, the standards are already there, and they're in print; they're just not enforceable and not applicable to everybody.
There are also many enforcement problems. The cases of dozens of cabinet ministers and MPs being let off the hook with no penalty since 2007, along with many others who have escaped accountability for unethical behaviour in the past decades, show just how much the federal ethics rules and enforcement system are an ongoing bad joke. In the past 20 years, about 50 cabinet ministers have violated federal ethics rules, and only two have been penalized in any way: they were kicked out of cabinet. That's not a great enforcement record.
The Ethics Commissioner is a major part of the problem with ethics enforcement. Since 2007, she has rejected at least 80 complaints filed with her without issuing a public ruling. There could be more, because she didn't even disclose the total number of complaints she received in 2008-09 or in 2010-11. There is a total of 100 situations that she mentions in her annual reports, and she has issued 17 rulings, but that means there are 83 secret rulings at least. We don't even know how much she might have covered up, and there's good reason to suspect that she has covered up some cases, as she has repeatedly interpreted and applied the act and codes in very narrow, bizarre, and legally incorrect ways since 2007 and has let dozens of people off the hook.
A lot of the Ethics Commissioner's recommendations don't really have to be implemented. All that has to happen is for her to reverse her bizarre rulings and start enforcing the act and codes properly, legally, correctly, and in the spirit of the act and the codes. The real intent is to prohibit anyone from making a decision or undertaking any action if they're in any type of conflict of interest, real, potential, or apparent.
However, because of these loopholes and flaws, because the government has ignored recommendations over the past five years from the Ethics Commissioner and from others, including the Oliphant commission, and because the Ethics Commissioner shows no signs that she will reverse any of her bizarre rulings, there are 30 changes needed to the act and the codes, and another 14 changes, to actually clean up federal politics after the more than 145 years since Canada became a country.
There are no valid excuses for failing to close the loopholes and strengthen enforcement. It's really just a choice. If you as a committee don't recommend closing these loopholes and strengthening enforcement, you'll essentially be confirming that you think unethical decision-making and unethical relations by everyone in federal politics is just fine.
You face the same choice that past committees have faced. None of the committees has made the recommendations, and governments haven't made the changes, even though both the Chrétien and the Harper governments promised ethical decision-making and relations in federal politics. This is the 10th time that I've testified in the past 20 years. I'm hoping finally that it will have some effect and that we will finally get these changes that will make corruption effectively illegal.
We should be trying to match not just the standards that the Supreme Court of Canada has set out in several rulings but also those of the UN, the OECD, the World Bank, and the IMF. Every international institution says that if you don't have a democratic good government in which unethical decisions and relations are prohibited, you do not have democracy.
Therefore, I appeal to you to think about yourselves, to look in the mirror or look at your kids and your grandkids, and to think about whether you want to tell them in the future that you had an opportunity to push to close loopholes to end unethical decisions and relations in federal politics but that you did nothing.
Hopefully you will do something, as you did with the Lobbying Act. I think the committee made a good try. The minister rejected most of them. There were some loopholes the committee didn't address, but it was definitely a step forward, and hopefully the minister will respond more favourably in the future.
I will turn to the recommendations of the coalition.
First, as I mentioned already, ensure that everyone is covered by ethics rules. Some people are not, currently, but everyone should be, including the MPs' and senators' staff and advisers. We need to extend the codes to cover them.
Second, enact a general ethics integrity rule, essentially an anti-avoidance rule, such that if someone tried to exploit a technical loophole, they would not be able to but would still be found to be guilty for not maintaining high ethical standards and acting in a way that shows integrity. This rule already exists for public servants, so apply it to everybody else.
Third, enact an honesty in politics rule that everyone is required to comply with at all times. This rule already exists for public servants. It's also set out in the accountability guide for ministers and in the MPs' code in the principles section, so just apply it to everybody and make it enforceable. To paraphrase Gandhi, a lie for a lie will make the whole world dumb. As long as we allow lying in federal politics, we're going to continue turning off most voters. It's the number one hot button issue that Canadians want accountability for. Again, it's already in the rules; just make the rule enforceable.
Fourth, enact a rule prohibiting everyone from being in an apparent or foreseeable potential conflict of interest. Again, this rule already exists for all public servants, except the most senior people, who are covered by the act. This rule is in place for B.C. politicians in their act. It's also, again, set out in the principles in the accountability guide for ministers, in the MPs' code, and in the senators' code. Just make it enforceable. There has to be an apparent conflict of interest standard in force.
The huge loophole that exists in the act and in the MPs' and senators' codes is that you cannot be in a conflict of interest if you are dealing with a matter of general application. Ninety-nine per cent of what you do involves matters of general application. This loophole has to be eliminated, or the act and the codes will continue to apply to only 1% of what federal politicians, their staff, cabinet appointees, and advisers do. There's no reason to have that law if it's only going to apply to 1%.
View Tilly O'Neill Gordon Profile
CPC (NB)
Thank you, Madam Chair, and thank you, witnesses, for being with us today.
We've heard from other departments, as well as yourself, that they are trying to work more and more towards no tolerance of sexual harassment, or any harassment, really. I'm happy that you people are also working hard to obtain that objective, that goal.
I understand that the unions were consulted during the development of the new Treasury Board Secretariat policy on values and ethics. What was your participation in the development of this policy?
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