Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 4 - Evidence
EVIDENCE
Ottawa, Thursday, May 30, 1996
The Standing Senate Committee on Banking, Trade and Commerce met this day at 11:00 a.m. to continue its examination of the state of the financial system in Canada.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, perhaps I should give you just a little of the background for today's hearing. In 1994, we dealt with Bill C-2, which, essentially, was meant to amend the National Revenue Act in order to put Taxation and Customs and Excise together. At the time of those hearings, the union members expressed some considerable concern on a number of elements of the merger. Because the committee was frankly quite taken with the testimony presented by the union at the time, the committee agreed to hear the union again a year or so later in order to get its assessment of how the integration had gone. In fact, it is now about a year and a half since the integration. We wanted to hear how the integration had gone and what had happened to their concerns, the things they were worried about when the legislation was going through Parliament. The intention was that, following that, the minister and the deputy minister would appear in response to the union's concerns. Incidentally, there is a different minister now, but the present deputy minister was the deputy when the bill originally went through.
This meeting today, then, is essentially fulfilling a commitment that we made to the union some 18 months ago, and we have before us members of the Customs Excise Union, headed by Mr. Mansel R. Legacy, president of the union.
Thank you, Mr. Legacy, for appearing with your colleagues. We have your brief, which I understand you are going to summarize for us, but for the record, as well as for the interests of members of the committee, would you would please begin by introducing the union members you have with you. We will then turn to the minister and the deputy minister.
Mr. Mansel R. Legacy, President, Customs Excise Union: Mr. Chairman and members of the Standing Senate Committee on Banking, Trade and Commerce, my name is Mansel Legacy. I am the national president of the Customs Excise Union. Just before I introduce my colleagues, I should tell you, Mr. Chairman, that CEUDA is one of 18 components that form the Public Service Alliance of Canada, which is the recognized collective bargaining agent for over 165,000 unionized federal employees.
In my capacity as national president of CEUDA, I represent about 10,000 government employees who occupy GST and customs positions in the Department of National Revenue.
To my immediate left is Victor Dumesnil, CEUDA's second national vice-president. Next to him is Wayne Mercer, the fourth national vice-president. On my right you will find Ms Diane Lacombe, CEUDA's first national vice-president, and, next to her, Douglas Kosakowski, the third national vice-president. That actually makes up the national executive for the union.
I should like to draw to your attention, Mr. Chairman, the fact that Mr. Dumesnil and Mr. Mercer are both with Excise-GST at Revenue Canada, while Ms Lacombe and Mr. Kosakowski are both uniformed customs inspectors at Revenue Canada. All are fully conversant with the daily operations and responsibilities of the Excise-GST and Customs employees represented by the Customs Excise Union.
Mr. Chairman, before I continue, I should like to comment that we feel it is both a privilege and an honour to appear before you on the subject matter of Bill C-2, an Act to Amend the Department of National Revenue Act. As you are aware, it has been more than two years since Bill C-2 received Royal Assent and we cannot be more pleased that you have agreed to hear our testimony on this matter.
We should also like at this time to compliment the new minister, The Honourable Jane Stewart, for agreeing to testify before this committee so early in her mandate. As should be expected, our presentation today will be very critical, and we commend the new minister for her willingness to appear before the committee jointly with this union.
Mr. Chairman, as senators will likely recall, Bill C-2 received Royal Assent on May 12, 1994, allowing for what we have since labelled a shotgun wedding of Revenue Canada, Customs and Excise, with Revenue Canada, Taxation. The enactment of Bill C-2 came much to the disappointment of the Customs and Excise Union, since we had undertaken an extensive and expensive lobbying campaign in order to build a strong opposition to the bill.
Our concern then was that the role of customs inspectors should not be confused with that of tax administrators, or diluted by allowing customs inspectors from Revenue Canada, Customs and Excise, to be integrated with some 30,000 tax administration employees of Revenue Canada, Taxation. Mr. Chairman, quite obviously we were extremely troubled about this government's attempt to erode the rich law enforcement tradition of Canada Customs by surrendering legislative authority over Canada Customs to bureaucratic tax administrators with no community of interest or experience in customs enforcement.
Senators may also recall that, aside from addressing issues surrounding Canada Customs, serious questions were raised about the announced savings that would be realized from the amalgamation of Revenue Canada, Customs and Excise with Revenue Canada, Taxation.
As is often the case, the motivation that has brought us together here today is founded primarily on the issue of accountability. Given the history of what is now called the Administrative Consolidation project and our objective here today, the matter begs two questions: First, have the government's commitments, announced during efforts to sell Bill C-2 to Parliament, been honoured? If so, to what extent? Second, have savings been realized from the shotgun wedding of Revenue Canada, Customs and Excise with Revenue Canada, Taxation?
Unfortunately, Mr. Chairman, and this should not come as much of a surprise, our response is not overly positive. In fact, both senators and the government should not find it surprising that our position here today is more negative than it is positive. In our opinion, administrative consolidation has been a misadventure in the making without a plan since inception.
Mr. Chairman, the government has neither goals, nor focus, nor any real direction, so far as the nation's tax administration and border protection are concerned. Our position is thoroughly detailed in our 30 page brief which has been given out to the senators over the past two days.
Mr. Chairman, given that copies of our brief were provided to the senators in advance and that our time here is limited, may I make a request that you agree to appending our brief to the minutes of today's meeting?
The Chairman: Yes, Mr. Legacy. We said to you before that we would do that.
Mr. Legacy: Thank you. We will then dedicate the remainder of our time for questions and answers, until the minister takes the floor to testify.
We should like to advise you that we have also prepared, and attached as an appendix to our brief, a number of what we feel are critical questions we wish to bring to your attention. We trust that you will take an interest in them and raise them with the minister here this morning. These questions are included in the brief as Appendix A, "Questions Regarding the Status of Administrative Consolidation at Revenue Canada in Keeping with Previous Government Commitments."
In closing, Mr. Chairman, once again we wish to thank you for agreeing to hear us today. My colleagues and I will be more than pleased to answer any questions senators may have.
The Chairman: Thank you, Mr. Legacy. Before turning to Senator St. Germain, who will ask you the first set of questions, may I just ask you one sort of broad question? Having read the brief that you presented, may I ask what you think the two or three biggest problems are as a result of the integration, and, conversely, looking at the other side of the coin so to speak, can you tell us what the two or three benefits are?
Mr. Legacy: Mr. Chairman, I will try to answer both those questions. As we had explained in general terms within our brief, we see that there is no community of interest between Customs and Excise, more on the customs side, and Revenue Canada Taxation. In our opinion, in such a large department, since the actual merger the customs side of the house is not getting the proper attention we feel it should. We see that the collection of revenue seems to be the motivating factor, and there is not enough attention to the enforcement part of the job of customs inspectors.
As we stated in the brief, there are now going to be closures of over 100 customs inland ports. We are going to see more technology coming in. Now that the theory of voluntary compliance seems to be the order of the day, quite frankly, as a former customs inspector, I have to say that voluntary compliance works with the honest people and it always has. It never has worked with the dishonest people and it never will. Although we like to think as Canadians that we are a fairly honest society, and for the most part we are, there is an element within our society, and it is growing, of real dishonesty. I am not really talking at this point about the bottle of liquor or the carton of cigarettes or the extra sheets and pillow case that may be smuggled across the border.
We are now in the day and age that smuggling for profit is what we should be looking at. As we see every day on television and read in the newspapers, more and more contraband seems to be coming into the country in the way of firearms, drugs and so forth.
We believe, and have always believed, that the customs side should be separate. We even put on what we thought was a very substantive campaign to bring to the attention of the public and of the politicians that there needs to be a separate venue for the customs side of the house, that it simply cannot function within the tax administration.
That would be the primary problem that we have.
From a positive side, being fair, from a taxation point of view, service to the client will be improved. We believe that there will be some opportunity for people who are in fact working in the department, although most of the opportunity seems to be going once again to the taxation side of the house. Service to the client, service to the public, from a taxation point of view, certainly has some bearing on this from a positive point of view.
The Chairman: I have just one other question which relates to your testimony of two years ago. At that point you were seeking to have customs officers made peace officers. As you recall, some of the police associations actually appeared on your behalf on that question. This is not covered in detail in your brief. Can you tell me, for the record, what has happened on that question?
Mr. Legacy: Yes. I should explain, first of all, that customs inspectors are peace officers under the Criminal Code for the purposes of enforcing the Customs Act.
The Chairman: Right.
Mr. Legacy: However, we do not have any peace officer status, for example, under the Criminal Code or with respect to the various highway traffic acts, or those kinds of legislation. When we were here about a year and a half ago, the best example we could present to the committee was the fact of impaired drivers at the border.
The Chairman: Right. That was the example that you used.
Mr. Legacy: Yes. We will use it again today because I think it is the prime example. Many of our border crossings are obviously near some major centres, and some not so major, but during the hours of 12 midnight to 4:00 in the morning, we do encounter numbers of drunk drivers, or drivers who are impaired. We have no authority either to stop them or to hold them, if they are Canadian citizens, unless they have violated the Customs Act, which means that the best we can do is in fact let them go and phone the city police or phone the RCMP, whichever has the actual jurisdiction. That is just one example of the need for us to be covered further under the Criminal Code.
The Chairman: Thank you. I will now call on Senator St. Germain.
Senator St. Germain: I would just thank Mr. Legacy and the others who are appearing before us here this morning for their brief. I have gone through it. It is a good brief.
Supplementary to the question about policing, in the event that you were given that authority, would your people require additional training, or do you feel that the training that you receive now would be adequate for you to enforce the Criminal Code? If you can enforce the Criminal Code, logically, you can enforce any highway traffic act.
Mr. Legacy: It certainly would require training in some areas, depending on how extensive the actual powers would be under the Criminal Code. A report was commissioned by the department, by Mr. Roger Tassé, who may be familiar to the honourable senators. He was formerly the Deputy Minister of Justice.
We met with Mr. Tassé, and in asking us certain questions about the Criminal Code, he was looking at that point to see what areas of the Criminal Code might be applicable or required. Our response was that it would be more feasible to grant full peace officer status under the Criminal Code and then regulate those functions that we would be responsible for.
Very simply put, if we were to be given certain powers specified under the Criminal Code, then, if the department found that they were too few or too many, we would have to go through, once again, the process of legislation. However, if we were given full peace officer status and then regulated, a simple order of council could either add to or take away from what actual powers we would be responsible for.
Senator St. Germain: Seeing that it is not happening, as a former police officer, I cannot visualize how you would graduate the responsibilities, but maybe it is possible.
My next question also relates to the enforcement side. It relates to the gun control scenario that we have just gone through, which I am sure you are familiar with.
Mr. Legacy: Yes.
Senator St. Germain: The government is seeking to bring more rigid controls into the utilization and the ownership of guns, but some of us feel that in some ways their approach has been an attack on law-abiding citizens, in that one of the greatest concerns was the aspect of smuggling, which your particular area of responsibility is directly part of. As customs officers, you say that you cannot do your job adequately if you are not peace officers. Am I quoting you correctly that you cannot do your job effectively in controlling the border without peace officer status in bringing about effective control of the movement of firearms at the border? Have you got a comment on that?
Mr. Legacy: Yes. Of course, the movement of firearms at the border is only one aspect of it. Quite obviously, we see the gun seizures that take place at the borders and we see the smuggled guns coming in. With respect to the actual gun control bill, we are on record as not being partisan towards either one side or the other of that debate. We are nonpartisan. Our position is simply that, whatever the bill states and whatever the final legislation is, we will certainly do the job that has to be done.
We see so many smuggled guns coming in that we find that, with our status and with the voluntary compliance theory, we have a very difficult time in some areas to do our job properly, mostly in isolated ports or very volatile ports, where there is a high degree of criminality, such as the Windsor-Detroit border. Most of our officers are at times afraid to do their job because they have very poor self-defence training. We are not armed in certain areas.
I should say for the record that the Customs Excise Union does not espouse full arming of customs inspectors right across the country, but we do feel that there are certain areas and certain groups that work within Canada Customs that should be armed, such as the drug teams and those who work the dangerous borders and so forth. We do not believe, however, in the wholesale arming of customs inspectors at this time.
Senator St. Germain: Your U.S. counterparts, though, have full peace officer authority for arrest and detention, as opposed to the authority you have.
Mr. Legacy: Yes, I believe they to. That actually touches on something else. In many areas, we rely on foreign nationals to protect our officers -- for example, the U.S. customs inspectors. I tour on a regular basis right across the country. I tour the isolated ports and I tour the Yukon-Alaska border, and so forth. We get to speak to our U.S. counterparts. They tell us that they are very fond of their Canadian counterparts, but they cannot bring their guns into Canada. Therefore, much as they would like to help, they will refuse to come in and help our officers in any kind of dangerous situation, when they have to leave their sidearms at home.
While there is a perception that we do get some protection from U.S. officers, I know from speaking to them personally that they have no intention of coming to the aid of customs inspectors in Canada, unless they can bring their side arms with them and, of course, there is a prohibition on that.
Senator St. Germain: Therefore, basically, what you are saying is, if the onus of responsibility became greater on you for greater control, and if we became that much more restrictive in this country in regard to firearms -- with the flow of firearms inevitably and increasingly coming into the country from the U.S. -- you believe this would place more emphasis on the need for you to be given the authority of full peace officers and possibly being armed?
Mr. Legacy: That is just one aspect of it. We have the authority now to seize the weapons and so forth. I think another aspect of it is the resources to look at these things. While we seize guns at the border that are hidden in transport trucks or in tourist baggage, once again, we have to look at the real problem, which is smuggling for profit. Smuggling for profit is not coming across at the recognized border crossings. It is coming across where there are no customs inspectors, where we have miles and miles of undefended border with no border patrol, and it is coming in on the East Coast and the West Coast by the shiploads. We simply do not have the resources. We see whatever resources we do have being slowly chipped away.
Senator St. Germain: I agree with you completely on the points that you have brought forward. The area that I have problems with is that you spoke of the goals or the focus of the government. I do not know how long this particular bill, Bill C-2, was in the making, but I am sure the it goes back through various administrations.
As to rationalization, governments have no alternative to trying to cut back, as far as I am concerned. The only course they can follow is to deal with the deficit and the debt. I think we are in agreement on that. If a rationalization was not to take place, have you any suggestions as to how the government could reduce costs? I happen to be a staunch supporter of reduction of the deficit and the debt, and I think what they are trying to do here, through consolidation and through efficiencies and reducing the number of deputy ministers, is good. I realize that you suggest in your brief that it has not reduced expenditures, but I am sure that it has, because I was part of the previous government up to 1988 and I know what we had to do at the time and what the government of the day is doing, and I applaud them for what they are doing in certain areas. The minister is going to speak later and may comment on that.
I ask you, in the spirit of deficit and debt reduction, which you agree with, how could these efficiencies be accomplished? How could the deficit and the debt be reduced to make government more efficient?
Mr. Legacy: The previous government came very close to doing what we felt should have been done a long time ago, and that is to have a department of public security. I just want to mention that. Of course, that went by the wayside when the new government took over.
To reduce the debt is necessary, of course. We agree as well because we all pay income tax and other taxes and we know that it is very hard in this day and age. We do believe that the consolidation on the tax side has been successful to some extent in cutting costs. However, there is another aspect to it. Reducing debt does not always mean that you have to cut costs; it can simply mean collecting the money that is owed to the government, and there is a tremendous amount of money right now that is uncollected with the GST and so forth, not to mention the underground economy, which we do not even have a figure on. Once again, we are talking resources and we are talking about doing the job we were hired to do.
I believe just a brief comment from one of my colleagues will give you some idea of what kind of money is not being collected by the government.
Mr. Wayne Mercer, Fourth National Vice-President, Customs Excise Union: One of the things the department thought they would do was to invest money in setting up a collection call centre in a place called Saint Stephen, New Brunswick. That centre cost in excess of $1.5 million to be set up, while at the very time we had a location in Summerside, Prince Edward Island, with a fully trained staff, all the equipment and everything else, with uneven workloads. We could have put that centre in Summerside, been more cost effective and produced more.
That centre was supposed to work jointly with GST accounts outstanding and small-balance income tax accounts. In March, when I visited the centre, all 18 employees were working strictly GST accounts. There was no cross-over; there was no money being saved.
In Summerside, we had uneven workloads, instead of travelling flat-line where everybody is working at their optimum; yet they spent $1.5 million setting up a centre in the province of New Brunswick, when we could have done it with the work force and the equipment and the technology we already had to do it.
Senator St. Germain: I can understand what you are saying. This is one of the anomalies of the country. I sat in government and I saw how the government tries to create or tries to dispense job opportunities across the country through government departments. That is a debate that could go on for a very long time, as to whether or not the government should have everything here in Ottawa. I am from British Columbia and the greatest curse I have when I go home is that we send you people to Ottawa, and as opposed to representing us in Ottawa, they are representing Ottawa to us. I know that argument.
The illegal activities that are going on, Mr. Legacy, must be dealt with, but, in all fairness, the government has a responsibility. I do not think you can compare the two things. If there is an underground economy, we have to deal with that. That money should be paid and should be collected and we should do everything we can to mitigate it. That does not absolve the department of its obligation to try to improve its efficiency.
Much as I support you on your law enforcement side and your customs side, the argument that taxes are not being collected does not, I think, reduce the responsibility of the minister, who is sitting in here this morning, to try to make her department as efficient as possible through reduction of deputy ministers. Much as I like most deputy ministers, I still think that two in a department is generous, especially when various other heads of departments are created when you have an extra deputy minister. So, obviously, this will have to take place, if we are going to improve the efficiency.
With that, I thank you for your comments. If there is anything else during the course of this meeting that we can help you with, we would be glad to try.
Mr. Legacy: If I could just have one extra word on that, aside from speaking about what moneys should be collected, there are very strong mandates, and we are not that naive to think that cost reduction is not a factor, but there are other places within the department where there are numerous costs that are not being reduced.
We feel that it would be more prudent to reduce some of the costs of acting managers and interim managers, who are travelling on travel status throughout this whole consolidation process, rather than cutting customs inspectors, who are there for the protection of people, and for the protection also of Canadian industry, because that is our prime goal. In just one area alone -- I am not going to name the area, but I can show you the figures -- a number of people are on travel status in acting positions, but in each other's city. You do not have them acting in their own city; they are on travel status.
I have figures for December 18, 1994 through to June 30, 1995; these figures come from Access to Information, and this is one of the few times we have been able to get any information from them, I might say. One individual for that time period through to June 30 spent $10,000 in travel; other individuals spent $5,000, $6,000, $3,500, $2,500. That money might be saved with better administration, leaving one customs inspector at a border crossing where he might do some good for the Canadian public.
We do agree that there has to be cost reduction. We do not shy away from that. What we feel is that there are other and better places, more appropriate places, to do the reduction.
Senator St. Germain: A quick question, Mr. Chairman, if I may. Does the manager ever call you in and ask you for your opinions as to where you could create cost savings?
Mr. Legacy: Actually, I should tell you, Mr. Cocksedge is here. There is a meeting being scheduled in the Eastern Townships for exactly that purpose, where some of my people have found places, and it does include shutting down certain border ports that may not be as busy. Therefore, yes, that is a factor. This will be the first time that we have done it in this way, but we hope that it will lead to more across the country.
The Chairman: Senator Kenny, followed by Senator Angus, and then we will move on to the minister. We will move to the minister and the deputy.
Senator Kenny: Just a quick follow-up. Is there any incentive program in the department to encourage cost savings?
Mr. Legacy: I do not know. You would have to ask the deputy. I am not aware of any, although there might be on a managerial level; but I am not aware of any.
Senator Kenny: Do you think it would be a good idea?
Mr. Legacy: Of course. As I have always said, and will keep on saying, the working people at the grass-roots level are aware of these things, because they do the job every day, and they are a wealth of information that needs to be tapped. Hopefully, it will be tapped through the union. We have a labour relations program, and while we might be at odds on this issue, our program works quite well across the country and we are doing business on a number of other things.
We are very strict in the fact that, if you are going to have any kind of labour relations, you must separate the issues. We do not take this issue that we disagree on and carry that baggage into some other program. We simply leave this where it is and we work on other things, and some of them quite well and quite successfully.
Senator Kenny: In the past the union has made reference before this committee to the Ekos report. Would you care to refresh the committee's memory about that report and then comment on whether it has been implemented?
Mr. Legacy: Yes. You are going back quite a way on the Ekos report. It was a study commissioned by the Department of Immigration originally. It showed that at the PIL line, or the primary line -- in layman's terms, when you cross the border or go through an airport, and you speak to the first officer, who is the primary officer -- we are missing as many as 50,000 illegal immigrants over a certain period of time. I cannot give you the actual figures right now, but they are still in my mind as being very high, around the 50,000 mark.
These illegal entries were based on a number of things, including poor training; but I think the major cause was lack of incentive on the part of the officers, who were getting mixed messages from management as to what was their actual mandate. Was it one of enforcement or one of facilitation? There was a lot of confusion on that. That was the basis of the Ekos report.
However, more important than that is the Tassé report, which is a study on the powers of officers. We have been trying to get that report for the past year through Access to Information. I have discovered over the past year just how few teeth Access has. That is the latest document that I feel should be made public -- or at least we should see it because it may satisfy some of our concerns, or it may raise new issues.
At any rate, I think the Tassé report and the Ekos report will probably show some of the same characteristics or problems at the border. However, I can only speak right now on the Ekos report because we have not seen the Tassé report.
Senator Kenny: Have communications improved and have mandates been clarified since the Ekos report was made?
Mr. Legacy: As far as we are concerned, that was just about at the time of or just prior to the administrative consolidation. I think that more than rectifies some of those mandates. They are more in a state of flux because there are really numbers of things happening. The latest one is the new revenue commission, which has thrown everything upside-down again, because now we are looking at a whole new structure again or at least a somewhat different structure.
I do not think the mandates can be clarified until the department knows what its own mandate is. While I think that they knew what the mandate was to some extent, the new commission situation certainly raises another question mark.
Senator Angus: Mr. Legacy, I would like to add to the welcome extended to you by my colleagues. I congratulate you on the candor with which you are presenting your views to the committee.
I have a couple of questions which may not necessarily arise directly from your brief. Perhaps they are not relevant. I have always been confused as between the role of the immigration inspector and the customs inspector, and I have often wondered if there is not an overlap or room for major savings there.
Let us just take as an example an airport situation such as at Dorval or Mirabel. I just flew into Mirabel this week; it always seems to be a zoo there, even though there are only about eight flights a day. It seems to all happen at once, and then you hear people saying, "These darned customs people; can't they get their act together?" But I am thinking to myself, it is really not Customs, it is Immigration. They are dealing with passport control and so forth. I have to say I have a big level of confusion there.
Could you comment on that, explain the difference, and say how some improvements could be made?
Mr. Legacy: In my previous life I was a customs inspector, and yet to this day friends of mine, and even relatives, still think I am an immigration officer, because there is a lot of confusion.
I would like to take the U.S. side and the Canadian side as two examples. When you cross into the U.S. at a border crossing, at the primary questioning you could be speaking to either a customs inspector or an immigration officer. Same uniforms, same questions, but different shoulder flashes. There are actually two departments, but they take turns on the primary line and so you may be questioned by either one.
Senator Angus: On either subject-matter?
Mr. Legacy: That is right.
Senator Angus: An immigration officer might ask you for your customs declarations. They always collect your customs papers and so on.
Mr. Legacy: That is right. In Canada, when you reach the primary line, you always speak to a uniformed customs inspector. Immigration inspectors do not work the primary line. They are inside the office and they deal with what we call secondary referrals.
The Chairman: I know this sounds mundane, but you mean that, when I walk up to the line at Pearson airport, the person I show my passport to is a customs person?
Mr. Legacy: That is correct.
The Chairman: But it says "Immigration" over the counter.
Mr. Legacy: I would like someone else to talk about the airport situation, but on the land border crossing --
The Chairman: I am quite surprised. I thought that they were all immigration officers.
Mr. Legacy: You would only go to the immigration officer if you were referred by a customs inspector. In other words, there are certain standards that we question. If the customs inspector is not satisfied that you are who you claim to be, or there seems to be a difficulty with your country of origin, or if you are coming in to work and you are a U.S. citizen, we refer you, in all cases, to the immigration officer inside the office, who does what we call a secondary referral, and then approves or disapproves of the entry of that person into Canada. But you always speak first to a customs inspector.
Senator Angus: Just to be sure you are focused on what I am trying to find out, and I think you are, there is an overlapping of functions at that front line level. Members of your association or union are doing some immigration jobs in addition to their customs work.
Mr. Legacy: Right.
Senator Angus: And that gives rise to the substantial confusion.
Mr. Legacy: Yes it does, because most people, because they are asked where they live and if they have a passport and so forth, automatically think that it is immigration. Well, rightly so. It is immigration questioning, but it is a customs inspector whom you would deal with first.
Actually, that is a change. Years ago, up to the mid-1960s or so, you used to be questioned by an immigration officer. Once you passed that immigration officer, then you would be questioned secondly about goods by the customs inspector.
Senator Angus: Everywhere in Europe it is that way. That is how it works in Europe.
Mr. Legacy: That is right. They stopped doing that around the early 1960s or mid-1960s. Customs took over all the primary questioning at that time and they have been doing it ever since. Mr. Kosakowski may want to comment on that.
Mr. Doug Kosakowski, Third National Vice-President, Customs Excise Union: I work in Niagara Falls, at the Whirlpool Bridge, which is a point of entry. As Mr. Legacy was saying, every customs inspector does primary immigration. Some do get referred to secondary immigration. Immigration does no customs inspections. There are MOUs set up with immigration, where some customs inspectors even do more than the primary immigration. Smaller ports will do even more than that primary. Therefore, it even goes beyond that overlapping in some areas -- let us say out west in isolated ports, and places like that. I hope that clears that up just a little bit.
Senator Angus: The point I am trying to get at, ladies and gentlemen, is that it appears to me that too much valuable time of the customs people is taken up in a lot of these low-risk areas -- low-risk in terms of contraband and illegal smuggling, which is the real issue you feel you do not have sufficient resources for and where our noble tradition of good law enforcement is being eroded. I have the sense that at airports, the places where the vast majority of the Canadian travelling public goes, all of these customs officers are doing an immigration function while the customs function is almost nothing.
All you have to do is watch and you will see hundreds and hundreds of people coming in, saying, "I have nothing to declare." They go right through, but, nevertheless, each one of those individuals takes up five or ten minutes of the time of that officer, who could otherwise be out at Kanesatake, or somewhere useful, dealing with the real problems. I just wonder if you have a recommendation in this regard, if we are not missing the boat there.
I do not know if free trade is relevant here, but I thought from my reading of NAFTA and the FTA that, especially in these low-risk areas, we were supposed to get rid of the need for customs officers.
Mr. Legacy: Yes. We have actually looked at this a number of times. However, it is probably something that would be really better asked of the minister, as to what arrangements, if any, are being looked at, or have been looked at, for some kind of amalgamation or some kind of joint memorandum.
However, you will like this one even better. If you buy a pass for $50, you do not have to talk to anyone. You can just come through.
Senator Angus: What do you mean?
Mr. Legacy: I am referring to the CANPASS project.
Senator St. Germain: But you can throw in spot-checks at any time on that, can you not?
Mr. Legacy: Yes, of course you can.
Senator St. Germain: Don't you think that is even more onerous?
Mr. Legacy: I did not really want to start more confusion.
Senator St. Germain: If I may, Mr. Chairman, I would like to pursue that question. In the $50 line, your express line, you do have spot-checks, but the question is -- and you are the experts so I am asking you -- don't you think that it creates a greater sense of responsibility and a greater fear, if you just spot-check? If the person coming in knows he is going to be checked, he is going to be careful; he has to be. The reason I ask this is that I know there was opposition to this by your union.
Mr. Legacy: Au contraire. I just threw that out as a comment, and I guess maybe I should not have; but I would like to answer, if I could. Really, we support the CANPASS program, and that is what I was talking about. I threw it out to put a tail on what I was talking about. We support the CANPASS program and certainly we also realize that there is low-risk traffic and there is high-risk traffic.
Simply put, we should not be wasting our time and our resources, which are few, on the low-risk traffic. We agree with that in principle. We do, however, have a caveat to that, and that is that, if we are going to do that, we must have a good source of intelligence with a strong infrastructure so we can separate the low-risk from the high-risk.
Secondly, yes, we must do spot-checks. The penalties must be high enough that these people will see it as a deterrent and they will not violate the trust that they have been given in the past. If those things are done, we do support it, because it is one way of moving our resources where we need them. All joking aside, it is a good program for this day and age as to what we have to deal with, if we look after all the other things.
The Chairman: Senator Angus has one last question and then Senator Perrault has a short one and Senator Austin, and then we are moving to the minister.
Senator Angus: Just to summarize it, as I understand it, you folks vigorously opposed this legislation, Bill C-2, and the so-called shotgun wedding of Customs and Excise to Revenue Canada, Taxation. Nevertheless, the bill passed in spite of that. Now you are saying, in no uncertain terms, that against your better judgment the thing was legislated, and now the implementation process is not being properly followed, and a lot of the measures which were promised have not been done, including the money that was to be spent, and so forth, and the new people that were to be hired to enhance your side of the operation. These things have not been done. Have I got that right?
Mr. Legacy: To our knowledge, yes.
Senator Angus: Therefore, you have a major complaint that, even though it was probably ill-advised in the first place, the redeeming aspects have not been followed up on.
My final point in this regard then, if I may read something into your evidence or into your point of view, is that really the functions that customs officers should be performing in the present environment are quite incompatible with tax collection, and you would rather see their functions as totally different, say in a public-security mode or something like that. Is that correct?
Mr. Legacy: Yes, that is correct.
Senator Angus: I hate to oversimplify it, but that is the big picture.
Mr. Legacy: I think you have said it quite nicely.
The Chairman: Senator Austin and then Senator Perrault, and then I am moving on.
Senator Austin: I just want to ask this as a supplementary to Senator Angus' question; if you had your druthers, would you go back to the status quo ante, the previous situation, or is your presentation today, which is the way I am reading it, that you want to make what was done work better? Which is it?
Mr. Legacy: Actually, it is neither. We believe that there should be a venue for law enforcement at the federal level. Even when we were really separated at one time in the past, we were not totally satisfied with that situation either. We felt that we should be part of a law enforcement group. Although we do collect revenue, we also do work for all other agencies, and we felt that Customs and Excise should be in some kind of federal law enforcement group.
As a matter of fact, the Canadian Police Association at the present time, I think working closely with the chiefs of police, are lobbying for a federal law enforcement group which would then encompass, similar to the public security portfolio, all the federal law enforcement people, fisheries officers, immigration officers, customs inspectors, the ports police and so forth.
While it would seem that we had started this process when the amalgamation took place, we had really started the process long before then to change the venue. Therefore, it is now even more important, because we are in such a large group of taxation people that once again there is no real community of interest, other than the fact that we do collect some revenue. However, the revenue that we collect has gone from 4.2 per cent of the federal income in 1994 to around 2.2 per cent in 1995. That is because, with free trade and NAFTA, there are fewer actual revenues being collected, because most goods are coming in free of duty; but there is a strong new law enforcement requirement, as we see a lot of things moving into Canada from south of our border, and we all know what those are.
While we have gone through two separate sessions, we have a third situation now with the new Revenue Commission, which makes it even less likely that Canada's first line of defence would be privatized to an arms-length agency or commission.
Senator Austin: Your basic quarrel is with the philosophy of the government's concept of operation in this sector. You basically feel that law enforcement is being traded off against other objectives?
Mr. Legacy: I believe so.
Senator Austin: That is your basic concern.
Mr. Legacy: Yes, that is correct.
Senator Austin: Could I ask just an additional question? Has the number of members of the Customs Excise Union changed since Bill C-2 came into force? Is your union about the same size? Is it greater in number or is it lower in number?
Mr. Legacy: We are down about a thousand members over the past two or three years. They may not necessarily all be out of the customs side, because we also represent the GST workers. I do not have a breakdown as to which ones may be GST and which ones may be customs, but certainly about a thousand have gone.
Senator Austin: You are not saying that Bill C-2 was necessarily the reason for that downsizing?
Mr. Legacy: I think the government downsizing had a lot to do with it.
Senator Austin: The general downsizing.
Mr. Mercer: Yes, the general downsizing, but there was also a downsizing when they moved the Excise/GST people into a tax service office -- and that marriage is a good marriage in the sense of generating revenue for the department, because we are both doing the same job. They are auditing for income tax; we are auditing for GST, and there is a logic to that. We are not disagreeing with that. However, when that took place, the Excise/GST side of the house released many more people, if you are making a comparison. If you look at it percentage-wise, then you are dealing with the tax office. In the unit I work in, in my office, before we co-located or joined into the one office, we had 25 people in our section. We are down to nine. They have been dispersed into taxation jobs.
Senator Austin: They have remained union members?
Mr. Legacy: Of someone's union.
Mr. Mercer: Yes, but the issue there is, as tax collectors, it is a far different job than being a customs enforcement officer.
Senator Austin: I have your point.
Mr. Mercer: We do not see that marriage working properly.
Senator Perrault: Mr. Chairman, I welcome the opportunity to finally ask a question. We have some garrulous senators. They are good guys, but they go overtime once in a while. I had several questions to ask, but I will forego them because I want to hear the minister. I think that is an important submission.
Mr. Legacy, as to the net effect of these changes, really, you summarize it at page 25. You say, "...more poison pills have been added to the stew." That is quite a negative statement.
We have heard some of your concerns here today. I would like to reiterate what was said earlier by a number of the senators, that we welcome your suggestions as to how we can obtain more value for the taxpayer dollars expended in this whole operation. You have listed all the reasons why there are faults in the present system. We would certainly welcome, regardless of our party affiliations, your suggestions as to how we can make this operation more successful and more efficient.
I am going to ask just one more short question before we hear the minister. On page 24, you are very critical of the collaborative work with the RCMP at the border. You say that:
Many of our Members have advised us that they wouldn't even recognize any of the RCMP constables from their local detachments. Locally, we are advised that telephone communications between the two (2) organizations are also non-existent. The RCMP has been very reluctant to assist Canada Customs in efforts to deal with export control of illegal grain shipments, for example. The RCMP simply will not get involved for whatever reason. There is definitely no coordination of enforcement activities with the RCMP at the border.
That is an incredible statement for you to make.
Mr. Chairman, I think we require some evidence and proof, because it is an untenable situation that at our border there is absolutely no coordination with the RCMP and they are not even in telephone contact.
Senator Angus: You should have been on the ship in Halifax harbour yesterday to see the men at work.
Senator Perrault: We do require amplification. I would like to hear your comment.
Mr. Legacy: On your previous statement about actually working together to try to make things better, I stated earlier, and I should state it again for the record, that we are at odds with our department and with the government over this issue. There are many other issues, however, on which we are not at odds and on which we are working extremely well together and there is good communication. We do give input on a number of policies and programs. However, we are not going to agree on everything and this happens to be one that we don't agree on. This is not really a condemnation of the department or the government. It is simply one issue that we do not agree with, although there are more that we do agree with.
On the question about the RCMP, we sent out a questionnaire right across the country to our grass-roots members. Within this brief are the answers that came back to us.
Senator Perrault: It is very disturbing, though.
Mr. Legacy: Yes, it is. However, that does not mean that it is not working in some places. It may well be working in some places. I think you have to keep in mind that numbers of our people work in areas where the RCMP are the contract police; those areas are less populated than areas where you have city police or, for example, the OPP. That means that the RCMP may have to cover hundreds of miles of area within any given shift -- and I don't imagine they are exempt from the downsizing that is taking place. So they have their own difficulties. Indeed, I believe that of late they are even more short-staffed. If we have a problem, we may phone. If we phone from the Eastern Townships, for instance, we probably have to phone through to Montreal, and they will see if they have someone; but most times they do not.
Senator Perrault: It is an area that demands attention.
Mr. Legacy: That is correct. Probably, where we do not need as much attention are the metropolitan areas, where we have RCMP at the airports and so forth; but that is going, too, as I understand. It is more in the isolated areas, where there are not many people and there are no police forces available most of the time.
But I don't think this has anything to do with any kind of controversy between us and the RCMP. It is simply because they do not have the person power either.
Senator Perrault: Something has to be done about it.
The Chairman: Mr. Legacy, to you and your colleagues, thank you for coming. Of course, you are more than welcome to stay. I know you are looking forward to hearing the minister and the deputy.
Senators, our next witnesses are the Minister of National Revenue, the Honourable Jane Stewart, and the Deputy Minister of Revenue, Pierre Gravell. As some you will recall, Mr. Gravell has been here on a number of occasions in the past on this and other issues. This is Mrs. Stewart's first appearance before the committee, and we thank her very much for coming.
The Hon. Jane Stewart, P.C., M.P., Minister of National Revenue: Thank you, senator.
The Chairman: You will find that, unlike in committees of the House, the questioning here, if I do say so myself, is a little less political, but far more substantive and frequently more difficult.
We have read your brief, and I understand you have an opening statement, after which you will be prepared for questions.
Ms Stewart: As you have identified, I am new but my friends are not, the Deputy Minister Pierre Gravelle, Assistant Deputy Minister Allan Cocksedge, and Assistant Deputy Minister Bill Crandall. You have seen them before.
If you will forgive me as the new minister, I would like to take some time to talk to you about how I view the department and particularly the part of Revenue Canada that pertains to customs. I hope I can clarify matters for you and convince you that the interest that we have in this very important part of our department is clear, is focused, and is forward-looking.
I should start by saying what a good job CEUDA has done, and we certainly give recognition to Mr. Mansel Legacy, who has been the president of that union for 15 years, but who, I understand, will not run again for office. He has done a tremendous job representing our employees and we will wish him well after October, when he carries on with his other areas of interest.
Senators, I must say that coming into the department and recognizing the change that is under way has really astounded me. I understand that change impacts on people and I am very aware of how difficult it can be, but I must say that I am completely and totally impressed with what I have seen and with how our employees are responding to the change, and how they are continuing to deliver high quality service to Canadians.
Regardless of that, we know that the status quo is just not acceptable. It is not acceptable today. It is not acceptable tomorrow. We are all in a state of continuous improvement, and that is the responsibility we have as a government. Change is necessary and it will help Canada work better. The stakes are higher than ever before. We are more professional, more innovative, more flexible and more in tune with what Canadians want and need from a modern revenue and customs administration.
I am sure it is no surprise to you that a revolution is under way. Governments in Canada face mounting pressure to reduce public and private debts, to restore fiscal order to the nation's finances, and to invest resources where they are most needed. Revenue Canada must respond and must respond quickly.
We always have a choice. We can fight change or we can use change as an engine for progress in the future. We have to become smarter and more responsive. We must harness the energy and enthusiasm of our staff, because we can really make a difference.
At Revenue Canada, we are in the midst of the largest organizational re-engineering project in Canadian history. We are making real progress in that regard, and in large measure it is due to the hard work of our 40,000 employees. The major element is the administrative consolidation of Customs and Excise and Taxation.
Consolidation is not about shuffling organizational boxes. It is about working smarter. It is about building a better, more effective, revenue and customs administration, an administration that improves compliance, reduces the burden and costs for businesses, individuals, and taxpayers, and improves accessibility and service.
The customs side of Revenue Canada presents unique opportunities for us. Customs administrations around the world have reached a turning point in their long histories as the frontier posts of their respective states.
Again, the status quo is just not on, as a result of changes in the world. Our working environment is changing at a phenomenal pace. Not too many years ago, business was done by telephone and telegraph, and goods were moved in ships. Tariffs were high, goods and people moved slowly, and protectionism was the norm.
Today, here in Canada, 34 per cent of our economy is driven by the export market. Tariffs are being lowered to zero, information technology now provides lightning-fast communications and deal-making.
Efficient and effective border management means finding ways for "low-risk people and goods" to pass quickly through customs control, so that customs can concentrate its efforts on "unacceptable people and goods." This is not less enforcement. It is better and smarter enforcement.
If governments are in competition in certain areas, they are also, because of expenditure restraints, being forced to find innovative solutions. The new world order, globalization and competition all demand smarter thinking and better ways of doing things.
As representatives of our nation, Revenue Canada's customs employees are expected to be champions of national pride and true friends of tourism and trade. At the same time, however, customs officers must also carry out a law enforcement mandate. They enforce laws which protect our communities from illegal firearms and drugs, laws which protect our businesses from unfair foreign competition, and laws which regulate the movement of people into Canada. They also collect various taxes and duties. Their responsibilities are significant, they are complex and they are often competing.
Just by way of example, let me illustrate this complexity. Imagine that you are a customs officer; it is 3:00 p.m. and you are at Windsor at the tunnel. It is hot, you are tired, and there is a long line-up of trucks, hundreds of trucks, and you know that some carry prohibited goods, guns and drugs. How do you manage the situation? You want the traffic to flow, but you have that enforcement responsibility. There is one certainty: we will not compromise on protection.
To give another example, it is late at night, a 747 has landed from Heathrow with 400 tired people who only want to get out of the terminal and reunite with their relatives or catch a connecting flight, but some of the passengers have connected from a country where there is an outbreak of the deadly Ebola virus, a highly contagious virus transmitted via bodily fluids, a cough, or a sneeze. This is a difficult situation, but rest assured, we will never knowingly allow entry if there is risk to Canadians.
Before I go on, there are a couple of other kinds of examples that we can talk about. Imagine you are a worker in a steel plant in Hamilton. The plant is fighting for survival in a very competitive industry. Every job is vital. Every dollar is needed to build the business and create jobs. You are not worried about international trade relations or trade sanctions and you are not worried about trade facilitation. What you are worried about is the livelihood of the company and yourself.
Or say you are a tour operator in British Columbia. Success and your employees' pay cheques depend on Canada's being seen as a warm and friendly place for visitors. You want an open border, with no delays, and fast and friendly service, and you do not care about the other problems; you have enough of your own.
These are only a few examples of the tough, real-life decisions made by our customs officers every day, seven days a week, 24 hours a day, from coast to coast to coast.
They also illustrate the incredible challenge placed on our employees, and I have to say that Canadians should be proud of the job they are doing. We do have to catch the bad guys, but we cannot inconvenience the good guys.
So what is the solution? These complexities, combined with antiquated legislation, reduced resources, significant increases in business volumes and demands for service, and rapidly evolving rules of international trade are all real and they are not going to go away.
We need a modern, flexible, responsive customs border service. We need a smarter border. We need to confront the real issues without compromising the health, safety, and security of Canadians, their jobs, or their business competitiveness. We need to win the war against illegal smuggling of drugs and guns. We need to prepare ourselves to deal with emerging international concerns such as environmentally hazardous materials, nuclear waste and disease. Yet we need a border that warmly welcomes visitors from around the world. It is an enormous challenge.
My goal, as the minister responsible for Canada Customs, is to institute a smart border. We have a plan. It is innovative; it is bold. It takes maximum advantage of our dedicated professional staff, new technologies and modern business practices. It is an ambitious plan that requires all of our energy and a real partnership with staff and Canadians.
A smart border recognizes that most people obey the law. A smart border allows us to simultaneously manage the dual requirements of facilitating trade and tourism and protecting Canada and Canadians.
The strategy we are implementing is designed to streamline our procedures for low-risk people and commercial activity. That frees up our staff and resources for improved service and a special focus on high-risk traffic.
We want our staff in value-added work that will make a difference. We want our staff out of the hum-drum, using their knowledge, skills and judgment in a meaningful way. We are eliminating archaic paper-based processes that add little or no value. We are using technology as our strategic tool to free our staff to focus on the basics.
Our action plan has four key elements. First, we are completely re-engineering our commercial processes. Goods must be able to enter Canada more quickly, and the burden and cost of compliance to business must be reduced. We have to be more competitive. We have to be better than the United States. We have to be better than our aggressive Asia-Pacific trading partners.
As an example, we have introduced the accelerated commercial release operations support system, or "ACROSS". It allows for the electronic exchange of permit data that can be processed at one site for several ports of clearance. Think of the convenience and the time-saving benefits for businesses. They do not have to go to Revenue Canada. In fact, Revenue Canada comes to them. Businesses do not stand in line and fill out forms; they attend to commerce and customers. Imports do not sit idly at the border; they sit in showrooms, in warehouses and on shelves for Canadians to purchase. Factories are not silent; they are humming.
The second key element is that we are redesigning our processes for travellers. Service is the goal, through an appropriate mix of targeted enforcement and facilitation. The recent opening of the new Vancouver International Airport Terminal is a wonderful example of the marriage between state-of-the-art facilities and new approaches to Customs. The CANPASS pilot in Vancouver is a good example of a smarter way of doing business that benefits the traveller but does not compromise our protection mandate. We hope we will soon be able to offer low-risk travellers a "smart card" that will allow them to stop at a kiosk and "swipe" themselves across the border.
Third, we need a legislative base that enables us to achieve our goals. We have to remember that many of the laws we are dealing with are over 100 years old. We have taken action in this regard. Bill C-102 dramatically modernized our duty-referral and duty-relief program. Omnibus legislation has allowed us to streamline procedures, and other statutory and regulatory changes are already in progress.
Of course, we have to remember that the bill we are here to talk about today, Bill C-2, changed a 75-year-old piece of legislation, thus allowing us administratively to make changes so that we can target our energies where we feel they are required.
The fourth element is our ongoing commitment to responsible enforcement. Revenue Canada's contraband strategy for 1996-97 is designed to increase interdiction in high-risk areas while decreasing efforts in low-risk areas. It will strengthen the relationships we have with our law enforcement partners, our stakeholders, and our clients. It will increase and optimize our investments in contraband detection technology and detector dogs; strengthen our risk assessment, intelligence and targeting capabilities, with, for example, the integrated customs enforcement system, or ICES as we call it; and it will strengthen the strategic export control program.
Honourable senators, as part of its responsible enforcement strategy, our government has launched anti-smuggling initiatives and the Canada Drug Strategy. Funding has been approved for these programs through to the end of this fiscal year. I want you to know that I am having ongoing discussions with my cabinet colleagues on future funding for these programs, and I know our CEUDA colleagues support these important programs.
Last month in Windsor, I visited the Ambassador Bridge border crossing at midnight because I wanted to go out and see how our staff manages in the dark hours. I can only say that they were there working effectively and positively in a team milieu. The local union president was there at twelve o'clock to talk to me and he presented his issues very candidly and clearly. These are the kinds of things that we have to continue to do.
I was impressed that night with the commitment and the success of what is going on at that border. Earlier in the day I had met with local law enforcement representatives, members of the Windsor Police, the OPP, the RCMP, and our immigration friends here from the federal government. We sat together at a table like this and talked about the partnership we need to have to ensure that we have safe homes and safe streets in Canada. The indications were that we are working right. We do have our strategies in place and we do have our goals and priorities in focus.
The area I was particularly interested in was precisely the one that has been drawn to your attention by Mr. Mansel Legacy, the issue of the extension of powers under the Criminal Code. I had to be sure that our partners, our local partners, agreed with that, the police who already have those powers. Does this partnership make sense to them? Certainly, in the discussions I had, the indications were clearly ones of support for that, and so I will continue to work with my two partners, the Solicitor General and the Minister of Justice, to move towards that end.
In Montreal, I met with our customs staff to celebrate a very different strategy, a memorandum of understanding that we have signed with the shipping federation aimed at combatting drug smuggling. You must understand that this is not something legislated by law. It is not legislation; it is just smarter thinking, and working closely with our partners to deal with this issue of illegal goods entering the country.
I was impressed by our staff, their commitment, skill and their use of the technology. They are very proud of the contraband detection equipment they have. Better targeting strategies, better training and better tools have enabled them to increase drug seizures.
In 1995, we seized, in total, $751 million in goods. Already, in the first four months of this year, we have seized $536 million worth of goods.
We share the world's longest undefended border with the United States. They are our friends and we work with them to ensure it is the best managed border in the world.
The Canada-U.S. accord has helped us enormously to implement the key elements of our strategy, but the best strategy, tools and organization will not be effective, if our people are unable or unwilling to meet their responsibilities. The commitment and professionalism of our staff is the fuel that drives our engine for change. We must ensure that customs staff are at the right place, doing the right job, with the necessary training and tools to be effective.
In 1994-95, Revenue Canada's training budget amounted to $26.4 million. The department provides more than ten full days of training to each of its 42,000 employees in a typical year.
It is through examples such as these that the department demonstrates its desire to harness the talents and energies of its employees towards a common goal: commitment and high quality service.
The department continues to offer training in emerging areas to ensure that all inspectors can meet changing needs. For example, there is training on new automated systems, in anti-terrorism and in cultural and AIDS awareness.
We can no longer afford to have 20 per cent of our people doing 5 per cent of the work just because that is the way we have always done it. We are concentrating our valuable resources where there is a business need. We will be more efficient. Service will be maintained, although provided differently.
In conclusion, I would say that the dynamism and strategic approach to re-engineering at Revenue Canada mirrors that of the federal government -- to be more efficient, to be more business-like, to provide services that Canadians want and need. We are more client-oriented -- or, in our case as a government, more citizen-oriented. We are doing our part to promote an economic climate that fosters strong economic growth and job creation and makes government truly responsive to the needs of Canadians. We must also do our part to ensure that Canada is well-positioned to take advantage of the economic opportunities of the next century. We want to work with Canadians, not stand in their way. We will make a difference. A smart border will ensure Canada's success. We will do our part to keep Canada a prosperous and safe country -- indeed, the envy of the world.
All this is a challenge; it is tough for everyone. A system that was healthy in the 1840's needs change in order to be healthy in the 1990's and beyond.
Again, Mr. Chairman and honourable senators, I would like to remind everyone that it is our employees who are doing a wonderful job to help us manage today and for the future. It is my commitment as the minister to ensure that we all move ahead together, profitably and effectively, so that we can serve Canadians.
The Chairman: Thank you, minister, for those opening remarks.
Senator St. Germain: Minister, my first question has to do with the Tassé report on the study of the powers of customs inspectors. Has it been made public or not? If it has not, what does the study recommend, if I may be so bold as to ask?
Ms Stewart: This study actually did take a look at the responsibilities that we feel many of our employees have asked about, as in the discussion you were having earlier about whether or not it makes sense to have capabilities under the criminal act afforded to our customs officers. Their recommendations are ones that we are studying now.
I can tell you, as I said earlier in my comments, that the examples given by Mr. Legacy in his earlier representations about the need to be able to stop drunk drivers, about the need to be able to stop people who may be kidnapping children across the border, have to be seriously thought about. For Canadians, when they look at that and think that customs officers do not have the ability to do that under the law, it does not seem right. It does not make sense.
I am working, as I say, with the Solicitor General and with the Minister of Justice in trying to understand those implications. I tend to agree with you, senator, that if we are going to do it, we cannot pick and choose. Trying to cherry-pick the appropriate areas of involvement would be very difficult. I am of the same mind.
I would just confirm to you that it was one of the first files to be put on my desk, thanks to the deputy minister, and in my own mind I want to be sure, as I say, that our partners, your colleagues from before, agree that it is the right strategy. To my understanding in the discussions I have had, they do.
Senator St. Germain: I think that is reinforced by what Mr. Legacy pointed out. If they are fearful of carrying out their duties, and I think their responsibilities are becoming more onerous, especially with the gun legislation, that will put more pressure on them, because more will be expected of them. Therefore, I would definitely urge you to pursue this as quickly as possible.
A fact-sheet put out by Revenue Canada in regard to the government's firearms control initiative said something to the effect that "service is not at the expense of enforcement." I may have misunderstood this, but I think the union representatives who were before us, Mr. Legacy and his delegation, were implying that.
Would you comment on that briefly, please?
Ms Stewart: In my comments I hope I made it clear that I feel my challenge is to work towards the smart border so that our enforcement activity really targets those people that we must target. It means focusing more on our partnerships with the RCMP, with our neighbours across the border, with our friends in Immigration and Agriculture Canada, and on our relationship with the provinces, because, of course, we are responsible for some of their legislation in the areas of health, the environment and transportation.
We have to prepare ourselves to support freer trade and the need for commercial transportation and exchange, but we have to target those people we do not want. With a smart border, using the capabilities and the potential of our individual employees, we can do that in a different way.
In the old days, everybody was kept out. We were protectionists. The job was: "Stop it right there; we don't want anybody in." It is not that way anymore. We have to modernize to accommodate the difference, recognizing absolutely and clearly that the issue of enforcement is a very big part of it.
Senator St. Germain: For clarification of a point that Senator Perrault brought up, I think the reason the RCMP were hesitant in interfering in the grain issue is that it is such a political issue. As opposed to a criminal or a dangerous issue, it is a question of whether we need the Canadian Wheat Board. That was most likely the reason why the RCMP were hesitant in becoming involved at the request of customs officers. Do you agree or disagree? Would you comment on that.
Ms Stewart: Actually, I have looked at the file in depth, and I would certainly congratulate our employees on the work they have been doing out there in a very tough circumstance. I appreciate that. The RCMP have been cooperating with us in a real and appropriate fashion. That is not to say that we do not have the responsibility to get the laws right, but as Mr. Legacy said, their job is not necessarily to comment on the law but to make sure it is applied. They are doing a very good job in that regard.
Senator St. Germain: This is my last question: What savings has this bill brought about? How many top-level positions have been eliminated, and have the savings found their way down to produce more customs officers or more personnel at the field level?
Ms Stewart: I will refer the details to Mr. Cocksedge, but I will say that as a result of program review we in Revenue Canada have to find $300 million in savings. That is a big chunk of change. That is $300 million by 1997-98. We are at about $150 million now. So we are halfway there, and a lot of it is as a result of consolidation, managing administration in a different fashion.
Mr. Cocksedge will comment specifically on the numbers.
Mr. Allan Cocksedge, Assistant Deputy Minister, Customs Border Services, Department of National Revenue: I will comment briefly. Mr. Bill Crandall can add to that as well.
The consolidation has meant that we have replaced what were ten operating customs regions with seven regions and, therefore, the managerial layering that occurred in the old organization has been streamlined as a result.
As part of the savings target that the minister referred to, we are responsible for coming up with $45 million in savings over the three-year period, and we are well on our way to doing that. That is part of our contribution to the overall savings target of the department. The savings are not only real but they are real in the right areas.
As the minister said, we need to play it smart, and where we have cut our operating costs has been in inland offices where the workload was very small, and it made sense to offer services differently because of the availability of electronic commerce techniques to clear goods inland. By doing that we have maintained the presence at the physical border, which is most important for our dealing with the issues that the minister outlined.
Mr. William Crandall, Assistant Deputy Minister, Finance and Administration Branch, Department of National Revenue: The only point I would add, senator, is that, in our efforts to find the $300 million in savings, we have skewed those savings to administrative and overhead and information technology areas. In fact, something like 45 per cent of that $300 million has to come from those areas, and they only represent about a quarter of the department's base. We really made an effort to protect, as much as we could in the program-induced savings, all the key program business lines of Revenue Canada, including customs, trade administration, revenue collection and audit.
Senator Perrault: This has been a very positive presentation by the minister and I know that my colleagues will agree.
On the war against illegal shipments of drugs, you gave us some very good figures. You say we seized $751 million in 1995, and in the first four months of 1996, $536 million. What estimated percentage does that represent of the total drug flow into Canada?
Ms Stewart: Senator, I would not hazard a guess.
Senator Perrault: It is a tough question.
Ms Stewart: I would not hazard a guess. Again, it has been fascinating to see the focus on this particular area. In the relationship that is being built with the RCMP, we work together, by and large, in every single one of those drug busts.
As I would point out, too, there is a wholly different way of doing business. We have signed these memorandums of understanding with the shipping federation. We hope to sign them with the airlines and with freight carriers. It is really an agreement where we share information and intelligence on what is coming up, who is bringing it in, and where our risk points are. We have a better understanding of the structures on ships and where we should look. As I say, it is all done without legislation; it is just a different way of doing business and recognizing that we have to be partners as opposed to stand-alone players.
Senator Perrault: With respect to the information-gathering process, obviously, you have computer contacts throughout the world with other nations. Is there a sharing of information on an adequate basis involving other nations to warn us, for example, that an illegal shipment is on the way to Canada? Are we well informed in that area?
Ms Stewart: Yes, we do that. As technology improves, we will be even better informed. Of course, the relationship through Interpol tends to require our continuing partnership with the RCMP here, and formulating those connections is a must.
In Windsor, when we were sitting down, as I say, with our partners, we were talking back and forth between ourselves and the RCMP. We even agreed that at this level we have to do a better job at our information sharing. I think those doors are opening as we come to understand the responsibilities and the power of partnership.
Senator Angus: Minister, I would like to add my word of welcome to you and your deputy ministers, and I congratulate you on your appointment to a very challenging portfolio. I am sure you will do a great job at it.
Obviously, as you outlined in your opening statement, living in this amazing time of change, what you do one day is out of date practically the next day. I, for one, am delighted at your thrust for a smarter approach, not only to problems at the frontier, but also to cooperating with the private sector.
I have spent most of my career as a maritime lawyer dealing largely in East Coast ports and in Montreal with the flow of cargo in and out of Canada. It used to be very much of a stand-off. There was more of an interest in getting the customs collected than in looking at the bigger picture. I have already noticed a major improvement. I think it is terrific.
There are a couple of areas that I would like to ask you to comment on, if I could. First of all, you went out of your way, and I thought in a very nice way, to say good things about the workers, particularly about Mr. Legacy and his association. At the same time, you were here this morning when he gave his evidence. By his own admission, some of it was quite negative. I wonder, in a general way, if you would like to respond to some of the direct criticisms.
Also, in earlier questioning we wondered to what degree you do have a dialogue with the union and with Mr. Legacy in particular. I would like to have your side of that story to see how it is working. It seems to me that if it is working well, there would not be the need for this ventilation that is set forth in the brief.
Ms Stewart: No, and I can appreciate your point of view. I believe it was within the first or second week of my appointment that I felt compelled to make contact with the union presidents, and I called Mansel. We had a chat and had lunch together and talked about the concerns that he has brought forward, many of them in the representation today. That was an important first step for me, to understand particularly the aspect of the extension of rights under the criminal act, the sense of how the union members were feeling, given this incredible change that we are facing.
I want to make it clear that, even though we are one big department, there is room for everybody. I have to say I do find it passing strange that in the confines of the union itself, both tax people and customs people are there and they seem to be able to manage themselves very effectively. I would only hope that as we move ahead that sense will continue in the confines of the department itself as well.
There are always concerns. I am glad that Allan Cocksedge is going to be working with the union as we identify areas of improvement -- and continuous improvement is the next step. It is fundamental. As we change the whole approach to who we are as a government to a client-based or, as we say, a citizen-based strategy, we have to make sure we do that internally as well.
I often say to the employees that for very many Canadians Revenue Canada is the government. We are the ones they deal with at the border or on their tax issues. If we cannot make our relationship more positive and a more partnering one with the citizenry of the country, we will never get out of this mould of the government's being big and bad and distant.
I have been most impressed with the members that I have had the opportunity to meet, either at the border points or here in these venues.
Senator Angus: The criticisms that were put out this morning were quite specific. If you reject them, that is fine. I would like to know that you feel they are not legitimate critiques or criticisms. If you do acknowledge that they are positive, in the sense that they have merit and you are going to address them as a priority matter, then I am quite comfortable.
First of all, perhaps you can say are they well founded, at least as far as you know?
Ms Stewart: As I read the report -- and I did read it and I thank Mansel for providing it to me in advance -- the focus of the report is good. The issues are of concern, but they still box us in the old strategy, the old paradigm of "us and them". What we really have to move out of is that paradigm. We have to understand that it is not a matter of "how many of these and how many of those," but "how many of us." It is going to take some time to change that.
We are talking about change here, significant change, structural change. It is hard on everybody's part to deal with that. I recognize the concern, particularly on the enforcement side, and the sense that they have to have the tools and the training and the commitment behind them to ensure that we keep our homes and our streets safe. That is a commitment of mine.
We will review it in detail, as we continue to do, and make sure we work together. That is the job of our new administration as well.
Senator Angus: Could you indicate, minister, perhaps with the assistance of either Mr. Gravell or Mr. Cocksedge, whether that is the criterion you have applied in closing some of the customs ports? As an example, I gather that in Newfoundland, about five out of ten ports, plus St. Pierre and Miquelon, have been closed down.
Ms Stewart: I made fleeting reference in my comments to the fact that we cannot have twenty per cent of our work force doing five per cent of the work. We found that at many of our inland ports staff was just there waiting for goods to arrive, and, as Mansel has pointed out, knowing that the frontier, the border itself, is where we have to keep our real focus and our value-added efforts.
We have been working to use technology in a more effective way, not to lessen the service but just to provide it differently. That has been the target of our focus in terms of managing our human resources. I will leave it up to the deputy minister to say something more, if he wishes. If we are talking about any kinds of human change in terms of losses, it has pretty much been there.
Mr. Pierre Gravell, Deputy Minister, Department of National Revenue: One comment I would like to make, senator, is that the identification of those inland ports where a continuous presence could not be warranted was done on the basis of objective criteria and in full consultation with the various stakeholders. That means, certainly, the employees concerned, the local elected officials and so on. We did not make a move in one fell swoop, immediately. We have adjusted our strategy and we have staggered the closures in order to accommodate our employees' concerns, and not only theirs, but clients' and stakeholders' concerns as well. The ultimate objective, basically, is not to close, but is to provide, as the minister has said, service in a different way. We believe that the concept of the smarter border will help us to do better risk assessment and better targeting, and, with the introduction of technology, will allow us also to make much better use of our very valuable resources at the border.
Senator Angus: I have just one other area, if I may, concerning a complaint related to customs that has come my way in the last three or four years. I know this has come to Mr. Gravell's attention too, and very recently, from a colleague of mine and a former minister of the Crown. I refer to the issue of pre-clearance that our friends to the south have, the Americans. I would just like to know where we are on that. When the travelling public is flying out of Montreal to Atlanta or New York, they clear U.S. Customs right at the immigration desk. "Bob's your uncle," and you are off and running.
Poor Canadians. First of all, the carriers are suffering and so is the travelling public coming in the other direction. Where are we at, and is this just an international stand-off or do you have some good news?
Mr. Gravell: We have some good news. I would like Mr. Cocksedge to give you the good news, but I would like to preface his comment by saying that we have made substantial progress with our American counterparts, that is, Canada Immigration and Canada Customs with U.S. Immigration and U.S. Customs.
We have put together a Canada-U.S. border accord so that we can administer jointly the border in a smart way, to meet our competing demands and objectives and the same pressures that we experience on both sides of the border. Part of that, of course, relates to the introduction of CANPASS programs, the possibility of sharing joint facilities in the future, joint technology, better sharing of information for enforcement and so on and so forth.
Part of that also relates to what we can do together to support travellers as well, and that brings us to the topic of pre-clearance.
Mr. Cocksedge: On the pre-clearance front, as you may recall, when the Open Skies Agreement was announced, one of the issues that was pursued was the extension of pre-clearance to as many additional airports as possible beyond the current six airports. We are doing that and in fact Ottawa has been recently announced.
The pre-clearance negotiations also include simplifying and streamlining the movement of passengers through our airports so that they become attractive gateway airports to the whole of North America.
Senator Perrault: Like Vancouver.
Mr. Cocksedge: Indeed. With regard to terminal three in Vancouver, for example, its attractiveness and its competitiveness as a gateway, not only to Canada but to all of North America, are crucial to the economic future of that airport and indeed others across the country.
We are in the process of negotiating with American authorities the streamlining of the Customs processes through those in-transit airport facilities so that an in-transit visitor, for example, from Japan travelling to the Midwest of the United States, would not have to go through two inspection services. We are in the process of negotiating a one-step process while, at the same time, dealing with the very legitimate concerns of U.S. authorities with regard to high-risk travellers. We are nearing the end of those negotiations, and we hope to be able to announce something soon.
Senator Angus: Will the ultimate solution that you are hoping for include passengers boarding, say, at LaGuardia in New York or in Chicago at O'Hare, and coming up to Canada. Will they be able to pre-clear at that end? Today, the American forces are at work here in Canada but our Canadian forces are not at work down there.
Mr. Cocksedge: Indeed.
Senator Angus: That is a terrible playing field that we are facing.
Mr. Cocksedge: The issues of pre-clearance in the other direction are being discussed as part of the accord. In fact, we are even exploring, in a tentative way, the concept of pre-clearance between North America and Europe.
One thing that all airports share at certain critical peaks is congestion, and anything you can do to facilitate the inspection processes at either end contributes to a better flow. The issue of pre-clearance is for the Americans as it would be for us possibly operating in the United States. There are legal and financial issues that we need to sort out.
We are in the process of talking with our stakeholders, for example, the Canadian carriers and some U.S. carriers, to see whether or not they are prepared, as they do currently with U.S. officials, to pay all or part of those costs. Therefore, it will really be a function of how the open skies world sorts itself and where it makes economic sense to have pre-clearance in perhaps some U.S. locations.
Senator Angus: That is good news.
Senator Kenny: Welcome, minister. It is terrific seeing you there. You have mastered your brief remarkably well. I see a dynamic duo, in fact, sitting there. Mr. Gravell has been keeping politicians out of trouble for the past twenty-five years. I know him from his days in PCO. The two of you are a formidable team.
I, like Senator Angus, was hopeful that we would hear you address more of the criticisms that we heard earlier this morning. The message I got from your reply to Senator Angus was that you intend to address them; perhaps not here, but they are issues that you will work on. I wanted to observe that Senate committees have a fair amount of continuity and we tend to be around a little longer. We expect to be here next year and perhaps even the year after. Perhaps we could think of the list of criticisms as a baseline for future visits by you and Mr. Gravell, and the next time we have an opportunity to meet, we could start with the list and see which issues had been crossed off?
Ms Stewart: We are always at your service, and you know that. However, I would just say that, if you think of the representations that were made prior to me coming to the table, probably the most important one was the issue of enforcement.
In my comments, I in no way wanted to skirt the issues that were being brought to the attention of the committee by Mr. Legacy. If enforcement is the issue, certainly we have talked about the extension of powers under the criminal act. We have talked about the need to be able to target better so that we use our resourcing smartly. We have talked about the need to continue with an anti-smuggling initiative. We have talked about the need to ensure that our employees are providing value-added servicing, that each one of them is maximizing their potential and working in an area that uses their skills so that they are not just using technology as a job but as a tool to do the job.
Although my presentation may have been less specific or lacked an itemized strategy, I hope I have responded to a number of the concerns that were presented in the brief made by CEUDA. Certainly, if you senators want to see us, we will be here.
Senator Kenny: Terrific. My last question, Mr. Chairman, relates to the minister. It is well known that she was the sponsor of --
Ms Stewart: A very important bill.
Senator Kenny: -- Bill S-7 in the House of Commons. We have heard a great deal today about change and adapting to --
Ms Stewart: Ethanol. I use ethanol in my car, if that is your question.
Senator Kenny: -- new approaches in the department, and I was wondering what sort of progress the department was making in moving towards alternative fuels.
Ms Stewart: Perhaps Mr. Crandall would like to reply to that question. I just start by saying that my car is gassed up with ethanol.
Mr. Crandall: I will just say, senator, that we are aware of the new legislation. We are aware of the goals and the targets, and we have a mountain of work ahead of us to get out there with our field managers and convince them that these alternate-fuel vehicles will do the job and are worth the effort. We have started that, and we have told the minister we intend to meet all the targets.
Senator Kenny: I cannot think of a better way to end this session, Mr. Chairman.
The Chairman: I have just one quick question, minister. In your brief and in a number of your answers, you have talked about the use of technology. This committee has had a lot of experience with the way technology is revolutionizing other sectors of the Canadian economy, notably financial services. The revolutionizing is taking place basically in two ways, improving customer service, on the one hand, and, on the other hand, actually decreasing operating expenses.
Could you give us some illustrative examples of what technology means in your business? Frankly, given the pressure government is under to constrain expenditures, my gut tells me that investment in technology by government is probably not being as easily accepted in Finance and Treasury Board as it might have been, in the sense that you have to put money up front to ultimately provide service, although if you are in the service business, maybe that money ought to be put up front.
I guess I have two questions: One, can you give us some illustrative examples of what you are doing; and two, can we help you lean on people to make sure that financial constraints do not stop you getting money that you need for legitimate technological improvement and customer service?
Ms Stewart: Absolutely. The technology is vital to our survival and our future, there is no doubt about it. I referenced the cross-implementation which helps us deal with commercial traffic. As you know, people go into the long houses, fill out the paper and everything is done. That can now be done in an automated fashion, paperless.
We got the pilot up and running as of April 24. That will revolutionize the activities at the border points.
The Chairman: For trucks, is it?
Ms Stewart: For trucks, just commercial traffic. The other thing that we point to is ICES, which is our connection, as we talked about, with our partners who have profiles on people operating on the criminal side.
At the border points, we have technology which offers individual profiles of people for whom we are on the look-out. Also, at border crossings, we have license plate readers. The license plate is targeted and the profile pops up on the terminal. These items are real as assets when it comes to dealing with the issues of targeting the bad guys and keeping the flow going on the other side.
Structurally, we are seeing some real changes at border points in our partners in the private sector, and we are building commercial allies so that tourist traffic is not get mixed in. Therefore, when we have 100 trucks lined up and the odd tourist in between, we try to clear them. We are trying to target the different kinds of folks and goods that come across.
We have all kinds of examples. On the drug enforcement, I would like to bring the dogs in here so you could see how they work. They have x-ray machines, and to see how our Customs Officers utilize that equipment is just astounding. At the Port of Montreal, the results that we are getting with the tools there are just incredible, and you see the pride of the employees in having these tools, which make their job more effective. The ion scanner is too much. You must come to the border with me and see it. It is some machine. After wiping a piece of gauze cloth over a steering wheel or over a person, it is put into the ion scanner. If there is any kind of drug, it will show up. I was at the bridge in Windsor when a little Mustang came across, and the officers used the ion scanner. They brought this little piece of gauze in for scanning and there it was, "cocaine, cocaine, cocaine."
This equipment means that our employees have to be trained. They have to understand how to use the equipment and the aspects of the law that pertain to this kind of usage. It is complex. Really, what it means is that we will have a smart border by using smart people.
The Chairman: Minister, thank you very much for appearing. If anything, you made only one mistake today. As this committee has a tendency to like good witnesses, we may find other reasons to invite you back.
Ms Stewart: Thank you.
The committee adjourned.