Proceedings of the Standing Senate Committee on
National Finance
Issue 18 - Evidence
OTTAWA, Tuesday, November 4, 2003
The Standing Senate Committee on National Finance, to which was referred Bill C-212, respecting user fees, met this day at 9:30 a.m. to give consideration to the bill.
Senator Joseph A. Day (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Good morning, ladies and gentlemen, welcome to this edition of the Standing Senate Committee on National Finance. We are continuing our hearings into Private Member's Bill C-212, an act respecting user fees, sponsored by Mr. Cullen in the House of Commons and Mr. Stollery in the Senate.
This morning, I am pleased to welcome representatives from the Treasury Board Secretariat.
Mr. Morgan, the floor is yours.
Mr. John Morgan, Executive Director, Financial Management and Accounting Policy Directorate, Treasury Board of Canada Secretariat: Mr. Chairman, honourable senators, thank you for the opportunity to appear before this committee to discuss Private Member's Bill, Bill C-212, and by association, the Treasury Board external charging policy.
In the interests of brevity and to allow time for my colleague from justice to highlight some legal difficulties with the bill, I will skip over some of my written opening remarks.
User charging can be a challenging undertaking, and the government readily acknowledges that its performance relative to certain programs with user fees requires attention. It is for this reason that the government undertook a comprehensive review of its policy with the aim of improving the implementation and ongoing management of all external charges. In our opinion, however, the proposed bill is not the solution.
The President of the Treasury Board and the government support a policy approach as the more effective and appropriate mechanism. A policy approach is better equipped to function with the diverse factors, stakeholders and public policy objectives that make up the external charging environment. We believe that the proposed legislation may not be a fine enough or flexible enough instrument for this environment and could have unintended and negative consequences.
Nonetheless, this proposed legislation has its supporters. Therefore, today my objective is to assist the committee in two ways: first, by providing the government's comparative assessment of the two alternatives and highlighting our concerns with the bill, and second, by leaving with the committee supporting information for subsequent review.
Proposed Bill C-212 appears to concentrate on three main areas: increased accountability; increased transparency; and improved service and performance. The revised policy also focuses on these three themes, but addresses them in a different and, we believe, more comprehensive and responsive fashion.
The revised policy respects the traditional parliamentary system of accountabilities, whereby ministers operate within the authorities delegated to them by Parliament. This delegation establishes that individual ministers are responsible for decisions related to program management, including external charging. However, the system also provides for an appropriate measure of oversight where fee-setting is concerned, and this oversight includes the opportunity for input, both from the executive and from Parliament.
The vast majority of external charging proposals, for example, follow a process that requires review by the Treasury Board Secretariat, approval by Treasury Board ministers, approval by special committee of council ministers, approval by the Governor in Council, two separate publications in the Canada Gazette and examination by the Standing Joint Committee of the Senate and the House of Commons for the Scrutiny of Regulations.
In addition, House committees may, at their own discretion, review departmental activities along any lines they see fit. The proposed bill seeks to impose mandatory conditions on this House review, potentially replacing the ministerial responsibility Parliament has chosen to delegate. Further, the proposed legislation does not specify the how and when House of Commons reviews would occur in relation to the existing approval process.
It is apparent that the proposed bill intends that the House committee review occur before a fee is put into place. It is silent, however, in regard to whether this review should occur before or after Treasury Board approval, or before or after special Committee of Council approval, or whether those bodies would still be relevant to the approval process at all.
What is also apparent is that the approval process would be lengthened as a result of the 40 sitting day House committee review period, and any subsequent recommendations suggesting departmental response. This result is contrary to the requests of both departments and stakeholders for more responsive government and service delivery.
In its appearance before the House Standing Committee on Finance, on June 4, 2003, the Right Honourable Herb Gray described how the provisions of the proposed bill could conflict with the current roles of various cabinet committees. I would encourage senators to read his testimony on this important matter.
The policy also respects the principle of ministerial responsibility in the area of dispute management. The revised policy recognizes that ministers and agency heads should make the final rulings on disputes in the respective portfolios. The policy is also clear, however, that they may seek independent advice on matters as they see fit.
The provisions of the proposed bill establish that every department and agency with fees must make available to stakeholders an independent dispute resolution body. The government believes this requirement will introduce considerable cost and administrative burden to the external charging process when the dispute-related results of its review simply do not bear out a need to do so.
More generally, the mere fact that provisions in the proposed legislation are open to a considerable degree of interpretation highlights an overall concern that it lacks necessary clarity, clarity, as in the case of dispute management, which can directly impact accountability. Notwithstanding Mr. Cullen's statements to the effect that specifics can be worked out later in regulations, it seems only reasonable that the proposed legislation itself contain a requisite amount of detail so we all can have a clear understanding of its direction.
The revised policy enhances the reporting of external charging information to Parliament, the public and stakeholders. This reporting will take place through familiar vehicles, including the Public Accounts of Canada, departmental performance reports and reports on plans and priorities. These documents will contain information on costs, revenues, disputes, charging authorities, service and performance and may, of course, be examined in detail by interested committees.
The departmental performance reports, tabled October 30, 2003, are the first documents to include the additional external charging information. As can be seen in the reports of Veterans Affairs and the Canadian Nuclear Safety Commission that we have distributed to the committee, we believe the government has taken a positive first step. While some reports may be more complete than others, we are confident that through continued dialogue with departments, parliamentarians and stakeholders, we will achieve the constituent and comprehensive level of disclosure sought by all.
I would also like to highlight that in its requirements for reporting through reports on plans and priorities, or RPPs, the revised policy provides for the review of departmental charging on a three-year planning basis. This is a novel approach aimed at maximizing the front-end transparency of external charging. It will provide stakeholders and parliamentarians with lead-time to ask questions or conduct independent review. On a three-year time horizon, departments and agencies will be required to describe their planned fee proposals in terms of expected costs and revenues, charging rationale, consultation analysis plans and contemplated dispute management regimes.
Subsequent RPPs will update this information until such time as the proposal is approved and implemented. That, of course, is where reporting in the departmental performance report will take over. Add to this reporting process the elements of direct stakeholder consultation and Canada Gazette publication, and we can see considerable transparency at every stage of the fee proposal life cycle.
The proposed bill, however, makes no provision for the public disclosure of planned external charging activity, although one could presume there may be some opportunity for public notification as a fee proposal is referred to the committee for review. This level of notification, however, does not compare to the notification provided by reports on plans and priorities.
It is the government's understanding that service performance is the primary concern of paying stakeholders. They contend that service commitments are not met, and conclude that the entire implementation of external charging throughout government is therefore invalid. At their recent appearance before this committee, officials of the Canadian Nuclear Safety Commission emphasized that where health, safety, financial or physical security are concerned, the Canadian public, rather than paying users, are the true clients of regulatory agencies. Therefore, service should not simply be measured in terms of speed or paying stakeholder satisfaction.
Service to paying users is nonetheless a very important issue, and the revised policy treats it accordingly. In response to the comments of stakeholders and parliamentarians, the revised policy requires that the departments must establish, through consultation, service standards for all programs with external charges. This requirement applies equally to those programs with external charges as to those where charges may subsequently be amended or introduced.
The policy also requires that departments consult on feasible options to be explored if the standards cannot be met. Fee reductions are mentioned as one of the options that could be adopted. However, alternatives, such as business re- engineering and alternative service standards could also be considered.
This policy approach intends to provide stakeholders and departments with the flexibility to determine up front and in consultation the option that is best suited to their specific circumstances.
By comparison, the provisions of the proposed legislation respecting the establishment of service standards appear to apply only to fees introduced or amended after the bill's effective date, that is programs with existing fees would not be required to establish service standards.
Other provisions in the proposed bill contain explicit consequences for departments that miss their service standards. In this capacity, however, the proposed legislation ill does not allow for the consideration of extenuating circumstances, or for the publicly supported view as raised by the Canadian Nuclear Safety Commission that health and safety mandates take priority over service standards. The proposed bill simply describes the apparent one-size-fits- all mathematical treatment that must be applied when a stated condition exists.
The difficulty we have with this kind of punitive response is that it may neither promote nor ensure service improvement. In fact, the opposite is more probable, given the potential for added strain on programs already operating within tight budgetary limits. The policy's approach is intentionally proactive as opposed to punitive, focussing on prior consultation, communication and planning between departments and stakeholders. It allows for the examination of each case on its own merits to find case-specific solutions.
Some may suggest that the policy is too forgiving in this respect; however, given the current level of interest and external charging, the policy's requirement to report service achievement both to stakeholders and to parliamentarians should not be underestimated as a consequence to sub-optimal performance.
We have provided for your reference a table comparing the proposed legislation to the external charging policy along the lines of accountability, transparency and service. I point out, however, that we have concerns in other areas as well and could provide this analysis to the committee at its request.
I wish to thank you, Mr. Chair and honourable senators, for this opportunity to present our views on the proposed bill. If I can further assist the committee I would be more than pleased to do so.
In the final analysis, we must ensure that the legislative and policy frameworks operate cohesively toward the overall public interest.
[Translation]
Ms. Mylène Bouzigon, Senior General Counsel, Legal Services, Treasury Board Secretariat: Mr Chairman, I am pleased to appear before you to outline some of the difficulties that we have identified in our review of Bill C-212. This bill proposes interesting formulas and approaches. In his presentations and in his participation in discussions on this bill, Mr. Cullen has very clearly set out the objectives he was pursuing by tabling Bill C-212.
We are of the view that the manner in which the drafting of the bill has been approached is not favourable to the attainment of these objectives. In general, the bill sets up legal requirements in terms that cannot be understood with the kind of clarity and precision expected when Parliament enacts legally enforceable rules.
In our view, the bill, as drafted, will lead to far greater involvement of lawyers and the legal system in the process to set fees. Applying standards and rules contained in statutes, versus those contained in administrative policy, requires a kind of legal certainty. Bill C-212 does not offer that type of certainty, in our estimation. If I may, I would like to illustrate these points with a few examples.
First, the bill does not, on the one hand, describe sufficiently the processes that it aims to implement. On the other hand, neither does it provide for the regulation-making power that would provide for the modes of that implementation. The fee reduction provided for at clause 5.1 is one of those processes. We do not know where, or who, to ask for the reduction and who will decide it. Very few parameters are set out concerning how the reduction would be calculated. The dispute resolution process also lacks a framework or a process to set one.
Second, the provisions of the bill should be interpreted in conjunction with those of other statutes, some of which are quite detailed, and already provide for the setting of fees. While we have not determined that there exists any conflict of laws between those texts, we are concerned that no review has been done to determine if the different statutory requirements need to be harmonized in order to give effect to the provisions of the bill.
We also noted that the bill uses a language that differs from that of the Financial Administration Act, while also establishing a fee-setting procedure that parallels that which is set out in sections 19 and 19.1 of the FAA.
Some of the concepts that are central to the bill are not set out clearly. This impacts directly on the determination of the application and scope of the bill. For example, we were unable to determine conclusively what organizations should be covered by the definition of ``regulating authority.'' While it had been stated that the bill should not apply to Crown corporations, the language used does not exclude them.
Finally, from a terminology perspective, many of the words and expressions used in the bill lack sufficient precision. For example, the term ``client'' is not defined and sometimes appears to include, sometimes to exclude, service users. Many of the terms found in key portions of the bill lend themselves to more than one interpretation.
Canadian legislative texts are known as models. We have tabled a Justice Department document that provides additional details about the type of issues I just described. Mr. Chairman, I would now be pleased to answer any question that you may have.
[English]
Senator Oliver: Is there anything good in this proposed bill?
The Deputy Chairman: I will call upon you shortly, Senator Oliver.
Will Ms. Shirreff make a presentation or are you ready for questions?
Mr. Morgan: We are ready for questions.
[Translation]
The Deputy Chairman: Ms. Bouzigon, have you discussed the problem with NAV Canada? They sent us a letter. Have you had discussions with NAV Canada and are you aware of their concerns?
Ms. Bouzigon: Yes.
The Deputy Chairman: Are you making a reference to NAV Canada's problem on page 3 of your submission? Do you agree with the position taken by NAV Canada?
Ms. Bouzigon: Without going into the specifics of NAV Canada's presentation, it appears that the bill's provisions could also be extended to include NAV Canada.
The Deputy Chairman: Could you outline to us the problem that NAV Canada is experiencing?
Ms. Bouzigon: No, not in any detail.
The Deputy Chairman: We have yet to receive this organization's submission. If you were familiar with their concerns or their submission, we could discuss this today. If you would like to take a few minutes to acquaint yourself with NAV Canada's letter, by all means do so and then we can discuss specifics. Otherwise, we will have to wait to hear from them.
Senator Comeau: Have you circulated a copy of the letter?
The Deputy Chairman: Has everyone received the letter?
Senator Comeau: You should not be discussing letters sent to you as chairman before first discussing the matter with us.
The Deputy Chairman: I fully agree. I thought everyone had received the letter. We can give everyone a copy. I am asking if NAV Canada officials will be testifying.
Senator Ringuette: I have a general question for you, and there seems to be a consensus of sorts around this table. What positive things do you see in this bill?
[English]
Mr. Morgan: Mr. Chair and honourable senators, with my apologies I will respond in English.
Many of the proposed bill's principles are consistent with what we have in the policy such as consultation with stakeholders, transparency and accountability. The government supports these principles.
However, the government does not support entrenching them in legislation because it believes that a policy approach is more effective and flexible to respond to the many thousands of circumstances relating to user fees. These fees cover a wide range of activities. Trying to entrench them in legislation in an effective and comprehensive way could lead to unintended consequences.
Senator Ringuette: It is my experience that legislation is always followed by regulation put together by the bureaucracy to reflect policy of the department. What is different in this case?
Mr. Morgan: The difference is that the proposed legislation is all encompassing. It covers all sorts of fees. It requires that the new fees go to the House and be referred to committee.
Currently, individual ministers, through their respective legislation or through the Financial Administration Act, have the authority to determine fees. They make proposals and come forward to special committee of council for approval after review by Treasury Board ministers.
This introduces a new process for fee setting. It is one that would involve the House directly in those decisions.
Senator Ringuette: That is why we had unanimous consent of the House.
Do you believe that the different departments would have a technical problem to justify the user fees?
Mr. Morgan: I do not believe that it would be a technical problem. As I said earlier, the government supports the broad principles of consultation.
Given that it is entrenched in legislation, it opens up departments and the government to legal action from interpretation of what the proposed bill actually means. As indicated by my colleague, there is sufficient uncertainty as to the intent of the proposed bill that could present complications down the road.
Senator Ringuette: Do you agree that the user fees and any review of user fees from one department or agency should be brought forth to the House of Commons and the Senate?
Mr. Morgan: I believe that it is an important thing to achieve in terms of transparency. As we have outlined in the new policy, ministries are required to come forward in their Report on Plans and Priorities. In the report they must outline in a very comprehensive way their planned consultations if they plan to undertake a review of a fee proposal within the next three years. They must also include their proposed activities for that consultation process.
We believe that there is a need for transparency in reporting to Parliament and the public, and that is best achieved through such reporting as the Report on Plans and Priorities, which is comprehensive about all departmental activity. As well, it includes a departmental performance report that states what they have achieved in terms of their results and performance standards.
It is a different matter to engage parliamentarians in the approval of individual fees. The accountability of ministers through their delegated legislation and policy is best suited for that procedure.
Senator Ringuette: The Canadian public is asked to pay additional fees for certain services. The Treasury Board recently indicated that it has the technology to revise fees on a regular basis, as required.
I believe that it is very important that parliamentarians have a say on a proposed bill and the revision of user fees, to which they do not necessarily have access through the policy process, which is mostly bureaucratic.
Mr. Chairman, I would like to voice right now my support for proposed Bill C-212.
Senator Comeau: Mr. Morgan, you indicated in your presentation that you had other concerns that you would relate to the committee.
Would you please forward those concerns to the committee members?
Mr. Morgan: I would be pleased to do so.
Senator Comeau: You indicated that under the present policy you report to Parliament by way of the public accounts plans and priorities report, et cetera.
Would this continue under the proposed bill or would it change once it became law?
Mr. Morgan: If the proposed bill were to become law, we would have to take a look at our policy to ensure that it would work effectively with the new legislation. Further review would be required to determine whether the two would be compatible.
Senator Comeau: Your report calls for reporting to the House of Commons. Would that remove the oversight privilege that we now have as a part of Parliament? Would that remove the Senate from the equation?
Mr. Morgan: Documents such as reports on plans and priorities, public accounts, and departmental performance reports are referred to the Senate for examination. It is unclear to me, though, as to what the role the Senate would be given if this proposed legislation become law.
Senator Comeau: There is no role. It is in the bill. It goes directly to the House of Commons and ends there. It is no longer to Parliament.
You might consider reviewing whether we would have access, as we have now under the policy for the setting of fees, et cetera. Would that remove us completely from the process?
Mr. Morgan: You would still have access to the information and reports to which I referred.
Senator Comeau: As you know, unlike the House of Commons, the Senate needs to have a specific order of reference in order to look at items. We must have a specific order, and we would no longer have that specific order.
Mr. Morgan: I am sorry, sir, I cannot comment further on that issue.
Senator Comeau: You mentioned ministers' accountability on page 3 and ministerial responsibilities on page 4.
We had a witness last week from the Canadian Nuclear Safety Commission who told us that the minister does not have ministerial responsibility. The commission reports to the minister. However, he has no ministerial say in how the department handles this work. In fact, the commission is not responsible to Parliament directly.
Mr. Morgan: That is correct, sir. The commission would be responsible through a minister to Parliament. Parliament would have established the authorities of the commission. There is a degree of independence in the commission's daily activities.
Senator Comeau: They have more than a degree of independence. They are independent.
That begs a question in favour of the proposed bill. If we do have a number of departments that have this independence, would it not make those departments accountable?
Would it establish accountability where they do not have it now?
Mr. Morgan: Those organizations would be required to report to Parliament in any event through their report on plans and priorities as well as their departmental performance reports. That information would be available to parliamentarians. Committees could call departments at any time to ask them about their plans.
Senator Comeau: You mentioned the cost of the dispute settlement process. I assume that added costs would be borne out of this legislation.
Have you done any kind of calculation yet?
Mr. Morgan: No, we have not. However, we expect that there would be incremental costs associated with the proposed bill.
Senator Comeau: Given the experience that we had with the firearms registration bill, where we started out with $2 million and wound up with over $1 billion and counting, the government's ability to plan has been seriously put into question in recent years among many Canadians. We naturally now question any initiatives that may be coming forth to establish new bureaucracies. I see this as such a situation.
I notice in the bill that we will now have to compare our user fees, our user costs, with other jurisdictions, whatever those may be. On assumes it is the U.S. and several other countries, although it is not mentioned in the bill. A whole slew of costs will be added on if this bill becomes law. Would it not be Treasury Board's role to do some number crunching here and give us an estimate?
Mr. Morgan: It certainly would be very difficult at this time to look in a comprehensive way at what the cost impacts of the bill would be. We would almost have to take one particular user fee and understand what the nature of that is and what the impact might be.
We do require in our policy that departments understand their full costs. We do require in the policy that they do an environmental assessment, understanding the various factors, including the trading partners.
The question then is, to what degree is that carried on and presented to the House, and the rigour with which that would have to follow at that point, given that it would be, because of the bill, subject to law and legal challenge.
Senator Comeau: Have you not done any number crunching because this is a private members' bill? Had this been presented by the President of the Treasury Board, would you have done some number crunching?
Obviously we are passing costs on the taxpayers, and if we are establishing a whole new bureaucracy here, ultimately someone has to bear the costs somewhere. Is it because this is not being done by a minister?
Mr. Morgan: That is one reason. The policy itself has expanded on the requirements of an earlier policy, so in terms of consultation and doing assessment of the environment, those are items that were included in the previous policy we had for user charging. In the new policy, we have expanded upon that, particularly in the area of reporting and transparency of information. Taking that information to the House for review would require a further level of rigour and analysis in terms of it being entrenched in law.
Senator Comeau: Ms. Bouzigon mentioned the legal costs involved in this as well. Obviously there will be some legal ramifications in all of this. It would be helpful for us as a committee of parliamentarians to have some kind of a handle on what this will cost, ultimately, to the Canadian taxpayer, because at the end of the day someone has to bear the cost of all these lawyers and officials comparing our user systems with other jurisdictions and so on. There is a cost there somewhere. This committee is kind of going blind on it.
Mr. Morgan: If I may, Mr. Chair, there is a lack of clarity in the bill, so we would have to obtain further clarity as to what the bill is intending to do. Also, given that we are talking about an area of external charging, obviously we would require departments to understand their full costs, and then in terms of assessing the charges to be put in place, looking at what adjustments, if any, might occur there. Should the individual users of the direct services be charged for those costs, or should the general taxpayer be required to absorb those cost?
Senator Comeau: The general taxpayer will pay anyway, whether it is passed on to the consumer or to the agency that is paying the fees. At the end of the day, the consumer will pay.
Mr. Morgan: At one point, the consumer will pay.
[Translation]
Senator Gauthier: Basically, I am an old school parliamentarian who is concerned about the fees charged by agencies or departments for services. I see these fees as an indirect, regressive form of taxation in that everyone pays the same fee, regardless of income level.
Taxes are subject to parliamentary review. Regulations give officials considerable latitude in the setting of fees. In my opinion, there is very little difference between taxes and fees.
On October 28, 2003, the Joint Committee for the Scrutiny of Regulations tabled a report on broadcasting in general and on the CRTC in particular. The conclusion reached is somewhat the same, namely that if fees are indeed a form a taxation, then Parliament must expressly delegate taxation authority.
The Supreme Court ruled on this matter some time ago. If fees are legislated, then they constitute a form of taxation. We now have before us proposed legislation.
I have read your submission and I agree with most of what you have said. Fees generate $4 billion in government revenues every year. As a Treasury Board official, do you turn the revenues collected over to the Consolidated Revenue Fund?
As a sidebar, Mr. Chairman, I would like us to invite the Chairman of the CRTC to come before this committee to explain to us his report so that we can review it. It is a sound, detailed and clear report.
As a Treasury Board official, your job, in principle, is to do a review and report back to us. Do you in fact examine regularly and efficiently the fees charged by government organizations and agencies? Have you observed any shortcomings? Do you have the human and financial resources you need to do a good job, given the fundamental importance of this process?
[English]
Mr. Morgan: When a department is proposing to modify fees, which require the approval of the Treasury Board, they are reviewed extensively in the Treasury Board submission by our policy centre in the secretariat to ensure compliance with the policy. We can expect that, in future, any such proposals again will be subject to that review and in fact be more comprehensive in terms of the elaboration of what their fees will be, the consultation that has taken place as well as the performances and the standards they expect to put in place.
That being said, once the Treasury Board does approve a proposal for a new fee, it then goes to the special committee of council for review, and there are a number of fees that would go directly there for ministers who have the authority in their own legislation to propose fees on their own. These are then subject to scrutiny through the Canada Gazette as well as the Joint Committee for the Scrutiny of Regulations, so there is a fair degree of review that goes on and has gone on for many years in terms of process.
We are going to require, through our policy, a lot more information in departmental reports on plans and priorities and the departmental performance reports. I believe those requirements will help to ensure much more transparency in the information. Then ministers, or the deputy heads of those commissions that have that degree of independence, can be held accountable for their overall performance.
[Translation]
Senator Gauthier: The system is in place. Do you have the resources you need to effectively monitor how the system is working? You say you do, so I do not understand the problem.
[English]
Mr. Morgan: I believe we have the resources required to implement the policy, which requires not only providing guidance to ministers and departments, but also to ensure there is a good communication network amongst departments so they can share their best practices.
[Translation]
Senator Gauthier: Do you review each new request for a fee increase?
[English]
Mr. Morgan: No, in the Treasury Board Secretariat we would only be involved in those fees that are required to receive Treasury Board approval. There are some areas where some ministers have been delegated authority through their own legislation to set fees. They would go through a separate process; they would not necessarily come to the board.
[Translation]
Senator Gauthier: Approximately what percentage would that be?
[English]
Mr. Morgan: I am sorry; we do not have that information.
[Translation]
Senator Gauthier: Could you send me some documentation about this? How many fees have you reviewed? What overall percentage does this represent?
[English]
Mr. Morgan: Yes, we will undertake to provide you with that information.
The Deputy Chairman: Mr. Morgan you indicated that a department might introduce a fee, and would not talk to you about introducing a user fee or a charge if they had been delegated, through legislation, the authority to implement it.
Is it possible that a department could decide to impose a fee-for-service without having legislative authority to do so, and if so, under what circumstances?
Mr. Morgan: No, a department would have to have the authority to establish a fee, either through their own legislation directly or through the Financial Administration Act. If it is through the Financial Administration Act, it would require the review of the Treasury Board ministers and their approval. Our policy requires that departments consult with the Treasury Board Secretariat, even if there is no requirement for them to come to the board for formal approval, so we hope to engage departments in that manner.
Senator Oliver: Mr. Morgan, you said that there were some other matters you would bring to the attention of the committee later on. Senator Comeau asked that you give that information later, but not today. I am curious to know what the subject matters of those concerns are.
Without going into details, what are the headings of the subject matters of your concerns?
Mr. Morgan: One area would be equity in terms of equity for the public interest versus the paying users. Another area would be to go through the individual elements of the proposed bill and the policy to find out what is expected in the management and consultation processes. We would go through the each individual aspect of the policy and the proposed bill and compare them.
Senator Oliver: The chairman mentioned NAV Canada. I have received calls in my office from officials from NAV Canada expressing concern about this proposed bill.
The chairman has circulated a letter from Mr. Neil Wilson, the vice-president and general counsel, in which Mr. Wilson makes a suggestion for a possible amendment.
I would like to read some of the letter to you and ask you to comment.
As we discussed, NAV Canada believes there is a simple solution to the complex problem created by the possible inclusion of the private sector under the ambit of this bill.
In other words, they want the proposed bill to be for the public sector only, and not the private sector, or corporations operating outside this area.
We believe the Senate Standing Committee on National Finance should include the words 'of the Government of Canada,' following the term 'any other body' in the section 2 definition of regulatory authority. This solution provides legislative clarity of the intent of the bill's sponsor and avoids potentially causing significant harm to private sector companies for whom the bill's measures were not designed.
What do you say about their suggestion for a proposed amendment?
Mr. Morgan: The proposed bill is sufficiently unclear as to its scope of application, which has caused some concern.
Senator Oliver: This is an attempt to define and narrow the scope, though.
Mr. Morgan: That is correct. If that amendment were to be made, the question remains, will the proposed legislation apply to Government of Canada entities, which it was not intended to apply to?
As an example, would it apply to all commercial Crown corporations that have the authority to set their own fees?
Would they be required to come into the House with their proposals and lay out why they are set at a certain level and the consultation process they followed?
This is a question that will need to be asked and answered. There was an amendment made to the proposed bill to remove the words ``Crown corporations,'' but there is sufficient doubt as to whether or not the current definition of a regulating body would include Crown corporations as well. That could have some significant consequences to entities that are operating at a degree of arm's length from government.
Senator Oliver: Ms. Bouzigon, do you wish to speak?
Ms. Bouzigon: The concern expressed by NAV Canada corresponds to the concern we have identified.
The notes we provided to you explain that under the definition of ``regulating authority,'' which we find extremely broad, is likely to include NAV Canada, for exactly the same reason they explained.
The proposed legislation does not include any suggestion that the bodies covered by it have to be subject to government directions or funded by the government, which might have been the intent. Just putting ``of the Government of Canada'' would not obtain that objective. It might serve to exclude NAV Canada, but it would not exclude Crown corporations. It would not exclude the Federal Court of Canada. It would not exclude other bodies like the CRTC, for example. So it still remains very broad and very difficult to define.
Senator Oliver: If not ``of the Government of Canada,'' what other language would you suggest?
Ms. Bouzigon: I would like to first find out the intent and what we want to cover. What is the purpose of the proposed bill? Then, perhaps, I would make recommendations. Right now, I do not feel at liberty to make suggestions because we are looking at it one by one, and I am not aware of the overall principle that proponents in the House or the Senate would want to put forward. I will be pleased, once I have that information, to provide any suggestions.
The Deputy Chairman: The Treasury Board announced a revised external charging policy, which came into effect, I believe, not that long ago. Is that correct?
Mr. Morgan: That is correct, it came into effect in August.
The Deputy Chairman: Has this been in the works for some time? I understand you had another policy in place as of 1997. Has this revision been in place, or was it prompted by the proposed legislation?
Mr. Morgan: In the 1997 policy, the government committed to initiate a review within a three-year period. Over the last two or three years we have undertaken extensive consultations with external stakeholders and departments in respect of improving upon the previous policy. We conducted an international benchmark comparison between Canada and a number of other countries on the basis of that particular review before us on the revised policy on external charging. During the course of the tabling of the proposed bill we had discussions with Mr. Cullen and the external stakeholders to try to improve upon the policy, taking into account some of the proposals that were being contemplated in the proposed legislation. That is why you will find a number of similarities with elements of bill in the policy.
The Deputy Chairman: It is my understanding that this policy came into effect on August 12, 2003. How does that come into effect? Does the minister simply declare the new policy and then file a copy?
Mr. Morgan: Once the President of the Treasury Board approves the policy it will be in effect. The policy was announced a few weeks later. Many of our departments were aware that the policy was under development and going forward to the Treasury Board. We also indicated that there would be an implementation plan associated with the policy so that departments would not be immediately required to have performance standards in place for all of their programs. They have been given a two-year window to put them in place. Any new fees coming into play, or any amendments to fees that have been developed would require the development of a performance standard.
The Deputy Chairman: The President of the Treasury Board, Ms. Robillard, appears before this committee at least once a year. Presumably Ms. Robillard would be open to questions on this issue because it falls under her area of responsibility. Is that correct?
Mr. Morgan: That is correct.
The Deputy Chairman: I would like to ensure clarity for the committee; the policy is written in such a way that it does not have to come before us before it is implemented; however, we have an opportunity to review it afterwards. Whereas, we review proposed legislation before it is implemented. I am reacting to a question that was asked earlier.
[Translation]
Senator Gauthier: This morning, we received a large document outlining Treasury Board's policy. We are being asked to review it at a moment's notice and then to ask some relevant questions about Bill C-212. I do not think that is possible. It would have been preferable to receive the material earlier. Then we would have been able to prepare a series of pertinent questions and get some useful answers. I am not happy with the way things are working out here.
[English]
The Deputy Chairman: In that case, we may have to bring you back to answer some more questions. It is difficult for us to go through this bill quickly.
Senator Ringuette: I am from New Brunswick and a pretty simple person. I view user fees as services. For instance, I recently cancelled my American Express credit card because of excessive user fees. However, as a consumer I have the option to do cancel my credit cards, but the users affected by the user fees that we are looking at do not have that option. It is for that reason that parliamentarians must review these issues. Perhaps in a few years' time, we will review the various departments, their user fees and their bases. We may find that the user would be better served by a private service rather than a departmental service. For the user to be completely satisfied with the fees-for-service, we need to scrutinize the system. There may be other options in the future.
You mentioned that there are no provisions in the proposed bill to lower user fees. In your experience, which departments or agencies have reduced their fees over the last ten years?
Mr. Morgan: The Minister of Finance reduced the air traffic security charge just recently. With respect to other departments, we have to keep in mind that we are not talking about 100 per cent cost recovery, which is the ceiling in respect of services and access to facilities. For the most part, these fees are set below full cost. They are reassessed on a regular basis with their stakeholders and departments, keeping in mind the environmental situation and whether the stakeholders financially absorb these fees. As a result departments do adjust them from time to time. I am not aware of the specific details of any reductions by departments or agencies.
Senator Ringuette: Could you obtain that information for the committee? It would be useful to have a list of departments and agencies that have reduced their user fees in the last 10 years.
The previous policy required that a private benefit be conferred before a fee could be charged. Does your group deem this a fundamental requirement to a cost recovery fee, as opposed to a simple tax? Why did you remove this requirement from the revised policy that was just completed?
Mr. Morgan: If I may, Mr. Chair, I would like to ask Ms. Shirreff to answer that question.
Ms. Suzanne Shirreff, Senior Director, Cost Recovery Policy Division, Treasury Board of Canada, Secretariat: The 1997 policy quantified ``public'' versus ``private.'' It was an extremely frustrating concept for both stakeholders and departments because no matter how one goes about doing that, it requires a kind of assessment and no one can actually say what is right or wrong.
When we did the benchmark study of other countries, we found that they recognize the concept of ``benefit'' in a broader, more general level. For example, they recognize that there are some benefits for stakeholders in respect of being regulated. It may reduce some of the liability and it provides the consumer with product confidence.
The concept adopted by some of the other international groups that we have looked at is good, without examining the level of quantifying what is in and what is out.
The overall concept of benefit of regulation is embedded in the new, revised policy. We have also included the initial full cost and also determined what the fee schedule would look like. For example, what will the price ultimately be?
We have provided some general guidelines to allow departments to look at issues of public policy objectives to be taken into account and the ability to pay. Overall, when we say the concept is gone, it is not actually gone but rather put into a practice that is more acceptable, from the standpoint of the process to establish the fees.
Senator Ringuette: Was the international study of comparison in respect of user fees was tabled in the House of Commons and in the Senate so that parliamentarians would be fully informed?
The Deputy Chairman: You should ask the panel whether they have given us that background information.
Mr. Morgan: If you are referring to the actual benchmark study, we did, I believe, table that it at one of the Standing Committee's on Finance appearances in the House. We would be pleased to table a copy of it here as well.
The Deputy Chairman: Would you please send us a copy?
Mr. Morgan: Certainly.
Senator Comeau: The legislation calls for an independent dispute resolution process. As I understand it, the proposed legislation is silent on the key elements of the process. Would you be able to provide us, should the proposed bill go through, the elements of an independent dispute resolution process?
Ms. Bouzigon: The only certain element is that it has to be independent. Normally, an attribute of independence in that context would be a three-person panel: one person appointed by the department or minister, one person appointed by the person who is seeking the establishment of it, and a third person appointed by both.
Whether the effect would be binding, how it would function, or who would pay the cost, is uncertain, as there is no regulation making power in the legislation.
Senator Comeau: There is no such power?
Ms. Bouzigon: That is part of the problem with the proposed bill. There is no regulation-making power. There has to be in order for an administration to be able to make regulations.
Senator Comeau: It would not be possible to make resolutions binding under the legislation?
Ms. Bouzigon: No.
Senator Comeau: The independent dispute resolution people would be toothless tigers.
Ms. Bouzigon: Once a minister or a department sets out a process, they may decide it would be binding, but the proposed legislation does not contain any direction to that effect. In the end it would be up to the courts to determine upon perhaps application from an interested party what the act means.
Senator Comeau: Under the independent disputes resolution process, do you think the proposed legislation, as it is written now, would extend not only from the direct stakeholders, but also ultimately to the final users, the Canadian public? Would they have access, or is the wording vague?
Ms. Bouzigon: It is part of the items for which I have no answer. We cannot determine that from reading the proposed bill.
Senator Comeau: It is another of the elements that we do not know.
Ms. Bouzigon: The notion of ``clients'' is not defined. It is used inconsistently throughout the proposed bill.
Senator Comeau: Should this come to pass, one could make the case that a consumer should have access to the dispute resolution process?
Ms. Bouzigon: If you have an interest in it, yes.
The Deputy Chairman: On behalf of honourable senators, I thank the Treasury Board Secretariat personnel who have been with us today, Mr. Morgan, Ms. Shirreff and Ms. Bouzigon.
Thank you very much for coming today.
[Translation]
We will review the material you have submitted. I hope that you will also provide us with the other documents we requested.
[English]
We will now start with our next panel. I will understand if any colleague wishes to leave to attend the Korean War Memorial Celebration service in the Senate, which takes place in about 15 minutes.
Mr. Jay Myers, Co-Chair, (Canadian Manufacturers and Exporters), Business Coalition on Cost Recovery: Thank you very much for inviting us to appear before you. My name is Jayson Myers and I am the Senior Vice-President and Chief Economist of Canadian Manufacturers and Exporters. I am also the Co-chair of the Business Coalition on Cost Recovery, the BCCR.
I will start with a bit of what has unfortunately become ancient history. BCCR first became active on the cost recovery file in 1998 when a group of concerned businesses associations came together to solve some specific and, we hoped at that time some straight forward, problems concerned with federal cost recovery policy.
Our members include Canadian Manufacturers & Exporters, Canadian Federation of Independent Business, the Canadian Animal Health Institute, Rx & D, Canadian Chemical Producers Association, Canada's Medical Device Technology Companies and about 20 other business associations. We generate about $330 billion a year in economic activity and employ well over two million Canadians.
From the start, we have understood and supported the need to pay reasonable fees for federal services. However, in return, we expect fees to be fair, set in an accountable and transparent way, and linked to a specific service or benefit as provided to the fee payer.
While the government's first cost recovery policy recognized many of these principles, they were rarely implemented in the design or the administration of departmental cost recovery programs. Unfortunately, the revised federal cost recovery policy does not even recognize many of the key principles that we have continually maintained are so important. It really does nothing to ensure that user fees will be implemented on an accountable, fee-for-service basis.
The major issue here, honourable senator, is not the policy itself, but that the departments do not implement the policy.
In our many appearances before committees of Parliament over the last several years, we have documented our ongoing concerns with cost recovery. Our top concern is that the departments are not meeting the commitments that they have made in exchange for charging fees. Specifically, they routinely fail to deliver on their promised performance standards. Ms. Szkotnicki will give you some examples.
Ms. Jean Szkotnicki, Co-Chair, (Canadian Animal Health Institute), Business Coalition on Cost Recovery: It takes Health Canada an average of 672 days to approve a new human prescription drug, nearly double the promised standards of 365 days and 10 months longer than the average approval time in the United States.
For new active biological substances flagged for priority review, meaning they might be used to prevent a serious debilitating or life threatening disease, the average approval time in 2000 was 825 days, compared to the U.S. average of 212 days for the same class of products.
It is even worse for veterinarian drugs, with which I am most familiar. They take an average of 818 days to review, double the U.S. average, and five times the performance standard of the Veterinarian Drugs Directorate, which is 180 days.
In most cases, approval times have lengthened not because approval procedures have become more complicated, but because applications are caught in time-consuming queues waiting to be reviewed examples. Even though promised performance standards are not being met, cost recovery fees are still being collected in full.
In response to our concerns and pressure from Parliament, Treasury Board prepared and implemented a revised cost recovery policy. Treasury Board says that their revised cost recovery policy addresses the many concerns identified by our coalition and others, including the Commons Finance Committee, the Joint Committee on the Scrutiny of Regulations and the Auditor General. We wish that were true, but unfortunately it is not.
Mr. Myers: The revised policy that Treasury Board was discussing earlier this morning really falls short in three key areas.
First, Treasury Board's revised cost recovery policy does not link performance delivery to fees. It is true that Treasury Board does require cost recovery programs to set a standard, but no one is empowered to enforce this standard. It is our experience that unenforceable performance standards are essentially meaningless.
The main benefit companies should get for their fees is predictable performance of the service that we are paying for, and that departments are pledging to meet. If departments do not deliver services in the way or the time they promise, then we believe that fees should be reduced, and if there is no service being provided, then fees should not be paid. Otherwise, there is no incentive for any department to actually meet or improve service standards.
Other jurisdictions have successfully linked fees to performance standards. The U.S. Prescription Drug User Fee Act is one example. In Australia, the 1989 Therapeutic Goods Act provides legislated penalties for missing performance targets in the review of human drug products. The Australian Pesticides and Veterinary Medicines Authority also has legislated performance standards and, incidentally, a 97 per cent to 98 per cent on-time delivery rate. When performance is not met in these instances, companies can apply to a special tribunal for a fee reduction.
We believe, that linking fees to service standard would help to insure that services provided by government are improved and that standards are indeed met. The proposed bill, if passed would ensure that would happen. The experience of other jurisdictions indicates that such improvements can be made without either a reduction of fee revenues or resort to legal challenges.
Our second point is that the policy needs an independent dispute resolution mechanism. In the event of a dispute, Treasury Board tells us to take it up with the department that charges the fees, so it simply goes up and up the chain to the minister, if it ever gets there. In legal terms, it is like the defendant also being asked to be the judge.
Treasury Board points out that a special committee of cabinet must approve new fees, but unfortunately, since the SCC only reviews new or increased fee proposals and does not monitor fee implementation, it is unable to take action when departments or agencies routinely deliver below their standards. Because the SCC process is secret, companies cannot review or comment on fee proposals, as they would with parliamentary review.
Third, the revised policy takes a major step backward, we believe, in ignoring the principle that fees must be linked to specific service that provides a private benefit to the fee payer. We think this is unacceptable. Without having to demonstrate a private benefit, the justification for charging a fee is removed, meaning the fee is nothing more than a tax. Worse, by dropping this requirement the government effectively allows agencies to charge new fees with no expectation that a service will actually be delivered. We think this is also unacceptable.
Let me give you an example. Environment Canada recently introduced cost recovery for its new substance notification program. Under the program, companies are charged a fee to register new substances on the domestic substance list, but once a substance is registered, anyone can import or distribute it in Canada. In this case, there is no private benefit linked to the fee. In fact, this means that the initial fee payer must subsidize all its potential competitors. Despite this, Environment Canada went ahead with the fee, with Treasury Board's blessing.
Unlike Treasury Board's revised policy, the proposed bill addresses these concerns by providing exactly the kinds of funding principles, enforcement powers, and fairness standards that we have been asking for since 1998. They are also principles and standards that the members of the Commons Finance Committee and the Auditor General have repeatedly called for. In fact, just last week your colleagues on the Standing Joint Committee for the Scrutiny of Regulations reiterated the need for improved cost recovery.
Treasury Board had the chance to develop and implement a revised policy that addressed the concerns of industry and fee payers and Parliament, but they chose not to.
Ms. Szkotnicki: Last January, I sent Treasury Board a letter specifying exactly what the BCCR thought needed to be included in the policy to make it work. I am tabling that letter with the committee today. Sadly, we have never received a response or even an acknowledgement of our points, and they clearly had no influence on the board's thinking as they put the revised policy together.
When it gets right down to what this committee has a clear choice. I think it is clear: Either it can vote to accept the proposed bill, which carefully addresses the many problems we have experienced with the implementation of cost recovery, or it can decide to stay with the Treasury Board's revised policy, which continues the most glaring and unfair practices of the old policy.
In our opinion, the right choice is also clear: The proposed legislation will improve cost recovery; Treasury Board's recently revised policy will not. The proposed legislation should be passed and implemented by Parliament. We hope you will help us ensure that this happens.
Mr. John Stewart, General Manager and Senior Vice-President, Purdue Pharma, Business Coalition on Cost Recovery: Mr. Chairman and members of the committee, thank you for allowing Canada's Research-Based Pharmaceutical Companies, also known as Rx & D, to present our views on cost recovery. I am John Stewart, President of Purdue Pharma, one of Rx & D's member companies. I am also currently chairman of the board of Rx & D.
Canada's Research-Based Pharmaceutical Companies is the national association that represents the more than 23,000 Canadians who work for over 60 research-based pharmaceutical companies here in Canada. Our companies are both big and small. They include several biopharmaceutical firms. However, all of them have one primary objective, and that is to discover and develop innovative medicines that improve the quality of life and enhance our health care system.
Let me state at the outset that Rx & D respects the principle of cost recovery and supports the proposed legislation because it will improve the enforcement of performance standards. In fact, our organization has been supportive of paying appropriate fees for the evaluation of drug submissions since the federal government first raised the issue in May 1986. The disappointment we face is that the pharmaceutical industry supported cost recovery on the promise of improved performance, a promise that has not been delivered. As a result, Canadian patients have had to wait substantially longer for new drug therapies than patients in many other countries, and Canada has missed out on research and manufacturing investments that it otherwise could have gained.
I would like to provide a brief background on the innovative industry's experience with cost recovery.
In 1994, as part of the federal government's program review, the Therapeutic Products Program, now the Therapeutic Products Directorate, or TPD, began a consultation process that resulted in the implementation of annual fees for the renewal of drug identification numbers, manufacturing establishment licences, and fees for the evaluation of drug submissions. An integral part of that initiative, and consistent with Treasury Board policy, was the introduction of performance standards for the review of new drug submissions. The TPD committed to meeting performance standards that were competitive with those of leading regulatory agencies such as the United States Food and Drug Administration and the U.K.'s Medicine Control Agency.
In addition to providing revenue to government, cost recovery was intended to result in improved performance within the TPD, performance that would see patients receive more timely access to new therapies. At the same time, the innovative pharmaceutical companies would benefit from earlier product introductions, increased overall revenue potential that would encourage further research.
Although there was some scepticism within our companies, the majority supported the introduction of fees, since the TPD repeatedly stated that implementation would result in improved timeliness in its review and approval performance.
The TPD established some very favourable targets, such as the completion of review of a new drug submission in 365 days. At the time, there was even a statement from then Minister of Health Diane Marleau that the fee schedule would be set in such a way that fees would be reduced for submissions where the TPD failed to meet its performance targets. There truly, at the time, seemed to be a commitment from government to deliver on its promise of improved performance.
Today, the unfortunate reality is that the TPD's performance has failed to meet its targets; the linkage between performance and fees has never been established in regulations; and, over the same period, drug regulatory agencies in countries such as the U.S., the U.K. and Sweden have vastly improved their performance, leaving Canada and Canadians far behind.
Linking fees to performance has been implemented successfully in other jurisdictions. You have heard about the FDA, and Australia, which has done the same. A major reason for this, FDA officials say, is that the PDUFA five- year sunset clause and the ongoing oversight by Congress have kept the focus on the FDA to improve its performance targets.
In our view, the linking of fees to performance is one of the key elements of the proposed bill. Under Treasury Board policy, there is no linkage between fees and performance; fee payers that do not have their performance met are simply told to go back to the departments that are charging the fees and not meeting the performance standards. This approach has not worked in the past. We believe the right approach is to link performance to fees. As noted previously, this has been shown to work in the United States, Australia and other countries.
According to Rx & D's annual notice of compliance, or TPD performance survey, the average time taken to approve new drugs in 2002 was 672 days. This is substantially longer than time taken by FDA and other international drug regulatory agencies. What is particularly frustrating is that we recognize that the submissions spend much of that time waiting for the review process to begin. In other words it is time spent in non-productive stages between aspects of the review. I have three slides that will show to demonstrate the process.
This first slide illustrates the average number of days spent waiting for approval of new drug submissions in Canada since 1995 through 2002. You will notice that the bottom of the graph is 350 days, which is the actual target. What we have seen is that over the past seven years, the closest that we have come to meeting the target was 550 days, back in 1997; and over the past several years, there has been a decrease in performance, or a lengthening of the average review time.
Now, just to show how this compares internationally, what you see here is the median time for approval of new drugs in the three-year period of 1999-01. Recognizing that any country can have a bad year, we looked at it over a three-year period as to what Canada had been able to achieve compared with the U.S. and other jurisdictions. I think you can see that Canada holds the distinction of taking the longest or being the slowest to review and approve drug submissions.
I point out these are essentially the same drugs and same drug submissions that are submitted to the Canadian TPD, the U.S. FDA, et cetera.
My last slide may look a bit busy, but each one of those lines tells the same story. The red bar that goes to the top, 3TC is an antiviral drug, is the number of days that elapsed between that drug submission being delivered to the TPD and it being opened for review. The dark blue line is the time it took to conduct the safety and efficacy evaluation to determine that this drug was safe and effective, and lastly, some other time.
In most of the cases, the delays in the start of the review are substantial. The overall finding was that the actual mean safety and efficacy time was only 196 days. That means the time it took the review to be performed to determine that the drug was safe and effective was 196 days. However, because of other inefficiencies in the system, that translated into a total review and approval time of over 600 days.
Mr. Chairman, Rx & D respectfully requests that this committee endorse the proposed bill. It will make a difference in getting medicines into the hands of Canadian patients with the least possible delay, and will help the innovative pharmaceutical companies invest more in this country.
I thank you for your attention, and we will be pleased to answer any questions you may have.
[Translation]
Senator Gauthier: You note on page 3 of your submission that Treasury Board's revised policy takes a major step backward by ignoring the principle whereby fees must be linked to a specific service that provides a private benefit to the fee payer. You go on to say that this is completely unacceptable because without the requirement to demonstrate a private benefit, the justification for charging a fee is removed, meaning the fee is nothing more than a tax.
I totally agree with your position. If there is no private benefit and the government in fact benefits, then we are dealing with a tax.
In your testimony, you compare Canada to its best trading partners. Trade with the United States accounts for 84 per cent of Canada's overall trade volume. You argue that the United States are more effective in terms of linking fees to service standards in some areas, notably pharmaceuticals, and I do not disagree with you. What is the connection between the fees charged by another country and those charged by Canada? You point to the pharmaceutical industry as an example. However, how does this relate to the fees charged?
[English]
Mr. Myers: I think a part of the problem in trying to understand cost recovery in Canada is the lack of information that we have about the fees that are being charged, let alone any sort of comparison with other country's fees and standards.
There is analysis certainly about the standards that have been set in other countries, and Treasury Board has said it would table that before this committee. However, even the figure of $4 billion per year is based on an estimate that Treasury Board developed in 1999. We have not seen an accounting of all the fees since 1999. Part of the problem of the lack of transparency about this whole process is exactly that problem.
Perhaps Mr. Stewart or Ms. Szkotnicki could answer with respect to their specific sectors.
Ms. Szkotnicki: I think there are linkages in program-by-program areas. For example, we know what fees the government provides for, however, if I look at what is being charged in the United States, for performance that is better than in Canada, there are no fees.
We have had a cost recovery program for seven years, for which U.S. has a similar risk assessment process, and they do not charge fees.
The linkage is very little, if anything at all. I can use that as an example, which applies to veterinary biologics as well.
Mr. Stewart: With respect to fees for drug evaluations, we can certainly submit the actual fees in the United States and Canada. They tend to be slightly higher in the United States than they are here. The significant difference, however, is how those fees are used. The FDA used the fees to hire additional scientific evaluators so they could pick up the submissions and begin the review and evaluation in a timely fashion.
When Canada began receiving fees for evaluation of drug submissions, it simply took almost the equivalent amount of money away from the appropriation base that was given to Health Canada. There were few dollars left over to hire the scientific evaluators to deliver the improved performance.
Mr. Myers: This comparison of the fees and standards of other trading partners should be provided in the environmental assessment as a part of existing Treasury Board policy. That information is rarely completed and shared among the fee payers that are in the process of consultation and preparation of fees. All of this depends on an actual service being delivered for the fee being paid. In some cases, fees are being paid without any service delivery. For example, there are companies that have to pay for icebreaking services on Lake Superior when federal icebreakers are not used. There is no service being provided but those companies are expected to pay the fee.
Senator Comeau: You have identified some extremely serious concerns, which I share, with the user fee process and I support your objectives.
Is this proposed legislation the appropriate vehicle to attain these objectives?
Does it provide the means to that end?
Officials have raised a number of issues, such as the ambiguity of the regulatory process, how it will work, and the proposed dispute mechanism. There are no estimates of costs so, obviously, a number of departments will have to be created to set the process in motion, compiling costs of our major trading partners, et cetera.
The client will have to be identified. There is question as to which departments and agencies will fall under the proposed bill and the ``major trading partners'' are not named. I assume it will be left in the hands of the public service to determine the trading partners.
All of these comments suggest that the proposed bill should not be touched and should be passed without changes. Is this what you recommend?
Mr. Myers: Senator, perhaps I should clarify that there is no mandatory approval process in the proposed legislation. Rather, it allows committees of the House the option to conduct a review and then report back to the House on its findings. The expectation would be that the review would be carried out only if there were problems emerging from the cost recovery program in place, which I think is a good check.
A number of issues have been raised about the complexity and the lack of specification. Much of that complexity is already contained in existing Treasury Board policy, specifically the need to conduct assessments that take into account what other trading partners are doing. Presumably, if departments were doing their jobs, the costs would be borne by the departments.
Treasury Board has developed the complicated nature of the process and the proposed bill simply provides to parliamentary committees the ability to review cost recovery programs.
Senator Comeau: It should be ``Commons committees,'' if I may correct you.
Mr. Myers: That is correct. There is nothing in proposed bill that would prevent the information being provided to Senate committees. I would be concerned if Treasury Board's response to the proposed legislation were to change its own policy so that it would not provide the Senate with information to be used in determining these issues.
Senator Comeau: Are you assuming that the policy will remain after the proposed bill is passed into legislation? Would we not be operating under the provisions of the proposed bill rather than under the policy?
Mr. Myers: Yes, but I think there are many cases where the policy, as Treasury Board said, would have to be brought into harmony with the proposed bill, which reflects much of Treasury Board policy. It simply provides a vehicle for the House of Commons committees to review areas where problems may exist.
You mentioned the possible cost of a dispute settlement procedure in place. Many cost recovery policies have been argued over the last five, six or seven years with no determination at all. They have simply produced a great deal of uncertainty and consumption of time for both departments and fee payors.
It seems to me that a process by which departments could determine some form of objective review, or an objective third party voice, to assist departments in clarifying the problems would be a tremendous step forward. I would suggest doing that in any case.
Senator Comeau: You not pushing to the unconvinced. I indicated at the outset that I am not happy with the process as it stands. I am not happy with the process. However, should we think that the proposed bill is good enough to be passed immediately with no changes?
Mr. Myers: I believe it is a good bill and it was not put together quickly. Rather, it was developed over the course of five years in response to many of the issues that we have seen in the implementation of cost recovery. It is a very good and would provide the effective checks that we need to implement the existing policy.
[Translation]
Senator Gauthier: When the bill's sponsor testified before the committee, I gave notice of a series of 40 questions I had. Have we in fact received the answers to my questions?
The Deputy Chairman: Not yet. When we do, we will share them with the committee.
Senator Gauthier: It would be useful to have these answers as soon as possible.
[English]
The Deputy Chairman: Mr. Myers, do you have a comment?
Mr. Myers: Yes. We would be pleased to appear before the committee to answer any additional questions that you might have regarding the proposed bill.
Many of the objections raised by the opponents of the proposed bill seem to be based on the premise that departments are incapable of meeting the standards that they have to set under existing Treasury Board policy. If that is the case and these standards are not being met by departments, or are being ignored by departments, then this confirms that we need a form of check to ensure that policy is actually being implemented. If the policy is irrelevant, then against what standard can government be setting the fees?
The Deputy Chairman: Thank you very much. You have raised some very interesting and telling points.
Senator Ringuette: Mr. Chairman, I move, seconded by Senator Finnerty, that you report this bill to the house without amendment today.
Senator Comeau: One moment, please.
The Deputy Chairman: There is a motion.
Senator Comeau: Mr. Chairman, it is becoming an ongoing movement within your caucus to place pressure on the opposition members. Last week, the Standing Committee on Rules, Procedures and the Rights of Parliament set a meeting outside of normal time that was at the same time as the regularly scheduled meeting of the Standing Senate Committee on Legal and Constitutional Affairs. Members of both committees had to miss the Rules Committee meeting. The chair of the Rules Committee held a meeting without members of the opposition and reported to the House.
This morning, we are again experiencing ram-rodding, railroading and the pushing- through of legislation without the benefit of having opposition scrutiny. We have to sit through clause-by-clause, as proposed by Senator Ringuette, which then takes me out of my normal schedule as this meeting is supposed to be ending right now.
Is this a practice of showing muscle that your side will start imposing on opposition members because of your numbers from the greater number of appointments of Liberals? Our numbers are dwindling. This is no great secret. We know that the Prime Minister is appointing his supporters, which means that our side is becoming reduced in numbers. We are experiencing this nonsense of your side flexing its muscles against us more and more often.
This is not the historical way in which we have done things in the Senate. We have not resorted to this before, even in the wildest times.
If you start using this approach now, the atmosphere of congeniality, cooperation, and consensus building will be lost. If this is kind of nonsense continues, it will not work.
The Deputy Chairman: Thank you, Senator Comeau.
Senator Finnerty: May I say something?
The Deputy Chairman: On this issue?
Senator Finnerty: Yes. This was not a preconceived move. We just feel that we do not have much time to make changes.
Senator Comeau: Yes, we have time. We have until next June. If there is a change of government coming, it does not mean that the Senate has to stop its work. People want to have a different timeline by proroguing or adjourning at the end of this week. We do not operate in this place on the concept of prorogation and adjournment.
We have a job to do on behalf of the Canadian taxpayers and the Canadian public. We do not operate in terms of prorogation and adjournment. We have time. We will be here, not next week because it is November 11, but we have time, absolutely.
Senator Ringuette: Mr. Chair, you have a motion before you.
The Deputy Chairman: I have a motion. I will not call the motion for two reasons. First, we did not as a committee give notice that we would be dealing with clause-by-clause today. Therefore, we should not proceed.
Second, I excused a number of our members to go to the memorial service today. It would be highly improper of me as deputy chair to excuse them and then proceed with a motion.
I will not be calling the motion at this time. Your steering committee will deal with the issue of whether we should call it immediately when we return.
We still have six other parties that wish to be heard on this issue. As Senator Gauthier has pointed out, we have 40 outstanding questions to which we have not received answers. Your steering committee will deal with those outstanding issues, and the motion will not be tabled until the next meeting.
The committee adjourned.