Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 13 - Evidence - December 14, 2006
OTTAWA, Thursday, December 14, 2006
The Standing Senate Committee on Banking, Trade and Commerce met this day at 11 a.m. to examine and report on issues dealing with interprovincial barriers to trade.
Senator Jerahmiel S. Grafstein (Chairman) in the chair.
[English]
The Chairman: Welcome, Minister Bernier and Ms. Swan, to the Senate Standing Committee on Banking, Trade and Commerce. Today, we will continue our study on issues dealing with the interprovincial barriers to trade, in particular to the extent that they limit the growth and profitability of affected sectors and the ability of businesses in the provinces, jointly with relevant U.S. states, to form economic regions to enhance prosperity, and measures that can be taken by the federal and provincial governments to facilitate the elimination of interprovincial barriers to enhance trade and develop a national economy. I welcome Canadians from coast to coast to coast as we broadcast live on television and on the internet. Minister Bernier, you will be seen and your words will be heard worldwide.
The topic of interprovincial barriers is important as we seek to develop a prosperous and competitive national economy. Such barriers, in the view of this committee, increase costs to businesses and ultimately for consumers, and might lead to inefficiencies that reduce competitiveness and productivity, on which this committee has done a study. It is essential to make all Canadians more prosperous. Certainly, we need to focus on actions that will enhance competitiveness and productivity and remove internal barriers to trade that are harmful to this goal.
This hearing is most important in the context of Advantage Canada: Building a Strong Economy for Canadians that was made public by the Minister of Finance on November 23, 2006. Two particular policy commitments have particular importance in terms of our study: to foster a strong Canadian economic union by continuing to engage the provinces and territories to enhance internal trade and mobility; and, to work with the provinces to create a common securities regulator, a long-advocated initiative of this committee. Obviously, we are very interested in hearing what you have to say.
The Deputy Chairman of the Committee, Senator Angus, from the province of Quebec, will make introductory remarks.
[Translation]
Senator Angus: I am very pleased to welcome you to the Standing Senate Committee on Banking, Trade and Commerce. We are aware of your reputation for free trade in open markets, and that is why we are particularly happy to see you here today. We are eagerly awaiting comments from the minister, Maxime Bernier, a man from the Beauce with a very solid reputation.
[English]
Hon. Maxime Bernier, Minister of Industry, Industry Canada: Thank you. As the Chairman said, this is my first appearance before a Senate committee. It is a privilege to be here and it is important because, as a politician, it is always good to present and answer questions. At the end of the hearings, the committee will produce a report and I know that Senate reports are very useful to politicians and ministers.
I am pleased to provide input to the work of the committee. As senators know, I will meet with my provincial colleagues in February on the Agreement on Internal Trade. I would appreciate a copy of the committee's report before this meeting because it would be very useful.
[Translation]
Thank you for those kind words of introduction. I see several experienced people around the table, whether in parliamentary or Senate matters, or even with experience in various areas of business. I am new to federal politics. I have a great deal to learn and will answer your questions and carefully read your report.
I am happy to be here to discuss internal trade and I congratulate you for studying this agreement because it is important for Canada's economic prosperity. As you know, internal trade and international trade are the basis for an open economy and prosperity. Wealth is created when companies from various countries are allowed to trade.
I believe in Mr. Ricardo's theory about the comparative advantages of countries. As you know, Mr. Ricardo is an economist who proved his worth alongside Adam Smith and others. And when there are open economies, prosperity results, and each business specializes in what it knows how to do best. There was an example of this with the free trade agreement, which provided access to the U.S. market. You will no doubt remember this agreement, which was widely supported by Canadians. There was a political debate about it, an election that was virtually a referendum, and several weeks and months of debate over the free trade agreement, but after 15 years now, all economists and stakeholders agree that it has brought prosperity to Canada.
[English]
It is my opinion that a well-functioning economic union is critical for Canada, for Canadians and for the prosperity of this country. A well-functioning economic union will attract investment, new technologies, innovation and opportunities. With a well-functioning economic union, Canadians will be able to work, live and prosper anywhere in Canada and businesses will be able to operate across the country without interference. A national approach to eliminating internal trade barriers is important for our future prosperity.
[Translation]
In our party's electoral platform, we promised to further develop the economic union and move forward with common standards and common objectives to encourage the provinces to adopt standards that would not impede trade.
In his economic update, my colleague Jim Flaherty was emphatic about a large and strong economic union. One example is the Australian economic union. You have no doubt by now heard comments from experts, because you have been studying this matter for a number of weeks. Australia has a treaty in which the states, in their trade relations, work on a mutual recognition basis.
[English]
This is a very important principle. This principle forms the basis of the economic union in Australia. If we can achieve the same kind of principle in Canada, we have our Agreement on Internal Trade. In that agreement, there is a clause asking each province to rely on mutual recognition. In addition, Alberta and British Columbia signed an agreement a couple months ago. It is a very complex, complete and global agreement. It is based on the principle of mutual recognition.
I think it is something we can learn at the federal level, and it is very important to be sure that the relationship between provinces will be as efficient as possible.
[Translation]
Mutual recognition is an important principle from the economic standpoint because it allows competition. As Senator Angus said just now, I believe in the free market and in competition between economic entities. Mutual recognition allows a company in Montreal to sell its products in Toronto or Vancouver on the basis of a set of uniform rules, the rules of the province in question, and which are normally recognized by other jurisdictions. This means that a business headquartered in Montreal can sell its products in Vancouver by following only one set of regulations rather than two or three sets of different recommendations. If a business headquartered in Vancouver wants to sell its products across Canada, it need only follow the rules of its head office in Vancouver.
This makes competition possible because products made by companies in Vancouver that are sold in Montreal, and Montreal products sold in Montreal within the province follow two different rules. Thus mutual recognition allows, in the various jurisdictions — and here I am using the example of Quebec — for two companies to sell products in Quebec by following two sets of different standards, namely the standards at their own head office. Such a situation places regulators in competition with one another. Competition gives us better standards. Companies put regulators in competition with one another because, if they are completely free, they can choose where to locate their head office and hence choose which set of rules they believe is most appropriate for their economic growth.
This is different from harmonization. If I compare the concept of competition to that of a monopoly — harmonization is a monopoly — only one rule will apply for all businesses, no matter where they operate. This concept is not quite as consistent with the economic theory of the free market. That is why the economic community has opted for mutual recognition as a basic principle for building the European economic community. The first principle of the concept of mutual recognition is that each country can have distinctive rules because the distinctions are minimal, but they can also lead to harmonization when there are very important safety standards. Thus countries will tend to make their rules consistent. Mutual recognition allows for harmonization, but does not require harmonization at any cost.
[English]
What is the role of the federal government in this regard? Last September, I had the privilege of attending my first federal-provincial meeting in Halifax with my colleague in charge of the Agreement on Internal Trade. The provinces play the most important role because it is in their jurisdiction. Our role is to push this idea of more cooperation and more freedom among the provinces.
After our meeting in Halifax, the provinces and the federal government issued a press release with an agreement that before April 1, 2009, we will have labour mobility in this country. I am proud of that accomplishment. That means that a nurse in Montreal will be able to work in Toronto or in Vancouver without having the obligation to take other tests or exams.
This initiative will take a long time. That is why it will come into force before April 1, 2009, because each province must have discussions with each other. In addition, in Canada we have more than 400 regulatory bodies in charge of regulation for people, such as nurses and doctors. All of the professions in Canada are regulated. That is the reason this will take time. However, we have a plan in place with the provinces to achieve this goal, and it is the greatest news we came away with from this meeting in Halifax.
[Translation]
The Agreement on Internal Trade goes back to 1995, as you know. Can improvements be made to the agreement? I believe so. The provinces are also aware that improvements need to be made to the agreement. We have no effective mechanism for dispute settlement. The mechanism in the Agreement on Internal Trade does not mention an administrative financial penalty and it is difficult to enforce decisions.
The agreement between Alberta and British Columbia on dispute settlement is one that appears to be stronger, with more teeth, and a better way of ensuring that decisions can be enforced and followed. The provinces have promised over the coming months to examine and consider this agreement as a way of possibly improving the Agreement on Internal Trade.
[English]
In addition, as you know, we achieved a big step in Canada. As I have stated, the agreement between B.C. and Alberta is a big agreement. The most important aspect in that agreement is that it allows other provinces to jump into it if they choose to do so. For example, in Halifax, they told us they wanted to study the possibility of jumping into the agreement. That is a good thing.
We have another agreement in Canada and that is between Ontario and Quebec concerning labour mobility. I think that is a significant agreement.
As the federal Minister of Industry, I am very pleased to see my colleagues from the provinces reach an agreement to ensure that people will be able to work all across the country without any barriers.
What is the contribution of the federal government? As I said, I called my provincial colleagues before the meeting last September to be sure they were in line with our goal. They are in line with the goal to have a more prosperous and free country for trade. That is why we had the meeting last September. We decided to do a follow-up. Usually, you have that kind of meeting once a year or every 18 months. We decided to have a follow-up meeting as soon as possible. The next meeting will be at the beginning of February.
That is good news. Each province will present its action plan in more detail, outlining what we want to achieve before 2009. It will also address our next challenges, such as the dispute settlement mechanism, an update on labour mobility and perhaps an update on the energy sector on which the provinces do not fully agree.
I will end my opening remarks here. I want to add that I have a good team with me at Industry Canada. Ms. Swan is with me, along with my Deputy Minister, Richard Dicerni. We are working on the same goal, to ensure we will have free trade across this country as soon as possible.
I am pleased to answer your questions, or perhaps Ms. Swan will be able to answer some of them in more detail. I look forward to reading your report. If it is possible to have that report before February, I will put that on the table at that time.
The Chairman: Minister, thank you very much. Regretfully, I do not think we will be able to have our report to you before February. One of our plans, which we are about to work out after this meeting, is to travel to at least a portion of the country to hear witnesses in the regions. However, we are working on the same goal, and we will be following the actions taken by the council and the federation and, obviously, the work of your department.
We are here to be catalysts to move toward a common goal of developing a national economy. We do not think we have a national economy — we have a fragmented economy.
Senator Angus: We started this study; we set it up as a round table, to be a brief, snapshot look at this issue of interprovincial trade barriers. We wanted to look at it from the perspective of greater productivity, which is a Canadian problem. We are lagging behind our American neighbours especially and our other trading partners in productivity and competitive situations.
We learned a lot from our first few witnesses. I urge Ms. Swan, if she has not already, to check the transcripts of our hearings in terms of the minister's meetings in February. Many witnesses told us that the situation is very bad and much deeper than we realized.
The federal government has pretty much exclusive jurisdiction in this area of interprovincial trade. It has been acknowledged as a problem over the years — for literally 100 years — and very little has been done about it.
Whether it is professionals like the chartered accountants, or the certified general accountants, or the trucking association, or the breweries association or many different manufacturing groups in this country, they come to with us with horror stories that boggle the mind.
If, as you suggest in your remarks, there is some momentum toward improving the situation, we are delighted. Obviously, we have seen the agreement between British Columbia and Alberta. We believe Ontario, to some extent, has bought in to that type of agreement, although we are not sure. I see Ms. Swan shaking her head, so I may have it wrong. However, one of the witnesses, perhaps from the labour mobility side suggested to us there was some element of it that they liked.
We need to have hearings across the country in order to delve more deeply into the issue and make sure there is indeed momentum to fix it. That is where you folks have to come in and work with us.
I would like to start my questioning by asking you why, in your opinion, has so little been done over the years? We made a big thing in the 1980s about international free trade. The 1988 election was fought on free trade with the U.S, which resulted in the North American Free Trade Agreement. It split up families; it was a big issue. Many witnesses told us we should have started with the internal trade issues before going across borders.
We know that even to this B.C.-Alberta agreement, there are many exceptions. The chairman and I heard witnesses tell us there are some 60 exceptions. All is not as it seems, perhaps.
Why do you think we have this problem? Why have not we made progress? Do you have optimism you can fix it?
Mr. Bernier: First, if you need to solve a problem, the first ingredient must be leadership. That is very important.
It is why I called everyone together. The premiers in each province have leadership on that issue so it is at a high level. As you know, that is one of the priorities of the Conseil de la federation, which is a bit like you and me and all Canadians; it is tired of discussion without achievement.
It was very important for me, as the Minister of Industry in charge of international trade in Halifax, to know that premiers want us to succeed. Our committee reports directly under the Conseil de la federation. Therefore, there is leadership at a high level.
Perhaps in the past, you did not have the Conseil de la fédération and you did not have that kind of leadership. Now we have leadership at the federal level and at all levels.
We have an important role to play, and to emphasize to provinces the need for free trade across the provinces. In our last budget in 2006, we made a commitment — and also at the last economic update.
My colleague Jim Flaherty will be in Vancouver tonight and tomorrow all day. On the agenda is fiscal imbalance and economic union. That is a priority for our government and also for the provinces. That is why I am optimistic that we will be able to have concrete and real action in this file. That is why we will have another meeting in February, with an action plan and dates to ensure that we deliver.
I am optimistic. We know that has a cost for enterprise, for companies, for organizations that want to deal in each province. The cost is huge. We want them to be competitive.
As you said, the productivity of a company is important. A company has to be productive if it wants to succeed and to be active on the international scene.
The productivity and the trade barriers are not working together. We want to improve the productivity by lowering taxes. We want to ensure that trade can take place in this country without any barriers. I am optimistic because we have leadership on both sides.
Senator Angus: As you know, one of our overriding mandates is the well-being and the health of the financial services industry and the markets in Canada. We have heard about the anomalous situation where there is a securities commission in every province. There have been studies by wise men and further studies by equally wise persons; it has been a cottage industry.
The chairman and I have decided — and you need to listen to this minister, because you have talked about leadership — if the government does not take the lead in the area to bring in its own legislation to have one national securities commission, we will seek your support as we bring our own bill forward in this regard.
Every single witness on all sides of finance, our trading partners and the governments find it a total drain of resources, an anomalous situation that drives investment south and into Europe. It really is hurting Canada. We need your leadership in that regard.
The chairman and I have reached a level of frustration with the problem that we are going to take our own action unless you join hands with us as we go forward.
The Chairman: Senator Angus sums up the frustration of each member of this committee. I was here in 1965 and started a study on the national securities commission and here we are over four decades later no closer to the point. Senator Angus and I are investigating and we hope to present our findings by the end of next month, which might help you in your deliberations; a federal national securities commission using the federal power. We think it is important and might act as a goad to the provinces to get on with it and to see if they can come to a common principle and policy. If they do not, however, we will try to exercise the federal power and give you a lever to take to your meeting in February.
[Translation]
Senator Goldstein: Thank you minister and Madam Swan, for having come to speak to us about a subject that is very important for you and for us. My first question was going to be about a national securities commission, but since my colleagues have already asked it, I will refrain. However, I must note one aspect of the question that will be repeated in my other two questions, which is the matter of provincial jurisdiction and the jealous manner in which each province protects its territory and its freedom of action. Although my colleagues told you that they intended to introduce a private member's bill, I wonder nevertheless whether you might have something to say to us about the matter in order to provide us with guidance.
Second, I would like to ask whether the labour mobility agreement that the provinces have just signed meets the requirements of my province, Quebec, with respect to language and knowledge of the French language on the part of those who come from other provinces. If so, how could these requirements impede the freedom of labour mobility?
Third, I am wondering whether your department will have an opportunity to look at how the European Union has addressed the problems — which are not the same, but rather similar — of cross-border trade and service delivery, which closely resemble our interprovincial trade problems.
Last, there is the issue of federal jurisdiction over interprovincial trade. If I have understood correctly, and it has been a long time since I studied anything constitutional, power as expressed in the Constitution Act is not as clearly stated as we would like. Needless to say, no one wants to attempt to amend the Constitution Act. But is there a way of testing the scope of this power through reference to the Supreme Court in order to help us impose, if required, freedom to deliver services and to trade in goods across Canada, which is something we really need?
Mr. Bernier: Thank you. I will begin with the first question, which is perhaps the one I am most familiar with: the fact that we do not in Canada have a National Securities Commission or a single securities commission. Before going into politics, I worked in securities, banking and insurance. As a stakeholder, I was able to observe the cost involved for companies because we did not have a single regulator in Canada.
Nevertheless, the provinces have made some progress in recent years. And I mean "some'' progress. They have put on a table a passport system to enhance fluidity and improve standards to allow for common standards that companies would need to comply with. This model passport is only in the early stages, and I believe, as my colleague Jim Flaherty, the Minister of Finance, said in his economic statement and his budget, that we need to go further still if we are to have a single regulator in Canada.
We are the only OECD country and the only developed country not to have a single regulator and I have confidence that Jim Flaherty will be able to manage this file and the discussions that will ensue. I intend to monitor very closely the discussions that Mr. Flaherty is going to have with his other colleagues on this issue beginning tomorrow. But in principle, it is the reason why our government, and why we, are promoting the idea.
What form could the single regulator take? Would it be a regulator that has the cooperation of the provinces, a strictly federal regulator, or a regulator jointly established with the provinces, to whom they would delegate powers? We have not got that far in the discussions. The starting point for discussion is the idea of launching this single regulatory body. I believe that it would be very good for all Canadians.
As for the issue of the French language in the labour mobility agreements, that is a good question. I do not have the answer today. I will return to you concerning this question through my officials. We will study it and return to the committee with a written response.
As for the federal government's jurisdiction over interprovincial trade — I am not a constitutionalist by training, but a lawyer — I believe that the federal government has certain powers under the Constitution with respect to interprovincial trade.
Can its point of view on this issue be imposed on the other provinces? I believe that constitutionalists are divided on this issue, as you said earlier, and the idea of putting the matter of the federal government's jurisdiction to the Supreme Court has been making headway. I will speak to the Minister of Justice about it. I do not know what his final decision will be, but we want to move forward more quickly in terms of cooperation with the provinces, and that is what we are doing at every level.
Several departments are involved, including the Department of Finance and the Department of Human Resources Development. Several departments are working together with the provinces to ensure that there will be Canada-wide standards. The federal government is in favour of a federalism that is open and consistent with the Constitution.
I do not see the need to impose anything on the provinces, because of the current leadership and the desire expressed by the provinces to settle this problem. By this I am referring to the provincial ministers and premiers. When people of good faith sit down at the table with a common goal, that of solving a problem, they usually succeed. That is why I am very pleased about the outcome of our meeting in Halifax.
Senator Goldstein: What can we learn from the European Union about free trade between different countries?
Mr. Bernier: The answer is a clear and affirmative yes. The European Union is built on the mutual recognition and the agreement between British Columbia and Alberta is also based on mutual recognition, and mutual recognition is also mentioned in our current Agreement on Internal Trade.
I believe that we need to learn from these precedents to improve the agreement currently in force in Canada.
[English]
Senator Tkachuk: Do Ontario and Quebec have a jump-in clause?
Mr. Bernier: I do not know the answer to that question. I would ask Ms. Swan to respond.
Carole Swan, Senior Associate Deputy Minister, Industry Canada: Are you asking about Quebec and Ontario's labour agreements?
Senator Tkachuk: Yes.
Ms. Swan: The department has been looking at that to determine whether it is possible. I am informed that they do not have a jump-in clause. As a model, as momentum, it is quite useful.
Senator Tkachuk: Alberta and British Columbia have an agreement with a jump-in clause and Ontario and Quebec have a labour mobility agreement. I like the fact that they are addressing the issue of trade and that there is a jump-in clause in the agreement. However, I am not happy that separate agreements are taking place among some powerful groups. Ontario and Quebec hold most of the consumer market in Canada and Alberta and B.C, both wealthy provinces, have signed an agreement. Their respective wealth might be the result of their free trade ideas. Nonetheless, this balkanization bothers me and I am concerned that Ontario and Quebec might use their agreements to keep other provinces out of their markets, thereby doing it for selfish motives rather than for national motives. Does that concern you, minister, and your department?
Ms. Swan: It is my understanding that the Ontario-Quebec agreement relates only to the flow of construction workers.
Senator Tkachuk: I understand that. I am concerned that one such agreement will lead to more. Other things concern me with the Ontario and Quebec agreement, such as an excuse to keep a market to themselves. Ontario and Quebec have marketing boards, for example. That gives me another concern, as a citizen of Saskatchewan.
Ms. Swan: Yes, the Alberta-British Columbia bilateral agreement has a jump-in clause. The purpose of the Agreement on Internal Trade was on a consensus basis to ensure that everyone moved ahead at the same speed. With the Alberta-British Columbia agreement, we are seeing the opportunity to provide a little momentum. Other provinces can work in the same collaborative way if they wish to do so in terms of agreements.
The Deputy Chairman of the Committee mentioned Ontario and we have indications that other provinces are quite interested and looking at this agreement in detail. Our hope is that it will be possible to move this ahead within the larger framework of the Agreement on Internal Trade, rather than balkanization and separate arrangements, we would see this as providing momentum to move forward under the auspices of the Agreement on Internal Trade.
Senator Tkachuk: This shows that some provinces are interested in reaching agreements on trade matters. When Alberta and British Columbia were negotiating their agreement, they invited Saskatchewan but Saskatchewan declined. As we get closer to a provincial election, the Saskatchewan government is moving closer to opting in, possibly. Nonetheless, the government declined. I believe that the offer was extended to Manitoba with the same result, although I am not sure about that.
Are some provinces less reluctant to join the game, for example the concept of a national security commission?
Mr. Bernier: I can assure you that it is on the table in Halifax. Each province wants to improve the Agreement on Internal Trade, and we are working on that. Some provinces want to jump in, such as the agreement between British Columbia and Alberta. We all have the same goals to improve the flow of goods and services across Canada and so that provinces can sell their products anywhere in Canada without trade barriers. I understand the intent but if your question is directed to specific provinces, I will not answer for them. The sense I have around this table is that we all want to move ahead with improving the Agreement on Internal Trade to ensure that all Canadians will benefit from a free trade system.
[Translation]
Senator Massicotte: The theory is clear: Canadians would benefit from the free trade of products, goods and services. But politics and reality are such that each province, in its own self-interest, wants to maximize its success. As we have seen for decades in Canada, it is often easier to jointly negotiate with another country than it is to negotiate among ourselves. What kind of hammer might you have to force the provinces not to engage in petty politics in the short term? I know that there is a team spirit, and a spirit of engagement.
However, the reality is that individuals will act in terms of their own needs, interests and political situation. What do we have here that can lead to results?
Mr. Bernier: My view is that we need to build on past experience. This experience has shown that barriers in Canada are costly from both the political and economic standpoints. The provinces are aware of this. That is no doubt why the premiers and the Council of the Federation consider this matter a priority. Ultimately, the provinces will reap the benefits, on condition that they are able to rise above individual interests.
I was pleasantly surprised to see that there was a desire to open discussions on energy, and a desire to look into the matter. A few years ago, one would not have expected this willingness, given the divergences between the provinces. It was finally decided to put the question on the table, to discuss it and to take stock over the next few months.
Your committee is considering this issue because you feel that it is important to Canadians and also because it is a hot topic. The same is the case for us politicians. We consider this question to be important and timely.
A meeting will therefore be held in February. As the Minister of Industry, I am responsible for ensuring that this meeting is held as soon as possible in order to keep the momentum going. Prior to this, meetings were held once a year or every 18 months. But governments change and priorities change, which may be the reason for a number of failures.
Now, those running the show are behind us and we have decided to move forward. We will perhaps not be able to solve all the problems. However, we will examine them one at a time.
We considered labour mobility. We will look into the clause on dispute settlement, which has a number of weaknesses in the Agreement on Internal Trade, to ensure that the provinces can comply with the decisions that are made.
It is unlikely that we will achieve all of the objectives that we have set. However, if we meet 50 per cent of them, it will be a step forward and we will continue to work.
Does the federal government intend to impose anything on the provinces? It will not be necessary, because the provinces are working closely with us. Officials at the Department of Industry and the Department of Human Resources and Skills Development have been holding working sessions on a regular basis to ensure that the deadlines are met, particularly with respect to labour mobility. We are therefore making every possible effort in this regard.
The desire can be felt around the table, and felt just about everywhere in Canada. Moreover, the fact that you have tabled a report on this policy will boost the momentum, and this is a very health sign.
Senator Massicotte: As you know, the negative impacts are visible. People are not very much aware of the benefits, because benefits are often achieved over the long term. Is there a communication program or a way of explaining directly to people what the benefits are, in order to create political pressure that could motivate the provincial legislators to agree? Do you have something more specific to propose?
Mr. Bernier: We have not yet discussed communication plans in detail. We are still busy dealing with mobility problems. There is a very full agenda at these work sessions. Nevertheless, as a politician, it will be important to communicate this message.
We have also been holding discussions with several of the organizations involved. For example, the Quebec engineers and the Alberta engineers association, doctors in Quebec and doctors in Ontario are some of the professional bodies with whom we have been holding discussions, because many of the rules depend on them.
The process is rather complex. However, we set April 1, 2009 as a deadline, a date that suits me just fine. We are working towards a common goal and I believe we are going to achieve it.
Senator Massicotte: I wish you good luck. It is a very important question.
[English]
The Chairman: Minister Bernier, I hope you will allow us a few minutes after 12 p.m. because there are a couple of senators who are anxious to ask questions. I have been trying to curtail questions and responses. It is very important for us to understand all of the ramifications of the issues that you must confront.
[Translation]
Senator Hervieux-Payette: Having worked for SNC in the past, I know that the Building Code developed jointly with the National Research Council of Canada to establish standards and materials has been a success. It has existed for a long time now and is a model that could be used in several fields.
However, I continually ask myself the following question. How come there are barriers for certain products? Take beer for example. I have never understood why brewers could not sell their products outside their province.
I am also very interested in food issues. In Quebec, we eat apples from British Columbia and potatoes from the Maritimes. It is therefore appropriate to look into the issue of product mobility and the circulation of goods. However, my question has to do primarily with labour mobility at your level of government.
I recently met representatives of a number of labour congresses. They told me that Quebec workers who wanted to go and work in Alberta were faced with barriers and that they did not have the same support as workers from the Maritimes who wanted to go and work in Alberta. Some people have to remain unemployed because they do not have the means to go and explore the Alberta market, or to go there for interviews. When you do not have a job or financial support, you cannot pay for a plane ticket or for a two- to three-week trip for an interview. A number of programs for workers in the Maritimes provide them with just this kind of help.
If our federal policy is applied differently from province to province, that constitutes a barrier. Identical treatment should be provided to skilled tar sands workers, for example.
On the other hand, how confident are you in addressing a national regulatory body with respect to financial markets? As you know, Quebec was the province most firmly against the idea. Moreover, your team included a former federal politician, when this file was put forward, that we have talked about for a long time. There was a great deal of talk and many committee meetings. It is important to obtain the consensus of Quebec. The plan to locate the headquarters in Toronto generated considerable apprehension, given that the financial market is already largely in Toronto. Quebec of course does not want to lose its authority over this matter.
Have you been discussing this issue, and do you expect that it will be dealt with within a reasonable amount of time? How do you intend to deal with this issue? There are 600 to 700 skilled workers who are unemployed and do not have the means to go and work in other provinces.
[English]
The Chairman: I counted five questions senator.
Senator Hervieux-Payette: No. I have one question with regard to the mobility of manpower and the other question is with regard to the organization of autorité des marchés financiers.
The Chairman: I appreciate that. I thought you had more questions. If there are only two, please go ahead.
[Translation]
Mr. Bernier: First of all, let us talk about the Building Code. This is of course an important tool. However, uniformity is not always the rule. As you know, the Building Code in Vancouver is somewhat different because of a number of distinctive features there. According to the experts, the Vancouver area needs to consider potential earthquakes and thus standards differ from those elsewhere in the country. It is all very well to want consistency, but sometimes distinctions are needed.
You also spoke about products like beer. In the course of the Halifax discussions, we spoke about one particular product: margarine.
There was a decision by the committee about the Agreement on Internal Trade with respect to Quebec and Ontario — ruling that Quebec imposed a regulatory barrier with the colour of margarine.
In our discussions of a dispute settlement mechanism with the powers and means of enforcing decisions, margarine was in fact dealt with. This is something that has been evolving because the Government of Quebec now wants to ensure that future decisions of the tribunal are applied. This leaves an opening. If there are future decisions on margarine, the response is likely to be the same.
The fact that Quebec is open to negotiating the settlement mechanism is positive. As for labour mobility, you referred to federal programs that encourage people from the Maritimes and allow them to readily find employment in Alberta or the West. I am not aware of the details, but given that you say so, I assume that these programs exist.
As for the reason why these programs do not apply to other regions of Canada, I will discuss this with my colleague Diane Finley, the Minister of Human Resources and Social Development, and will return to you with a written response.
As for authority over financial markets and the role of Quebec, the Government of Quebec's historical position has been to say that securities are a provincial jurisdiction. Quebec has in fact now agreed to negotiate with the provinces a model passport in which there would be loss of jurisdiction.
If you say to company X headquartered in Vancouver that its prospectus, once approved in Vancouver, would be recognized in Quebec, the Quebec financial market authority would no longer need to analyze the prospectus. It would be part of the passport system and hence Quebec would leave the application of its area of responsibility to the passport system.
I find that this augurs well for a discussion about the establishment of a single securities commission. The question is, what position will Quebec politicians end up taking? I cannot tell you, but I hope that they will join us and hope that my colleague the Minister of Industry will be able to rally everyone around the table tomorrow on this matter.
Senator Hervieux-Payette: Are we speaking about mutual recognition in which one province accepts something and the other automatically approves it?
Mr. Bernier: In the field of securities, it is based on mutual recognition. It is the passport system that is now used within the European Economic Community. The Canadian provinces did not come up with anything new, but rather followed the lead of the European Economic Community, which allows a company located in Paris to issue a prospectus in Paris and this prospectus is automatically approved throughout the community, which is to say just about everywhere in Germany.
The only thing that needs to be done is to translate the summary of the prospectus into the common language used for securities. So if you are a German company and your German-language prospectus is approved by the German Securities Commission, you will be able to sell your products or be listed on the London Stock Exchange, but you will have to translate your prospectus into one of the common languages used for financial matters.
The European politicians did not want to say "English,'' but the common language is definitely English. The same concept will apply here for the passport systems. Does it work? It's a start, and we are at the introductory stage, but it could move forward still further with a single commission.
[English]
Senator Eyton: This is not a good history. The Agreement on Internal Trade, by my memory, started in the late 1980s and early 1990s and became effective in 1995. I would suggest that the progress has not been rapid or that the agreement has not been very effective.
I note here in the January 2006 progress report — we are talking here 11 years after the agreement became effective — that the short-term objectives are stated to be to "recommit to honour the obligations under the current AIT.'' That seems sensible enough; after 11 years, you would hope that was so. Another objective is to "develop a comprehensive communications plan'' — again, that seems to me to be pretty ordinary territory; and then to "complete the provincial- territorial negotiations on Crown procurement.'' Here we are talking about all of the parties at the table saying we should do this; we have been at it for 11 years and we really, short-term, ought to do what we said we would do 11 years ago and all the parties are at the table. Those were the short-term objectives.
Beyond that, there are the longer-term objectives. I note that one of them is to improve the procurement chapter of the agreement. Then there are a lot of very important issues, including the dispute settlement resolution that is wholly ineffective, and a chapter on energy and things of that sort.
That is an abysmal record. In the real world, if you had an agreement of that sort that had been around for 11 years, and you were talking, after 11 years, about a better communications plan, is it not realistic to look at it and say, this is not working very well. Is it realistic to throw it out and start all over again? Is that a realistic alternative?
Mr. Bernier: On the history of the relationship and the improvement of the trade barriers across the country, you are right; we have something to do and it was not perfect. That is why I will come back to the meeting I had with my colleagues in Halifax in September.
We have an action plan, we have dates and we have deadlines, specifically on labour mobility. We needed to pick priorities and we have done that. We do not want to be all over the map like we were in the past. It will be successful now because we have priorities and we are all working together.
On labour mobility, we have a date — April 1, 2009. What we will do in between that date is have meetings at both the ministerial and official levels. That is working very well. Many departments at the federal level are involved in this file, and it is the same thing at the provincial level.
You have a commitment. As you know, as a politician, when you say something publicly, you want to succeed. I want to succeed, and my colleagues want to succeed, because Canadians and this committee will judge us. I do not want to come back a year from now and have you tell me, minister, you do not have a word; you have a press release and that is nothing.
I am in politics to achieve something. I want to achieve something for Canadians. That is the same thing for my colleagues from other provinces. We want to achieve something and be sure that we will succeed. We think we will reach an agreement on this issue. Our reputation is on the line.
We have a good commitment. We are working right now. We will have another meeting and we will push that.
What will the future be? I cannot tell you. I hope I will be Minister of Industry for a long time in this government so I will be able to finish the job.
Senator Eyton: As it happens, I share that ambition.
Senator Grafstein: Do you have a follow-up?
Senator Eyton: I take it that your answer is we have this agreement and we will work with it the best we can. My follow-up question is: How can we get some urgency?
The real effects of this agreement may be 15 years out from the effective date of the agreement, and that is only one element with which we are trying to deal within internal trade barriers.
The federal government has constitutional authority over interprovincial trade and it may be in a position where it can mete out reward or punishment to bring things along, but what are the limits, beyond political, to what the federal government can do to be more active and have a larger presence in making sure there is some urgency?
How can we accelerate the solution of a problem that costs our GDP 1 per cent or more every year? We are talking billions of dollars.
We are taking 15 years to get to some of the important elements that we considered originally. What are the limits of the federal government in taking a more active role?
Mr. Bernier: I understand your point. I want to put that in the context. The Alberta-B.C. agreement is a very good one. Each government and each cabinet worked together for four years to achieve that. They achieved that by forming a joint cabinet; they had a minister from each province at the same time at the cabinet level. It was a good idea; they shared their issues. The ministers of B.C. and Alberta were very proud at this meeting. It is not perfect, but it is a good deal.
I hope that the other provinces will jump in. That will help us to improve the agreement on internal trade at a federal level.
Your question is: If you think you are not able to achieve that and the momentum is not there, do you have other tools? Do you think you can do something?
I am optimistic. We are working hard; we have a goal and we want to achieve it. I do not want to have a plan B on that. We need to cooperate with provinces and they understand the need to change it.
It is why we are all proud of what we achieved in Halifax. We know that the record of the agreement on internal trade is not very good. We want to improve it.
I do not have a plan B. I am working positively and with cooperation with the other ones. You have had experts that have come before your committee with different opinions. I am not an expert. I will wait to read the report.
Senator Eyton: Good luck with your plan A.
Senator Harb: My colleague raised an important question. I submit that the whole issue why we are not having any progress is the fact that we do not have leadership on it. I am not blaming any specific government. I served with your dad during the Mulroney days; he was a good guy. We have had Conservative and Liberal governments.
Mr. Bernier: What about his son?
Senator Grafstein: Senator Harb, Minister Bernier asked a second question. He said: What about his son? Is the jury still out?
Senator Harb: It depends how the minister answers my question.
I submit to you that the reason why we have failed leadership on this issue is that we do not know the answer. I will ask you the question. If you give me the answer then you have proved to me that, in essence, we have leadership and we are going to move the agenda forward.
The business case for interprovincial trade is not there. Do you know what the actual cost is to the economy? If you give me the answer then we have the business case. If you do not, I submit that is the problem.
Where is the study that shows the cost to the economy because of the lack of interprovincial trade? That will determine whether or not you understand.
Mr. Bernier: Did you understand, Carole?
Ms. Swan: Yes.
Senator Grafstein: I will give you a hint, minister; look at the Conference Board numbers.
Mr. Bernier: I cannot agree with you on the leadership question. Who chaired the meeting in Halifax? It was not Maxime Bernier or another minister from another province; Premier Doer chaired the meeting. He reports to the confederation. We have leadership from the provincial primaries and provincial governments. The leadership is there.
Concerning the costs, the Fraser Institute did some studies, as did the Conference Board and the Montreal Economic Institute. Yes, there is a cost. What is the exact cost; how many billion or million? I do not have the number here.
I read the study. I know there is a cost. I was in that business working for an insurance company. When selling insurance in each province, you must follow 13 rules across the country. I was in charge of people as the vice-president, people working in Alberta and B.C. and Quebec, and I had to be sure that the salespeople respected provincial legislation. That is a cost. If you add that to each sector of the industry and each company, the compliance costs would be huge. We know that. We read the study. I do not want to point out a number here. The goal for us is to be sure if we are doing nothing, the costs will be huge and the number will increase.
Senator Harb: It is an element of credibility of the case. From what I have seen figures show .05 to .1 of the GDB and up to 1 per cent of the GDB. I submit that .05 and 1 is 20 times different. I am not going to look at a study like that with confidence. I want a study that has credibility and goes sector by sector of the economy, whether we talk about labour mobilities, food and safety, or professional levels. I want to ask each sector to give me a number in terms of how much they are losing because they cannot have interprovincial trade.
Mr. Bernier: I want to understand your question. The cost is between $2 billion and $3 billion and you want to know the cost on each industry. We are not there. We want to solve the problem. We are here to solve the problem.
If I have a study telling me that the manufacturing sector is $1 billion, we know there is a problem. I do not want to add another step or study. It is time for action. If you have the study, good. We know there is a cost. That is why it is time for action. We are not in the same place. It is better to acknowledge that and act on that information.
Senator Harb: Minister, you need to know the temperature of the patient and if the patient has a fever, you must take quick action. Both the chair and deputy chair have indicated the fact that this affects the economy overall on the international scene.
I suggest that since the time of Confederation, someone at the national level might have identified not only the patient but the problem as well. I submit that one of the reasons that people have not moved on this issue is because we just continue to guess at the problems.
Mr. Bernier: We chose the problem of labour mobility, and I think you are aware of the costs associated with that issue. That is the reason why we picked that particular issue. It is costly on families, on people and the economy. That is the most important issue and our work must be done on a priority basis.
The Canadian Manufacturers Association, the Conference Board and the Economic Council have done studies. As a politician who will be before the electorate, perhaps sooner rather than later, I want action and results on this issue. Other politicians around the table and our colleagues from the provinces want the same thing.
Senator Grafstein: Minister, thank you. You can see that each member of this committee is deeply involved in the facts of the issue. Our concern is growing and not receding.
Recent studies have indicated that Canada is slipping behind. We have gone from seventh in the world to twelfth or thirteenth and European countries, such as Spain, are displacing our position in the G7. This would be terrible for Canada in all respects. As well, in terms of direct foreign investment in Canada, at one time and not too long ago, we had 6 per cent of the direct foreign investment. Today, that has dropped to around 3 per cent. This means that there is not enough economic muscle and capital coming into the country to make us more productive. Everything goes to the question of productivity and these interprovincial trade barriers, which clog our prosperity.
Senator Harb, Senator Goldstein, Senator Eyton, Senator Tkachuk, Senator Massicotte, Senator Angus and I are of the same view that this is a huge concern. That is why we will travel across the country to try to make the case as best we can on a region-by-region basis.
We thank you, minister, for appearing before the committee today. The federal government has staunch powers on interprovincial trade that have not been exercised. We have powers of disallowance that have not been exercised. The federal government has been reluctant to exercise its own powers, and that is the history of this issue.
Departmental legal advisers will make the case for you minister. If you want the power, you have the power, provided you want to exercise it. I am not suggesting that you should exercise all of your powers but you do have capacious powers to do what you want to do. Before you attend your meeting in February, take note that you have more powers than you think you have.
Mr. Bernier: I appreciate this opportunity to appear today. I will await the report of the committee.
The committee adjourned.