Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 1 - Evidence - March 5, 2009
OTTAWA, Thursday, March 5, 2009
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:02 a.m. to consider a document concerning a proposed review of the user fees of the Explosive Regulatory Division of Natural Resources Canada.
Senator W. David Angus (Chair) presiding.
[Translation]
The Chair: Good day, everyone. I would like to welcome you to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
My name is David Angus. I am a senator from the beautiful province of Quebec and I also chair this committee.
[English]
Our committee's mandate is to examine legislation in matters relating to energy, the environment and natural resources generally.
I want to take this opportunity to introduce the senators who are members of this committee and who are around the table today, beginning on my right with the eminent deputy chair, Senator Mitchell, from Alberta. Next, we have my predecessor as chair of this committee, Senator Banks, from Alberta; our famous elected senator, Senator Brown, also from Alberta; and two new colleagues to the Senate, Senator Lang, from Yukon and Senator Neufeld, from British Columbia. Senator Neufeld was Minister of Natural Resources in the British Columbia government, so he comes with some ability to humble us here.
To my left is our clerk, Lynn Gordon; Senator Milne, from Ontario; Senator Sibbeston, from the Northwest Territories; Senator Merchant, from Saskatchewan; Senator Spivak, from Manitoba; Senator Peterson, also from Saskatchewan; and Senator St. Germain, from British Columbia.
I welcome our witnesses today. We are here to deal with a matter that has been referred to us. On February 10, 2009, a document concerning a proposed review of the user fees of the Explosives Regulatory Division of Natural Resources Canada was referred to this committee for examination. As stipulated in the Rules of the Senate, our committee has 20 sitting days from February 10 to report back to the Senate. Otherwise, the matter of these user fees is deemed to be approved.
Today we welcome officials from Natural Resources Canada to explain the increase and to provide us with an overview of these user fees. The increase is substantial from the last time the fees were approved; and the witnesses are here to answer any questions senators might have.
Before I introduce these officials, I remind honourable senators that once we have completed our examination of the user fees today, we will move to our two draft budget applications, one for legislation and the other for our special study on emerging issues, for the period ending March 31, 2009.
Following this item, we will briefly suspend and move in camera to consider future business.
I welcome not only all colleagues, the officials and other persons in the room, but also our viewers on CPAC, which is televising these proceedings, and those on the World Wide Web.
It is my pleasure to introduce our officials from Natural Resources Canada, Kiran Hanspal, Director General; and Jean-Luc Arpin, Inspector of Explosives.
Welcome to you both. Please proceed with any introductory remarks you might have. Then, we will follow with questions. How do you plan to proceed?
Kiran Hanspal, Director General, Explosives Safety and Security Branch, Natural Resources Canada: I believe you have before you a presentation that I would like to make to describe the user fees and explain our story.
The Chair: You will deliver that?
Ms. Hanspal: Yes.
The Chair: I point out that this document is in both official languages.
Ms. Hanspal: Yes, it is.
[Translation]
Mr. Chair, we would be happy to answer questions in either official language.
Thank you for inviting us to this meeting. I would like to take this opportunity to give your an overview of our proposal.
[English]
You have the presentation before you in English and French. I draw your attention to page 2.
The purpose of this presentation is to outline the basis of costing the proposal and how we assess the impacts on industry as well as Canadians; and how we took great care in consulting with stakeholders and responding to the concerns and feedback we received from our stakeholders and the results.
The Chair: This being our first meeting of this session of the Fortieth Parliament, it would help us to know who the stakeholders are in your particular subject matter.
Ms. Hanspal: We will provide that information in this presentation. If you have any questions, we will be happy to respond to them.
If we go to page 3, we look at explosives; why are they important in Canada and in society? They are needed to build our roads. They are needed to create the gravel that goes into building our various buildings, bridges and what have you. They are needed to extract minerals and metals from the ground. Canadians also enjoy them for entertainment. They are used for pyrotechnics in music shows and in the film industry. I recently spent a week out West where I went to a small studio in Vancouver where they were shooting a Superman movie. They are also used for safety purposes to control avalanches so people are not hurt when there is a snow accumulation.
Explosives are important in society, and in accessing the natural resources in Canada and in ensuring the economic competitiveness of the nation.
How do we go about ensuring the safety and security of commercial explosives in Canada?
Natural Resources Canada has a mandate under the Explosives Act and Regulations that we carry through our regulatory arm, which is the Explosives Regulatory Division, and through our Canadian Explosives Research Laboratory, CERL. Those two organizations are a perfect marriage of science and policy; we deliver a high-class, internationally-renowned regulatory program to ensure the safety and security of Canadians and Canadian workers as they handle, distribute and transport explosives in Canada.
NRCan is also responsible for explosives of a military purpose but which are not immediately under the control of the Department of National Defence.
How do we do this? Through the Explosives Regulatory Division, we maintain a system of authorization, licensing and certification permits. We also have a compliance program, which is focused not only on active inspection, but also on educating the public and the stakeholders to encourage compliance positively.
The CERL also undertakes safety testing to ensure the safety of products authorized by the chief inspector of explosives. What is the value added to industry? We assure a level playing field through our inspection processes and our authorization activities; we support innovation by helping products reach the market, through explosives testing services; and, in summary, we ensure the safety and security of employees and Canadians through our role as a regulator and as a science and technology arm.
I draw your attention to page 4. Why are we here today? Why are we revising our explosives user fees? The current schedule in place is about 16 years out of step. These fees were originally established in 1993. Senator Angus said that the increase is substantial. The increase reflects the 2009 costs of operating the Explosives Regulatory Division.
Right now, we recover only 13 per cent of the costs. The private sector currently receives some explosives safety services at no charge, or at an unusually low rate, and this situation has been pointed out by our key stakeholders. I will talk about our list of key stakeholders shortly.
We started activities to revise the explosives user fees in 2005. We consulted with industry for fee scheduling in 2005 and we started again in 2008.
The Chair: I have something to say on that point. By the way, I am glad to see you were listening to my opening comment. I am also glad to see that you are sensitive to the issue of the extent of the increase. Given you started this study in 2005 to revise fees that were set in 1993, does that study indicate that user fees are changed every ten years? Why has it been such a long time since the fees were reviewed?
Ms. Hanspal: We initiated the revision of the user fees and we were tabling the proposal in Parliament. The political process being what it is, Parliament prorogued and an election was called. Then we had to go back. We are respecting the User Fees Act closely, which says we should consult stakeholders and follow certain processes. We followed that act again and we undertook activity-based costing of all the explosives safety services. We hired a third-party consultant, so the costing was carried out in a neutral way. We respected Treasury Board methodology.
We returned to square one again.
The Chair: That was after 2005.
Ms. Hanspal: A study was undertaken for 2005, as well.
The Chair: You did not start this study in 1997.
Ms. Hanspal: No.
The Chair: Why did it take so long, from 1993 to 2005, to study the fees?
Ms. Hanspal: We started in 2004; the User Fees Act came out in 2004. We had started before that act came out in 2004, and we had to comply with the requirements of the UFA. In doing so, we respected the parliamentary process. Then, we needed to restart the process.
We restarted it in 2007. We undertook consultations in 2008. Now, here we are.
The Chair: Please proceed.
Ms. Hanspal: Did I answer your question sufficiently?
The Chair: I wanted to make that point of clarification.
Ms. Hanspal: The proposal you have before you follows the structure of the 2005 proposal, except it reflects the costs of operating these services in this day and age, in 2009.
What is the additional revenue from this proposal? What will it go towards? It will go towards the current realities we face in regulating explosives in Canada. There is a need to undertake more robust authorization testing; meaning we have an increased rate of imported fireworks in Canada. Canadians handle fireworks. Through our testing services, we have discovered imported fireworks have a high failure rate — about 60 per cent do not meet standards. Therefore, we want to strengthen post-authorization testing.
We also want to enhance our inspection activities. Additionally, given that we are operating with a 1993 level of revenues, we need this level of revenue to ensure the sustainability of our services.
I draw your attention to slide 6. The cost base for the 2009 user fees proposal, as I indicated earlier, was approached with an activity-based costing. We respected Treasury Board policies on costing. We captured the direct and indirect courses — the full costs — of delivering these services. We also included in it the costs that we assess would be required to enhance our inspection and post-authorization testing services.
We are looking at a total of about $4.7 million grosso modo in terms of operating costs.
The Chair: Is that a general figure?
Ms. Hanspal: The total is $4.684 million.
Senator Milne: What do you mean by grosso modo? It sounds to me like a manufactured word.
The Chair: It is a colloquialism.
Senator Milne: Why not let the witness answer because she seems to be puzzled by grosso modo, as well.
Ms. Hanspal: It means ``about.'' I rounded $4.684 million up to $4.7 million.
Senator Milne: She still has not defined grosso modo for me.
Ms. Hanspal: Grosso modo is a phrase that means ``about.''
Senator Milne: Is it Latin?
Ms. Hanspal: It is Latin, yes.
The Chair: I do not think the witness is finished her presentation yet. Have you finished?
Ms. Hanspal: No.
The Chair: Please carry on.
Ms. Hanspal: I draw your attention to slide number 7. We took great care in also determining the public-private split. In essence, we wanted to ensure that the services we provide for public safety and security remain in the public domain. Where we assessed economic benefit for the private sector, we wanted to ensure that the revenues or the user fee proposal charged only for the private benefit.
We used certain criteria that are highlighted in the table on page 7. We included these criteria in the consultation document and we used them as a basis to determine the public-private split of every activity we costed.
We also looked at activities that we know are used by small businesses, meaning organizations with zero to five employees. We looked at those activities and we further reduced the user fees for the small businesses by 20 per cent. We took great care in assessing the impact on small business.
I draw your attention to slide 8. Slide 8 clearly sets out the costing of each major set of activities that we undertake to deliver our explosives safety services. The slide also sets out the percentage recovery that we charge for each service.
Originally, we went to stakeholders with the proposal of $2.4 million. We received feedback from the stakeholders and, in particular, the focus was on the first item — the authorization list. We originally anticipated a cost recovery of 80 per cent. After discussions with the stakeholders, we brought the cost recovery down to 45 per cent. The stakeholders were happy and gave us written approval that they were happy with this coverage and the approach taken for the cost recovery of this item.
Slide 9 shows our key stakeholders, who are licence holders and permit holders. Sixty-seven per cent of our stakeholders are represented by four major associations. The sector is a small, static and highly specialized. Four associations represent 67 per cent of the revenue.
We sent letters to all the licence holders. We held bilateral meetings. We went across the country to Halifax and to Calgary. We met with one association here in Ottawa and went through the proposal in detail. We made a presentation. The members asked us specific questions. We took great care in responding to the questions not only during the meetings, but also on a bilateral basis.
The associations are the Canadian Explosives Industry Association, the Canadian Pyrotechnic Council, the Petroleum Services Association of Canada and the Canadian Association of Geophysical Contractors.
The Chair: Did you meet with the Canadian Construction Association?
Ms. Hanspal: No.
Jean-Luc Arpin, Inspector of Explosives, Natural Resources Canada: The Canadian Construction Association is represented by the Canadian Explosives Industry Association, CEAEC, that covers blasting explosives for mining, quarrying and construction activities.
The Chair: You would think they would be big users of explosives.
Mr. Arpin: They are indeed.
The Chair: Carry on.
Ms. Hanspal: We wanted to ensure that all our stakeholders had heard the proposal, and that we had responded to the concerns. We even responded in writing. We responded by letter as well.
The concept of cost recovery was fully accepted by stakeholders. One of our major stakeholders also said in writing that, ``no one in industry can criticize this department for lack of consultation.''
We took great effort in resolving the issues and we even addressed the concerns of ammunition manufacturers. Many clarifications were provided to stakeholders. We provided to you a copy of the consultation report. In that report, we have details on the comments received and the responses we provided. For the most part, when people called us, they wanted to understand how the fee proposal applied to them, and we responded to those questions.
In fact, I was out West last week and I talked to stakeholders again to ensure that the proposal was still relevant and that there is still support for it. Our inspectors in our regional offices have regular dialogue with industry associations and stakeholders. We go to their meetings on a regular basis. We provide an update on the user fee proposal and seek feedback. There is still support for this proposal. I am proud of the quality of work undertaken by the Explosives Regulatory Division. They have a positive relationship that was underscored by the testimonials I heard last week.
In summary, I will leave you with three messages about this proposal. First, we took great care in costing the explosives safety services appropriately. Second, we also took great care in assessing the public/private split for each of the activities appropriately. This split was also supported by our stakeholders. Third, we conducted extensive consultations and continue to maintain an ongoing dialogue with our stakeholders to ensure the relevance of our proposal and our explosives regulatory services.
The Chair: Thank you, Ms. Hanspal. Mr. Arpin, do you plan to speak?
Mr. Arpin: No, I will answer questions as needed.
The Chair: Senator St. Germain, you have a point of order?
Senator St. Germain: The document is in French only, I believe; at least this is what we have here.
The Chair: No, we have it in both languages.
Senator St. Germain: Good, thank you.
Senator Banks: Thank you, witnesses. I will return to the question asked by the chair, and push you a bit on it. He asked: What is the regime that determines when you re-examine user fees? Is it when you get around to it or when they are out of whack, in your view? Are there regular five-year or ten-year cycles in which you examine your user fees, or is it simply ad hoc?
Ms. Hanspal: The trigger for examining user fees depends on the program. It is driven by the program and the assessment of the need to renew the user fees.
Senator Banks: Are the examined whenever they become inappropriate?
Ms. Hanspal: In this case, our intent is to come back in five years. We are reviewing the proposal again in five years. We intend to follow this cycle. that is what we highlighted in the consultation report. That is the trigger we are putting in place.
The Chair: Do you want to add something, Mr. Arpin?
Mr. Arpin: Yes; it is also driven by the type of activities in which we become involved. With time, technologies change. Twenty years ago, most explosives used were packaged explosives. Now, it is base explosives that are transported to the point of use, sensitized and pumped into bore holes. The way they operate determines the way we issue licences. That operation dictates how we charge fees. It evolves with time.
Senator Banks: The explosives to which you referred are the kind that are made effective, if that is the right word, or armed at the point where they are used?
Mr. Arpin: That is correct. Twenty years ago, the technology was different.
Senator Banks: The inspection regime, by definition, would also be different.
Mr. Arpin: That is correct.
Senator Banks: You talked about the split in costs and that the government should recover those costs from fees that relate to public safety. What aspects of the inspection regime do not pertain to public safety? They are referred to here sometimes as ``competitive'' or ``financial'' advantages. What competitive or financial advantages are gained by your stakeholders as a result of your inspections?
Mr. Arpin: The answer can be lengthy.
Senator Banks: Please provide examples.
Mr. Arpin: For example, when we issue a licence to handle, store or process explosives, these explosives must be at a sufficient distance from the public, meaning a residence or a public road.
Senator Banks: That is a matter of public safety, is it not?
Mr. Arpin: That is correct.
Senator Banks: What are the things that are not matters of public safety?
Mr. Arpin: In issuing the license, stakeholders propose the way in which they pump or store the explosives, and we review the proposal as to whether it is done in a safe manner. This proposal will impact on their cost of operating.
Senator Banks: That proposal is also a matter of public safety, though.
Mr. Arpin: No, it is a matter for the interest of the company to operate in a certain way.
Senator Banks: That is safe.
Mr. Arpin: It is safe, but also so that they can operate, period.
Senator Banks: What part of that operating cost of the company is not related to public safety?
Mr. Arpin: We have estimated it at roughly a 60 per cent to 40 per cent split — 60 per cent of the review is for the company to operate and 40 per cent is to address the public good.
Ms. Hanspal: If you will permit me, as Mr. Arpin said, part of the proposal is the choice of where and how they want to use the explosives.
The public safety element ensures safe use of the innovations the companies want to use to access something better and faster. That choice is made by the company. We support that innovation, but we need to ensure it is safe, so we apply outcomes-based standards to ensure that they handle the explosives safely in the new way that they are contemplating to be able to do business more competitively. Handling the explosives safely is the public safety element, and the choice of mechanism and technology is more the economic part of the proposal.
Senator Banks: What is the PSAT funding?
Ms. Hanspal: PSAT funding is the funding we receive to undertake our explosives security activities.
Senator Banks: Where does the funding come from?
Ms. Hanspal: This funding is from the public purse, from appropriations. Not in the deck, per se, but in the tabled proposal, we specifically took the cost of the PSAT-related activities out of the cost of the user fees proposal because that funding is purely for security. We already receive funds for it. Security is 100 per cent a public good, so we do not apply user fees towards those activities.
Senator Banks: And PSAT is an acronym for?
Ms. Hanspal: Public Services and Anti-terrorism activities.
The Chair: Senator Banks, would you outline the rule you had, as chairman, about the use of acronyms? Did we not have a fund?
Senator Banks: We had a fund; we had a pot. It was necessary that all of us, and our guests, put a buck in the pot every time we used an undefined acronym, but we did not give you notice so you are absolved of the responsibility. However, henceforth, you have been forewarned.
Fees now have been put in place for certain kinds of regulation, whereas before, no fee was charged for that regulation — zero, not merely 60 per cent or 40 per cent, depending on the purpose, but no fee. What was the rationale for no fees? I understand why we are charging a fee to recover the cost but why did we not charge that fee before?
Mr. Arpin: Some of these activities did not take place previously.
Senator Banks: They are new activities?
Mr. Arpin: Correct.
Senator Mitchell: As I read this slide then, it is not $4.6 million in total in costs but $6.5 million because the $1.9 million has been taken out. I thought, for example, in the first row, authorization list, that the discount for your share of public safety costs was 55 per cent.
The Chair: You are looking at page 8?
Senator Mitchell: I thought the discount on that cost was 55 per cent to reflect properly your department's share of costs. In fact, that 45 per cent is further discounted by virtue of the $1.9 million in PSAT funding, so I do not see the overall cost recovery rate of 47 per cent as the result. What I see is $2.1 million in revenue, not against $4.6 million but against $6.5 million in costs. The pick-up is not 47 per cent but about 30 per cent or 33 per cent.
The Chair: Are you asking it as a question?
Senator Mitchell: I am asking it as a question to see if that is the case. If it is the case, it is a huge discrepancy.
Ms. Hanspal: We apply the user fees to explosives safety services, so the $4,687,617 is our estimate of the cost of services related to delivering explosives safety regulatory services. The $1.9 million has been extracted because that funding is for explosives security services. It is our estimate when we apply the user fees to the $4.687 million.
Senator Milne: My first point follows on Senator Banks' comment. I am upset when I see these lists of acronyms, an alphabet soup of initials, and I find it insulting to the committee and the public who are watching us on television.
On slide 6, you have total ERD costs; cost allocations — MMS; cost allocation — NRCan, that I understand; and FTEs ``address a significantly increased workload.'' Hello, what do all these acronyms mean? You then use a word like grosso modo, which you cannot really define yourself. I know pro rata and pro bono, but grosso modo is industry- specific, obviously, and I think the committee and the public deserve explanations for all these terms.
Ms. Hanspal: Would you like me to go through each of them?
The Chair: I think the senator is asking, for each of the acronyms she outlined, if you can give the full name.
Senator Milne: O and M.
The Chair: In fairness, grosso modo is not industry-specific. It is a term that, perhaps, has escaped you, but it is well known.
Senator Milne: I have never run into it on the Standing Senate Committee on Legal and Constitutional Affairs, and I have run into a lot of Latin there.
The Chair: If you defer and give us a list after the hearing, it might be more practical. Do you agree, Senator Milne, to receive a list of these acronyms with their full names and have it filed with the committee?
Senator Milne: That will probably save time here, but it will not help the public at all.
The Chair: At this point, maybe not.
Senator Milne: When it comes to consultations, you have held bilateral meetings umpteen hundred times with four major industry organizations, et cetera. Many outside experts have drawn up two different schedules now that we know about. There have been how many trips across the country to consult with all these different groups and people since 1993, and it has taken you until now to come up with this proposal?
Ms. Hanspal: In 2004, the User Fees Act came into force. We had a revised proposal, and we had to change our proposal to respect the legislative requirements, and so we had to undertake the consultations dictated by the User Fees Act.
Senator Milne: That was 2004. You came out with the proposal in 2005 and then circumstances interfered. Still, it is 2009 now.
Ms. Hanspal: Again, in 2007, we re-costed to ensure the stakeholders see the freshest possible proposal. We updated the costing in 2007. As quickly as we could, we consulted in 2008 and had the proposal tabled in Parliament on May 26 of last year.
Senator Milne: I know what has happened since May 26 last year, but those circumstances still do not excuse all this time and all these trips across the country at public expense. I believe it is a great job to have.
Ms. Hanspal: We undertook . . . Pardon me?
Senator St. Germain: I said, so is the Senate.
Senator Milne: You should know, Senator St. Germain.
Ms. Hanspal: Senator Milne, for the purposes of these consultations, we undertook two sets of trips: one to Halifax and one to Calgary. Stakeholders made a point of coming together in Calgary and Halifax, and we picked trips where we knew stakeholders were holding annual general meetings, so as not to displace them too much. We took great care in minimizing the impact, even of the consultations with stakeholders.
We tried our best to consult, and to meet the requirements of the User Fees Act as fully as possible while minimizing the cost to the taxpayer.
Senator Milne: The other day we had a list in front of us of how each one of the sets of fees have increased, and now I cannot find that list of individual fees.
At that time, I spoke about having some sort of a comparison of 1993, 2005 and now to see if all these sets of fees are increasing in an approximately straight line so that we know that it is increasing in a fair manner, but I do not see that comparison here, and I do not see it in your presentation.
The Chair: We have it.
Senator Milne: We had a chart of the fees alone. I do not know where that list has gone.
We had a chart that showed the fees that are charged now, the 1993 fees and what you propose here. We need to know if these fees are increasing at about the same rate that the costs to the industry have increased over that same period of time. I do not see anything in your presentation whatsoever that is specific.
Ms. Hanspal: We base the fees on the cost of delivering the operations, in terms of delivering our explosives regulatory services. Some costs have changed because of the new activities, as Mr. Arpin highlighted, such as post- authorization testing. The world has changed; and the technology has changed. We have more imported fireworks. Risks are different today than even 16 years ago.
To ensure we were objective, we had a respected third-party consultant undertake the activity-based costing. We made sure we respected Treasury Board costing policy. We worked closely with central agency to ensure that we were transparent and that we respected all the accountability principles. The costs are based on the delivery of our explosives regulatory services to industry.
If I understand you correctly, we did not look at the industry budgets per se. However, the industry stakeholders we consulted provided robust input on our fee schedule. The focus was primarily on the new fees we were charging on authorization. We originally proposed charging fees with coverage of up to 80 per cent. We received feedback from industry, which looked at the proposal closely, based on their assessment of their budgets, and we brought coverage down to about 45 per cent.
The Chair: I believe it is 47 per cent.
Ms. Hanspal: Yes, that is correct. To answer your question, we took great diligence in reflecting our costs. We worked closely with Treasury Board and people outside the Explosives Regulatory Division to ensure that we were held true. The industry assessed their budgets and then provided input. We listened to industry and modified the proposal to reflect their concerns.
Senator Milne: This matter should be dealt with properly in regulations. Was it put into the bill, at whatever time the new bill came through, or was it in the bill in 1993 that you were originally operating under? Will you need to go through this exercise again, coming before Parliament to change your fees every five years?
Ms. Hanspal: The User Fees Act dictates that we come to Parliament and we respect the law. We come here because these fees are charged as a result of delivering regulatory services. Hopefully, following your approval, we will undertake regulatory amendments to be able to charge these fees. We cannot undertake those regulatory amendments until we have undertaken the due diligence, as dictated by the User Fees Act of 2004.
Senator Milne: Are you telling me this issue must come back to Parliament again in five years?
Ms. Hanspal: Yes.
The Chair: That is what she is saying.
Mr. Arpin: The User Fees Act again is a new act of Parliament, adopted only in 2004. Before the User Fees Act, our user fees that appear in regulations did not have to go through a parliamentary process, as is the case now. This is why, if we want to change the fees again, we need to go through this process to comply with the User Fees Act.
The Chair: The process is a two-step one to protect the user from being summarily overcharged.
Mr. Arpin: That is correct.
Ms. Hanspal: We brought copies of the User Fees Act.
The Chair: We have them available. Thank you very much.
Senator Lang: I thank the witnesses for their information. They have done a good job in giving us an outline in an area that most of us know little about.
Looking at the information here, we are not only looking at a cost recovery of 47 per cent, as opposed to 80 per cent, but the division will also increase its activities, if everything is approved. In other words, if we maintain the status quo, and the division does not increase its scrutiny of the industry and its testing, we would be at a budget of about $2.8 million or $2.9 million. However, with the increase in fees, and what the proposal recommends, the division will increase the cost of its services by an additional $1.1 million. Is that correct?
Ms. Hanspal: No, if you go back to page 6, the total cost allocated to delivering our current services is $4.684 million, and $600,000 is for the additional work that we are contemplating. It is only $600,000 of the total cost. That is only the cost of delivering the services, and $600,000 in direct and indirect costs for delivering the enhanced inspection activities to undertake the post-authorization testing.
We took that cost and set up a recovery schedule, which is set out on page 8, if you move forward by three pages.
Senator Lang: I have it.
Ms. Hanspal: We then took each one of the activities that go into delivering the services, and determined the split. We will recover only $2.185 million in estimated revenue.
Senator Lang: On the question of fireworks, you say up to 60 per cent of these fireworks that come into Canada do not meet standards, yet we will recover only 40 per cent. It seems to me that is where much of your testing will be. Is that correct?
Mr. Arpin: That is correct. Fireworks occupy a great deal of our time with respect to the authorization of explosives.
I want to make several comments as well. In 1993, most of the fireworks sold and used in Canada came either from Europe or the U.S., or were manufactured in Canada. Nowadays, the situation is different. More than 90 per cent are imported from China. Because of the way the act and the regulations are written, when we authorize an explosive, it goes on the list of authorized explosives and stays there forever.
You are allowed to take samples at any point in time to verify whether these explosives can continue to be imported, manufactured, stored or used safely. These additional fees are needed to address this type of issue. We know there is an issue out there, because when the fireworks go through the formal authorization process, even though the manufacturers know that they are to be tested by our lab, 60 per cent of them still fail the authorization process.
Senator Milne: What happens to these ones that fail? This issue is a matter of public safety. How do you dispose of them?
Mr. Arpin: These fireworks are only samples that are sent to the laboratory. If they fail the authorization process, they are not added to the list of authorized explosives and they cannot be imported.
Senator Milne: So they cannot come into the country at all.
Senator Sibbeston: I wonder if we are putting so much focus and attention on such a small matter because of the nature of the industry, or the nature of what it is about: that is, the fact that it can explode and damage things. Is that the reason there is so much emphasis on this issue? Why are we, as a Senate committee and even as a Parliament, worried about user fees? Thousands of areas are controlled by regulation and involve user fees. Why are you before us, in a sense?
The Chair: Before I ask the witness to answer, the steering committee addressed this question. In particular, as explained by the witness earlier, there has been a long hiatus; there has been prorogation. Since we were only starting, as a new committee, there was the potential to hold a hearing to understand what the issue was all about, and we decided to hold the hearing. Otherwise, senator, the 20 days would elapse, these fees would pass on to the regulatory process, and we would not spend time studying it. The idea was that we would clarify a few issues, and I am happy that you posed that question.
Ms. Hanspal: We are meeting the requirements of the user fee act, and we appreciate the opportunity to come here to speak. We appreciate the opportunity to give you a presentation to answer any questions you may have.
Senator Sibbeston: I appreciate that need. It is most unusual for this committee to review user fees. Thousands of different areas deal with user fees, for example, ships, boats, planes, airports, and their representatives do not come before us. The minister can probably deal with this matter and present it to Parliament.
Why are we doing this study? Is it because of the nature of the subject; because explosives are dangerous and they can cause a lot of damage if not properly dealt with?
Ms. Hanspal: It is not the substance. In the last 10 years, we have not had any major incidents. I think it is because of the excellent work the team is undertaking. We are here because we are meeting the requirements of the law, the User Fees Act. According to the User Fees Act, every user fee proposal must be tabled in Parliament; 20 days in the House of Commons, and 20 days in the Senate. If we are invited to speak to the committee, then we come and present the proposal. We were invited to present the proposal, and to respond to any questions.
The Chair: Again, Senator Sibbeston, your point is well taken. However, during the 1980s when the government started to look at cost recovery for a lot of areas, the concept of user fees became very much in vogue — so much so that there were alleged abuses. There were fears that there could be misapplication or exaggeration of these fees, and those fears led to the enactment of the User Fees Act, which is not a statute geared only to explosives and to the department of these witnesses. The statute applies to all user fees. For example, there are big user fees for sending a tugboat in the Arctic to a stranded vessel, or something like that. A process was needed to review that issue. We do not have to hold the hearing but it is our option; that is why we have the 20-sitting-day window.
The steering committee look at this proposal and, for the reasons I stated earlier — and Senator Milne has accurately pointed them out as well — to us it appeared that there is a large discrepancy in the fees for which they now ask approval, compared to the 1993 list, albeit we recognize that it is nearly 20 years later. That is why we are studying this item, Senator Sibbeston.
Senator St. Germain: What happens if we do not approve the proposal? What happens then? I agree with Senator Sibbeston. I do not question the suggestions of the steering committee, but user fees are so common in our system, why are studying this particular subject? What happens if we disapprove them as a committee?
The Chair: We would report back to the Senate, and then answer to our colleagues in the Red Chamber.
Senator St. Germain: I realize that.
Senator Sibbeston: Can you explain the process to me? In the Northwest Territories where I am from, there is a lot of use of explosives in the diamond mines and other mines. Yellowknife, as an example, is built on rock that is part of the Cambrian Shield, so a lot of explosives are used when they build roads, subdivisions, and so on. What is the process for people obtaining permits to use explosives? Is it complicated? Do you have staff in Yellowknife? Is the application process simple or complex?
Mr. Arpin: That area comes under the federal Explosives Act, which regulates the import, manufacture, storage and authorization of explosives. If someone wants to blast in Yellowknife, and if someone wants to manufacture close to the point of use, they need a factory licence to manufacture the explosives. If they want to store for a period of time at the factory, that is allowed. If they want to transfer explosives from Alberta to Yellowknife that are already manufactured, and then store them in Yellowknife, they need a magazine licence to store those explosives. To do the blasting itself is a provincial jurisdiction.
Senator Sibbeston: Does a person then go into an office in Yellowknife and try to obtain a permit, or where does the permit come from?
Mr. Arpin: We have offices across Canada, from Halifax to Vancouver. Your area is covered by the Calgary office. We have inspectors. Whenever we issue a licence, we will conduct an inspection before issuing the licence, or after having issued the licence to verify that licensee respects the conditions of the licence.
Senator Sibbeston: Is the process a smooth one, or is it bogged down in bureaucracy, red tape and paper?
Mr. Arpin: As part of the user fees proposal and as mandated by the User Fees Act, a performance standard must be respected. We provide the response within 30 days after receiving the request. We are normally much faster than 30 days.
The Chair: Our diligent clerk has anticipated the question that you raised, and also that of Senator St. Germain. We have examples of other user fee submissions to a committee, the report of that committee, and observations made by another committee. I will arrange to have this information circulated to all members of the committee to give you a sense that this is part of an overall process.
Senator Neufeld: I thank the witnesses for their answers. I think they have given a good record of what takes place.
You said you held major hearings in Halifax and in Calgary, and I am thinking also about British Columbia. Further to Senator Sibbeston's question in regard to blasting for home construction, who represents home construction and such matters? What group did you talk to that would speak for all home construction in Western Canada?
Ms. Hanspal: Last week, I met with the International Society of Explosives Engineers, ISEE. They are not only engineers, but the blasters, the individuals involved in construction. We met the executive from their British Columbia chapter. We undertook outreach with them. I said that the explosives user fees are still active and we have them tabled in Parliament. They asked about the status, and they still are fine with the proposal. We consult them on a regular basis, and our regional office undertakes outreach with them as well.
The ISEE, Western Chapter, represents the Western provinces, and there is an Ontario chapter. ISEE does not have a Canadian chapter, per se. They are not as organized, but these organized bodies represent the British Columbia interests and the Western interests.
Senator Neufeld: I assume it is the same for mining and oil and gas. Is that correct?
Mr. Arpin: The companies that manufacture and distribute in Canada operate all across Canada. Essentially, it is three or four large companies, Dyno, Orica, Austin and one other.
Senator Neufeld: I am aware that the provinces must take authority for the second part. Using the example that Senator Sibbeston brought forward in Yellowknife, if a permit is issued, it would come out of Calgary, and an inspector would have to travel from Calgary to Yellowknife. that travel would be time-consuming and expensive.
Would you use, perhaps, an inspector that the Northwest Territories has already located in Yellowknife to do that inspection for you?
Mr. Arpin: There is indeed a provision under the act to have delegated inspectors. The Explosives Act can be applied by the OPP, the Sureté de Québec or other provincial inspectors as well.
Senator Neufeld: Has inspection ever been delegated? If it is possible to delegate, that is great. However, has it been so used on such occasions? You may not have an answer to that question, but I would appreciate the answer. I would like to know how many times in the last six months you have delegated that authority to a provincial group to carry out those inspections, rather than having an inspector travel that kind of distance.
Mr. Arpin: The opposite has happened in recent years. Provincial authorities have asked us to do the inspections on their behalf. Under the Explosives Act, the storage and use of explosives in mines and quarries is a provincial jurisdiction.
Senator Neufeld: I am aware of that.
Mr. Arpin: We do not become involved in that area. If someone wants to manufacture and they are issued a manufacturing licence, one of our inspectors would go to that location.
Senator Neufeld: I appreciate that, and I understand that process fully. I want to know if authority has ever been delegated to a provincial or territorial authority to have a provincial or a territorial inspector carry out the inspection for your organization.
The Chair: A new gentleman has come to the table. Can you introduce him?
Ms. Hanspal: I would like to introduce Chris Watson, Director and Chief Inspector of Explosives. He heads up the Explosives Regulatory Division. I believe he can answer your question.
The Chair: He is not from the Northwest Territories office?
Christopher Watson, Director and Chief Inspector, Explosives Regulatory Division, Natural Resources Canada: As Mr. Arpin said, we can have deputy inspectors under the act who are not members of our group. In the past, this inspection has been performed principally by RCMP local detachments. We have used the RCMP in the past extensively to carry out inspections for us where it is more cost-efficient than having inspectors travel. The RCMP has asked us to stop using them for inspections as they feel they are under-resourced and overtaxed. They prefer we do not use them except in emergencies, and we respect that request.
As Mr. Arpin has said, the trend in recent years has been the reverse. Three provinces have negotiated with us to hand over their inspection activities to us and get out of inspection totally. A couple more provinces would like to do the same. The provinces are withdrawing their manpower and their effort in the area of explosives inspection, and turning it over to the federal government.
Senator Neufeld: I do not want to belabour this point, and I appreciate what you are saying. I can understand the RCMP not wanting to perform inspections. I am familiar with the RCMP, too. They are overloaded.
If there is a qualified inspector in Yellowknife, would your group delegate to that qualified inspector the task of making an inspection on behalf of your organization rather than moving someone from Calgary all the way to Yellowknife? I use Yellowknife as an example because of the distance. We can use that example any place.
Mr. Watson: We are aware of the fact that to perform inspections far away from our five regional offices is costly, so we try to optimize our travelling so that an inspector who goes on a swing, say, through the Northwest Territories would do a series of inspections at a time to minimize the cost per inspection. We try to use the money as best we can. We prepare a cost-benefit risk-based approach when we prepare our travel budget. In Ontario or southern Quebec, we can perform a lot of inspections in a week. Obviously, when we go to Nunavut or the Northwest Territories, we cannot make many inspections. We try to plan so we make as many as possible on a trip to cut the cost of inspection.
We have not recently talked to any province about using their inspectors. We will meet with provincial chief inspectors of mines in May or June at the Canadian Institute of Mining, Metallurgy and Petroleum conference, and I can ask them whether they are prepared to make inspections on our behalf, how much would they charge and so on.
Senator Neufeld: On page 10, you say the proposal was based on robust activity. My take is that for mining, oil and gas and the large users of explosives, activity is not robust right about now across Canada.
In your documentation where you increase the costs, you talk about full-time equivalents, FTEs. Are you ready to hire FTEs to take up the amount or the dollar value that you have identified here? Have you embarked on hiring full- time equivalent employees?
Ms. Hanspal: We have been building up the regional capacity to meet the inspection requirements in the regions.
Senator Neufeld: You have prepared the estimate based on a robust activity. Maybe I am misreading ``robust'' activity. Are you talking about robust activity in the group or in the industry?
Ms. Hanspal: We are talking about robust activity-based costing, meaning the costing itself. We ensured that the costing was accurate, and that it respected all the Treasury Board policies.
Senator Neufeld: That answers my question.
Ms. Hanspal: ``Robust'' was applied to the costing.
Senator Peterson: You said you had extensive consultation with industry, and that is good. You also made a commitment that, with this extra money, you will achieve a 95 per cent performance delivery rate. Did the industry look at that proposal and say: For that performance rate, we are prepared to pay the extra money?
Ms. Hanspal: The performance standards are part of the consultation document. In our discussions, we invited everyone to comment on not only the user fee proposal but on the services and the performance standards. We were transparent. We said: These are the services we provide, and this is what we are willing to commit to; are you happy with this proposal? They said: Please get on with it; you provide great service. They supported the proposal. Whenever concerns were highlighted, we addressed the concerns.
Senator Peterson: Everyone is happy, and you do not think you will have any problem meeting that rate of 95 per cent?
Ms. Hanspal: No.
Senator Peterson: Very good; thank you.
Senator Spivak: I have a curious question. You are not looking at full cost recovery here, so what are the criteria? As Senator Sibbeston said, there are huge numbers of user fees. If you gave the government full cost recovery, the government might spend that money on Employment Insurance. Why do you not look at full cost recovery?
Ms. Hanspal: We are not looking at full cost recovery because, as we had responded to Senator Banks, we are fulfilling a public safety objective. that objective is under the purview of the federal government and the governments of Canada. There is also the security element, which we felt was already financed 100 per cent so that funding is also not part of the equation. We are only charging for those elements where we believe industry derives an economic benefit.
Senator Spivak: I understand that point, but this money is taxpayer money. It does not matter. If the government thought this activity was less important than some other expense, you could choose full cost recovery, because this money does not come from the ceiling but from taxpayers.
Mr. Watson: Traditionally, when government charges fees, Treasury Board directs us to consider public good versus private good. To spend the public purse, we pay for public good, and industry should pay for private good. We looked at the services we provided and felt there was an element of both. The industry derives the benefit of access to the Canadian marketplace and the ability to sell their products and make money, so that is private good and industry should pay for that benefit. The public good part is what we do to protect the safety of citizens, and traditionally, it has always been the role of government.
Senator Spivak: Yes, thank you. That explanation is clear. Is it true of most user fees?
Mr. Watson: It is the principle that user fees are charged on. I cannot speak for other departments.
Senator Merchant: Thank you for your presentation. On page 6 and the cost base for your fee proposal, almost half the costs are for salary. On page 6, your total budget is $4.684 million, and $2.33 million is for salary costs. Is that amount for operating your offices.
Ms. Hanspal: That amount is for inspectors' salaries and the staff.
Senator Merchant: Yes, I read it, but we also have an audience so maybe you can tell us how big your operation is, and how many employees you have. I do not think you mentioned that in your presentation, although it is in your written presentation.
Mr. Watson: The explosives division has 41 full-time employees — about 25 in Ottawa and the remainder in the regional offices from Vancouver to Calgary. Of those 41, 25 are explosives inspectors who do the licensing and inspection. The rest are support staff who provide the office support and so on to enable the inspectors to do their job. We are a small group of 40-odd people.
Senator Merchant: You are asking to increase your staff by two?
Mr. Watson: Yes.
Senator Merchant: Have you increased staff on a regular basis, or how has staff need been handled?
Mr. Watson: During program review times in the early 1990s, the number of staff were reduced. It was then felt that the reduction had gone too far. We were down to 19 people at that time, as I understand it. We had a risk study conducted of our activities, and the conclusion was that we were seriously under-resourced and under-staffed. The recommendation was that we should increase numbers. We have increased the number of staff to the point where we have an average of two inspectors per regional office, which is not a lot when you consider the territory they cover. The Calgary people cover the three Prairie provinces plus the Northwest Territories, and British Columbia covers B.C. and the Yukon.
Ms. Hanspal: That is why we have a strong educational and outreach component as well. The division has worked hard on developing guidance and outreach documents so that the industry and public understand the requirements; industry for guidance on how to comply with certain elements of the regulations, and the public for fireworks.
Mr. Watson: Across the country, we have about 2,400 active licences; about 2,000 storage licences, and the rest are manufacturing licences, so you can see the ratio of inspectors to licences means we do not see everyone all the time. Yes, we do not think we are overstaffed. Yes, we rely on industry to self-regulate to a large extent, and industry is a compliant and safety-oriented group. Safety is good business for the industry as well as for the public.
Ms. Hanspal: In the visit out West, talking to the range of industry representatives, the range of safety requirements was clear. There are provincial requirements and requirements from other federal departments. Our requirements dovetail into the other requirements, and they are seen as part of a suite of safety policies, activities and standards that individual stakeholders comply with. Our requirements are part of a whole set of safety requirements.
Senator Merchant: With the downturn in the economy right now, do you still feel that you require all the employees you have, plus the extras?
Ms. Hanspal: Yes; I would also indicate that we maintain an ongoing dialogue with stakeholders. We have talked to the associations, and they still support these fees. For example, the big four associations that have big companies with factory licences and what have you, representing 67 per cent of their revenue, for these companies, our fees are less than 1 per cent of their operating costs. The fees are a fraction of their operating costs. They are not significant, relatively speaking. They are important for us, but not significant for them.
[Translation]
Senator Mitchell: My first question is about the implications of maximum fees in terms of total revenue.
[English]
I am concerned about your point that the fees do not add up to much. If the fees are way less than 1 per cent for some huge mining concern, they still have implications for you not covering your costs, for example, if we do not make it out of the downturn.
One specific thing concerns me. In every one of these sections, there is a maximum fee. I will use an example that, hopefully, is exaggeration for emphasis. Let us say we have five companies utilizing a section where the maximum fee is $2,500. In fact, your costs in providing those services would be $5,000. In the first case, you are limited to 47 per cent of $12,500. In the second case, it is twice as much; you are limited to $25,000. It is not 47 per cent of that; it is now 23.5 per cent.
How often do companies reach this maximum fee and how often do they go over, which immediately begins to dilute the percentage you receive? The overall 47 per cent is thrown into question.
Mr. Arpin: In fact, yes, some fees are somewhat volume sensitive. For example, there is a minimum fee for a manufacturing licence and the maximum fee is different. Essentially, only three companies would pay the maximum fee. They are large companies with a few hundred employees at their site. Most of the licencees will pay closer to the minimum fee.
Senator Mitchell: The three largest companies, which it seems to me would account for a good portion of the total fees you receive, would go over the maximum, and therefore dilute the 47 per cent. At the end of the proverbial day, given your experience, can you give me an idea what reduction in the percentage you would experience? Is it now 46 per cent, 30 per cent or 35 per cent?
Mr. Arpin: We are trying to reflect the actual amount of work an inspector must perform for a licence. This is where these maximum fees came from. It is unrealistic for a large site to pay per process unit, which is how it is described in the fee schedule. Large sites have many process units, and if they paid per process unit, they could pay $300,000 for a manufacturing licence, which would not make sense. We would definitely not have three inspectors full time at their location throughout the year.
Senator Mitchell: My question is not about that so much, although it is to some extent. Why do you say 47 per cent if you have the continual experience of people going over those maximums? Why do you not tell us what your experience would tell you, for the benefit of openness and transparency?
You could say it averages 43 per cent or 40 per cent.
Mr. Arpin: The average is indeed 47 per cent. We are aiming at a lower cost recovery for small businesses and a higher cost recovery for the large stakeholders.
Ms. Hanspal: We have made every effort to mitigate impact on small business. Therefore, you are seeing the average of the big businesses and small businesses. This percentage is the average experience. We have some outliers, but you are seeing our assessment of the average experience, taking into account the mitigation measures we put in place for small business. We are conscious of that impact.
Senator Mitchell: I know that you spend a great deal of time and effort inspecting ongoing factory licences, for example, in Canada. However, apparently you do not spend the same time and effort on imported explosives. Is that true? What is the difference and what is the implication for safety and security?
Mr. Arpin: I mentioned earlier that the situation has changed. Over the past 20 years, a much larger proportion of explosives has been imported rather than manufactured in Canada. This is why we came up with different fees. We have established fees for the authorization process as well as for the post-authorization testing. We have also modified the way we issue a fee for import permits. This modification will allow us to conduct verification on the products imported. When explosives are manufactured in Canada, we can conduct verification at the licensed factory.
Senator St. Germain: Do you have inspectors offshore or are the inspections conducted here?
Mr. Arpin: No, we select samples once the explosives are imported. When they import, they need the import permit and they also need a magazine licence to store the explosives.
Senator Merchant: I am trying to understand how big the explosives industry is in Canada. What is it worth to the economy?
Mr. Watson: We have no remit to collect or demand statistics from the industry. Our estimate is about $1 billion per year in total sales.
Senator Milne: I believe your answer to me was incorrect. You said all you received was a sample and you tested this small sample when materials are imported. However, the whole amount is imported and then you receive the sample. What happens to materials that are turned away?
Mr. Arpin: When I mentioned a sample earlier, this sample was for the initial authorization of the explosives. When we authorize an explosive, then it goes on the list of authorized explosives for an indefinite period of time. Five years down the road, we may want to take more samples. The explosive is still on the authorized list and they are allowed to import it. However, we want to take samples of the explosives at regular intervals to verify that these explosives continue to be safe.
Senator Milne: If it does not pass, what happens to that bulk of explosives?
Mr. Arpin: The product is removed from the list of authorized explosives and it may mandate a product recall.
Senator Milne: Yes, but you are still not telling me what happens to the explosives that are sitting there from which you have taken the sample.
The Chair: They have not come yet.
Mr. Watson: We do not allow large imports of materials that are not authorized. We would tell —
Senator Milne: However, these materials have been authorized. They are already on the list. They have been imported. Five years down the road, you take another sample to verify. If this sample does not pass, what happens to the rest of that explosives material?
Mr. Watson: It is out on the market already. The distributor would be ordered to recall it, and either export it or destroy it.
Senator Milne: Then how do they destroy it?
Mr. Watson: By incineration normally.
Senator Milne: They use it.
Mr. Watson: It cannot be used once it is no longer on the authorized list. Using it would be breaking the law. It must be disposed of by exporting it to where it came from or by destruction, and destruction is normally by incineration.
Senator Banks: If I were operating one of those companies and someone came to me and said your inspection fees will now increase by 4.5 times, I would not write you a letter saying how happy I am.
I will refer specifically to the initial factory licence to manufacture blasting and bulk explosives or military explosives. You said that the fee is based on a per-unit process that. Until now, the fee has been $180. The proposal is to increase the fee to $800. That is an increase of about 4.5 times. I do not know who will be subject to that increase. However, if that manufacturer were sitting in that chair, would the manufacturer say: Yes, we are happy to have our inspection fees increased by 4.5 times?
Ms. Hanspal: This group of stakeholders is represented by the Canadian Explosives Industry Association. We met this group in Ottawa. They have representatives from such factories. We went through the rates and they realized that they are being charged at 1993 rates. They also acknowledged the performance standards they currently enjoy from the Explosives Regulatory Division. They also recognize the positive relationship we have. We encourage compliance.
Senator Banks: They are happy with it.
Ms. Hanspal: They are happy with us. They say they support this increase and they are waiting for us to go forward.
Senator Banks: I am sure they are anxious to send more money.
Ms. Hanspal: No one is ever happy with user fees, but they support these fees and they know we need them.
Senator Banks: There are many innocent things around that can become explosives, fertilizers in particular. Are they subject to the same kind of rigour of inspection?
Ms. Hanspal: We recently promulgated the precursor regulations that regulate nine restricted chemicals. All the regulations have come into force as of March 1, 2009. We have nine restricted components, and of those, three are fertilizers. There are specific requirements under those regulations to regulate those percursors that are not considered explosives per se but can be used to manufacture improvised explosive devices.
Senator Banks: Without naming them, is that list an inclusive one?
Ms. Hanspal: It is nine chemicals and we have engaged to review the list within three years.
The Chair: I thank you all, Ms. Hanspal, Mr. Arpin and Mr. Watson, for joining the panel. We will deliberate and take into consideration the information you have given us. We all know a little bit more about the process. You may now leave if you wish.
We have several items to deal with on the record. The clerk has circulated two draft budget applications for the period ending March 31. Of course, today is March 5. This item is an issue of process. For whatever reason, and those of you on other committees may have seen it elsewhere, the Standing Senate Committee on Internal Economy, Budgets and Administration, even though we have a budget in the works for beyond March 31, has asked us to submit an interim budget, if you will. The committee may or may not call us to justify it, but you will see items in these two draft budgets.
I need two motions. The first one relates to the legislative issues. I need a motion that the legislative budget application for the period ending March 31, 2009, be approved for submission to the Standing Senate Committee on Internal Economy, Budgets and Administration.
Senator Banks: I so move.
The Chair: All in favour?
Hon. Senators: Agreed.
The Chair: The other one I will just explain a little bit. As you know, one of our items, work in progress, going back to the last session of Parliament, related to the trip to the Arctic. We have circulated to you the draft report, in English and French, and asked for your comments. Senator Mitchell has agreed to take the lead in putting this issue together. We have also had extensive comments from Senator McCoy.
The steering committee considered a proposal from the deputy chair to the effect that we want to have a good report. This trip was expensive and extensive, and there are interesting findings. It was felt that we should have a professional writer take into consideration everyone's comments, tie together the various drafts we have, and come up with something for our consideration.
The bulk of the budget you see relates to that issue. I need a motion supporting the incentive to hire Dan Turner for the purposes of revising and editing the draft report on the Arctic.
Senator Banks: I will move that motion, but I have a question. If we anticipate that the report will be finished and printed — and if the answer to that is no, then my question is obviated — then the courier charges in this budget are insufficient. We are not anticipating releasing and sending out the report before March 31?
The Chair: No.
Senator Banks: Then I shall move the motion.
Senator St. Germain: Why would we hire an outside writer? The Library of Parliament generally provides the manpower for that item. Why we are going outside?
The Chair: Before Senator Mitchell addresses that question, the draft you have was prepared by Lynne Myers from the Library of Parliament. She has retired. There are many comments and a lot of complexity, and in this ad hoc situation it was deemed by the steering committee that it made sense to hire a professional.
Senator Mitchell: I want to address the question as well. It goes beyond simply ad hoc. First, there is precedent for this approach amongst other committees. Second, often there is a technical kind of prose in these reports. If we want to make this kind of report more accessible and interesting to Canadians, we need a professional writer with a background to make these things more interesting. I am concerned when we put these reports out that readers need a PhD in physics to read them, and not every Canadian has one.
Senator Neufeld: Who is the professional writer? What is this professional writer's background? How did you choose this person?
The Chair: There is a specific reason.
Senator Mitchell: He is a former journalist. In addition, he has done a great deal of work for the Standing Senate Committee on National Security and Defence. I sat on that committee and I am aware of the quality and nature of his work and, more importantly, the impact of it. The Defence Committee has a tremendous track record of exposure, of interest in their reports. The committee has had significant impact over time through its recommendations and its input to government.
The Chair: I point out, senator, that this item is ad hoc in the sense that this motion does not call for an ongoing contract with this writer. This contract is specific to complete this report by the end of March, to get the show on the road. Senator Mitchell has satisfied himself that this person is appropriate, and the steering committee agreed. We are all familiar with his work.
Senator Neufeld: I am happy with that item. I know it is only to complete this report by the end of the month. The person who writes the report may have a certain way of describing a chain of events that may be different from someone at the library explaining that chain of events. I respect that view.
However, it also brings up a bit of a red flag with this person. I am not trying to dispute the person's qualifications or anything like that. I would not do that. However, I am cognizant of, and I do think about, where this person is coming from to start with on these issues. The Arctic brings all kinds of things forward that could be included in a report. I am not saying that they are not useful, but I think we had better be careful about who we work with and how the report is written.
Does the subcommittee review that report as it is being completed?
The Chair: We will all have another kick at the can once we receive the draft.
Senator Neufeld: I appreciate that. As the report is being drafted, does the subcommittee review it or does the report come directly to this committee from that person without any discussion with the subcommittee?
Senator Mitchell: I can answer that in part, and perhaps Senator Angus can add to the answer. I agree with you in the question of how we select someone. I want to take this approach in the future as well. My commitment is that we should have a broader process to pick someone. If members are interested, they can be involved in the consulting, as it were, to the steering committee, because, yes, what you are saying, essentially, is that people bring perspective and bias, so we need to be careful about that perspective.
I am not aware of any particular bias on the part of this person. The matter was urgent so we made a decision. However, for the future, your point is a great one.
The Chair: Not only that, but the person will not be starting from scratch. He will have the draft that you have seen, plus the McCoy input, plus all your comments that we will receive by the end of this week.
Senator Mitchell: We will, all of us, review it. I want to review line by line. You will have it in advance of when we review it and, ultimately, I want to bring the subcommittee into that process, and ensure that there is some pre-review.
Senator Sibbeston: Mr. Chair, this study was to look at the North, particularly the North as it relates to global warming and other things. I am aware that the committee travelled to Yellowknife, Norman Wells, Inuvik, Tuktoyaktuk and Whitehorse. I am curious to know whether you consider that study complete, because those communities are only a portion of the North. We have not been into the Arctic per se, the real North: the Eastern Arctic, the High Arctic, Resolute Bay and so forth. I am curious to know the intention of the committee. I suppose the steering committee has decided. I have the impression that this study is now considered final and the report about the study is being completed.
The Chair: As we mentioned at the last meeting, those of us on the committee today were not here when the trip was taken. The trip was a fact-finding study. The steering committee addressed this study as a work in progress, with a view to completing it. No, we have not addressed whether we should undertake further studies in the Eastern Arctic or try to mesh with the Standing Senate Committee on Fisheries and Oceans. You understand what I am saying. We have not addressed that item, and it is an item we are all interested in.
Senator Sibbeston: That being the case, Mr. Chair, before we launch into finalizing a report and so forth, should we consider the question of whether we now ought to travel into the far Arctic, to the Eastern Arctic, to look at the question of global warming and things of that sort before we spend money trying to finalize the report?
Senator Mitchell: There is something to be said, Senator Sibbeston, for considering the report, or even naming it, an interim report to indicate that it is a step along the way, and to demonstrate that it is not limited to what we have seen. There is an argument to be made in many studies to prepare interim reports. It has been almost a year since we had that experience, and we have not had a chance to give Canadians any sense of value for the money we have spent. It is also double or triple the chance to gain exposure for what we do and express important issues for Canadians, particularly on behalf of the North. There is little that we could study that would be more important.
Senator Sibbeston: That being the case, ought we to consider then amongst the committee members whether we ought to complete that study? I do not consider the trips we have taken to be a thorough analysis or review of the North. We want to talk about global warming, the melting of ice and so forth, and the trips that we have taken were to the Western Arctic. Tuktoyaktuk is on the Arctic Ocean, but the trips to Inuvik, Whitehorse and Yellowknife are not the Arctic. The study would not give a good impression of the Arctic as it really is. We need to go way up to the Eastern Arctic, Resolute Bay and places that are far north along the northern passage areas that are susceptible to global warming, the melting of ice and so forth. Are members interested in going on such a trip? that travel would finish conclusively the study we have undertaken.
The Chair: We are dealing with a budget resolution on the record. We will have a discussion about future work right after the budge, and all these points are relevant to that discussion. I want to finish dealing with this item. If you have had a look at the draft reports that were circulated, there is context in terms of another committee that travelled, at the same time apparently as this committee, to another part of the Arctic. Perhaps Senator Banks can enlarge that context.
Senator Banks: It was a time and financial consideration that led to the fact that this committee went to the Western Arctic while the Standing Senate Committee on Fisheries and Oceans went to the Eastern Arctic. It was inappropriate in terms of money and inappropriate in terms of time, because you know better than any of the rest of us, Senator Sibbeston, that you do not run up there for a couple of days and see what needs to be seen.
The Chair: Unless the fishing is good.
Senator Banks: that is true, and there is not a whole lot of fishing in the Western Arctic. That decision was a matter of practicality. The report that is being talked about now is a report simply on a visit: about the things we saw and the people with whom we met. That is what the report is about. It does not preclude future and ongoing interest.
With respect to the question of the writer, I think it is important to make clear that the fact we are contemplating engaging a writer to remould what we are saying is not in any way a criticism of the work done by the committee and by the Library of Parliament people. The work has been absolutely terrific. The substance of what is being said and the points being made are not things that will be changed by the writer, as a matter of course. The normal process, senator, is that the committee and the Library of Parliament people devise what the point of the report is, and then bring the report to the point of a draft, which we now have before us. Senator McCoy has made other comments on the draft. That input is then taken, and I think the word would be ``massaged'' so it can have more face time, ink time and attention paid to it. As Senator Mitchell has already said, by that means, committees have had the capacity to change and affect public policy. A report that goes over the edge and sits on the shelf has no such effect. The purpose is to make the report, as Senator Mitchell said, more palatable, an idea to which I subscribe heartily.
The Chair: When it is finished, if we like it, we will have a press conference to highlight it.
Senator Banks: In the other committee, when we conduct this review, the committee sits down more than twice, and reads every word, comma, semicolon, heading, typeface, box and stylistic device included in the report from stem to gudgeon. The process is long and involved, and no part of it escapes the glaring scrutiny of the committee as a whole.
The Chair: Colleagues, we have 10 minutes left to discuss future business. I want to finish this budget item.
Senator Spivak: My comment is not addressed to the current need to release this report by March, but here is my experience with reports. The Standing Senate Committee on National Security and Defence is not a good example because the subject matter is usually something controversial, and the chair goes out to the editorial boards, and he has established a personality cult. I think that the role of the journalist writer is to write the press release, and maybe a summary. In my experience, this approach has not had the impact that you think, which is that more people will read it. No journalist has the depth of professionalism and knowledge that the Library of Parliament has. It does not happen. When the substance or topic is relevant to the public, and I give the example of the boreal forest report, Soil at Risk, which was not written by journalists, the substance catches the attention of the public.
The role of the journalist writer is important, but not to redo reports. That is my view.
Senator Banks: I agree entirely. The writers do not affect the substance of the report at all.
Senator Spivak: Yes, they affect the way that the report is received and written. The report is not written the same way as the Library of Parliament would write it. However, the issue of impact is vital, I agree with you. However, rewriting the report by a writer is not always the way to improve impact. There are other methods and impact is important because important work has been done here; it should be disseminated.
Senator Milne: I have a brief point of information for new members of the committee. When we travelled to the North, two of the then members of this committee were unable to come with us because they were travelling to the Eastern Arctic with the Fisheries Committee. We agreed at that point to try to adopt some of the findings of the Fisheries Committee, which had agreed to ask some of our questions in the Eastern Arctic. This approach allowed us to incorporate their findings in this report.
Senator St. Germain: I understand what the steering committee decided, based on the original Library of Parliament person who is no longer with the library. However, I flag this item because of the importance of the work that researchers perform in the Library of Parliament, which is excellent in 99.9 per cent of the cases.
Senator Peterson, I and others sit on the Standing Senate Committee on Aboriginal Peoples. The library has written tremendously good reports for us. I wanted to ensure that the Library of Parliament is treated the way it should be. Unless it was brought forward, chair, there could be misconceptions.
The Chair: All these points of view are valid. They are on the record.
I ask for the necessary motion in relation to this writer to have the 30-day ad hoc budget and agreement that the special study budget application for the period ending March 31, 2009 be approved for submission to the Standing Senate Committee on Internal Economy, Budgets and Administration. I will ask the Senate for permission to hire this writer, and the motion will incorporate that authority.
Senator Banks: I so move.
The Chair: All in favour?
Hon. Senators: Agreed.
The Chair: Thank you.
(The committee continued in camera.)