Proceedings of the Standing Senate Committee on
National Finance
Issue 8 - Evidence - June 9, 2010
OTTAWA, Wednesday, June 9, 2010
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study the expenditures planned in the Supplementary Estimates (A) for the fiscal year ending on March 31, 2011.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourables senators, we continue tonight our review of the Supplementary Estimates (A) for the 2010- 2011 fiscal year, which were referred to our committee.
[English]
This is the committee's third meeting concerning Supplementary Estimates (A), which are the first set of supplementary estimates tabled by the government in this fiscal year and a supplement to the Main Estimates, which are now before the Senate.
Our meeting is divided into two panels. In the first panel, we will consider government advertising; and in the second panel, we will consider the Canadian Air Transport Security Authority.
The advertising aspect that came to our attention is in the amount of $65.4 million at page 59 of the supplementary estimates. A horizontal item included in the supplementary estimates lists a number of departments and agencies, and a good number of them are represented here this evening to help us out with that entry.
The witnesses should know that we are just trying to understand how matters function, and none of our questions are intended to be anything other than fact-finding.
We have one hour for this panel. I will call on Ms. Smart to give opening remarks, and we will then proceed to our usual question and answer period.
Anne Marie Smart, Assistant Secretary to the Cabinet, Privy Council Office: I have a short opening statement just to set the context.
My colleagues and I are pleased to be here to discuss with you the government's proposed advertising expenditures as set out in Supplementary Estimates (A). I propose to provide the committee with a brief overview of the process for the management of government advertising and to identify the respective roles that my colleagues and I play in that process.
Let me begin by saying that the process, which was established in 2004, has three objectives: to ensure that advertising campaigns are aligned to government priorities; that they comply with government policies, procedures and legislation; and that they meet the information needs of Canadians. All three of those priorities are very important.
The respective roles and responsibilities of institutions in advertising have been established at all stages in the process, including in the planning of advertising, in executing it and also, importantly, in evaluating it.
Generally, the bulk of government advertising in any given year is funded by what we call the central advertising fund. That is the amount of $65.4 million per year that is set aside in the fiscal framework.
Departments and agencies work with us, with the Privy Council Office, to develop advertising proposals that are based on government priorities. For example, the Speech from the Throne is a very important document in establishing the advertising proposals for the year. These proposals are brought to cabinet by the Privy Council Office for consideration and approval. If approved, they are then submitted to the Treasury Board for review and approval of the funding and, finally, they are submitted to Parliament. Once funds are approved, they are then allocated to departments, who then manage the campaign budgets and expenditures on behalf of their ministers.
The next stage in the process is the procurement of advertising agencies for production and media planning. This work is undertaken solely by Public Works and Government Services Canada, who work closely with and on behalf of departments. The procurement of advertising agencies is based on a competitive process, and it is in accordance with all the established policies and procedures.
Public Works also manages the government's advertising agency of record, which is a single firm that purchases all advertising time and space for the government. The purpose of doing this, and the reason why it is centralized, of course, is that the agency leverages the combined buying power of the government to obtain favourable pricing, whether it is television, radio, et cetera.
Again, the selection of the agency of record is based on a competitive process. I am sure that Normand Masse from Public Works will be pleased to respond to any questions that you may have in relation to procurement.
As I mentioned earlier, advertising is subject to Treasury Board policies and procedures. To assist all departments to comply with the rules, Public Works and Government Services works closely with Treasury Board Secretariat. We review advertising creatives and the media plans to ensure that they comply, and we provide advice back to the departments.
Treasury Board policies and procedures also require departments to pre-test and to conduct post-campaign evaluations of their major advertising initiatives.
Finally, the last step in the process is reporting, which is performed on a number of tracks by means of the Treasury Board Secretariat website that identifies the monies that have been committed to advertising from the central advertising fund. Public Works also has annual reports on advertising, and there are departmental websites as well.
My colleague, Phil Hurcomb from Treasury Board, would be pleased to answer any questions you may have on the policy framework for advertising.
I mentioned at the outset of my remarks that most government advertising is funded by the central advertising fund. I should also note that it is not the only source of funding. Departments can obtain funding through policy memoranda to cabinet or in a cabinet decision. One example of this would be any of the advertisements you may have seen discouraging drug use by youth, which were funded as part of the National Anti-Drug Strategy. Departments can also fund advertising from their operating budgets. There are many public notices in a given year. For example, public notices may advertise construction of a federal road, et cetera. They are used extensively.
Regardless of the source of funds, all government advertising is subject to the legislation, policies and procedures that govern this function.
I have briefly described the process. I sought to identify rules and responsibilities of the institutions represented at this table tonight — Treasury Board Secretariat, Public Works and Government Services Canada, and the two key advertising departments, Department of Finance Canada and Human Resources and Skills Development Canada.
I hope this brief overview will assist committee members. I will help you determine who is best placed to respond to your questions. Thank you for your invitation.
The Chair: Thank you. That was helpful. You answered a number of my questions.
However, I have one other question to set the stage for us. If this $65.4 million in the central advertising fund is an annual item, why is it in supplementary estimates and not in the Main Estimates?
Ms. Smart: It depended on when we took the annual plan forward to cabinet for consideration and when cabinet approved it. In the cycle of approvals, the timing put it into the Supplementary Estimates (A).
The Chair: Is it typical that the funding is in supplementary estimates?
Ms. Smart: Usually, the annual plan is on an April 1 to end of March basis. We start receiving proposals in January from departments or a Speech from the Throne, et cetera that lays out priorities and themes for advertising. We then bring forward the annual plan.
The Chair: Is that schedule tied into rolling out the budget? It seems contrary to the concept under which we operate. Main Estimates are the government's best estimate of what will be necessary to function for the year. Supplementary estimates are extraordinary items. However, you say you pop it into supplementary estimates every year.
Ms. Smart: We work by the parliamentary cycle. By the time we prepare these annual plans, identify themes, and move it through the cabinet cycle, it tends to be this time of year. This year, the themes came from the Speech from the Throne in February. Funding is on an April 1 to March 31 cycle for our department. I could review it, but in my three years at the Privy Council Office, this has been typical.
The Chair: Thank you.
Senator Finley: My questions are about content and intent rather than process.
Can you provide a few brief examples of the kinds of advertisements anticipated under this request in Supplementary Estimates (A)?
Ms. Smart: I can give you the overview. Perhaps, some of my colleagues could add some of the main campaigns.
This year, the annual plan for $65.4 million is a horizontal initiative. It includes monies for 10 different departments and 16 campaigns. Campaigns are divided under themes from the Speech from the Throne.
The economy is a key item. Making Canada the best place for families is another theme from the Speech from the Throne. Strengthening a united Canada in a changing world is a third theme. The fourth theme is standing up for those who help build Canada. The various campaigns that fall under those four themes can cover everything.
Obviously, we did a lot of advertising on the economic stimulus package. We were in the global recession and the government had a stimulus package. The campaign was not only to advertise the stimulus package. Its goal was to drive Canadians to the website to find a complete database of services and benefits available to help them.
For example, if you were a business and may have to shut down, you could go to the website, search and find initiatives and measures to help you perhaps through work sharing or other benefits. That is one example of a key campaign.
The government advertises recruitment for National Defence or the RCMP. We do campaigns for Citizenship and Immigration such as services for new Canadians to permit arrivals to learn what services and benefits are available to them. We advertise to encourage people to look at the website and take advantage of tax filing measures available to them, including filing online. That is an overview.
Senator Finley: For example, in the past, advertising may have driven people with no prior knowledge or understanding to the Home Renovation Tax Credit or to understand better what increased or improved benefits were available on Employment Insurance.
This question is addressed to the marketers from Human Resources and Skills Development Canada and the Department of Finance. You presumably look at benchmarks set and analyze the efficacy of completed programs or during their rollout. Is this form of government advertising to drive public awareness a worthwhile venture to ensure that Canadians are supplied with the data, services and knowledge they need?
Peter Larose, Assistant Deputy Minister, Public Affairs and Stakeholder Relations Branch, Human Resources and Skills Development Canada: I will give you two examples from our department.
Last year — and we will continue it this year if supplementary estimates are passed — we ran an elder abuse awareness campaign. It highlighted the problems and what constitutes elder abuse. As Ms. Smart explained, we evaluate the campaign after it is finished. The evaluation showed that the recall rate was approximately 56 per cent. The industry standard is 35 per cent. Therefore, the campaign was a success. More importantly, of the people who saw the campaign, 71 per cent spoke to another person about it. We created what we call the water cooler buzz around the campaign.
A second example from last year was advertizing the government program to help apprentices continue their studies. The recall rate was approximately 37 per cent or 38 per cent. One out of five people who saw or recalled that ad intended to do something about it, which is what we intended. We have had some success.
Alan Freeman, Assistant Deputy Minister, Consultations and Communications Branch, Department of Finance Canada: We have similar experience, particularly with the Home Renovation Tax Credit. This was a key part of Canada's Economic Action Plan. This idea for people to do their own renovations or to have it done for them was truly shovel-ready. These measures were being done immediately after Budget 2009. It was time sensitive.
An important part of the advertising campaign was to inform people about the Home Renovation Tax Credit. Canadians had to use the credit within a specific period of time. The campaign was important in maintaining confidence in the economy beyond the economic activity created by the Home Renovation Tax Credit in and of itself. It built confidence at a time when the world faced a lot of uncertainty.
When we do focus groups or ask people in surveys, the public believes that the government should inform them of public policies and programs of which they can take advantage. Advertising is a very efficient way of doing so. It gets to many people, especially if you use television and the web. I think the HRTC was considered a success, and in large part because people knew about it.
Senator Finley: It is interesting you say that, unless you think the questions I am asking are in any way partisan. I have a record from a Standing Senate Committee on National Finance meeting here in this room back on December 7, 2009 when one of my esteemed colleagues mentioned having concerns about how self-employed people would learn about a certain program. I will not go into the entire quote; it is already on the public record.
My colleague expressed some concern about the communication plan and went on to say that she was sure that business groups were doing something, but was particularly concerned about what the government would be doing. That, of course, was Senator Callbeck, who is oftentimes here, who advocated about the government's ability to reach out to the public, to provide them with data to ensure that they are getting to the programs that they need. She has been a very energetic senator in that respect.
I am particularly interested in the EI issue because that is what Senator Callbeck was talking about. Mr. Larose, tell me about the EI program and how effective advertising was in the period of crisis in getting directly to the people who needed the programs, could benefit, but might not know about them.
Mr. Larose: As you may know, last year we did, as part of the stimulus package that Mr. Freeman referred to, some advertising to highlight the benefits that are available, in particular the EI changes the government introduced. Again, we did fairly extensive advertising starting primarily in January of this year, ending in around mid-March. For those of you who watched the Olympics, you probably saw one of our advertisements on television. They were quite ubiquitous.
Again, the preliminary evaluation we have done has been very successful, the recall rate was very high, which for us was a good benefit. It was around 61 per cent, and for unemployed Canadians it was even higher, as high as two thirds of them recalled the ads.
You made a good point, and Senator Callbeck's comments are quite true. It is important that the government introduce measures, but it is also important that Canadians know where they are and what to do about it. The advertisements did, as Mr. Freeman referred to them. We drove them to our website where they could find out if they were eligible and, if they were, apply for the benefits. That is, in fact, what we did, and it was quite successful.
Senator Gerstein: I see that the figures for government advertising during the fiscal year 2008-09 were just released. As a matter of fact, I think it was just today that they came out, if I am not mistaken. In the year 2008-09, the government spent a total of $79.5 million on advertising. I gather that the high-water mark — because I looked back in my records for government advertising — was set by the previous government in 2002-03, at $111 million. It was lower the following two years, but I suspect that may have been largely because of the sponsorship scandal. Two elections, perhaps, put a damper on the government advertising programs.
We know that the current government has made a tremendous effort to inform Canadians about time-limited programs. Senator Finley has referred to a particular situation under Canada's Economic Action Plan, the Home Renovation Tax Credit, and of course there was a lot of advertising, I suspect, for the H1N1 prevention measures that were available to Canadians. I must say that the current government spending is still considerably below the high-water mark of $111 million set by the previous government.
What types of advertising might you see that the current government is not doing that the previous government may have done? Where have advertising costs been cut in order to keep expenditures below the previous level?
Ms. Smart: I will take that in a couple of different chunks. As you know, after 2004 the process was $65.4 million, and that is a set amount each year. The government can spend a bit more than that through, as I mentioned, memoranda to cabinet, but there is that set amount that is in the annual advertising plan.
As I mentioned, the annual advertising plan is meant to be completely tied to government priorities. Years ago when I was doing this kind of thing I used to get a hundred different proposals and you would have to sift through them. Now that we have, for example, the Speech from the Throne, and the themes of the economy or helping Canadian families, the proposals tend to come in much more targeted, I would say, more focused. The role of the Privy Council Office is to do the coordination and the challenge function, so that helps us look at the proposals and evaluate them against the priorities.
Over the years we have come up with a couple of other principles. We do not do what used to be called, in advertising terms, advocacy advertising. Now, as we have mentioned, there must be a component in it that is called a call to action. You are usually doing advertising to inform people so that they can go to a website and find further information about benefits and services that are available to them.
The decisions are ultimately made by cabinet. However, having a set plan every year that goes through an approval process, goes through the process I set out in my opening remarks, has helped to focus expenditures. We also evaluate. My colleagues have been giving some of the numbers from evaluations. If we find out through some of the evaluations that a certain campaign has not been useful, then that campaign does not continue.
I do not know whether that completely answers your question, but that is what I can tell you from my experience at the Privy Council Office.
Senator Gerstein: That is helpful. It certainly sounds like the process has been tightened up dramatically.
Ms. Smart: Considerably.
The Chair: As a supplementary question, Mr. Hurcomb, is it Treasury Board that developed this figure of $79.5 million per year for advertising? Does that $79.5 million include the $65.4 million we are talking about?
Ms. Smart: The $79.5 million includes the money from the central advertising fund for last year, plus there would have been an amount approved separately in a memorandum to cabinet, MCs. For example, Mr. Larose mentioned the elder abuse awareness campaign. That was funded by the government through an MC. It happened to be in an MC as part of a program. That number is an all-encompassing number.
The Chair: An MC is a memorandum to cabinet?
Ms. Smart: An MC, is a memorandum to cabinet, that is correct. That amount does include the central advertising fund plus a certain amount from other memoranda to cabinet.
The Chair: The special initiatives for home renovations were an extraordinary initiative, so I would have thought that would have been supplementary to the $65.4 million, but you are telling me it was included.
Ms. Smart: With the economic action plan and the stimulus money, there were four or five departments that we called the "stimulus department.'' It would have included the Home Renovation Tax Credit. It included HRSDC because of the initiatives around EI for workers. It included Finance and doing advertising around the fact that the budget exists and drove people to the website to get further information it. It was included as part of that package.
The Chair: Are we talking only about paid media advertising here? We are not talking about promotion and trips to Tim Hortons to have your photo taken?
Ms. Smart: That is expressly forbidden, I believe under Treasury Board policy. These are TV, radio and print; plus we do more and more social media these days, such as Google advertising on the Internet.
Senator Callbeck: You have given some examples of successful advertising. You mentioned elder abuse, the tax credit, home renovation, EI and apprenticeship. Can you give us some examples of advertising campaigns that have not worked well?
Ms. Smart: Yes, although I would not say my example was unsuccessful. The Public Health Agency did a small campaign and bought a little time on radio and a small space on Google ads through the Internet to promote one of their programs, not H1N1. We did the evaluation afterwards and asked people if they recalled seeing the ad. The government benchmark is about 38 per cent and if they cannot recall seeing it, we take a look and find out what went wrong with the campaign. In that case, we decided that the campaign was just too small and that we would have been better off not doing it or expanding it and involving more radio and TV to penetrate a larger market.
That is why it is so important at the outset that departments do their planning very well. They do pretesting to see what works and what does not work. That is just one example.
Senator Callbeck: Departments submit their plans to the Privy Council Office, and then they go to cabinet. Does a department spell out in detail what it will advertise and all the various themes?
Ms. Smart: Yes, it does that at the planning stage. We do memoranda to cabinet. Every department with a proposal has to spell out the target audience, what they plan to do, how much they plan to spend, whether they have pretested, whether they have advertised in this way before and what kind of results they had, what they hope to achieve, how it ties to government priorities and how long will it last. We look at many of these campaigns and, based on the experience of people who have done many of them, we talk to departments to figure out whether it is a good fit for that year.
Senator Callbeck: The central advertising fund is $65 million. You mentioned that departments have the authority to spend smaller amounts on advertising within their budgets. What do you mean by "smaller amounts?''
Ms. Smart: There are many public notices, which you might have noticed in newspapers over the years. We did public notices at the beginning of H1N1 to let people know they should contact their local health clinic. The fastest way to get the ad in, if it is time-sensitive, is via a public notice. The departments have authority to do that. There is a cap of about $2 million on a public notice.
Senator Callbeck: Each department can spend an additional $2 million. Is that right?
Ms. Smart: Yes, it is in addition to the $65.4 million but on public notices only. That is the only area where they are allowed to do anything extra, which is mostly print.
Senator Callbeck: Everything is included in the $65.4 million except for public notices.
Ms. Smart: Except for public notices and anything that a minister puts forward as part of memorandum to cabinet that is very large. I mentioned elder abuse as an example. The funding for that came through a memorandum to cabinet.
Mr. Larose: To give you an example of public notices, our department spends $200,000 per year. We are one of the largest departments so that gives you an idea how rare public notices are. When a new Service Canada centre opens in a community, we do a small notice on the address and the opening date. We might do one on Canada summer jobs to encourage non-profit organizations to apply. The information is very factual and inexpensive because they tend to be in small, local newspapers, which do not charge a lot of money. We do not spend a lot of money on them.
Senator Callbeck: You could spend $2 million if you chose to do so.
Mr. Larose: Yes, we could do that but our track record is usually around $200,000.
The Chair: This parliamentary committee, which oversees government expenditures, would expect to see those memoranda to cabinet approvals. That authorization would flow through a supplementary estimate under the department somewhere along the way.
Mr. Larose: Also, it could be found in the Main Estimates.
Senator Neufeld: I have a supplementary to Senator Callbeck's question. That would be normal practice and not anything new or different. Is that right? These public notices found in small local newspapers are common practice.
Mr. Larose: Yes, they are common practice.
Ms. Smart: I have been around for 20 years with public notices.
Senator Neufeld: I wanted it on the record that this is common practice.
Senator Dickson: Does the $65 million include opinion research?
Ms. Smart: No, it does not include any public opinion research. Evaluations of a big advertising campaign can be done using a survey, but it is not official public opinion and research.
Senator Dickson: Who covers public opinion research? Is that not your responsibility?
Ms. Smart: It is indeed my responsibility. I handle public opinion research with Treasury Board.
Senator Dickson: Are the amounts for that in addition to the $65 million?
Ms. Smart: Absolutely.
Senator Marshall: My question relates to process, Ms. Smart. There was reference in your opening remarks to departments and agencies working with Privy Council Office. Could you elaborate on that and tell us what the process is and who is involved?
Ms. Smart: Certainly. In any given year, a number of proposals would come in. This year, we happen to have the Speech from the Throne, which contained as one of its themes benefits for Canadian families. We would have gone to Human Resources and Social Development Canada to look at that but other departments were also to deliver benefits to Canadian families. We might reach out to Health Canada or other departments involved and have them work together either on separate proposals or on a common proposal. Our role is to coordinate; we are horizontal in nature. There is a huge process before we ever reach the stage of back and forth development of proposals. We have a series of departments that meet quite regularly to present proposals from little interdepartmental government advertising agencies. We receive feedback from colleagues to ensure that the proposals have been looked at from its various facets because something can easily be overlooked that should be included. Our role is to ensure that departments work together. We coordinate the effort so that when proposals come in to be developed for cabinet consideration, they are extremely well rounded and solid. The advertising plan for this year comprises 16 different campaigns. We looked at 30 to 40 campaign proposals before we arrived at that number. We heard from the various departments usually on a weekly basis. It is quite an active area.
With the economic crisis and the economic action plan in the past year, it was extremely important that the stimulus departments — Infrastructure Canada, Human Resources and Skills Development and the Department of Finance — met regularly. Not only were we developing advertising and driving people to a website, but when they got to that website, we were determined that we present the bigger picture and not just the information. We did something quite innovative. We put up a map in a very transparent way and as projects were starting in communities, they would show up on the map, and if you were wondering what was happening in your community, you could look them up. We all went in to see what was happening in our area and to see if projects were under way. It involved a large amount of back and forth discussion and coordination.
Senator Marshall: I used to be with the provincial government in Newfoundland and Labrador, and we did have some exposure to advertising. My recollection is that in the Privy Council Office of the federal government, there was a communications coordination group or something of that nature. Does that still exist?
Ms. Smart: I did not want to use the acronym, but we have GAC, the Government Advertising Committee, and those are the departments at my level or at the Director General level meeting to consider proposals and to offer feedback.
Senator Marshall: It that similar to what existed half a dozen years ago?
Ms. Smart: Yes. There has been some iteration of these things in my years in communications.
Senator Marshall: Would there be a defined mandate for that committee? Is that something we would be able to get a copy of?
Ms. Smart: It is not a written mandate, but it is part of the role of the Privy Council Office to coordinate, provide the challenge function and ensure things are well rounded. It is a place where people present their proposals. There is not really a mandate that I am aware of.
Senator Marshall: Would it be just internal to government? I know you were talking about different departments and agencies. There would not be anyone from the outside; it would all be internal?
Ms. Smart: No. It is all internal, yes.
Senator Marshall: How long has that committee been in effect? Obviously, it must be working.
Ms. Smart: I have been at the Privy Council Office for three years in this role, and it has existed in those years. I presented various iterations of that committee throughout my years in communication, so it has been around for a while.
Senator Marshall: Does that committee keep minutes?
Ms. Smart: No.
Senator Marshall: It is not structured, is it?
Ms. Smart: No, it is not structured.
Senator Marshall: It has never kept minutes?
Ms. Smart: Not in my days, no.
Senator Marshall: It is something that is fairly informal.
Senator Finley: You mentioned a predecessor committee, did they keep minutes?
Ms. Smart: Not to my knowledge.
Senator Ringuette: Because you are all in advertising and communication, my first question would be whether you are all familiar with the message event proposal system. Has any one of you had experience with that system?
Ms. Smart: Message event proposals have nothing to do with advertising. They are a communications planning tool that I think all the departments use to keep track of announcements. I do not know if any of my colleagues can offer anything more. It is not used for advertising.
Senator Ringuette: You are in contact with that tool. Is that right?
Ms. Smart: Yes.
Senator Ringuette: Mr. Larose?
Mr. Larose: Yes.
Senator Ringuette: Mr. Freeman?
Mr. Freeman: To a certain extent.
Senator Ringuette: Mr. Masse?
Normand Masse, Director General, Services and Specialized Acquisitions Management Sector, Public Works and Government Services Canada: No.
Senator Ringuette: Mr. Hurcomb?
Philip Hurcomb, Assistant Secretary, Strategic Communications and Ministerial Affairs, Treasury Board of Canada Secretariat: Not personally, no.
Senator Ringuette: In regard to the message event proposal system, has any one of you been subjected to an MEP for this meeting tonight?
Ms. Smart: No.
Senator Ringuette: Thank you. I appreciate that.
Mr. Freeman, you indicated, and rightly so, that it was very important that the Home Renovation Tax Credit be communicated well because it was a key economic stimulus and time limited as well. I agree with that. However, it was not in the budget bill and it was not renewed, yet it was so key and so important to economic stimulus.
Because the Home Renovation Tax Credit ended January 31, after that period, was there any advertising with respect to that program?
Mr. Freeman: No, the advertising ended quite a bit prior to the end of the HRTC.
Senator Ringuette: With regard to the effectiveness of the messaging via communication, you indicated that there was one communication item through Google that was not successful.
Ms. Smart: Google ads.
Senator Ringuette: What is your experience with regard to advertising penetration through the Internet? You do an evaluation after the advertising to see the rate of success. Is that right?
Ms. Smart: That is correct. The whole area of advertising via social media and the Internet is exploding, but we have only been doing it and starting to measure it for the last year or two. We do not yet have the kind of what we call benchmarks for how effective it is like we do for television and radio. We would call you as part of an evaluation of a campaign and ask you if you recall seeing any government advertising or if you recall seeing anything specifically. We ask questions about whether you recall seeing anything on the Internet, and we find that people are just not there yet in terms of immediate pickup. Therefore, our numbers are lower for Internet usage. People are still recalling television, radio and print more than they are recalling social media.
Senator Ringuette: Who conducts that public opinion research that you just referred to?
Ms. Smart: When they are doing an advertising campaign, the department does so as part of their advertising evaluation.
Senator Ringuette: Is it contracted out?
Mr. Larose: Yes.
Senator Ringuette: Is it part of the $65.4 million?
Mr. Larose: No, it is not part of the $65.4 million. The government communication policy is clear, as I think Ms. Smart alluded to in her opening remarks. We have to evaluate any major advertising campaign afterwards. Out of our departmental operating funds, we have to go through a process to get all the advertising assessed. Working through Public Works, we tender and some firm wins the bid. It is out for tendering, and then they evaluate it for us and provide us with an assessment, but we have to do them all.
Senator Ringuette: Has it ever occurred that the agency that was hired by Public Works to do an advertising program was also selected to do the public opinion research for that specific plan?
Mr. Masse: No. Those companies appear on two different lists.
Senator Ringuette: There are no companies that appear on both lists?
Mr. Masse: No, not that I know of.
Senator Finley: The main drive of your marketing or advertising programs is to use the traditional media — television, radio and print — to drive people to the Internet as a portal to greater levels of information. Am I correct? You are not advertising on the Internet for a call to action, as you put it?
Ms. Smart: No, if there is a Google ad, it drives people to that website.
Senator Finley: It is still primarily the mainstream, traditional media that you are working with.
Ms. Smart: Yes.
Senator Ringuette: Mr. Masse, in regard to tendering public opinion research, approximately how much money was spent last year on this research?
Mr. Masse: I do not have the numbers for the public opinion research; I work more on advertising. I think very little was spent last year in contracts for public opinion research. I do not want to guess at a number.
Senator Ringuette: Correct me if I am wrong, but last year we did approximately 30 different campaigns?
Ms. Smart: We have 16 different campaigns for this year.
Senator Ringuette: Out of 16 different campaigns, will you have 16 different public opinion research initiatives?
Mr. Masse: Each department decides how they want to assess the campaign depending on its cost. Public opinion research to do the evaluation depends on the size of the campaign. However, we are assessing a small portion of advertising campaigns.
Senator Ringuette: What is the benchmark to prompt public opinion research to determine if the campaign worked?
Mr. Masse: Maybe my colleagues have a rule of thumb for how much public opinion research costs to evaluate a campaign.
Mr. Mr. Larose: It is only a rule of thumb, but most campaigns have an evaluation budget somewhere between $75,000 and $100,000 each. We did about six campaigns last year; we probably spent approximately $500,000 to assess their effectiveness. Those campaigns totalled approximately $20 million. Evaluation is a small percentage of the total cost.
Senator Dickson: Ms. Smart, my questions basically relate to opinion research. What types of opinion research do you use?
Ms. Smart: That is separate from advertising. Public opinion research is, again, tied to government priorities. Mr. Larose can elaborate. For example, we ran a number of focus groups last year to get Canadians' views on the economy — how it was doing, how they were feeling and were they aware of the economic action plan stimulus. We did those focus groups and one or two quantitative surveys. That is the best example of the type of public opinion research we do.
Mr. Freeman: That is correct. You notice my long title. Consultations actually come before communications.
There are different ways to consult people. You consult them through the ballot box. We consult people through town hall meetings or meetings that our minister will do. Consultations also include public opinion research, either in quantitative research where they telephone people to ask what they think of things or focus groups. They can be useful in sounding out people on, for example, issues of the economy and where Canada was during the economic crisis.
We consider consultation to be a useful tool.
Senator Dickson: Generally, how much would you spend in that type of research?
Mr. Freeman: I do not have those figures.
Senator Dickson: Could you get back to us with the figures?
Mr. Freeman: Yes.
Senator Dickson: I put that type under the classification of specific research.
What about syndicated research? Many companies do monthly polls.
Ms. Smart: We have not done any syndicated research for the past three years.
Senator Dickson: Was syndicated research done in the past?
Ms. Smart: I believe it was, but that predates my time. I will have to check and get back to you.
Senator Dickson: In the 2003 Auditor General's report, she noted that the government of the day failed to follow its own guidelines. It paid for syndicated research that monitored, among other things, voter behaviour and political party image. Have you any knowledge about who may have directed the questionnaires for that research?
Ms. Smart: I have no information on that.
Senator Dickson: Who was your predecessor in the role you have now?
Ms. Smart: My predecessor was Dale Eisler.
Senator Dickson: Does he still work with the federal government?
Ms. Smart: Yes, he does.
Senator Dickson: In what department?
Ms. Smart: Foreign Affairs.
Senator Dickson: You have no knowledge, but this person in Foreign Affairs will have knowledge of that research.
Ms. Smart: As I said, we do not do any syndicated research currently.
Senator Dickson: If you were to learn political questions were asked during the period of time the Auditor General refers to and I gave you a document tonight, could you ascertain from your records what transpired to generate a particular survey?
Ms. Smart: I will undertake to try.
Senator Dickson: I have a document here.
The Chair: Please make it available to all committee members through the clerk and then we will give it to Ms. Smart.
Senator Dickson: I will table it and we will make it available to everyone.
The Chair: That is fine. It is a pity we did not ask the Auditor General that question when she was here recently.
Senator Dickson: It is a pity, but these things occur.
Under the current advertising guidelines you describe, if syndicated research was sought, what would be the process to obtain it?
Mr. Masse: The process would be to pick one of the firms competitively-established with a standing offer. We would pick a different category to what the syndicated study would be.
Senator Dickson: How many companies are on the standing offer list?
Mr. Masse: I do not have the latest list with me today.
Senator Dickson: Will you deliver a copy of that list to our clerk?
Mr. Masse: Yes, absolutely.
Senator Dickson: I understand no budget line shows any amount for syndicated research. Am I correct?
Mr. Masse: Yes.
Ms. Smart: That is correct.
The Chair: Please provide the information on any undertaking to which you commit to the clerk.
Ms. Smart: Yes.
The Chair: Mr. Thompson will ensure all senators receive it.
Senator Murray: I know message event proposals are not your responsibility. Are they the responsibility of the PCO?
Ms. Smart: All departments use message event proposals. We do not use message event proposals.
Senator Murray: You coordinate it, do you not? All I know about it is what I read in the media, that these go through a central clearing house, which is PCO. I want for the sake of information to know where in PCO that responsibility resides.
Ms. Smart: Any message event proposal from a department would come through communications, my shop.
Senator Murray: You are communications?
Ms. Smart: I am in communications.
Senator Murray: That is all I need to know. Forgive me for coming in a bit late, Mr. Chairman. I missed the opening statements and perhaps some of the early questions. I apologize if I ask questions that have already been answered.
It has been a long time since I have focused on this area of government activity. Just to show you how dated my information is, the last time I looked the major items in the federal government advertising budget seemed to be tourism — both the direct media advertising by the federal government and co-op advertising that they do or did with provinces — recruitment for the Armed Forces and the RCMP, Canada Savings Bonds were a big item in those days and may yet turn out to be an item again. After that, I do not recall, perhaps health.
Do you know offhand what are the departments and functions that are the major spenders on advertising? We are talking media advertising here, right?
Ms. Smart: I mentioned at the outset we have, for this year, the $65.4 million.
Senator Murray: I see that.
Ms. Smart: It is for 10 different departments, 16 campaigns. The major spenders, as you say, are Human Resources and Skills Development Canada doing campaigns for families, helping workers and apprentices, benefits for families and elder abuse that we talked about a couple of times.
You are quite right, we still do advertising for RCMP and DND recruitment, we do a little bit of advertising for commemoration. You may have seen on television the advertisements commemorating the centennial of the navy.
Senator Murray: That would be under DND, would it?
Ms. Smart: That is correct. It is not Canada Savings Bonds, but we do what we call tax filing incentives. This is to encourage people to file online or to go online and find out what benefits are there and what savings they can take advantage of when they are filling out their tax returns. Health obviously included anything from H1N1. We have an anti-drug strategy that has been running in various phases for the last couple of years, targeted mostly at youth.
As I have mentioned, the advertising is tied very closely to the Speech from the Throne or whatever the government priorities are.
Senator Murray: The $65.4 million is for the present fiscal year?
Ms. Smart: That is correct.
Senator Murray: Would you mind filing with the clerk at some point, if you have not already or if we do not have the information, how much each of those departments account for in the present fiscal year?
Ms. Smart: Yes.
Senator Murray: Then, in addition, there are what I would call these one-off situations, in which a minister brings in a memorandum to cabinet. It is a program.
Ms. Smart: That is correct.
Senator Murray: As part of that program there is an advertising proposal and a budget, which is usually for one fiscal year, one assumes, or perhaps for more than that?
Ms. Smart: Elder abuse was funded over a couple of years.
Senator Murray: The present fiscal year would not be a good example, so perhaps the last fiscal year. Do you know how much those one-offs would have accounted for in addition to the $65.4 million?
Ms. Smart: Public Works publishes the annual report which gives the total advertising dollars. That includes the $65.4 million from the central advertising.
Senator Murray: Is it identified as such?
Ms. Smart: Yes, plus whatever else that has been given to advertising, as you say, through memorandums to cabinet. I can give you last year's: 2008-09 was $79.5 million. That was the $64.5 million plus whatever.
Senator Murray: I used to know this a long time ago, but it has changed. How are the advertising agencies paid? How do they make their money? It used to be a very simple percentage of the placement in the media. What is it now?
Mr. Masse: The placement is one thing.
Senator Murray: What do they get out of it?
Mr. Masse: They are paid a per diem, which is obviously the amount of work they do to develop the campaign.
Senator Murray: The creative agency.
Mr. Masse: The creative agencies. The placement agency —
Senator Murray: Is the agency of record?
Mr. Masse: The agency of record gets a combination of a fixed fee plus a variable fee, depending on the size of the campaign.
Senator Murray: Who pays the fixed fee?
Mr. Masse: The fixed fee is recovered from Public Works because we are getting a service, the reports that are provided. All the annual reports we issue are obtained from the agency of record. We have to pay for those reports, advice and training. This is a minimal amount in the contract.
Senator Murray: Where does the agency of record really make their money? They get a percentage of what they place in the media.
Mr. Masse: Yes.
Senator Murray: What is it now, 10, 15 per cent?
Mr. Masse: This is obviously commercially confidential.
Senator Murray: There is a standard, we all know that.
Mr. Masse: It is commercially confidential to the contractor.
Senator Murray: What is the variable fee? Who pays that?
Mr. Masse: The variable fee is paid by the departments that are running the campaign.
Senator Murray: They are paid to the agency of record or to the creative agency?
Mr. Masse: To both. In fact, first we issue a contract to the creative company that develops the campaign.
Senator Murray: Yes.
Mr. Masse: That is paid by the department running the campaign. The placement is also paid by the department running the campaign. Then that fixed fee that we mentioned is separate and is paid by Public Works.
Senator Murray: To the creative people?
Mr. Masse: To the agency of record.
Senator Murray: The department pays the creative fee to the creative agency?
Mr. Masse: Yes.
Senator Murray: Ms. Smart, can you file with the clerk, when you can, a list of the advertising agencies, the creative agencies? There is only one agency of record, right?
Ms. Smart: That is correct.
Senator Murray: One would like to know, just as a matter of curiosity, how much you paid them, but give me the list of the creative firms that have been engaged by the government and the dollar amount of the campaigns that they have conducted, say for the fiscal year that ended at the end of March.
Could you do the same thing for the public opinion polling firms, a list of the ones that have been engaged and the dollar amounts? They are not projects, but you know what I mean.
Ms. Smart: The research projects.
Senator Murray: Research projects, yes. I think that is all I have to ask.
The Chair: That is a good number of undertakings, and I will give you a few more.
Senator Finley: Do you have a common media placement agency for everything or is there more than one?
Mr. Masse: There is only one.
Senator Finley: Can you tell me who that is and how long they have had a contract with the government?
Mr. Masse: We just renewed the contract last February with Cossette. Prior to that, Cossette had the contract for six years from 2004 to February 2010. It was a competitive process.
Senator Ringuette: I want to return to the budgeted amount. You said that public opinion research is not part of the $65.4 million. Is the consultation process part of the $65.4 million?
Mr. Freeman: No.
Senator Ringuette: It is an additional amount. Could you identify the amount, the department and to whom it is paid, please? Is there a minimum tender for a standing offer?
Mr. Masse: I am sorry?
Senator Ringuette: I am asking about the standing offer. You said that Cossette is the placement agency.
Mr. Masse: Yes.
Senator Ringuette: There are not 20 agencies that do placement.
Mr. Masse: There is only one placement agency.
Senator Ringuette: Does the creative agency refer to the list of about 20?
Mr. Masse: Yes.
Senator Ringuette: Are they the same as the people who do the consultation?
Mr. Masse: No.
Senator Ringuette: Are they the same as those who do the public opinion research?
Mr. Masse: No.
Senator Ringuette: Could you supply that to the committee?
Mr. Masse: Yes.
Senator Ringuette: The last question goes to any one of you. Is there an advertising budget for the G8 and the G20? If so, what is the amount?
Ms. Smart: I am trying to recall. Nothing was submitted. There was an amount put aside for public notices on what streets would be closed in Toronto during the G8 and G20 and to direct them to public websites. I do not have the figure with me but I could get it for you.
The Chair: You can answer that in writing with the other requests. That would be appreciated.
We talked about an overall global figure last year of $79.5 million, which includes the $65.4 million "plus-plus'' as Senator Ringuette has indicated. On Treasury Board Secretariat website there is an advertising fund allocation that shows it was $85.3 million last year. Can you help us with that discrepancy?
Ms. Smart: The $79.5 million is for 2008-2009.
The Chair: Is the figure of $85.3 million that I see on the website for Treasury Board Secretariat under advertising fund allocations accurate?
Ms. Smart: Yes. Two things happened last year: The recession, which prompted advertising for the Economic Action Plan and the H1N1 pandemic.
The Chair: We have had a good session with the Privy Council Office, Public Works and Government Services Canada, Treasury Board Secretariat, Human Resources and Skills Development Canada and the Department of Finance Canada. Thank you for being here.
We are pleased now to welcome representatives of the Canadian Air Transport Security Authority, also known as CATSA: Mr. Kevin McGarr, President and CEO; and Mario Malouin, Chief Financial Officer. Mr. Garr, please proceed.
Kevin McGarr, President and CEO, Canadian Air Transport Security Authority: We are pleased to be invited here today to speak with you and answer any questions that you might have.
The attempted bombing incident last December 25 is a stark reminder of how the events of 9/11 created an unprecedented global awareness of the link between air travel and terrorism. In Canada, this attack on our close neighbour underlined the need for continued vigilance on our home front.
Since 9/11, CATSA has been working to protect the public by securing critical elements of the air transportation system. As outlined in the Canadian Air Transport Security Authority Act, we do this by delivering effective, efficient and consistent security screening services that are in the public interest. The December 25 incident, along with other recent acts of attempted terrorism, serve to remind all of us of the importance of aviation security and the continuous need for vigilance and preparedness in the face of impending threats.
I would like to take a moment to provide you with some of the most recent advancements we have made in aviation security during the last fiscal year. In the area of pre-board screening, we have deployed multi-view x-rays across the country. We have installed Full Body Scanners in all Class 1 airports. We have networked walk through metal detectors in Canadian airports for data collection to help with improved passenger throughput. We have hired oversight officers to better monitor screening officer compliance and performance, and to ensure consistency. For hold bag screening, which is the checked baggage, we have been continuously evaluating the latest explosive detection equipment in a new testing facility that significantly enhances CATSA's ability to evaluate new leading-edge technology and helps us to maintain international security compatibility.
[Translation]
We are exploring ways to further secure the Critical Restricted Areas in airports, including the screening of non passengers, and are currently finishing construction of a vehicle checkpoint at Vancouver International Airport.
On a broader level, we have improved our communications with passengers through the launch of a new user friendly website and mobile site, launched a passenger campaign based on extensive research to help target our efforts to specific types of travellers and their needs, and improved the consistency of airport signage across the country.
[English]
In the last eight years, CATSA has undergone huge growth. We have moved from establishing operations to maintaining those operations and, more recently, improving them. We have shifted from reacting to threats to undertaking proactive planning and action because we now have the stability and expertise in place to move in this direction.
It is a shift where our continuing efforts to use resources more efficiently will lead to better throughput of passengers; where those efficiencies, combined with improvements in customer service, will result in higher satisfaction levels among the traveling public; where we are in better compliance with our standard operating procedures and will produce consistency across the country; and where continuous efforts to strengthen our relationship with Transport Canada and with our screening contractors will ensure ongoing respect, trust and openness.
[Translation]
Our number one priority continues to be striking the right balance between keeping planes secure while providing the best in customer service. We are committed to implementing a rigorous performance measurement program to ensure that our operations are the most effective that they can be.
The only way to truly reach excellence in operational efficiency is by measuring how we are doing, focusing on what we do best and fixing what can be done better.
[English]
The announcement of $1.5 billion in long-term funding for CATSA in the latest budget will go far in moving us in this direction. We can now plan and invest for the long term, maintain our core mandated activities and improve the effectiveness and efficiency of our programs with the certainty that this investment brings.
We will also now have sufficient resources to acquire the newest cost-effective and proven technology. This will keep Canada on track in terms of compatibility with our international partners.
[Translation]
In tandem with the announcement of CATSA's long term funding was the additional announcement of a Government review of our organization. We are awaiting further direction from Transport Canada on the nature of the review but understand that it will consider our efficiency, funding and structure, and will include stakeholder participation.
CATSA fully supports this review. We are always looking at ways to improve the efficiency of our operations in order to ensure the highest standard of security and excellent customer service.
[English]
Additionally, we are also now preparing for the implementation of the recommendations stemming from our 2009- 10 strategic review. These include options to streamline our operations and enhance the cost-effectiveness of our activities to make the best possible use of the resources afforded to us by Canadian taxpayers.
Incidents such as that of December 25 are unique in nature. Each needs to be assessed and a response tailored to meet that incident, working with Transport Canada and airport stakeholders. We assess today's threats, adjust accordingly and plan and prepare for the future. That is why we are focusing on the testing of new technologies, changes to our checkpoint configurations and other variables in our security approach. This type of planning leaves us well-positioned to put in place any emergency measure while allowing us to meet our obligations to the travelling public.
If the crisis stemming from December 25 taught us anything, it was that we, as an organization, need to be able to manage change better. As we take this into account and transform the way we do business, know that we are taking on this challenge openly and willingly. We are committed to change because we know it will take us to where we want to go, that it is in the best interests of Canadians and because it is critical to our continued success.
[Translation]
Our most recent challenge, the 2010 Vancouver Olympic and Paralympic Winter Games, provided us with an opportunity to experience change on all levels as we stepped outside of our usual arena to demonstrate the best in aviation screening services to the world.
I am proud of the hard work of CATSA employees, our partners in the aviation industry, and by the Screening Officers who worked on the front lines ensuring that all visitors who travelled by air to and from the Games and elsewhere across Canada during this period experienced excellence in aviation security.
[English]
CATSA will build on that momentum as we move forward with a renewed commitment to delivering world-class aviation security to Canadians in the most effective and efficient way possible.
The Chair: As you know, we are studying Supplementary Estimates (A). There is a $350.6 million request in the Supplementary Estimates (A) that we would like to talk to you about and how that fits in with the $1.5 billion over five years that you talked about.
Senator Runciman: Perhaps you can respond to the chair's query with respect to the $350.6 million and how that fits into the $1.5 billion, if it does.
Mr. McGarr: The $350.6 million is a component of the $1.5 billion that is being allocated to the corporation in this current fiscal year.
We have made a proposal to government for our annual operating plan that is being considered by government, and we do hope soon to have a response as to how those funds will be expensed during the year.
Senator Runciman: How far along are you with respect to the acquisition of the new equipment you have outlined here?
Mr. McGarr: In the last fiscal year, we acquired about 145 of the multi-view x-ray units that have been deployed at airports already. We also acquired in the last fiscal year 44 full-body scanners, and that deployment is ongoing.
Senator Runciman: Were the associated costs part of the last fiscal year? Is that separate from the $1.5 billion? How is that factored in?
Mr. McGarr: The $1.5 billion is a budget allotment that is spread over five years. In this current year, the $350 million is part of a proposal that we have put forward, and we are awaiting a decision by government on that proposal.
Senator Runciman: Where are those full-body scanners being deployed? Are they simply in the major airports, or any airport that has connections with the United States?
Mr. McGarr: The priority was all of the airports with flights towards the United States. The eight major airports were our first priority, and we are currently expanding that now to other airports.
Senator Runciman: I am curious about the process involved with respect to the reaction of the United States to the underwear bomber and the demands that were placed upon other countries from which air travellers entered U.S. air space.
How did that process evolve? I am curious as to whether it applies to other countries as well. Has the volume of air traffic from Canada to the United States been an ingredient?
I am thinking of countries in the Caribbean, for example, that have flights going to the United States. I have not travelled in a lot of those countries. Perhaps it is occurring in any country that has direct flights to the United States.
Mr. McGarr: It is my understanding that all flights entering U.S. air space were subject to the same rules, that they were applied globally.
Senator Runciman: What is the plan with respect to the cost of these enhancements? I know that we have the Air Travellers Security Charge. Will that recoup all of the costs over this period of time? If it will recover only a portion of those costs, what portion is it anticipated that it will recover?
Mr. McGarr: The Air Travellers Security Charge is totally managed by the Department of Finance. I understand that CATSA receives the bulk of those monies for our operations, but the actual reconciliation of the revenues and expenditures is done entirely by the Department of Finance.
Senator Runciman: If it is a direct offset, you are not aware?
Mr. McGarr: I do not have that information.
Senator Runciman: A year or two ago, the Minister of Transport went out into the area at Pearson where the planes are loaded with baggage and was not interfered with by anyone from security. Have you addressed that kind of situation? The minister himself was involved in pointing out that weakness.
Mr. McGarr: My understanding of the incident to which you refer is that it occurred at the perimeter of the airport, and perimeter security is not part of the mandate of CATSA. We operate only on the designated security line within the air terminal.
Senator Runciman: Do you play a role with respect to scrutiny of employees working in international airports in Canada?
Mr. McGarr: Yes, we do. There are two areas in which we are directly involved. First, there is a program of non- passenger screening that is applied to all non-passengers, for the most part employees at the airports, who have demonstrated a right and a need to access the restricted area of the airport. CATSA does random screening of those employees.
Second, after Transport Canada issues a security clearance to an airport employee, that airport employee is issued a restricted area identity card. That card has dual biometrics contained in it, and every time an airport employee accesses the restricted area of an airport he or she is obliged to present the card. CATSA conducts a validation of the card and the security clearance linked electronically with the card. There is a verification of the identity by comparing a biometric sample provided by the cardholder with the biometric data contained in the card, which was captured at the moment of issuance.
We validate that the card is linked to a valid security clearance, and we verify that it is the same person presenting the card as was registered at the moment of issuance of the card.
Senator Runciman: What biometrics are you utilizing?
Mr. McGarr: We use the fingerprint and the iris.
Senator Runciman: You mentioned that you are focusing on particular types of travellers. Can you expand on that, or would you rather not?
Mr. McGarr: I would be pleased to. We realize that the business traveller, the very occasional holiday traveller and the traveller with a family have very different requirements, so we are adapting our screening process to better address those requirements by doing things like implementing a family lane with a larger-gauge x-ray machine that allows us to screen car seats or child seats and most of the prams that people travel with in order to expedite and facilitate their passage at the same time as removing the delay they could cause in other lanes, with the goal of expediting other passengers.
We are moving to address the identified needs of some groups of travellers by type of traveller, such as vacation and business.
Senator Neufeld: Senator Runciman covered a number of the questions I wanted to ask.
I understood you to say that you are conducting a cost effectiveness study or that the minister responsible is doing a value-for-money audit of CATSA. Could you explain that? If that is the case, what is happening or has happened?
Mr. McGarr: The minister announced that there would be a substantive review of CATSA. The exact terms of the review have yet to be disclosed, but it is my understanding that all facets of our corporation, including our expenditures and our governance structure, will be subject to the review. We are looking forward to participating in that review, but the specific terms have yet to be disclosed.
Senator Neufeld: I go through a lot of airports to get here from Northern British Columbia. It seems to me, as it does to other travellers, that there is quite a difference among screening processes in different airports. In the screening process in Terrace, for example, I may be stopped. The same day, I can whisk right through the screening process in Vancouver, and I will not have done anything different or carried anything different.
I am happy and appreciative that you are doing the work you are. I feel safer because of it, as I believe all Canadians do. I am not saying anything negative about your process, but it is confusing when you are scanned twice in the same day and you make it through one but not the other. I wonder whether the intensity of the screener is set higher when I cause the bell to ring.
Mr. McGarr: No, we do work with a standard. However, there is a surprising list of factors that can impact the standard. All electronics in play in the airport environment have a potential impact. This includes radar and the proximity to other pieces of technology. This concerns us very much and we are constantly trying to get things as consistent as possible. However, there are so many things that can impact the sensitivities that it is a constant adjustment to get things as consistent as possible. A host of factors impacts the detection levels.
Senator Neufeld: I want to compliment you on the Olympics. I am from British Columbia, and I heard many good reports about how well it was handled at the Olympics. You did a great job, so you should know that. I heard that personally from a lot of people.
Mr. McGarr: On behalf of the screening officers, I want to accept that and say thank you very much.
Senator Neufeld: It is very true.
Let me give you an example again of going through a check. I usually take my belt off. If a light goes red, you will get searched by a person who will reach under your jeans to check around your tummy. If I wear my belt, all they will do is look under the belt. Tell me why.
Mr. McGarr: If it is resolving an alarm of the walk through metal detector, that is a lot more direct.
There is also a random selection of travellers, who normally would not alarm, but the technology is set to trigger on a random basis, and those passengers are subjected to a secondary measure that would not normally be applied to travellers. I would imagine that is the circumstance that you are referring to.
Senator Neufeld: That answers my question.
Senator Ringuette: You indicated that in last year's budget you purchased 44 full body scanners, the new machine that we have seen advertised and reported in the media, and 145 multiview X-rays. Is the multiview X-ray the one you put your handbag through and so forth?
Mr. McGarr: That is exact, senator.
Senator Ringuette: You made those purchases last year.
Mr. McGarr: Yes.
Senator Ringuette: How many of those two items will you be purchasing this year?
Mr. McGarr: We are awaiting the decision of Treasury Board ministers on a plan that we have proposed, and we will not know until we have received approval, if we receive approval. It would be premature to say what we intend to do this year because our plan has yet to be approved.
Senator Ringuette: Is the $350.6 million that we are discussing tonight in Supplementary Estimates (A) for the purchase of the equipment?
Mr. McGarr: We intend to use the funding that has been allocated or earmarked for the corporation to maintain our core day-to-day operations, to invest in the newest, most cost effective and proven technology to continue keeping Canada on track, to be compatible with our international partners and to meet the U.S. requirements on flights to the United States.
However, the exact allocation of those funds will only be known once we receive approval for the proposal that we have put forward to the government.
Senator Ringuette: Mr. McGarr, there is a communication tool called "MEP,'' message event proposal. Have you been subjected to this communication tool?
Mr. McGarr: Not to my knowledge.
Senator Murray: It is very insidious.
Senator Ringuette: I still do not know how you will use the $350.6 million, and I still do not know, what equipment you will be purchasing for this fiscal year, and it is part of our responsibility to understand the spending in order to approve it.
Mr. McGarr: I have tried to express the outcomes that we are seeking with these funds, but until such time as we receive government approval of our operating plan, I do not know either exactly how those funds will be expensed. It will be in keeping with the approved plan, but we have yet to receive that approval.
I would be very happy to come back to you, once we receive the approvals, and explain exactly what we intend to do with the funds.
Senator Ringuette: The supplementary estimates comprise funds that Treasury Board and Finance have approved for the different departments and, for instance, for your specific authority. You have approval for $350.6 million, subject to parliamentary approval of these estimates. Therefore, I am disappointed, but I will move to another question.
What is the cost of one full body scanner?
Mr. McGarr: It is $250,000 per unit when we include the integration costs at the airport.
Senator Ringuette: And the installation?
Mr. McGarr: Yes.
Senator Ringuette: What is the cost of a multiview x-ray?
Mario Malouin, Chief Financial Officer, Canadian Air Transport Security Authority: There are two types of multiview x-rays, and the price per machine ranges between 175K for the lower capacity, and 200K for the higher capacity.
Senator Ringuette: Are there many suppliers of these machines, whether they are type A, type B and the full body scanner?
Mr. McGarr: There are a number of suppliers of the technology. However, in order to acquire technology, it has to be on an approved products list that is maintained by Transport Canada.
Senator Ringuette: Who supplies you with those full body scanners and the multiview x-rays?
Mr. McGarr: The full body scanners were provided by L-3. L-3 is the name of the corporation.
Senator Ringuette: Where are they from?
Mr. McGarr: I believe their head office is near Boston.
Senator Ringuette: Is that purchased in the U.S. to satisfy U.S. travelling?
Mr. McGarr: We have acquired imaging technology based on consultations with Transport Canada over about two years. We had tested this technology 18 months prior to the events of Christmas past, in Kelowna, British Columbia, for an extended period. We had completed the testing and were moving towards the deployment of the technology in advance of the events of Christmas Day, which is why we were able to move so quickly once the enhanced security measures made this technology a much more attractive piece of equipment to be deployed.
Senator Ringuette: Who supplies the multi-view x-rays, the two types?
Mr. McGarr: The current multiview x-ray that we are buying is supplied by Smiths Heimann.
Senator Ringuette: Where are they?
Mr. McGarr: Their main office, I believe, is in Wiesbaden, Germany.
Senator Ringuette: In regard to X-ray technology, I thought Canada was one of the top providers. Do we not have Canadian companies that can provide this equipment?
Mr. McGarr: Actually, Smiths Detection, I believe, is a Canadian company, and they are related to Smiths Heimann. The actual manufacture of the technology is done in Germany. They were the only approved vendor of x-ray technology for use in airports in Canada.
Senator Ringuette: By Transport Canada?
Mr. McGarr: At the time of the purchase, yes.
Senator Ringuette: You are saying that you have no flexibility in regard to the security equipment that you purchase, that you have to follow the list provided to you by Transport Canada?
Mr. McGarr: I would like to say also that we are increasing the flexibility significantly with our new test facility that we have opened.
As an example, a couple of years ago, the CAT scan machines we use for luggage, had only one supplier, and that was General Electric. Since that time, we have tested and now approved two additional suppliers, L-3 and Reveal. We have created competitive markets and we are doing this with each of the platforms of technology.
Senator Marshall: I would like to go back to what is in the $350.6 million. Can you narrow it down? What are we paying for? It must be more than just the equipment.
Mr. McGarr: The majority of our expenses are related to the actual provision of screening services by the service providers that supply the manpower to us. The $350 million, if I can try to be as clear as I can, is subject to the approvals of the Supplementary Estimates (A), but it is additionally conditional to the approval of Treasury Board ministers. Until we receive the approval of Treasury Board ministers, we cannot touch a dollar of that money.
Senator Marshall: I was jotting the numbers down as you were speaking. You talked about the 44 scanners at $250,000 a unit, so that is $11 million. Then the 145 new X-ray machines at $200,000 is $29 million. That is $40 million in total, so where is the other $310 million?
Mr. McGarr: Senator, if I may, the acquisition of the 44 full-body scanners and the X-ray technology was from last year's funds. I am unable to give any indication of the breakdown of funds for the coming year because we are awaiting government approval.
Senator Marshall: What you are saying then is that the $350.6 million might not be just for additional equipment. It is probably also to pay salaries or contractual services; is that what you are saying?
Mr. McGarr: Yes, it will be applied to all of our expenditures that are approved by Treasury Board, prior to accessing those funds.
Senator Marshall: Earlier you talked about the costing analysis that was carried out, and then you talked about how much will be recouped from individual travellers, all of which rests with Treasury Board. Once the equipment is purchased, I would think that the fee being charged to travellers would decrease. Is that something that falls within your shop or is that something that falls within Treasury Board's shop?
I am trying to think long term. We are talking about $1.5 billion over five years. We are talking about $350 million the first year. At some point in time many of those costs will not recur, so do the fees drop off after year five? That is what I am trying to determine.
Mr. McGarr: The entire Air Travellers Security Charge is managed by the Department of Finance. We operate 100 per cent on an appropriations base. We have absolutely no direct interaction with the ATSC. That is actually managed by the Department of Finance.
Senator Marshall: I appreciate that the witnesses will probably not be able to answer my next question, but I would like to raise it for the benefit of the committee. If the government is funding the acquisition of this equipment and these services and air travellers will be charged a fee, where is the revenue budgeted?
The Chair: It would be very helpful, Mr. Malouin or Mr. McGarr, if you could provide us with a breakdown of the total amount of revenue that comes in that goes to the Department of Finance, as you have indicated. We know that in the Main Estimates,that we are in the process of approving now you have requested $243 million, and in addition you are asking for $350 million. It would be helpful for us to understand the flow of that money, how much coming in and how much going out. As has been pointed out, government policy is to increase the security fee to cover the $1.5 billion.
Mr. McGarr: I understand, Mr. Chairman, but I personally, and at CATSA, we do not have access to that information. You would have to look to the Department of Finance for that information.
Senator Dickson: What is capital and what is operating expense, generally, during an annual period? You have all these contracts for services. I do not know how you put it on the record, or how you audit insofar as equipment is concerned, but you must have a breakdown. You have machinery there, and over here you have service contracts. How much are the service contracts?
Mr. McGarr: It has varied greatly over the years, senator.
Senator Dickson: Give me the last number that is in your mind, the last year. I want to get a handle on it.
Mr. McGarr: Last year our operating expenditures were $472 million.
Senator Dickson: How much was it for service providers?
Mr. McGarr: It was $335 million for service providers.
Senator Dickson: The amount was $335 million for third-party service providers last year.
Mr. McGarr: Yes, that was last year.
Senator Dickson: How much was spent for staff of CATSA?
Mr. McGarr: I believe our staff costs last year were $53 million.
Senator Dickson: I will turn it back to Senator Marshall, who is an accountant.
Senator Marshall: I am finished with my questions.
The Chair: The figures are not adding up in the way that we would like, but we are getting closer. If you were to write a letter to the Department of Transport saying that their $350 million was in jeopardy of getting approval until we can figure out these various amounts, do you think you might receive an answer that would help us?
Mr. McGarr: It is my understanding, senator, that until the Treasury Board ministers approve our corporate plans, we do not have that information. We anticipate that approval to be forthcoming relatively soon.
The Chair: We know that you have asked for $243 million in the Main Estimates for operations and equipment. Now, you are back asking for another $350 million. Is that right?
Mr. McGarr: That is exactly right.
Senator Finley: Like Senator Neufeld, I could ask many questions about the vagaries — the weird and wonderful process of going through airport security systems, but I will not do so. I appreciate that you are there, and the vast amount of money it appears to take is a small price to pay to prevent an airplane of Canadians going down. I have two questions, one of which is born out of curiosity.
It absolutely amazes me that terrorists seem to come up with truly weird and wonderful ways to plant bombs, whether in the soles or heels of shoes or in their underwear. Do you have a system that is as weird, wacky and wonderful as that of these terrorists so that you can try to anticipate the next levels of technology to combat it?
Mr. McGarr: Yes, we have that, senator.
Senator Finley: You are not going to tell me anything about it, of course. I understand. It is claimed that the Israelis have the most successful and fastest airport security processing system. I can agree with that from first-hand experience, having been there recently. They claim it is not based so much on technology but on psychological profiling. They watch people in queues in airports. Could you quickly address that because it might be a way to make our system more efficient, more universal and perhaps cheaper? Could you address what we might do in that area? Is there any validity to Israel's claim?
Mr. McGarr: In the past fiscal year, we worked with an Israeli firm to develop a passenger behaviour observation program. We are in the midst of finalizing the development of the program. We hope to add it as a layer to the existing layers of security within the airport environment. I fully agree that there is an opportunity to allocate rare resources to detecting those who have demonstrated behaviours that would warrant secondary screening measures. In that spirit, we are looking to develop a program with our regulator and government authorities to try to add to our existing screening technologies. We believe in it strongly, and we agree that it has been proven to work in other jurisdictions.
Senator Murray: I presume the screening of checked baggage is someone else's responsibility, or is it your responsibility?
Mr. McGarr: It is our responsibility.
Senator Murray: Can you tell us about it?
Mr. McGarr: I can tell you that every piece of luggage that travels on an aircraft in Canada from a designated airport is screened using some of the very best technology that exists in the world.
Senator Murray: How often does it happen that a piece of checked luggage is removed from the belt and opened for further inspection and action taken?
Mr. McGarr: It happens pretty regularly. This afternoon, a passenger was leaving a Canadian airport with an undeclared rifle in his bag. It was removed, the police were called, and the passenger was charged. It happens regularly that prohibited items, or at times dangerous goods, are located in checked luggage. When that occurs, there is an appropriate response.
Senator Murray: It is not necessarily a case of a traveller being intent on committing a crime. Is that right?
Mr. McGarr: Exactly.
Senator Murray: How often do you pull someone aside whom you have reasonable suspicion to believe is up to no good?
Mr. McGarr: Thankfully, it is a rare occurrence.
Senator Murray: What are your people trained to do in terms of physical searches and so on. We know that if we make the mistake of bringing scissors in our carry-on luggage, even nail clippers, they are confiscated; and we understand it. How often does it happen that there is something not only more dangerous but more suspicious, which might not stand up in court, perhaps, but you confiscate the item and the person boards the aircraft. What happens? Are your people trained to report this infraction to someone? If so, to whom do they report? Is it the RCMP, the local police or the airport authority?
Mr. McGarr: There is a full reporting protocol. Screening officers regularly encounter items that are prohibited not only by regulation but also by law. In the circumstance when a prohibited weapon is found, as an example, law enforcement is immediately called as well as Transport Canada, the airline, the airport authority, and all other parties involved.
Senator Murray: It is a legal issue rather than a safety issue, is it not?
Mr. McGarr: In that instance, yes.
Senator Murray: Are your people trained to identify things that are a safety issue, apart from the familiar prohibited items? If someone boards with a bag of fertilizer, and your people have a reasonable suspicion that the person is up to no good, you would confiscate it. What would happen next?
Mr. McGarr: More often than not, most of the confiscations are related to people who are not intending to cause harm. We know that there are a number of dangerous goods, such as flammables, that are not allowed on an aircraft. Even though it is not illegal, it is dangerous. Our screeners are trained to identify those objects and to alert the airlines when they find a dangerous good. They have a responsibility to ensure that such goods do not board the aircraft. They will work with all of the stakeholders within the airport community.
Senator Murray: Your people are trained, and you say there is a protocol to be followed when making a report.
Mr. McGarr: Yes.
Senator Murray: To the airport authority? To the police? To the security services? To whom?
Mr. McGarr: Normally, it would be to all of the above — not to security services, but the airport authority, the airline representatives, Transport Canada inspectors and law enforcement, if there is a question that any of the laws of the country are being infringed.
Senator Dickson: I have a couple of quick questions. Number one relates to the process of selecting the service providers, the companies. Could you briefly outline that process?
Mr. McGarr: Certainly. We issue a competitive request for proposals and we receive bids. Currently, we have contracts with 11 security companies for the provision of service across the country. We will hopefully, in the near future, going to market again to renew the contracts that we have and to see if there are new entrants that would be of interest for delivery of service.
It is a competitive bid process, and the evaluation of all the bids and the award of contract follows.
Senator Dickson: Does the winning bid win on price or is there a points system?
Mr. McGarr: We use an evaluation system that includes both technical capabilities, and price is a factor. The single most important thing before price is considered is that all bidders must have provided us assurance that they meet all the technical requirements we are looking for.
Senator Dickson: Could you supply through the clerk of our committee a copy of the typical tender sheet you use?
Mr. McGarr: I would imagine.
Senator Dickson: Either you can or you cannot.
Mr. McGarr: I cannot imagine that there would be a reason not to. It is a public tender, so we will supply that to the clerk.
Senator Dickson: Without waiting to receive that document and to look at all the conditions, I am interested in whether there are special conditions as to the qualifications of the people who are working for these service providers. In other words, do they have to go through some kind of a psychological test that is presented to you as pre- conditioning? I am just curious.
Mr. McGarr: The bulk of the workforce was inherited when CATSA was created. We took over the re-certification process. The criteria that a candidate must meet are in designation standards maintained by Transport Canada. If a candidate meets those criteria, he or she is eligible to be employed by a service contractor, at which point the service contractor presents that candidate to CATSA for training and certification. We do the training and certification of all of the screening officers, even though they are employed by independent contractors.
Senator Poulin: Does your agency do quality control once the service provider has been chosen and is in place in the various airports across Canada?
Mr. McGarr: Yes.
Senator Poulin: How would you proceed and at what frequency?
Mr. McGarr: It is an ongoing process. There are multiple components to it. We have across the country approximately 100 oversight officers. These are employees of CATSA who conduct oversight on the operations at the individual airports. They report daily to us on the compliance rate that they find at the airports.
Senator Poulin: How would they go about it? In other words, do they travel as a passenger? Or do they introduce themselves and say, "I am doing quality research and I would like to see how it is going?''
Mr. McGarr: They are present at all the larger airports and many of the secondary airports. They will present themselves. They would be known or identified to screening officers, and they have a set program that they measure.
We also use people who are unknown to the service providers to attest to the effectiveness of the screening operations, and we also have a very elaborate performance program for the individual service providers on which part of their compensation is based. Therefore, our contracts with all the service providers are performance based.
On top of that, I would like to say that Transport Canada also has a very significant presence of inspectors in all of the airports who also monitor and test our operations.
Senator Dickson: Is there such a thing as an international association of security agents, associations or companies like yours?
Mr. McGarr: Actually, my predecessor in 2004, I believe, started the International Forum for Security Screening in Aviation. There are about 20 countries who participate in that association. We meet annually, exchange best practices and there is an awful lot of discussion on some of the common challenges we are facing.
Senator Dickson: Has that association ever had an independent audit of the 20 firms that belong to it? What I am driving at, where would you rank as against the other 19?
Mr. McGarr: My personal belief is that we are in the top tier.
Senator Dickson: I am pleased to hear that you are in the top tier. If you are in the top tier, what is the difference between the methods you use versus the methods of those that are above you? If I quantified my question to cost and efficiency of a passenger going through, I would assume that those above you have better practices at compatible costs. It would not be at more cost.
You may not want to go down that road. It is getting late. You can always get back to us in writing with your answer.
Mr. McGarr: Seriously, I do not believe there are countries that are above us.
Senator Dickson: Israel is an example. Anyway, if there are, I would like to know; this is a lot of money we are talking about.
Mr. McGarr: It is indeed. Israel is a different circumstance. I believe our security outcomes are as good as anywhere in the world, believe me. Whenever we learn of a best practice anywhere in the world, we try to see if it can be implemented here in Canada. We are totally committed to continuous improvement, and we strive only for the most effective and efficient security screening.
Senator Dickson: It is interesting, but I assume the majority of people going through airports in Canada are Canadians, and we are a peace-loving people. Therefore, we should not have a lot of occurrences. Anyway, I will not pursue that this evening.
Senator Ringuette: I have three quick questions. You indicated that CATSA trains the officers of the service provider. Who pays for that?
Mr. Malouin: CATSA.
Senator Ringuette: You pay to train the employees of the service providers?
Mr. McGarr: That is right.
Senator Ringuette: In regard to best practices, how many best practices do you — or maybe you do not — share with your colleagues at the airports working for Canada Border Services Agency and Immigration?
The Chair: Is that something you can answer quickly or do you want to write us a note and tell us what you do?
Mr. McGarr: Very few of our processes apply to the CBSA.
Senator Ringuette: There is still profiling and screening and so forth.
The Chair: If you have anything further to elaborate on that, maybe you could write to us.
Senator Ringuette: The final question concerns the G8, G20 summits. I suppose this will all be happening at the Toronto airport. I would like to know your cost to provide airport security during the summits. I presume there will be additional airport security there.
Mr. McGarr: A sum of $400,000 was allocated to CATSA for increased services during the G8 and G20 summits.
Senator Ringuette: Are you saying that in addition to the base budget in the Main Estimates and the additional $350 million in the supplementary estimates, which we cannot get any specifics on, there you are asking for $400,000?
Mr. McGarr: That amount was identified to cover any potential requirements. Whether those funds will be expensed or not, we do not know.
The Chair: I believe you will find those in Supplementary Estimates (A). You are going to be asked to vote on this next week.
Senator Runciman: In relation to the G8 and G20 and inbound traffic, you do not play any role with respect to security. Is there some sort of coordinating involvement? What role do you play, if any?
Mr. McGarr: On the inbound traffic, there is only the corresponding traffic — any international flights that would arrive on either the East Coast or the West Coast that would then transfer on. That is the only inbound impact; the rest of the impacts would be on outbound traffic.
The Chair: For your information, honourable senators, we will begin next week a study of Bill C-9, assuming that we get authority to go ahead and second reading is concluded. In Bill C-9 is an increase in the travellers' security fee. Therefore, we will have to have officials from Finance in to talk to us about that, and we will get answers to these questions that we unfairly pressed you on.
On behalf of the Standing Senate Committee on National Finance, Mr. McGarr and Mr. Malouin, thank you for attending and helping us out.
(The committee adjourned.)