Proceedings of the Standing Senate Committee on
National Finance
Issue 11 - Evidence - May 6, 2014
OTTAWA, Tuesday, May 6, 2014
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the subject matter of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014, and other measures.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Good morning. This is the fourth meeting on the subject matter of Bill C-31. Today, we have a very lucky number this morning as it is May 6 and we're dealing with Part 6, Division 6. If you are buying lottery tickets, keep that number in mind.
We are very pleased to welcome from Treasury Board Secretariat, Rosalba L'Orfano, Senior Director, Pension Policy and Stakeholder Relations; Bayla Kolk, Assistant Deputy Minister, Pensions and Benefits Sector; and Deborah Weekes, Pension Policy Officer, Pension Policy and Programs.
We will be dealing with clauses 166 and 167, which can be found in the bill at page 131 of the English version.
Ms. Kolk, would you like to act as spokesperson? If you could give us an overview on these clauses, we will see if there are any questions coming from your comments.
Bayla Kolk, Assistant Deputy Minister, Pensions and Benefits Sector, Treasury Board of Canada Secretariat: Thank you for the invitation to come to your committee today. I'm here with two of my officials to provide an overview of Part 6, Division 6 of Bill C-31, which would amend the Members of Parliament Retiring Allowance Act to prohibit members of the Senate and the House of Commons — that is, parliamentarians — from making pension contributions and accruing pensionable service as a result of suspension from Parliament.
``Pensionable service'' refers to the amount of time that is counted toward qualifying for a pension, that is, at least six years, and is also counted toward determining the amount of the pension that will be payable to parliamentarians.
To take you through the clauses, clause 166, proposed section 2.9 prohibits parliamentarians from accruing pensionable service from the date that a suspension begins as determined by a majority vote of the Senate or the House of Commons until a date on which they are permitted by a majority vote of either house to resume doing so.
Proposed section 2.91 prohibits parliamentarians from paying pension contributions with respect to the period referred to in proposed section 2.9.
Proposed section 2.92(1) prohibits parliamentarians from making elections to purchase past service, which would have had the effect of increasing their total pensionable service. They would not be permitted to make such an election from the date that their suspension begins until the date that they are permitted to do so as determined by a majority vote of the Senate or the House of Commons or until the date that the vote actually takes place if that date is later.
Proposed section 2.92(2) provides that the same period referred to in 2.92(1) is not to be counted in the one-year time limit within which parliamentarians are allowed to make an election, thereby ensuring such a time limit would not expire during a suspension.
Proposed section 2.92(3) provides that parliamentarians cannot ever make an election to include as pensionable service a past period during which they were not permitted to accrue pensionable service as a result of a suspension.
Finally, clause 167, the ``Transitional Provision,'' specifies that there will be no retroactive effects of the above provisions. The amendments will apply prospectively starting on the date that they come into force, even for parliamentarians who were suspended prior to that date.
I would like to add that affected parliamentarians and any eligible dependents would still be covered under health, dental, life insurance and disability benefits. That said, a suspension would preclude a parliamentarian's ability to contribute to his or her pension and to accrue pensionable service regardless of whether he or she was in receipt of disability benefits during the affected period.
To conclude, the rationale is that accruing pensionable service is not consistent with the intent of a suspension. The proposal is to ensure accountability and transparency and to support the integrity of public office and public institutions.
We would be happy to take any questions you may have.
The Chair: Thank you very much.
One of the important points you made — and I think we understand the suspension and the policy behind that — is that this legislation says it is not retroactive to the time of suspension.
Ms. Kolk: That's correct.
The Chair: From the day that this portion of the bill is proclaimed into law, the accrual of pension time stops for someone who is suspended.
Ms. Kolk: That's correct.
The Chair: This applies to both houses.
Ms. Kolk: That's right.
[Translation]
Senator Rivard: Thank you for being here, ladies. We remember how extremely unpleasant and difficult it was to sanction and punish our colleagues last year.
In order to be better informed, we asked a lot of questions about what was done elsewhere. For example, we discussed the House of Lords in London and in a few other places such as Australia. To your knowledge, are any measures similar to what we are introducing this morning in force elsewhere in the world? Have you had time to look into that?
[English]
Ms. Kolk: We did compare to what exists elsewhere in Canada. In the federal public service, if a public servant is suspended, they do not accrue pensionable time. The same is true for the Canadian Armed Forces; and four provinces have now taken the approach to not permit pensionable accrual time during a period of suspension.
Are you aware of other countries?
Rosalba L'Orfano, Senior Director, Pension Policy and Stakeholder Relations, Treasury Board of Canada Secretariat: Internationally, it varies as to how they apply such rules.
The Chair: What is it like in Cambodia?
Ms. Kolk: I am not aware. Maybe your guests can tell you that.
The Chair: I mention Cambodia because we have a number of employees, servants of the Parliament of Cambodia here watching our process this morning, and we welcome them.
Ms. Kolk: Wonderful.
[Translation]
Senator Bellemare: Thank you for being here. During the period of suspension, we understand that a senator does not accumulate any rights. On the other hand, where a senator has accumulated five years of service at the time he is suspended, do the years during which he was suspended count when he returns, even if they are not part of the contribution period and if, for example, he becomes ill upon his return and decides to leave his employment?
In other words, do the years of suspension count for the six-year period, even though no contributions were paid for the entire six-year period for the purpose of subsequently receiving a retirement allowance?
[English]
Ms. Kolk: When the individual would return, the four previous years would count towards a pension. The period of time during which the suspension took place and there is no pensionable accrual time would not count. The only circumstance in which that period could be bought back or count is if the house or Senate would rescind the suspension. That period of time is lost to suspension of time; then, in a recommencement of reinstatement to the Senate or the house, through a majority vote, the pension would begin again.
You're conceivably looking at the four previous years and then, once starting again, however many years accrue, bearing in mind that you need at least six years to get a pension.
[Translation]
Senator Bellemare: That is why I asked the question. If the person contributed over a period of four or five years and comes back two years later, that will not add up to six years. Consequently, it is the period of four or five years that will count as the four or five years during which contributions were previously paid. Is that correct?
[English]
Ms. Kolk: That's correct. The six-year period is the period of time in which one must have service to qualify for a pension.
Senator Callbeck: Thank you for your explanation. Actually, that was the question that I had.
The change in this legislation then means you're putting the parliamentarians on the same basis as the forces and public servants; is that right?
Ms. Kolk: That is right.
Senator Callbeck: Thank you.
Senator Eaton: If I'm suspended and then reinstated, can I buy the missing years if I've been suspended, say, for two years? Can I pay back into the fund and buy myself back into the fund?
Ms. Kolk: No, that would be prohibited. As I said, the only circumstance is if your suspension was rescinded by the Senate or the House of Commons.
Senator Eaton: Can you briefly explain the following:
No election shall be made under Part I or Part II by a member during any period that begins on the day . . . .
What does that mean?
Ms. L'Orfano: That provision means that while a member is suspended they cannot take advantage of the provision that allows them to purchase a previous session of Parliament service. During the period of suspension they cannot increase their pensionable service to, let's say, get to the six years in order to be eligible for a pension. However, during the period of suspension, that period is not counted toward the one year that the member has in order to make an election to purchase a previous session.
For example, the one-year time limit to make the election starts and they become suspended, on that period of suspension the clock stops. Once the majority vote allows that member to continue contributing again, the clock begins again on the one-year period to allow that person to purchase a previous period of service.
Senator Eaton: I see, but I thought you said you cannot purchase.
Ms. L'Orfano: You cannot. You can purchase a previous session of Parliament but you can never purchase a period during which you were suspended.
Senator Eaton: Okay, thank you very much.
The Chair: Your suspension is over and you're back to work, but you still cannot elect to purchase that period while you were suspended.
Ms. L'Orfano: While you're suspended, you cannot take advantage of that provision.
The Chair: You're not suspended any longer if you're back.
Ms. L'Orfano: If you're no longer suspended and the majority vote has specified a date that you can begin contributing again, then you could make an election if your one year is not up, but never for the period of suspension.
The Chair: I think that was part of the earlier part of the question.
[Translation]
Senator Rivard: That leads me to ask you for clarification on one point. My understanding is this: a bill becomes law when it receives Royal Assent. Bill C-31 will become law around June 22 or 23. Does that mean that the provisions respecting the pension plan in the event of suspension would apply retroactively to the day we suspended our colleagues by resolution? That is the case regarding salary matters, of course, but is it so with respect to the needs of the pension plan? By that I mean will the act be effective retroactively? Or will it be effective on the day on which Bill C-31 receives Royal Assent.
[English]
Ms. Kolk: It will not be retroactive. It will be effective only on the date it receives Royal Assent. Therefore, those who are suspended presently are contributing to their pension. That ability will stop only on the date of passage of the bill.
[Translation]
Senator Rivard: That is contrary to what we thought when we suspended the senators. We thought that benefits stopped at that point. The clarification you are making for us this morning is therefore very important. Thank you.
The Chair: Because this bill is necessary and it is not retroactive.
Senator Rivard: That is correct, like all acts, unfortunately.
The Chair: Yes, normally. I have no other questions. Thank you very much.
[English]
Ms. Kolk: Thank you for the opportunity.
The Chair: We'll go now to Division 9, the Atlantic Canada Opportunities Agency, page 135 of the bill, clauses 175 to 178.
[Translation]
I would like to welcome Denise Frenette, Vice-President, Finance and Corporate Services, Atlantic Canada Opportunities Agency (ACOA).
Ms. Frenette, I believe you want to make an opening statement before we ask questions. Go ahead.
Denise Frenette, Vice-President, Finance and Corporate Services, Atlantic Canada Opportunities Agency: Good morning and thank you. This morning, I will talk to you about Divisions 9 and 10. ACOA was created in 1987 with a mandate to enhance the growth of earned incomes and employment opportunities in Atlantic Canada.
[English]
We carry our mandate by helping businesses to become more competitive, innovative and productive by working with diverse communities to develop and diversify local economies and by championing Atlantic Canada.
[Translation]
Today I am here to provide you with a technical briefing on the legislative changes ACOA is proposing through the 2014 Budget Implementation Act. More specifically, I will talk to you about Divisions 9 and 10 of Part 6 of the bill. I will be happy to answer any questions you may have following this briefing.
[English]
I'll begin with Division 9 of Part 6 of the Budget Implementation Bill, which proposes two initiatives that would allow Atlantic Canada Opportunities Agency to achieve efficiencies. Those initiatives are the elimination of the ACOA board and the agency's requirement for a five-year report to Parliament. I will guide you through legislative clauses 175 to 178.
Clause 175 provides for the repeal of the definition ``Board'' in section 3 of the Atlantic Canada Opportunities Agency Act as the bill proposes to dissolve the board pursuant to subsection 178(1).
[Translation]
Clause 176 provides for the repeal of sections 18 and 19 of the Atlantic Canada Opportunities Agency Act. These sections establish and describe the board's operations, such as its quorum and frequency of meetings.
Clause 177 provides for the repeal of subsections 21(2) and 21(2.1) of the Atlantic Canada Opportunities Agency Act. These subsections required ACOA to table a comprehensive report before Parliament every five years, providing an evaluation of all activities in which the agency is involved. This report is now considered redundant in light of the current reporting framework, which includes annual departmental reports.
[English]
Clause 178 terminates the appointment of members to the Atlantic Canada Opportunities Board. Furthermore, subsection 178(2) provides that members of the board are not entitled to claim compensation as a result of early termination of appointment.
I will now talk to you about Division 10, unless you want to break now for questions on Division 9.
The Chair: I have three senators who have an interest in talking about Division 9. Maybe we should do that one first and talk about the Atlantic Canada Opportunities Agency.
[Translation]
Senator Bellemare: How many people currently work at the board?
Ms. Frenette: The board currently has six members present. The board is an advisory body. The president of ACOA is a member of the board. There may be as many as seven members, and representation is determined by province, one member for each province.
Senator Bellemare: Are they generally personalities from the industry? They are not public servants.
Ms. Frenette: From the industry and the community.
Senator Bellemare: How will the agency go about finding analyses and obtaining feedback to guide its actions? How will it replace its economic partners who provide the advice it has to solicit?
Ms. Frenette: You have to go back to when the board was originally created. It was established in 1987 when the agency was founded. At the time, we did not have a structure or mechanism for surveying community opinion. We have made a lot of progress since then. We now have several forums, round tables and meetings where officers and the minister meet community and business people to discuss and obtain comments. We now have a much more elaborate form of consultation. In addition, with developments at the agency, we also have much more contact with the community, many more committees on which the agency sits. We have also developed a capability for our development policies and research analysis so that we are in a better position to take the pulse of the community.
Senator Bellemare: The board had to prepare an activity report, and now officials will be preparing the same annual activity report.
Ms. Frenette: Those are two separate things. The board did not prepare an activity report. The activity report we propose to abolish is a report that the agency, not the board, prepared every five years.
Senator Bellemare: How much were the board members paid?
Ms. Frenette: If I am not mistaken, between $275 and $350 a day.
Senator Bellemare: That means a saving of how much?
Ms. Frenette: Historically, that is an average saving of $175,000.
Senator Bellemare: How were the committee members selected?
Ms. Frenette: Names were proposed. It was by ministerial appointment.
[English]
Senator Buth: I'm not sure you can answer this, but there are other development agencies or organizations across the country. Were any of those structured the same way as ACOA in terms of having a board?
Ms. Frenette: I believe ACOA is the only one where it's in the legislation to have an advisory board.
Senator Buth: So the others would typically be run by the public service and would be gathering input, in terms of their priorities and programs, through a regular consultation process without a board.
Ms. Frenette: Yes.
Senator Callbeck: You say that you're going to eliminate the five-year comprehensive report, which I understand evaluated all their activities. Is that information going to be available anywhere else? I know you're doing an annual report, but I'm concerned about the evaluation of the projects that ACOA is involved with.
Ms. Frenette: The requirement for the five-year report came at a time when ACOA, as you know, was created for just a five-year period and there was a need to report back to Parliament. The decision at the time was to have a five- year report.
Since then, two elements have changed. The government has now confirmed ongoing funding for ACOA. Legislative requirements have also changed and made it such that there are new, more modern ways of accounting, and more transparent ways to account for the activities of ACOA. Among other things, as a government we now have an evaluation policy where all of our programs are evaluated on a five-year cycle and all of this information is posted on the agency's website, so there is transparency.
We have the annual departmental report as was mentioned, and we also produce quarterly financial statements that are also available on the agency's website.
Senator Callbeck: So all the projects will still be evaluated every five years and put on your website.
Ms. Frenette: Yes.
Senator Callbeck: The last meeting of the board was fall 2013, I believe. After that meeting, did they provide any advice and support to the agency?
Ms. Frenette: I believe the last meeting was in May 2013 and they have not been convened since then to provide additional advice.
Senator Callbeck: But after their last meeting, I assume that when they get together they provide support and advice to ACOA after every meeting; is that right?
Ms. Frenette: As part of the meeting, during the deliberations they provide advice, yes.
Senator Callbeck: Do they meet with the members of ACOA? The chairman of the board is the president of ACOA, right?
Ms. Frenette: Yes.
Senator Callbeck: Are there public servants at those meetings or what was taking place at these board meetings?
Ms. Frenette: Typically at the board meetings you would have the president and vice-presidents of the four Atlantic provinces present. They would make presentations and have discussions on current topics related to items that are happening within the agency or future plans the agency is considering.
Senator Callbeck: So you feel that's not necessary now that you're having discussions directly with the public; you don't need that.
Ms. Frenette: Yes.
Senator Callbeck: I was talking about an evaluation. Is there anything those five-year reports cover that's not going to be covered somewhere else, whether it's the annual report or whatever?
Ms. Frenette: Yes. It's a different format, but it's still a comprehensive overview of the agency's programming, performance and accounting for the agency's results.
[Translation]
Senator Mockler: First of all, Ms. Frenette, I want to congratulate you on the leadership that ACOA constantly shows. It has always been at the forefront of the development field in Prince Edward Island, Nova Scotia, Newfoundland and Labrador and especially back home in New Brunswick.
First, I accept the proposal you are making because I believe it is important. You are going to have round tables and stakeholders; you will also have representatives from the business community, from small, medium and large enterprises, around the table when ACOA representatives contact them.
You mentioned that that was redundant, that you had to modernize. You also said you were going to dissolve the board of directors, if I heard correctly. What does ACOA's original architect think? What does Donald Savoie say about that? Has he made any comments on the subject?
Ms. Frenette: I am not aware of his personal opinion on the subject. However, I believe that Ms. Savoie has followed developments at the agency and has also definitely noted the extent to which the agency is involved in the communities, as well as the consultation efforts that are being made by the agency's senior officials and by the minister responsible for ACOA.
Senator Mockler: I have always attributed the concept to Mr. Savoie and to the governments of the time as well. Second, I know that he is in favour of change, and, in the spirit of what is being done now, people who are close to him tell me that he agrees with what is being proposed.
My last question concerns efficiency. Can you explain how ACOA will avoid becoming less efficient in our four provinces and how you will still be able to take their pulse for the purpose of developing their resources?
Ms. Frenette: Of course. I would like to note that these are two budget-cutting initiatives. They are really initiatives designed to improve efficiency by redirecting employees' efforts and the funding allocated to provide support for the board and to prepare reports to other, currently more appropriate economic activities and performance measures.
Senator Chaput: I would like to make sure my understanding is correct. It is the ACO board, which is an advisory entity at ACOA, that is being dissolved, is it not?
Ms. Frenette: Yes.
Senator Chaput: ACOA, as an agency, will remain?
Ms. Frenette: Yes.
Senator Chaput: And if I understood correctly when you made your presentation, ACOA will now also receive more stable, more sustainable funding, will it not?
Ms. Frenette: What I explained is that, when ACOA was initially established in 1987, it was created for a period of five years. We therefore had to come back and confirm our funding. Now ACOA's funding is stable.
Senator Chaput: And ACOA has a board of directors?
Ms. Frenette: No. The only board that we had was the advisory committee; we do not have a board of directors.
Senator Chaput: It is directed by the department?
Ms. Frenette: Yes.
Senator Chaput: Will members of the community be involved at some point? Earlier you said, as my colleague mentioned, that you would be having round tables for consultation purposes. Has a commitment been made to hold round tables to consult the communities?
Ms. Frenette: Yes. That practice is part of the way we manage our organization. We regularly organize round tables on various topics. We also have many committees on which members of the community can get involved in our work.
I would also like to mention that ACOA has a highly decentralized structure that is very much involved in the community. Our business offices are really close to the communities, as are the entrepreneurs. We work very closely with those people.
Senator Chaput: And do you have business agents working closely with the communities in various provinces?
Ms. Frenette: Yes.
Senator Chaput: Do you have one, or even several, business offices in each of the Atlantic provinces?
Ms. Frenette: Yes. We have regional offices in the four Atlantic provinces, and their head offices are located in the provincial capitals.
Senator Chaput: I would just like to add one point regarding what Senator Mockler just mentioned concerning the creator of the concept, Mr. Savoie, to say that I have no problem if he is comfortable with these changes. Thank you.
Senator Bellemare: Ms. Frenette, I understand a little better, but you currently manage a budget at ACOA that is intended for businesses, is it not?
Ms. Frenette: It is a budget intended for both businesses and the communities. We have business development projects, but also community development projects.
Senator Bellemare: Was it the advisory committee that previously approved the allocation of the budget to the communities?
Ms. Frenette: No, a committee did not make decisions. A committee gave advice.
Senator Bellemare: All right. Then the process of allocating funding to the community will not change?
Ms. Frenette: No.
Senator Bellemare: I simply wanted to emphasize — and I think it is important to say this — that the effectiveness of public intervention in the industrial field generally depends to a large degree on the close contacts that the agency — this one or any other — may have with the community on labour matters and economic development issues.
Obviously, at first glance, when you want to dissolve a committee that is normally there to provide advice on the needs of the community, you have to ensure that mechanisms are well in place. Otherwise officials may have all the necessary knowledge, but that will not be comparable to having people who are directly producers or creators of wealth and who can advise the government on the community's needs.
It is important to take that into account because it is an important concern for your organization.
Ms. Frenette: In that regard, the upstream approach of holding round tables, which involves senior executives — our minister also takes the initiative of meeting with the business community and people from the communities — gives us a constant and comprehensive perspective on the views of those people who might be able to give us advice.
The Chair: When you say ``give advice'', does that mean advice on projects that are to be subsidized?
Ms. Frenette: It is not advice on specific projects but rather on the implementation of agency policies and program development as a whole.
[English]
Senator Callbeck: Just a couple of questions on the round tables. That sounds good; senior managers are going to be sitting down with the public at large. I'm from Prince Edward Island. Will they take place, let's say, across the Island? I'm particularly thinking of the rural areas. Are we going to find these round tables mainly in Charlottetown?
Ms. Frenette: Typically, depending on the topic and what needs to be addressed, these round tables can occur at various places. We don't systematically just hold them in one urban location, if I can put it that way. We are mindful of reaching out to rural communities as well.
Senator Callbeck: I'm from a rural area so I just wanted to put that on the table, because there's a tremendous need out there.
You said round tables, and then committees where members of the community can get involved. Have those committees been established yet, or is that to come?
Ms. Frenette: In terms of committees, I'll give you an example. On official languages, we have committees where you would have RDÉE. I'm not sure how you would translate that. You have representatives of the community on those and you would also have ACOA representatives on these joint tables. That is an example of a committee.
It depends on the issue, but I'll take an example in the north. There were some issues in New Brunswick, and there are some working committees where you would have people from the community — businesses, as well as ACOA employees — to discuss how we move forward.
Senator Callbeck: Would ACOA pick these people to go on the committee or are they representatives of organizations within the area?
Ms. Frenette: It depends how the committee gets formed and who is taking the lead. Sometimes we get invited to committees, and sometimes we might want to take the lead in setting up a structure on a particular issue.
The Chair: Just to clarify the record, RDÉE is Réseau de développement économique et d'employabilité. That's the acronym for that particular group.
Senator Mockler: Those were very good questions from Senator Callbeck. Let's say, as we have seen, they have a challenge in fisheries; the agent of ACOA, with ACOA and the communities, will put together stakeholders at the community and/or industry level. My question is: Will those committees continue to be reinforced in all provinces?
Ms. Frenette: Yes.
Senator Mockler: Thank you.
The Chair: That's sort of like, ``What do you think about that?''
Ms. Frenette, you're Vice President of Finance and Corporate Services. Are you installed in Moncton, New Brunswick, or do you work here in Ottawa?
Ms. Frenette: I work in Moncton, New Brunswick.
Senator L. Smith: Thank you for your participation.
I have a simple question: How would you assess the effectiveness of the agency in terms of results and accomplishments?
The other question is: Was this change made for financial reasons or was it made for reasons of effectiveness?
Ms. Frenette: On the first question of how we assess effectiveness, as mentioned we do evaluations of all of our programs on a five-year cycle. We have an opportunity to do a thorough evaluation of our programs. The ongoing consultations also allow us to respond on a timelier basis to what we're hearing from the community.
What was your second question?
Senator L. Smith: Was the change made in terms of the advisory group due to performance or money?
Ms. Frenette: It's more about building efficiencies. As all government departments, we are in an era where we're looking to ensure efficiencies and redirect our resources to more value-added functions.
Senator L. Smith: The reason I asked the question is because, as was mentioned by Senator Bellemare, from an impact perspective there's a difference between the levels that certain people can attack or get support from when you're a high-profile advisory member versus an employee within the agency.
In terms of results, if you had to list the two or three top results that have occurred by or through the agency in the last couple of years, what would they be? I'm trying to get a sense of what they've done, as opposed to having meetings and trying to stimulate people and the economy. If there are two things that the agency has done well in the last couple of years — two highlights, two hits, two successes — what would they be?
Ms. Frenette: One of the key things right now is we've just undergone a review of our innovation programming. In terms of achieving success on a priority file, innovation is one where our minister has done a lot of consultation. In Budget 2014 it was recognized that ACOA is refocusing on innovation. On the innovation file, certainly we've had a lot of success.
Atlantic shipbuilding comes to mind in that we've developed an Atlantic shipbuilding strategy whereby we're really going to focus on helping small and medium enterprises to take advantage of this huge Atlantic shipbuilding procurement opportunity.
The Chair: That was Part 9. Why don't we go on to Division 10?
Ms. Frenette: Thank you, Mr. Chair.
I will now walk you through Division 10 of Part 6 of the Budget Implementation Bill, which relates to the dissolution of Enterprise Cape Breton Corporation, ECBC.
ECBC is a federal Crown corporation responsible for economic development through Cape Breton Island and a portion of mainland Nova Scotia in and around the town of Mulgrave. In addition to its own program, ECBC is responsible for the delivery of ACOA programs and certain obligations of the former Cape Breton Development Corporation, also known as DEVCO.
Division 10 provides for the dissolution of ECBC and authorizes the transfer of its assets and obligations to either ACOA or Public Works and Government Services Canada. ECBC's economic development activities and associated budgets would be transferred to ACOA, which would assume sole responsibility for the delivery of economic activities in Cape Breton. ECBC's real property holdings and obligations related to DEVCO would transfer to Public Works and Government Services Canada.
I will guide you through the bill from clauses 179 to 192.
Clause 179 provides definitions for this division.
Clause 180 dissolves the Enterprise Cape Breton Corporation, ECBC.
Clause 181(1) provides for the transfer of the assets and obligations of ECBC and its subsidiaries to either the Atlantic Canada Opportunities Agency or the Department of Public Works and Government Services Canada.
Paragraphs 181(1)(a) and (b) provide that all ECBC's assets and obligations, with the exception of real property holdings, would be transferred to ACOA. These assets and obligations include ECBC's equity portfolio, loan portfolio and economic development programming.
Under paragraphs 181(1)(c) and (d), ECBC's real property holdings and any outstanding obligations to the former employees of Cape Breton Development Corporation, DEVCO, would be transferred to Public Works and Government Services Canada. The obligations to DEVCO employees include pension and other benefits.
[Translation]
Clause 181(2) provides for the transfer to PWGSC of any unexpended Enterprise Cape Breton Corporation appropriation, that is to say approved funding, relating to the real property and obligations that would be acquired in PWGSC under this clause.
Clause 181(3) is similar to clause 181(2). This clause provides for the transfer of the remaining portion of the unexpended Enterprise Cape Breton Corporation appropriation, that is to say approved funding, to ACOA.
[English]
Clause 182(1) provides that ECBC employees, whose functions are associated with the assets and obligations being transferred to ACOA, would be deemed appointed under the Public Service Employment Act to positions in ACOA. These employees would be part of the core public administration.
Clause 182(2), similar to clause 182(1), provides that employees whose functions are associated with the real property or DEVCO obligations being transferred to PWGSC would be deemed appointed under the Public Service Employment Act to positions in PWGSC. These employees would be part of the core public administration.
Clause 182(3) provides that employees being appointed under clauses 182(1) and (2) would retain the rate of pay they were receiving as employees of ECBC and would carry over any unused vacation and sick leave credits accumulated while in their former positions. The clause further provides that employees' accumulated years of service would be used in the calculation of vacation leave provided in their new positions. No other entitlements would be carried forward, and the collective bargaining agreements or other employment terms and conditions associated with the employees' new positions would apply to the employees in all other respects.
[Translation]
Clause 183 provides for the termination of the appointment of part-time Enterprise Cape Breton Corporation board members and that of the CEO. Furthermore, clause 183(2) provides that, except for the CEO, members of the board of directors would not be entitled to compensation on termination.
As for clause 184, normally the transfer of assets from a Crown corporation would need to comply with rules of the Financial Administration Act. This clause confirms that requirements under this act relating to the transfer of the assets of a Crown corporation do not apply in this case, because it is being done by operation of law.
[English]
Clause 185 empowers the minister to carry out whatever is required in order to close out the corporation's affairs after dissolution.
Clause 186 provides for the transfer of any legal actions pending against ECBC or its subsidiaries to the federal Crown.
Clause 187 amends the Atlantic Canada Opportunities Agency Act to confer, among other things, on ACOA the authority necessary for the administration, management, control and disposal of the assets and obligations transferred to the agency.
[Translation]
Clauses 188 to 191 are consequential amendments to other acts that make reference to the corporation. Those acts must be amended since the Enterprise Cape Breton Corporation will be dissolved.
Clause 192 repeals the Enterprise Cape Breton Corporation Act.
Mr. Chair, this concludes my presentation. I will be happy to answer your questions.
[English]
The Chair: I'm trying to understand the difference between clause 192, which repeals the Enterprise Cape Breton Corporation Act, and clause 180, which dissolves the corporation itself.
Ms. Frenette: Yes.
The Chair: If we dissolve the ECBCA, wouldn't that dissolve the corporation anyway?
Ms. Frenette: I'll leave that to the lawyers to answer. There must be a reason that they separate the two.
The Chair: There must be a reason.
Senator Eaton: I'm looking at ECBC and ACOA. The advisory board to ACOA is gone, and the board and CEO of ECBC are gone. Could you explain how management or the hierarchy will work?
Ms. Frenette: The corporation itself will be dissolved.
Senator Eaton: You've taken away all the top structure — the advisory boards and CEOs of both ACOA and ECBC. How will it filter up? Who will report? Does it go minister, deputy minister? Will it simply be a public service hierarchy?
Ms. Frenette: It will be a public service hierarchy. The structure of how ECBC staff will be incorporated into the organization has yet to be defined. There's a committee working on the transition. Employees of ECBC will be part of ACOA in terms of the staff that were working on economic development activities and the staff that were working on property development. The former responsibilities of DEVCO will go over to Public Works. They will be integrated into the structures of these two departments.
Senator Eaton: I understand, because I'm sure there was overlap and all kinds of things. There's just a chain of public servants now right to the minister? There's no outside business or any entrepreneurs involved at any level; is that correct?
Ms. Frenette: That is correct. The elimination of the board was seen as redundant because there were other ways to consult with stakeholders. The same logic would apply as ECBC falls into ACOA and Public Works. It would be the same structures.
Senator Eaton: I see. Unlike a Crown corporation, which has a certain amount of independence, there would be no independence basically?
Ms. Frenette: Yes.
Senator Eaton: What happens to ECBC's economic development programs, which represent about $8.5 million? Are those funds going to be transferred to ACOA and focused on Cape Breton, or do they just go back into the pot and then it's however you decide they should be disseminated across the four provinces? Is that the intent?
Ms. Frenette: The budget of ECBC will be rolled into ACOA and they will be directed to stay within the area of Cape Breton.
[Translation]
Senator Hervieux-Payette: Was the Enterprise Cape Breton Corporation established on roughly the same date as the Atlantic corporation? Were they created at the same time?
Ms. Frenette: I have to say I am not sure about the date on which it was established, but it was at least some 20 years ago.
Senator Hervieux-Payette: You told us that the other one was in 1987.
Ms. Frenette: Yes.
Senator Hervieux-Payette: Twenty years. So it would have been at roughly the same time.
Ms. Frenette: I honestly do not know the history.
Senator Hervieux-Payette: I was wondering why Cape Breton was not part of the other corporation. I obviously would have understood if it had been created 20 years earlier. I understand less if it was established at virtually the same time.
Why is Cape Breton isolated from the corporation that is concerned with the Atlantic? When last I heard, Cape Breton is in the Atlantic region. I do not understand why there are two organizations. Is there any special reason?
Ms. Frenette: There is a history to its founding. I cannot defend the reasoning today. I do not have those details.
There was a special economic situation, and the government decided there was a need to establish a separate Crown corporation. Today the government is conducting an evaluation and saying that, as a result of the agency's experience with program delivery, the purpose of the proposal is to come up with a federal agency that represents the government's leadership on economic development in Cape Breton and the Atlantic region as a whole.
Senator Hervieux-Payette: Were the users or the people likely to call upon the services of those two corporations consulted or did they learn from Bill C-31, as we did, that these two organizations were being dissolved? Perhaps they were consulted, agreed and now think this is a good way to manage the region's economic development.
Ms. Frenette: When you said ``consulted,'' did you mean the employees?
Senator Hervieux-Payette: The community, not the employees.
Ms. Frenette: There were no direct consultations. However, the people learned about the situation immediately and the decision was made. No notice was given.
Senator Hervieux-Payette: Or to the governments of those four provinces? You work with those governments, I hope?
Ms. Frenette: Yes.
Senator Hervieux-Payette: They were not consulted either.
Ms. Frenette: I guess there were no direct consultations.
Senator Hervieux-Payette: From an operational and cost-cutting standpoint, you said there would be a saving of approximately $180,000 in the case of the Enterprise Cape Breton Corporation. What savings will result from better management of economic development in that region?
Ms. Frenette: The purpose of the proposal is not to cut costs because the budgets are being allocated to ACOA and funding will be redirected to the Cape Breton community. There will be no savings, but this is a budget that can be managed by the agency to optimize benefits for the Cape Breton region.
Senator Bellemare: Cape Breton is a very special region. It is virtually a province in itself, without actually being one. How much did the agency's portfolio in Cape Breton amount to? What will be transferred to and centralized in New Brunswick? There is an annual budget, a portfolio and employees. How many employees are there?
Ms. Frenette: Approximately 52 employees.
Senator Bellemare: How big an annual budget are we talking about?
Ms. Frenette: In terms of appropriations, $8.6 million is allocated to economic development. After that, there were also the obligations of DEVCO, which is the former corporation that was integrated into the Enterprise Cape Breton Corporation. This is a budget that fluctuates from year to year because it depends on expenditures planned to meet obligations associated with the rehabilitation of properties and human resources. The total is $40 million for the current year.
Senator Bellemare: That is the portfolio?
Ms. Frenette: Yes.
Senator Bellemare: I understand no consultations were held. This will be centralized in New Brunswick. Will a strategy of involvement with the Cape Breton community be developed to offset this centralization?
Ms. Frenette: With regard to consultations, our minister met with people from the community to discuss the initiative. We made a commitment to work with the community to maintain services of the same quality as people are used to receiving. It should not be forgotten that the employees who administered the Enterprise Cape Breton Corporation's programs also administered ACOA's programs. Consequently, they were very familiar with ACOA's programs and will stay in their positions to continue their work. Consequently, we are also inheriting all that knowledge to guarantee a transition that will continue to meet the community's needs.
Senator Bellemare: We also manage labour programs in Cape Breton, as we do in the various Atlantic provinces. Are the economic partners involved in that? Was the Enterprise Cape Breton Corporation involved in managing the labour force?
Normally when there is involvement in managing the labour force, a certain relationship is maintained between people who manage labour and those who manage industry to stimulate learning and to ensure that training is provided where there are needs.
Were there any relationships? How will the partners be involved so that economic development and labour development go hand in hand?
Ms. Frenette: There will be a continuity. As I mentioned, the Enterprise Cape Breton Corporation people will be employed by ACOA and will continue their work. They maintained a very close relationship with the community and worked with those people to understand the needs of the region's economic activities, more specifically on the labour issue.
Senator Bellemare: So the employees will not be moving.
Ms. Frenette: No. We made a commitment that the employees would stay in the Sydney area. They will be staying there, yes.
Senator Chaput: Senator Bellemare has asked all the questions I had.
[English]
Senator Callbeck: I just want to be sure I understood correctly. There has been no consultation with any of the provinces with regard to the changes that are coming in the Cape Breton corporation and to ACOA; is that right?
Ms. Frenette: At the official level, there is ongoing consultation on how we deliver our programs. That knowledge was factored into the decisions that we've made and that we're proposing in the bill.
Senator Callbeck: So could you say that you have the blessing of the provinces?
Ms. Frenette: I would say so.
Senator Callbeck: You would say so.
Is the number of employees currently in Cape Breton in the public service going to remain the same, or will there be a change there?
Ms. Frenette: The number of employees will remain the same.
Senator Callbeck: In Cape Breton?
Ms. Frenette: Yes.
Senator Callbeck: I'd like some explanation on clause 184. It says normally the transfer of assets from Crown corporations would need to apply with rules of the Financial Administration Act. Could you generally explain what those rules are and why they are not going to apply in this particular situation?
Ms. Frenette: This clause is there to help facilitate the transaction. Upon Royal Assent, it was important to have this clause so that the assets could be directly transferred to ACOA and PWGSC. Otherwise, they would have to have an order-in-council process in order for the Crown corporation to have the authority to transfer these assets.
Senator Callbeck: Is that within the rules of the Financial Administration Act, that you have to have an order-in- council?
Ms. Frenette: Yes.
Senator Callbeck: In other words, you've done that to simplify the whole process?
Ms. Frenette: Yes.
The Chair: Thank you, Senator Callbeck and Ms. Frenette.
That concludes our list of questions. You have explained these two divisions very well for us. We thank you for that.
Next, we're going to deal with Division 12 of Part 6, which is the Nordion and Theratronics Divestiture Authorization Act, clauses 206 to 209 at page 143 of the bill.
Halverson from Finance has arrived. Can you explain to us why these particular sections are necessary?
Soren Halverson, Senior Chief, Corporate Finance and Asset Management, Department of Finance Canada: Certainly. The divisions remove, subject to certain conditions, restrictions on non-resident ownership that are imposed in the Nordion and Theratronics Divestiture Authorization Act. In particular, there is a maximum of 25 per cent ownership by a non-resident but is applied as a limit to Nordion within that act.
The restrictions in question were included as part of divestiture legislation in 1990 to allow for the privatization of Nordion International Inc., which was formerly part of Atomic Energy of Canada. Nordion was privatized by the government in 1991.
Recently, Nordion approached the Government of Canada requesting the removal of these non-resident ownership restrictions. The restrictions do not presently serve a policy objective and are duplicative with Canada's foreign investment review process.
The removal could allow Nordion to more readily access investment capital and enable it to better grow and create jobs. The amendments specify that the removal of the non-resident restriction is conditional on a transaction receiving approval under the Investment Canada Act review process.
The review of the transaction under the Investment Canada Act would determine whether it is of net benefit to Canada and whether the proposed transaction poses any concerns from a national security perspective.
I would be happy to take questions on the proposed amendments.
The Chair: Mr. Halverson, before I go to my list, could you refresh my memory on this; Nordion was involved in the lawsuit against Atomic Energy of Canada, another Crown corporation, with respect to the supply of radioactive isotopes a while back?
Mr. Halverson: That's correct, yes.
The Chair: Does this change have anything to do with that lawsuit?
Mr. Halverson: This is in no way related to that particular lawsuit.
The Chair: Thank you. That's helpful.
You indicated at the time that Nordion was privatized and was part of Atomic Energy of Canada Limited, or at least part of the group of companies dealing with nuclear matters. When it was privatized, the 25 per cent restriction was put in place.
Mr. Halverson: That's correct.
The Chair: And what we're doing is basically removing that now.
Mr. Halverson: Exactly.
[Translation]
Senator Hervieux-Payette: I have followed that project. Is Nordion the new name given to the former corporation AECL, which was sold to SNC?
[English]
Mr. Halverson: Nordion has been a corporate entity for basically 25 years, perhaps longer, actually, because it existed at first as an operating division of Atomic Energy of Canada Limited. When it was privatized in 1991, it was sold to a company called MDS, which subsequently changed its name, I believe, to MDS Nordion.
So Nordion really has no connection to the changes that have taken place at Atomic Energy of Canada Limited in recent years as far as the sale of its commercial division. It has been its own entity, a private sector firm operating with the name Nordion for many years.
[Translation]
Senator Hervieux-Payette: What did that entity do as a division of AECL?
[English]
Mr. Halverson: In their role at Atomic Energy, they were involved in activities around the use of medical isotopes.
[Translation]
Senator Hervieux-Payette: It was a division that lost a lot of money for governments and that, at one point, virtually jeopardized the entire Canadian medical system.
Eliminating the 25 per cent limit means that a foreign company would be able to get its hands on it tomorrow morning based on the current criteria, which have never really been very rigorously enforced. In the interests of Canada and national security, the primary objective is to make it possible for any international entity to purchase the company.
[English]
Mr. Halverson: I should clarify that Nordion has existed as a private sector entity for 25 years, so it has contractual relationships with Atomic Energy of Canada Limited for the provision of certain isotopes. Nordion in its present form exists under no statutory obligation to provide isotopes to the Canadian market or other markets. It is a purely private sector entity, and it is involved in the delivery of nuclear medicine products on a purely commercial basis and has been for many years.
[Translation]
Senator Hervieux-Payette: Is it a Canadian business that belongs to Canadians and for which foreign holdings are restricted to 25 per cent of its shares? Because, if that restriction is eliminated, the business could be sold to foreign interests without any limit, such as the 25 per cent limit on its shares.
[English]
Mr. Halverson: I should also clarify that today Nordion is a publicly traded firm. It's traded on the Toronto and New York stock exchanges and it has wide holdings by Canadian, American and other investors. If you were to add up the total level of investment in Nordion by the residence of the owners, you would find that the majority of Nordion today is not owned by Canadians. In that respect there is not a particularly significant change. To put a more fine point on it, what is at question is control by a non-resident owner.
[Translation]
Senator Hervieux-Payette: Why has the 25 per cent limit been withdrawn? By comparison, we sold Petro-Canada in pieces when Canadians held a certain percentage of its shares. My question is this: what is the purpose of withdrawing the 25 per cent limit? What does it limit?
[English]
Mr. Halverson: The limits that it creates, as we understand it from Nordion, restrict their flexibility in obtaining capital to fund their operations. It would be best for you to discuss the reasons for that with Nordion, but it has to do with finding investors who are willing to take a long-term strategic view on the particular asset as opposed to a potentially shorter term view that participants in the equity markets might ascribe to this asset.
[Translation]
Senator Hervieux-Payette: I am going to ask my question in reverse. Why was the 25 per cent limit previously established?
[English]
Mr. Halverson: It's probably useful to provide a little bit of historical background on that.
Since the 1990s or the 1980s there have been on the order of 30 privatizations of federal government corporations. About six of those have had this type of restriction imposed on them. They apply to a certain time period. This was probably the most recent of the transactions that would have had a restriction like this. My perspective on that question is that it reflected a norm of the day in the legislation and if you look at subsequent divestitures you don't see similar restrictions apply. I believe there is a historical context for why it's present in this particular legislation.
[Translation]
Senator Hervieux-Payette: If the others do it, we do it. That is not a grand philosophical reason. Can you explain the fundamental reason why the 25 per cent limit was set? Even though other corporations received the same treatment, there must have been a reason for that decision. It is not because another corporation did it that this one had to do the same thing.
We are not talking about something that happened 100 years ago; we are talking about something relatively recent.
[English]
Mr. Halverson: The reason you would move towards this change is because it could create a more favourable capital environment for a firm that is invested in Canadian communities and hopefully it will help this firm grow and create jobs.
We also have a number of controls in place, including a foreign investment review process. We have regulations in terms of the nuclear aspects of Nordion's activities and so those do not pose strong rationales for keeping this particular restriction in place.
[Translation]
Senator Hervieux-Payette: I do not believe the witness is giving us the real reasons. In my opinion, they had to lobby the government hard. If it is already a company whose shares are listed in New York and Toronto, I do not believe it had any major financing problems.
I am going to stop there because ultimately I think we are running round in circles. I thank the witness.
[English]
Senator Buth: I need clarification on this. You're removing the 25 per cent limit, are you?
Mr. Halverson: That's correct.
Senator Buth: It's really taking that limit off, and now the company has full rights to go out and essentially find the investment wherever it needs it.
Mr. Halverson: Exactly.
Senator Buth: You're removing those restrictions but the company will still be subject to the Investment Canada Act. Does the Investment Canada Act cover just full purchase of the company, or does it limit Nordion's ability to attract investment in any way?
Mr. Halverson: The Investment Canada Act would apply in this instance as it would apply in any other instance involving the proposed acquisition of a Canadian business by a non-resident.
Senator Buth: It's just the acquisition that will be covered. Like any other company, if this bill is passed, Nordion can go out and find investment in any way, but the Investment Canada Act will come into play if there is foreign ownership that essentially proposes to take over Nordion?
Mr. Halverson: Right.
Senator Buth: Thank you.
The Chair: I need a little clarification. I was thinking 25 per cent was the cumulative total non-resident holding, but I now understand you to say from the answers to the questions that it's 25 per cent by any one entity by a non-resident.
Mr. Halverson: Correct.
The Chair: That leads me to the point that the Library of Parliament has advised us about. A company by the name of Sterigenics announced that they want to acquire full control. That announcement came very, very coincidentally with the announcement that the government was going to get rid of this restriction of 25 per cent. Can you assure us that that's coincidence and that there is no insider activity going on and this legislation is not begin passed to satisfy Sterigenics?
Mr. Halverson: I can tell you that at the Department of Finance we learned of the specific transaction and the name of the proposed acquirer on the same day everyone else did. We were not aware that a release like this was going to come out on the same day the budget bill was tabled and we have no evidence to suggest there is any inside baseball attached to this, except that we were dealing with a stated interest from Nordion but there were no specifics attached to that particular expression of interest on their part to have this restriction removed.
The Chair: We had this restriction for 20, 25 years. The day that it's announced that we're getting rid of it, a U.S.- based company makes this announcement. They would have been off limits with this 25 per cent rule until we changed this. They make this announcement that very day. It sounds like a coincidence, does it not?
Mr. Halverson, I have no other senators on our list. I thank you very much for explaining this to us and we'll take it from there.
Mr. Halverson: Thank you.
The Chair: Moving along, we're going to Division 18, which is at page 163, and that deals with the Canadian Food Inspection Agency Act and changes thereto.
I'm very pleased to welcome Tony Ritchie, Executive Director, Strategic Policy and International Affairs with Canadian Food Inspection Agency; and Nicolas McCandie Glustien, Manager, Legislative Affairs.
Tony Ritchie, Executive Director, Strategic Policy and International Affairs, Canadian Food Inspection Agency: Mr. Chair, we're here to discuss the proposed amendment to the Canadian Food Inspection Agency Act that creates an exemption from the application of the User Fees Act for fees introduced or amended for services provided pursuant to the Safe Food for Canadians Act. This exemption from the User Fee Act only applies for the regulations currently being developed for the Safe Food for Canadians Act. The User Fee Act will continue to apply to all other CFIA user fees.
The exemption is necessary to help us achieve the timely introduction of the safe food for Canadian regulations. In order to advance the Safe Food for Canadians Act and its regulations by 2015, which is what we're committed to, related user fees must also be in place.
Although the act was passed in 2012, the coming into force of this act is dependent upon the introduction of new food regulations by 2015, and those new food regulations require that a proposal for user fees will be developed.
The User Fee Act outlines a process for revising fees that is very much in line with the Canadian Food Inspection Agency Act requirements. However, certain obligations under the User Fee Act may require more time, particularly if we have to convene an independent advisory panel under the User Fee Act or if Parliament is not sitting when the user fee proposal is ready to be tabled to both houses. Such a delay may impact our ability to proceed with the Safe Food for Canadians Act regulations by 2015.
The Canadian Food Inspection Agency Act, however, addresses all the transparency and recourse requirements identified in the User Fee Act. For this purpose, we feel that those requirements can well be addressed by the Canadian Food Inspection Agency Act currently, and therefore we're proposing that we be exempted from the User Fee Act for, as I said, those fees unique to the Safe Food for Canadians Act.
The Chair: Thank you for your explanation. I understand what you've said.
Senator Buth: Thank you very much for being here today.
Will this apply to any other user fees that CFIA currently has?
Mr. Ritchie: The exemption would not apply to other fees.
Senator Buth: So it's just under the Safe Food for Canadians Act?
Mr. Ritchie: That is correct.
Senator Buth: Can you walk us through and remind us again which user fees then apply under the Safe Food for Canadians Act?
Mr. Ritchie: I'll have to speak in general, because we're approaching the regulation development at this point in time, and that will further clarify the range of fees that we would apply under those particular regulations. In general, those regulations would apply to areas like export services, where the CFIA would undertake a service to facilitate export requirements. They could apply to any related testing that might be required from our laboratories, for instance. They could relate to inspection of facilities that are licensed or those kinds of entities. That would be the range of activities that we would undertake to collect fees from.
Senator Buth: If we're not going to go under the User Fees Act, which I understand is a lengthy process, how will you ensure that you get stakeholders' views?
Mr. Ritchie: Let me explain the process and how we currently set fees and the requirements under the Canadian Food inspection Agency Act, and I'll relate those back to the User Fee Act.
Currently, under the Canadian Food Inspection Agency Act, we are required to ensure that any fee we establish does not exceed the cost of delivering the service. The first step is to determine the cost of delivering that service for the agency. In doing that, we would then establish the ceiling. This would be the maximum that it would cost us to deliver that particular service.
We would be required to undertake an impact assessment. An impact assessment would look, for instance, at what our international partners are doing with respect to user fees, and would also take into consideration any other specifics, perhaps, of that particular industry in Canada. That is very much in line with the User Fee Act as well. We're required to do that.
We would have a range of tools at our disposal, based on the impact assessment, if we needed to modify the fee. We could perhaps reduce the fee, if required, or we could perhaps stagger its implementation over a number of years in order to deal with the impact assessment.
Those considerations would be provided to the minister. She would support those or not, and then we would release the user fee document for consultation. That is very much in line with the User Fee Act as well.
Stakeholders or impacted parties would have a range of opportunities to provide their comments. They could provide those comments directly back to the minister, their member of Parliament, the president or through the program itself.
We would take into consideration those particular comments. We would respond back to each individual who provided a comment, addressing how we would consider their issues. As well, we would table, for transparency purposes, all of the comments that we received and how we would respond to those particular comments.
Those comments would be taken into consideration, and if further changes are required to the way in which we're implementing the fees, those would be identified to the minister. The minister then, under the CFIA Act, has the authority to set the fees. She would set the fees. Those fees would then be tabled through the gazette process for 30 days. As well, they are deemed permanently referred to the committee indicated in section 19 of the Statutory Instruments Act for the purposes of reviewing or scrutinizing the statutory instruments. Currently it would most likely be the Standing Joint Committee on Scrutiny of Regulations.
Senator Buth: This process is outlined under the CFIA Act?
Mr. Ritchie: That's correct.
Senator Buth: It requires this consultation and stakeholder involvement?
Mr. Ritchie: That's correct. It requires consultation on the fees. As well, the User Fee Act indicates that should stakeholders require it, an independent advisory panel can be constituted.
Under the CFIA Act we can address that same demand. The minister does have an advisory committee. He is obligated to establish an advisory committee, so we could use that committee to address those particular concerns, if required. There's nothing stopping the minister from instituting any other panel to address any concerns that stakeholders might have with respect to the user fees.
Those are opportunities that we would certainly use to address any concerns where stakeholders feel they need an independent review.
The Chair: Mr. Glustien may have a comment he would like to make in relation to one of your questions.
Nicolas McCandie Glustien, Manager, Legislative Affairs, Canadian Food Inspection Agency: Thank you for the opportunity. I wanted to give the reference in the Canadian Food Inspection Agency Act that obligates the minister to hold public consultations, or consultations on the user fees. It's section 26(1):
Before fixing a fee under section 24 or 25, the Minister must consult with any persons or organizations that the Minister considers to be interested in the matter.
That really is the duplicative nature of having the User Fee Act as well as our CFIA Act.
Senator Buth: Anybody who has any interest in terms of the issue, I would assume that you would be doing mainly industry consultation. One of the concerns, of course, is that you're going to put undue costs down to industry in part of this. In terms of the public input into this, it would be gazetted so there would be the opportunity for general public input under the gazette process; is that correct?
Mr. McCandie Glustien: I believe it's gazetted under Part II, so it goes in as notification as opposed to the consultation. However, we have committees set up within the agency that have public consultation elements to them, and they would be able to bring comments forward in that avenue as well. But you are correct; the bulk of the interested parties in this are industry themselves.
The Chair: I've always thought of the user fee legislation as being oriented towards protecting the public from indirect taxation by the government and government departments, but you've just agreed that these things in the Canadian Food Inspection Agency Act with respect to user fees are industry-oriented. Can you assure us that under the regulations and the Canadian Food Inspection Agency for setting user fees, there is this important provision that costs for the delivery of the service that you're charging the user fee for will not be exceeded?
Mr. Ritchie: The CFIA Act does require that we not charge user fees beyond the costs to deliver those particular services. In setting the fee, we would identify what that cost is. The cost would be based on our internal analysis over the course of the last couple of years in terms of how we deliver those particular services. It would be based on the current collective agreements with respect to establishing an hourly cost for delivering a particular service. We would look at the cost of providing any services with respect to lab services and those kinds of things.
The costs would be transparent and we would indicate in the user fee proposal how those costs are arrived at so that parties, when we consult with them, would have an opportunity to raise any issues they might have.
[Translation]
Senator Hervieux-Payette: In fact, my question is a mirror version of your question: will consumers be better protected by this new policy if user fees are set by another mechanism? If consumers do not have an opportunity to intervene so that costs are as low as possible, they ultimately will not be protected. Who will guarantee a balance between consumers and businesses?
I am still thinking of that beef plant out west that wound up with tonnes of products destroyed. I thought that plant was subject to self-regulation. I thought that cost a lot of money, but does that apply? Where, when, how and to what product does it apply? In food production facilities, whether they produce ketchup or cereal? I want to know where it applies and how consumers are going to be consulted.
[English]
Mr. Ritchie: In our consultative process, we would consult with consumer protection agencies and those entities that have the interests of consumers as part of their mandate. It would be publicly posted on our website. We would have an extensive distribution of our consultative process.
With respect to the Safe Food for Canadians Act as well, we've been very transparent to date with respect to how we're going to be developing those particular regulations. We're going through a second food forum to date. We've already had one. That food forum was open to the general consumer associations, the public, as well as independent stakeholders, to be able to provide assurances as to how we were proceeding with our regulatory practices and consequently the user fees that would be associated with them.
We try to be as extensive as we can in a consultative process so that we do understand not just what stakeholders' interests are or implicated parties are but what the general consumer's position might be on that.
With respect to who gets charged, we are talking about services that are in the private interest. First, the industry, as well as the government, both share responsibilities for safe food for Canadians. Industries are required to adhere to a regulatory framework. That's their requirement, role and responsibility. Our responsibility is to ensure that those regulations are being complied with.
There is a dual responsibility. Industry has willingly admitted itself that it has that role for safety. They don't see that as a competitive role amongst the industry. In other words, the industry is united in its perspective that it has a role to play in terms of safe food for Canadians.
We would have certain requirements under regulatory regime, for instance, that entities that are required to be licensed with respect to preparing food or importing or distributing food in Canada need to be licensed. We would have to inspect those particular entities with respect to the licence to ensure those requirements under the licence are being applied. That would be a fee for which we would charge the entity. If those entities need to export to other countries, and those other countries require certification from the agency that the food being exported is free from certain requirements, we would certainly charge for those services because it's an export-related activity and the benefit is primarily to the entity doing the export services.
Those are the kinds of services that we would charge for under the regulations.
[Translation]
Senator Hervieux-Payette: Now, how much did that bring in and how does the administration of that kind of a system compare with the United States and Europe?
[English]
Mr. Ritchie: Now we're getting into the actual details of the user fee proposal itself. Those are currently being developed. Our regulations are currently being developed. As we develop our regulations, it will become clearer what the range of services are that we're going to charge a fee for. As I've indicated, we would go through the process of looking at an impact assessment in terms of how we benchmark against some of our major trading partners, taking into consideration as well any specific circumstances that might impact a particular industry.
Those things will be taken into consideration when we set the fee.
Senator Hervieux-Payette: You have a fee right now.
Mr. Ritchie: We have fees right now. The fees are currently being modernized because they're out of date. The fees were established in 1997. We have had a moratorium on our ability to address the fees. Now that the moratorium is lifted, the agency is going through a modernization of its entire user fee structure.
We understand that going through that modernization, we do have to consult and we're obligated and we want to consult with stakeholders and the general public on the modernization of those user fees. We've linked any modernization of our user fees to our regulatory practices.
Under the Safe Food for Canadians Act, the regulations are currently being developed. That is our opportunity to review all of the existing fees that currently apply with respect to food safety. We are updating, modernizing those fees as required. Some fees, for instance, may get dropped. Some fees may find the rates change because they haven't been addressed since 1997.
[Translation]
Senator Hervieux-Payette: In conclusion, someone, a consumer or a taxpayer, will pay for that increase.
[English]
Senator Eaton: How does industry feel about this? Are they excited about your user fees? Have they talked to you about it?
Mr. Ritchie: Yes, they have discussed it with us. As I've indicated, the industry recognizes it has a role in safe food for Canadians. They recognize they have to adhere to the regulatory reform or the regulatory obligations. They are cognizant of the fact that they are implicated at this point in terms of development of those regulatory practices. They have indicated to us that they recognize that the agency has an obligation to cost recover and that the fees are out of date.
Senator Eaton: For instance, I'm a food processor and I export. Under the regulations, am I obliged to have the food inspected or is this something I do to reassure my foreign clients? What I'm getting at is this: Do you feel food inspection will actually fall off a little bit because of the new user fees? People will say: ``No, no. I'm just going to slip this through.'' Or is that against the law?
Mr. McCandie Glustien: I can take a little bit of that in terms of current practice. In terms of exporting, and its useful to mention, the Safe Food for Canadians Act isn't in force yet. What it will do — and what it did when it was given Royal Assent in 2012 — is consolidate four different statutes that all dealt with food safety: the Canada Agricultural Products Act; the Meat Inspection Act; the Fish Inspection Act; and parts of the Consumer Packaging and Labelling Act.
In the current world, when you're exporting, there are certain baseline requirements you are expected to meet. Certainly under the Meat Inspection Act you must meet certain export requirements.
There are other areas that are not as well characterized in terms of requirements for export. Under the Food and Drugs Act, export of certain products may not have as many regulations around them. The Safe Food for Canadians Act gave us clear responsibilities in terms of being able to set regulatory requirements for export as a baseline.
Depending on where I'm exporting to, they may have other requirements that are necessary. That's where that private benefit would really kick in, in terms of ``I'm coming to certify these exports, and as an inspector, I need to make sure that you meet all the Canadian requirements imposed on exports.'' Often, for most food products, those are the same as the Canadian requirements. If I'm going to sell it in Canada, it needs to be able to be sold internationally as well, or it would meet the international export. Certain jurisdictions have other higher standards, though, or different standards.
Senator Eaton: So there's no other way that food inspection is voluntary?
Mr. McCandie Glustien: No.
Senator Eaton: So if I run a meat packing plant, I have a number of predetermined visits each year or each week — I don't know how often you do it — and that will stay the same?
Mr. McCandie Glustien: Absolutely. It's those extra services that benefit the private entity we would have the user fee for, which is not obligatory. If I wanted to export to market X, let's say, and they require the CFIA to attest that the fish was sourced from a certain source — something that doesn't have a food safety element to it — that would be the extra benefit that the CFIA would be able to provide through a user fee-recovered activity.
Senator Callbeck: I thank both of you.
You want to be exempt under the User Fees Act and go to the Canadian Food Inspection Agency Act. I take it, from what you say, that it's quicker and doesn't cost as much; is that right?
Mr. Ritchie: It is quicker, yes. The transparency and other requirements under the User Fees Act are already inherent in the Canadian Food Inspection Agency Act. The need to consult is inherent, and the need to do an impact assessment and to be able to understand what other impacts might have on users is required.
As well, there are recourse mechanisms in place under the CFIA Act. The User Fees Act itself says that if individuals have certain concerns with respect to the fees, they can request an independent advisory panel to be established.
The Canadian Food Inspection Agency Act already has an established advisory committee that's under the minister, which can immediately be used, if required, for any complaints received.
We do have a complaints and appeals office. It was established in 2012. That office reports directly to the president and is established with respect to taking any concerns from stakeholders on service delivery or regulatory practices. That's an opportunity for individuals. They can access that particular office. As well, there's nothing stopping the minister from establishing any other form of committee to review those particular requirements.
We feel we're well covered under the CFIA Act with respect to any obligations under the User Fees Act.
Senator Callbeck: The first question asked was that you're doing this because you think that it's less costly and because it's faster; right?
Mr. Ritchie: That's correct.
Senator Callbeck: The first thing you mentioned was about the need to consult. My concern is the consultation process with industry and consumers. If the CFIA Act is so much faster, what is being eliminated here?
Mr. Ritchie: Consultation is not where we would save on any costs. The primary interest in being exempted from the User Fees Act is with respect to the obligation to establish an independent advisory panel. Establishing an independent advisory panel can take considerably longer to arrive at a conclusion than we may be able to do with our current requirements under the CFIA Act. We already have an advisory committee established, as I've indicated. We have a complaints and appeals office already established that can quickly respond to any concerns from stakeholders. If the minister needs to convene a panel, she can do that in fairly short order.
The second component is that it removes the obligation to table the user fee proposed for 20 days in both Houses of Parliament. Particularly problematic, for instance, is during the summer period whereby the houses may not be sitting and we can find ourselves facing a much longer period of time. In that context, the Canadian Food Inspection Agency Act states that, ``Any fee fixed'' under the act is ``permanently referred to the Committee referred to in section 19 of the Statutory Instruments Act, to be reviewed and scrutinized as if it were a statutory instrument.''We feel that would address that particular component and allow us to move a little quicker.
Senator Callbeck: You say the user fee has to be tabled in both houses for 20 days, and if the house isn't sitting, that creates a problem. You just read it, but explain to me so I understand exactly what you're saying. Under the inspection act, what happens?
Mr. McCandie Glustien: Under the inspection act, the user fees are first published in the Canada Gazette as a notification. Then the act says that it's permanently referred to the committee under the Statutory Instruments Act, under section 19, which I believe at the moment is the Standing Joint Committee for the Scrutiny of Regulations. The Statutory Instruments Act outlines a committee of the house, the Senate or jointly to look at the scrutiny of regulations. The Food Inspection Agency Act obligates us to refer all our user fees permanently to that committee.
There's no time constraint in terms of the User Fees Act; it's 20 sitting days for both houses and there's nothing to say what happens if Parliament isn't sitting at that time during the summer recess.
We're still obligated to wait for those 20 sitting days once Parliament reconvenes. In the Canadian Food Inspection Agency Act, it's referred to the committee for it to review and make comment with the Food Inspection Agency, but it doesn't hold up the actual implementation of the user fee itself. It's a giant regulatory process that we're undertaking under the Safe Food for Canadians Act, taking 15 different regulations right now and building it into one regulatory environment.
If we needed to then delay the user fees that need to be in place for the regulations to be working, which need to be in place for the act to come into force, and if we have to wait all that extra time potentially at the end for the user fees proposal to be reviewed and go through the process under the User Fees Act — as opposed to the process under the Food Inspection Agency Act where it can be brought into force and can operate and be reviewed by Parliament — we felt that the delay may possibly implicate the bringing into force of the Safe Food for Canadians Act, which is really delaying a foundational act for the CFIA and for Canadians in terms of food safety.
I believe Senator Mockler was the chair of the committee that looked at that act a few years ago.
Senator Hervieux-Payette: I have a point of information. I am on that committee. We had a meeting last week about regulations on these questions. There are even two regulations on the same thing, one saying it's an order-in-council, the other one a minister for establishing the same thing. When you say it will go before our committee, this question has been dealt with in our committee several times. It takes years to have the department make the amendments to be in conformity with the bill. So telling us today that it is going to accelerate is certainly not in the best interests because, actually, it takes an eternity to get the changes, sometimes up to seven years. I just want to say that because it is the reality. I've been sitting on that committee for more than 15 years, and this is the experience we have.
The Chair: It is the Standing Joint Committee for the Scrutiny of Regulations to which the senator is making the reference.
[Translation]
Senator Bellemare: From the answers you have given, I am beginning to understand a little better why we want to do that. I am simply going to improve my understanding somewhat by asking you the following question: what will Canada's new food safety act do that it did not previously do? I understand that what you are asking us helps accelerate the process, but I would like you to clarify that, particularly since Canadians' food safety is important.
[English]
Mr. McCandie Glustien: Thank you for the question. It's near and dear to my heart. I had a chance to work on that with Senator Mockler and the Standing Senate Committee on Agriculture and Forestry in 2012. I love the opportunity to talk about the Safe Food for Canadians Act.
It's taking four very old statutes: the Canada Agricultural Products Act, the Meat Inspection Act, the Fish Inspection Act and the Consumer Packaging and Labelling Act. The Fish Inspection Act largely dated to the 1930s.
We had this mishmash approach to food safety across those different commodities. We absolutely are comfortable that food safety is maintained for Canadians under those statutes. It's just a very difficult way to manage the process.
You have different regulations respecting meat, dairy, honey, and other agricultural products, and there is not necessarily cohesion between them.
One of the main elements of the Safe Food for Canadians Act is to bring it all under one house legislatively and to bring a standard baseline for all food commodities sold in Canada. That is one very important element of it to bring everything into kind of the same level playing field, the same food safety playing field.
As well, a lot of elements are missing in some of those older statutes. Regulations surrounding import are unfortunately not as strong as we might like at the moment. Right now, the sale of unsafe food is regulated by the Food and Drugs Act. We really wanted to extend that with the Safe Food or Canadians Act in terms of import of unsafe food, so that's a key element in the Safe Food for Canadians Act that we're hoping to bring into force.
It will modernize authorities for inspectors as well. Some of those statutes, if you can imagine, didn't envision inspectors taking photographs or accessing computer equipment because of the age of the statute. We've also modernized the suite of inspection authorities under that. Again, for inspectors to be able to use these modern authorities, they need to have the Safe Food for Canadians Act brought into force.
I'll end my comments quickly because I could keep going for a while.
Other elements are fines and penalties. Some of the fines and penalties under the old statutes are quite out of date. You could get fined in the order of $5,000 or $10,000 under the Fish Inspection Act versus $50,000 to $100,000 under the Meat Inspection Act versus a very high level under the Food and Drugs Act. So, again, rationalizing all of those and bringing them into the modern era are things we can't do until the act and the regulations come into force.
[Translation]
Senator Bellemare: So what you are asking of us will accelerate the entire regulatory process with respect to this act, but then inspection costs will nevertheless be self-funded as a result of your new way of reviewing them. Is that correct?
[English]
Mr. McCandie Glustien: Yes. The user fee proposal that would go along with the food regulations is really one component of that entire process of bringing the regulations in. I wouldn't necessarily say it speeds it up too much. It's that it makes sure it doesn't get delayed to move along at the same time as the regulatory development so that stakeholders and interested parties can see things moving in concert together, and then it can all come into force at the same time.
Senator Buth: I have a clarification. I was on the Agriculture Committee as well when we looked at this act. I recall — and perhaps you can confirm — that there was broad industry support for the Safe Food for Canadians Act.
Mr. McCandie Glustien: Absolutely. We had many industry and consumer stakeholders appear before your committee at the time to give support to the rules that we were proposing. Most of them all said that the devil will be in the details and the regulations, which is the case in such a broad, sweeping piece of legislation.
The development process we're using for the regulations is incredibly transparent and incredibly inclusive of all of these different groups. As soon as Royal Assent was given, we started work on the regulations. So it's a long, multi- year process. The feedback so far has been excellent from all involved parties in terms of the process we're following and the way that we're going with the regulations.
The Chair: We, of course, are not here to discuss the Safe Food for Canadians Act as much as we are to talk about an amendment that is deemed necessary to the Canadian Food Inspection Agency.
Thank you very much Mr. McCandie Glustien and Mr. Ritchie. We appreciate your help very much on this.
Colleagues, I know our time is drawing down, but we have, this afternoon, witnesses with respect to Division 21, which is the next division. We also have the government personnel here who could explain to us what Division 21 is about, and so I wonder if they could come forward from Treasury Board Secretariat. We'll just get an explanation of what's in Division 21, and then we can have them back to deal with questions and a broader explanation later on. That will prevent us from having a hearing this afternoon on a section we haven't looked at yet.
From Treasury Board Secretariat we welcome Don Graham, Executive Director, Compensation and Labour Relations Sector; Drew Heavens, Senior Director, Compensation and Labour Relations Sector; and Dennis Duggan, Senior Policy Analyst, Compensation and Labour Relations Sector.
Division 21 is entitled ``Public Service Labour Relations,'' clauses 308 to 310, on page 201.
Gentlemen, we're sorry to keep you here and may have to ask you to come back. I know you're not available to come back this afternoon, which would have been another alternative. We will be meeting this afternoon, and we'll have witnesses who are impacted by this legislation. So if you could tell us what is in these sections and why the government feels this is necessary, that would be very helpful. We won't go into a question and answer at this time.
Don Graham, Executive Director, Compensation and Labour Relations Sector, Treasury Board of Canada Secretariat: Thank you very much, Senator Day.
It's a pleasure to be here today to speak to you on these changes. The changes that we're discussing are with respect to the essential services and recourse provisions under the Public Service Labour Relations Act. These amendments being proposed came about in reviewing the provisions that were introduced last fall in Bill C-4. We identified the need for some amendments to ensure that the provisions of the act were clarified and that, as a result, they would be implemented in accordance with their intent.
The first of these deals with recourse. It's with respect to a change at clause 306, which amends provision 226(1) of the Public Service Labour Relations Act. This amendment is being proposed to bring clarity and certainty to the powers of an adjudicator when it has been determined that the employer has been engaged in discriminatory practice, and this change allows for the granting of systemic remedies.
This is a power that was available to human rights tribunals previously. The changes made in Bill C-4 made it clear that adjudicators appointed by the Public Service Labour Relations Board could order remedies with respect to cases for individual employees. However, there was a lack of clarity as to their powers to grant remedies where the case was systemic in nature.
The intent of the change that we're proposing is to ensure that this right that previously existed is maintained so as to make it clear that adjudicators have the power to grant systemic remedies.
With respect to the second set of changes that are dealing with essential services, these are amendments to the changes that were put in relative to transitional provisions in Bill C-4. In Bill C-4 last fall, changes were enacted to the Public Service Labour Relations Act to provide for two dispute resolution methods and a process to determine which would apply when there was an impasse at collective bargaining. It provided that bargaining units that would have 80 or more per cent essential service positions designated would be required to utilize arbitration, while groups with less than 80 per cent positions identified essential would be required to use the conciliation strike route.
To address the situation of groups still in collective bargaining at the time the legislation was enacted, transitional provisions were drafted to ensure that groups without an essential service agreement and that were at the latter stages of bargaining would continue to follow the existing rules for arriving at an essential service agreement until a new collective agreement was signed. This was to facilitate bargaining. It was also the intent to ensure that employers could concurrently pursue essential service designations in preparation for the following round of collective bargaining. This was important to ensure that groups still in negotiations from the 2012-13 round of bargaining that had not yet finished and reached a collective agreement would have their dispute resolution for the new round — the round to follow — determined in accordance with the same process that applied to all other groups.
As a consequence of drafting ambiguities in the transitional measures, it was noted there was an avenue to argue that certain provisions in the transitional measures could be read as applying sequentially rather than being concurrent. The amendments being proposed in Bill C-31 are designed to bring certainty to the applicable process for bargaining units that are still in bargaining, where a public interest commission or arbitration board has been established prior to the commencement day and where no essential service agreement has been concluded with respect to that bargaining unit.
These amendments would come into force at the same time as the original transitional provisions.
I'll ask my colleague Dennis Duggan to run you through the provisions for essential services.
Dennis Duggan, Senior Policy Analyst, Compensation and Labour Relations Sector, Treasury Board of Canada Secretariat: Clause 309 of the bill deals with proposed section 338 of the Economic Action Plan Act 2013, No. 2. For the first portion, proposed subsection 338(4), the only change between what's in the current act now and what's being proposed is that proposed subsection 338(4) says ``Subject to subsections (6) and (7),'' about which we will speak shortly.
Specifically, proposed subsection 338(4) deals with bargaining units for which an arbitration board has been established prior to commencement day, which is the coming-into-force day of the act. It provides that the old PSLRA continues and that the rules that apply there continue to apply until the arbitration award is rendered. The proposed amendments make this provision subject to the process for designation under proposed subsections 338(6) and (7).
Similarly, subsection 338(5) is also amended to make them subject to subsections (6) and (7). Proposed subsection 338(5) is a mirror of the previous subsection, except that it applies to bargaining units on the conciliation route and for which a public interest commission, or PIC, has been established. The proposed amendments are likewise a mirror of those noted in the previous section.
Proposed subsection 338(6) reflect the changes we made or that are being proposed to new subsections (4) and (5) — the change there says ``Despite subsections (4) and (5).'' What that does is that the provision that provides for the process by which employers designate essential services for bargaining units where no essential service agreement had been concluded prior to commencement day. The proposed amendments clarify that even for bargaining units for which the old rules apply, the designation process is still applicable in preparation for the next round of bargaining, which is what we refer to as the 2014 round of collective bargaining.
The Chair: I'm sorry Mr. Duggan. I promised we'd be finished by quarter to 12. We're not, but we'll ask you to come back and provide more detail. However, your intervention has given us a flavour for what is here.
Mr. Heavens, I'm sorry we didn't even get to you, but thanks for being here.
Colleagues, this meeting is now concluded. We'll meet this afternoon at 2:30 in room 257 East Block.
(The committee adjourned.)