Proceedings of the Standing Senate Committee on
National Finance

Issue 31 - Evidence - December 5, 2012

OTTAWA, Wednesday, December 5, 2012

The Standing Senate Committee on National Finance met this day at 2 p.m. to examine the subject matter of all of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures introduced in the House of Commons on October 18, 2012.

Senator Joseph A. Day (Chair) in the chair.


The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on National Finance to order.


Honourable senators, today we are continuing our examination of the subject matter of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.


Honourable senators will know that there were five other committees that were tasked by the Senate chamber to look into parts of Bill C-45. The Standing Senate Committee on National Finance will be required, once Bill C-45 arrives at this committee through the Senate chamber, to conduct a clause-by-clause consideration of the entire bill, including those parts that were studied by other committees.

For that reason, we felt it prudent to understand those portions of the bill that we did not study ourselves and that were studied by the other committees.

We have heard from the Chair and the Deputy Chair of the Standing Senate Committee on Transport and Communications last Thursday, and we look forward to hearing from the remaining four other committees involved in the subject matter study this afternoon between two and four o'clock.

Initially, we will begin with the Standing Senate Committee on Energy, the Environment and Natural Resources. We are very pleased to welcome the Chair and Deputy Chair of the Standing Senate Committee on Energy, the Environment and Natural Resources, Senator Neufeld from Charlie Lake, British Columbia, who was a former member of this committee but somehow we let him get away. We have him back today. Welcome back, Senator Neufeld. We also have with us the Deputy Chair of the committee, Senator Mitchell from Alberta, who periodically is a pinch hitter in this committee as well.

We will be dealing with the subject matter of those elements contained in Part 4 of Bill C-45. Divisions 4, 18 and 21 were the three divisions studied by this committee. Division 4 can be found at page 203, Division 18 at page 275, and Division 21 at page 334.

I would ask honourable senators to give us a bit of an overview of what they heard and saw during their hearing on those various divisions, and then perhaps we will go into a discussion. Senator Neufeld, the floor is yours.

Hon. Richard Neufeld, Chair, Standing Senate Committee on Energy, the Environment and Natural Resources: Thank you, chair. I look forward to presenting the issues we heard from both the people who actually administer the bill and from different groups and organizations that will have to proceed with the new rules and regulations.

I will deal with them in the order they came to us, so I will deal with the first one, the Fisheries Act. By no means will I touch every section because time will not permit it. I will try to be as quick as I can. I am not trying to miss anything; I am letting you know there is quite a bit and a lot of it very technical.

From the Fisheries folks, we heard there is an amendment to direct all fines collected under section 40 of the Fisheries Act to the existing Environmental Damages Fund to be used for proactive initiatives to further advance the protection of Canada's fisheries.

The second amendment clarifies the interpretation of the term ``Aboriginal fisheries'' in relation to a fishery. That is to actually add a sentence that says ``purposes set out in a land claims agreement'' which was not there before. There are some bands with land claims agreements and some bands that do not have them. This will add to it.

The third one addresses the unintended consequences of previous amendments to the Fisheries Act. There are amendments here to some of the amendments that took place earlier that did not allow for authorization of obstructions to fish passage, and a provision is added to clarify that issue, to have it only for fishing gear and that the minister has the authority to remove those obstructions if, in fact, they are causing serious issues with fish.

The second one is Division 18. This was probably the one that most people commented on, which is the Navigable Waters Protection Act. I will paraphrase some of the things we heard from the folks who administer this. All levels of government, industry and small private builders have long complained about delays in getting projects approved under the Navigable Waters Protection Act, not only because of the time involved but also the extra costs associated with waiting for approvals. They question why, if the objective of the act is to support trade and commerce, the current regulatory burden creates so many obstacles to commercial navigation. When the legislation was originally created in 1882, it was designed to approve infrastructure projects in waterways that support trade and commerce. It set out to balance the efficient movement of commercial marine traffic with the need to construct works that might obstruct navigation.

Over the past century or more, the courts have interpreted the question of navigability generously. Today, if a waterway is navigated even by a canoe or an irrigation ditch, any works constructed in those waters become subject to the act. This has dramatically expanded the scope of the application of the Navigable Waters Protection Act far beyond commercial navigation.

I will go back. In 2009, some incremental improvements were made, primarily to minor works and waters. Orders came into effect. As a result, low-risk works to navigation can be built as preapproved. This refers to things like boathouse, dock, water, intakes and so on.

It is interesting to note that since then there have been no complaints about these changes or the designation of low- risk works that have been brought to the attention of the department. Despite this improvement, Transport Canada still faces a considerable backlog on applications with resulting delays and uncertainty that discourages public and private sector investment. As a result of this, municipal, provincial and territorial governments, industry and small private builders have all urged us to make substantive changes to the act. They cite projects that have been delayed by two or even three years.

The proposed changes will streamline and update the act to make it more responsive to navigators and builders who operate in and around Canadian waters. The key elements to the proposed plans are to focus the time and resources only on Canada's busiest waterways, specifically, those listed in the act. The amended legislation will clearly define the waterways where regulatory review is required prior to construction of a project. The requirement for approvals would only apply to works considered likely to substantially interfere with navigation. This would let us zero in on bodies of water that are the busiest or the most heavily navigated in the country. This determination is based on statistics we have that indicate high levels of either recreational boating or freight movement. This change would enable us to review projects early on these important waterways, ensuring they comply with the requirements of the act.

We would expand the classes of minor works eligible under the minor works and waters order. This would permit more low-risk projects to be approved because they pose very little or no impact on navigation. Builders planning construction projects in unlisted waters could opt into the legislation if they choose. They could request that the minister review and, if appropriate, approve the work in the same way projects in listed waters would be. The advantage would be greater certainty about building in unlisted waterways. The proposed name of the legislation is the navigation protection act to reinforce that the act is focused on protecting navigation.

Despite all the changes that are proposed in the bill, there are several fundamental principles that would remain the same. Nothing in the amendments alters the roles or responsibilities of other federal departments and agencies or those of provincial, territorial or municipal governments.

There are still eight other acts within Transport Canada alone that protect marine safety and marine navigation, including the Canada Shipping Act and the Marine Transportation Safety Act. There will be no deterioration in public safety.

Likewise, environmental laws are unaffected by these amendments. The Canadian Environmental Assessment Agency, Environment Canada and complementary provincial rules and regulations will continue to protect the quality of Canada's waters.

Fisheries-related laws are unchanged by these amendments. The Department of Fisheries and Oceans will continue to implement its acts unrelated to this legislation. Municipalities will continue to decide where and when projects can be built locally.

The Crown's obligation to consult with First Nations will continue to be fulfilled. Where Crown conduct is being contemplated that is likely to adversely impact Aboriginal or treaty rights, the Crown will engage in consultation with the Aboriginal groups that may be impacted.

Division 21 makes some minor and technical amendments to the Canadian Environmental Assessment Act. Clauses 425, 427, 429 and 431 are intended to ensure concordance between the French and English versions of the act. Clause 428 corrects an oversight with respect to conditions that can be put on a decision statement. Clause 430 clarifies that the obligation for federal authorities to ensure their actions with respect to projects on federal lands do not cause significant adverse environmental effects is limited to the environmental effects caused by the components of the project that are situated on federal lands.

The committee held five meetings and heard 19 witnesses across a range of stakeholder interests and received submissions and written evidence. We heard broadly supportive views that the amendments will improve the efficiency and environmental outcomes from regulatory reviews and environmental assessments for major infrastructure projects while maintaining a strong record of responsible development.

The Canadian Association of Petroleum Producers, the Canadian Construction Association and the Canadian Energy Pipeline Association said that improving the regulatory framework is crucial to attracting the investment required to create Canadian jobs, economic growth and energy security in an increasingly competitive global market. They noted that regulatory efficiency is vital to our effort to be internationally competitive and that the proposed amendments will reduce the regulatory burden.

The Canadian Energy Pipeline Association added that consolidating the National Energy Board as the primary regulator for the pipeline sector creates a more efficient permitting process and helps create better outcomes by reinforcing accountability with a single regulator.

The Canadian Construction Association said the amendments focus resources on projects on waters where regulation is warranted and appropriate to protect navigation.

Witnesses who appeared before the committee also expressed a number of concerns. The Canadian Association of Petroleum Producers noted that there may be unintended consequences from the depositing and dewatering prohibitions in sections 22 and 23 of the proposed navigation protection act. These are not limited to listed waterways; they apply to all navigable waters. This may have impacts on industrial, municipal or private users of surface waters. It was suggested that the term ``dewatering'' be defined so as to permit the removal of water unless it creates a significant impediment to navigation and the dewatering prohibition restricted to the navigable waters listed in Schedule 2 to the proposed navigation protection act.

With respect to projects on federal lands, there is a requirement in sections 66 to 72 of the Canadian Environmental Assessment Act for a federal authority to determine if a project is likely or not to cause significant environmental effects. The act gives no guidelines as to how this authority will make this determination and fulfil its responsibility. The Canadian Construction Association was concerned that this could be interpreted to mean requiring an environmental assessment. It was suggested that the responsibility of the federal authority be clarified.

The Assembly of First Nations noted a concern with respect to lack of consultation between First Nations and other stakeholders regarding these amendments. They suggest that this may affect First Nations' constitutional rights under section 35 of the Constitution Act.

The Assembly of First Nations expressed further concern with the breadth and discretion in administering the Environmental Damages Fund in the Fisheries Act. They recommended that First Nation technicians be included in the technical body that reviews proposals for the Environmental Damages Fund and that the fund adopt a preference system similar to that in the 1986 habitat policy to assess funding proposals. Moreover, the Assembly of First Nations also advised the committee that the Canadian Environmental Assessment Act, the Fisheries Act and the proposed navigation protection act are silent in terms of specifying whether or how the Crown is to discharge its duty to consult with and accommodate First Nations, which could lead to more litigation between First Nations and government.

The World Wildlife Fund, Mountain Equipment Co-op, Ecojustice and the Lake Ontario Waterkeeper advised the committee that waters not listed in Schedule 2 of the proposed navigation protection act will be subject only to the protection of the common law right to navigate. They suggested that this is reactive and expensive and could lead to litigation and more uncertainty. They also noted that there are no automatic public notice and comment provisions for projects on navigable waters under the proposed navigation protection act. They suggested that without knowing what works are to be planned it will be difficult to ensure that they do not interfere with the rights of navigation or that they will not pose a risk to the safety of water users.

According to the World Wildlife Fund, the West Coast Environmental Law Association, Ecojustice and the Lake Ontario Waterkeeper, focusing resources on listed waterways means that there will be no federal oversight of navigational matters such as dewatering and depositing material into unlisted waters. As navigation is the sole jurisdiction of the federal government under the Constitution Act, 1867, the provinces lack the authority to act there.

Also, according to Mountain Equipment Co-op and World Wildlife Fund Canada, the focus on commercial navigation minimizes the importance of paddling, recreational boating, fishing, hunting and other water-based recreation activities. It was suggested that such an approach marginalizes the outdoor recreation and tourism industry.

The obstruction of fish passage prohibition in section 35 of the Fisheries Act prohibits serious harm to any commercial, recreational or Aboriginal fishery or to fish that support that fishery unless authorized. This leaves the fish that are not part of or do not support a commercial, recreational or Aboriginal fishery with no protection.

The Assembly of First Nations advised the committee that certain First Nations fisheries use seines and weirs that extend across entire rivers for fishing purposes as well as for the purposes of counting and monitoring fish stocks. As the right to practise these fisheries is protected by the Constitution, it is unclear how this right will be accommodated in light of this prohibition against obstructing passage.

I will leave it there. That gives you a high level review of what we heard from those who will administer the act and those who had some concerns with the bill. Senator Mitchell and I are ready for questions, unless Senator Mitchell wants to add anything.

Hon. Senator Grant Mitchell, Deputy Chair, Standing Senate Committee on Energy, the Environment and Natural Resources: The Chair covered the water very well.

I want to mention one piece of testimony that all of us found interesting. It came from David Labistour, the Chief Executive Officer of Mountain Equipment Co-op, who emphasized the size, impact and magnitude of the outdoor industry. While we do not have similar up-to-date figures, apparently, in Canada, by way of illustration, he said that the outdoor industry association in the U.S. has shown that consumer spending on outdoor recreation is almost double that of pharmaceuticals, motor vehicles and parts, gas, fuels and household utilities. He said that the outdoor industry in the U.S. employs more people than in oil and gas, finance, construction, transportation or the education sectors. He is confident that this would hold true in Canada as well.

That is to emphasize how significant and important this is and how sensitive these kinds of changes can be and how clearly they need to be considered.

The Chair: Thank you. Before I go to my list, could you clarify a point? You left me a bit confused. You talked about dewatering and the Canadian Association of Petroleum Producers' concern that, from a dewatering point of view, the act still applies to all navigable waterways, whereas the Mountain Equipment Co-op people who came to talk to you wanted the act to apply more broadly, but they were interpreting it to say that the act is now being restricted to waters listed in Schedule 2. Can you help me there?

Senator Neufeld: Dewatering was an issue that the mining association raised with us as well because they can use and do presently use some ponds for putting their tailings in. That could be classed as dewatering.

The other thing is there could be some small ponds in areas that other industries may draw all the water because there is no real commercial fish or anything like that in those small ponds. The industry thought that it was a bit vague. They were asking for more information or a better explanation of what the legislation will actually mean when it comes to actual dewatering in places.

On the opposite side of the fence, the folks wanted probably every body of water in Canada to be regulated again by Transport Canada so it takes a long time to get anything done.

There is probably some room there and government has to think about regulations and how it would determine what dewatering actually means in the context of this legislation, because it is a bit grey.

The Chair: Assuming that this act is passed, the waterways that will be covered are in the schedule attached. Are there any portions of this act that will continue to apply to waterways in addition to those in Schedule 2?

Senator Neufeld: No. Senator Mitchell can perhaps add to this. As they told us, all the rules and regulations in place by all the other agencies — that means federal, provincial or municipal — are still in place. It is not an abandonment of all those other waterways. It is to try to simplify and have an act that deals with navigation, which the act is now called.

They determined which lakes, oceans, rivers to include by going to the provinces and territories and asking for information, as we understand, and also to their own staff across the country to find out which waterways are used for commercial traffic so that they included those.

The Chair: I am sorry to belabour the point, but I am looking at the end of the first full paragraph of page 7 of your report. This is the Canadian Association of Petroleum Producers. The last bit of that sentence says ``the dewatering prohibition be restricted to the navigable waters listed in Schedule 2.'' That is what they were looking for. Witnesses recommended that. Your interpretation is that it would be restricted to only those waterways in Schedule 2, but they are saying they would like to see it restricted.

Senator Neufeld: Yes.

The Chair: You do not agree with their interpretation then, is that it?

Senator Mitchell: No, I think we accept their concern that this is not clearly defined and it could in fact apply to not just specified or listed or major works. It could apply to everything. Their concern is that if it applies to everything, how is it applied and does that not defeat the purpose the government had in mind for this bill?

In your question, chair, were you specifically seeking clarification on the dewatering when you asked about how this act applies more broadly? There are a couple of things I could add.

The Chair: Please add them. I interpreted this legislation to restricting the number of waterways that would be covered by this legislation. Then I read your comment here that the petroleum association thinks that the act would, from a dewatering point of view, still apply to waterways other than or in addition to those listed in Schedule 2. Are there other activities that this legislation will continue to cover in addition to the waterways in Schedule 2?

Senator Mitchell: In certain ways, there are. First, we had no testimony to the contrary, that dewatering would not apply to unlisted waters, which are 99 per cent of the waters. Industry was concerned about that, because they would say it defeats the purpose of the bill.

There are other ways or examples, and people had concerns about some of these. The fact is that anyone doing a minor work or a minor project on an unlisted waterway would still be responsible for upholding whatever regulations and standards apply to that particular piece of water with respect to navigation or fish, which in one sense can be argued to be of some advantage, of course. The weakness in that is that the only remedy would be civil litigation by someone, a neighbour or a paddler who is saying this is not working the way it should. There is little recourse beyond that for that kind of project. That is one way you could argue that it applies broadly.

The other way, and I may be stretching it a bit, is the opt-in provision. If a business, or for that matter anyone, is doing a project in an unlisted waterway and it could be defined as a minor work, that means it would not have to qualify for certain approvals. They have the option to apply for a permit. I am not a lawyer, but we are told that in that case it would give them some defence against suits in the future. You could see where the act could apply more broadly in those cases, but it runs against the remedy, which is civil action.

The Chair: Thank you for that clarification.

Senator L. Smith: I wanted to follow up. Is there any definition of dewatering, or is it just through usage that different types of definitions have been made?

Senator Neufeld: Actually, we asked that question, and dewatering is just dewatering. That is why people are asking for a more fulsome description of what dewatering actually is.

Senator L. Smith: To this point, what has been the interpretation of dewatering? Is it just taking water out and putting waste in a small lake and having to recycle it at a later date? Is that what it is?

Senator Neufeld: I would assume that could apply. I will not say no, because it is a grey area. I cannot firmly define what it would be. That is the question that comes up from both sides, from those for and those against. ``Please define this better so we understand what we can and cannot do.''

Senator L. Smith: The responsibility to define it would fall to whom?

Senator Neufeld: The ministry, in drafting regulations to actually administer this will, I am hoping, by our recommendations, actually examine that.

Senator Finley: I have a standard question that I raise where other committees have studied a bill that we are studying.

Did anyone that you questioned or anyone who interceded wave any major red flags about this piece of the legislation? I understand that there is opposition to the omnibus variety and so on, but as a stand-alone piece of legislation here, with the merits that it has, were there any major red flags, major concerns, or warnings for the future that came up?

Senator Neufeld: Senator Mitchell can add to this if he wishes. Obviously, those who were opposed to any changes to the Navigable Waters Protection Act did tell us that there will be some serious environmental damage. The interesting part came from one group who also attended a meeting of the Standing Senate Committee on National Finance in 2009, who said that with the changes to minor works, there was going to be major environmental damage. When I asked the question of the gentleman, ``Across Canada — I have not heard of anything — can you tell me of anything that has happened that has been major?'' he said, ``No, I cannot. I just write in theory. I do not really know what happens on the ground.''

That is just one example from one person. I would say we did not get any huge red flags. Obviously, when you draft new legislation and come out with it, there will be some suggestions. What we are trying to do as a committee is to take those reasonable suggestions and actually put them back to the government so that the ministry can deal with them in some form or fashion. I do not believe there was anything that was a huge red flag.

Senator Mitchell: I have no reason to contradict the chair at all. I would say that the Aboriginal issue of subsistence and definition of fisheries with respect to Aboriginal usage would be in the major column. We have heard it before with respect to changes to Bill C-30. I think there would be those who would argue that, overall, the impact of 38 and 48 with respect to fisheries and navigation and the Environmental Assessment Act accumulate to major. However, one of our witnesses, for example, made the point that in the absence of not knowing what did not happen, if I can put it that way, that because we did not have these things in place and we will not have these things in place, we do not know what they might have found.

The point was raised, and it might be something for the government to consider, that there is a legitimate hypothesis raised by these changes: Are they going to make for negligible impact? Will there really not be any problems? It might be that an audit of this can be done by the government to say: Let us test a few cases across the country in different ways to see if it did make a difference in a good way or in a bad way. I think that would put a lot of concerns to rest or focus on things that could be corrected.

Senator Callbeck: Thank you for coming and presenting the findings of your committee.

In your brief, first, you have covered a wide area here with the amendments to the Navigable Waters Protection Act and also to the Fisheries Act. On page 9, it says a number of witnesses commented on the lack of consultation prior to introduction of the amendments in Bill C-45. What did the government officials say when you asked them about that lack of consultation? What is the reason?

Senator Neufeld: First, the people who came and explained to us were ADMs and directors. That question was not asked because we heard from them first and then we heard from the other groups who said they would have liked more consultation. At least in my experience — I will put on the record here — it does not matter how much consultation you have with different groups and organizations; it is still not going to be enough. If you think about going across the country and trying to talk to everyone who would access waters for paddling or canoeing, you would probably take ten years to figure that out; and when you figured it all out, you would not know where you started from.

What we tried to do is just take the major ones. I think it is the Ontario waterkeepers and some of those major ones. I understand that maybe they were not consulted. I do not know that for a fact. Maybe one of them was consulted. I am not the minister and I am not the government. We are just senators trying to hear from people about their concerns.

Senator Callbeck: You really do not know whether there was any consultation with any groups before this legislation was introduced?

Senator Neufeld: Senator Mitchell, I do not think you would have anything different to say. I do not believe there was consultation. I mean, I do not know if there was or not. I cannot comment ``yes'' or ``no'' on that. That would be a fair question for the minister, if you wanted to ask the minister.

Senator Mitchell: All we know for sure is that the Aboriginal representatives said they were not consulted adequately, if at all, and the waterkeepers, again, said that the environmental groups were not consulted.

Senator Callbeck: When did these groups learn what was in the legislation?

Senator Neufeld: When it was released, I would assume.

Senator Callbeck: When it was tabled.

The other thing I wanted to ask about is the witnesses. There has been so much discussion about the omnibus bill, that there are so many things in this. Certainly I agree with that. We can see that from the findings of your committee, because it covers such a wide area. Did many of your witnesses express the view that this should be stand-alone legislation?

Senator Neufeld: I cannot remember exactly who, but there were some who said that there should be stand-alone legislation. Yes, we did hear that. I have heard that before, too.

The Chair: You might even hear it again.

Senator Neufeld: Exactly.

Senator Buth: I have a very simple question. What is the definition of ``navigable''? I could not find it.

Senator Neufeld: No, you could not find it, and I cannot tell you where you would go to find that, either.

Senator Buth: Would it be in the Navigable Waters Protection Act?

Senator Neufeld: What it used to be is that a canoe that could float with a certain amount of pounds in it was considered navigable. A gentleman who represented the rural municipalities in Saskatchewan came and talked to us about the lengthy time it took to get a permit to build a bridge. It was not a stream. In the springtime, when the snow would melt, or during heavy rains, you might have a little bit of water run through there. They had to go through all of these things with Transport Canada to be able to build a bridge. However, that got changed to actually class that as a minor work, which helped them to be able to build that bridge across that river.

I know that also in the Lower Mainland in British Columbia, some of the ditches that were made — and these are small ditches to drain water and keep it off the farmland — were classed as navigable waters. That is what I think they are trying to do. Well, it is what they are trying to do. It is navigation. It is about navigation. Let us decide which rivers, streams and oceans, and those that make up that waterway actually are commercially used for freighting and all of those kinds of things. I am sure they have not hit every river, or everyone would probably say that this river could be in or that river could be in. I think the minister can actually add and take away as he or she deems necessary in the future. This is not written in stone that it will always be this way. There can be changes to this by the minister.

Senator Buth: I have experienced a lot of the same things with producers, farmers across Western Canada, trying to do some drainage on their land and then facing the potential of permits, et cetera. I was curious about the definition and whether or not the list, essentially, defines ``navigable.''

If it is the Navigable Waters Protection Act —

Senator Neufeld: For commercial navigation.

Senator Nancy Ruth: For commercial navigation, then it is really the list of water bodies that defines what is navigable.

Senator Neufeld: Exactly.

The Chair: It is subject to the minister adding or subtracting from that list, as you say.

Senator Neufeld: Yes, as they see fit over time.

The Chair: Presumably, there is some procedure in the bill to do that. I am not familiar with that procedure.

Senator Mitchell: I could add one thing, Chair. The fact is that many rivers and bodies of water that are not on that list are navigable, but they will be excluded from mandatory permitting and reviews.

Senator Neufeld: Because they are not commercially —

Senator McInnis: Presumably, docks and moors and the likes of that would be preapproved if they are not on the list, if they are not on a navigable water.

Senator Neufeld: If they are not on a navigable water. If they are on anything else, they are minor works.

Senator Mitchell: On or off a navigable water, a minor work would not need review or permitting. You could be on a big lake and your neighbour could build a dock and you could find out later that this is a problem. It would not have had to have been permitted before.

Senator Neufeld: Exactly.

Senator McInnis: You can opt in. If I am a developer and I have a major development and I want to protect myself — I want to get under the act — then you can do that; you can opt in, can you not?

Senator Neufeld: Yes.

Senator McInnis: The other point I wanted to make is an observation with respect to the common law. I presume that the precedents have already been set in many instances, so that when they say common law, it is not that we are presuming there will be litigation in each instance. There has been considerable litigation that has formed the basis for the common law that most of the enforcement officers would understand quite quickly. Therefore, it is not a presumption that we will have to all go to court in order to establish the law; it will be predicated on the common law that has been established.

Senator Neufeld: I would assume so. It is much the same as all other issues are.

Senator Mitchell: I am not a lawyer and this will become immediately apparent, I am sure, but there is a distinction between common law and civil action. Our witness testimony regarding unpermitted cases where an individual has a problem with a neighbour's dock, the only remedy is civil action. I do not think it was ever said to us that the common law might be established and we could call a fisheries person and they would come out and say, ``This person is breaking the law and we will fine them.'' I am not sure. That is a very good question; we should pursue that.

Senator McInnis: Actually, what happens is that the fisheries officer would come out and would likely be aware of what the common law is, in most instances, because most of the Crowns have attorneys who advise them. However, having said that, it is a fact that it does not take much to get civil litigation underway between neighbours. However, the common law would be used in the court of law to establish who is right and wrong.

Senator Mitchell: The concern expressed of course was that such a course is very expensive, and most individuals do not have the money to do it. Therefore, you are shifting it from government that does have resources to deal with those things to individuals who do not. In a sense, you are, some would say, ``abdicating;'' some would say ``delegating.''

The Chair: Were there any other follow-ups?

Seeing none, on behalf of our Finance Committee, I would like to thank both of you for being here. Senator Neufeld and Senator Mitchell, thank you for helping us understand those sections that you studied. Also, thank you for your report. That was very helpful in preparing for this.

Senator Neufeld: Thank you. We appreciate it very much.

The Chair: We are pleased to welcome the Chair and the Deputy Chair of the Standing Senate Committee on Banking, Trade and Commerce: Senator Gerstein, former Deputy Chair of this committee, and Senator Hervieux- Payette. We will be dealing with the subject matter of those elements contained in Part 4 of the bill, Divisions 1 at page 176, 3 at page 197, 6 at page 217, and 14 at page 270.

Hon. Irving Gerstein, Chair, Standing Senate Committee on Banking, Trade and Commerce: Thank you very much, Mr. Chair, and thank you, colleagues. It is a pleasure to appear before you today. As the chair has stated, the Banking Committee was charged with studying four divisions of Part 4 of Bill C-45; namely Divisions 1, 3, 6 and 14.

Bill C-45 was to amend legislation that was examined by the Banking Committee relatively recently in the context of other bills. Overall, the committee held four meetings on the various divisions, hearing from 22 different witnesses, beginning on November 6 with both the Minister of State for Finance, the Honourable Ted Menzies; and the Ministry of Industry, the Honourable Christian Paradis.

Division 1 contains technical and coordinating amendments to support provisions already adopted in Bill C-38, particularly the provisions allowing public sector investment pools to become equity investors in federally-regulated financial institutions.

Division 3 responds to a G20 commitment to preserve the stability of the global financial sector in relation to over- the-counter derivatives.

Division 6 follows an agreement made by IMF members in 2010. In particular, it would amend the process for electing board members by eliminating the requirement that 5 of 20 members be elected by the members with the largest quotas.

Division 14 would amend the Agreement on Internal Trade Implementation Act, providing for the introduction of person-to-government dispute resolution processes and to the enforceability of orders resulting for the dispute settlement mechanisms, in particular, between the two orders of government.

Our report was tabled in the Senate on Thursday, November 29, 2012. A summary of each division is represented and outlines the evidence heard by the Banking Committee. I would note that all witnesses were basically supportive of the legislation, with only minor exceptions.

Before turning it over to my colleague, I would like to close with one observation the committee made regarding Division 14 and the Agreement on Internal Trade. For that I would like to direct your attention to the final paragraph in the presentation made by the Senate Banking Committee. On page 7, it simply states:

Finally, Division 14 addresses a variety of issues in relation to internal trade. The Committee urges the federal and provincial/territorial governments to work together with a view to reducing barriers to internal trade.

With that, it is a pleasure to turn it over to the deputy chair, Senator Hervieux-Payette, for her comments.


Senator Hervieux-Payette: Mr. Chair, our examination dealt mainly with extremely technical matters, and I do not have any comments to add.


Senator Callbeck: The last paragraph says that Division 14 addresses a variety of issues in relation to internal trade. Could you elaborate on that?

Senator Gerstein: I would be pleased to. In particular, I would refer to you the comment that was made by the Canadian Council of Chief Executives. They have repeatedly stated, as have other groups — the Organisation for Economic Co-operation and Development, the IMF — that the internal trade barriers are a major factor in Canada's poor productivity. These barriers cost Canadian businesses up to $14 billion a year. Furthermore, the perception that Canada has internal barriers to trade affects the way in which international investors view the country.

They were very supportive of the elimination of the discriminatory practices and policies. They emphasize that it is not the payment of penalties that is important in dealing with this issue but the discontinuance of the practice and the policy, and hence the recommendation that I referred to as the final paragraph, which the committee endorses.


Senator Hervieux-Payette: In the case of penalties, when it is a private party or, in any case, not a government party, filing a complaint, there used to be complaints that someone who initiates procedures does not recover their costs even if they win. So a business that complained about a barrier and that won its case would have to spend considerable amounts of money. There is a fund where all the penalties go, but a company that suffers damages does not have access to these funds. In the future, it will be important that those who report poor productivity and who rightly complain about these barriers have access at least to reimbursement of the costs of filing their complaint.


Senator Callbeck: Is that what Division 14 addressed, the recovery of costs, or are there other things regarding the barriers?

Senator Hervieux-Payette: Mostly recovery of cost. What is very important is the fact that actually we have a process that is more or less doing the same thing as we do when we go to the World Trade Organization. You have to build a case. You have to defend a case. If you go to the WTO, you will remember that there is a damage that is being paid, and sometimes it is a very large amount of money. The country that puts some barriers to trade, if they have made some damages to a company, they will have to pay back all the damages. In the case of Canada, it is a penalty; it is not repairing all the damages. We are far from the international system, and I feel we still have some progress to make.

If you operate in Ontario and you want to sell in Quebec, P.E.I. or B.C., you have all sorts of barriers. In Quebec, we know the most famous one is about the beer. I never understood why there was a trade barrier for beer and why beer from one province could not be sold in other provinces. There are all sorts of barriers. Yes, you can eventually overcome this, but it has to be done through a system that is very complicated.

When it comes to the enterprise, mostly in the private sector, it is even worse, because then you are not getting the best price, the best value for what you are buying.


Senator Bellemare: I would like to understand a bit better the discussions you had in connection with Division 3 on derivatives. Because we know that there was the big financial crisis in 2008, and that it was brought about to a large extent by asset-backed commercial papers, ABCPs, and the whole question of securitization. Did you address that in this division?


Senator Gerstein: Thank you very much for the question. In fact, we did, and this whole issue of derivatives was in keeping with a commitment made in 2009 by the G20 in Pittsburgh. I would start with a comment that was made by Bank of Canada Governor Mark Carney, who stated, when he appeared before the Commons Finance Committee, this very committee:

We do well to remember that there are immense markets globally. They bring real true systemic risk to global financial institutions. The so-called infrastructure of these derivatives market was found wanting during the crisis and needed to be fixed. We actually want to know what is going on in these markets so that regulators and authorities can see the actual level of activity, spot trends, see emerging vulnerabilities and address them as necessary. Unlike the equity market, one does not have a central repository of the trades that happen in derivatives, and it is not acceptable. It is being fixed. It is the first element, and Canada is moving forward on that.

That, basically, is the framework of how we are moving forward on the situation.


Senator Bellemare: That means that the bill provides for the creation of an oversight body or a registry? Because anyway I learned that, in 2008, for example, even the Bank of Canada was not able to follow what was going on with ABCPs, was not familiar with this type of product, could not really act preventively. So is there some concrete action in this bill?

Senator Hervieux-Payette: Whether the creation of an oversight body is being allowed, I think we can talk about an oversight body that is not necessarily national but international, in which many countries take part. This is not in the bill itself but it is headed in that direction, that is, towards transparency. Actually it is the norm. Then there is something else to be added, that is, the matter of transactions made with foreign currencies. Derivative transactions are accessible to currencies other than Canada's. I repeat to my colleagues who were not members of the committee that we are talking about an industry worth $775 billion a year. These are not small sums.

Senator Bellemare: Absolutely.

Senator Hervieux-Payette: This is a very large sector. But it is something that will take place gradually from what the Governor of the Bank of Canada tells us. Whether it is England or the United States, we are headed in that direction, but it is not complete and that is part of the mandate of the committee considering it.


The Chair: On page 5 of your report, in relation to the internal trade agreement again, the minister indicated that this legislation, which is a budget implementation act, is implementing changes agreed upon in 2008. Do I read that correctly? Did you get into any discussion as to why we waited for four years; and second, why it ends up in a budget implementation act?


Senator Hervieux-Payette: In fact, the one who more or less was the witness on the operation of that was the minister from the northwest or one of the ministers chairing a committee of ministers from the other provinces. In the end, we are one part, but there are ten other governments that are part of it and that lay down the rules. We understood that there were not a lot of annual meetings of all those ministers. So the process is very slow in being implemented. They have plenty of work ahead of them and, really, having one meeting a year slows down the process of implementing the reduction of barriers and moving more quickly towards implementation of a free-trade system in all the provinces.


The Chair: The other point I want to clarify is back at page 1. You indicate that these are technical and coordinating amendments to support the provisions of Bill C-38. My recollection is that Bill C-38 was a budget implementation act that we handled in the spring, in June, was it not?

We handled some changes in relation to this particular subject matter in that bill, which was budget implementation No. 1, and now we are into budget implementation No. 2, expanding on, rectifying and clarifying something we did in the last budget implementation. Did you get into a discussion on that?

Senator Gerstein: We did, but it was basically to ensure that Canadian financial institutions are competitive with foreign financial situations and that it is open to investment pools. It does not in any way change the restrictions of how corporations are owned in Canada.

The Chair: My point is, Senator Gerstein, that if this was something we should be doing, why did we not do it all together in one piece of legislation rather than in two budget implementation acts?

Senator Gerstein: I will leave that for others to answer.

The Chair: I do not want to get into an argument on this, but I wondered if you might have had that discussion.

Senator Gerstein: We did not.

The Chair: That is too bad.

Colleagues, on your behalf, I have would like to thank Senator Gerstein and Senator Hervieux-Payette for being here from the Banking Committee and providing us with a good report on the subject matters they studied and helping us to understand that report. Thank you very much. It was good to have you back.

We are now pleased to welcome the Chair and Deputy Chair of the Standing Senate Committee on Aboriginal Peoples, Senator White and Senator Dyck. Thank you both for being here and going through this process. We are dealing with the subject matter of those elements of Bill C-45 contained in Part 4, Division 8, at page 226 of the bill. There are proposed amendments to the Indian Act.

Senator White, I give you the floor.

Hon. Vernon White, Chair, Standing Senate Committee on Aboriginal Peoples: Thank you, and thank you also for allowing both of us to come in today.

There are two notable changes. One refers to the designation of land and the requirement in the past of a double majority, a majority of a majority, for the land to be designated. It would now be changed to a simple majority. The second change would have required the Governor-in-Council, or GOC, approval and the change that would be suggested with that legislation would instead require the approval of the minister.

In both cases, there have been discussions among First Nations and between First Nations and the government in the past about the need for expediency, and both of these were identified as opportunities to improve expediency when it came to designating land. I will ask Senator Dyck speak to this as well, if she would like.

Hon. Lillian Eva Dyck, Deputy Chair, Standing Senate Committee on Aboriginal Peoples: I am not sure whether we should go through what witnesses told us. I am new to this procedure. Could you give me a little guidance as to what you expect us to present?

The Chair: We are interested in knowing if you found a number of your witnesses in favour of the legislation, saying, ``Finally, you have done it,'' or, ``We have some concerns that this may be going too far.'' We are interested in knowing about that.

Senator Dyck: Overall, we did not have a lot of witnesses. We had the minister and officials come to speak to us one time, and the next week we had a witness from the Assembly of First Nations. That was it. I believe we also invited one other vice chief, but for some reason he was not able to attend.

I think the overall view from the First Nation communities, the Assembly of First Nations and other regional chiefs, is that they are not happy with this bill because of the lack of consultation. I believe that is reflected in our report. It is put in strong but delicate language.

Yesterday, as we all know, the First Nation chiefs were on the hill, and they were very upset. Chief Wallace Fox from Saskatchewan, from a very prosperous First Nation, was speaking to this bill directly. They were upset at the lack of consultation and the implications that it might have with respect to actual ownership on the land. They are not confident that this is the best way to go, and they are not in favour of this proceeding. They want those sections to remain the way they are. They do not want any changes. They have not been consulted.

The minister indicated he had consulted, but his consultation was to send a letter to all First Nation chiefs across the country after the bill had been tabled. He said he had not received any complaints. However, two letters have been received by the committee after the bill was tabled and after the minister said he had received no feedback. Chief Wallace was one of the chiefs who wrote to us, saying, ``Stop the bill. We do not want it to proceed.''

Senator White: If I may, to be fair, having only heard from one representative from the Assembly of the First Nations, Ms. Lickers, I believe, she did state that, on its face, and I do not want to quote her but I think that was the term she used, it appeared to be acceptable, but she did raise issues around consultation and specifically in relation to the department. They have regular meetings in relation to land, and she felt there should be an opportunity.

Also, to be fair, and not as an excuse, but this being my first time as well, not understanding the realities of a budget bill and the inability to have some consultation in some cases might have made it more difficult for them. Certainly consultation was the concern, and I think it was the concern more so than the substance. I do know some members from both sides of table in the committee meeting identified from their perspective that this would be a positive thing for First Nations. Again, both sides also had concerns around the department's lack of consultation and the fact that they meet regularly with First Nations.

Senator Dyck: If I could add, Ms. Lickers also talked at some length about the word ``surrender,'' which is used. She said although surrendering of lands is the term used legally, it is actually poorly defined or vaguely defined in legal terms. There was some concern about the exact meaning of ``surrender''. However, because it is used in other pieces of legislation, it seemed appropriate to leave in. Yet, there was concern about what surrender meant to the actual ownership of the land to the individual First Nations. Yes, overall she did indicate that it was a positive move that may help initiate economic activity on reserves.

One thing that kind of surprised me was one of officials from the department, when I asked what were the disadvantages of this bill, said that still a band member could stop the process. In fact, from my point of view, I thought that was an advantage, but from his point of view it was a disadvantage. It depends on which side of the fence you are on.

Senator White: I do believe we see it as an advantage that a member concerned about the process followed has an opportunity to stop the process if there are concerns being raised.

The Chair: Thank you. Turning to the surrender issue, I am looking at Bill C-45 at page 227, and clause 207 makes reference to absolute surrender. Is absolute surrender a term that is in the Indian Act now, or is this newly introduced? I agree that it seems a somewhat cumbersome term.

Senator Dyck: I am not sure if the original Indian Act says ``absolute surrender,'' but she did indicate that ``surrender'' was the word used. Since ``surrender'' is open to interpretation, there was some concern whether the surrender meant surrender temporarily to the Crown or for the purposes of leasing. What would happen if someone should decide there was a dispute? If a corporation, for example, were to go bankrupt on the leased land, would that land then revert back to the reserve, or would it become part of a dispute during bankruptcy? That is how one of the chiefs explained it to me. He was worried that that land might become the property of someone else because that company had gone bankrupt.

Senator Finley: I only have two very general questions, one which I have asked, I think, three times today in other committees with other groups. First, in your evidence here, were there any major red flags? I am not talking about the process, the consultation or the omnibus bill but about the actual subject matter of this division. Were there any particular red flags waved about that or any difficulties?

Senator Dyck: I do not think that there were any major red flags, but, on the other hand, I would say that the lack of consultation and putting it in the omnibus bill is a major red flag to First Nations, although it may not seem that way to this committee.

Senator Finley: I do not disagree with that. I did say apart from recognizing that those two burrs might exist, and I am not saying that they do not. I was really speaking to the content of bill, about whether there were red flags in the content. I acknowledge the other issues.

Senator Dyck: Thank you.

Senator White: I think, as Senator Dyck said, that we had limited representation, to be fair. However, I do think that there were quite a number of people around the table in that committee who have a huge amount of experience dealing with First Nation land and First Nation issues across this country, a couple having been former premiers of primarily First Nation territories. They all acknowledge that this is a good move and to be seen as good economic development. The ability to actually do business more quickly will make them better communities when it comes to fiscal responsibility and opportunities.

I did not see or hear any red flags in relation to what this will do for First Nation communities.

Senator Finley: Thank you, senator. Thank you, chair.

Senator Callbeck: I thank both of you for coming. As to the issue of consultation, we heard about it from the first committee this afternoon, the Standing Senate Committee on Energy, the Environment and Natural Resources. If I am to understand correctly, there was no consultation whatsoever with First Nations on this and they learned about the measure when the minister sent a letter. You say that it is insulting to First Nations and unacceptable and I certainly have to agree with you on that.

You mention that there is a joint process that the government should have followed on this. Can you comment a little bit about what is involved in that joint process?

Senator White: If I may, the joint process referred to was referred to us by the Assembly of First Nations representative, who talked about the regular meetings they have in relation to Additions to Reserve, ATR. They are regular meetings to talk about land issues between the First Nations and the Government of Canada.

To be fair as well, a lack of understanding, on my part anyway, of the ability to actually speak to a budget bill prior to it becoming a piece of legislation probably allowed me to be stronger on the lack of consultation than I properly would have been. I worked in the federal government for 24 years and also will acknowledge that, as a government official, there are times when you can have discussions with other partners that may not be clear on how it will occur but can be clear on what is possibly going to occur. The opportunity for the department to have had at least some discussions around ``what if we were able to'' or whether it is possible is really what I think most people would have expected to see from department officials. That was not seen. The presentation that we had from Ms. Lickers would indicate that it was not seen.

Senator Callbeck: Did any of your witnesses express the desire that these amendments should have been in standalone legislation rather than in an omnibus bill?

Senator Dyck: I do not think so.

Senator White: No, I do not think so.

Senator McInnis: I have a couple of points I want to make. Back to the word, Mr. Chair and witnesses, ``surrender.''

In this context, when the land is designated, it is leased. It is not conveyed, and so where is the difficulty?

Senator Dyck: I would have to look at the transcripts again as to what Ms. Lickers said, but she certainly did indicate that the word ``surrender'' was open to interpretation and that, because it was used commonly, she did not have a great objection but said that there was a concern that, within individual First Nations, it is not really clear exactly what that means. Apparently, as I tried to indicate, there is a question as to whether, in the case where it is leased to someone who is not a First Nation member — a corporation or whatever — and where there are difficulties and that corporation goes bankrupt, that land becomes surrendered back to them or not. It is apparently a temporary surrender, but, again, it is because of the interpretation of the word.

Senator White: Ms. Lickers did refer to ``surrender,'' but my understanding, in this case, is that it would be a land designation and that the First Nation would retain rights and interest in the land.

I think she was expressing — and we did not ask the question, to be fair — a bit of frustration on her part as to understanding what the end result would be. That was not the reason that she had concerns with the legislation, but it was a small flag that she held up to say that we have to ensure that there is a level of ownership maintained by the reserve. Land surrender would mean that, if something happens later, the land is no longer part of the reserve. I think that was what she was expressing, but, to be fair, I do not know that we got to that point.

Senator McInnis: It is probably poor wording. It certainly implies that you are surrendering your rights, but, in fact, you are not.

Senator White: That is correct.

Senator McInnis: I want to come back to this business of consultation because consultation with governments takes different forms. On March 15, 2012, the National Aboriginal Economic Development Board voiced concerns to the House of Commons Standing Committee on Aboriginal Affairs and Northern Development that ``First Nations do not have the ability to move swiftly in developing their land as a result of the restrictions that arise under the Indian Act and the red tape that comes with that.'' Further to that, the Auditor General identified the designation and leasing process as the cause of unnecessarily lengthy approval times on reserves.

You have that instance, and then, obviously, you must have had consultation in 2009 on matters such as this when the federal framework for Aboriginal economic development was put in place. When you have an Aboriginal economic development board coming forward and saying, ``We are not able to get developments forward. This is cumbersome. It takes months and months to get this through the process,'' it strikes me the government acted responsibly and at the behest of the economic development board from the Aboriginal community. I know and appreciate, for all groups out there, that consultation is extremely important, but, quite often, you react to requests from individuals and, particularly this board, who want to see economic development in areas that are crucial to them. It seemed to me that the content of this bill was absolutely enhancing the development opportunities and was done at the request of the Aboriginal community.

Where regular meetings are held with the Aboriginal community and the chiefs and so on it perhaps could have been mentioned. However, there probably was a presumption that there was agreement.

Senator White: If I may, you are absolutely right; you have a lot more experience in government than I do, thankfully.

I do not disagree that from a content perspective this is a very positive thing. In fact, we heard concerns about the process from the Auditor General and many other witnesses in the Additions to Reserve hearings that we held. We heard over and over that it is taking way too long to get through double majority, too much time for GOC approvals, purchasing land, accessing land, using land and the fact they pay tax until it is placed on reserve in the meantime while they are waiting 12, 14 or even 18 years. There is no question this is a concern of First Nations and, to be fair, a concern of the department and the Auditor General. I do not disagree with that. This is a good news story from a content perspective, from my perspective only.

Senator Dyck: I would like to add comments. You were talking about surrender and the consultation question is related to that. If there had been more consultation with the various First Nation parties, the question of surrender probably would have been discussed head of time and there might have been something different in the bill that addressed their concerns. You also say, and I agree, that it is a good move to speed up the process because you do not want things to be dragging on for years. We heard in our Additions to Reserve study that the process was incredibly long. They had a list that would span the width of this room on the process they had to go through.

Apparently a big part of that is dealing with the communities from which they are trying to purchase land. It is a complicated process and this has removed part of it, but we did not really get a good idea of what the major barrier is in terms of time. This will remove some of it but it may not be the only answer.

The Chair: On behalf of the Standing Senate Committee on National Finance, I would like to thank Senator White and Senator Dyck for being here and explaining what they found during their study of their part of Bill C-45.

Senator White: Thank you very much.

The Chair: We will have our final panel for this afternoon. Senator Mockler is our next presenter. We are pleased to welcome the Chair of the Standing Senate Committee on Agriculture and Forestry.

Senator Mockler will be dealing with a subject matter of those elements contained in Part 4 of the bill at Division 19, page 307, which proposes amendments to the Canada Grain Act.

Senator Mockler, up until now we have been inviting the Chair plus the Deputy Chair. Is your Deputy Chair not available to be in attendance?

Hon. Percy Mockler, Chair, Standing Senate Committee on Agriculture and Forestry: Mr. Chair, the Deputy Chair did not participate in the study of this particular section and he told me that he would not be present at this committee.

The Chair: Thank you. As long as you know that the invitation was extended. We appreciate your explanation and put the weight of explanation on your shoulders.


Senator Mockler: I wish first of all to thank you for allowing me to appear before you as the Chair of the Standing Senate Committee on Agriculture and Forestry.

On October 30, 2012, the committee received an order of reference from the Senate to examine Division 19 of Part 4 of Bill C-45, A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, which contains amendments to the Canada Grain Act.


On Thursday, November 22, 2012, our committee tabled its eighth report and dutifully reported back to the Senate on the previously mentioned order of reference.

If you would permit me, honourable senators, I would like to now give a brief summary of the work of the committee as it pertains to this order of reference. Between November 1 and November 22, 2012, the committee held three meetings, comprising approximately seven hours in total on this study.

In addition to testimony by the Honourable Gerry Ritz, Minister of Agriculture and Minister for the Canadian Wheat Board; and Mr. Elwin Hermanson, the Chief Commissioner of the Canadian Grain Commission, the committee heard testimony from senior officials with Agriculture and Agri-Food Canada, the Canadian Grain Commission as well as representatives from 12 organizations.

Two people also appeared as individuals. Feel free to refer to the appendix attached to the committee's eighth report to see the names of all the organizations and individuals who appeared.


The witnesses who appeared work in various areas of the grain sector, including those in production, transportation, handling, storage, processing and also research and development.


Through testimony, the committee was informed that the intention of this legislation would be the modernization of the Canada Grain Act, which has not been revised in over 40 years. The specific goal of this legislation would be to simplify the activities of the Canadian Grain Commission and to reduce the regulatory burden on grain producers. It is estimated that the proposed changes would eliminate about $20 million annually.

For the most part, honourable senators, the testimony received touched on the following: privatization of certain inspections and weighing issues, an increase of CGC user fees, implementation of an insured base program to protect payments to producers, grain marketing freedom, and rail transport of grain.


Honourable senators, some questions have been raised in connection with the bill. Nevertheless, most of the witnesses have indicated that this is a step in the right direction and have suggested other amendments for the future.


While some concern was raised over the proposed legislation, the majority of witnesses indicated that this legislation was a step in the right direction and proposed further modification for the future. In the end, the majority of committee members did not see any necessity to propose any changes to the legislation as outlined and so none were recommended in our report to the Senate.

In conclusion, I believe that we have given this study its due diligence, and I thank you again for your interest in the work of our committee.

The Chair: Thank you very much, Senator Mockler. I notice Senator Mercer and Senator Plett have both joined the same committee.

Senator Callbeck: I thank the three of you for coming. I am a member, as you know, of the Agriculture Committee. From sitting through the various hearings and hearing the witnesses, I firmly believe that these amendments to the Canada Grain Act should be stand-alone legislation. I do not think they have any place whatsoever in an omnibus bill. I would like comments on that from the three of you.

Senator Mercer: I agree with Senator Callbeck. As Senator Mockler said, general agreement was had from most of the witnesses that there was a need to overhaul the legislation. As Senator Mockler said, it has been a long time. However, everyone said there were other things that needed to be done that are not contained in the legislation. It was believed that there was enough that it became obvious to me and some others that it probably would have been a bill that should have been introduced by itself. There would be more changes, more thought given to some of the changes that have been proposed and that stand-alone legislation would have been the answer.

Senator Plett: Thank you, senator, and thank you, chair. Although most witnesses had comments to make, the witnesses, all but a very few — maybe two or three witnesses, the way I understood them — were very clear that this is a good first step. What we are doing is a good first step.

Certainly, everyone wants more all the time, senator. They all had suggestions of what we could do down the road. However, again, I want to emphasize that they were in agreement that what we were doing was the right way to go; it was a step in the right direction. They all expressed, as most witnesses do, the desire for further changes down the road. Certainly, they did not suggest that this should be stand-alone legislation.

Senator Mockler: If you permit me, Chair, I believe that the minister, when asked, addressed that particular question. I also believe that the officials from Agriculture and Agri-Food Canada addressed that particular question. That is why you have a report of the majority of members — we tabled this report — and I believe that the majority of witnesses addressed that particular question.

The Chair: Have you given us a summary of what the witnesses had to say?

Senator Mockler: In my previous statement.

The Chair: That this was considered to be a good first step; is that right?

Senator Mockler: Absolutely.

The Chair: We have made note of that.

Senator Callbeck: There is one other area. Under the current legislation, the elevators post a bond in an amount equal to the value of the grain that they are handling so as to protect the producer. This legislation will do away with that. We will move to an insurance-based program. However, that legislation does not say that it is mandatory. Do you have concerns about that?

Senator Mercer: I have some grave concerns; some of the witnesses expressed some concerns. The bonding issue has worked extremely well. As a matter of fact, Mr. Laurence Nicholson, a member of the Canadian Wheat Board Alliance, told us a story in his testimony about a farmer who had a small amount of wheat that he was having difficulty moving. He was recommended to a buyer in Lethbridge and, indeed, he sold his grain to that buyer. Between the time he sold it and the time he should have been paid, the people went broke. However, he was fine because the bond system took care of him and he got paid.

There is nothing wrong with insurance, but what is missing is the fact that it is not defined if it would be mandatory for people to carry that insurance and it is not defined who would pay for that insurance. It is really in the protection of the farmer that we have to be concerned.

Again, it is a moot point. I do not want to have the debate we had at the Agriculture Committee in front of the Finance Committee. However, stand-alone legislation would have allowed you to look at the whole aspect of this. Since there were other questions that could not be answered, when I questioned the minister about the number of people who would lose their jobs because there were changes and inspection levels would be removed, he could not give us the answers on the issue of how many.

Both Senator Plett and Senator Mockler have talked about this being a first step, but it could have been a complete step if we had that stand-alone legislation and helped improve it. However, it is lumped into a budget bill. We are all political people around here. We know that getting an amendment on a very small part of the budget bill will not wash in an omnibus bill whereas a logical amendment in a stand-alone bill sometimes works and can happen. The legislation could have been improved and the service to the people who we are trying to protect and serve with this legislation would have been much better.

Senator Plett: The bond issue would have done nothing — would have not made any difference whether it was this legislation or stand-alone legislation. The bond issue could have been left alone. Witnesses overwhelmingly said the problem with the bond is that they rarely pay out 100 per cent. Those of us who have been in business and had to supply bonds know this. They pay out anywhere from 50 to 75 cents on the dollar, and that was a problem with the bond. The insurance companies will pay out 100 per cent.

Absolutely, the insurance is voluntary. I certainly would not want to be in business without carrying insurance and grain companies would not want to be in business without carrying insurance. No farmer would go and sell his grain to a company that would not have insurance to carry that, just like they would not have done that without the bonds before.

The insurance aspect is a much better one, because the farmers will be able to be paid out 100 per cent.

Senator Mercer, I find it strange — I do not recall that there were any amendments suggested other than a bit of a wording change in the report. That was the only amendment suggested by the other side. I am not sure, if this was not good legislation, why they did not suggest an amendment.

Senator Mockler: On that, we can agree to disagree. I have to consider the quality of the witnesses we heard from. If I may, the minister explained that the proposed changes based on an insurance model are more efficient and easier to manage than the bonding cash set-aside model. Also, Mr. Elwin Hermanson, Chief Commissioner of the Canadian Grain Commission, added that the amendments would reduce licensing costs and improve protection coverage. I believe it is a step in the right direction.

Senator Callbeck: As you say, this proposed legislation is a step in the right direction. However, as Senator Mercer said, it could have been a complete step if we had had a stand-alone bill.

The proposed change to go to the insurance-based program is fine if the insurance is there, but I am seeing in the bill that this is not mandatory and is on a voluntary basis. My concern is the protection of the producer.

The Chair: Thank you for your point, which some senators have commented on.

Senator Finley: On the process, omnibus bill notwithstanding, we have certainly heard arguments on both sides of the chamber and at endless times throughout committee that omnibus bills are not exactly new. They have been around for an awfully long time. The purpose of this committee is not to set the process. The purpose of this committee is to determine the changes to the proposed legislation placed before it.

I will ask you, Senator Mockler, if I may, the same question that I have asked each of the three committees that have appeared before us today. In the process of your investigation and testimony, were there any witnesses who raised deep red flags indicating dangers or warnings about the future regarding this bill? Was there anything of that nature that we should be looking at?

Senator Mockler: We have at this table five members of the Agriculture Committee. I would answer the question by saying that the majority of those witnesses told us that it was a step in the right direction. Plus, they said that they would like to see further changes made to the bill.

May I share with you some comments that were taken under the chair's advisement? For example, the Canadian Canola Growers Association advocates for changes to the CGC structure of governance. Another witness said that CGC weighing and inspection of offshore exports should be made optional. This was from the Western Canadian Wheat Growers Association. The Alberta Barley Commission, the Western Grain Elevator Association, the Inland Terminal Association of Canada and the Grain Growers of Canada said that CGC weighing and inspection of offshore exports should remain optional. The Alberta Barley Commission and the Grain Growers of Canada called for more involvement of farmers in the CGC's governance. The Grain Growers of Canada suggested that the dispute settlement role of the CGC be extended in order to cover value-added facilities.

It is fair to say that what is in Bill C-45 is a step in the right direction; however, a great number of witnesses, I will say the majority, said that we should go further, sir.

Senator Mercer: That was a good and accurate rundown by Senator Mockler. It goes back to the point that if it was a stand-alone bill, those things could have been addressed. We could have been a much more efficient Parliament in dealing with it at that time because, in all likelihood, we will be back to deal with it in the future, tying up the resources of both the House of Commons and the Senate and the committees in both places to deal with something that we could have dealt with now.

Senator Plett: My colleagues have covered it but if we had a stand-alone bill, we would not have a bill that 100 per cent of the people would be happy with. There would always be room for improvements as there could have been further moves made in this bill. A stand-alone bill would have made little difference. As Senator Finley pointed out, omnibus bills certainly did not start here in the last year; we have always had them.

Senator Hervieux-Payette: I was not intending to raise the question of the tradition of the British parliamentary system. However, I am thinking of all the witnesses who appeared and tried to give us their best advice but eventually had no say in anything we do with regard to these big budget bills. I also think of the parliamentarians. We are talking, in general, about those on one side who are elected and on the other side appointed. I have been a parliamentarian for a good part of my life, so I want to remind my colleague that usually when a budget bill contained other provisions, most of the time it was for emergency correction of some legislation that had major flaws. It was not the tradition and has never been the tradition otherwise. The largest bill ever introduced by the other party was 125 pages. We are now dealing with budget bills that are 400 to 500 pages. We are involved in a very different way of parliamentary procedure and parliamentary democracy.

You said this would be a saving of $20 million. What is the size of the grain business? How many billions of dollars?

Senator Mockler: I could not give you the exact figure but, if you permit me, I would be honoured to present that figure to the chair within the next few hours.

The Chair: We will circulate that to everyone.

Senator Hervieux-Payette: Can you add the definition of the grains we are talking about? We produce more than wheat in this country, such as canola and several other grains. I would like to know which ones are covered by the bill. I suppose you would like to add this to my first request.

More on the substance and the privatization of inspection, I have some very big reservations. Who will draft the regulation? Who will review the regulation? How will you cope with the conflict of interest? If the people who deal in this business of grain do that they will be self-regulating, so what about Canadian citizens? How can they have a say? How can other organizations have a say in the regulations? Here we have a process whereby when you have regulations and they are revised, we have to make sure that they are in line with the legislation, so we have the Standing Joint Committee for the Scrutiny of Regulations. Under this bill, a large number of Canadian business will be self- regulating, even after the big problem we had with XL Foods, where there were government inspectors. Under the proposed legislation, we will have no government inspectors, just industry inspectors. Tell me how this will operate.

Senator Mockler: It will be administered by the grain commission.

Senator Plett: Canadian Grain Commission.

Senator Mockler: Canadian Grain Commission, CGC. As for the different grains, cereals, I could also provide you with the exact nomenclature of the grains. There are certain grains that I would not be in a position to share because I do not personally have the proper knowledge of this.

Senator Hervieux-Payette: I want to have the guidelines. How will we be able to monitor the privatization of the inspection? Will the regulations being developed at the commission level be submitted to parliamentary review?

Senator Mockler: It is teamwork on our committee, Mr. Chair. I would ask Senator Plett, since he is from Western Canada, to comment.

Senator Plett: The Canadian Grain Commission regulates that now, and they will continue to do that. There is no change there. The Canadian Grain Commission will still be the regulating body that will be in charge of inspections.

Senator Hervieux-Payette: This means it will still be reviewed by the parliamentary committee?

Senator Plett: If a producer is not happy with the grade they get, they can take a sample to the grain commission and have them review that to make sure they have been given the right grade for their grain.

Senator Hervieux-Payette: That is not what I am talking about. I am talking about the regulations, how they are established. I am not talking about someone contesting the inspection and the grade that was given to their product. I am talking about who will develop these. Who will change them over time? How often will the inspection be done?

I have seen in the bill that, yes, there will be some samples and there are different steps to be taken with the samples that are being taken. Then, of course, the grade can be contested. Then there is a certain level where people stop contesting because the decision will be final.

Who will overlook the whole process of establishing the inspection process through regulation? Is it the minister or is it the parliamentary committee?

Senator Mockler: Mr. Chair — and can you add, if you want, Senator Plett — we have been assured that it will be the Canadian Grain Commission and also Agriculture Canada will be working, as they do presently, hand in hand with agriculture across Canada. On that technical question, again, Mr. Chair, this is a question that is within the context of the report we have presented, and we would be happy to bring that to your attention.

Senator Hervieux-Payette: Just to complete this, then: Who will pay the inspector at the end of the day?

Senator Buth: May I interject? We seem to be straying from the actual legislation that is included in here.

Senator Hervieux-Payette: No. This is in the bill.

The Chair: Just a second, please. Make your point.

Senator Buth: What is being changed in the bill is the elimination of mandatory inward inspection. Inward inspection is when grain moves from an elevator to another elevator within the system, or from an elevator to a terminal elevator. That is being changed from being mandatory to voluntary. It used to be that those were different companies. In the past, because a lot of the grains were under the Wheat Board, the grower actually still owned the grain as it was moving through the system.

With the changes to the industry, when what you are doing is you are having a company move grain from their own elevator to their own terminal elevator, there are costs in the system because it was a mandatory inspection that the grain commission inspected the grain. The companies do not need that anymore, so it is going voluntary.

It is not a privatization of an inspection that is actually needed. That is where the $20 million in savings is coming from, the elimination from inspections that are within the system that are no longer needed, essentially, and no longer needed to protect producers either.

Senator Hervieux-Payette: At the beginning or at the end?

Senator Buth: Outward inspections are still mandatory. They are done by the Canadian Grain Commission and they have to be done. Some companies choose to hire private inspectors because their buyer wants a different inspection done than the Canadian Grain Commission, but outward inspections are still done by the Canadian Grain Commission.

The Chair: The term is ``inward inspection''?

Senator Buth: Yes.

The Chair: That is in articles 352 and 354 of the bill.

Senator Hervieux-Payette: I used the words that were in the report. I took the notes and I was told that it was a privatization of the inspection. I was reading some of the articles, and there were many articles dealing with the inspection. For me, when we talk about privatization and inspection, there are different levels and different inspections. I do not think we can see it from the bill.

Senator Buth: You can actually see it from the bill but I agree it was not completely clear in the report. However, really the changes are essentially within the system.

The Chair: Thank you. That was helpful.

You are okay with that explanation from another member of your committee who knows the western grain industry?

Senator Mockler: Absolutely. When we were in Western Canada, Senator Buth has certainly a good reputation and is an icon when it comes to the canola industry and the process of grains, like others, but in Western Canada.

Senator Mercer: We have learned not to argue with Senator Buth.

The Chair: She is developing a good reputation in the Finance Committee too, so we appreciate that.

I notice at clause 352 and 354 that since the Canadian Grain Commission is no longer required to do these inward inspections and weighing services that they did previously conduct, that there is also the elimination of a board or tribunal, the Grain Appeal Tribunal. Did you get into that? Was that a tribunal that helped producers and that will disappear?

Senator Plett: The appeal would be to the grain commission again, as I said earlier. Senator Buth is quite correct about the inward inspection. If Richardson buys their grain and transfers it from one terminal to another, it is their own system. They have no need for it. However, if the farmer or the producer is not happy with the grade that Richardson is giving him, then he still has the opportunity to get that further inspection.

The Chair: Was that Grain Appeal Tribunal internal to the commission or a separate, stand-alone tribunal that the producer could go to?

Senator Plett: Maybe we could ask Senator Buth again to be the witness here.

The Chair: We are all friends exchanging information.

Senator Buth: I cannot recall the details in terms of where the Grain Appeal Tribunal resided. However, Senator Plett is right in terms of protecting the producers. There is no change in terms of protecting the producers and their ability to essentially appeal.

The Chair: The tribunal is being eliminated.

Senator Buth: Yes, but the producer can still go to the Canadian Grain Commission and appeal the basis, essentially, of the grade they have been given.

The Chair: Yes, or the weight, I suppose.

Senator Buth: Yes, into the system. However, as I mentioned, there is no need, then, for the Grain Appeal Tribunal to look at issues between two companies, because that inward inspection essentially is not being done between two companies, typically; or if it is, then those two companies have the opportunity, essentially, to hire a private inspector, although that is pretty rare.

The Chair: The only reason I think these questions are being asked of you, Senator Mockler, and your team, is because we are interested in knowing if and how this impacts on producers, and if the producers will be disadvantaged as a result of these changes. I think that is what the questions are going to.

Senator Plett: They will not, chair.

The Chair: They will not. Good. You have investigated that and say they will not.

Is there follow up on that?

Senator Hervieux-Payette: Just to point out that in clause 358, that is where they talk about those who are dissatisfied, where they can go, where they can appeal, and it will be the chief grain inspector for Canada. Where does that chief grain inspector sit? I do not know, but I know that they can appeal to the chief grain inspector, and it is article 39.1, 39.2. They have a limited period of time. They have 15 days to appeal the first decision as to the grade that was awarded by the commission.

Senator Buth: They will typically do that quite quickly. If they go to an elevator and they get a grade that they are not happy with, then they will do something about that quite quickly.

The Chair: Thank you. There are $20 million in saving anticipated by these changes. Did the Canadian Wheat Board have to go through all of these steps as well and, if so, would the savings be to the Wheat Board as well if it were still in existence?

Senator Plett: Regarding the Canadian Wheat Board, I think Senator Buth explained that clearly. With the Wheat Board, the inward inspections were needed, so they would not have been able to do this with the Wheat Board buying all this grain because they would still be going to different elevators and inward inspections would still be necessary.

With this, if Cargill buys my grain and moves it from elevator to another or from one terminal to another, it is their grain. If they have graded my grain when it leaves my farm, I have a grade and what happens after that is Cargill's responsibility. With the Canadian Wheat Board, that was not the case.

We were told by some witnesses that the changes as they are could not have happened had we not passed Bill C-18.

The Chair: That is the point I was getting to. This flows from the elimination of the monopoly with the Canadian Wheat Board. This flows from that.

Senator Buth: I actually had a question that relates to the last or second last panels that were at the committee.

The question is to Senator Plett, because it will be his recollection, since he asked the question. It was the panel of witness that actually had the most suggestions in terms of changes and they clearly had been in conversations with the Canadian Grain Commission for quite a considerable amount of time.

I wonder if you can recall, when you asked them, how they would like the legislation. Would they like the changes being done now or would they like to wait until the changes could be incorporated with all the other suggestions they had made? Do you recall the answers to that?

Senator Plett: As I recall, they wanted this to start. Again, as I said in my first answer earlier, they all would like more. I think that is fairly typical of all of us in that we always want a little more. However, they definitely believe these changes were good and needed to take place and needed to take place as quickly as possible.

The Chair: Thank you, Senator Buth.

Senator Plett, Senator Mockler and Senator Mercer, thank you for being here and for your report. That helped us understand what is being studied.

Colleagues, this concludes our meetings with the other committees that have studied parts of Bill C-45. We had set aside some time tomorrow afternoon to finish this up. That is not necessary. You can have tomorrow afternoon to sit in the Senate chamber; we anticipate receiving Bill C-45.

We had also hoped to do clause by clause tomorrow, but we are not able to start on that until we have the bill referred to us, and that takes second reading first. It is very difficult for us to predict when that might happen but it will be sometime next week that we will have the bill here. Since we have studied the proposed legislation fully, we will go into clause by clause immediately. That is the plan.

Thank you very much.

(The committee adjourned.)