Proceedings of the Standing Senate Committee on
National Finance
Issue No. 65 - Evidence - May 3, 2018
OTTAWA, Thursday, May 3, 2018
The Standing Senate Committee on National Finance, to which was referred Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, met this day at 1:33 p.m., to continue its study of the subject matter of the bill.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on National Finance.
[English]
I wish to welcome all those who are with us in the room and viewers across the country who may be watching on television or online. My name is Percy Mockler, senator from New Brunswick and chair of the committee.
Now, honourable senators, I would like to ask you to introduce yourselves.
[Translation]
Senator Pratte: André Pratte from Quebec.
Senator Moncion: Lucie Moncion from Ontario.
[English]
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you.
This afternoon we continue our consideration of the subject matter of all of Bill C-74 with officials from the Department of Finance Canada and other departments. Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, is what we call a budget implementation act.
Today we will focus our study on the divisions of Part 6 that were referred to our committee, which are Divisions 1, 3, 10, 11, 13, 14, 17 and 18. As you know, the other divisions of Part 6 were referred to a number of other Senate committees for pre-study exactly seven other committees.
To start the review of Part 6, Division 1, which pertains to the Financial Administration Act, we have before us, from Treasury Board of Canada Secretariat, Sonya Read, Senior Director, Digital Policy. Ms. Read, thank you very much for accepting our invitation and sharing your comments and information with us.
And from the Department of Finance Canada, we have with us Marie-Josée Lambert, Director, Crown Corporation and Currency, Financial Sector Policy Branch.
Thank you both for accepting our invitation and sharing your comments and information with us.
Honourable senators, we will ask Ms. Read and Ms. Lambert to make short presentations, to be followed by questions from senators. Then, other public servants will give us additional information on Division 3 after we finish with Division 1, and this will keep going until we complete up to Division 18.
So on Division 1, Ms. Read or Ms. Lambert, the floor is yours.
[Translation]
Sonya Read, Senior Director, Digital Policy, Treasury Board of Canada Secretariat: Thank you. This proposal is to amend the Financial Administration Act to establish the office of the Chief Information Officer of Canada.
[English]
Recognizing the fundamental importance of information management and information technology to government operations and ongoing service delivery improvement, the proposal supports strengthened government-wide governance much in the same way that the establishment of the role of the Comptroller General has done for financial management and the role of the Chief Human Resources Officer has done in respect of human resources management.
The amendments establish the role of the Chief Information Officer of Canada as a deputy head within the Treasury Board Secretariat and provide authority for the Treasury Board to delegate powers and functions to that office. It is expected that these amendments will support improvements to the general management of information technology across the Government of Canada as well as support the improved delivery of projects that are aligned on information technology for their success.
The Chair: Thank you.
Ms. Lambert, please.
[Translation]
Marie-Josée Lambert, Director, Crown Corporation and Currency, Financial Sector Policy Branch, Department of Finance Canada: The proposed legislative amendments are technical in nature and will have no impact on the government’s debt or deficit. The government is proposing amendments to the Financial Administration Act to ensure that Crown corporations are able to implement the accounting changes associated with the new international financial reporting standard, IFRS 16, for leases without exceeding their legislative authority or their borrowing limit.
[English]
These legislative amendments will ensure that Crown corporations with no borrowing authority are able to enter into lease agreements to run their day-to-day operations. They will require the Minister of Finance’s approval before entering into leases over a certain threshold. Statutory borrowing limits exclude lease transactions. Thank you.
Senator Marshall: I have some questions on the position of Chief Information Officer. Isn’t there already a Chief Information Officer? We’re doing a study of Phoenix and in some of the documents we’ve been provided with there is a reference to Chief Information Officer. Is there one already?
Ms. Read: Yes, there is a Chief Information Officer within the Treasury Board. This legislative proposal just formalizes the role within the Financial Administration Act, the same as the Comptroller General is formalized and the Chief Human Resources Officer is formalized, and allows for the delegation of powers from Treasury Board to the Chief Information Officer.
Senator Marshall: So the person in the current Chief Information Officer’s position, will that employee stay in the position once the Financial Administration Act is amended?
Ms. Read: I think that would be a decision pursuant to the appointment process.
Senator Marshall: In the material we were given, we were told that this position will be a senior leadership position within the government for the management of information technology and information management. Is that to address issues like Phoenix and Shared Services, where there have been some problems the last couple of years?
Ms. Read: Yes. One of the original instruments or reports suggesting this was required was the independent review of Shared Services Canada, which took place over 2016. The idea is that this strengthened leadership will help to support the improved delivery of information technology enabled projects in the future.
Senator Marshall: So this is a position at the deputy minister level position, and it’s equivalent to the Chief Human Resources Officer; is that correct?
Ms. Read: Yes, it would be in the same level as the Chief Human Resources Officer and the Comptroller General, as a deputy head position.
Senator Marshall: Thank you very much.
Senator Pratte: I’d like to follow up on this. What is the authority of the Chief Information Officer in relation to Shared Services Canada?
Ms. Read: Shared Services Canada is responsible for the provision of infrastructure, so information technology infrastructure services. The Chief Information Officer is responsible for supporting the Treasury Board in respect of the prioritization of priorities for investment and advice in terms of standardization of information technology and information management, among other things.
Senator Pratte: My understanding of Shared Services Canada’s role is to encourage departments to have a uniform approach to technology. Is that it, in part?
Ms. Read: It was the consolidation of a lot of the infrastructure aspects of technology, so the data centres. However, responsibility for the applications that run on the large mainframe computers, the software, the investments they make in terms of the programs and service delivery are still all within departmental mandates. The role of the Chief Information Officer is to help with the prioritization of those types of investments and to help improve standardization across departments.
Senator Pratte: So will the Chief Information Officer have staff? I suppose so.
Ms. Read: There is an existing Chief Information Officer branch within the Treasury Board Secretariat.
Senator Pratte: Is it a large staff?
Ms. Read: I don’t actually have the number of staff right now, but I could provide that information.
Senator Pratte: I would appreciate that, yes. Thank you.
The Chair: Are there questions from other senators?
[Translation]
Senator Moncion: Can you tell us a bit more about how the IFRS 16 will impact the government’s financial statements?
Ms. Lambert: The changes are technical in nature and will have no impact on the government’s debt or deficit.
Senator Moncion: How will they appear in the financial statements?
Ms. Lambert: It is simply a way of classifying Crown corporation leases. It does not affect the government’s financial statements.
Senator Moncion: So there will be no financial impact —
Ms. Lambert: No.
Senator Moncion: — because I have seen other international financial reporting standards that had major financial consequences.
Ms. Lambert: In this case, there will be none. What we want to do is to slightly amend the laws affecting Crown corporations so that IFRS 16 does not affect their daily operations, but this has no impact whatsoever on the government’s financial statements.
Senator Moncion: Thank you.
[English]
Senator Andreychuk: I want to go back to the Chief Information Officer. We’re supposed to scrutinize this, and the definitions and the operations are puzzling. I thought I understood what was happening, that there is some sort of coordination. But what you’re saying is the department still will have the differences. They will still operate the systems, I guess. So what does the Chief Information Officer do? Make sure the equipment is the same? Is that what’s being standardized? What are they looking at there that would be helpful to our cybersecurity, et cetera, when it’s none of the programming and it doesn’t seem to be even what they’re doing within each department. So what is their role?
Ms. Read: The Chief Information Officer would have a role in respect of the development of standards around business process technologies and applications, which would impact how some of the decisions are made within departments to align with those standards. This would allow for greater connectivity between departments and allow for greater economies of scale in ensuring there is that standardization across departments, where it’s suitable. It’s not going to be 100 per cent standardization, but I think the idea is it will support more improved integration, better information sharing and increased alignment of the investments made by departments with Government of Canada priorities.
Senator Andreychuk: But is this officer at all involved in the policy development of information sharing? The problem with most of the security difficulties looking back is they’ve never connected the dots because they haven’t shared the information and they’re working on different systems, even in our criminal system, trying to coordinate between provinces and federal.
Does this office have any responsibility for that kind of policy coordination to ensure that we don’t have the gaps, or is he looking strictly at the machinery?
Ms. Read: The Chief Information Officer branch right now has the responsibility for information technology policy, the information management policy within the Government of Canada, so the Treasury Board administrative policies. The security policy, privacy policy and access to information are also within the Chief Information Officer branch and the service policy. So there is a policy function and a coordination function there in terms of some of the roles and standardization of data management and information management, as well as to ensure the interoperability of data.
There is also a role in respect of cybersecurity in coordination with the Communications Security Establishment and Shared Services Canada.
Senator Andreychuk: Who does this officer report to?
Ms. Read: He will report through the secretary to the Treasury Board, to the President of the Treasury Board.
Senator Andreychuk: Through the secretary?
Ms. Read: Yes.
Senator Marshall: I’m a bit confused now about the Chief Information Officer. If it’s a deputy minister position, would it report through the secretary to the Treasury Board or would it be on the same level?
Ms. Read: It would operate the same way as the Comptroller General and the Chief Human Resources Officer within the Treasury Board Secretariat.
Senator Marshall: They report to the secretary?
Ms. Read: Yes, the secretary is responsible for the coordination of operations of the Treasury Board Secretariat.
Senator Marshall: I mentioned that this committee was looking at the Phoenix system. We’ve been given a lot of material on it. In something I read, it was somewhat critical of the Chief Information Officer — that’s why I thought there was already a position there — that the Chief Information Officer wasn’t more involved in the Phoenix system.
So the question I had asked earlier, how actively would this position be involved in the development of these large systems? Is it just a matter of policy, or will they be actively involved to make sure the project is evolving as it should evolve? What would the role be? Just clarify that for me.
Ms. Read: The role would be enhanced, I guess, engagement with departments early in the onset of IT-enabled projects.
Senator Marshall: So there would be involvement?
Ms. Read: Yes. There would be an enhanced and strengthened role in terms of involvement, oversight and guidance around those enterprise-wide projects.
Senator Marshall: Okay. That’s what I would expect. Thank you very much.
The Chair: To Ms. Read and Ms. Lambert, thank you very much for your presentations.
Now we will move to tab 3 in the binder, Division 3, which is the Federal-Provincial Fiscal Arrangements Act. I will ask the following people to come to the table: from Health Canada, Gigi Mandy, Executive Director, Strategic Policy Branch, Canada Health Act Division; and from the Department of Finance Canada, Galen Countryman, Director, Social Policy Division, Federal-Provincial Relations and Social Policy Branch.
Thank you very much to both of you for being present. I will ask Ms. Mandy to please provide us with her comments to then be followed by Mr. Countryman.
Gigi Mandy, Executive Director, Strategic Policy Branch, Canada Health Act Division, Health Canada: Actually, Mr. Countryman is going to do all the opening remarks.
The Chair: Okay. Mr. Countryman, the floor is yours.
Galen Countryman, Director General, Social Policy Division, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Thank you. I will also open with a correction on my job title. It seems like the GEDS listing is clearly out of date on a number of fronts. I’m the Director General of the Federal-Provincial Relations Division, in the same branch at Finance Canada, so the Federal-Provincial Relations and Social Policy Branch.
With that introduction, I am pleased to be here today to discuss two parts to Division 3 and Part 6 of Bill C-74.
The first part is provisions that renew the equalization and Territorial Formula Financing program for the next five years. The second is provisions that will legislate a new reimbursement policy for deductions made from the Canada Health Transfer with respect to extra billing and user chart provisions of the Canada Health Act.
The minister’s authority to make equalization and Territorial Formula Financing payments is set to expire on March 31, 2019. Accordingly, this bill proposes to renew those two programs for a five-year period beginning April 1, 2019, and therefore ending March 31, 2024.
[Translation]
Equalization payments are the Government of Canada’s main transfer program for addressing fiscal disparities among provinces. Equalization payments enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at relatively comparable levels of taxation.
Similarly, the funding formula for the territories provides funding to enable territorial governments to offer a range of public services comparable to those offered by provincial governments, at comparable levels of taxation, in recognition of the higher cost of providing programs and services in the North.
[English]
Following consultations with provincial and territorial governments, the government is proposing to renew the Territorial Formula Financing for a five-year period beginning April 1, 2019. Technical changes will be made to improve the accuracy and efficiency of the calculation of entitlements through regulatory amendments.
The government is also proposing to make transition payments to Yukon and the Northwest Territories over the renewal period to offset projected negative impacts of the changes on Territorial Formula Financing entitlements.
With respect to the reimbursement policy, this proposal proposes to recommend that the Federal-Provincial Fiscal Arrangements Act be amended to permit reimbursement of amounts that were previously deducted as directed by the Minister of Health from a province’s or territory’s Canada Health Transfer payment due to violations of the Canada Health Act provisions for extra billing and user fees.
Under current legislation, the Minister of Health may direct the Minister of Finance to make deductions from a province’s or territory’s Canada Health Transfer payments if it permits extra billing, user fees and delivery of public health care. This amendment will enable the Minister of Health to direct the reimbursement of the CHT deduction when a province or territory has taken corrective action to align their public health care system with the principles of the Canada Health Act. This proposal creates a fiscal incentive that recognizes jurisdictions that have taken the necessary steps to address issues of non-compliance.
My colleague and I would be pleased to answer your questions.
The Chair: Thank you. Before I recognize Senator Marshall, permit me to ask Senator Jaffer and Senator Cools to introduce themselves, please.
Senator Jaffer: Thank you, chair. My name is Mobina Jaffer and I’m from British Columbia.
Senator Cools: Hello. My name is Anne Cools. I’m a senator from Toronto. I apologize for being a little late. Very busy here; over busy.
Senator Marshall: Thank you for being here.
Our briefing notes say there was consultation with the provincial and territorial governments. Does that mean that all the provinces would have agreed to the changes, or does it just mean there has been consultation and that their agreement isn’t really an issue there?
Mr. Countryman: Fair question. Yes, at the officials level, we’ve had consultations over a number of years on the development of the technical changes we will be proposing through regulation. These changes were discussed at the ministerial level at the federal-provincial finance ministers’ meeting in December 2017.
I would say there was no objection by the provinces and territories to any of the technical changes being proposed.
Senator Marshall: Would the changes all be favourable to the provinces or would they be mixed?
Mr. Countryman: They would be mixed. The equalization program is a fixed envelope that grows in line with gross domestic product; so it’s a fixed envelope in total. As you tinker with the elements of the equalization formula, as one province’s entitlement may go up, another province’s entitlement may go down. So there will be a mixed impact depending on the province.
The trend has been that Ontario has been receiving less and less equalization, and when you combine that with the growth in the program, it’s hard to say overall whether a province would see from one year to another year a decline.
Senator Marshall: Well, I represent Newfoundland and Labrador. Are you able to tell us the impact?
Mr. Countryman: Newfoundland and Labrador currently does not receive equalization.
Senator Marshall: Right.
Mr. Countryman: And with these changes, we do not foresee Newfoundland and Labrador — they don’t qualify.
Senator Marshall: It won’t have any impact on them?
Mr. Countryman: It will not have any impact on the fact that Newfoundland and Labrador does not receive equalization today, no.
Senator Marshall: Okay. Thank you very much.
Senator Pratte: On equalization, the territories will receive transition payments because equalization is a large part of their budget. That’s the logic, I understand.
Would you provide to the committee the impact of the technical changes on the provinces?
Mr. Countryman: I think the issue that we would have with providing — obviously we’ve done estimates on what we think the impact would be based on current data. These changes will not take effect until the 2019-20 fiscal year. So we won’t actually know what the impact would be on the provinces until the time we actually have the data and the calculations done for the 2019-20 fiscal year.
Senator Pratte: But you already know because equalization is a smaller part of their budget.
Mr. Countryman: Yes, we do know that. As I said, we’ve obviously had estimates. I can undertake to provide the calculations we had for the fiscal year, but it would be an estimate. It would not be the actual impact.
Senator Pratte: Still, I’d appreciate that. Thank you.
On the Canada Health Transfer, there have been cases where Canada has reduced the transfer because some provinces have allowed overbilling. In the past, have there been cases where the government has decided to reimburse the province after the practice has stopped?
Ms. Mandy: Yes, there have been. There were penalties taken against Quebec for the last two fiscal years because of extra billing and user charges that were occurring in the province and roughly amounted to $10 million. So the federal Minister of Health, being aware of that, was forced to take a deduction from the CHT transfers.
However, because of the fact that the deductions are always taken on something that has happened two years previously, Quebec had already taken corrective action and eliminated the charges by the time the deduction was taken. In recognition of that fact, they were reimbursed the money that had been deducted.
That has happened two years in a row and is one of the main reasons we’re proposing that under the Federal-Provincial Fiscal Arrangements Act it be formalized that when a province has taken corrective action, they can be reimbursed, because these two payments to Quebec had to be done through another mechanism.
Senator Pratte: You’re formalizing something that already happened.
Ms. Mandy: That’s correct.
Senator Pratte: Nothing has changed in section 25. It remains that it is an option for the federal government to reduce the transfer payment. It is not mandatory for the government to do it.
Ms. Mandy: That is right. The Minister of Finance reduces payments upon receipt of a certificate from the Minister of Health directing them to do so.
Senator Pratte: So it’s still the word “may.” The minister may reduce the payments.
Mr. Countryman: I don’t recollect the wording, but I don’t believe that wording has changed. The act to make the deductions and the wording has not changed.
Senator Jaffer: Were these technical changes made in consultation with the provinces?
Mr. Countryman: We did consult with the provincial officials on all of those technical changes.
Senator Jaffer: Was there any input from them?
Mr. Countryman: We received feedback on all those technical changes and whether they supported them, and indicated no objection. At the finance ministers’ meeting, there was no significant concern with any of those four changes we plan to make.
Senator Jaffer: Is there a province that is not following the Canada Health Transfer?
Ms. Mandy: There are always issues that come up. Sometimes they’re easily resolved and they don’t result in deductions. This past year there were deductions taken against two provinces for failure to comply totally with the Canada Health Act.
Senator Jaffer: And you have not been able to resolve the issues?
Ms. Mandy: We have in one of the provinces, and we are well along the way of resolving it in the other province.
Senator Jaffer: With this amendment, you will be able to reimburse the province later on.
Ms. Mandy: That’s correct, once they have taken corrective action to eliminate the problem that led to the deduction in the first place.
Senator Jaffer: Is that just within the fiscal year or can they do it later?
Ms. Mandy: It can happen either within the fiscal year in which the deduction was taken or two fiscal years after.
The Chair: Thank you, Mr. Countryman and Ms. Mandy.
We will proceed, senators, to invite Mr. Christian Sylvain to discuss, at tab 10, Division 10, clauses 250 to 256, Canadian Institutes of Health Research Act.
[Translation]
Christian Sylvain is the Director General of Corporate and Government Affairs.
Christian Sylvain, Director General, Corporate and Government Affairs, Canadian Institutes of Health Research (CIHR): We have just one representative here today.
The Chair: Mr. Sylvain, please go ahead.
Mr. Sylvain: I will be fairly brief. For those of you who are less familiar with the Canadian Institutes of Health Research, as the name suggests, it is a federal agency that funds research at universities and university hospitals in Canada. It is a government agency with an annual budget of $1.1 billion dollars.
[English]
There are three amendments to the Canadian Institutes of Health Research Act proposed in Bill C-74. I will describe them to you very briefly.
The first one is to separate the roles of president and chairperson of the Governing Council. Currently these roles are combined and held by the same person. These are clauses 250 and 251 in the act.
The second is to simplify the language to describe the responsibility of council to establish policies and to clarify to whom certain powers of the board can be delegated. These are clauses 253, 254 and 255.
The third is to ensure that the French version of the act is easier to follow. The word “president” is used interchangeably to refer to the CEO and the chair of the board, so in the French portion of the act this has to be clarified. This is done in clauses 252 and 256.
We think these changes will help enhance and modernize the governance of our agency. I will be happy to answer questions about these changes.
Senator Marshall: Thank you. Which position will be vacated?
Mr. Sylvain: The position of chairperson of the board is currently vacant. That is the new one that’s being created. The President of CIHR is both the CEO and chair of the board.
Senator Marshall: He or she remains CEO, so you’re looking for a new chair?
Mr. Sylvain: That’s correct.
Senator Marshall: That’s what I wanted to know. Thank you.
Senator Jaffer: Senator Marshall asked this question. If I understand it, this bill seeks to separate the roles of the President of the Canadian Institutes of Health Research and chairperson of the Governing Council. Would this change affect the compensation at all? Why is there this change?
Mr. Sylvain: Because when CIHR was created in 2000, these two roles were combined to help the leader of the organization, which was new at the time, be effective in a fairly big community of health researchers in the country. In 2018, it is no longer considered best practice to have a CEO report to himself or herself as the chair of the board. So, we’re splitting the roles to align with best practices that are known in public sector organizations and other organizations.
Senator Jaffer: The functions in section 14 suggest a broader scope of policy making?
Mr. Sylvain: No, it’s just that the word “policies” appear twice in section 14 under (a) and (g), and it’s confusing for the organization as to what is meant. So they are being combined to empower the board to have authority on all policies generated by the agency, to simplify the language.
Senator Jaffer: The appointments are made by —
Mr. Sylvain: Appointments to chair of the board? The Governor-in-Council appoints.
Senator Andreychuk: You’re separating them. The government appoints; the government funds. I think there are external sources for funds also. I’m not sure about that now. Do they set their own policies? With the separation, who would initiate their research? Is it independent of the government in that sense on the research that they choose and how they conduct it?
Mr. Sylvain: All research funded by our agency is determined by peer reviewers, so other scientists in the country will make recommendations to our agency as to what should be funded. The board members, or the governors, do not have access to this information and are not privy to these decisions. The Governor-in-Council is responsible for setting the broad strategy for the organization and providing proper oversight to the agency.
Without that split, at the moment, you have the CEO of the organization that also chairs that board, so we feel that oversight role is weakened in the modern governance we would like to see in 2018. Hence, the need to split this role.
Senator Andreychuk: But my question is this: Is there any direction from the government on the policy, or are there rules in place? I realize it’s peer evaluations and all that, but is the initiation of any research independent of what the government may or may not want or is doing?
Mr. Sylvain: I would say absolutely independent from government decisions. That doesn’t preclude our agency from trying to find ways to harness the capacity of our research community to serve the greater good through arrangements with a government agency.
I will give an example. We know that PTSD is a big issue among veterans, and so we are working with Veterans Affairs to try to make sure that our research capacity is harnessed to serve that need. That doesn’t mean someone has asked us from a political standpoint to do this — there’s a relationship that exists there — but all decisions made by our agency are independent of the government and the Minister of Health, through whom we report to Parliament.
[Translation]
Senator Moncion: I looked on your website to see how many people were on your Governing Council.
Mr. Sylvain: There are 18.
Senator Moncion: Your director general was also the president and chairperson?
Mr. Sylvain: Exactly.
Senator Moncion: He is the acting president and you are looking for a chairperson. Is the position of chairperson a paid position?
Mr. Sylvain: The chairperson of the Governing Council is not a paid position.
The Chair: Thank you, Mr. Sylvain.
I now invite Ms. Jeannine Ritchot to take a seat.
[English]
From Treasury Board of Canada Secretariat, Jeannine Ritchot, Executive Director, Regulatory Cooperation, Regulatory Affairs Secretariat.
Ms. Ritchot is here to explain tab 11, honourable senators, clauses 257 to 264, Division 11, Red Tape Reduction Act.
[Translation]
Ms. Ritchot, you have the floor.
Jeannine Ritchot, Executive Director, Regulatory Cooperation, Regulatory Affairs Secretariat, Treasury Board of Canada Secretariat: Thank you, Mr. Chair. Twenty years ago, I was a page in the Senate, so it is a great pleasure to be back here in this lovely Aboriginal Peoples room.
Today, I would like to talk to you about the Red Tape Reduction Act, the purpose of which is to reduce the administrative burden on businesses in Canada. Implemented in 2015, this act established a “one-for-one” rule.
[English]
We call it the “one-for-one” rule in English.
There are two aspects to this rule and both are meant to control administrative burden. The first aspect is that every time a regulator brings a regulation in that has administrative burden, which is paperwork burden for small business, they have to bring a title out; so they have to take one regulation off their stock. They also have to take a corresponding amount of administrative burden out of their overall regulatory stock. It’s both a title out and also an administrative monetary burden out.
[Translation]
Since 2015, we have seen a $30.1 million reduction in red tape and we have withdrawn 120 regulations from Canada’s regulatory stock.
[English]
This has had a significant impact on small businesses.
Currently, the law only applies to regulations that are put in place in Canada. However, Canada has entered into regulatory cooperation initiatives with a number of its trading partners formally, including the United States. CETA has us operating a regulatory cooperation initiative with Europe, and also with provinces and territories under the Canadian Free Trade Agreement.
The amendments we’re seeking would allow Canadian regulators to count any administrative savings to Canadian businesses that might result from regulatory changes made in another jurisdiction as a result of a regulatory cooperation work plan. The real goal here is to encourage departments to look for opportunities for regulatory cooperation.
I will leave it there and see if there are any further questions.
The Chair: Thank you.
Senator Marshall: I will start with the one-for-one rule. That really depends, doesn’t it, on the complexity of the regulation? It’s possible that a very simple regulation could be eliminated and a very complex one could be put in its place, yet be deemed a success. Is that possible?
Ms. Ritchot: That’s why there are two aspects to the one-for-one rule, senator. There is the title. In the case of the title,it doesn’t really matter on the complexity of the regulation itself; you just have to demonstrate that if you’re bringing one title in, another title has to come out. Often what departments will do is take out a regulation that is really no longer being used because it’s quite old and ineffective.
The second aspect is what prevents the concern you are raising, which is you have to quantify the administrative burden you’re bringing in with a new regulation, and then you have to open up your stock and find the same amount of administrative burden so there is an equality there in terms of the burden you’re bringing in and the burden you’re taking out.
We use a standardized costing methodology. All departments must use the same costing methodology, and it’s an internationally recognized methodology. That keeps the playing field more equal in that sense.
Senator Marshall: To me the $30.1 million doesn’t sound like a lot. It sounds like $30.1 million, when you think about the federal government and the regulations that they’re imposing on businesses and individuals, isn’t that significant.
Ms. Ritchot: It only takes into account administrative burden and that’s an important qualifier. Compliance burden, which would be the costs for inspections, for example, or every time Health Canada inspects a drug manufacturing facility there are significant costs to business that arise from that, but those are considered compliance costs.
[Translation]
In French, it is called “réduction de la paperasse,” —
[English]
In English it’s red tape reduction. It’s only targeting the paperwork burden. So the $30 million is only about the paperwork, the forms that you have to fill in.
We’re certainly looking for ways to improve the one-for-one rule. There will be a mandatory review of the Red Tape Reduction Act in 2020, and that will give us an opportunity to see if there are ways to strengthen and improve it.
Senator Marshall: This information, both the net reduction of the regulations and the dollar amount of the annual burden, is being reported. Who checks the validity of what’s being reported?
Ms. Ritchot: We do at the Treasury Board Secretariat. The Regulatory Affairs Sector plays a challenge function role vis-à-vis the regulatory department. When they provide cost-benefit analysis, we have a centre of expertise that works with departments to help them do it so they understand how to do it and how to apply the costing methodologies, but also challenge functions as well. The one-for-one, all of that is published in the regulatory impact analysis statement that accompanies the draft of the regulatory text, and all of that is consulted on publicly as well. So it’s done in a very transparent and open manner. Then the President of the Treasury Board submits a yearly report to Parliament that documents how much cost has been saved to the system and how much has been brought in.
Senator Marshall: Does the report to Parliament indicate which regulation has been eliminated and what the new regulation does?
Ms. Ritchot: Yes, it does.
Senator Marshall: In our briefing notes, there is a question:
Have stakeholders have been consulted?
Business stakeholders (i.e., the Chamber of Commerce, Canadian Manufacturers & Exporters, and the Canadian Federation of Independent Business) did not raise any significant concerns . . . .
But it sounds like they weren’t very enthusiastic either.
Ms. Ritchot: There are some stakeholders, like the Canadian Federation of Independent Business, that represents smaller businesses and have often raised concerns that they would like to see the one-for-one rule go further. For example, we talked a moment ago about administrative burden versus compliance burden. When we review the rule in 2020, that will be an opportunity to take a deep dive into those matters.
There are other stakeholders, like the Chamber of Commerce, that are more enthusiastic about this one because they are enthusiastic supporters of regulatory cooperation. Ultimately, regulatory cooperation does reduce the burden on business. If you have a common marketplace but two sets of regulations, one in Canada and one in the U.S. for a drug approval, for example, it can be quite burdensome for business. We’ve made sure that it is understood that regulatory cooperation is also a way to reduce unnecessary and duplicative requirements.
Senator Marshall: Thank you very much.
Senator Jaffer: Welcome to the Senate again. It will be interesting to hear from you regarding the changes you see. You are always welcome here.
I want an example as to how these amendments will apply.
Ms. Ritchot: I’ll take the Canada-U.S. Regulatory Cooperation Council because it’s our longest-standing formalized regulatory cooperation initiative. Regulators in both jurisdictions will get ideas from stakeholders about areas of regulatory misalignment that are not working well for them because they’re creating two separate rules for the marketplace, and it’s too costly for business to do business in both countries as a result.
Let’s take an example of something that happens at the border, where you have to fill out forms in Canada and in the United States. If Canada has proceeded with an amendment that removes the need for paper forms but doesn’t remove the need for forms entirely, they’ve reduced the burden and they can count that in the one or one. If the U.S. were to do the same thing, that would have a burden decrease on Canadian businesses as well that would no longer have to fill out those paper forms on the U.S. side, but we could not count that.
As a result, what this regulation will let us do is if the cost of business from the U.S. implementing that same — let’s say, and I’m just making up a number here, removing paperwork at the border or the need for paper forms at the border will save Canadian businesses $50 million a year, and that’s a very high number, but it will save $50 million to the Canadian economy, then the regulator in Canada can count that and put it in their bank. So when they do want to bring in a regulation in another area that has administrative burden, they have that money sitting in their bank. That’s practically how it would work, but only if they have a regulatory cooperation relationship, those two departments together.
Senator Jaffer: We went across the country, and one of the constant refrains was the tremendous amount of paperwork and that businesses have to do more and more. I was very disillusioned the other day when I was listening to people from Finance about all the other paperwork that now has to be done. This is a good step, but do you have an idea as to whether it really reduces the paperwork? How effective will this be?
Ms. Ritchot: I don’t know that I can give you a quantifiable idea, but I can give you an example of some of the benefits we’ve seen through regulatory cooperation. I will get the exact figures for you because I do have some quantifiable numbers. I unfortunately don’t have them with me, but I will get them to the clerk.
Health Canada and the Food and Drug Administration a few years ago worked together on the Common Electronic Submissions Gateway for drug submissions. This has established a common IT infrastructure database. If I’m a drug manufacturer, I used to have to provide an application to the FDA in the U.S. and a separate application to Health Canada here in Canada, and it was extremely burdensome. There were minor differences in the applications, so you always had to adjust them for which country you were applying in. Both Health Canada and FDA realized we have similar requests, so why not create one common gateway so companies can apply once to two markets? Now companies can come in using this gateway and apply once. They don’t have to apply in Canada and the U.S. They apply through their gateway and it automatically goes.
I do not have the quantifiable numbers with me, but we calculated the reduced burden for drug manufacturers. There are a number of examples I can provide that will demonstrate some of the early wins we’ve seen with regulatory cooperation and the impact it can have.
Senator Jaffer: Thank you very much.
Senator Andreychuk: I am following up on what Senator Jaffer was asking about. I understand that you get credits if you’re in cooperation with another country. I think you have here $30 million in annual burden removed. How much of that is from cooperation agreements, or is this all internal Canadian?
Ms. Ritchot: The $30 million now is all internal Canadian. The amendments we’re seeking would allow us to, moving forward, count any administrative burden reductions that result in changes to regulation in another jurisdiction.
Senator Andreychuk: What interests me is the fact that this is a good initiative, but it’s a minor one. What we see is all the new regulations coming in. While we’re reducing some red tape, we’re adding because there are new programs and each one of them, we’re told, will be dealt with in regulations. Do we have any idea of the regulation burden on businesses? And is this a success story or a minor success story?
Ms. Ritchot: We have never been able to fully quantify the existing burden of the regulatory stock. To be quite honest, senator, that would be a very important task, but it’s a very resource-intensive task and monumental.
The baseline was zero when this rule came in 2015, and we counted since then. But to answer the question as to whether we know the total cost of the regulatory system in Canada, unfortunately we don’t.
This is but one piece of a larger regulatory reform agenda currently being undertaken. In Budget 2018, aside from announcing that we would look at legislative changes such as this, the government also announced that there are three other regulatory reform elements aimed at making the system more agile.
The first was the development of an electronic platform to allow for consultations to take place in a more modern and transparent way.
The second was to put in place a regulatory cooperation table domestically with the provinces and territories under the Canadian Free Trade Agreement.
The third, which I suspect will be the most interesting, is they announced funding for a regulatory stock review in three key sectors, which are very big ones: aquaculture and agricultural and agri-food, health and biosciences, and transportation and infrastructure. From those reviews, we’re expecting to look at the efficiency of those regulatory frameworks to see what is out there that should not be out there any more, and how we can do things more effectively in a more agile way.
I would say that this is a very important success story, but it’s one piece of a broader regulatory reform agenda which is meant at creating a more agile framework for small businesses that, as you have all heard from, really do feel the burden of regulation.
Senator Andreychuk: It comes from the fact that we are adding more issues that they have to address in a more complex way, whether it is the tax system or applications for subsidies or just doing business, and then laid on the provinces and municipalities.
Ms. Ritchot: Absolutely. Unfortunately, we can only help at the one level, which is the federal, but there are also the provincial and municipal aspects as well.
[Translation]
The Chair: On that note, Ms. Ritchot, I would like to thank you for your presentation. Your presentation and the information you provided cannot have made any parliamentarian uncomfortable, especially since you once served as a page.
We thank you very much for your presentation and wish you good luck in your career.
Ms. Ritchot: Thank you. I appreciate the opportunity.
[English]
The Chair: The following witnesses to give information to the committee will be Mr. Pirthipal Singh and Ms. Julie Lalonde-Goldenberg. They will be explaining tab 13, clauses 268 to 283, Division 13, with regard to the Department of Employment and Social Development Act.
[Translation]
Mr. Singh is the Director of Tier 1 Partnerships and Services Offerings for Federal Partners, Partnerships Development and Management Directorate. Thank you for being here. Also from Employment and Social Development Canada, we welcome Ms. Julie Lalonde-Goldenberg, Director General, Partnerships Development and Management.
[English]
Thank you for being here. I have been informed that you have a presentation to make to be followed by questions.
[Translation]
Please go ahead.
Julie Lalonde-Goldenberg, Director General, Partnerships Development and Management Directorate, Employment and Social Development Canada: I want to thank the committee for welcoming us today. As you said, we are here to talk about amendments to our departmental act.
[English]
Today, we are here to talk about proposed amendments to the Department of Employment and Social Development Act and to support the budget commitment to improve services to the public, with partners, including e-service delivery.
As you probably all know, the Department of Employment and Social Development is responsible for the delivery of various social and employment programs to the public, including the Canada Pension Plan, Employment Insurance and Old Age Security, just to name a few. The department has an extensive service delivery network, online, by phone and in person, with up to 550 points of service in person across the country.
Like other federal institutions, the mandate of the department allows for the delivery of the programs of our department. A lot of infrastructure has been created for the delivery of those programs.
Over the years, the department has received and has entered into partnerships with other federal institutions and jurisdictions to leverage our service delivery experience and infrastructure to help in the assistance of the delivery of their programs. Our department does not have a specific authority to deliver those programs, so each time a new partnership is formed, a specific authority is provided on a case-by-case basis. It’s a machinery decision. It can be time-consuming and has prevented sometimes nimble response to partners who want to use our offices or our service delivery infrastructure for including urgent things where there is a fire or a flood, for instance.
Regarding the specific authorities that we’ve received over the years, I can look to 2006, where our department got a mandate to run the 1 800 O-Canada call centre, which you probably know about, and, more recently, the delivery of domestic passports in our offices and the existing passport offices as well. We are also responsible now for Canada.ca and running the infrastructure for that online service.
As I have mentioned, that case-by-case approach has prevented better services to Canadians by not allowing us to react as quickly or to be as proactive in the partnerships that we can deliver for partners. These proposed amendments are to broaden the department’s mandate to include service delivery and to allow partnerships to do service delivery for partners.
The types of services that this would allow us to do are help deliver the services of other departments, do things online for them, and also use our offices to do things like appeal hearings, interviews and so on.
The partners that this contemplates service delivery for are other federal institutions, provinces, territories, and specified Indigenous organizations. The proposed amendments also allow the department to cost recover for those incremental expenses for the service delivery that we would provide.
The amendments also ensure the safeguard of the personal information and clarify who is responsible for making sure the personal information that’s collected in the service delivery continuum is protected. ESDC, our department, would have the authority to collect the personal information that is necessary to provide the service delivery and then give it back to the partner and not use it for anything else. So there are clear provisions for safeguarding personal information.
Another thing the provisions would allow is for the department to provide all its service delivery, including for partners, electronically, which is something that is not there right now.
Finally, it would allow the department to use CRA’s business number in its dealings with businesses.
Overall, that is what these provisions do. They’re machinery-like in nature, and a lot of our partners already think we have those authorities. I should note that this proposal is not seeking funding. It’s not a funding proposal. It’s authorities to deliver those services. It’s not our mandate to say that every partner has to use Service Canada or ESDC services; it’s just to allow the department to do the services if the partners would like to leverage our infrastructure to do that.
The partners continue to be responsible for their programs. For instance, IRCC, the immigration department, is responsible for the passport program. ESDC delivers it the way that the partner wants it. They’re in charge of the entitlement rules, identity and what kinds of identity documents they want us to collect. It’s really an administrative role and not taking over anybody else’s mandate for the programs that they have the mandate to deliver.
We were asked the question whether these authorities are connected to any other budget initiative. They are not connected specifically to any other budget initiative, but they will provide the department with the ability to enter into partnerships that will facilitate the implementation of other initiatives such as increasing access to service in the North for Indigenous communities. That may require us to partner with provinces, territories and other federal institutions, and this would provide the authorities to do that.
I think I will stop there and see if you have any questions.
Senator Marshall: Thank you very much. I don’t think I quite understand what the legislation is supposed to do. Is your department going to be providing personal information to other organizations so they can deliver services on behalf of your department? Is that one part of it?
Ms. Lalonde-Goldenberg: No. These provisions are to enable the department to provide services for partners. So when I speak about the personal information, provisions that we’re proposing to add to our departmental legislation are to say that when we provide a service for another department —
Senator Marshall: When your department provides a service for another department?
Ms. Lalonde-Goldenberg: Yes. We have the authority to collect it because we have the authority to provide that service delivery. Then when we give it back to the department, we do not use it for anything else. So it clarifies —
Senator Marshall: So this is an exchange of personal information between departments so there can be a crossover with regard to delivery of service.
Ms. Lalonde-Goldenberg: Absolutely.
Senator Marshall: When you were going through your opening remarks, you talked about the federal government, the provincial, territorial, other governments, and then you referred to Aboriginal organizations. But our briefing note also refers to other non-profit bodies or public bodies. What non-profit bodies would that be?
Ms. Lalonde-Goldenberg: These are non-profit bodies that are providing services for the federal-provincial-territorial partners that we could be providing services for.
Senator Marshall: What are some names of the organizations? Can you give me an example so I can relate to what the legislation means?
Pirthipal Singh, Director, Tier 1 Partnerships and Services Offerings for Federal Partners, Partnerships Development and Management Directorate, Employment and Social Development Canada: There is no specific example. The way the legislation is written is that in the future there could be entities created that we could rely on to deliver combined services both from the provinces and the federal organizations.
So right now, there is not a specific name, but it enables the legislation to allow for future ways of delivering services.
Senator Marshall: So if this legislation goes through, it will allow your department, if you can come up with an arrangement with a non-profit organization, to provide confidential information on people to this non-profit organization so they can deliver services on behalf of the department?
Mr. Singh: If a non-profit corporation approaches, let’s say, the federal government and the provinces and territories and states that they can reach certain populations better or they can do certain things better, then departments and whichever entities they approach would agree to that and would ask us to do something for them, a small portion for which they have gotten the mandate from whichever entities they’re supporting.
Senator Marshall: So this could be like a seniors organization if there are seniors that aren’t receiving benefits they’re entitled to. You could really delegate it out to the seniors organization.
Mr. Singh: Exactly.
Senator Marshall: In the briefing note, it says that this has been shared with the Privacy Commissioner. Could you tell us what the response was? It says that the Office of the Privacy Commissioner has been consulted during the drafting of the bill. Can you tell us what the Privacy Commissioner had to say about the legislation?
Ms. Lalonde-Goldenberg: Sure.
I just want to clarify from the exchange that we just had that this is about ESDC providing services on behalf of a partner. So the partner would ask us to do a portion — to take applications in our offices for their program.
Senator Marshall: Who would a partner be? Give me an example of a partner.
Ms. Lalonde-Goldenberg: The partner could be Veterans Affairs Canada. They have a new program and you need to go and apply in an office. We have offices across the country and we would say, “Sure, your clients can come to our office and we’ll take their application for them, that you’ve created, and we’ll make sure they have all the documents and send you the application so you can process it and see if they’re entitled.” That’s the service delivery partnership.
The information that we’re seeing is information that we will then share with Veterans Affairs. So this is allowing us to collect that information to do the service delivery, give it back to Veterans Affairs, who owns the information. What it’s saying is we can’t do anything else with it.
When we consulted the Privacy Commissioner’s office about this legislation, they were supportive that we were putting in these measures that protect the personal information and making it clear that that will not be further used by our department for anything else but the purpose for which it was selected.
Senator Marshall: But the examples you give relate to other federal departments. The briefing note also talks about other non-profit bodies. That’s the area that raises a red flag for me.
Ms. Lalonde-Goldenberg: The non-profit bodies are the ones that would be acting on behalf of the partners. That’s what the legislation defines in terms of partners. So if a provincial entity wants us to do a service for them would like us to partner with that entity because they work with that entity, we would be doing that work for that entity.
Senator Marshall: Well, it raises concerns. When you talk about sharing personal information, it does raise a question. When you think about it from a personal perspective, do you want your own personal information going from here to — like, where exactly is it going?
But thank you for your comments.
Senator Jaffer: Thank you for being here.
Can you further expand on why you felt there was a need to have more powers?
Ms. Lalonde-Goldenberg: Sure. For instance, I talked about the in-person network that our department has. ESDC is one of the only federal presences across the country that serves Canadians.
I’ll give another example of immigration, who is implementing a collection of domestic biometrics in Canada for permanent and temporary residents. They need to go and get biometrics information collection. They’re an in-person office. Our network is the only network. That prevents that department from having to build an infrastructure across the country to respond to those services. That’s one example.
We also, as I mentioned, have an online presence. Our department runs Canada.ca, where there is a lot of information about government departments. We are developing our capacity to do things online. Instead of having other partners having to develop that capacity as well, they can just leverage ours at that incremental cost.
This is really about that kind of thing, saying for each new program or existing program that federal or provincial departments or jurisdictions have, if it can be better for the clients to have a common place to go or leveraging of that infrastructure so more things can happen in a seamless say, this will allow us to get into that partnership.
Senator Jaffer: With the additional resources and the expansion that you may be doing, will that mean increased bilingual services?
Ms. Lalonde-Goldenberg: It could. We have many bilingual offices across the country, so our partners could leverage our experience and expertise in providing that bilingual service in areas where they may not have that capacity.
Senator Jaffer: Thank you.
[Translation]
Senator Pratte: If I understand correctly, essentially these amendments formalize something that was already been done, is that correct? Because there were already partnerships. You simply want to add something to the act that already existed?
Ms. Lalonde-Goldenberg: The idea is to codify the authorities that we have been receiving on a case-by-case basis. So we want to legislate authorities in order to offer services for which we had to obtain the authorities one by one in the past. Our department’s mandate did not include the authority to provide these services, but, as I said, we have established various partnerships on a case-by-case basis. So this gives us the flexibility to establish these partnerships more seamlessly.
Senator Pratte: I would like to talk about cost recovery. I would like to know how it works exactly, because I am sure that, in order to maintain good quality infrastructure, such as your website, you have to make investments every year and so forth. How do you calculate the costs you request from your partners in order to offer them the service? Does your price include part of what you have to invest to maintain your infrastructures? How do you calculate that?
Ms. Lalonde-Goldenberg: Right now, there is a formula to determine the cost of a partnership which includes direct costs and partnership development costs. We are working on a model for the future that will be more inclusive and that will cover investment costs on a shared basis. You have to remember that the new partnership services are just a small part of the other services the department offers. The model that will be established once the authorities are in place will include the additional costs for the delivery of services. We will also have to determine what portion of long-term investment costs the partners will have to cover.
Senator Pratte: The financial model has not been finalized?
Ms. Lalonde-Goldenberg: Exactly. There is still a lot of work to flesh it out before new partnerships are formed.
Senator Pratte: Okay. Thank you.
[English]
The Chair: Thank you, Ms. Lalonde-Goldenberg and Mr. Singh, for your presentation.
We will next move to Division 14.
Senator Marshall: Could I just mention something? I’m always concerned when we talk about moving personnel or sharing personal information. The department saw fit to consult the Office of the Privacy Commissioner, so could the steering committee take under advisement whether we should have the Privacy Commissioner come and testify?
The sharing of personal information, I know sometimes people think it’s not an issue; you share and you keep it to yourselves. But if the department thought it was relevant enough to have the Privacy Commissioner take a look at what they’re planning, I think it would be interesting for us to know what his views are on this. Could the steering committee take that under consideration?
The Chair: Yes. There will be a steering committee next week and it will be an item on the agenda.
Senator Marshall: Thank you.
The Chair: On this, Ms. Lalonde-Goldenberg and Mr. Singh, thank you.
Division 14 will be at tab 14, clauses 284 to 296. The two individuals from Employment and Social Development Canada are Andrew Brown, Acting Director General, Employment Insurance Policy; and Cara Scales, Director, Policy Analysis and Initiatives, Employment and Insurance Policy.
To both public servants, thank you for accepting our invitation to share with us the changes in Division 14.
The floor is yours for comments, please.
Andrew Brown, Acting Director General, Employment Insurance Policy, Employment and Social Development Canada: Thank you, chair. Good afternoon, honourable senators. I’m pleased to be here before you this afternoon to speak about changes to the Employment Insurance Act that have been proposed in Bill C-74.
[Translation]
As you may know, employment insurance is the largest labour market program in Canada. It provides temporary income support to individuals who have lost their jobs in the form of regular benefits, as well as special employment insurance benefits under specific circumstances that may arise during a person’s working life.
I am here to talk to you about proposed amendments to the Employment Insurance Act that determine how benefits are modified when a claimant earns income while collecting employment insurance benefits.
[English]
In other words, the working-while-on-claim provisions.
[Translation]
These provisions pertain to work done while a person is receiving benefits. The provisions are intended to encourage claimants to accept work while they are receiving benefits.
[English]
Each year, about 800,000 Employment Insurance claimants do some work while receiving EI benefits, with women more likely than men to work at least one week while on claim.
The current legislated provisions have been in place since 1971, and a series of pilot projects over the last 12 years have tested different approaches to adjusting EI benefits when a claimant earns some income while receiving their EI benefits.
Budget 2018 now proposes to make one of these approaches permanent. First, the amendments proposed in the budget would make the default rule of the current pilot project permanent. Under these rules, workers retain all of their employment earnings and EI benefits are reduced 50 cents for each dollar, up to 90 per cent of their pre-claim earnings.
Secondly, the Budget 2018 proposals would for a time-limited period allow EI claimants that opted for the alternative treatment of earnings to continue to do so. This three-year period would provide time for this small group of claimants — about 0.5 per cent of all claimants — that are working while receiving EI benefits to have three years to adapt to the permanent 50-cent rule.
The third change proposed is that the working-while-on claim rules would be extended to sickness and maternity claimants for the first time. Extending these rules to maternity and sickness claimants is not intended to encourage work. Rather, this change would allow workers to benefit from the same treatment as other claimants if they choose to stage their return to work and would be allowed to retain some additional income.
Lastly, there are some technical amendments included to ensure that the changes to the working-while-on-claim rules do not result in unintended consequences on other aspects of the program, such as the waiting period and the EI Premium Reduction Program.
As indicated in the budget, these measures are estimated to cost $351.9 million over five years starting in 2018-19 and $80.1 million annually ongoing. The measures would be expected to come into force on August 12, 2018, later this year, to avoid disruption with the old rules under a pilot that will be expiring on August 11 of this year.
There has not been significant stakeholder reaction to the budget announcement on this particular measure, which is not particularly surprising in that it is largely a continuation of the current measures in regulations being made permanent under legislation. The Canadian Union of Public Employees has indicated that it was pleased to see that the working-while-on claim rules would now apply to sickness and maternity claimants.
I will leave it there and open it up to questions.
Senator Marshall: Thank you very much.
What is the objective? Is it to encourage people to form an attachment to the labour force? Is that the main objective?
Mr. Brown: Yes, it is. In the EI program, since almost the very beginning, there have been rules to encourage people receiving benefits for job loss to accept work. There has been a series of different rules which have allowed people to combine some of their EI benefits with earnings.
The purpose of the pilot projects over the last 12 years has been to test which of those approaches seem to have the greatest impact in terms of encouraging people to stay attached to the labour force; in other words, to seek out some work even while they are receiving EI benefits.
Senator Marshall: Can claimants go back and forth between two options?
Mr. Brown: Between the two options they cannot go back and forth. They do need to make a choice. So with the current pilot that is in place, we apply the default rule — in other words 50 cents on the dollar. The advantage it has is that as you’re earning money, you’re always better off in terms of your total income, because you’ve now earned some money. Suppose you’ve earned $200 that week, we will have reduced your EI benefits by only $100 because of the 50 cents on the dollar rule. There is a sustained incentive to accept work.
What we call the alternative rule is one where a claimant can earn up to a certain threshold without any reduction in their EI benefits. Beyond that threshold, there is a dollar-for-dollar reduction. At that point, if you’re continuing to work, you’re not better off in the sense of that additional $50, $100, $150 you earn — we’re reducing your EI benefits by that same amount.
Senator Marshall: So which option is most commonly used, given the choice?
Mr. Brown: Everyone has the ability to choose. The choice that you make applies to your entire Employment Insurance claim. So we encourage people to make a choice towards the end of the claim, because once you make that choice you are locked in. That allows the claimant to know which treatment will be more beneficial. We encourage them to do that at the end.
Notwithstanding the ability to choose, for the current pilot we’re seeing that 99.5 per cent of people are sticking with the default approach. It’s only about 0.5 per cent that are opting for the alternative treatment.
The rules are allowing that proportion. The people who have opted for the alternative treatment on the current pilot, the two-year period, if you access that over the two-year period you can continue to do so for a three-year period. That’s the grandfathering provision.
Senator Pratte: Since you’ve chosen to make this pilot permanent, what makes you think that you have found the perfect formula?
Mr. Brown: I wouldn’t dare to say that we’ve found the perfect formula. I would say that we have learned from the pilots over the last 12 years, and we believe that this is a solid approach to encouraging work.
What I can say is that over that period there have been a number of different pilots. Some of those were regional and did not apply across the whole country. The most recent pilots have been national, just as what we’re proposing here.
I also mentioned under the current pilot there is the 50 cents on the dollar approach, or alternatively up to a certain threshold and then dollar for dollar. That’s where a lot of our analysis has focused, to try to understand which of those two is better in terms of creating an incentive to work. I would say that the broad conclusion has been that the sustained incentive of 50 cents on the dollar has been a better approach and that’s the reason it is being taken forward.
Senator Pratte: Do you have any indications or data that will indicate that the program produces results? That is that it encourages people to find work and to stay in the labour market?
Cara Scales, Director, Policy Analysis and Initiatives, Employment and Insurance Policy, Employment and Social Development Canada: We do have evidence. We report on the performance of these rules in our annual Employment Insurance Monitoring and Assessment Report, which is presented to Parliament.
Senator Pratte: This data indicates that the pilot projects do produce results?
Ms. Scales: That is right.
Senator Pratte: We’re in a period where the unemployment rate is very low, so people could find work very easily. Do you have any indication that what you see in this data goes beyond the fact that the unemployment rate is extremely low?
Mr. Brown: Perhaps there is one thing that I can add in terms of the effectiveness. In terms of the working-while-on-claim provisions, we know that about 50 per cent of claimants are doing some work while on claim, while receiving EI benefits. We’ve looked at whether they were working for the same employer before or after, or in fact if they are now working for a new employer. One of the things we’ve been able to see is that claimants who do some work while on claim, I’m going to say 16 per cent, actually found a new job through essentially testing a job working while on claim.
We have workers in different sorts of situations. The idea is for them to try out a new job, which could become a permanent job. We know that a good proportion of workers do so. In the meantime, for anyone who is working while on claim, that’s additional income for them, and in fact it is reducing the draw on the EI Operating Account because of that reduction. If they earned $400, and because of the 50 cents on the dollar rule, we reduced the benefits by $200. That’s $200 that stays in the EI Operating Account. The act of encouraging people could have benefits for them but also benefits for the program itself.
Senator Pratte: Thank you.
Senator Andreychuk: I’m not that familiar with EI, but I’m certainly familiar with social assistance programs where you try to find ways to move people off social assistance and into a paying job. That clientele is somewhat different than this clientele — EI as opposed to social assistance.
You used the term that you’re picking this model because it is more conducive as an incentive to work. Can you tell me, is that what you’re aiming for? Because that term is a loaded term — incentive to work. What kind of incentive to work, what kind of principle is behind that? Are you saying that people find themselves in EI and can’t get out of that? Or are you saying that they’re utilizing EI benefits for a longer time before they start to look for a job? What is the public policy behind the phrase “incentive to work”?
Mr. Brown: I’ll just recall the broad objective of the Employment Insurance program, which is to ensure an efficient labour market. It is to provide support to Canadians in terms of income support when they lose their job, or in other situations such as maternity, parental and sickness benefits. Through the second part the EI program that’s delivered by provinces and territories, it provides employment supports to workers, to help them with skills training, being able to look for a new job and to get back into employment. That really is the objective behind the entire Employment Insurance program.
The working-while-on-claim measures are, I would say, consistent with that objective. It’s an element which is encouraging people to look for work even while they are eligible for EI benefits.
The second thing I was going to say about the work incentives is if we look at what’s happening with job loss benefits, what we refer to as EI regular benefits, we know that roughly 65 per cent of Canadians that receive EI regular benefits are returning to work or finding a job, perhaps, before their EI benefits run out. We know that because they don’t go right up to the end of their EI benefits. A good proportion of people receiving EI benefits are already returning to work.
I’ve used the term “work incentive,” but I would say it’s an encouragement in that without the working-while-on-claim provisions, for someone who decides they’d like to try a job, takes that job and is earning $500 a week, without these rules we would reduce their EI benefits by that same $500. The rationale under the program would be that they don’t require that because they just earned $500.
This has been a measure to ensure there is some encouragement to take jobs, that we wouldn’t entirely reduce their benefits dollar for dollar. What we have now landed upon is this 50 per cent rule.
There have been a variety of different rules in the past that have taken different approaches. In fact, the legislated rule, the one I spoke about from 1971 — it’s in the law, but it hasn’t been applied now for about 12 years — is one where people are able to earn about $50, after which they would see their benefits reduced dollar for dollar. This is moving on from then.
I wouldn’t say this is the end of the road forever in terms of the working-while-on-claim provisions, but it is recognition that it has been piloted for quite a long time, and we believe it is now time to move forward in a permanent way rather than continuing to test.
Senator Andreychuk: From the point of view of the employee who goes EI on, it’s how much money they have to subsist on. Are you saying that more people chose the model that you are proposing now than other models, or was it a public policy decision that it’s in the best interest nationally to do this? In other words, was it national-interest focused, or was it focused on the individual who finds themselves on EI?
Mr. Brown: I would say it is focused on the objective of attachment to the labour force, which is the objective of the EI program. That’s where we found that this 50-cents-on-the-dollar rule seems to be the approach to follow.
Senator Andreychuk: Before you came to this recommendation, what kind of consultations did you do with provinces that are involved in job creation, et cetera, and with the people receiving EI benefits themselves? Is there some process, by way of consultation outside of government, to come up with that?
Mr. Brown: There was what I would describe as more informal consultations with business and labour stakeholders. These were undertaken by the EI Commissioner for Workers and the EI Commissioner for Employers. The departments provided support and participated in the engagement sessions that the commissioners led. That information was then taken into account and considered prior to moving forward with the proposed legislative changes.
Senator Andreychuk: These commissioners are provincial?
Mr. Brown: They are GIC appointees responsible to represent the views of workers and employers who are the funders of the EI Operating Account.
Senator Andreychuk: You said they were stakeholders and businesses. Were any of the recipients of EI included in those consultations, or were there separate ones, or were there none?
Mr. Brown: There were separate informal consultations. The EI Commissioner for Workers held a couple of sessions, one in Ottawa and one in Montreal. The Commissioner for Employers also held a session. So those were two separate sessions. The department supported each of those, and it was taking away from them information that was relayed to the minister as part of the decision-making process.
Senator Andreychuk: Do we have access to those reports?
Mr. Brown: Those are consultations which I have been speaking to because I was present at those particular sessions, but they were led by the EI commissioners. I don’t want to speak on behalf of the two EI commissioners. I’m not sure there is a written report, per se, from those sessions.
Senator Andreychuk: Those were the only two sessions?
Mr. Brown: Those are the only sessions that I can think of that were specifically focused on the working-while-on-claim provisions.
Senator Andreychuk: Thank you.
The Chair: Thank you. I believe, honourable senators, that we have given this due process.
Mr. Brown and Ms. Scales, thank you very much.
We will proceed to tab 17, Division 17. We now have with us, from Western Economic Diversification Canada, Mr. David Dewar, Director, Strategic Policy and Government Affairs, Policy and Strategic Direction.
Mr. Dewar, I have been informed that you have a few comments, and then we will proceed to questions.
David Dewar, Director, Strategic Policy and Government Affairs, Policy and Strategic Direction, Western Economic Diversification Canada: The Department of Western Economic Diversification is a regional development agency within the Innovation, Science and Economic Development portfolio. Our mandate is to promote the development and diversification of the economy of Western Canada; that is, the four Western provinces.
Through the budget implementation act, we’re seeking a minor amendment to our enabling legislation, the Western Economic Diversification Act. Our act currently requires the minister to obtain Governor-in-Council approval — essentially cabinet plus the Governor General — before Western Economic Diversification can enter into agreements with provincial governments. This requirement can add months to the process, which can delay the implementation of Western Economic Diversification’s initiatives, as well as those of the provinces that we’re partnering with. We’re seeking to amend the Western Economic Diversification Act to eliminate this requirement. This change would allow Western Economic Diversification to respond more quickly to opportunities and to collaborate with provinces in areas of shared priorities.
Thank you. I’m happy to take questions.
Senator Marshall: Thank you very much.
Bill C-24 is currently in the Senate awaiting third reading, and it’s going to eliminate the position of Minister of Western Economic Diversification. What will happen to this? Will another amendment be required? Because once Bill C-24 goes through, it won’t be the Minister of Western Economic Diversification; I think it will be the Minister of Innovation. I think it’s Minister Bains.
Mr. Dewar: That’s right. Minister Bains is the Minister responsible for Western Economic Diversification.
Senator Marshall: It refers here to removing the requirement that the Minister of Western Economic Diversification obtain GIC approval. But if there’s going to be no Minister of Western Economic Diversification, then —
Mr. Dewar: This is Minister Bains in his capacity as the Minister responsible for Western Economic Diversification. When he wishes to enter into an agreement with a province on areas of shared priority, all this change in the budget implementation act does is it says that he doesn’t have to go through the Governor-in-Council process to get approval before he can sign off on that.
Senator Marshall: Are you going to change the name “Minister of Western Economic Diversification”? Because that’s not the right minister; it’s going to be the Minister of Innovation.
Mr. Dewar: That’s a good question, senator. I will have to get back to you on that.
Senator Andreychuk: Why would it be Minister responsible for Western Economic Diversification? Because we know it’s Minister Bains. I have some comments about the shift and whether it’s working for Saskatchewan, but that’s another story.
It may be the innovation minister, but tomorrow it will be someone else. But it’s the person who holds the responsibility, so why wouldn’t it say “minister responsible for”?
Mr. Dewar: If I were a lawyer, senator, I would probably have a good legal answer to that question, but I’m not.
Senator Andreychuk: You might want to get back to us.
The Chair: Mr. Dewar, you will get back to us on that?
Mr. Dewar: Yes, senator.
Senator Moncion: I’m curious about the budget that you work with.
Mr. Dewar: Yes. In the Main Estimates, it was approximately $150 million for fiscal year 2018-19.
Senator Moncion: Is there the same kind of program for Eastern Canada or for elsewhere?
Mr. Dewar: Yes. There are regional development agencies that cover all the country. There is a Regional Development Agency for the regions of Quebec as well.
Senator Moncion: And Ontario?
Mr. Dewar: There are two for Ontario: one for northern Ontario and one for southern Ontario.
[Translation]
The Chair: You also have the Atlantic Canada Opportunities Agency, or ACOA?
[English]
Mr. Dewar: The Atlantic Canada Opportunities Agency; that’s right.
[Translation]
The Chair: On that note, Mr. Dewar, we thank you for your presentation.
[English]
Senator Andreychuk: That was a supplementary. May I have a question?
The Chair: Please. Senator Andreychuk.
Senator Andreychuk: In making this change, do any of the duties and responsibilities of the minister change? And those who want to participate from a provincial basis, does this change any of the discretions, responsibilities and procedures that are in the present act? Are they changed by virtue of this amendment?
Mr. Dewar: Not at all.
Senator Andreychuk: So everything will stay the same; it’s a question of who is responsible?
Mr. Dewar: It’s a question of whether the minister has the authority to, on his own, sign these agreements with the provinces, as opposed to having to get the approval of the Governor-in-Council first. It really is quite a minor housekeeping amendment, in my opinion.
Senator Andreychuk: It will be if your answer is correct to this point, if you answer the designation.
Mr. Dewar: Yes, senator, which we will.
The Chair: Thank you, Mr. Dewar.
Now we will move to tab 18. We will call the following public servants: Ms. Selena Beattie and Ms. Anne Burgess. The division title is “Parliament of Canada Act,” clause 360.From the Privy Council Office, thank you, Ms. Beattie and Ms. Burgess, for being here. Would you please make your comments, and then we will proceed to questions.
[Translation]
Selena Beattie, Director of Operations, Cabinet Affairs, Legislation and House Planning, Privy Council Office: Thank you, Mr. Chair. As you surely know, there is currently no legislation or policy on parental leave for parliamentarians. Parliamentarians do not contribute to employment insurance and are not entitled to employment insurance maternity or parental benefits.
[English]
So, senators, you don’t contribute to Employment Insurance, and neither do your counterparts in the House of Commons. You do not have access to maternity or parental benefits through EI.
What’s more, as you may very well be aware, under the Parliament of Canada Act, if you are missing sittings of Parliament, then your salary can be cut, even if it is for reasons of maternity or parental leave.
The government, as part of its priorities, wanted to take a look at making Parliament in both chambers more family-friendly. One of the measures that has been identified is creating the ability for senators and members of Parliament to have access to maternity and parental leave.
Under the Parliament of Canada Act, there are three reasons why the salary cut of a senator or a parliamentarian can be exempted. The first is if the Senate or the house is not sitting on the day that they’re absent. So your salaries are only cut if you’re missing a sitting day. The two other reasons are for public or official business and for reason of illness, neither of which dovetails very nicely with maternity or parental reasons.
The proposal is to amend the Parliament of Canada Act to enable the Senate and the House of Commons to adopt maternity and parental leave provisions for their own members.
There exists currently in the Parliament of Canada Act a provision that allows the Senate and the House of Commons to respectively make regulations for their own members. Most of the time when we’re talking about regulations, we’re thinking of something that the Governor-in-Council is doing that’s applying to all Canadians. There is a provision in the Parliament of Canada Act that allows the Senate to make regulations making the attendance and deduction rules more stringent for its own senators, and for the House of Commons to do the same.
Looking at that model, the budget implementation act would create a similar regulatory power that would enable the Senate and the House of Commons to establish maternity and parental leave programs, or initiatives, for their own members. The parameters of that would be set by the Senate, for senators, and by the House of Commons for members of the House of Commons.
The regulation-making power can be done by way of an order of the Senate or of the House of Commons, and those orders of each chamber would be done under those chambers’ own rules. So each chamber would establish the rules that would apply to its own members, and each chamber would have the opportunity at that point to consider the details of the application. Is it a specific number of days? Is it a portion of the salary, et cetera? That would be established in those regulations.
The final point I would add is that the regulation-making power would enable the Senate or the House of Commons to make provisions both for what is equivalent to maternity — so to deal with the impact of a pregnancy for the pregnant person, usually a woman; it is still a woman, as far as I can tell these days — and also for parental-type leave. So that would apply to any parent, both in the case of a natural birth or an adoption.
We’d be pleased to answer any questions you may have.
Senator Marshall: Thank you very much. I just have one question.
You talked about the regulations. What will be the process for the regulations? Will they come back to the Senate and to the House of Commons for approval? Is there going to be a committee struck? Is there anything you can tell us about that?
Ms. Beattie: The Senate and the House of Commons have their own rules for how they can make orders. I can speak to the example we have under the existing regulation-making power.
The Senate has done this twice in the past, in 1998. In those cases, there was a report of the equivalent of the Senate Rules Committee now, which was then adopted by the Senate, which constituted the order. That is the way we have seen that type of regulation-making power adopted in the past. We have only those two examples from the Senate in 1998, but that was the way that this similar power, on which the new power is modelled, operated in the past. The development of those regulations, or whatever was going to go into the order, would be developed under the Senate’s own rules.
Senator Marshall: Thank you very much.
Senator Andreychuk: You said there were two examples in 1998 in the Senate.
Ms. Beattie: Yes.
Senator Andreychuk: Where the Senate utilized I think what is now our Internal Economy Committee to establish rules pursuant to —
Ms. Beattie: The similar provision, that’s correct.
Senator Andreychuk: Yes, within the Parliament of Canada Act. You mentioned there were three ways now in the Parliament of Canada Act that could lead to establishing regulations pursuant to Internal Economy. Which one of the three?
Ms. Beattie: Perhaps I can clarify. There is currently in the Parliament of Canada Act only one provision to establish regulations, which has been used twice in the past. The current section 59 establishes the power for the Senate or the House of Commons to make regulations regarding the payment, and that was used twice by the Senate in 1998. One was to deal with deductions if a member is suspended from the Senate, and the other was to increase the penalty for absence for senators to $250 per day from what is set out in the Parliament of Canada Act, which if I’m not mistaken is $120. In those two cases, it was a report of the Senate Rules Committee, which was then adopted by the Senate Chamber as an order.
Senator Andreychuk: But going back to your other point, you said that presently there is power within the Parliament of Canada Act for the House of Commons or the Senate to make regulations, but they’re restricted to three —
Ms. Beattie: That’s right. Section 57 is what establishes the deductions for non-attendance. The Parliament of Canada Act sets out three times when the deduction is exempted. Those three times are, and I can read to you from the statute, if a member did not attend a sitting by reason of public or official business. Your income is not cut if you are on public or official business. If there was no sitting of the house on that day, so you can’t be absent if you had no sitting to be absent from. The third is being unable to attend by reason of being ill.
Senator Andreychuk: So this would add a fourth?
Ms. Beattie: This would not add a fourth right into the act itself. It would allow the Senate to make rules to create an ability to have a maternity and a parental absence. The reason the structure had to be done a little differently than just adding a fourth reason is really so that the Senate and the House of Commons each have time to develop the parameters of the scheme. If there was a fourth reason simply added, you can imagine that it might take a little time for there to be a consensus and the ability to adopt an order in the Senate and the House of Commons. What would be the agreed-upon number of days? What would be the agreed-upon level of whether there will be 100 per cent income for those days or a smaller percentage? There would be a need for senators and the house to reach some consensus on what would apply to their own members.
If the current Parliament of Canada Act was amended to add that as a fourth reason right away, before senators and members of the house had time to consider those regulations, then it would have been an unlimited number of days and 100 per cent income until such time as the Senate and the House of Commons organized themselves to adopt the regulations.
There would also have been a rather complex sequencing challenge in terms of making things come into effect at the time. Establishing a separate power for the Senate and the House of Commons to create their regulations enables senators and members of the house to first decide what are going to be the parameters of this new availability for maternity and parental leave and then have it come into effect. It’s not putting the availability before the parameters of the leave can be established and agreed to by the Senate and the House of Commons.
Senator Andreychuk: But in effect this will be a new power for the chamber to govern itself in the issue of maternity or parental leave?
Ms. Beattie: That is correct, a new power for each chamber, for its own members.
Senator Andreychuk: So you’re saying this was not a power that could be dealt with today within the confines of the Senate and the House of Commons; it required an act.
Ms. Beattie: That’s correct. The Parliament of Canada Act does not currently foresee enabling the Senate or the House of Commons to make such a decision.
Senator Andreychuk: It’s very prescriptive in the Parliament of Canada Act.
Ms. Beattie: That’s correct.
The Chair: Thank you, Senator Andreychuk.
To Ms. Beattie and Ms. Burgess, thank you for appearing.
Senators, this completes our discussion with public servants on the pre-study that was given to us by order of reference from the Senate of Canada.
(The committee adjourned.)