ENSU Committee Meeting

STANDING COMMITTEE ON ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

COMITÉ PERMANENT DE L'ENVIRONNEMENT ET DU DÉVELOPPEMENT DURABLE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, September 29, 1998

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[English]

The Chairman (Mr. Charles Caccia (Davenport, Lib.)): We can start. You're aware of the fact also that at 10.30 a.m. there may be a vote that will abruptly and rudely interrupt our work here.

[Translation]

Good morning, ladies and gentlemen. We are beginning our study of Bill C-32, An Act respecting pollution prevention and protection of the environment and human health in order to contribute to sustainable development.

[English]

We have here quite a broad representation by way of witnesses who have kindly agreed to appear before us on the question of regulations.

I'd like to refresh the memory of committee members on something that we discussed away back in June. At that time we somehow came across the fact that there is a directive by Treasury Board on the writing of regulations, which came as a surprise at least to some of us, including myself. One should be aware of everything on the Hill. The clerk was kind enough to obtain the Treasury Board directive for us, which we all received. The title of that document is “Regulatory Policy 1995”, and it is issued by Treasury Board as I said. It sets the pace and the rules for the writing of regulations, because regulations have to be written according to criteria that are contained in that particular document.

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As we make our way through the bill, colleagues, it seems desirable that we would develop an understanding of how regulations are now written. It is an immensely important skill, because we know from experience that at times regulations have exceeded the powers given by legislation. This has been the task of the statutory instrument committee over the decades. The committee had some very distinguished members working on it, including former Senator Forsey. It is a task that must, of course, be of particular interest to parliamentarians and government to ensure that the will of Parliament is not exceeded.

Therefore, today's meeting is a part of this established tradition of ensuring that regulations fully reflect the extent and intent of the law and neither exceed it nor minimize it. This is why we are particularly interested in relation to Bill C-32.

We are very pleased to have with us today the officials from the Privy Council Office, the Treasury Board, the Department of Justice, and Environment Canada. I'm sure they will help the members of this committee to better understand the implications of this recent policy.

We are also extremely pleased to welcome Dr. Peter Victor, the dean of environmental studies at York University and former assistant deputy minister of the Ontario Ministry of the Environment.

Having said that, without further delay, I'll ask you to start. I'll give you the floor, Mr. Redling. You may want to indicate to us the order of interventions. Welcome to the committee again.

Mr. George Redling (Assistant Secretary, Special Committee of Council, Privy Council Office): Thank you, Mr. Chairman.

My name is George Redling. I'm with the Privy Council Office. My colleagues and I are here to respond to the committee's request, which we understand is to have an understanding of the regulatory policy you referred to, its implications, and how the regulations are written.

With me today is Ms. Jody Aylard and Mr. Richard Foserooke from the Treasury Board; Mr. Jacques Desjardins from the Department of Justice; Dr. Harvey Lerer from Environment Canada; and Dr. Peter Victor.

As part of the introductions, I would summarize the respective roles of officials as follows. Treasury Board Secretariat is responsible for developing the regulatory policy and assisting departments in meeting its requirements. Justice drafts the regulations and ensures their legal validity. PCO ensures the necessary information and documents are provided to ministers to consider proposed regulations. PCO also registers and publishes the regulations in the Canada Gazette. A key role is that of the regulatory departments themselves, who are ultimately responsible for meeting the requirements of the regulatory policy and providing the rationale for the proposed regulations.

I understand my colleagues will also make brief introductory remarks, starting with Ms. Jody Aylard from Treasury Board. Thank you.

Ms. Jody Aylard (Senior Analyst, Regulatory Affairs, Economic Sector, Treasury Board of Canada): I'm going to speak to you about the regulatory policy and how it governs the process of making regulations.

The regulatory policy, as you mentioned, is a policy of the Treasury Board. It's a policy of the federal government. The current policy was approved in 1995; however, its underlying principles and objectives are virtually identical to those found in the first policy statement of 1986.

The objective of the policy is to have the government use its regulatory powers for the greatest net benefit of Canadians. At the outset, the policy makes it clear that regulating in the area of health, safety, the quality of the environment, and economic and social well-being is part of the government's responsibility to serve the public interest. The policy affirms this responsibility and commits the government to using its regulatory power when it is the best tool to achieve public policy objectives.

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The policy sets out an analytical framework for determining whether and how to regulate. It commits the government to working in partnership with all stakeholders. From the policy fall process requirements to ensure notice, opportunity for public participation, input from stakeholders on the problem, and proposed solutions.

The process also requires the provision of information to decision makers so they can make good decisions in the public interest.

The key points in the policy are that the problem is understood, and the policy recognizes that risk of environmental or other harm qualifies as a type of problem; that consideration is given to the range of policy tools available to address the problem and use what is most appropriate and effective; that Canadians are consulted; and that a regulatory intervention results in more good than harm, costs are minimized as much as possible, and where the government chooses to intervene it uses resources where they will do the most good.

How then does the policy work in practice? This is best illustrated by describing the regulatory process. The process begins when the Governor in Council or an individual minister is given authority by statute to make regulations. As stated in the policy, the next step for the regulating department is to find evidence of a problem or a risk and to determine whether the government should intervene.

The department will then consider alternative approaches to addressing the problem or risk. Ideally, consultation begins at this stage with those potentially affected and continues throughout the process of developing regulations.

If the department determines regulation is the best alternative, it will work with the Department of Justice to draft the regulation. The regulating department must also draft the regulatory impact analysis statement. We refer to this as the RIAS. The RIAS is an important document. It provides evidence to ministers and to the public that the regulatory policy is being followed.

The policy is a framework for analysing an issue and exploring possible solutions. The RIAS explains to the public and to ministers how officials did that analysis, why they chose the particular regulatory regime being proposed, who was consulted, and what the stakeholders thought about the recommended regulation.

The RIAS can be used throughout all stages of consultation with stakeholders, but it is especially important during the last stage of public consultation, prepublication. When the draft regulation and the RIAS are completed, they are submitted to the Governor in Council. This allows cabinet ministers a first look at the proposal for a new regulation and at the analysis that supports it.

If the Governor in Council agrees, the documents are then published in the Canada Gazette, part I. This is the step referred to as prepublication. Prepublication of the proposed regulation and RIAS informs stakeholders of how a department has reflected previous consultations on its proposals and gives them yet another opportunity to concur with or offer additional suggestions for improvement.

The minimum prepublication period is 30 days. Certain acts, such as CEPA, may contain provisions that specify a longer prepublication time. If the initiative is subject to notification under one of Canada's trade agreements, it is prepublished for at least 75 days.

Following prepublication, the department will review comments and make any required adjustments to the regulation and, if necessary, the RIAS. The Department of Justice must review from a legal standpoint any revisions to the regulation.

The regulation and RIAS are then submitted to the Governor in Council for final approval. If approved, the regulation is registered by the Privy Council Office and published with the RIAS in the Canada Gazette, part II. Once published, the regulation is referred to the Standing Joint Committee on the Scrutiny of Regulations for review.

That's the regulatory process. It is driven largely by the regulatory policy. Requirements of the policy are communicated in the RIAS. The RIAS is testimony to ministers and to the public that the regulatory policy was followed.

As you will have noted, several departments have a role in the process. The Treasury Board is responsible for developing and updating the federal regulatory policy. The Treasury Board Secretariat assists departments by providing general advice on how to fulfil requirements of the policy and the process. TBS also supports capacity building across government. For example, TBS has developed the regulatory process management standards. These are quality assurance standards for government regulatory activities similar in concept to the ISO 9000 standards. All departments are implementing these standards to manage their regulatory processes. We also provide guides on the process and its requirements and sponsor best practices seminars where learning experiences can be shared.

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The Department of Justice is responsible for drafting regulations and providing legal advice. The Privy Council Office ensures the necessary documentation and information is provided to ministers in order for them to consider regulatory proposals, and the PCO also registers all regulations and publishes them in the Canada Gazette.

Finally, and most importantly, are regulatory departments. They are ultimately responsible for individual regulatory proposals. They are accountable for meeting the requirements of the policy. They must have the systems in place to meet the regulatory process management standards. They are accountable for carrying out adequate consultation and sufficient analysis, and for providing the supporting rational for the regulation they are proposing. Ultimately, they are accountable for proposing sound regulations that will achieve the policy objectives endorsed by Parliament when it approved the enabling legislation.

[Translation]

The Chairman: Mr. Desjardins, the floor is yours.

Mr. Jacques Desjardins (Deputy Chief Legislative Counsel (Regulations), Legislative Services Branch, Department of Justice): My name is Jacques Desjardins and I am the Deputy Chief Legislative Counsel responsible for managing the Regulations Section at the Department of Justice.

The Department of Justice created the Legislative Services Branch, which consists of two sections, one being responsible for the drafting of bills and the other for the preparation of draft regulations. I'm responsible for managing the Regulations Section. I was asked to come here to say a few words about the Regulations Section's mandate and to show how this mandate ties into the overall context of the regulatory process. I will be doing this over the next two or three minutes.

I handed out a document which gives you a more detailed overview of the role played by the Regulations Section in the regulatory process. Generally speaking, the Regulations Section's mandate comes from the Statutory Instruments Act. We must ensure that all draft regulations pass two tests: a legal test and a drafting test.

As far as the legal test is concerned, we must ensure that all draft regulations are authorized under the enabling legislation, that they do not trespass unduly on individual rights and freedoms, that they are consistent with the Canadian Charter of Rights and Freedoms and that they do not constitute an unusual use of power.

As for the drafting test, we must ensure that all draft regulations are written so as to be understood by the people that they are targeting. Should we uncover any legal or drafting problems with the draft regulations that we review, problems that cannot be resolved with the client departments, we must then advise the Clerk of the Privy Council.

We intervene in the process at various times. Sometimes, we intervene at the very beginning of the process, when the client departments are preparing their policies, so that we can guide them through the process. Sometimes, we don't step in until the end of the process, once the client departments have written draft regulations. However, whether or not we participate at the start or at the end, we must always ensure that every draft regulation passes the two tests that I referred to earlier.

In a nutshell, the Regulations Section of the Department of Justice is responsible for advising the government on the legal and drafting aspects of draft regulations. We may intervene at any time throughout the process, depending on the clients' requirements.

The Chairman: Thank you, Mr. Desjardins.

[English]

Mr. Lerer.

Mr. Harvey Lerer (Director General, CEPA Office, Department of the Environment): Thank you, Mr. Chairman and members.

The role of Environment Canada's regulatory action under CEPA is the protection of the environment and of human health. Science plays the key role in deciding whether there is a risk that requires action to be taken.

When a regulation is being considered, the federal regulatory policy guides our decisions, and we apply that policy in the consultation process with stakeholders and interested parties in: examining the alternatives; considering the socio-economic impacts and implications of the variety of actions that are under consideration; determining the most appropriate “persons”—and I use that in quotation marks because it's the legal sense of persons—to take that action; and the specific role that the federal government would play in any intervention that is being contemplated.

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The problem identification phase of determining a regulation is not based on socio-economic considerations, but on the science that substantiates the cause and effects that we are dealing with in the issue. Socio-economic analyses are conducted to help determine how to go about achieving the desired result in the most effective and most efficient way possible.

Environment Canada's interest is in developing and implementing mechanisms that will result in the protection of the environment and human health. We consider the full range, and in doing so, we consider the full range of available mechanisms and opportunities to achieve the result that we want to achieve.

The Chairman: It couldn't be more cryptic than that, but thank you very much.

Who is next? Dr. Victor, please.

Dr. Peter Victor (Dean, Environment Studies, York University): Gentlemen, I did produce some speaking notes, which I think have been passed around.

My remarks are directed not particularly at the bill before you, but on the experience I had as an assistant deputy minister in the Ontario Ministry of the Environment, where I was involved in many issues that required the development of new regulations. What I want to do is draw on that experience, and hopefully what I have to say will be of benefit to you in your current deliberations. I'll also make a few comments on the 1995 regulatory policy that we've just heard described.

The two examples I've chosen to talk about are, first of all, the Ontario Environmental Bill of Rights, and secondly, the Municipal and Industrial Strategy for Abatement.

The first substantive page there, headed “The Environmental Bill of Rights”, sets out before you a sequence of events starting in October 1991 when the government established a multi-stakeholder task force to draft the bill. It was unusual to have a group of people from outside government to actually draft the legislation. It took them about eight or nine months to come up with a draft bill, which was then sent out for public comment. After the comment period, the task force made some new recommendations to the government, and the bill was submitted for first reading in May 1993. It was proclaimed into law in 1994.

In the background was a lot of work by public servants, myself included, to try to ensure that all parts of the government were onside sufficiently for this bill to go through and, at the same time, to maintain the consensus of the task force.

The main point I want to make at this stage is that this was a very quick process. This went from the establishment of the task force in 1991 to legislation in 1994. That's less than two and a half years. Not only was it quick, but it was quick for a very complex piece of legislation.

The next page gives you the main provisions of the EBR. I'm not going to go into this in any detail, but just to list them off: there are the standard definitions and purpose; there is a requirement for all government departments and ministries, as we say in Ontario, to develop statements of environmental values; how proposals for policies, acts, regulations and instruments would be handled under the bill; the establishment of an environmental registry so that the public would receive notification ahead of time and could comment; how the public could apply for any existing policy or act to be reviewed and have investigations undertaken; a new right to sue; whistle-blower protection; and provisions for regulation-making.

So it was a very complex piece of legislation to get through in two and a half years. It was, in fact, the first major environmental legislation in Ontario in 15 years.

This is my key point in particular with this case. This was a signature initiative of the government. As a bureaucrat working within the system, I was working with a very strong and clear signal that the government wanted this piece of legislation passed, and it wanted it passed in a way that maintained the consensus of all those who had been involved in developing the draft.

That very strong signal we received made it that much more possible for us to conduct effective negotiations with the various stakeholders—and I've listed some of them there at the bottom of the page entitled “Lessons from the EBR”. We negotiated with the first nations, with farmers, with industries, and in particular with other ministries, many of whom were not very enthusiastic about this bill and saw it as treading on their toes, creating problems for them. The Ministry of the Environment was a relatively junior ministry, and it was going to have some sort of oversight responsibility for other ministries. So there was a fair amount of resistance from within the system.

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The reason, to my mind, this was able to work as well as it did was again because of the very strong and unambiguous message that came through in various ways that this is what the government wanted. I think this comes back to the question of the relationship between legislation and regulations. I think one can as a bureaucrat do a good job in developing regulations if the legislation is clear on what the ultimate intent of those regulations is.

The second example is a rather different one. This is the Municipal and Industrial Strategy for Abatement, otherwise known as MISA. This was an initiative launched in 1986. Again there was a good effort to involve stakeholders. There were industry joint technical committees set up for nine sectors. There was a multi-stakeholder advisory committee set up. But this process took nine years and this was simply done through regulation.

There were two phases of regulations. In 1990, four years after the initiative was launched, the regulations for monitoring of industrial waste were promulgated, and then four or five years later the regulations that set limits for these industries were promulgated. Those regulations, by the way, still gave industry about another three years to come into compliance.

Now, let me just quickly review the main provisions of MISA. It was designed to control hazardous and conventional liquid discharges from municipal and industrial sources. As I said it had separate monitoring and effluent regulations. The effluent regulations or effluent limits were to be based on best available technology economically achievable, and there was a requirement for non-toxicity.

What are the lessons that I would draw from the MISA experience? First of all, MISA in its own way represented a major shift in policy. It is difficult to effect such a major shift in policy through regulations alone and possibly it's not the way to go when you're trying to make a significant policy shift. This then had an impact on our role as public servants, or at least my role as a public servant. It made negotiations with the various industries in particular that much more difficult because we weren't working here with such a clear signal from the government that this is what in fact they really wanted.

This made it that much easier for the industries to which we were talking to resist the regulatory thrust of this strategy. The way that would happen would sometimes be through very laudable efforts to present us with new information and better information than we had. But quite often it would involve threats. It would involve, well, you know, if we can't get what we want from this negotiation we'll simply go to another level and that could easily be to a political level. I don't think any senior bureaucrat likes to be...first, you don't like to be threatened, but then you don't like that threat to be carried out either.

Sometimes the threat would be quite along the lines of, well, if you set a limit of that level there will be no more investment from my company in this province. You know, there's a lot of bluffing and you're not always sure what is true and what isn't.

The point I'm trying to make here is that to conduct negotiations without a clear signal of the government's intent is not an easy task. I think when it comes back then to considering your piece of legislation that's something you should take into account. The end result of MISA was that the regulations for the nine industrial sectors were passed but no regulation governing the municipal sector was ever passed and, to my knowledge, has not been passed to this day.

Let me draw from this some conclusions beyond those I've touched on in my first remarks. There are really different views one can have about how to use regulations. The first view, which I think is a sound one in some regard, is to use regulations to be responsive to new information, to changing circumstances, and to avoid opening up legislation, which can itself involve problems. In the environmental area we're always being faced with new information and changing circumstances. That's not just new environmental information; the circumstances of the industries that one is interested in regulating also change, and that has to be taken into account.

I've already mentioned that policy change through regulation can be problematic. I think that was certainly a lesson of the MISA process. But then my third conclusion would be that if you leave too much to regulation, there's a danger the will of Parliament can be undermined, and the chair has already mentioned this can be in either of two directions. There can be regulations that perhaps go beyond what was intended by the original legislation, but there are usually—and I think we've heard from the Department of Justice—mechanisms in place to prevent that. The regulations are, at least in Ontario and I see here in Ottawa, checked against the legislation under which they're being drawn up.

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My concern is rather more at the opposite end, that there can be all sorts of obstacles put in the way of making new regulations, and I touched on some of them in the MISA case. So if the will of Parliament is to have a fairly strong level of environmental protection, if that's not conveyed very, very clearly in some way through the legislation, it may not happen through regulation.

Let me complete my remarks by making some comments on the regulatory process management standards, based exclusively on my reading of the document. Now, I am aware that in practice such documents may not be followed to the letter, and therefore what may appear to be a problem may in fact not turn out to be such a significant one. However, upon reading the document, I have to make the following comment.

It seems to me this policy requires that a proposed regulation pass a benefit-cost test. There are two places where this becomes clear. On page 2 of the regulatory policy, if I can direct your attention to that, point 3 says that “regulatory authorities must ensure”—that's very strong language—“that the benefits outweigh the costs to Canadians, their governments, and businesses.”

Subsequently, on page 10 this is developed in more detail. You'll see a heading on the fourth bullet point on page 10 called benefit-cost analysis. The words that caught my attention are: “It must be demonstrated that the benefits of regulatory requirements are greater than their costs.” Then it goes on to say, as if that weren't sufficient: “When regulations address health, social, economic, or environmental risks, it must also be demonstrated that regulatory effort is being expended where it will do the most good.”

Now, I've had a lot of experience with benefit-cost analysis. Before I was in the provincial government I worked as a consultant and I did a lot of these kinds of studies. My professional training is in economics, so I have some basis for making the following comments.

I am nervous about such a strong requirement for environmental regulations for the following reasons. I have a slide here that summarizes them.

Benefit-cost analysis methodology is not transparent. It's not understood, I would argue, by people who haven't spent a lot of time studying this methodology. It's not just a simple matter of saying, well, let's look at the benefits and costs, however we may do that. It sets forth a pretty demanding requirement of how you go about doing that.

It tends to favour the status quo. And the reason it does is that normally what you do in a benefit-cost analysis is estimate what those who will benefit from the regulation would be willing to pay for the benefits they will achieve, and you compare that with the costs that those who will suffer will lose. So you always have to show that the gain is greater to those who are going to benefit from it. It's like pretending these benefits from the regulation were going to be sold through the market, then asking, well, if they were sold, would there be enough people out there willing to buy those benefits?

One can conceive of this test in exactly the opposite way, though, although it's seldom done this way. You could ask the question, for those that you're contemplating regulating—in other words, those who are contaminating the environment—what are they prepared to pay to have the privilege of continuing to be able to do that, and what would those who are suffering be willing to accept in payment? But that's not the way benefit-cost analysis is normally done for regulations. So the result is it tends to favour the polluters, not those who suffer from the consequences.

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Because benefit-cost analysis uses this test of willingness to pay in almost all cases, it favours those who have higher incomes, because those willing to pay are assumed to have the resources with which to pay. This is within the framework of this methodology. To take a hypothetical example, if you were considering devoting resources to protecting a lake that was used by anglers of low income and the alternative, because you've got limited resources, is to protect a lake that's used by anglers with high income, if you use this methodology you'll favour protection of the lake that's used by people with high income. That's just the way it works.

Benefit-cost analysis is concerned with efficiency, trying to find where benefits exceed cost, but many environmental protection issues raise questions of equity, questions of rights, questions of justice. Benefit-cost analysis is very ill equipped to deal with these considerations.

Finally, I would just add the point that in a country where we have deliberately taken health care out of the market system in the sense that we don't apply a market test when we decide who can have access to health care, one wonders how appropriate it is to reintroduce that market test for environmental regulations when often the primary benefits are health benefits.

So for all these reasons, I find it very surprising that we have an official policy of the government that says that an environmental regulation must pass a benefit-cost test.

I just want to leave you with one final comment. While I realize I've been critical of benefit-cost methodology, I do believe it can play a role in giving guidance, in giving some useful information in some situations, and that is the view that I think you'll find many economists would hold. In fact, I can refer you to an article that was published in Science in 1997. I brought it with me. It was led by Kenneth Arrow, Nobel Laureate in economics, and signed by many of the best practitioners in this area, and they make very much that point. For example, they say:

Although agencies should be required to conduct benefit-cost analyses for major decisions and to explain why they have selected actions for which reliable evidence indicates that expected benefits are significantly less than expected costs, those agencies should not be bound by strict benefit-cost tests.

There are many other statements with the same thrust.

So those are my remarks and I hope they are of some use to you.

The Chairman: Dr. Victor, you could add to your five excellent bullets a sixth one that would highlight the fact that it is much easier in the benefit-cost analysis to quantify in a monetary manner the costs than the benefits, and for anyone who has doubts about that in this room, I would invite him or her to come up with a benefit-cost analysis of having a baby. Try that out.

We have enough time for a first round of questions before 10.30 a.m. and a second one after the vote, if each member tries to keep his or her questions within five or six minutes so as to allow for one full round.

Mr. Gilmour, followed by Madame Kraft Sloan.

Mr. Bill Gilmour (Nanaimo—Alberni, Ref.): I don't know which area this would go into. The old CEPA bill in the last Parliament didn't make it through and there were a number of changes made. Is it the department that decides? Where does the thrust come from to change the old legislation and to move it through? Can you describe the process whereby we got to a bill today that is more palatable than the one that was in the last Parliament?

Mr. Harvey Lerer: It occurs, Mr. Gilmour, through paying attention through the consultative mechanism and the debates that go on in the parliamentary process. We are constantly talking to stakeholders and paying attention to the parliamentary debate. In the time between the introduction of Bill C-74 and of Bill C-32, we spoke with a number of people, and we reviewed amendments the government was considering putting before the committee during clause-by-clause consideration. The opportunity came to make changes, and we submitted them through Parliament.

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Mr. Bill Gilmour: Dr. Victor, you mentioned a signal coming from government or from Parliament. What kind of signal do you see being sent regarding CEPA? Is it strong? Where do you see it?

Dr. Peter Victor: I cannot claim to be very well informed about CEPA, so I had better hesitate about giving an answer to that. I think what my remarks are trying to convey is that in terms of trying to find the right balance between what you put in the legislation and what you rely on regulations for, it seems to me there needs to be a strong statement in the legislation as to what the regulations are to achieve. For example, if you believe that, as we had in MISA, industries shouldn't put anything toxic into the environment, that statement could appear in the legislation. The actual regulation would work out the details. As I say, I don't know if that's in the draft of CEPA, but that's the sort of statement I would be looking for.

Mr. Bill Gilmour: For the rest of you, is the way CEPA is written now strong enough to get concise regulations, or is it vague?

Mr. Harvey Lerer: I believe the bill before you now is strong enough to allow for a very precise and concise drafting of regulations.

Mr. Bill Gilmour: Is that the view of the other departments?

Ms. Jody Aylard: I can't comment on the content of the bill.

Mr. Bill Gilmour: That's fine for now, Mr. Chairman.

The Chairman: Thank you, Mr. Gilmour.

Madame Kraft Sloan, s'il vous plâit.

Mrs. Karen Kraft Sloan (York North, Lib.): I have a series of questions. Maybe we could stick with the clarity issue, which has just been brought up. The preamble for CEPA includes pollution prevention as one of the principles of the bill. However, a number of witnesses who have come before the committee have suggested that pollution prevention is not really reflected in the legislation itself, it's not really operationalized in the legislation, and that perhaps what it really points to is pollution control. One example is the definition of virtual elimination.

So it seems to me, from what some of the witnesses have been saying, that there is a lack of clarity and that there are contradictions between the preamble and the rest of the bill. Anyone is welcome to comment on that.

Mr. Harvey Lerer: Perhaps I might start. The pollution prevention principle is mentioned in the preamble, as you state, as well as the precautionary principle. You will find throughout the bill statements such as those found in clause 65, I think it is, which talks not only about a danger but also an imminent danger or an imminent threat, which allows for taking action based on the suspicion. So I think the pollution prevention and precautionary principles are operationalized in the bill through statements such as those. That's one example I would give you.

Mrs. Karen Kraft Sloan: It may be that those statements exist in the bill. However, there are other statements that move the bill away from real pollution prevention, according to witnesses we've had before the committee. So it creates some contradictory understanding of where the bill is actually going. I'm just repeating what we've heard from other witnesses.

Mr. Harvey Lerer: I'm sorry, but that's not a question.

Mrs. Karen Kraft Sloan: It's not a problem.

I want to go back to page 2 of the regulatory policy guide. It talks about benefits outweighing costs to Canadians or governments or businesses. There's a another economic section, which talks about costs to business and respecting intergovernmental agreements.

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If you go to page 10, Dean Victor has pointed out that when you're taking a look at environmental and health risks, you have to make sure the regulatory effort is being expended where it will do the most good. There are references to limited resources of government, but the concern I have as a legislator and as a parliamentarian is that I always feel that the bottom line of government is the health and well-being of Canadians. When I see policy requirements...when regulatory authorities must ensure that, I don't see anything that says the health of Canadians must be maintained or improved, that the environmental health of their natural environment must be preserved.

So I see a lot of things that talk about cost, and cost to industry, but not cost on the environmental and health deficit side. So I have concern about how policy has been developed and how it has been articulated in this guide. I wonder why a statement about maintaining certain health standards or environmental health standards has been omitted from this. Isn't that what we do in government? Aren't we supposed to do that?

Ms. Jody Aylard: Maybe I can start off with an answer. Clearly, the first page of the policy outlines that the government's regulatory activity in the area of health, safety and the quality of the environment is part of the responsibility of the federal government and its responsibility to serve the public interest, so I think that is part of the policy statement of the regulatory policy.

With regard to assessing benefits and costs, the policy certainly contemplates a qualitative approach to benefit-cost analysis, as well as hard numbers. It's a matter of assessing both qualitative and quantitative impacts of any kind of regulatory initiative when making a decision, and that is certainly how the policy contemplates cost-benefit analysis being undertaken. Each department, though, has to have its own methodology for how it does cost-benefit analysis, based on the policy objectives it's trying to achieve under a piece of legislation. I can't speak, then, for how Environment Canada carries out its cost-benefit analysis, but it's not just a question of numbers and the bottom line.

Mrs. Karen Kraft Sloan: Isn't this policy statement on page 1 kind of like the preamble of legislation, and then when you go to the requirement it says that it must ensure that? I would have more confidence in this process if it said it must ensure that the health and well-being of Canadians is the foremost objective. It's not reflected in there.

Maybe that's the way it works, but looking at this document doesn't give me a lot of assurances. It seems that it goes out of its way to ensure that whatever is going to be done in the name of health for Canadians and social policy for Canadians and good environmental policy for Canadians, we have to intervene as minimally as possible and we have to ensure that there is the least cost possible attached to it. Sometimes when you're dealing with short-term and long-term costs, those things are not properly measured and not properly weighed.

In undertaking benefit-cost analysis, you said each department has its own set of methodology for undertaking that. I wonder how you take into account health costs and environmental costs and things like that. Is there anyone who can speak to some of those things? These things, as our chair has pointed out, are very difficult to quantify. You talked about qualitative measures of this, and I wonder what is the approach that's taken here.

Mr. Harvey Lerer: The approach that we take—and my first statement may appear to be trivial; I apologize for it—is the one that works.

Sometimes those are quantitative analyses and sometimes they are not, and we have set an objective in our mind in terms of the protection of the environment and human health and we do those analyses. At times they are economic analyses, and very often they're a mixture. That economic analysis could be, for example, what will be the cost of re-manufacturing a particular product? But in terms of setting the objective, do we attempt to put a quantification on the value of the environment to Canadians? No. That is an inherent value that is fixed. The same is true for the health of Canadians. We do not do actuarial analyses of health care benefits, much like insurance companies.

• 0955

So in terms of the policy, do we do benefit-cost analyses? Most certainly. Are they always quantitative? Do we attempt to do them quantitatively? The answer to that is no.

Mrs. Karen Kraft Sloan: How does the precautionary principle fit with these policy requirements that are identified on page 2?

Ms. Jody Aylard: I think that the policy and the precautionary principle, as I understand the precautionary principle, are completely consistent. The policy recognizes that determination of risk is a problem in terms of how the policy defines a “problem” and would certainly support government intervention. If the department were going to make a regulatory proposal, that would be justification for intervention.

The Chairman: Could you indicate where the precautionary principle is mentioned in this document?

Ms. Jody Aylard: The precautionary principle per se is not mentioned, but on page 2 of the policy, the first policy requirement states that regulatory authorities must ensure they can demonstrate that a problem or a risk exists.

The Chairman: So what? That doesn't have anything to do with a precautionary principle, unless we have a different definition of it.

Madame Kraft Sloan, I'm sorry to intervene in your time.

Mrs. Karen Kraft Sloan: No, no, that's fine.

Ms. Jody Aylard: As I understand the precautionary principle, this does not preclude using the precautionary principle as an approach for regulating.

The Chairman: That doesn't mean that it refers to the precautionary principle, if it does not preclude it.

Ms. Jody Aylard: No, I didn't mean to imply that.

The Chairman: There's quite a big difference between the two statements.

Ms. Jody Aylard: Yes. I wasn't implying it was contained in our policy.

Mrs. Karen Kraft Sloan: I just wanted to add that when you take a look at the first statement under the policy requirement, while it may not preclude the precautionary principle being initiated or implemented or used, it seems that the wording here may pose a barrier as well to the precautionary principle being used. The wording isn't that clear on that. And when you say you can demonstrate that a problem or risk exists, there's a tremendous level of debate on that. It might be helpful to have the words “precautionary principle”, as the chair has pointed out, somewhere in this document.

The Chairman: Mr. Laliberte, please.

Mr. Rick Laliberte (Churchill River, NDP): There's quite a lot of interest today and this presentation is a learning process. It's Regulations 101, I guess—you've got to learn this process before you carry on.

You mention the legal and draftsmanship tests. Where in those tests does definition and interpretation come in—in which part?

Mr. Jacques Desjardins: In fact, the definition and the interpretation come in when you analyse the legal authority. First of all, each section of each regulation has to be authorized by the enabling authorities. But when you analyse the enabling authorities, you have to look at the whole context of the act. You have to have a good grasp of the scheme of the act. And in order to have that, you have to use the definitions and the interpretation section.

Mr. Rick Laliberte: Thank you. So going back to Environment Canada's presentation, the second bullet goes right into “science plays a key role”.

Mr. Harvey Lerer: Yes.

Mr. Rick Laliberte: In CEPA there are terminologies that are kind of foreign to Environment Canada's process up to now as I understand it. Precautionary principle is an example—it's an emerging principle—and also virtual elimination, and even to the basic definition of toxicity. Where do these play with science? When you look at precautionary principle, it waters down scientific data to take the careful journey.

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Mr. Harvey Lerer: If I understand your question, sir, I do not see how the precautionary principle waters down the need for accurate and precise science.

What the precautionary principle means to me is that we will not wait for complete science, full scientific certainty, before we consider taking the appropriate action. That science that any action depends on is accurate; it is complete within itself. But we shall not wait for all of the science, for the complete understanding, if there is a valid suspicion that there might be a danger or imminent harm. So I see no conflict between the requirement for good, precise science and the precautionary principle.

Did I understand your question, sir?

Mr. Rick Laliberte: Yes. What it leads to is that the precautionary principle highlights a cost-effective measure, and then it goes to Dr. Victor's statement of cost-benefit analysis.

Precautionary principle, as you say, is for the person who has the money. That's who you're analysing, how much benefit or risk that person has. Industry plays a key role here, so the terminology of “polluter pays” is highlighted in the preamble. So I'm touching on preamble spots here.

My question is, when you close the book, how has that followed through? Are all these principles well worth...in CEPA, or do we need...?

As to virtual elimination, if you put “pollution prevention” in the preamble, it says “pollution prevention” and then “control and management”. Control and management seems to define virtual elimination. It doesn't quite ban it, but should the terminology of banning or totally eliminating come first before virtual elimination? Should the target be total elimination first, and if your arrow drops a little too low, then it's virtual? But your target should be cleaning the toxicity of all substances.

Mr. Harvey Lerer: Those are all options that are available.

One would be an outright regulatory ban, and action like that has been taken. The next step in the process that one would consider would be ensuring that there are no releases at all to the environment, which I think is the essence of virtual elimination. The third possibility is a management system that is put in place in order to ensure that exposure is lessened to a point where there is no danger or imminent harm.

So all those three steps are available to us in the bill, and there are examples in the current act, as well as in other acts in Parliament, where those three steps have been taken.

Mr. Rick Laliberte: As to the other part of creating a bill—and reading between the lines of Dr. Victor's presentation—I think you've stated that the willingness of the government, in my interpretation, would be paramount. It's no use trying to draft or create a bill if the willingness of government....

But how do you gauge it? Is it the department's interpretation, or are you expecting this committee to be the one to test the limits of the willingness of government? Are we the ones with that role, to take it to the edge and find out how willing this government is?

Dr. Peter Victor: What I'm envisaging is a situation where the legislation is passed and the public servants then have to stop working on the regulations, which will be the real bite for some of the components of CEPA. How effectively they will be able to work on those regulations, especially in a climate where a lot of consultation is called for, depends so much on what is actually in the legislation.

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In some pieces of environmental legislation, there are clauses that set forth prohibitions so that companies, for example, or municipalities—any polluters—can still be held liable against that piece of legislation even if they're not violating a regulation. That's one possibility. But if you don't have the prohibition in there, the only thing that will matter will be what's in the regulation.

If you have a clear statement in the legislation, and you take that as the will of Parliament, which is what it is, you're in a much stronger position in negotiating regulations than if it's not there. That's the best response I can give you.

If I may, I wanted to come back to your question. It also relates to a point the chair raised when he commented that it's usually much easier to estimate the costs than it is the benefits. You also have to add to that consideration that much of the information you get when you're estimating the costs comes from the companies. It's hard to get it if you don't get it from them.

So if you're doing a benefit-cost analysis of a regulation and you're getting a good deal of information on costs from the companies, everybody can appreciate the kind of information you're likely to get. There are incentives at work here. They would tend to tell you it's going to be more expensive to comply, rather than less expensive. So you're debating with companies a regulation that you're going to be bringing forth into the political process. They're giving the information on cost. They're likely to be telling you it's more costly to comply than you may think it is.

On the other hand, you've got very weak information on the benefits, and if this regulation ultimately has to pass a benefit-cost test, it's not going to be easy. So you need to have something right in the legislation itself that will somehow constrain that, so you don't end up with a very weak set of regulations, or possibly no regulations.

The Chairman: Mr. Laliberte, last question.

Mr. Rick Laliberte: The more you touch on this benefit-cost...there's a hyphen, a specific hyphen there. It's not “benefit-cost”, it's “benefit and cost” analysis.

Dr. Peter Victor: Exactly.

Mr. Rick Laliberte: So in the precautionary principle, it says “postponing cost-effective measures”. Maybe that should come into there as well—“cost-benefit and cost-effective measures”. Then you balance both sides.

Mr. Peter Victor: True.

The Chairman: Thank you, Mr. Laliberte.

[Translation]

I will now turn the floor over to Mr. Charbonneau, to be followed by the Chair, unless other members are prepared to ask questions.

Mr. Yvon Charbonneau (Anjou—Rivière-des-Prairies, Lib.): I would like to ask a question related to the regulatory policy. In particular, I would like to talk about this part of the policy that lists six requirements. It is the sixth requirement that attracted my attention in particular. It states that regulatory organizations must demonstrate:

6. systems are in place to manage regulatory resources effectively. In particular, regulatory authorities must ensure that:

And I would like to focus on the third point:

- resources have been approved and are adequate to discharge enforcement responsibilities effectively and to ensure compliance where the regulations bind the government.

Does the organization responsible for regulatory policy have to ensure, either with the Department of Finance or the Treasury Board, that appropriate resources have been provided for regulatory enforcement when these regulations bind the government? For instance, in the case of certain regulations, the departments have to prove that they comply with regulations pertaining to the environment or to the management of hazardous waste. What is the exact scope of this requirement?

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Does the organization responsible for regulatory policy have to, for example, take into account the report that our committee produced a few months ago, and which demonstrates that the government does not have nearly enough resources to enforce environmental regulations appropriately? The Auditor General was also of the opinion that we didn't have the resources. Do you have to take that into account when you prepare new regulations? What is the scope of that? It seems to me that the scope is very, very broad, according to my initial reading of the document.

[English]

Mr. Harvey Lerer: Do we have to take into account whether or not we will be able to discharge our obligations when the regulation is passed? The answer is unequivocally yes. Your report pointed out what the committee considered to be deficiencies, and the government will be responding to that report in October, I believe.

To your specific question as to whether a department has to ensure that it is able to deal with the regulations it puts forward, the answer is yes.

[Translation]

Mr. Yvon Charbonneau: But the Auditor General made comments on this matter. The Commissioner of the Environment and Sustainable Development stated that there were many deficiencies as far as resources and regulatory fees were concerned. How can we talk about regulatory organizations ensuring that there are adequate resources when we see that there are scarce resources or resources that are constantly being cut back?

[English]

Mr. Harvey Lerer: I must apologize. I am not familiar with the details of the Auditor General's report on the compliance, nor am I involved in the preparation of the response to the committee's report. My understanding is that the report brought to the attention of the government that there might be some difficulties. I'm not familiar with the specifics of it, and I apologize for not being able to answer those questions.

[Translation]

Mr. Yvon Charbonneau: If I understand you correctly, you are responding to the observations made by our committee. You are in the process of preparing a reply to our report, but you are unaware of the comments made by the Commissioner of the Environment or the Auditor General.

[English]

Mr. Harvey Lerer: No, I did not mean to leave that impression. What I am saying to you is that I am not familiar with the comments of the Auditor General on enforcement or with the response the committee will receive to its enforcement report. I'm simply not qualified to answer.

The Chairman: We'll now turn to Mr. Casson, who will be followed by the chair.

Mr. Rick Casson (Lethbridge, Ref.): Thank you, Mr. Chairman.

I would like to address my question to Jody Aylard. It has to do with the regulatory impact analysis statement. You indicate that officials have to indicate how they did their analyses, who they talked to, who was consulted and the stakeholders who were involved. We've heard from a number of witnesses that the amount of their involvement in the consultative process has been unsatisfactory.

If it's indicated in this regulatory impact analysis statement that there has been a shortcoming in some aspect of developing the policy, what is the process that follows from that? If there is a clear indication that some of the procedures haven't been carried out to their fullest, what happens? Are the regulations sent back? Is it the department's advice to do them over? What happens?

Ms. Jody Aylard: If there is a clear lack of information being provided, we work with the departments to try to ensure that is addressed. Ultimately, ministers are not going to approve a regulation if they don't have all the information on which to base their decision.

Mr. Rick Casson: So if you did see a shortcoming, you would go back to the minister.

Ms. Jody Aylard: We'd go back to the department.

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Mr. George Redling: If I could just add to that, there is a prepublication process in the regulations as well, and I understand that you may be referring to two elements. One is the initial consultations the department may have to get views from the stakeholder groups. There is also the prepublication stage, where all groups have an opportunity to respond to the regulations. Officials would look at the contents of both, and what kind of substantive responses have been received from stakeholders, in assessing whether or not adequate consultation has been made and whether or not a balanced view has been taken.

Mr. Rick Casson: So some of the onus is on the stakeholders to make their position known without a formal request from the department?

Ms. Jody Aylard: Actually, prepublication is in fact a formal part of the consultation process, and all documentation is made public at that point, although in most departments consultation starts long before that. But at that point the draft regulation itself is published along with the regulatory impact analysis statement, and all that information that ministers saw is made public, so stakeholders are aware of what was presented.

Mr. Rick Casson: So if we have witnesses who come to us and say they haven't had an opportunity to consult or an opportunity for input, then some of the onus has to be placed back on the witness to do so of their own accord.

Ms. Jody Aylard: Yes. They have a role in the process, absolutely, and a responsibility, yes.

Mr. George Redling: The process is intended to be transparent, and the prepublication is an important tool in that transparency, to allow broad stakeholders to be able to assess and respond to proposed regulations. So there would be an onus on stakeholders to take note and to respond as they see fit.

Mr. Rick Casson: Good. Thank you, Mr. Chair.

The Chairman: Before launching a second round, there are a few comments from this end of the table. It seems to me from rereading this document—and I'm addressing these comments mostly to Treasury Board officials, of course—that this document lacks balance.

I think it would be more convincing if on page 5, in addition to the obligations under number 1, it would also include other obligations. How about the UN Convention on Biological Diversity? How about the Basel Convention? How about the Montreal Protocol on Substances That Deplete the Ozone Layer, and so on and so forth? The obligations that are identified under number 1 are basically one-sided. They relate to trade and very little else. So the credibility of the document, I would submit to you, is seriously questioned.

Regarding number 2, it seems to me—and it is in a way a corollary to the first point—that there are no references in this document to environmental values. There are no references to environmental values. You can read as thoroughly as you like, on page 2, point number 1, but certainly to see in there even an oblique reference to the precautionary principle would take quite a leap of faith. There is no reference to the precautionary principle in this document. There is no reference to sustainable development. There is no reference to pollution prevention.

Again, there is this lack of another dimension, namely the environmental dimension and the sustainable development dimension, which is actually a commitment by the entire government and expressed by way of a public declaration signed by the Prime Minister and members of cabinet in 1995, at the time when this document was produced. It is as if Treasury Board would be operating in a compartment totally insulated from what the government of the day had expressed—a full commitment to sustainable development.

Third, one is inevitably driven to the conclusion that this is a document mainly driven by the business sector and not by the public interest sector. Some of the reasons for the difficulty in determining a cost-benefit analysis that takes into account the interest of the public have already been expressed and examined here by my colleagues.

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When you go into benefit-cost analysis, as you do here on page 10, the fourth bullet, what will the horizon for that benefit-cost analysis be? The long term or the short term? I'm asking this question because when you take into account the short term, you arrive at completely different conclusions in your analysis from those you arrive at when you take into account the long term.

Will the precautionary principle be included in the cost-benefit analysis? And how, as Dr. Victor indicated to us, can you have a satisfactory and accurate benefit-cost analysis when—and this is his fifth bullet—health care is not market driven? That's a very important point, because you don't have enough data to include the costs to health. They are extremely difficult to find for specific epidemiological conditions, such as asthmatic conditions—admission to hospital because of smog and high levels of pollution.

Now let me take you to the fifth bullet at the top of page 11. Let me ask who is to determine what is absolutely necessary? Who is to determine what is the least possible cost to the regulatee? Who is that authority? Where is that wisdom going to come from? How objective can you be in exercising this particular mandate? How can you determine what the absolute least cost for putting up a traffic light is? What is the cost of a red light? Is it the least cost of the regulatee? No. It is a cost, definitely. But it prevents blood from being spread all over the place, and you put it up because you're most likely driven by the precautionary principle. You don't carry out a benefit-cost analysis when you put up a traffic light, or one of those, however you call it, where the trains go by.

Ms. Paddy Torsney (Burlington, (Lib.)): Speed bumps.

A voice: Wigwags.

The Chairman: Wigwags? You put them up because you assume that once in a million cases, a human life will be taken if you don't do that. And what is the cost of that human life? Can anyone quantify that?

So you see, there are some other problems with this paper, not only with its implementation. As you can see, I don't have many questions; I'm just making some observations. It is imbalanced in its opening statement, in its requirements. It has no environmental values included in it when it comes to policy development and analysis. And it relies heavily on benefit-cost analysis, the usefulness of which many people greatly doubt.

Experience shows that when you take the short term into account you arrive at a benefit-cost analysis that can be diametrically opposite to the one you would arrive at if you looked at the long term. Sustainable development, as a policy adopted by this government, takes fully into account the importance, the value, of the long term. This is the essence of sustainable development. Otherwise, you wouldn't have that word “sustainable” in it.

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So how can we use instruments—or proposed instruments, November 1995 revised—that do not incorporate the policy embraced by this government, namely that of sustainable development? I am asking you, how can you do that in Treasury Board, or you in Privy Council? That is my question.

Ms. Jody Aylard: I would just like to say that each department has to use the policy as guidance for achieving the policy objectives it has under the statute it has to administer. The regulatory policy is intended to contemplate flexibility for departments to act in the public interest according to the policy directives they're trying to achieve. So I recognize your comments, but I....

Mr. Richard Foserooke (Senior Analyst, Regulatory Affairs, Economic Sector, Treasury Board of Canada): I would like to add that there is nothing in the policy that would prevent use of things like the Basel Convention. There were regulations approved last year, I believe, with respect to the transborder movement of PCBs, and they were certainly done with reference to Canada's obligations under the Basel Convention.

So any of the things you have mentioned, sir, are certainly includable in the policy—

The Chairman: But why are they not included?

Mr. Richard Foserooke: Probably at the time the document was being drafted they were omitted, I don't think with intention. They were probably just overlooked. I think the primary emphasis at that point or on that particular section was to draw people's attention to the fact that Canada had obligations under its international trade agreements.

But there were other things that were mentioned. I think there is reference there to the NAFTA addressing sanitary and phytosanitary measures, and the safety of life at sea convention, and the International Maritime Organization.

Certainly in any revision of this policy, the points you've made would have to be taken into consideration.

The Chairman: Then is this policy operative, or is it not?

Mr. Richard Foserooke: Oh yes, this policy is operative. But as I said, it doesn't preclude recognition and inclusion in the drafting of regulations of the points you've made.

The Chairman: But we are concerned with the way you are implementing this policy today, not when you will revise the document.

Mr. Richard Foserooke: Quite true, but today, as I said to you, there was reference in regulations to our obligations under the Basel Convention.

So they're not precluded. Just because they aren't mentioned in this policy—and I suspect there are many other agreements that are not mentioned in this policy—it does not preclude departments from having to be cognizant of them and having to make reference to them in their drafting of regulations.

The Chairman: Then perhaps, Mr. Foserooke, you could tell us why you had the foresight to include the WTO as one of the general obligations, the TBT—the Technical Barriers to Trade, the NAFTA agreement, and also the Canadian Agreement on Internal Trade, but not all the others. Why the oversight? Was it by accident, or just a lapsus mentis?

Mr. Richard Foserooke: I was not around when this was being drafted, but certainly in previous versions of the regulatory policy there was an emphasis placed on Canada's obligations under trade agreements, simply to alert departments that when they are preparing regulations they have to be aware of our obligations to our trade partners. But as I said, it does not preclude what you have brought up, which is very good.

The Chairman: Thank you, Mr. Foserooke.

The vote is in 15 minutes. We'll resume as soon as the vote is over. We'll have a second round, beginning with either Madame Kraft Sloan or Mr. Gilmour.

The meeting is temporarily suspended. Thank you.

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• 1109

The Chairman: Members of the committee, as you know, there is a motion by Mr. Gilmour that requires a quorum of eight in order to be presented and decided upon. So I will wait until we do have a quorum. Mr. Gilmour has indicated he would like to move it today. It's a motion that would request the appearance of the new deputy minister before this committee in about one month's time. So we will leave that until we have enough members present.

We'll start a second round of questions in particular for the benefit of those who didn't have a chance to ask questions on the first round but also for those who have not completed their list of questions. With that in mind, Mr. Gilmour, would you like to proceed again?

Mr. Bill Gilmour: Thank you, Mr. Chairman.

• 1110

In my earlier remarks I was asking about the strength of the legislation in regard to having strong regulations. With all due respect to the CEPA director, I would expect your answer to be that you think it's just fine. However, I would appreciate a response from Treasury Board or Justice as to whether they feel the language is strong enough so that strong regulations can be drafted or if in fact they see some areas where the language in the legislation could be strengthened so that the regulations would be stronger. Could we receive that response to the committee in the next couple of weeks?

Mr. Jacques Desjardins: I am not sure that I understand the question. What you want us to do is to look at the regulation-making power—I am just repeating what you said in order to make sure I understand what you want—in order to ensure that strong regulations can be developed. Is that it?

Mr. Bill Gilmour: I'm following up on what Dr. Victor was saying, which is that if the language in the bill is vague, then the regulations following that will also be vague. What I would like your opinion on is whether the language within the bill is strong enough so that strong regulations can follow.

Mr. Jacques Desjardins: Okay.

Mr. Bill Gilmour: As a committee, we need to find out if in fact some of the wording of the bill should be strengthened or modified so that the regulations that are going to come down the road can follow from the legislation.

Mr. Jacques Desjardins: Frankly, I didn't study all the wording of Bill C-32, and I was not involved with the drafting of it. But from my experience, the fact that the wording of a bill is less precise does not preclude the regulations from being more precise. In fact, it is the role of the regulations to provide very clear guidance as to how the Canadian citizen has to function. If you have a very unclear bill—unclear is the wrong way to put it, maybe a broad bill or an imprecise one—it does not necessarily mean that the regulations will be imprecise. The regulations are going to have to be precise.

Mr. Bill Gilmour: Dr. Victor, perhaps you can comment. I think my point is being missed.

Mr. Jacques Desjardins: Sorry.

Dr. Peter Victor: I think it's really a combination of considerations. It's what is in the bill in the context of the regulatory policy. So it's not simply a matter of looking at the regulation-making powers that are in the bill.

I have them in front of me. It talks about the Governor in Council being able to make regulations that specify the minimum, average, and maximum quantity of concentration of a contaminate. The question is, would such a regulation be able to pass the regulatory policy test that it shows a net benefit to Canadians? That is the dilemma. We have heard many comments this morning that this policy is in fact implemented in a very flexible fashion, with every department having its own methodology. None of this is stated in the policy. I don't doubt that it's true, but it's not here. All I could comment on, though, was the recognition that this policy as stated provides a very stiff test for any environmental regulation that sets out to limit the concentration of a substance.

So what I was suggesting was the possibility that perhaps more general prohibitions in the legislation itself might stiffen the regulation per se. In my experience in the trenches, if you like, we were certainly able to argue for stiffer regulations when we had either a legislative statement that was clear or a policy statement that was clear, which we could relate back to. It is kind of a complex issue we are talking about. It's this interaction between the legislation and this regulatory policy and how they are likely to work in practice.

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Mr. Bill Gilmour: Thank you.

The Chairman: We have now Madam Kraft Sloan, followed by Mr. Lincoln, followed by Madam Torsney.

Mrs. Karen Kraft Sloan: Thank you, Mr. Chair.

I just wanted to go back to the issue of appendix A. Before the break one of the witness had suggested that there would be no problem including the Convention on Biological Diversity. The title is “Trade Agreement Obligation for Regulators”.

On page 7 it talks about monitoring and it says:

Treasury Board Secretariat reviews all regulatory proposals for adherence to Treasury Board Policy. DFAIT or IC are notified if there are concerns regarding possible violations of trade agreement obligations.

Who would be notified if there were violations on things like the Convention on Biological Diversity or the Basel Convention?

Mr. Richard Foserooke: Generally, what we try to arrange with major regulatory initiatives, and most regulatory initiatives, is some form of interdepartmental consultation, so that, for example, the draft regulation is considered by representatives from the departments that would be potentially affected by it or interested in it. Departments too are stakeholders.

In this particular case I think Environment Canada in its understanding, or Foreign Affairs and International Trade, which have responsibilities for international trade and other international agreements, would probably be the ones who would identify at this particular point, because certainly people in Treasury Board cannot know every policy of the government in detail. I mean, I myself would never profess to know every one.

I think the onus is on our stakeholders, whether they be other government departments or other stakeholders. The public is in many cases quite knowledgeable about these things. They would draw attention and tell us that they think what we are doing might pose problems in a particular context. And that would be brought to the attention of the department proposing the regulation.

Mrs. Karen Kraft Sloan: But why do you specifically refer to the Department of Foreign Affairs and International Trade and Industry Canada? Why wouldn't you say that appropriate or affected departments would be notified? I think we have to go back to what the chair was talking about earlier: that there is such an emphasis on trade and economic agreements and accord, and there is barely any mention of anything else that has to do with health, with social policy, with environmental policy.

It seem to me that though you talk about this guide as being sort of flexible and all that, when you plunk this down in front of an incredibly busy person and they say here are the steps I have to jump through—here's appendix A, which says I have to notify DFA or Industry Canada if there are concerns regarding violation of trade agreements—that's not flagging anyone to phone up Environment Canada or Health Canada.

Mr. Richard Foserooke: Well, your point is taken. I think in particular there is an onus on the department making the regulation. I think on page 11, which was just pointed out, it says very bluntly “pertinent international and federal-provincial agreements must be respected”.

I think the onus is on the department crafting the regulations to make sure they are in compliance, whether it be our trade agreement obligations, our official languages obligations, our employment equity obligations, our environmental obligations.... There is a whole host, as you have identified, of policies and obligations that are there that reflect and impact upon the drafting of regulations, and the onus is on the department drafting it to make sure it respects those agreements, it's aware of those agreements. Then, if in order to do that it gets help from other departments, from stakeholders, whether they be environmental groups, industry groups, municipalities—whoever can give assistance to the department in its drafting of regulations—make them aware of it, because there are a lot of policies out there.

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Mrs. Karen Kraft Sloan: To return to the monitoring section, which provides oversight and the final double check to make sure the department hasn't overlooked anything, I see DFAIT and Industry Canada and I think we can continue to debate this.

Turning back to page 2, number 5, it says “inter-governmental agreements are respected and full advantage is taken of opportunities for co-ordination...”, etc. We go back to the appendix and it refers, I believe, to accords in here: “...and other accords entered into by Canada...”. Would this include the harmonization accord that has been negotiated by the federal and provincial governments on environmental management—on inspection, on standard-setting, on environmental impact assessment?

Mr. Richard Foserooke: We presume so, yes.

Mrs. Karen Kraft Sloan: So does this mean the harmonization accord would take primacy over the regulatory-making power in CEPA?

Mr. Richard Foserooke: The law comes first. It's my understanding that CEPA now has precedence over any policy. If there's a law, the law has primacy.

Mrs. Karen Kraft Sloan: So what if CEPA decided to do something that would appear to be a violation of the WTO?

Mr. Richard Foserooke: There you have two laws, and under those particular circumstances, I think what we usually try to do, if I can think of past experience, is work out the situation so that the obligations under both laws are respected.

Mrs. Karen Kraft Sloan: Okay, thank you.

The Chairman: You can come back to a third round if you like.

Mr. Lincoln, followed by Madame Torsney.

Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.): I'd like to ask a general question in regard to the impact of legislation with or without regulation.

Would you agree that this bill, without regulations, is really a shell? It's nice—it looks very thick and it's a nice piece of paper.

Take the example of the MMT legislation, which for all intents and purposes banned the import of MMT into Canada. Is it true the government was able, in one fell swoop without going back to Parliament, which had passed the legislation, to cancel the legislation because of a little loophole that said without regulation the law is an empty shell?

Doesn't that prove that without regulations these laws are virtually meaningless?

Mr. Jacques Desjardins: Frankly, I cannot answer for this particular bill. I don't know this bill enough. But there are cases where—

Mr. Clifford Lincoln: Let's talk about the MMT bill.

Mr. Jacques Desjardins: Well, I don't know that one either. Sorry.

Mr. Clifford Lincoln: Does anybody know?

Mr. Harvey Lerer: No, I'm not familiar with it either.

Mr. Jacques Desjardins: But there are some bills—it's rare, but it does happen—where in order to trigger the bills you need the regulations. Otherwise, for all intents and purposes they are not applicable. This is extremely rare.

In most cases the scheme can be put in place up to a point, and the fine tuning of the scheme comes in the regulations. So the regulations really fill the gap in the scheme. But in most cases—I'm repeating myself—much of the scheme can be implemented without the regulations.

Mr. Clifford Lincoln: Isn't it a fact that if you look through this law or many others of importance, every part of it is subject to regulation or regulations, every part of it?

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I was looking through just the administrative duty clauses. There the Government of Canada endeavours to establish nationally consistent standards of environmental quality—“endeavours”. It endeavours to protect the environment and biological diversity. It endeavours to act expeditiously to assess whether existing substances are toxic or not.

But then when it comes to intergovernmental agreements, including the harmonization accord, it doesn't “endeavour”; it does “act”. There's no “endeavour” there. It ensures that federal regulations “are addressed in a complementary manner in order to avoid duplication and to provide effective and comprehensive protection”—no “endeavour” there. And when it comes to giving out information, then it endeavours.

But under section 2(2) of the administrative duties, this law, which before was an overarching law, a horizontal law, now becomes almost secondary to any other act, giving the minister and a specific act joint power to determine, with the Minister of the Environment, “whether the measures that can be taken under the other Act are appropriate and sufficient to address the matter.”

I want to tie that in to the regulatory policy of 1995. When you look at just one example, intergovernmental coordination,

Regulatory authorities must determine what, if any, related regulatory requirements already exist and which other departments, agencies or governments are involved. New regulatory requirements must be coordinated with existing ones to avoid duplication and to take advantage of possible efficiencies. ... Pertinent international and federal-provincial agreements must be respected.

You look at that in connection with all the hurdles that have been put into the new CEPA, of now, consultation with provincial governments ad nauseam, the harmonization agreement, the fact that in all areas where the government should, it endeavours to, and I wonder how long it would take in the present system to develop a regulatory framework for the new CEPA, how long it will take. Will it ever happen? It will take years, according to this and what is in the law already, wouldn't you say?

Mr. Harvey Lerer: I would perhaps go back to your first comments and questions and try to answer them in sequence, sir.

As to the legislation, the statute, my understanding of it is that it is to set out the intent and purpose, and then provide the enabling powers and the authorities for the regulatory process that you've described. That is the purpose of the statute.

You've talked about the consultative process. The fact is, that does take time—I agree with you—and the decision has to be made as to how much consultation is required in order to find the solution to achieve the result you want to achieve.

With respect to the harmonization agreement, and harmonization and offers to consult with governments and other stakeholders, not just governments, there is nothing I know of in the harmonization agreement that would decrease any of the authorities that the minister has in terms of either the existing act or this bill that is in front of you. There is no limitation on her exercise of authority. There is a requirement, however, to consult with the stakeholders, as set out in the guidelines and in the policy.

Mr. Clifford Lincoln: Okay.

In CEPA, there's already an equivalence clause, right?

Mr. Harvey Lerer: Yes, there is, sir.

Mr. Clifford Lincoln: Okay. There's an equivalence clause that says if a regulation of a province is equal in standard to that of CEPA, then that regulation can be implemented and can apply. So we already have this. We have it in the present CEPA, in CEPA 1988.

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What I can't understand is why we're now being subjected to another level of delay. If equivalence is already in there and is in the new bill as well, why do we need, then, to be subjected to another restriction on the authority of the federal Minister of the Environment to act in regard to jurisdictions that have clearly been stated by the Supreme Court as being acceptable from the federal standpoint?

Why do we need all these references that will make it difficult? Before the onus was on the province to prove it had equivalence. Now it's up to us to say we have a regulation, which we can't bring forward until we've consulted with you and you give us the okay. Whether or not you agree, I think that politically the federal minister would be in a heck of a spot if tomorrow four, five, or six provinces, as has been the case many times, would say they don't agree. I know that she retains the authority, but putting this in lessens the authority. Wouldn't you agree?

Mr. Harvey Lerer: I will not, nor should I, speak to what the political difficulties would be. I think that would be out of bounds for me. But what I can say is what I've said before. I think the offers to consult, whether it be with government or with stakeholders, are positive. I do not agree with you, sir, that this lessens in law or in practice the authority of the minister. I don't think that is the case. I will leave the question of political difficulty to another person.

Mr. Clifford Lincoln: Have you read the committee's report on the harmonization agreement?

Mr. Harvey Lerer: Yes, I have, sir.

Mr. Clifford Lincoln: I take it from your remarks that you would disagree with the thrust of it and with its recommendations.

Mr. Harvey Lerer: No, sir. There are points you have made that in my experience are not as black and white as are suggested.

But I do recall that when the minister and officials appeared before you, they accepted some of the recommendations and had inserted in the harmonization agreement, as a matter of fact, the obligation to review the effectiveness of the agreement within a period of two years. I remember that very distinctly because it affected me directly. I do not recall the other recommendations.

Do I personally agree with all of the suggestions and recommendations of the committee? I'm not sure that I do. But I do remember some of the recommendations, and I believe my minister put in place actions that would satisfy those.

Mr. Clifford Lincoln: We have an equivalence clause that already gives permission to the provinces to put out regulations. I fought very hard for it at the provincial level, I can tell you, because I believed it made a lot of sense. It's not a question of federal against provincial. I fought very hard for this because I felt that if there were a regulation that could be proven to be of the equivalent standard, then there was no need for two. So if we have this, why lessen the impact of CEPA by putting in there several clauses that will make it almost impossible in practical terms for the federal government to act on its own?

Mr. Harvey Lerer: I have to answer the question you posed to me by saying that I do not believe that the offers to consult in any way make it impossible or more difficult for the minister to act with respect to any operational feature or in a legal sense, Mr. Lincoln. That's the only response I can give you.

The Chairman: I'll put you down for the next round, Mr. Lincoln. We'll now hear from Ms. Torsney, followed by Mr. Jordan and the chair.

Ms. Paddy Torsney: Thank you.

Professor Victor, I don't necessarily disagree with you, but I thought that in the case of the MISA standard versus the environmental bill of rights there was one piece that was missing in the analysis, which was the climate among the population for changes.

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Certainly when MISA came in, Jim Bradley was the minister and a lot of people hadn't clued into the importance of environmental legislation and the good things that could come out of it. He faced a fair bit of opposition in the general public as well as within the industry sector. Yet by the time Mr. Rae's government had taken office people were saying we want legislation and we want things to happen on the environmental front.

Is there sort of a fourth factor that needs to be put in there, where the public needs to be brought along and there needs to be some support for the kinds of things you're doing?

Dr. Peter Victor: I think it's a valid comment. Certainly environmental action by government depends very much, I believe, on public support.

By the way, MISA was actually introduced before Bradley. It survived three governments. They all had a hand in it.

Ms. Paddy Torsney: It didn't go anywhere.

Dr. Peter Victor: Well, finally there were regulations promulgated in 1994-95.

I chose the MISA example because it is an example where successive governments tried to make significant changes in the way environmental management was taking place in Ontario simply through regulation. So it's really an example of what happens if you put too much onus on regulation-making to try to effect a major change in policy. But your comments about having a feel for where the public stands of course are very relevant.

Ms. Paddy Torsney: Thank you.

The Chairman: Mr. Jordan, please.

Mr. Joe Jordan (Leeds—Grenville, Lib.): I apologize for not being here at the first session.

I want to talk about the benefit-cost analysis section. I'm looking at page 10 of the regulatory policy handout.

I guess the way I'm approaching this is that I think this is a pretty critical component of what we're talking about, because I think everybody is trying to advance the cause, as it were. I think it all comes down to how we define benefit and how we define cost.

When I look at this particular section, it says: “For all regulatory proposals a benefit-cost analysis must be carried out to assess potential effects such as impact on environment”. It then footnotes me to the back, where it says that Human Resources Development is developing a test, a workplace impact test. Not knowing what that is, I'm assuming that deals with potential job losses through legislation. Is that a correct assumption? No? There's more to it than that?

Mr. Richard Foserooke: Generally, what will be the effects of this particular initiative on the people in the workplace.... It really isn't on job loss.

Mr. Joe Jordan: Would it be on their health?

Mr. Richard Foserooke: On their health or on sort of their well-being.

Mr. Joe Jordan: Okay. Has that impact test been developed?

Mr. Richard Foserooke: There is a draft model. I don't know what Human Resources Development Canada has done with it.

Mr. Joe Jordan: Okay. Do you have any sense that it's a public document at this point?

Mr. Richard Foserooke: I would think it should be public, yes, because it was developed in conjunction with labour.

Mr. Joe Jordan: So I should approach HRDC for that.

Mr. Richard Foserooke: Yes.

Mr. Joe Jordan: Okay. Then it says: “Benefit-cost analysis guide for regulatory performance, chapter 7, consumer impact assessment”. Again I'll make the same naive assumption. Are we talking about the price of goods and the impact it's going to have on the consumers' buying power? Is that what we're talking about there? Or are we talking about the health of consumers?

Mr. Richard Foserooke: I'm not familiar with that particular guide, so I have to....

Ms. Jody Aylard: We can provide you with a copy of that.

Mr. Joe Jordan: Okay, I would appreciate that.

Then it says “The business impact test, Treasury Board Secretariat forthcoming”. Is that now a document that exists? Is the business impact test an economic measure of how this regulation is going to change the economics of business?

Mr. Richard Foserooke: Generally, it asks business to identify what will be the impacts of this particular initiative on their operations, their costs, whether there are benefits to them, whether there are things they're going to profit from.

Mr. Joe Jordan: So essentially it's assessing the impact on the free market forces.

Mr. Richard Foserooke: Yes.

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Mr. Joe Jordan: I just feel that the scale seems to be a little bit tipped here. I am curious as to why it's called a benefit-cost analysis. I've spent three years in business school, and cost-benefit analysis is what it's normally called.

It seems to me that it does a very good job of making sure the economics are protected, but I'm a little concerned that it doesn't seem to be giving the same amount of attention to the health and environment side. The reason I say that is because if you look at the environmental landscape these days, globally.... You know, climate change you can certainly debate, but you can't debate the Sydney tar ponds. You can't debate the fact that there are costs in this country that have escaped this net that aren't calculated in this benefit-cost analysis.

If we were to address that and make sure that we agree on what is a benefit.... There's also a time line here. One of the strategies or one of the outcomes of this benefit-cost analysis is that we're sticking these costs to future generations.

I think maybe if we could open up that a little bit and make sure that analysis or series of different pieces of this analysis are either in development or have been developed, then we can maybe get away from treating what I think are a lot of symptoms and address the central problem here.

Maybe I would direct that question to Dr. Victor first, and then maybe get other people involved.

Dr. Peter Victor: You've raised many points in your statement. I perhaps can respond to a couple of them.

First of all, it is often called cost-benefit analysis, but you'll find both terms used in the literature. It refers to the same thing.

I take the view that it isn't an arbitrary, loose way of assessing pros and cons. It is a fairly precisely stated methodology that's now got a 60-year history. So when people talk about a benefit-cost analysis, they are automatically saying a set of methodologies will be used to measure benefits and costs.

The normal measure for the benefits, even if they are environmental benefits, is what would people be willing to pay for those benefits if they had the opportunity to express that. So in a benefit-cost analysis you might use a questionnaire survey. You might do some analysis of recreational behaviour to get some estimate of what people actually pay in order to benefit from a pristine environment.

Mr. Joe Jordan: I understand that, but does it not depend on the public's knowledge?

Dr. Peter Victor: Of course. But then you see, one would argue that the value of anything you measure in terms of willingness to pay depends upon the public's knowledge. People's willingness to pay for toothpaste depends upon their knowledge. It's a test of that sort. So on your question of how do we define benefits, all I can say to you is within benefit-cost analysis that is answered in exactly the terms I've said.

The question of short term and long term has come up, and you've raised it. Again, benefit-cost analysis gives an answer to that. It uses, as I'm sure you know from your time in business school, the concept of discounting, which is an arithmetical way of saying that if a benefit is going to be experienced a long time in the future, we give it much less importance in our decision-making today as compared to a benefit that is incurred today.

So if you have a regulation that is going to impose significant costs in the short run on industries who have to comply to the regulation but will generate environmental and health benefits that won't likely be experienced for a long period, the methodology of benefit-cost analysis automatically reduces the weight given to the benefits, with the result that the cost will likely outweigh the benefits.

Mr. Joe Jordan: I guess that particular protest has roots partially in the cumulative interest. I think it's a very dangerous analogy to try to compare the long-term health and environmental effects and use the net present value to bring that back. I think at the end of the day what you're going to end up with is very short-term regulations. I say that with some confidence because I look around and see that's exactly what's happening.

I just want to ask one more quick question. It says here, and this puzzles me, that for health, social, economic, and environmental risks it must also be demonstrated that regulatory effort is being expended where it will do the most good.

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I'm wondering, is there is some sort of evaluation mechanism? If somebody invokes that and says this regulation isn't necessarily wrong but they don't think it's where it's doing the most good, is there some check that shows that they then go on and put it where it would do the most good, or is that a way of just scrapping it? Doing it somewhere is better than doing it nowhere.

Mr. Harvey Lerer: Yes. Perhaps I can try to answer that question, in that in the analysis that is done when one is bringing a regulation or any action forward, products and substances have a life cycle in the economy. We try to decide, and we do decide, where the pinch point is, where that pressure point is, so that we can make sure that the exposure to a substance, for example, is effectively minimized. Where we start from in this and where we end up depends on the information analysis. So for example in order to ensure that there was no exposure to lead in gasoline you banned lead in gasoline. There was no point in trying to.... That was the choke point of choice. That kind of analysis is done.

The other point I will make in terms of benefits, if I may, is that there is no necessity to calculate benefits—or risks, for that matter—in any quantitative sense. There are some things that have inherent value that we do not attempt, at this point in time at any rate, in my experience, to put some sort of quantitative measure to. And that's perfectly acceptable. That's been my experience in following the guidelines set out by Treasury Board.

The Chairman: Madame Carroll.

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): I hope I don't risk being redundant to Mr. Jordan, but again from a business perspective, and we did a benefit-cost analysis, we did factor in no action. So I'm listening carefully to what he said about short term and long term, but I did factor in what happens to my business vis-à-vis competitors, strictly from a business perspective, if I don't implement a certain action. So how do we factor in, within this environmental context, not proceeding?

Mr. Harvey Lerer: It is part of the analysis.

Ms. Aileen Carroll: It is, very definitely so.

Mr. Harvey Lerer: It is part of the analysis, but....

The Chairman: It's not mentioned in this paper.

Mr. Harvey Lerer: No, that may be, but it is part of the analysis conducted by Environment Canada—what is the consequence of taking no action.

Ms. Aileen Carroll: Well, I recently visited Nova Scotia and read as soon as I got there front page stories in the Globe and Mail national issue. Then there was quite a follow-up that week on what the ramifications of Sydney are going to be, and what the costs—human, economic, in every dimension—of that clean-up are going to be. I have to think, boy, that's some cost to not taking a particular environmental approach at that time.

So now we're looking at a new law and new regulations. Certainly I'm typical in not wanting to see anything like that occur again, so I have to figure how we are factoring that into any benefit-cost analysis contained within the regulations, contained within the new CEPA, that's going to give me peace.

Ms. Jody Aylard: I think that's intended to be captured under alternative solutions. Certainly an alternative when you're looking at possibly intervening or not is the status quo—whether you leave things alone, and analyse that situation along with other instruments you could use in a particular circumstance, whether it be regulation or other government action. I'm looking in the regulatory policy.

Ms. Aileen Carroll: I realize that.

Dr. Victor, why do I see something that sticks in my mind that mentions status quo? Do you want to comment on my concerns, Dr. Victor?

Dr. Peter Victor: Yes, I'll do my best.

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What this test requires is that the party proposing the regulation has to show that the benefits will exceed the costs. That should be as compared with doing nothing. That's why I agree with statements that have been made here that the doing nothing option is automatically factored in, because what you then have to do is show that doing something is better than doing nothing.

My argument there, that it favours the status quo, is that you have to show that the benefits to those who are going to gain are greater than the costs. The measure we use is whether they are willing to pay—what would they be willing to pay for those benefits in comparison with the costs? Right?

But you could turn the whole question around the other way. Instead of kind of assuming implicitly that those who are putting the contaminants into the environment—because we're talking about regulations that are going to reduce contamination—are going to be experiencing the costs and the others are going to be experiencing the benefits, you could do the analysis completely reversed. You could ask, what would the industries be willing to pay to continue polluting the environment, and then ask, what would those who are going to lose from this pollution be willing to accept to allow that to go on?

You see, what benefit-cost analysis does is simulate a market transaction. The question is, who's the buyer and who's the seller? The normal way of doing this analysis is to assume that the victims of the pollution are the buyer, and they somehow have to go and buy clean air. They wouldn't actually have to pay this money, but the analysis says if they did have to, how much would they be willing to pay?

As I say, if you were to reverse it, you'd have a different situation. So you could imagine somebody, for example, who's only willing to pay say $100, because they don't have a lot of money—which applies to any of us—to have an area cleaned up or to have contamination reduced. But if you said to them, how much would you require to accept willingly that contamination in your environment, they might say $1,000, or they might say there's no amount of money.

So the way we normally do benefit-cost analysis is to put the onus on the beneficiaries to show that they would be willing to pay enough to compensate the losers, who in that case are the industries. To do it the other way around, you get a different result, and that's why I say it tends to favour the status quo.

It's complicated, but I hope I've made my point.

Ms. Aileen Carroll: You have clarified it. Thank you.

The Chairman: Before we launch our next round, there are a couple of questions from here.

It is interesting to note that the term “cost” appears in several parts of the regulatory policy document of 1995. It is a dominant concern. It has also found its way into the preamble of the legislation. I'm referring in particular to the last paragraph of page 1 of the Bill C-32, where it reads:

Whereas the Government of Canada is committed to implementing the precautionary principle that, where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation;

So there is a qualification here with the word “cost-effective” before the word “measures”, and evidently it has a relationship with the document we are discussing today.

The term “cost-effective” is also found in clause 2 of the bill, on page 3, as the first item under “Administrative Duties”:

2.(1) In the administration of this Act, the Government of Canada shall, having regard to the Constitution and laws of Canada,

(a) take cost-effective preventive and remedial measures....

So the term “cost-effective” is the dominant factor, or certainly the major factor. I can't think of two more important amendments that we will have to consider when we go into this clause-by-clause exercise, because the presence of the term “cost-effective” somehow does reinforce the application of this regulatory policy, if we don't watch it very carefully.

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I wish the Treasury Board people were not here to listen so that we could say this in private, but it's important that we put this on record, because this is important public business. “The least possible cost”, says the Treasury Board document on page 2, item 4.

It is interesting to note—and this is what prompts my next monologue here—that under “Regulatory Burden”.... And I was wrong before when I said that sustainable development does not appear in this document; it does appear. It does appear under “Regulatory Burden” on page 10, which reads: “It must be demonstrated that adverse impacts on Canada's sustainable development...are minimized”. So I'm asking you, why minimized? If we are serious about sustainable development, then adverse impacts are not adequately dealt with if they are minimized. They are removed.

Why should we go for “minimized”, Mr. Lerer? What is your opinion on that? I know you have not written these documents, so you cannot be held responsible, but it would be interesting to know how you react to that, from the perspective of Environment Canada.

Mr. Harvey Lerer: My reaction is one of fear or trepidation—the first one anyway.

The Chairman: No, no, we are very harmless.

Mr. Harvey Lerer: No, and I am here to help.

I have no difficulty with “minimized”. There are times when the strategic goal is to eliminate and one moves in phases toward minimization, stage by stage. But I have found in practice that where elimination is required, or where we've suggested it, and the challenge is made and we've given our explanation, operating under this policy has not been difficult for Environment Canada, in practice. I will leave the policy discussion of the document to others.

The Chairman: Are there any comments from Treasury Board that can reassure this committee, as Mr. Lerer has already attempted to do?

Ms. Paddy Torsney: Which suggests a certain lack of achievement.

A voice: With varying degrees of success perhaps.

Ms. Jody Aylard: I have no further comments.

The Chairman: Well, we can start the next round. But before we do, since we have a quorum, we could put Mr. Gilmour's motion, which is very harmless, but it could be read.

Ms. Paddy Torsney: Don't we have another motion as well?

The Chairman: Whose motion are you referring to?

Ms. Paddy Torsney: The one we tried to deal with last week on the researching budget.

The Chairman: Yes. Well, that will take up more time for discussion.

Ms. Paddy Torsney: Okay.

The Chairman: Would the clerk please read the motion.

The Clerk of the Committee: Mr. Gilmour's motion:

Pursuant to Standing Order 32(6) and Standing Order 110(1), that the Standing Committee on Environment and Sustainable Development call Mr. Len Good, Deputy Minister of the Environment, to appear before the committee within 30 days of September 24, 1998.

The Chairman: Thank you. The motion is self-explanatory. Are there any questions? Can I put the motion to a vote?

Mr. Bill Gilmour: Can we have some discussion?

The Chairman: If you want to have a discussion, sure.

Mr. Bill Gilmour: I just have a couple of points. The reason I've asked Mr. Good to appear is, as many of you know, he was Deputy Minister of Environment previously. I would like to hear more his management philosophy than anything else, particularly because the administration he worked in before has a significantly higher budget than he's operating under now. So it's more just an hour, an hour and a half, to find out where he's coming from. He'll be very instrumental in drafting the upcoming endangered species legislation, and I'd just like to hear what his philosophy is.

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The Chairman: Do you mean that having moved from rags to riches, it might be helpful to know how he's going to survive?

Mr. Clifford Lincoln: You mean from riches to rags.

The Chairman: That's what I intended to say.

Madam Torsney.

Ms. Paddy Torsney: Perhaps after the chair has asked his last question of Mr. Lerer, we might also ask the witness to address those issues.

The Chairman: That will be up to the members, when the deputy appears.

(Motion agreed to)

The Chairman: On the third round we have Madam Kraft Sloan, Mr. Lincoln, Mr. Jordan, and maybe Madam Carroll.

Mrs. Karen Kraft Sloan: Mr. Chair, I didn't ask that my name be put on the list for the third round.

The Chairman: I thought you had.

Mr. Lincoln.

Mr. Clifford Lincoln: I see in annex A of the regulatory framework document that all the various ministries, such as Agriculture, Environment, and Health, must have had in place by December 31, 1996, systems that meet the standards and that they must be reviewed by December 31 of this year. Are these systems included in some form of document prepared by these ministries? Have they been filed with Treasury Board, or are they retained by the ministry itself?

Ms. Jody Aylard: I'm sorry, I'm not sure I heard all of your question. Are you referring to their documents that show they have the standards in place?

Mr. Clifford Lincoln: Yes.

Ms. Jody Aylard: We don't have yet formal submissions from the departments on their regulatory process management standards. We have been working with them to assess how close are the systems they have in place now to meeting the standards. We have worked with their audit and review groups to deal with any deficiencies. But the deadline for reporting hasn't been reached yet, and we haven't had submissions from them as to where they are right now.

Mr. Clifford Lincoln: According to this, the departments are two years late in presenting these standards in documentation form.

Ms. Jody Aylard: No. Departments have put the process management standards in place, but they have not yet done their management reviews and provided reports to the Treasury Board Secretariat. That's not required until 1999.

Mr. Clifford Lincoln: So by December 31, 1999, will each one of these departments have some sort of framework document, which sets out how each one intends to meet these particular standards that are—

Ms. Jody Aylard: No. They're supposed to be reporting on how they've actually put them in place and how in practice they are meeting the standards. In other words, it's a review of the processes they've put in place in order to meet the standards by 1999.

Mr. Clifford Lincoln: What I'm trying to find out is at what point we, as people who are vitally interested in this, would be able to see something like this document that will tell us how, for instance, Environment or Health will attack the question of cost-benefit, for example. This would be especially important in areas where you say that risk is a key factor. In fact, under the item entitled “General”, it says “whether the relative and absolute risks posed”.

What I'm trying to get at is how do I find out how the Minister of Health or the Minister of Environment have interpreted risk? For instance, I feel it's unacceptable to have manganese in gasoline, but seemingly the Ministry of the Environment or the Ministry of Health don't seem to find it's too much of a problem. Is the present limit on sulphur correct? What is the correct limit? What are the benefits? What are the risks?

Following on what Mr. Jordan, Ms. Carroll, and others have brought up, it seems to me that if we don't know how the Ministry of the Environment or the Ministry of Health, especially those two departments, define risk and cost-benefit, how can they put this in CEPA in a way in which we will understand where they're coming from?

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I want to know, either from you or from the ministries, whether at one point or another, very soon, after December 31, we will get some sort of a document from these ministries to address these particular points, inter alia.

Ms. Jody Aylard: It is a requirement of the policy right now that departments provide copies of their reports to the President of the Treasury Board on their reviews of their regulatory process management standards.

Mr. Clifford Lincoln: So can I ask the particular ministries, especially Health and Environment, if after December 31, 1999, we are going to be able to have documentation showing how you approach this particular document, especially the question of assessing risk and the question of assessing what is a benefit and what is a cost?

Mr. Harvey Lerer: What I can say to you is that we would try to get to the committee, through the regular process, the review that would be required under the policy guidelines from Treasury Board.

Mr. Clifford Lincoln: So there will be a document, and these questions will be addressed in there.

Mr. Harvey Lerer: I'm not sure that the specific questions you're asking will be addressed in there, but through normal channels we would provide to you the report that we would submit to the Treasury Board, as was indicated. I do not know that the report is addressing the specific questions you have posed, sir.

Mr. Clifford Lincoln: Is there any way for you to find out from the ministry and let us know whether it would include it?

Mr. Harvey Lerer: Absolutely.

Mr. Clifford Lincoln: Thanks.

Mr. Harvey Lerer: I will give the committee that information through the normal process.

Mr. Clifford Lincoln: Could I ask the same question of Health? Is there somebody from Health here?

A voice: No, there isn't.

The Chairman: Thank you, Mr. Lincoln.

Mr. Jordan, please.

Mr. Joe Jordan: To pick back up on the benefit-cost analysis, in regard to competition, I think the market forces are self-policing, and in most cases they work, if they're provided with the appropriate information. If we have a good understanding of benefits and a good understanding of costs, then I think that system works quite well, and it would be ridiculous to try, through some sort of command and control, to affect it. But if the benefits and costs are flawed, then I think the whole thing starts to fall apart.

As a quick point, if we were to put in regulations that changed labelling, certainly we would have to look at why we're doing that and at the costs associated with the industry for retooling or whatever they need to do to relabel. But I have a problem when we apply that to areas of the environment.

If we pass a regulation that's going to reduce an emission, I guess we're making the inherent assumption that the company has the right to pollute the air and we're somehow curtailing it from doing that. I think we have to pull these types of issues away from that very strict economic analysis.

Given the Kyoto commitments, I think it may be safe to assume that we're going to find an increase in regulations to try to meet these commitments.

Where did the initial guidelines come from? I don't need to know that. But how are they changed? How would a person go about trying to change that cost-benefit filter that's in here? I think that's a very, very important element to this. Does the government have to do that? I'm a new MP. I don't know. Somebody put that together. How would we go about trying to get people to change that?

There's a tremendous amount of work being done in full-cost accounting that allows for the quantifying of some of these costs that have been sort of inherent risks. Is Treasury Board looking at that information or working with people in that regard? I think we could solve or eliminate a lot of grief here if we could look at those things.

Ms. Jody Aylard: I can't comment. I don't have the knowledge to comment on full-cost accounting, so I'll have to leave that question.

In terms of comments you may have on the regulatory policy and regulatory process management standards, you can make representations. It's a cabinet-approved document. Ministers approved it, and if you have concerns with it, you can write to the President of the Treasury Board.

Mr. Joe Jordan: Okay. What's the process for changing something in here?

Ms. Jody Aylard: It's a Treasury Board-approved policy; it went to the Treasury Board.

Mr. Joe Jordan: Okay, thanks.

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The Chairman: If there are no further questions, I would like to ask a rather practical process-oriented question.

We have seven designated departments under the regulatory process management standards set out in appendix B. We understand they are required to have their regulatory management systems in place by the end of 1996. Is that document available?

Ms. Jody Aylard: Which document is it you're looking for?

The Chairman: Well, under your RPMS policy set out in appendix B, the seven designated departments—Agriculture and Agri-food, Environment, Fisheries and Oceans, Health, Industry, Revenue, and Transport—were required to have their management systems published by December 31, 1996.

Ms. Jody Aylard: It's not that they were required to have them published by then, it's that they were required to have them in place.

The Chairman: In place?

Ms. Jody Aylard: They were required to have them in place in their departments.

The Chairman: Is that a document that can be—

Ms. Jody Aylard: I can't speak for each department as to whether they have a document or not, or maybe even several, depending on how many regulatory programs they have. It's managed differently in different departments. But what these departments are required to do under the policy is do a review of that process, report on that review, and provide a copy of that report to the President of the Treasury Board by the end of 1999. That report is looking at how those processes work and whether or not they're meeting the process management standards.

The Chairman: So what did they do by December 31, 1996, since they were required to have a regulatory management system in place?

Ms. Jody Aylard: They should have systems in place that are ensuring they're meeting the management standards.

The Chairman: So should I ask Mr. Lerer whether he has the system in place, and if so, if there is a document that we can study to that effect?

Mr. Harvey Lerer: I will answer that question by saying I believe we have the system in place. I know of no document that sets it out. I think that document, on which systems are in place and the evaluation of those systems, is the document Mr. Lincoln asked for in his previous question, and it's due in December 1999.

The Chairman: So how can this committee determine whether the system you have in place is satisfactory from a sustainable development perspective?

Mr. Harvey Lerer: We can provide this committee with answers to questions about the system that is in place and how it works operationally. We would most certainly be willing to do that.

The Chairman: So what is the definition of a system then? Let's clarify that term. What is a system? Is it an integrated policy? Is it a directive that comes down from the deputy? What is a system in Environment Canada, or for that matter in any of these seven departments?

Mr. Harvey Lerer: Well, for me, being operationally inclined, the way “system” is being used here is to ensure we are going through the proper analysis and steps to provide the minister, essentially, with the information that is required for her to undertake whatever action is appropriate.

Sometimes there are documents involved. What I'm saying is that operationally, it means are we doing the job?

The Chairman: And what does the word “proper” entail? Is it in relation to the Treasury Board document? Is it in relation to the regulatory policy? What is proper?

Mr. Harvey Lerer: We use the Treasury Board document as guidance. We also define our results respecting environmental protection and the protection of human health we want to achieve.

The Chairman: So then is this committee to understand that since the end of 1996 you have been implementing the regulatory policy of Treasury Board?

Mr. Harvey Lerer: Yes, sir. We most certainly use it as guidance as we develop regulations and other actions.

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The Chairman: And are you correcting the imbalance of that document? This emanates from the answer given to us earlier when Mr. Foserooke said that the fact that certain commitments by Canada, as defined in appendix A, when I said they were all trade-oriented, doesn't mean that the obligations under the Basel Convention and other international agreements cannot be included in the regulations.

Mr. Harvey Lerer: Yes, we do consider all of those that you mentioned and others as well—our international commitments, our bilateral commitments with other countries. That is part of the consideration we give in developing regulations, or for that matter, any action we undertake.

The Chairman: We were hoping we could understand better the management systems that are in place and have a better understanding of them, but we'll have to settle for what you said.

Ms. Torsney, did you want to ask a question before we conclude?

Ms. Paddy Torsney: I just had a quick question. Why is it only those departments that have to have these plans in place? Is there something I don't know?

Ms. Jody Aylard: Those are the major regulatory departments in the federal government and they had to have those in place first and the other departments by the end of 1997.

Ms. Paddy Torsney: Okay. Thank you.

The Chairman: This is a supplementary question. I was asked by our researcher to inquire as to whether the application of these systems applies or would apply also to areas of policies other than the regulations.

Mr. Harvey Lerer: Yes, sir.

The Chairman: They do. Can you identify them?

Mr. Harvey Lerer: It too is guided by the policy. When a regulation is under consideration, we also consider alternative mechanisms and sometimes those are the mechanisms that are chosen if they provide the most effective result.

We consider regulation. We consider all the alternatives available to us as well. In this new bill, those alternatives could include—

The Chairman: They could be guidelines?

Mr. Harvey Lerer: They could be guidelines. They could be codes of practice.

The Chairman: Directives?

Mr. Harvey Lerer: Whatever instrument is available to us to get the job done.

The Chairman: I see.

Well, as you can see, we are thinning out rapidly. It is almost 12.30, so it's time to bring this session to a conclusion.

On behalf of my remaining colleagues, to whom I am eternally grateful, I would like to thank you all for being here today and for your input, your clarifications, and your explanations.

We leave it to you to assess the substance of our conclusions, but probably you have detected a profound suspiciousness with respect to benefit analysis—that wouldn't be an understatement—and some unhappiness about the 1995 document. You have, however, in your replies given us assurances that the imbalances of that document have been and are being currently corrected. So we have great confidence in your ability to keep the document honest and functioning in protection of the public interest.

We will certainly have to study your replies when we go into this bill, particularly in that portion of the bill toward the end that deals with the regulatory process, which is often underestimated in its importance. We may have to call on you again for help if we come to some difficult points.

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Having said that, I thank you very much for your assistance and cooperation.

This meeting is adjourned until tomorrow at 3.30 p.m.