[Recorded by Electronic Apparatus]
Wednesday, October 30, 1996
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[English]
The Chairman: I want to welcome everyone to this meeting of the Standing Committee on Agriculture and Agri-Food. We have before us today Mr. Pickard, parliamentary secretary to the minister, and some officials from several departments. I'll ask Mr. Pickard to introduce them. We are beginning our discussions and deliberations on Bill C-60, an act to establish the Canadian Food Inspection Agency and so on.
Mr. Pickard, I will turn it over to you to introduce your colleagues, the officials at the table with you today.
Mr. Jerry Pickard (Parliamentary Secretary to Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman. We certainly appreciate being here today.
I'm going to take more of a rest today and turn over most of the official responsibilities toMr. Ron Doering. Ron is the executive director of the Office of Food Inspections Systems. He has been working with the structure of this proposed legislation for over two years. He's met with almost everyone in the country who has anything to do with food inspection. Certainly he is without question a very qualified expert. He will introduce the officials he has with us today. Then he will go ahead and we will outline the specific purposes of the bill and the added benefits of the bill. Ron.
[Translation]
M. Ronald L. Doering (Executive Director, Office of Food Inspection Systems, Agriculture and Agri-Food Canada): Thank you, Mr. Pickard. Mr. Chairman, may I introduce the members of my team: Tom Beaver, Peter Brackenridge, Peter Sylvester, who is a lawyer, and Gerry Derouin.
[English]
We have a two-part presentation for you today, ladies and gentlemen. The first part should be no more than five or ten minutes. It's a broad outline of the structure of the bill. I assume you have good knowledge of it now. We'll just highlight it for you, to maximize time for questions. I will then conclude with some summary remarks on the benefits of a single Canadian food inspection agency as we see them. We'll leave the bulk of the time today for questions. Peter.
[Translation]
Mr. Peter Sylvester (Legal Counsel, Health Canada): My intention this afternoon is to briefly review the main features of Bill C-60.
Clauses 1 and 2 of the bill contain the short title and the definitions. Clauses 3 to 10 are about the establishment of the Agency and its organization.
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Those clauses discuss the role of the minister, the president and executive vice-president's powers, the Agency's head office, and the role of the advisory board, its list of members and its activities.
Clause 11 discusses the responsibilities of the Agency and the role of the Minister of Health. The Agency will be responsible for the administration of the eight Agriculture and Agri-Food Acts, the Fish Inspection Act, some provisions of the Food and Drugs Act, except those provisions that relate to public health, safety or nutrition.
The Agency will apply and enforce the eight Agriculture and Agri-Food Canada Acts, the Fish Inspection Act, the Food and Drugs Act provisions that relate to food, and the Consumer Packaging and Labelling Act.
Clauses 12 and 13 deal with human resources. The Agency will be a separate employer; employees will be appointed by the president. The president will be responsible for setting the terms and conditions of employment and designating inspectors.
Clauses 14 to 21 discuss the powers of the Agency. The Agency may enter into contracts and other agreements, obtain goods and services from suppliers outside the government, ensure the application of interim injunctions, recalls and establish federal-provincial corporations.
In clauses 22 to 32 the corporate plan and funding of the Agency are discussed. The Agency will draft a business plan at least once every five years and submit an annual report. These clauses also discuss fees and expenditures of the Agency, as well as accounting and auditing.
There are other provisions at the end of the bill. Clauses 32 to 36 are entitled Transitional Provisions and deal mainly with human resources.
Clauses 37 to 90 are consequential amendments referring to other Acts.
Clauses 91 to 92 discuss conditional amendments.
Clause 93 is about the repeal of the Hay and Straw Inspection Act.
And finally, clause 94 is about the coming into force of the Act.
[English]
Mr. Doering: On one level, this is not a very complicated bill in that it was decided we couldn't consolidate all laws and food inspection in the timeframe that we have, but that we could create and consolidate institutionally in one agency the responsibility for carrying out, implementing and enforcing eleven pieces of federal legislation.
The next step, and one of the first tasks of the new agency, will be to try to consolidate these eleven pieces of food inspection legislation into one comprehensive food act for Canada, which would be a significant contribution to Canadian public law and Canadian public policy.
All we're doing in this legislation is creating a new agency, but the agency has some particular benefits that I would like to share with you this afternoon.
There are five broad areas in which we believe there is significant improvement in Canadian public law and public policy, improvements that will enhance both food safety and trade and commerce opportunities for Canadians.
The first benefit relates to the clarifying of roles and responsibilities. By consolidating the setting of health and safety standards with Health Canada and by integrating all federally mandated food inspection and quarantine services into a single agency, food safety and accountability are significantly enhanced.
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By retaining standard-setting within the departmental system as a so-called steering function but moving the inspection activity - this is a more operational, rowing function - to a more arm's-length agency, the agency can be given a wide range of flexibilities that can permit it to be far more entrepreneurial in its modus operandi, more like a corporation.
In this sense, the agency will be a true hybrid. It is not a department of food inspection, but at the same time it is not a crown corporation. We are, for the purposes of section 2 of the Financial Administration Act, deemed to be a departmental corporation, but this is actually an agency. It is an agent of Her Majesty the Queen to carry out food inspection activities under 12 or 13 federal acts.
In terms of accountability, the agency will be like a department. It will be analogous to a department to allow it to carry out some very significant regulatory functions, which is all quarantine and inspection activity at the federal level. At the same time, though, it provides a number of more commercial types of inspection services. We want it to be able to act in a more commercial way, more like a corporation.
In its first year of operation it will have revenues in excess of $60 million a year. So much of the framework that's been set up to administer government is not really suited to a commercial orientation of that kind.
This $60 million, let me rush to say, still represents a very small part of its actual income. It's about a $300-million operation, with about $60 million achieved through cost recoveries. So the bulk, 80%, of its revenue will come from the taxpayers of Canada, which is why it's terribly important for us to enhance our accountability to members of Parliament.
We have clarified roles and responsibilities for the first time in a really significant way. There will be one agency reporting to one minister, rather than four departments reporting to four ministers. We've separated and differentiated somewhat the steering function from the rowing function, which should help us considerably to enhance food safety and improve trade and commerce.
The second area of benefit is simply the benefits that come from reducing the federal overlap and duplication. By replacing the inspection functions of four federal departments, we'll deal with a longstanding horizontality problem.
This is an issue that has been studied no less than four times in 25 years. Each time, a recommendation was made to create a single agency, and each time, for a variety of reasons, usually turf protection, that didn't happen. By doing it this time, the government can realize some fairly significant efficiency gains. By reducing overlap in such areas as enforcement, informatics, communications and overhead, we have estimated an annual savings of $44 million, beginning in 1998-99.
The third area of benefit relates to a general improvement of service delivery. Industry and consumers will at long last have a single window. Financial and human resource flexibilities will permit the agency to be more responsive to the changing needs of its clients and to the public. Government-industry partnerships will be considerably facilitated. We can elaborate on that later, if you like.
The agency will be much better able to respond to industry's call for the re-engineering of the Canadian food inspection system by changing the role of government from one of being essentially a hands-on, carcass-by-carcass inspector to being the auditor of industry's risk assessment systems.
In order to do a rather fundamental re-engineering of that kind, it was our belief and that of the government that what we really needed was a new, more entrepreneurial and more nimble kind of agency. In doing this re-engineering, we'll be able to concentrate on cost reduction, cost avoidance and the introduction of new technologies, thereby minimizing the need for the government to resort to new cost recovery.
You may be interested in knowing more about the cost recovery. We're anxious to talk with you about that. We'll deal with it primarily in the question format.
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The fourth area where there are really significant benefits to the agency relates to federal-provincial harmonization and cooperation. A single agency will create a single federal focus and the new legal powers provided to it will significantly facilitate federal-provincial collaboration and significantly promote a more integrated approach to the whole issue of food inspection in Canada.
There is an existing federal-provincial harmonization initiative called the Canadian food inspection system, CFIS. It is co-chaired by a provincial health representative, a provincial agriculture representative and a federal official, me. We have been addressing the whole area of trying to develop national codes. If we can, we will be able to significantly enhance food safety for Canadians and promote international trade, because we'll be able to deal with the really signficant gaps that now exist between inspection in the federally registered facilities and the inspection, or quite often non-inspection, in other operations.
There is no doubt harmonized standards, which we're working on, can lead to harmonized enforcement. We may be able to move to a truly Canadian system here. This is why we're proud to report to you all Canadian provinces strongly support this Canadian federal initiative.
The last advantage of the agency is it significantly enhances accountability in reporting to you. To balance these several increased flexibilities we have obtained and many of the new responsibilities and opportunities we have - to be more entrepreneurial, to be freed from many of the constraints of the departmental system - the legislation had to provide for enhanced planning and enhanced reporting to Parliament.
With respect to planning, we will do a comprehensive business plan. It will be presented to you and will set out the objectives of the agency and some very detailed expected performance criteria over a certain planning period. This will be a true business plan. We intend to live up to it and live by it.
The agency will report annually to Parliament. This report will include financial statements like those found in standard corporate reports. These will be the kind of financial statements companies do, not the kind departments do. The Auditor General will provide an opinion on these statements. Under our legislation, in addition, the report will contain information on how well the agency has done in relation to our operational, human resource and financial objectives. For your benefit, this report will also include an assessment by the Auditor General on the fairness and reliability of this performance information. The Auditor General, of course, is your agent.
These audit provisions, including the annual financial audit and the assessment of the fairness and reliability of the performance information to Parliament, which I am told is really quite unique, will significantly improve accountability reporting.
At the clause-by-clause, we will be pleased to have the Auditor General's office here to support and elaborate on this significant new effort to enhance reporting and accountability to Parliament.
In addition to the enhanced planning and reporting to Parliament, our Bill C-60 provides a role for the Minister of Health that is very important in assessing the effectiveness of the agency's food safety activities. There is a clear audit function. Health Canada is setting the high level of food safety standards. The agency will carry out the inspection. Then Health Canada will audit to make sure the agency does its jobs as it said it would.
This role for the Minister of Health provides greater certainty and should significantly improve the provisions of how the actual Food and Drugs Act is enforced. The bulk of the agency's funds are coming from the taxpayers. Coupled with the Auditor General's annual review of the agency's performances, it is our belief parliamentarians and Canadians will be provided with a much greater degree of assurance the agency is meeting its objectives and you're getting your money's worth.
Mr. Pickard, this concludes our brief overview of the main aspects of the legislation.
We appreciate very much the opportunity to explain to you what we see are the real benefits, Mr. Chair.
Mr. Pickard, if you agree we'll leave the rest of the time to deal with questions.
Mr. Pickard: Okay. Thank you very much, Ron.
I have just a very brief comment. I think it is significant that this is a really long overdue process of reorganizing food inspections in the country. There is no question about this.
The number one goal of health safety inspection is still the health and safety of Canadians. But also, it is making our system more competitive on an international and national basis, which is critical for all corporate interests involved in the safety inspection system in this country and internationally. So we feel it is a much-needed program.
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Ron, I do believe we have some amendments that are going to come forward. Would you like to present those now, or would you prefer doing those later?
Mr. Doering: I think your clerk has already distributed them. These are some very technical amendments only we lawyers can be that interested in, I would guess. But there are five technical amendments we shared with the committee. The committee will have the opportunity to review those before they're actually introduced, Mr. Chair.
Mr. Pickard: That's great. Then we can go to questions.
The Chairman: First of all, thank you very much for this initial presentation.
I'll go first to Mr. Easter.
Mr. Easter (Malpeque): Thank you, Mr. Chairman.
Welcome. There are many good aspects in this legislation in terms of bringing the various departments of government under one head.
Mr. Doering, you talked about enhancing the accountability to members of Parliament. To be honest with you, I'm trying to figure this out. I know how crown corporations operate. I know how government departments operate. Now we have this new beast, an agency. I'm trying to figure out how it is going to operate. Is it further removed from government? In this day and age there are Reformers and others who seem to want to get the government out of everything. Then there are others like myself who would like to keep the government in. Is it further removed or closer to government? Can you give me a comparison?
Mr. Doering: Thanks, Mr. Easter. Thank you for giving me the opportunity to explain this.
It is a hybrid. We are, for accountability purposes, the government. The minister is responsible for the agency. It is as if he had another department, a department of food inspection, reporting to him for accountability purposes.
Because the agency is now forced to do a whole variety of activities involved in providing a service to Canadians, there was a decision at the same time to provide it with a number of human resource and financial flexibilities not otherwise enjoyed by departments.
In one sense, when it comes to accountability it is like a department. But it has a separate employer status and many financial flexibilities, so in another sense it is more like a crown corporation.
As I say, to allow us to be more efficient and more effective, we had to offset those flexibilities with an enhanced system of checks and balances in terms of reporting to Parliament. This is what I've briefly alluded to here.
Perhaps a further elaboration could be provided by my colleague Mr. Beaver. As many of you may know, the Auditor General did a very critical review of food inspection a couple of years ago. One of the principal authors of this report was Mr. Beaver. We were impressed by the quality of this work, so we arranged to have him seconded from the Auditor General to my office. Instead of just being a complaining armchair quarterback, as the Auditor General sometimes is, he now has a chance to fix what they were complaining about. Mr. Beaver has made a real effort to try to deal with this in an innovative way to enhance our reporting to Parliament.
Tom, could you please elaborate on this for Mr. Easter?
Mr. Tom Beaver (Executive Coordinator, Office of Food Inspection Systems, Agriculture and Agri-Food Canada): Thank you, Mr. Easter.
I would like to raise two points. The first is on financial statements. Ron mentioned these. We are going to be using the standard accounting practices found in industry. These generally accepted accounting principles are going to be the basis for the financial accounting for the agency. Coupled with this financial framework, the Auditor General will do a financial audit. At this point, this is not done at a departmental level. Departments are grouped together and there is an opinion at the government level, but at the department level the Auditor General does not give an opinion on how well the books are kept and how well the business is performing financially.
The Auditor General's role here is then enhanced and there will be a better accounting of financial dollars. This will be good for both parliamentarians and for industry, which uses the same type of accounting procedures in its own work. They'll be able to understand the accounts of the agency, and where their money is going in and how it will be used. We've spoken to industry about this. They're actually quite enthused about this degree of transparency and they're very happy we are moving to this kind of accounting.
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The second point is on the performance statements. Through its business plan the agency will identify objectives it's trying to achieve and in its annual report it will assess its performance against those objectives. The Auditor General will then come in and take this performance assessment done by the agency and validate it. So before the information comes to Parliament, it will have had an objective, third-party look to ensure that the information being presented as to the performance of the agency, both operationally and with respect to its human resources and other systems, is in fact valid and reliable.
This is not done now. Even with the part IIIs of the estimates the parliamentarians receive now, they are not verified in this manner. It's a very new feature, and we hope it will enhance accountability to Parliament.
Mr. Easter: Sometimes when a department, or in this case an agency, gets more efficient and more effective, as you said, Mr. Doering, it depends on whose eyes that efficiency and effectiveness is being looked at from and who's bearing the cost.
I don't know whether you're familiar with it or not, but the Pest Management Regulatory Agency is another agency we're having some serious difficulties with. In fact we're wondering if at the end of the day we'll have an inflated bureaucracy at a primary producer's cost. We hope we can rectify that. We don't want to see the same thing happen here.
You might not have it at the moment, but at some point in time I'd like tabled before the committee... There are three departments involved here: Agriculture and Agri-Food Canada, Health Canada and Fisheries and Oceans Canada. Can you give me what the cost is now under those various departments for doing these services, plus the full-time equivalents, and compare that to what we'll be left with at the end of the day when this new agency is set up?
From a farmer's perspective, which I am, we would think you should be coming in at at least 25% or somewhere thereabouts in savings. We'll see when we look at the figures.
The last question I want to tie in is this. We people sitting around here have to deal with what departments, agencies and crown corporations do from a political perspective. Maybe the best way to see how you would operate is to get you to run through an example.
Say, for example, Mr. Collins here has a request from a constituent who's having problems with lamas in quarantine. When he gets that request, what does he do? Does he go to the minister? Does he go to the agency? Say he doesn't get satisfaction at various levels. What does he do? How does he handle it?
I agree we have a minister accountable and responsible, but if it's far enough removed from the minister, the minister can say ``Ah, that's just the agency. We'll get around to that in our annual report.''
So how does the politician, who's the one on the front line in terms of these complaints, handle this? How does Mr. Collins handle that complaint on lamas in quarantine for a year?
Mr. Doering: Very slowly.
Some hon. members: Oh, oh!
Mr. Easter: There are really two questions there.
Mr. Doering: That's not such a hypothetical case. I'm familiar with this. It rings certain bells with the lamas down in South America.
Some hon. members: Oh, oh!
Mr. Doering: I'm pleased to take the opportunity to answer both your questions, Mr. Easter. In fact we do have those numbers here for your second question, and I'll ask Mr. Derouin to provide those to you.
I'm pleased and proud to report that when Mr. Beaver did the analysis of food inspection in Canada three years ago, the federal government was spending about $410 million to $420 million a year on food inspection, and we'll be down to $300 million by next year. That is more than a 20% reduction in cost. By 1998-99 we'll save another $44 million.
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It is important to say, though, that these savings are not at the expense of food safety. By re-engineering the food inspection system, by doing a better job with the provinces and by simply getting rid of the overlap and duplication, we can deliver a better product at a much lower cost. There will be a very significant cost reduction for the taxpayers of Canada. I'll have Gerry give you the exact numbers in a moment.
In terms of your last question about the llamas, for a little while there was a thought that alternative service delivery... The thought was to move some of these activities away from the role of government. But it didn't take long in our many dozens of meetings with industry to see that no one wanted that. No industry came to us and no province came to us to say they wanted less of a role for government. The role of government is absolutely critical to food inspection in terms of food safety and also in terms of the Canada-approved, Canada-certified, Canada-inspected product for trade purposes. So it's interesting to note that for all the current talk about deregulation, this is not an area in which people have been talking about deregulation or less government.
It was clear to us that this is a function for government. The minister has to be responsible. All we were doing was trying to make some important administrative innovations so that we could be more efficient and deliver that kind of product at less cost. The arrangements that we now have, in terms of the minister being accountable...he's clearly 100% accountable for this in the agency. There's no arm's length in terms of his accountability at all, Mr. Easter. As members of Parliament in the traditional Westminster model, you will have a minister who is accountable for this.
We knew we could never have a case where someone would say ``Don't talk to me about your llama problem.'' Or even more significantly, we knew we could never have a case where someone would say ``Don't talk to me about the fact that your daughter died of E. coli 0157 or something, it's not my problem, speak to the president.'' That's not on. The minister is fully accountable. He is responsible for it as the overall director of the agency. We can't be much clearer than that in proposed section 41.
But with your agreement, Mr. Chair, Mr. Derouin can provide a very quick set of numbers for you to demonstrate the savings we have here.
Mr. Gerry Derouin (Executive Adviser, Finance, Office of Food Inspection Systems, Department of Agriculture and Agri-Food): Mr. Chairman, in 1995 we did a rough estimate because the organizations are part of other organizations. We had to make some assumptions about the numbers.
So to get to the $400 million that existed in 1995, the agriculture department had about$290 million in the FPI program, the Department of Fisheries and Oceans had about $30 million, and the health department had $50 million for both the policy side and the delivery side of their food inspection program. The balance of the $400 million is what we call overhead, the corporate support costs that are in the three departments and in the regional offices and that kind of thing.
By the time the agency is up and running, costs will be down to $300 million, and there will be a residual amount in the Department of Health for the policy side. That department takes over the setting of standards, research and policy-making with respect to food inspection.
In terms of the number of people, in 1995 there were about 5,100 people in the system. By the time the agency is up and running, the agency itself will have 4,500 people. There will be more people in the health department to do the policy-setting that I mentioned earlier.
The Chairman: You can put that on a chart or a sheet so you can table it with the committee as well as having it in the record.
Mr. Derouin: I'd be glad to.
The Chairman: Thank you.
Mr. Hermanson, and then Mr. Chrétien.
Mr. Hermanson (Kindersley - Lloydminster): Thank you, Mr. Chairman.
Thank you, Mr. Pickard and gentlemen, for appearing before the committee.
Mr. Easter stole a couple of my questions, but fortunately I still have a few left over.
Starting off with the very beginning of the bill, in clause 2 it states very clearly that this food inspection agency will be responsible to a minister, and the definition of minister is anybody the government chooses to be the minister. It could conceivably not even fall into the Department of Agriculture right off the bat. I suspect it's going to go to the Minister of Agriculture as his responsibility, but according to this bill, at any time, with an Order in Council, this agency could be transferred to the Department of Health or to the fisheries department or to the Department of Foreign Affairs, for that matter. I can see nothing in here that stipulates that the minister responsible needs to be the Minister of Agriculture. That concerns me greatly. I don't understand the rationale behind that.
Mr. Doering: I believe the thinking there from the Department of Justice drafters was that one can't assume there will always be a Department of Agriculture and Agri-Food, but I'm pleased and proud to report, as you may know, that the Prime Minister has announced it is Mr. Goodale, the Minister of Agriculture and Agri-Food, who will be responsible for the agency. It's most likely that it would be the person in that function, although I can just share with you that it won't be my say.
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I would assume it would continue to be like that in the future because part of the rationale for the agency was to separate the health and safety standards setting with another minister, so that such a minister is responsible for that so-called steering function, whereas the rowing function of the agency would rest with another minister. So the severance for the Minister of Health would be considered.
In terms of why the Minister of Agriculture as well is not another one, 75% of the activities the agency does were being done by the Department of Agriculture. It really is primarily an Agriculture and Agri-Food activity, but that minister will have to of course look out for the fisheries and other aspects of the work. But you're right: theoretically, the Prime Minister could arrange to have it report to some other minister other than the Minister of Agriculture and Agri-Food.
Mr. Hermanson: Just very briefly, could the responsibility of reporting be to more than one minister, such as the Minister of Environment as well as the Minister of Agriculture, or the Minister of Health and the Minister of Environment and the Minister of Agriculture? Is that possible under this wording? Or would it have to be one minister?
Mr. Doering: No, part of the clear intent here is to be clear on accountability. I'm not aware of any departmental corporation that would report to more than one minister. This would be the Minister of Agriculture -
Mr. Hermanson: You can't divide the responsibility within the agency to different ministers and say you're going to leave the Minister of Agriculture generally in this area, but you're going... You said that maybe the Minister of Health would set some standards. Perhaps you can translate that into certain roles of the agency as well.
Mr. Doering: I can honestly tell you that I can't imagine how that could be done,Mr. Hermanson. There is a specific responsibility for the Minister of Health set out in the act. His or her responsibilities are limited to that. The Minister of Agriculture and Agri-Food is the minister responsible for the agency.
Mr. Hermanson: Okay.
You also talked about the agreement of the provinces to move in this direction. Listening to your explanation, it would almost sound like this is an opportunity for the provinces to download onto the federal government, which is the reversal of what we've been seeing in the past number of years. Are the provinces going to just wrap up their food inspection agencies at the provincial level, or are they going to continue to provide services? If they are, where is there going to continue to be duplication?
Mr. Doering: The Canadian food inspection system is an interesting federal-provincial-municipal harmonization initiative that's been underway for about two years now. They've made really good progress in recognizing that food inspection is a shared responsibility. It can't be done completely by the feds; it can be done by the provinces. It's a classic example of shared responsibility under the Constitution. What the provinces have said throughout is that we should be concerned with what makes sense. So if the federal government can get its act together and have a single agency - which is what we've done, partly due to the complaints of the provinces - we could do a lot better job of working together.
There are already many agreements where the federal government does some activities for the province, and where the province does some activities for the federal government. So it's a case of getting government right, not a case of putting it in the federal government or in the provincial government. All of the provinces - and we deal with them everyday through the Canadian food inspection system - are very strongly supportive of this because they see opportunities to get rid of a lot of the overlap, but to also deal with the gaps. For example, you could have a province that says you have the economies of scale and you have 4,500 people, and could ask you to carry out this activity on their behalf. Under this legislation, we could on a contractual arrangement.
On the other hand, at the same time under this legislation - and this is a real case that is now being discussed - it could very well be that some federal activities, such as those at the retail level, for example, could be carried out by the provinces on behalf of the federal government, and we'd provide them with some money to do that. So we could end up with a very creative administrative solution to the dilemma of the mixed, fragmented jurisdiction in this area. It's really a case of working together as the key.
Mr. Hermanson: Okay, but does this legislation delineate, for instance, whether the federal or provincial government is responsible for food inspection in restaurants? I'll just use that as an example. Is it that specific, or does this all have to be negotiated down the road?
Mr. Doering: No, this changes no jurisdiction. The federal government's jurisdiction is retained, the provincial government's jurisdiction is retained, and the municipal government's jurisdiction is retained. What this legislation allows us to do is a much better job of working together, because what you really need... There's no point in having a federal inspection in a plant, then provincial jurisdiction over the truck that takes it, then municipal inspection when you go to the restaurant, and then the person who's dealing. The only way you could really deal with food safety is if you take a more holistic, comprehensive approach, which means all levels of government working together.
Mr. Hermanson: So where there's overlap now, there would still be overlap unless there was an agreement between the provinces and the federal government to eliminate that overlap.
Mr. Doering: Fiscal pressures have actually resulted in the case where there's very little overlap between the federal government and the provincial governments. Where the overlap exists is between one federal department and another. At the moment, there are more gaps between the federal government and the provinces than there are overlaps, and the Canadian food inspection system is certainly very confident that we can do a much better job by dealing with those gaps.
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Mr. Hermanson: Mr. Easter brought up the PMRA. Have you studied the PMRA? It looks like the PMRA has become an agency controlled by the bureaucrats, who want to have a very large service - larger than necessary - paid for by the user. The potential for the food inspection agency is to go down the same path.
We had some briefings here that said the staff might be 3,400 - an 18% drop. You're now talking about 4,500. Perhaps some staff who are currently doing food inspection are going to be retained in Health and at Fisheries and Oceans, so are we going to end up with the same mess that we're seeing with PMRA with this new food inspection agency?
Mr. Doering: Absolutely not.
Mr. Hermanson: How can you guarantee that?
Mr. Doering: I promise.
Really, though, we can't solve the problems that people are having with the PMRA. There's no doubt, however, that with the process we've now been engaged in with industry, the provinces - everyone - over the last two years, I think people really believe we can simply do a better job here. That's why we enjoy so much support. Whether it's the Meat Council, the Fisheries Council of Canada, the poultry people, or the retail food trade people, if they know food inspection, these people understand that the key is working together. If we can do that, we can save money - and we have a commitment. The savings have already been booked for 1998-99. There are savings to taxpayers of another $44 million in 1998-99.
In terms of cost recovery, the government is making it clear that there's no intent or dissipation of additional cost recovery at this time. The savings were totally associated with getting rid of overlap and duplication, therefore 80% of the money is coming from the taxpayer. That is why you have to have this kind of accountability to taxpayers through Parliament. So this isn't a privatization or a push for an additional cost-recovery initiative. This is a better-government initiative.
Mr. Hermanson: Are you indicating that my information, which says the agency's cost-recovery targets are to go from $40 million - or 13.3% of the budget of $300 million - up to 23%, or $70 million, is not a correct statement?
Mr. Doering: No, it's not. These numbers are difficult. I'm not trying to pretend that they are too complicated, sir, but there's a lot of confusion about these numbers. I wonder if I could have Gerry quickly walk you through these.
There is no additional cost recovery associated with initiative other than now exists in Agriculture's business alignment project. That target, as you know, was aimed at getting to$60 million but hasn't been achieved. In fact, Agriculture has had to let more people go because they haven't been able to meet that target.
Gerry, could you elaborate on those numbers for Mr. Hermanson, please?
Mr. Derouin: The number that Ron used was $60 million. That relates to the estimated cost recovery that Agriculture included in its part III, $58.5 million, and just recently the Department of Fisheries and Oceans introduced a new cost-recovery plan that is suppose to generate $4.8 million. So the sum of the two together is just a little over $60 million.
Mr. Hermanson: Your business plan here shows revenues: a base of $12.6 million, and a new $26.1 million, for a total of $38.7 million in fiscal 1995-96. Revenues for 1996-97 show a base of $12.6 million and $43.4 million new, for a total of $56 million. Fiscal 1997-98 shows a base of$12.6 million and $46 million new, for a total of $58.6 million. Are these figures correct?
Mr. Derouin: Those are the estimates that we have to date.
Mr. Hermanson: I have a last, very quick question. My understanding is that some of the responsibilities that are currently under the different departments - Health, Agriculture and Agri-Food, and Fisheries and Oceans - will remain with those departments. For instance, labs that are involved with food inspection will remain under Health Canada's jurisdiction, but there's some uncertainty as to whether they'll be used or who will pay for them. When you're considering these cost savings, are you considering the costs of those labs and other items if they remain in use under the other administrator's jurisdiction?
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Mr. Doering: Mr. Hermanson, the creation of the single agency will make lab rationalization much easier to do.
At the moment Health Canada will continue to have a lab function to help them carry out their standard-setting activity. In fact in June some Agriculture employees went to Health Canada to consolidate that at the lab in Guelph. But all of the Fisheries and Oceans inspection labs and all of the Agriculture labs will go to the agency, and then the the president and the executive group of the agency will be able to work through how these can be rationalized and how some savings can be generated. We're confident that some can, but this takes time.
Mr. Hermanson: Have you considered in your savings plan the fact that some of the money may still be spent in Health Canada?
Mr. Doering: Yes.
Mr. Hermanson: So that's not included in any savings or projections?
Mr. Doering: No, no.
Mr. Hermanson: Okay, thank you.
The Chairman: To the witnesses and presenters, I have to excuse myself for the rest of today's meeting. Mrs. Ur will take the chair and Mr. Chrétien is the next questioner.
I'm sure our paths will cross again before we're finished with Bill C-60.
The Acting Chair (Mrs. Ur): Go ahead, Mr. Chrétien.
[Translation]
Mr. Chrétien (Frontenac): I want to thank Mr. Doering and his group as well as Mr. Pickard for having come here this afternoon to inform us about Bill C-60.
There are several aspects of this bill that are of concern to the Official Opposition.
Clause 5 mentions that the president and the executive president will be appointed by the Governor in Council. An advisory board of not more than 12 members will also be appointed.
Recently, the government appointed 250 new returning officers. It also appointed chairs of arbitration boards in human resources centres and made other related appointments. The Opposition has some concerns about this, all the more so since clause 13 says that the president will appoint or hire the Agency's employees. That is very worrisome. Can you allay our anxieties in this regard?
Mr. Doering: Thank you for your question, Mr. Chrétien. It is a very important question for us.
Peter, can you explain the situation?
Mr. Peter Brackenridge (Senior Advisor, Office of Food Inspection Systems, Agriculture and Agri-Food Canada): Thank you, Mr. Chrétien, for having asked that question. About clause 5, which talks about the president and executive vice-president of the Agency, it must be said that under the Agency's responsibility structure, the relationship between the president and the minister can be considered equivalent to the relationship between a deputy minister and a minister.
It is expected that the appointment process for the president and vice-president will be similar to the process used to appoint deputy ministers. The executive vice-president position would be comparable to that of an assistant deputy minister. The appointment process will be the same as the one being used at the present time to appoint an assistant deputy minister. The persons chosen to occupy that type of position are chosen for their competence.
I will now talk about the advisory board. Clause 10 provides for the constitution of an advisory board which would advise the minister on matters within the responsibilities of the Agency.
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It is important that people appointed to the advisory board have the necessary knowledge and experience.
As for the employees, the Agency will be governed by the Public Service Employment Act, which is administered by the Public Service Commission, during a transition period until a staffing process has been established which will allow the Agency to attain its business objectives and hire personnel and train them in an efficient and effective manner.
During the transition, the Agency will prepare a business plan which will reflect the basic values of the Canadian public service. This means that the appointment process for the president and vice-president will be the same as for deputy ministers and assistant deputy ministers.
There will be a transition period for employees. A values statement for employees will be drafted, as well as one for the Agency vis-à-vis its employees, and it will be included in the corporate business plan.
As concerns the advisory board, it will be necessary for its members to have the knowledge and experience needed to advise the minister.
Mr. Chrétien: I have listened to you very attentively. All of that is very nice but I must say that you have not reassured me at all, all the more so since you said that the rules governing hiring were going to be suspended for an indeterminate length of time during which the president and vice-president will be doing the hiring.
Imagining the worst, one might conceive that the president, although a very competent person, could be a Liberal, and his vice-president as well. All of that is normal, since the current government is Liberal and Liberals are in the majority. One might also imagine that the vast majority of members of the advisory board will also be Liberals. Isn't there a danger that a large number of party activists from the governing party will be hired, since the hiring procedure will be suspended?
All of this is very worrisome. Moreover, if one looks at what has happened in the past, there is cause for concern. Your comments have not reassured me. Perhaps you would have something to add.
One can also read in the bill that the Agency may enter into professional contracts as it sees fit, particularly with legal professionals such as lawyers or notaries.
About these contracts, I know how things are done in the regions, where we see people leaving one office for another because there has been a change in government. I'd like to point out that although the Liberal Party committed itself in its Red Book to decreasing the number of such contracts, we became aware two weeks ago that their number had in fact increased as compared to the contracts handed out by the Conservative Party.
I would also like to have your opinion about the location of the head office of the Agency. Section 9 states that the head office of the Agency shall be in the National Capital Region, but the Governor in Council may by order direct that that head office be located anywhere else in Canada. Isn't there a danger there? It is conceivable to think that in a few months or in a few years, if the new minister of Agriculture and Agri-Food were from Nova Scotia, for instance, he might decide to transfer the Agency to his riding; such things have been seen quite frequently.
There's another point I would like to broach which is Quebec representation. I also have other questions, but I want to give you the time to reassure me on the previous ones.
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[English]
Mr. Doering: Mr. Chrétien, on your second point, the matter of the head office of the agency, the wording we've used here is fairly standard and conventional. It's in the national capital region or at another location that could be determined by the Governor in Council.
It is always open to the government to make those changes, but in my experience, food safety is so critical that it is not an area the government would compromise by activities that would be considered by most of us imprudent. But we can't go beyond that. This is still jurisdiction for the government. I concede that.
I would say, though, that on your first point, food safety is not an area that ministers traditionally interfere with in inappropriate ways. The government understands how critical it is. This is a very serious regulatory role that the agency will play, and we believe that while we've provided some flexibilities for the agency, at the same time we've provided some real checks and balances: the role of the Minister of Health to audit what the agency does, the role of the Auditor General to audit, the opportunity for members of Parliament to oversee the activities of the agency and the guarantees for a variety of activities.
We believe we have sufficient checks and balances there to protect the public interest.
The Acting Chair (Mrs. Ur): We'll move on.
[Translation]
Mr. Chrétien: I would have a few more questions.
[English]
The Acting Chair (Mrs. Ur): You've used up your time.
[Translation]
Mr. Chrétien: Mr. Hermanson spoke much longer than I, madam chair. I would like to ask you to be fair.
[English]
The Acting Chair (Mrs. Ur): Actually, Mr. Hermanson had 14 minutes and you've had about 16 or 17 minutes.
[Translation]
Mr. Chrétien: But it seemed to go by so quickly.
[English]
The Acting Chair (Mrs. Ur): Next time around. Sorry.
Mr. Reed.
Mr. Reed (Halton - Peel): Thank you, Madam Chair.
Actually the question I had about the streamlining of government and where these cost savings are going to be effected I think you really outlined as well as you could to this point.
Perhaps you might clarify that this process is still ongoing. I take it this is essentially enabling legislation and you'll be undertaking a course of action over the next...
Well, let me ask this question. Do you have a timeframe for getting over the streamlining?
Mr. Doering: Yes. Thank you, Mr. Reed.
The government agreed that there would be some start-up costs and they'd really need to give the agency some time to get its feet, get organized and then start to generate savings. It was terribly important that we implement this well, that we didn't have a slip between the lip and the cup. There are food safety issues here that are terribly important. There are trade and commerce implications that are very significant.
So the government agreed that the agency would get whatever the three departments are now spending. For its first year, that's what the agency would get. There's no requirement to reduce expenditures in its first year. It's for the second year, 1998-99, that we've made the undertaking - indeed the Treasury Board has already taken the money - of the additional$44 million that the agency will have to realize by virtue of getting a really good handle on this overlap and duplication.
This was not a number we pulled out of the air. Some pretty serious work was done on estimating that if you had a single agency, with HR and financial flexibilities, reporting to a single minister, you could save some money over than the existing situation of four departments reporting to four ministers. The estimate was roughly at that time between 10% and 15% of what is spent. That's where the $44 million came from.
So we have the first year to get our feet, but in the second year... There may be fewer numbers of people, and if we can't do it through... It really will be an important organizational change, but we remain confident we can do it. It's significant but manageable.
Mr. Reed: Do you expect that the federal-provincial changes or alterations that are made will be more or less uniform across the country? In other words, do you expect all provinces to more or less line their ducks up in a row together?
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Mr. Doering: I wish I could say yes, Mr. Reed, but frankly the answer is no. It would be nice, and clearly if we can harmonize standards it will be a much easier to move to harmonized inspection. But the circumstances are really quite different in the provinces. They are very different now. Some provinces have considerable inspection programs, others do not. Some provinces want to take parts of it and have the federal government do it, other provinces have in mind that maybe they could do some of the federal inspection.
So I think basically within the broad multilateral arrangement of the CEPA's blueprint there is a broad thing that has food safety, risk-based allocation resources - a bunch of principles. Within that broad multilateral framework, I think we're going to have to be content for now with having basically bilateral arrangements. I'm hopeful that down the road we can move to a truly Canadian system far more seamless than it is now, sir.
Mr. Reed: Thank you very much. Thank you, Madam Chair.
The Acting Chair (Mrs. Ur): Thank you. We'll go to Mr. Collins now.
Mr. Collins (Souris - Moose Mountain): With regard to Bill C-60, in your opinion have we addressed the concerns that the potential risk posed by the lack of uniformity is going to be overcome?
Mr. Doering: We've taken a big step, a really big step. The primary responsibility for food safety must rest with the industry that produces it. Consumers have a major responsibility in terms of their own care, but in terms of the role of government, we think we've taken a really big step here.
If we can get rid of the overlap and duplication at the federal level we can do a much better job of working with the gaps at the provincial level. This takes time, though, and the provinces are very jealous of their jurisdiction here. In many provinces it's actually carried out more at the municipal level than at provincial levels, but we remain confident that while we don't have the perfect system we may very well have the best in the world.
Mr. Collins: The Auditor General was concerned about the differences in procedures and standards under the various legislative mandates. In your opinion, are the actions we're taking going to allay his fears?
Mr. Doering: Yes, and this is so even in the Auditor General's opinion, might I say without quoting him, sir. He did a follow-up audit to the audit to which I referred, which Mr. Beaver was one of the principal auditors of, and in that audit he made several very positive statements about the progress that will have been achieved by the creation of the new Canadian Food Inspection Agency.
Mr. Collins: I understand that there are provinces that support the single inspection agency as a means of fostering greater collaboration between the two levels. What I would like to know from you is how many provincial governments have entered into any kind of a contractual arrangement at this time?
Mr. Doering: Several already, and the agency will become the assignee of the existing ones. To give you some examples, in Manitoba provincial meat inspection is done by the federal government, and this is equally true in most parts of British Columbia.
Alberta has written us a very interesting letter; they're anxious to sit down and have a kind of comprehensive set of negotiations on how we could work better on this. Indeed, the minister,Mr. Paszkowski, has written Mr. Goodale only this past week suggesting that Alberta have a representative on the federal advisory board.
We have excellent arrangements with Ontario both in terms of lab arrangements and other arrangements. Nova Scotia has a new meat inspection act, done in part to accommodate what the federal government has just done here. I was speaking to their senior official, Mr. Horwich, only this morning. So I'm quite confident that we'll have quite a number of these.
Mr. Collins: Do you have a timeframe for completion of those provincial-federal negotiations?
Mr. Doering: We're doing them right now. You may never get a completion of them. In many ways federalism is a process rather than a product, sir, and I think you will simply have a process to keep doing it better and better. I'm not sure you'll ever get a completely comprehensive negotiated arrangement like that.
Mr. Collins: I certainly support the idea that we remove as many levels of government and get it to be as efficient as we can. Under HACCP, is everybody in agreement with your seven points that those are the basic principles?
Mr. Doering: Yes.
Mr. Collins: Secondly, when you talk about established tolerances at each critical control point, what are you talking about there? Can you give me an example?
Mr. Doering: HACCP is an internationally recognized initiative now because we're very closely connected to the international standards under the Codex Alimentarius. The HACCP process is really for other members a quality-controlled program that industry would follow. They would identify the critical control points at each stage, of which there are seven, and they would be monitoring their own activities.
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If companies move in the direction of HACCP the role of government can change. It can change quite usefully for us, in that instead of being the hands-on, carcass-by-carcass, poke-and-sniff inspector, we're more the auditor of industry's risk assessment systems; that is, HACCP. Some food groups have moved in that direction already. The dairy industry, in terms of the Krafts, Nestlés and others, have already got full HACCP programs. The federal government role in terms of inspecting these agencies is very modest. The big change is going to be HACCP in the significant meat industry, and that's well under way. We remain very confident that within a year or two you'll see a big change there. Certainly the Americans are making a change. It will make it a lot easier for us.
Mr. Collins: By way of an observation, I was just over to England and Ireland and I have some real concerns about who's using the HACCP process over there. You read in some papers... Everybody seems to be changing the measuring stick they're going to live by. I think we really want to be very careful we have an assurance that the quality we have is a quality that is not only provincial-federal but worldwide.
Thank you, Madam Chair.
Mr. Pickard: Madam Chairman, excuse me, I got a notice to be back in the House, so I appreciate your patience with us. The department officials will stay here and answer questions as long as the committee wishes.
The Acting Chair (Mrs. Ur): Thank you, Mr. Pickard.
Mr. Hermanson: On a point of order, I have a very brief question. I have to go to the House probably for the same reason as Mr. Pickard. I wondered if I might have leave to ask a very brief question and then leave. I won't bother you any more.
The Acting Chair (Mrs. Ur): If it's agreeable with the rest of the members.
Mr. Hermanson: Thank you.
I'm not satisfied with your answer about why the Minister of Agriculture is not responsible. I'm looking farther in the bill, at the consequential amendments, and I see the Canada Agriculture Products Act is amended to delete the minister and put in whoever the Privy Council chooses. Then I see above that for the Agrifood Administrative Monetary Penalties Act, which is one we just passed a few months ago, the same thing occurs. Obviously, if there's no more Minister of Agriculture we have to change a lot of acts.
I'm a bit nervous as to why suddenly it seemed appropriate to let this decision be made through an Order in Council rather than specify in the bill that the Minister of Agriculture should be responsible for this agency. Your first answer isn't good enough in light of what I've just found.
Mr. Doering: I'm sorry I can't reassure you, sir, but the agreement of your committee to have you go ahead demonstrates yet again how food inspection is a non-partisan issue. Do you agree with me on that? Food inspection is too important to be treated in a partisan way. We saw that in the committee here just now.
I'm sorry, I can't say more than that this is a fairly conventional method. For now, it's the Minister of Agriculture and Agri-Food. Beyond that, I don't know what else I can say, sir. I'm sorry.
The Acting Chair (Mrs. Ur): Mr. Calder. Thank you for your patience.
Mr. Calder (Wellington - Grey - Dufferin - Simcoe): It is not a problem. In fact,Mr. Hermanson just gave a preamble to what I was going to ask in the first place.
I have two questions and I'll go to the second one first, which is about the statement you made, Ron, that there might not always be a Minister of Agriculture. I find that worrisome. If you also take a look at clauses 3 and 4 in it right now, according to the description and analysis from the Library of Parliament, the Canadian Food Inspection Agency would be established as an agency of the Crown reporting to a minister to be designated, currently the Minister of Agriculture and Agri-Food. In other words, it means to say there's latitude whereby this thing could move around.
If there wasn't a Department of Agriculture, then there's a chance of this thing itself becoming an agency, where I, as a member of Parliament, can't really reach out and touch it any more. I have concern with that. Say, for instance, the Department of Agriculture was turned into the Department of Rural Affairs - what's your comment on that?
Mr. Doering: Of course there will be some minister responsible for agriculture forever, and certainly in our time in Canada, sir. I was really making a more technical point, which is that it may not be described as agriculture and agri-food. If that was the case, they would have to amend this act. There wasn't always a Minister of Agriculture and Agri-Food. It was called the Minister of Agriculture. Before that it was Fisheries and Agriculture. It's had different names associated with it historically. So I think that was the point I was making, not that there wouldn't be a minister.
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Mr. Calder: Okay. You're telling me that this agency will always be part of a department where I, as a member of Parliament, will be able to reach out and touch, if I have to.
Mr. Doering: It will always be responsible to a minister of the Crown, who you can touch.
Mr. Calder: Thank you. That brings me to my second question. Right now we're dealing with another issue Mr. Easter alluded to, and that's PMRA; we have a problem right now with the way that budget is set up through cost recovery.
I'm now looking at an agency that is going to employ 4,500 food inspectors. It's basically bringing staff in from Agriculture, Health, and Fisheries and Oceans, and is going to run on a budget of $300 million. Is there a percentage of that budget that is going to be pulled out of cost recovery too? Do my farmers have to look at an extra cost out of that?
Mr. Doering: I don't think so, Mr. Calder. In fact one of the great advantages of the agency is that it will be able to focus on cost avoidance, cost reduction, and the introduction of new technologies and re-engineering the system, rather than resort to cost recovery. Cost recovery is something you have to do only as a last resort.
One of the things we've been able to do through the re-engineering that will be permitted here is... There's nothing more wasteful than trying to be more and more efficient, and doing things you shouldn't be doing in the first place. A lot of what's done now need not be done. Through the more reorganized system you can be much more effective and spend less money.
We've given you the detailed numbers; there's no secret about this. As Mr. Derouin said, about 20% now is cost-recovered. No part of the agency mandate or business plan anticipates it to be over and above that. This is not a technique to do more cost recovery.
That is not to say that down the road, in the year 2000 and after, in clear consultation with industry, the agency's management wouldn't deal with industry and say ``Can we sit down and discuss whether there's another way to do this?'' But certainly for the next two years, it's clear; the commitments we've received... The Minister of Agriculture has made a very clear commitment, in the House and otherwise, that there be no change in this regard without clear consultation with industry.
Mr. Calder: Okay. Thank you very much.
The Acting Chair (Mrs. Ur): Now, to earn a reprieve from Mr. Chrétien, round two. Did he want a question? No?
We will go to Mr. Landry.
[Translation]
Mr. Landry (Lotbinière): In your presentation, you said earlier, referring to personnel, that there would be a two-year transition period. Can you tell me what will happen after the two-year transition period?
Mr. Brackenridge: It is a one-year transition period. The transition involves the Public Service Employment Act.
As for the two-year period, that is the period of guarantee that will be given to employees for the transition to the Canadian Food Inspection Agency. Afterwards, it will be up to the Agency's administration to decide, according to the needs of the Agency and of the industry, after consultations with the industry and the provinces, how it wants to organize for the long term.
In fact, we don't expect any major changes for the employees after those two years. It is Treasury Board policy to offer a two-year guarantee to employees such as those of the Canadian Food Inspection Agency.
Mr. Landry: Thank you.
[English]
The Acting Chair (Mrs. Ur): Mr. Easter.
Mr. Easter: I wasn't asleep. I'm worried about this minister business. Anyway, it doesn't matter. I'm thinking out loud here.
In terms of the independence of the agency and its hiring practices - you basically operate as a separate employer under the Public Service Staff Relations Act, correct? Do you have any independence from Treasury Board in terms of those hiring practices, or is Treasury Board going to be the overall watchdog, or guiding principle, or whatever you want to call it? In other words, how independent is your independence? How far removed are you from Treasury Board guidelines in terms of your independence as an agency in your hiring?
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Mr. Doering: About that much, Mr. Easter.
The answer is really both. The agency will continue to be subject to a variety of Treasury Board guidelines. At the moment there are over 200 agency guidelines and a whole range of HR regimes. Many of these will apply to us - travel details, leave without pay and a long list of things the agency will adopt as its own.
Where we will be looking for real flexibilities, once we're a separate employer, is to be able to negotiate collective agreements with our own staff, so that, for example, we can overcome complaints that have been around for many years.
Government public servants work seven and a half hours a day, but the meat plants work eight hours a day. A solution to that rather modest problem has eluded everyone for a long time. If we can sit down and work with our staff in a collegial way, there's no reason we can't improve their situation and achieve some significant efficiencies.
There's no doubt that the long arm of the Treasury Board is still there. It's there to protect the interests of Canadians and parliamentarians, frankly. But they've agreed to a whole number of interesting flexibilities that we believe are offset by improved reporting, and will make a significant difference in how we deliver service to Canadians.
Gerry worked at Treasury Board for years. You can tell by the look on his face.
Mr. Easter: I'll admit that you get that kind of look at Treasury Board.
Mr. Doering: You can't get it out of your face.
Mr. Derouin might like to take a minute to elaborate on what I said. I think we will be freer from a lot of Treasury Board rules than most departments, but will still be subject to a whole range of important matters because we're still a public agency.
Mr. Derouin: I will go through a partial list. We have a long list we can go through.
In answer to your question on whether Treasury Board will be involved in collective bargaining, Ron's answer is yes. The Treasury Board will have an oversight role, and they'll adjust that to accept the objectives of delivery.
A second flexibility the Treasury Board is considering is multi-year appropriation, which allows the agency to carry over from one fiscal year to the other funds that are appropriated by Parliament but not spent. This is something you'll see in the Appropriation Act once the agency gets up and running, and once the Treasury Board defines the procedures on how it's done. And that will allow the agency to roll over from one year to the other all the funds that are unspent. The agency can use these moneys to offset changes in cashflow from revenue it has not received, or to invest in the kind of re-engineering the agency needs to do to become more innovative.
A third area relates to GAP. Tom mentioned that one earlier, the move to accrual-based accounting. That allows the agency to be a little different in terms of its management reporting. The system we have now is cash-based. It suits the needs of the parliamentary system for approval of aids and supply, but it's not very helpful for managers in terms of how they're using their assets and displaying to industry how costs are generated for pricing. The GAP system will enable the agency to do that.
Another section - I believe it's clause 18 of the act - talks about optionality of service providers. That gives the agency the power to select, on a cost-benefit basis, a better way of delivering goods. For example, Public Works and Government Services Canada does all the purchasing, rental of properties and that kind of thing. The act enables the agency to ask Treasury Board for the power to do its own rental. If the agency can do that, it can be smarter about how it uses its space. Instead of having space in downtown Montreal, we can look at alternative ways, like telework or hoteling - having employees work from an automobile instead of renting office space for them.
Those are the ones that come off the top of my head. I can go on for a long time and talk about these things, but those are the things we have in the legislation and we've worked out with Treasury Board. It's a completely different environment.
Mr. Easter: So you're looking at greater flexibility in that area, and I suppose all those kinds of arrangements will be worked out with the labour unions affected. In this town I find that bureaucracy takes on a life of its own, even worse than in the Reform Party.
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There are two kinds of negotiations that will go on. One is in terms of the union staff, and the other is in terms of the non-union. I can be wrong in assumptions, but there are three departments involved. Under Agriculture I know there's an assistant deputy minister in terms of inspections. I expect there's an assistant deputy minister in Health in the areas being transferred there, and an assistant deputy minister in Fisheries and Oceans in the area that's being transferred there.
Will two of those three assistant deputy ministers be gone at the top end? We're looking at savings here, and two assistant deputy ministers will become obsolete at the top end. Is that what will happen, and then the assistant deputy minister becomes - it's in here - president or whatever it is? Can you fill me in on that process?
Mr. Doering: Yes I can, Mr. Easter. In fact we have made some progress moving towards the agency already. The inspection group at Health Canada has already moved. We did this in a prior step that didn't require legislation, so the entire inspection staff at Health Canada, two hundred and some people, moved to Agriculture as a holding step in June. It's this group at Agriculture representing about 90% of the people, and the 10% that would come from Fisheries that would go together to join the agency when it's proclaimed in the spring, so long as we have the legislation approved.
Already there has been some rationalization at this level. The assistant deputy minister for the Health Protection Branch at Health Canada now has an acting person there, but there may be some significant reorganization of Health Canada. That remains to be seen. But those people have already moved, so there's a saving there.
In the case of Fisheries and Oceans, there was an assistant deputy minister for the Fish Inspection Branch. That position is now at a director general level, so it's been reduced by a rank.
Mr. Easter: [Inaudible - Editor].
Mr. Doering: It's gone. I can double-check with the Fisheries and Oceans people here, but as far as I know it's gone. The new director general is David Rideout, who would then join the agency as the senior Fisheries person in the agency.
How the agency actually organizes itself is still being worked on, and will be developed on the business plan, but there is no doubt that there can be significant savings, both in terms of management and enforcement and support staff there.
Mr. Easter: Thank you.
The Acting Chair (Mrs. Ur): Mr. Hoeppner.
Mr. Hoeppner (Lisgar - Marquette): Thank you, Madam Chair.
I came in late, so I don't know whether some of these questions have been asked. I was interested in your comment about Manitoba food inspection being done by the feds. That's the right approach to take, but don't they have different regulations, so they still operate under different regulations in the meat killing plants, especially the smaller ones? That's of concern to me.
Mr. Doering: For plants that are trading interprovincially, which have to be federally registered, this is a federally registered operation and these people are federal public servants, so it's done in the traditional way.
In the provincially registered facilities, the inspection is actually carried out by federal veterinarians and federal inspectors to the Manitoba standard, but the argument is made that these standards are the same in terms of the actual level of inspection.
Where it's different is primarily in the area of the facilities. In other words, what a federal veterinarian would stop in a federal plant is exactly what they would stop in a provincial plant in Manitoba. There may be differences in terms of the size of the abattoir, whether the parking lot is paved, etc., if there are additional federal plant requirements. But in terms of what the veterinarian looks for, the standard is basically the same whether he's in a provincially or federally registered plant.
Mr. Hoeppner: The complaint I get is that the smaller plants, if they have to upgrade to federal standards, will be put out of business. They tell me they can't compete. They're producing a product that is much cheaper to market in Manitoba, but they're not allowed to market outside the province. We have to have some kind of harmonization there, I think, if we really want to become efficient and get the maximum bucks out of this.
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Mr. Doering: You're absolutely right. This initiative, the harmonization of meat standards, is the principal job of the Canadian food inspection system's poultry, meat and fish code. It's chaired by the senior public health official from Nova Scotia, Mike Horwich. On the committee they have federal veterinarians, provincial staff people, and a Quebec veterinarian, as well as representatives from the Canadian Poultry and Egg Processors Council. And Mr. Weaver at the Canadian Meat Council seconded people.
So that whole industry-government group is working on a harmonized meat standard. If we can get that, there's no doubt that Canadians will have been very significantly served. Until we do, we're going to continue to have what you've described as a kind of patchwork of standards. That's certain.
Mr. Hoeppner: You mentioned the larger parking lot or the paved parking lot and these kinds of things. They're really not necessities in a lot of places, and if they're forced upon the provincial killing plants or the processors, what are we going to get? I'm worried about that.
Mr. Doering: We have to work hard at it, but the provinces are full participants in this. Nothing is going to be imposed on them.
Mr. Hoeppner: Okay.
Mr. Doering: But we can no longer afford the old system, and people really do think that if you can get the specialists together and if we can get people together in a true kind of economic union in the sense of those standards... If we can get standards, then we can move to harmonize inspection. If you have a clear national standard, then it doesn't really matter whether a provincial person inspects it or a federal person does. That's the real goal. The agency is not the end of the change process. It's really the beginning.
Mr. Hoeppner: How much authority do you have or how much pressure can you put on them so that this process starts moving a little faster? In 1985 they were already recommending harmonization. It still hasn't happened.
Mr. Derouin: You make a good point, sir, but actually, quite a lot of harmonization has happened. As a matter of fact, in the dairy sector we now have a national dairy code that will be going to ministers of agriculture at Christmas for their adoption. It was reviewed at the meeting of the ministers of agriculture in Victoria in July. Minister Julien from Quebec spoke in favour of this kind of initiative. We have made some real progress in terms of harmonized standards in some commodity groups, but I'll be the first to agree, sir, that there's still some real work to be done. I see a lot of good will, and if we can get the professionals involved, I think we can make some progress.
Mr. Hoeppner: That's encouraging.
When does the $44 million that will be saved kick in? Is it 1997-98?
Mr. Doering: No, it's 1998-99.
Mr. Hoeppner: Why doesn't it kick in faster?
Mr. Doering: It could. There are reductions in 1997-98 that come from earlier program review reductions, and there are cost-recovery targets that had to be met for that period of time, so it isn't as though there is no reduction in 1997-98.
But in terms of those of us who put the plan together for the agency, frankly, sir, Mr. Goodale was persuaded - and he persuaded his cabinet colleagues - that in the first year we need to be able to settle in and begin, in a systematic way, to realize these savings without compromising food safety. There was a feeling that if we had one year to really address these overlaps and duplications, we could.
Also, a lot of the changes we'd make can't be done overnight anyway. In terms of the HR regime, there were guaranteed employment provisions. In terms of some of the re-engineering, we couldn't go faster than the Americans. There are some changes in which we have to keep equivalency to the Americans.
So it's not a big change. It's significant. It's about 15%, but we think we can do it. We've committed to do it by 1998-99. Frankly, sir, as a manager, I'm a little bit more comfortable now that we have at least one year's relief on that score.
Mr. Hoeppner: Okay. Thanks for that comment.
This is the other thing I was going to ask about. And maybe my mind is not quite active on this, but I've seen somewhere that there were a number of laboratories from the three different departments whose use hasn't yet been decided on. Why has that not been done? That seems to me to be the real crux of the problem in making this thing harmonized and efficient and saving some dollars for government or for consumers.
Mr. Doering: I agree with you, sir. We're certain that some of the $44 million can come from laboratory rationalization. This is a complicated subject though. I think there is a consensus, even with the provinces, that we overbuilt laboratories in the heady days of the 1980s when decisions were made. It took five or ten years for the laboratories to come on stream. And they come on stream and we've reduced our activities. Some of the laboratory work has already been privatized and more of it could be with accreditation, but it takes a little while.
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I know that all three departments have made a very strong commitment to make progress there. At a very senior level, the people have said we had better make some progress there. The agency will certainly be very helpful because one management team will be rationalizing the labs.
Mr. Hoeppner: Can you give us updates while that is happening? It would be really good to have some information on that. If we don't harmonize it or don't make use of those labs, I think that is one of the areas where we're going to lose what we gain at the other end.
Mr. Doering: I'll do that, sir.
Mr. Hoeppner: Thank you very much, Madam Chair.
The Acting Chair (Mrs. Ur): Thank you. Mr. Chrétien.
[Translation]
Mr. Chrétien: Although a certain uniformity is necessary throughout the country, with the new Agency is it possible that we might relive a problem similar to the one we had last spring when on this side of the Ottawa River it had been decided to prohibit the production and import of cheese made from raw milk, which would have affected Quebec particularly? Indeed, Quebec consumes more than 90% of cheese of that type and that decision had been taken elsewhere, where the effects were of little concern. Could a similar situation arise with the new Agency?
Mr. Doering: It is probable that the situation is better with the new Agency. The former director who dealt with that cheese matter, Mr. Brackenridge, is here.
Mr. Brackenridge: I don't want to be considered responsible for that situation.
I think it is mostly a matter of communication. The Agency hopes to improve that aspect of things. Standards governing food safety are always set by Health Canada. The Department of Health and the Minister of Health have the responsibility for food safety standards. That is one outcome of the current situation and that is why there were such problems around raw milk cheeses.
I think the Agency will want better communications between the group responsible for the field and plant inspection system and the group that sets standards within Health Canada. But it is clear under this bill that the Minister of Health will continue to be responsible for setting food safety standards.
Mr. Chrétien: If there is no change, then a similar situation might crop up again.
Mr. Brackenridge: We hope that it will not, but if it were to happen again, the bill we have before us will not provide a remedy for such a situation.
Mr. Chrétien: In clause 11, subclause 4, in order to improve the bill, might we not include an opting out provision for a province or a region of Canada which might have different needs, with full financial compensation?
Mr. Doering: Perhaps our lawyer would have an opinion on the matter of opting out. This is certainly possible.
Mr. Sylvester: There is no opting out provision in the clause you refer to, Mr. Chrétien. The clause specifies that the Minister of Health is responsible for policies and standards relating to the safety and nutritional quality of food, etc. There is no opting out clause such as the one you describe in the bill as it stands.
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Mr. Chrétien: I have one last question, Madam Chair.
Since Quebec is in several regards a distinct society, would it not be appropriate, once again with a view to improving the bill, to have a guaranteed number of members of the advisory board from Quebec and to take a similar approach to the position of president and vice-president?
Mr. Doering: Everything is possible. Why not?
Mr. Chrétien: Would that be conceivable?
Mr. Doering: Is there a precedent?
Mr. Sylvester: I'd like to point out once again, Mr. Chrétien, that the purpose sought in creating the advisory board was to give the minister maximum flexibility in appointing members. You will note that he has the power to appoint representatives from each interest group represented in the bill.
Thus, we were not seeking to satisfy the aspect you mentioned and I don't know if there are precedents. It is possible.
Mr. Chrétien: One last brief question, if you will allow it, Madam Chair.
You expect 80 per cent of the $300 million allocated to that Agency to come from taxpayers' pockets - I'm using your expression - and 20 per cent from cost recovery, from the users.
Will the users who will be paying 20 per cent of the cost be consulted about the appointment of certain members of the advisory board, so as to give those users a voice in the process?
Mr. Doering: Yes, certainly.
Mr. Chrétien: Could that be included in the bill?
[English]
Mr. Doering: Not a lot of time has been spent yet on the matter of the appointment of the advisory board, Mr. Chrétien. We'll take that suggestion on advisement, perhaps, if that's all right.
The Acting Chair (Mrs. Ur): We'll move to our last questioner, Mr. Collins.
Mr. Collins: This doesn't fall right into the inspection area, but it creates a problem out in Saskatchewan, where you have people on the processing end. You may not be able to give me an answer, but you may be able to tell me where one goes to get the answer.
When they produce an end product and sell it, they have to charge a totally different rate from the rate charged by somebody producing it in a store. It could be pork chops. He can sell at a certain rate and not have to pay some additional fees, but the poor guy who's out there doing it legally has a different rate. A number of them in Saskatchewan have approached me and asked why there's a difference.
If there's a difference over that kind of thing, are there some other elements that appear in this process that create inequities? In rural life, we're having enough trouble trying to keep those people around, and this is just another roadblock for them.
Mr. Doering: That's a good question, Mr. Collins, and Saskatchewan is a good case in this regard, in both their position on the dairy code and their position relative to meat.
In Saskatchewan, they have a voluntary meat inspection arrangement, so if the meat is not going outside of the province, you can have a meat processing operation in Saskatchewan that does not have inspection as we know it. That is a good example of the kind of patchwork of coverage of these activities.
We are, though, going to have to be very sensitive to both the jobs, trade and commerce side of this stuff as well as the health and safety matter. Saskatchewan was quick to explain it to us, reported with his usual eloquence by Barry Wilson, the experienced reporter in these matters from The Western Producer.
Some hon. members: Oh, oh!
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Mr. Doering: Saskatchewan's view is that inspection is not all it's made out to be. There are ways to ensure safe food other than by inspection. Their view is there's no evidence of a higher incidence of food-borne illnesses in Saskatchewan than there is in other places, and so it may be. This is why we have to recognize that in a country as diverse as Canada there will be different standards and different approaches to this in different places.
Mr. Collins: Thanks very much.
Thank you, Madam Chair.
The Acting Chair (Mrs. Ur): Are there any other questioners?
Mr. Easter: I have one on this minister business. My question is to Mr. Sylvester, legal counsel.
All through the act - and I know part of the reason for it - ``the Minister'' means the member of the Queen's Privy Council for Canada. If those clauses were amended to say ``the Minister'' is to mean the Minister of Agriculture and Agri-Food, what would be the legal implications?
Mr. Sylvester: Thanks for the question, Mr. Easter. I'll try to answer it quickly.
Mr. Doering put his finger on the rationale behind the change to the definition of ``Minister''. It was really a technical drafting issue. In case there were a change, for example in the name of the department, from the Department of Agriculture to the Department of Agriculture and Agri-Food, we wanted to have the flexibility to make that change without having to open up the act. So there's an Order in Council possibility of making changes in the future, not to suggest that the Department of Agriculture would disappear, but that the name of the department might change. Really there is nothing more nefarious behind that change.
The changes made in the consequential amendments were made because different ministers were responsible under different statutes - the Minister of Health, for example, and the Minister of Fisheries. So it will now be clear that for each of those subsidiary statutes, if I can call them that - those listed in clause 11 - it will be one and the same minister, the designated minister for the agency.
Mr. Easter: Madam Chair, I'd like to put on the record that as an elected member of Parliament, I do have a serious concern about the amount of changes that can be made by the Privy Council Office by way of Order in Council. That's a concern from the political side. They may seem inconsequential to people at the time, but they can have serious repercussions down the line.
We'll think about that. Thanks for the answer.
The Acting Chair (Mrs. Ur): I would like to thank the witnesses for their good briefing today.
The committee will adjourn until tomorrow morning, in Room 371 of West Block, when we will resume Bill C-38.