EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 19, 1996

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[English]

The Chairman: Good morning everyone. We will get started.

In this session we are continuing our presentations on Bill C-60, the Canadian Food Inspection Agency Act. Our first witnesses this morning are from the Public Service Alliance of Canada. I will ask you gentlemen to introduce yourselves. I see you have a presentation. You can proceed with that and then we'll go to the usual round of questions and comments.

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Mr. Larry Leng (President, Public Service Alliance of Canada (Agriculture)): Thank you very much, Mr. Chairperson.

First, I'd like to introduce the people who are with me. On my far right is Neville Vincent, the acting executive assistant to the president of the health and welfare component of the alliance. To my right is Bill Pynn, the national president of the environment component. On my left is Steve Jelly, executive assistant to the executive management committee of the alliance, and myself, Larry Leng, the national president of the agricultural union.

On behalf of the 3,000 members of the Public Service Alliance of Canada who are to be to be transferred to the Canadian Food Inspection Agency under Bill C-60, I would like to thank the Standing Committee on Agriculture and Agri-food for the invitation to appear before you this morning.

Rather than read our formal submission, I would like to take a few minutes to summarize its main points. Subsequently, I and my colleagues would be happy to answer any questions you may have.

I should say at the onset that PSAC and its three components, agriculture, health and welfare, and environment, which represents fisheries and oceans, represent members who are to be transferred to the new agency and are on record as supporting the centralization of food inspection services into a single food inspection agency.

We have taken this position because we believe an agency that is separate from government but accountable to it can be structured to provide the flexibility needed to protect and enhance the export trade and the producing industry without jeopardizing the health and safety of our food supply.

That said, we believe the specific legislation language that has been proposed by the government under Bill C-60 is less than optimal. The Canadian government could have used establishment of the Canadian Food Inspection Agency as an opportunity to engage in a serious debate with the Canadian public over the quality of domestic and imported food and the type and levels of inspection services that I believe should exist in Canada.

Yet over the eight months since the budgetary announcement that the new agency would be created during the current fiscal year, the government has done little to foster public debate, preferring instead to limit its consultations to producers, provinces, and to a lesser extent the unions involved. In our opinion, this is particularly unfortunate in light of the serious failures of the food inspection systems that have occurred in the United Kingdom, Australia and Japan over the last year.

Hence, while your current committee process is necessary and desirable, it should not be seen as a substitute for the broad-based public debate that is so urgently needed. This is particularly the case since Bill C-60 is silent on a number of issues that will affect inspection services in Canada over the next few years.

In this regard, PSAC is particularly concerned that the creation of a new agency will be used to undermine government inspection and transfer responsibility for monitoring and enforcement of food safety to industry. We note, for example, that while the Canadian government has embraced HACCP, it has not indicated in the House of Commons or elsewhere whether it believes HACCP to be appropriate in conjunction with the government verification and inspection system or as a stand alone system.

For the record, PSAC believes that HACCP is not a panacea. As a result, the government surely has an obligation to ensure that the introduction of HACCP-based systems are properly evaluated and verified. In addition and of equal importance, HACCP must be supported by their programs, such as pre-operational sanitation and proper inspection performed by government inspectors that include carcass-by-carcass and bird-by-bird inspection.

In other words, HACCP must be viewed as a supplement to complement government inspection and not as a substitute system. Anything less is unacceptable to consumers and the PSAC because it will place public health at risk.

In this regard, we believe Bill C-60 should be amended to ensure that only agency employees can enforce or administer the various acts the agency is responsible for. I should point out this is not a unique proposal. On the contrary, legislation in the United States specifically requires that the inspection service of the U.S. government be performed by government employees.

If our proposed change is not made, the new agency will have the authority to delegate the inspection and other functions to the private sector. In fact, the issue of producing companies performing their own inspection services was debated at an international forum on food inspection equivalency that was held in Washington, D.C., last month. At that forum, government representatives from a number of countries indicated they would like the flexibility to delegate inspection services to producing companies and other third parties.

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Again for the record, the PSAC believes this is fundamentally the wrong approach. We take this position because company inspection by its very nature is a conflict of interest.

One final comment on food safety is warranted within the context of Bill C-60. While Bill C-60 strives to integrate functions currently performed by the Departments of Agriculture and Agri-Food and Health and Fisheries, the bill makes the Minister of Health responsible for establishing policies and standards relating to the safety and nutritional quality of food sold in Canada and assessing the effectiveness of the agency's activities related to food safety. In our view this check on the system is entirely justified and welcome.

Let me turn now to the structure of the new agency as outlined in Bill C-60.

While we have no quarrel with the fact that the new agency is to be operated by a president and vice-president accountable to the minister, we believe the proposed advisory board is inadequate and insufficient. To be clear, the mandate and representation of the advisory board is deficient in numerous ways. First, by establishing an advisory board rather than a board of directors the government is limiting oversight of the agency.

Second, the advisory board can act only when it has an issue placed before it by the minister. Therefore the advisory board will remain largely impotent. We believe the advisory board should have the authority to advise the minister and the agency on any matters it considers to be important, as well as on matters referred to it by the minister. We also believe your committee should have the opportunity to refer matters to the advisory board.

Third, the make-up of the advisory board leaves a lot to be desired. Given that it is the government's intention to use the agency as a vehicle that will, in the words of the 1996 budget, ``facilitate the transition to greater provincial participation, leading to a truly national system'', we believe the legislation should specifically ensure adequate provincial representation on the advisory board. As well, we note the government has not included unions in the list of sectors eligible for appointment to the advisory board. We assume this is an oversight and your committee will amend Bill C-60 accordingly.

On balance, the PSAC believes the advisory board should be replaced by a board of directors that has a mandate to review the operations of the agency and provide advice to the agency and the minister, whether solicited or not. Moreover, we believe the board should be structured to ensure a balanced participation that includes union representation and greater provincial government representation than is proposed in Bill C-60.

Before concluding, I should like to say a few words about the collective bargaining environment that is contemplated in Bill C-60 and the relationship between the agency and other government departments.

In initial conversations with us, the department involved indicated that the context for collective bargaining and the employment relationship was open. Having said that, the department puts three options, namely the status quo, the Canada Labour Code, and separate employer status under the Public Service Staff Relations Act, on the table. The PSAC made it clear from the outset that federal employees would be seriously disadvantaged when transferred to the new agency unless the status quo or the Canada Labour Code were to be adopted as the labour relations structure for the new agency.

When drafting Bill C-60, the government rejected this position because of a concern that the Canada Labour Code did not provide for the designation of workers. It is poised to legislate the entirely inappropriate separate employer status under the Public Service Staff Relations Act. In other words, while the government agreed to consult, it simply ignored the legitimate positions that were advanced by the unions. Moreover, the government took this position even though the PSAC indicated both verbally and in writing that it was prepared to discuss a designation process for the new agency, and it did so, in our opinion, despite the fact that separate employer status is not in the best interests of the government or of any other stakeholder, including the industry.

The Chairman: Thank you very much, Mr. Leng.

We'll go first to Mr. Reed.

Mr. Reed (Halton - Peel): Thank you, Mr. Chairman.

Mr. Leng, it sounds to me as if you would like to shelve this whole thing for a period while a good many of these issues you have brought forward are debated and discussed and so on. Do I read you correctly?

Mr. Leng: Most certainly we think some of the direction that has been taken isn't really giving the flexibility to the agency that it should have, and we feel it's being pushed through. There should be more consultation. We most certainly made respresentation by letter to the minister and to the department officials. Instead of being the separate employer... It really doesn't give them the flexibility they need. This should be under the Canada Labour Code. It seems to us that they started to go that far, got scared halfway down and stopped.

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I have some examples of why we feel that it's so... They would still be under the Treasury Board. We could spend a year trying to negotiate something that's good for the agency and good for the employees, and after that process the Treasury Board could turn down the whole system. We don't feel that we should be spending the resources on either side to do that.

As for the whole HACCP principle, we feel there should be a public debate like they had in Washington. They invited the countries, the consumer groups and the unions to participate. We were down there. I think it was a good process. In the rush to push this through the House of Commons, it seems as though they are not taking some of the other things as seriously, or maybe they're taking them as seriously but are not allowing the time that is needed to properly deal with this, in our estimation.

Mr. Reed: Something in your statement jumped out at me, and that was the question of whether the minister should respond to an advisory board or whether there should be a board of directors. I suppose it is a philosophical difference.

Canada's inspection process historically has been among the best in the world and has that reputation. Indeed, our exports depend on the excellence of the work that your people do. I suppose it's always evolving and it will continue to evolve. Things that you did ten years ago you might not do a year from now, but you might do something that's different and so on. It has always seemed to me that ultimately the minister had to be accountable to the people through the House. Do you feel that could be accomplished if you had a board of directors that was accountable rather than the minister?

Mr. Leng: I think the board of directors could be an advisory board. But like we say in the brief, people should should be able to refer things to them from this committee or from anywhere else.

Ultimately, the minister has to be accountable to the House of Commons. In my opinion, we can't have a whole board being accountable. It should be the minister, but there should be a board of directors that can then take these issues to the minister.

Mr. Reed: You also talked about the fact that only government employees should be doing the inspecting. Are you expressing the fear that some of this inspection will be spun off into private hands? What specifically are you concerned about?

Mr. Leng: Yes, you're quite right. I'm speculating about that, most certainly. When we were in Washington we listened to Australia's proposal. They originally started out with only a veterinarian in the plant and the rest of the inspection being done by the plant personnel. They changed it to one veterinarian and one inspector. This is most certainly not desirable.

For their domestic inspection the inspectors were hired by the plant and then became plant employees. I don't know if you're aware of some of the troubles they've had over there with the food poisoning and the little girl who died. I have that report in my office.

In fact, it seems to us that some of the witnesses that were before you from the poultry processors - and it seems like this from some of the meetings I've had with the department - were wanting to use their plant employees to do the carcass-by-carcass, bird-by-bird inspection and just have an inspector monitor at some point.

We don't think this is desirable. Although this may have started 20 or 25 years ago, the same diseases are there and in some cases more so. We find that it's a real conflict of interest. When they need their production and the line speeds, they will falter by letting some of these things go past that they think may be on the border, and it will happen without an inspector to catch this and keep an overview of this.

Mr. Reed: What arouses your concern that it would happen in Canada?

Mr. Leng: What arouses my concern? It has happened in other countries. It's not happening at this point here because we're still doing the inspection. I fear that they're going to look at that and...

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You made the statement that we have one of the best systems in the world, and I agree. If it's not broken, I don't think it should be fixed. HACCP is a good thing, but in addition I think we need HACCP to do some of the other testing. I think that's important, but not to take the place of the other inspection.

[Translation]

The Chairman: Mr. Landry.

Mr. Landry (Lotbinière): I am happy to meet the witnesses this morning. I have several questions for them, the first of which is very simple.

Do you believe that by merging these three departments into one, some harmonization will be possible or that on the contrary, it will be impossible to get along?

Secondly, will these changes have a direct impact on the Public Service Alliance of Canada?

My third question regards the comments you made at the start of your presentation. You said that the bill is silent on a number of issues. I would like you to clarify your thoughts in that respect, and explain in greater detail all of these issues on which Bill C-60 is silent.

Those are my three questions.

[English]

Mr. Leng: I missed the second one.

On the first one, as to whether the three departments can be harmonized, in my opinion, yes, they can be. I most certainly think they're looking down the road at some of the proper ways to go about it, but time is going to tell and it depends on how fast they go through this. I think it has to be well thought out.

If any of my colleagues want to expand on how they see their departments being harmonized... But most certainly the labs at this point are being looked at very closely by the department. We're waiting for an update on that. Some of them from Agriculture have been turned over to Health. So I think only time will tell on some of this, but, yes, in some cases, it can be harmonized.

On the second question, which I missed... Do you have that? Is there a direct impact? Only from the way it's going into an agency. Obviously from the other departments it will be grouped in now under Agriculture under the agency. But as to a serious impact against this, I don't see it. Most certainly we welcome an agency with one food inspection in Canada, and we believe in that, but we don't see a great impact on us.

The only thing that concerns us is the $44 million they say they're going to save by the end of 1998. I'm not quite sure how they're going to do that. I hope it's not from reducing staff on the front line. There have been so many cuts there now, I think we're getting to the level where it's going to be very dangerous if they cut any further.

On the third question, when you said the bill does not represent a number of points of view, can you clarify what you really mean by that?

[Translation]

Mr. Landry: At the start of your presentation, you said the bill was silent on a number of issues, on a number of points of view. I would like you to tell me what issues the bill is silent on. That is what I would like to know. I'm repeating the statements you made earlier.

[English]

Mr. Leng: Okay, I understand. Most certainly if we look at the whole collective bargaining process, we're not quite sure where we're going with this. Obviously the department tells us under the agency they want a smooth transition. I think we all do. They said they will carry over some things and live by the collective agreement that's negotiated between the bargaining agent and Treasury Board. Then, after a period of time, they'll look to negotiate with us to do some changes.

Right now there are seven committees set up with the department, and we have representatives on each of them. They talk about things such as the national joint council agreements, because under the legislation they will not be in effect, and obviously it either has to be carried over or it has to be negotiated. My understanding is that at that time they would like it carried over.

Most certainly when we look under the bill that's proposed, under the two-year job guarantee they're also looking at an ERI-EDI package in case they have to do some downsizing, and the legislation doesn't allow that. Most certainly, we're talking with the department, and obviously if we go through that we'll have to go through Treasury Board. Whether Treasury Board will allow it or not, we don't know. There are areas of that, like classification, that will have to be negotiated. There are many areas like that we are concerned about because they haven't been spelled out to us.

Does that answer your question?

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[Translation]

Mr. Landry: Yes. Thank you, Mr. Chairman.

[English]

The Chairman: Mr. Cummins.

Mr. Cummins (Delta): Thank you, Mr. Chairman.

In your brief in paragraphs 17 to 20 you talk about a carcass-by-carcass, bird-by-bird inspection process. You go on to conclude in paragraph 20 that the new agency will have the authority to delegate its inspection and other functions to the private sector.

I'm not sure whether this section of your brief addresses the inspection system that's already in place on the west coast in fish processing. For example, it's my understanding that some of that inspection is currently done in quality control in-house in those fish processing plants and is monitored quite carefully by the current system. Do you see that changing and do you want that changed? Is that what you're addressing in these paragraphs? Do you want to change the system as it is?

Mr. Leng: It's not about changing the system as it is. I can't speak too much about the fishery inspection because it's in another department, and my colleague here has just been newly elected and he's not quite sure whether that is the case or not. Obviously, if what's been going on there is working...

I guess what we're talking about is the poultry inspection, the beef inspection, the pork inspection, lamb, and in some cases now, horses and rabbits, etc., where you're doing carcass-by carcass-inspection. We think that should continue along with HACCP. Other countries are certainly pushing HACCP, and the United States is going to force its plants by 2000 to be under HACCP. Canada's voluntarily going this route at the present time.

I believe HACCP is good, but it's also another checkpoint to ensure we have a very safe food product on the market to build our exports. I think any lessening or any big changes to that could jeopardize it. We see what happened in Japan, Australia and a little bit in New Zealand when they did some cutting back and had some serious outbreaks. We don't want that to happen in Canada. Ultimately, it will mean our jobs too, and will destroy the economy of Canada in the agriculture section.

So we're saying don't take that out. Put the HACCP in place too. Look at it down the road after some time. That's our fear at this point.

Mr. Cummins: I appreciate your concern there. Maybe you could get back to me at a later point on that issue.

I do believe that in the canneries, especially on the west coast and I presume the east coast as well, there is some kind of in-house inspection system and quality control system in place that's carefully monitored by the current agency. That system seems to be working quite well. I don't think there's any great push in the industry or in government on the west coast to have that changed. I would hope you're not addressing that here.

Mr. Leng: I particularly was not aiming at the fish side of it. Most certainly I'll ask my colleagues at the fisheries department if we can get back to you on it.

We also have some lesser inspection in some of the plants that are only processing, and in the other red meats too. You may be aware we're on what they call the FOIL program - frequency of inspection level - where the inspector may only go in there once a day and in some cases once every two or three days. So I was not addressing that particular issue at this point.

The Chairman: Mr. Hoeppner, you may have the rest of Mr. Cummins' time.

Mr. Hoeppner (Lisgar - Marquette): Thank you.

I want to proceed a bit on the provincial involvement. You say there wasn't enough provincial involvement. Could you expand on that? What do you see that should be changed? I feel very strongly that the provinces have been left out, so I'd like your input on that, please.

Mr. Leng: The trouble is it hasn't been explained to us how this board of directors, or whatever you're going to call it, will be made up. It mentions a couple of groups, but most certainly, in our opinion, if we're going to have a one-inspection system in Canada, there's no doubt in my mind the provinces have to be involved. There has to be somebody from the consumers group involved, somebody from the ministry and somebody from the unions. You need a balanced board there that can look at all the issues. I don't think Alberta can speak on behalf of Quebec or Ontario. I don't think Newfoundland can speak on behalf of what's going on in B.C. So I think there needs to be representation there.

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Mr. Hoeppner: Are you addressing the issue of harmonization between regulations of different sections? It seems to me to be a big problem if there's no harmonization. How do you feel we can correct that?

Mr. Leng: I feel you can do it if you sit down in discussions with them. Basically the inspection itself for diseases and most of the sanitation is the same. Obviously it's a standard that needs to be taken care of for the plants and some other things. That has to be done over time, and it has to be done in cooperation with the provinces.

Mr. Hoeppner: We've heard testimony here that the federal government has over-built laboratories right across the country and they are probably not going to be usable, or usable to the extent they should be. Have you looked at cost comparisons between the meat inspection system in Canada and that of other countries? Can you tell us if some room is left for cutting back costs? We know with a lot of our red meats we have to compete on foreign markets. If the cost of inspection is passed on to the producer, somebody is going to get hit pretty hard.

Mr. Leng: I think we're very competitive. Our costs are lower. If you look at the industry... I can give examples because I was in New Zealand and Australia. In New Zealand the cost-recovery for the plants is 120%; 100% for the salaries of all the staff and 20% for contract negotiations and training. In Australia, when I was there, the cost to the plants was $70,000 for an inspector and $100,000 for a veterinarian. So if you look at the cost recovery in Canada, we're very, very competitive. The plants are as efficient as in the United States and in most cases, from what I've seen in Australia and New Zealand, more efficient than they are.

Mr. Hoeppner: Could you elaborate on the over-building of the laboratories? What is your view? How should these be restructured? Should they be disposed of? What are we going to do with them?

Mr. Leng: That's pretty hard for me to say, because I'm not privy to what it's costing the labs. I can probably say the way the inspection... The way the consumer is demanding that more testing is to be done, the labs are going to be needed. Whether there are too many in the country I can't really answer at this time, but I don't see it. I know when we need some of the testing done now it's a rush-rush job, because you need the results very quickly, especially if you're in the plant and holding up some of the animals in their coolers, animals that have to be released.

Mr. Hoeppner: We've been discussing the issue of what is really consumer benefit and what is producer benefit, because it will have to be shared somehow. How do we set up a model that will work?

Mr. Leng: That's a good question. I understand it's a real concern, because I know even in Washington they had a discussion about this. I think it's up to the agency, probably in consultation with the consumer groups and the industry, to come up with a formula they think is fair.

Mr. Hoeppner: You haven't looked at any type of formula?

Mr. Leng: Not a particular formula. Most certainly I look at what should be safe for the public out there. Obviously the grading was privatized, which is not a benefit to the consumer. I guess in some ways it is, but it's not a pure benefit to the consumer. But as for meat inspection for the consumer, not only in Canada but for our export trade, it's a benefit to the country.

Some of these things can be separated. I guess the trouble is every time you put cost recovery on anyone, they'll baulk at it because it's another fee they don't really want to pay. In my opinion they've been getting free inspection for years now. It just finally caught up to what some of the other countries are doing. They're trying to get some of the cost recovery back that's of benefit to the plants.

Mr. Hoeppner: Do we have more time? I would like to follow up.

The Chairman: The next time around.

Mr. Leng, in reference to your comments about the advisory board, in subclause 10.(3) it says the minister may appoint any person with relevant knowledge or experience to the advisory board, ``including persons from the agriculture, fisheries, food processing, food distribution and public health sectors, consumer groups or provincial or municipal governments''. It very clearly leaves the opportunity there for the minister to have provincial governments on there. It doesn't, as you comment, refer specifically to unions - I recognize that - but it certainly does not shut out the opportunity for the provincial governments to be present on an advisory board.

I just wanted to clear that up. Nothing there says the provincial government can't be on it.

Mr. Leng: I agree with you. Nothing says it can't. Twelve members will be on it. Nor does anything say they will be on it. It leaves the opening, and you're right. But our concern is that we would like to ensure all the people are included. That's our point, not that we couldn't be.

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The Chairman: I have another comment following on what Mr. Cummins has said.

I read into what Mr. Cummins said that in fish inspection on the west coast, there is a HACCP type of process in place.

Mr. Leng, if that type of process is in place in the fisheries inspection and it's working - and I have confidence enough that if it's there and it's going, it's obviously working, because nobody is quarrelling with their reputation - and if it creates efficiencies, continues the safety and all the other concerns, do you have a problem with that type of system being expanded to greater use in other areas of our inspection system in Canada?

You said if it isn't broke, don't fix it, but if that's there and it's working in that way, and it's not broke, well then, why can't we expand on that?

Mr. Leng: Most certainly there are areas where you can expand on it, and I don't have a problem with expanding it. I think it should be expanded.

My concern is that in the plants with the diseases that are in animals, it doesn't take the place of the government inspectors doing the carcass-by-carcass, bird-by-bird inspection. I don't have a problem with HACCP being expanded; I think it should be. But it should be in addition to, and it will go a long way to add that extra safety built into the system for the consumers and for export trading.

The Chairman: This is something I've always questioned. I know our system does the job and does it very well, but I've been in poultry processing plants where there are 150 to 200 birds a minute going by an inspector. I personally question whether that inspector can inspect every individual bird.

To some extent, is that inspector's job to inspect the system overall to make sure the quality of the product at the end of the process is there? When you say it's carcass by carcass and bird by bird, are you saying you think an inspector should almost hands-on take every carcass? We're not doing that now, and we're very successful.

Mr. Leng: Well, I think we are doing a carcass-by-carcass and bird-by-bird inspection. It's not hands-on; a lot of it's visual. Each inspector has an individual part of the animal he has to look at for diseases.

My concern is if that's taken away and given to the plant employees, the plants don't plan on hiring any more people. They want to work in their system with the trimmers they have there, and I don't think that will work.

They have been speeding up their lines from 26 a minute to 120 birds per minute, and that's why we need multiple breaks for the inspectors off the line. I can assure you some of those plants are not giving those kinds of breaks to their employees. Obviously after 45 minutes on that line, at that speed, you do start to falter. That's why you need a constant shift of the inspectors rotating through, so they don't miss any of the diseases.

The Chairman: You'd have to agree there's a joint concern between the plant and the inspection. Both the plant and the inspection service have a concern and a vested interest in the quality, safety, health, etc., of the final product.

Mr. Leng: Certainly I agree with you. No plant owner wants to destroy his business. I'm the first to agree to that.

But I've also worked in the plants enough to know that when push comes to shove to get the production out, they do start taking short cuts. They have meetings every Monday morning with their foremen or forewomen and want to know why their costs are up. They want to get costs down. They're the individuals who will try to take the short cuts, not the plant owner. He doesn't want to spoil his business.

The Chairman: Are there any other comments? Mr. Hoeppner.

Mr. Hoeppner: Thank you, Mr. Chairman.

I'd like to go to number 29 on page 7. I fully agree with you on the statement there that the advisory board should have the authority to advise the minister and the agency on matters it considers important. I also think it's very important that the advisory board isn't impotent. Why have it if the minister's only going to direct his concerns?

Really it's the industry that has concerns and should direct them to the minister. Don't you agree with that? Is that what you're telling us?

Mr. Leng: Yes, I agree with what you're saying, but there's nothing wrong with the industry also having some say with the agency, where they have concerns that the advisory board could look at. I wouldn't want to exclude them; that's for sure.

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I don't think any group should be excluded. I've always learned that four or five heads are better than one. There are a lot of people out there with good ideas and concerns, and some people will see a concern another person does not.

Mr. Hoeppner: My concern is - and maybe I'm wrong here - if the minister has the only authority to bring forward the problems the advisory board should deal with, it becomes a political advisory board, not an industry advisory board. I would fight against that very strongly.

Mr. Leng: Yes, and that's what we're saying. There should be other areas from which things can be referred to that board - this committee, for example, or any other group - not just the minister. I agree with you totally.

Mr. Hoeppner: My other question again is along the line of harmonization with the provinces. Do you have the guidelines or the regulations required in provincial meat inspection, and have you compared them to your guidelines or directives? How far apart are the two systems?

Mr. Leng: I do not have the guidelines. Most certainly I've been in provincial plants and in federal plants. One of the basic differences is usually the only time an inspector is in a provincial plant is when they're killing. Most certainly for some of the export trade it's a requirement by the country - and I think Japan is one of them - to have continuous inspection.

I don't think there's a lot of difference, but most certainly the plants themselves need some upgrading to meet federal standards, because of the export trade. But the basic inspection itself is essentially the same.

Mr. Hoeppner: In some of the rural communities, we're running into issues such as the fact that paved parking lots and standards that you require under federal legislation just can't be afforded by the smaller provincial processing plants. How do you see us correcting that?

Mr. Leng: Well, I guess that has to be in talks between the provincial and the federal.

Somewhere down the line there may have to be some money available if they want to upgrade. This has been done in other provinces. I know in Alberta we have given a lot of money to the different plants for upgrading to come up to the standards. It's not going to happen overnight, but most certainly it's a road we should be going down, to have one inspection system and one standard.

Mr. Hoeppner: We see the government estimates that by 1998-99 we're going to save about $44 million. Do you see that as a possibility, or is that dreaming in Liberal red?

A voice: It's a nice dream.

Mr. Leng: I'm a little bit skeptical.

The department will know better than me where they figure they can save it. From the documents I have read, what worries me is they say this is equivalent to 400 person-years. We've cut back far enough in the inspection staff on the front line that if we're looking for another 400 positions, we're in trouble.

Mr. Hoeppner: You can't see where the cuts are going to come from to make up that$44 million?

Mr. Leng: Well, they must have something in their back pocket or they wouldn't be making it, I guess.

We're willing to work with them to have a look at where the savings can be. There's probably some duplication out there, once the three departments get together, but I can tell you there's not a whole lot of duplication.

Maybe with the provinces, if they come in with it too, the $44 million could be found somewhere.

Mr. Hoeppner: It's very important that we convince the people outside Ottawa that this is possible, because if we can't, we're going to be in trouble later on.

Mr. Leng: Yes.

The Chairman: Thank you very much, Mr. Hoeppner.

Mr. Leng, if you have any further comments, you're welcome to make them now. If not, I thank you very much for coming forward. You have expressed your concerns very clearly and concisely in your presentation this morning. The committee will be continuing the rest of today and then we will take a few days to give some thought to and have further discussions amongst ourselves on where we go from here with this piece of legislation. Thank you for your contribution. We wish you well.

Mr. Leng: Thank you very much for allowing us to appear before you. We most certainly look forward to working with the agency and the committee in the future.

The Chairman: Thank you.

The Canadian Federation of Agriculture was scheduled to come, I believe, at approximately 10 o'clock. I don't see them here yet, so we will take a brief adjournment until they arrive.

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The Chairman: Maybe we'll wait just a couple of minutes. We do have a quorum, but the Bloc members aren't here. They've left their material here, so they're obviously coming back. We'll wait a couple of minutes and, if not, we'll go ahead.

In the meantime, I want to apologize to Mr. Crawford. I did write his name down. He wanted to ask the previous witnesses a question, then I ended up ignoring him. Apparently he caught up with them in the hallway and got his question to them personally, but it's not on the record and I apologize. Rex, it wasn't intentional. We're glad to have you with us.

An hon. member: Mr. Chairman, maybe Mr. Crawford could explain to us, while we're waiting, what that question was. It might be interesting to us.

The Chairman: It's up to him if he wishes to do so.

Mr. Crawford (Kent): They were stating they were doing 120 fowl a minute. I was chief inspector at a corporation I worked for, and I'm trying to equate what we ran compared to a body of a fowl. It is an impossibility. They have to go under the belt system, and I think that's what they were doing, using the belt system. Visually, you cannot do 120 a minute; it's an impossibility.

The Chairman: Did they agree with you?

Mr. Crawford: No. He said they did every individual bird. It's an impossibility.

The Chairman: All right. I think we had better get started.

Sally Rutherford, from the Canadian Federation of Agriculture, perhaps you would introduce your colleague with you this morning and proceed. Welcome again to the committee, Sally. You are certainly no stranger and we're glad to have you with us.

Ms Sally Rutherford (Executive Director, Canadian Federation of Agriculture): My name is Sally Rutherford. I am the executive director of the Canadian Federation of Agriculture, and with me is Jennifer Higginson, a policy analyst with CFA who has been working on the federal food inspection agency file.

I would like to express the regrets of Jack Wilkinson, CFA president, who can't be with us today. As many of you are aware, it's annual meeting season out there for farm organizations, and I have presidents across the country today. It makes it a little bit difficult trying to accommodate everything.

I guess to start I would like to say that I'm feeling slightly intimidated. I was told as I entered that the world had stopped for me - and that's a nice thought. On the other hand, I was told that the people in front of me had very little left to say and so left early. Just before, where I came from, there was a Treasury Board session on cost recovery and Mr. Bulmer told me he hoped I'd had a chance to see his brief because he had received a standing ovation. So I don't know what kind of reception this will actually get, but we'll see.

I told Art Olson, who was also there, that I was going to come and generally give him a hard time as usual, but it was part of the game in part. But just to be clear, we're very serious about the comments we will make.

The brief is essentially in two pieces...actually three, I guess. The first is some fairly general comments overall about the concept of a single food inspection agency; second, concerning the financing; and then the last section refers to a number of clauses in the bill on which we have some particular comments to make. Depending on your timeframe, I can certainly go through those as well.

As you are aware, CFA is an umbrella organization representing the majority of farm families across Canada. These are people with farm operations from coast to coast, producing every imaginable commodity. As such, all of them in one way or another will be touched by the federal food inspection agency. The whole issue of how the agency will be developed and how it will be operated is of concern to people.

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I think that perhaps as individual members of Parliament, you're also becoming more conscious of the impacts on your constituents as cost recovery, for example, and the impacts of special operating agencies come into being and begin to actually impact on the bottom line for people.

We're entering into an era of changing roles for government and for industry, and both government and industry have to be prepared to deal with these new relationships. There's no doubt about that. It cannot be one-sided, on either side. In many cases, the identification, continuation and improvement of activities will depend on mutual trust and the ability to work together.

Besides, we believe that complexity in rules about secrecy, and an as yet unshaken government compulsion to control all, work against real collaborative relationships. The definitions of consultation, negotiation and partnership have quite different meanings for government and the private sector. If role changes and new relationships are to be successful, these differences must be acknowledged and real efforts must be made to deal with them. I'm hoping that the session that's going on with Treasury Board today will make a stab at some of those, because that session is to deal not just with actual fee setting, for example, but with the whole policy around how government deals with new structures and new relationships.

The present legislation is a classic case with respect to the points I've just made. The intention to streamline efforts to save cost and to create a more efficient system is one the CFA has supported from the outset. The consultation process concerning the structure of the new streamlined entity was good as far as it went. One of the major failings from an industry point of view is the lack, even now, as the legislation works its way through Parliament, of a real business plan with costs and realistic revenue projections that can be shared with those who are effectively the shareholders.

As cost-recovery systems become part of business life, government must realize that as with any other business, those who pay call the tune. When industry is forced to pay user fees or service fees, it considers itself not just a stakeholder but a shareholder.

From this point of view, it's somewhat difficult to comment on the legislation. Bill C-60, as are most other new pieces of legislation, is enabling legislation. Most of the detail will be in the regulations, which we do not have to review. We also do not have a clear understanding of the financing of the agency.

The fact that statements such as ``there will no new cost-recovery fees for the first year of operation, April 1, 1997 to March 31, 1998'' are made, when industry knows that a new battery of fees that will be imposed on April 1, 1997, create at best a level of skepticism, at worst a level of distrust.

The fact that the legislation creates a single stand-alone food inspection agency with no clear accountability to stakeholders and shareholders gives us pause. What exactly are we being asked to comment on?

For the record, in the consultations undertaken concerning the format of the new entity last year, the CFA did not choose the present option. The CFA rejected the option of creating a stand-alone agency and was in favour of an entity with a direct relationship to the Minister of Agriculture because we had concerns about accountability. A recent experience with a similar entity, the Pesticides Management Regulatory Agency, has reinforced the CFA's concerns.

The CFA is pleased that the legislation requires the establishment of an advisory board, as this is an essential part of the legislation. It is disheartening to see that the responsibilities of the board are not stated in the legislation. If the advisory committee is to be effective, it must be given the mandate to complete an annual performance review of the agency and an annual review of the agency's fee schedule.

An example of an advisory committee that is working very well is the joint program management advisory committee established to oversee the re-engineering of Canada's veterinary drug program. This committee is working together on regulations to link fees to performance. The responsibilities of the committee could be used as a model for the food inspection agency advisory committee as well. This will improve the accountability of the agency.

Farmers should have significant representation on any advisory committee or board of this new agency.

In terms of financing, this is probably the most controversial issue in relation to its creation. It's ironic that this is the issue on which we have the least information. We know how much is proposed as savings. We don't really have any idea of how much is meant to be spent, nor do we have any understanding of what the money is to be spent on.

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As the $44 million the agency plans to save through a combination of cost reduction, cost avoidance and cost recovery is based on a 10% reduction of the total expenditure of three departments, it is therefore apparent - not something we had to work out - that the total budget of the agency in the second year will be $440 million, less, hopefully, the $44 million in savings, for a total budget of $396 million. Following this logic, in the first year of operation the budget of the agency would be $440 million.

CFA would like to be sure that all members of this committee understand that while the agency will not be looking to realize any savings from the creation of the agency in the first year of operation, the agricultural industry will be paying $52.5 million in cost-recovery fees, an additional$13.6 million over the 1996-97 fiscal year - I was told this morning that in a presentation yesterday this number was reported as $20 million by the department - for inspection services, according to the business alignment plan projection developed by the branch for AAFC. This will represent 27.5% of the budget for the food production and inspection branch. These costs are very substantial and will recur annually.

Therefore, it's understandable that when we are told that the agency will be looking to save $44 million in cost reduction, cost avoidance and cost recovery, we are very concerned. We hope that members of this committee will keep in mind the need to maintain a strong and competitive agri-food industry.

The ever-increasing number of cost-recovery initiatives are of significant concern to agricultural producers. The CFA feels that the completion of an assessment of the total cost-recovery bill the agricultural sector is paying and its impact on producers would be very useful and timely.

We have now raised two major concerns we have in regard to the bill. We do have a number of other specific concerns in relation to specific clauses in the bill.

On clause 2 - and there are subsequent clauses that refer back to this, a long string of them that are listed on page 5 that refer to the ``Minister'' as being that minister whom ``the Governor in Council may designate...for the purposes of the Act'' - we are given to understand there is nothing nefarious about this but that this now follows yet another set of new Treasury Board guidelines about how things are supposed to be done.

Our point of view, frankly, is that we don't care how they are supposed to be done from a streamlining point of view. The industry overall, I believe, would want the Minister of Agriculture to have responsibility for this act. To simply accommodate the efficiency guidelines of Treasury Board so that they don't have to write Agriculture and Agri-Food Canada in every piece of appropriate legislation is not sufficient reason to not have the minister designated within the legislation.

On the formation of federal-provincial corporations, under clause 21, while it is a positive move to streamline the delivery of food inspection between federal and provincial governments, it is also important to consider the effect this may have on the agency's accountability to users in the system. The creation of separate corporations in every province will make it more difficult to try to ensure that there is accountability.

That's not to say it may not be a way that works, but to this point there is no system for accountability that exists or at least that is apparent to the potential users. That is something that is going to become an increasingly more important issue as the number of service fees and cost-recovery fees...as there is a basic shift in the way government operates. This effectively is a new system of taxation that does not relate to level of income either gained or generated, and people are going to want a much clearer and more transparent accountability system than exists now, certainly. There being none within this legislation, it is a problem for us.

The string of clauses again refers to the specification of the Minister of Agriculture and Agri-Food.

The next couple of clauses, clauses 70 and 71, relate specifically to orders of compensation. CFA had participated in the working group on animal health compensation and were pleased with the recommendations coming out of this process, which now have effectively been incorporated in this piece of legislation. We are concerned, though, that the current legislation names the Governor in Council as having the responsibility to order compensation, as opposed to the specific minister. We believe that responsibility should again remain with the Minister of Agriculture and Agri-Food.

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Compensation to be paid for things ordered destroyed and treatments as required under the Health of Animals Act: currently the legislation and the program allow for the payment of compensation for animals and treatments. There are other costs, such as the cost of quarantine, that are directly attributable to the act and should be covered under this program as well. This will further improve the early reporting of diseases, which is the aim of the program. We would like the provision for that compensation to be included within those clauses of legislation.

Clause 94, coming into force of the legislation: the lack of financial information and the lack of accountability in the process have been commented on several times in this brief and in others. We feel there needs to be a commitment to supply the stakeholders, shareholders of this agency, and the public with some very key pieces of information before the agency comes into force.

The legislation should therefore not come into force until a business plan and budget have been tabled and approved by the House of Commons.

In conclusion, Canadian farmers are pleased to provide you with their comments on this matter. Certainly we are pleased with the effort to streamline. We understand clearly that the system needed reform and that there needed to be some rationalization of the inspection system, in particular between the federal, provincial and even municipal levels. We understand that in many respects this is an extension of the efforts of the business alignment plan in terms of trying to see in effect what it is the industry really needs and really wants.

I think the very important point to make is that it's crucial not only to the primary agricultural industry but also throughout the chain to ensure the health and safety of Canadian products, not just for the health and safety of Canadians, which is certainly the primary goal, but also from a crassly commercial point of view. Without those systems we cannot operate a successful commercial industry. Therefore, we need these services.

We think one of the major problems is the lack of definition around public versus private good that will underlie the operations of this agency as well and how it's going to operate and fund itself. While it is not perhaps specifically relevant, the whole issue of how fees are going to be raised to pay for the agency becomes a crucial part of what the agency is going to look like in the end.

If people walk away in droves because the services that are being provided are not considered to be worthy of payment, then it puts into question what the agency can actually do. If there is no clear definition of what the public good is and what the federal government's role is in terms of protecting the health and safety of Canadians and what the government is willing to actually pay for with general tax dollars, then I believe this also puts into jeopardy the whole role and functioning of the agency.

Again, it's very difficult to comment on the very specifics of the legislation. Many of them are the legal provisions that underlie creation but do not address, frankly, the points and concerns we have.

With that, I'd be happy to answer any questions there may be.

The Chairman: Thank you, Sally. I'll go first to Mr. Reed.

Mr. Reed: Thank you, Mr. Chairman.

I have two things that perhaps I could zero in on. One is your comment about the duties of the advisory committee. It's a point very well taken. Certainly I couldn't agree more that they should be outlined so the minister will know what is expected of that committee.

The other zeroes in on the minister himself. Of course, I think we all agree it's the Minister of Agriculture who must be accountable in the end in the House. You state that a number of times very emphatically and I can appreciate your sensitivity on this particular issue. But I wonder whether your sensitivity exceeds the thing a little bit. I point out to you that in my former incarnation as a provincial member, we had a Ministry of Energy, a Ministry of Natural Resources, a Ministry of Agriculture, and so on. Since that time, the designations have been changed. Energy and environment are now together - this is in Ontario - and it would appear that environment and natural resources will perhaps join forces in the future, and so on.

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While I agree with you at this time that the Minister of Agriculture is the one who should be the accountable person, as governments evolve and as things change in future, it may very well be that departments and the assignment of departments will change. There might therefore be a whole new designation of ministerial responsibility.

I just throw that out. It's not going to happen this year, but perhaps long after I'm gone from this place a change might be required.

Ms Rutherford: Quite frankly, I take your point. But from our point of view, it doesn't make any difference. This is a bigger issue than just simply this piece of legislation. It's the whole issue of responsible government, of what is happening with legislation, with regulations and with ministerial guidelines right now, and of the ability of ministerial fee-setting orders.

From our point of view, this may be the top end of the slippery slope if everything has to be so incredibly clockwork-like, so incredibly efficient, that nobody has to make the small change that could be made very simply through an omnibus bill once a year. If it would give the industry considerable comfort that this piece of legislation will reside with a minister in whom they have trust and who has a responsibility at the moment, we don't see that as an adequate reason to not have the minister named within the bill. Yes, it's a part of streamlining, but there is a balance between both public good and private good, for example. But I also believe there is a balance to be struck between what it is that the public and the stakeholders in a piece of legislation require - what will make them feel as though it truly is a piece of legislation for them - and what is not simply a piece of paper that gives the people at Treasury Board and in the PMO or PCO an extra fifteen minutes to work things out. It comes down to something as basic as that.

Mr. Reed: Thanks very much.

[Translation]

The Chairman: Mr. Landry.

Mr. Landry: On page 3 of your brief, it says:

The CFA would like to make sure that all members of this committee understand that while the agency will not be looking to realize any savings from the creation of the agency in the first year of operation (1997-1998) - the agricultural industry will be paying $52.5 million in cost recovery fees (an additional $13.6 million over the 1996-1997 fiscal year)...

I thought you said in your brief that these costs went from $13.6 to $20 million. I would like you to explain this difference of roughly $7 million.

[English]

Ms Rutherford: Essentially, the question centres around the difference between the $13 and the $20 million. I did mention $20 million. There was a presentation given yesterday by Flowers Canada at a meeting here in Ottawa. There was a presentation on the business alignment plan that will be included in the total here. The number that was given there was $20 million, as opposed to $13.6 million. That again simply highlights one of the concerns we have.

The numbers change from week to week, which in some respects is again understandable. As people work through the business plan, the numbers become more definitive. On the other hand, we're having to sit here and deal with this piece of legislation this week, and what are we dealing with besides essentially a box? You either like the box or you don't like the box, but you have no idea what's particularly going to be on the inside, so it's very hard to have an opinion, frankly.

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[Translation]

Mr. Landry: I have another question regarding the paragraph on the bottom of page 1, where you say:

From this point of view, it is somewhat difficult to comment on the legislation. Bill C-60, as are most other pieces of new legislation, is enabling legislation. Most of the detail will be in the regulations which we do not have to review.

Do you have confidence in Bill C-60 or do you have cause for concern? And if you have concerns, what are they?

[English]

Ms Rutherford: As I've mentioned, our level of discomfort is not specifically with what's in this piece of legislation. The model that has been chosen was certainly not our first choice. There were a number of options presented to the industry last year and this was one of them. Another was a grouping that would remain directly related to the Department of Agriculture and Agri-Food, and that was the model we preferred for exactly the reason that it would provide direct accountability. That is our major concern with the legislation as it stands.

The government has chosen to go a different route and it's a model we will learn to live with - perhaps never to love. There are no particular pieces within the legislation we have any particular problems with, besides the ones listed in the back of the brief. Our concern is simply that there is very little detail to comment on.

The major issue for the industry as a whole is how this construct is going to be operationalized. Those issues are by far the most important ones because they're the operational lines that are actually going to affect people in their businesses on the ground. People don't have a good handle on those issues, and that's what's beginning to make them nervous, not just about this piece of legislation and this agency, but about others and other constructs as well.

As I said, coming from a meeting on Treasury Board where people were starting to throw around yet other constructs of government, it certainly gives me pause. Frankly, if I were a member of Parliament it would make me very nervous to try to figure out what my job was going to be five years from now. How much will you be able to actually review in the end, and how much is just going to happen by fiat at the bureaucratic level?

That really causes us concern about how this agency will operate down the line. It will operate at arm's length, and coming to this committee to talk to you and the minister responsible - even if it is enshrined in the legislation it's the Minister of Agriculture and Agri-Food - what will be the level of accountability and the direct lines through?

To be fair again, I don't think a lot of this has been thought out for this agency or for others. Everybody is working on new territory and there have to be some systems worked out. We're very concerned and hopeful that industry will be given a real opportunity to determine what those systems will be, because it is very important that the systems in place be of comfort to the industry as a whole.

[Translation]

Mr. Landry: Ms Rutherford, does your group believe that there will be $44 million in savings?

[English]

Ms Rutherford: As far as we know, yes. It's a matter of faith in many respects. We've been given some numbers and they add up. I gather you've just been told by the previous witnesses that they don't think they add up. It's a matter of judgment, from our point of view. We're nice trusting souls, and if Mr. Doering tells us it's $44 million, we believe it will be $44 million.

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Again, the problem is that the numbers are shifting. A few weeks ago, $44 million was 10% to 15%. A little later, we found out that the Canadian Meat Council has a letter that states $44 million is 10%, not 10% to 15%. That tends to change the total. What is it 10% or 15% of?

It was $13 million a couple of weeks ago. Yesterday it appeared to be $20 million. I guess that's where people begin to get a bit nervous, because if those kinds of numbers tend to change, depending on who's giving the presentation or what day of the week it is, you begin to wonder.

The issue is that we're going to pay for this. If the government were going to pay for all of this out of tax dollars, you'd probably get people coming in here saying you have to cut it down because it's too much, and leave it at that. Because industry is going to have to pay a huge chunk of this bill, it puts our shoe on our other foot, because we have to pay a lot more attention to what is actually being spent and how it's going to be spent.

Yes, we believe the numbers, but we don't know what they actually mean.

[Translation]

Mr. Landry: You just said that industry will have to foot the bill. Will it not be the same for consumers?

[English]

The Chairman: Do you wish to sum up?

Ms Rutherford: Absolutely. It will be the consumers. I just left John Geci telling everyone that he wanted cost recovery to be transparent down to every can of soup on grocery store shelves. So we'll see how we do that.

The Chairman: Mr. Calder.

Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Thank you very much,Mr. Chairman.

Sally, I'd like to take the lid off of this box and take a look at some of the works inside.

Ms Rutherford: Good man.

Mr. Calder: I kind of figured you'd say that. On accountability to the users of the system, what I'd like to talk about here is the federal and provincial inspectors working together.

We know federally that the inspection service is an essential service - there isn't a strike federally in meat inspection or food inspection - but that's not the case provincially. We just went through an issue with OPSEU last year where the provincial meat inspectors went on strike.

The question is - and I'd like your comment on this - if we do have the federal and provincial inspectors together under this single window and for instance the provincial inspectors were going to do beef and pork and the federal inspectors were going to do poultry and fish and the federal ones can't strike and the provincial ones can, it seems the industry will be in a bit of a turmoil. How do we get around that?

Ms Rutherford: I'm not a labour lawyer. I know the issues around trying to accommodate new constructs of government and service provision, with what obviously are going to have to be new constructs around labour relations and negotiations, are very difficult. For me to pretend to give you a detailed answer would simply be a farce because I don't understand labour law to that effect.

I think the issue is clearly that those kinds of issues have to be addressed in terms of the way the legislation is put into operation. There have to be safeguards there. I suppose at some point some pieces of the inspection system would have to be declared essential services, but that would have to be worked into a very complicated negotiating process.

It is one of the concerns we have around how the corporations, should they be created within a province, are going to operate, for example. Who will they be responsible to? Who will they be accountable to? How are they going to operate? Are they going to decide they can simply operate on their own? There are no specifics in this legislation that require anybody to do anything, and therefore it's not clear what a federal-provincial corporation could actually do.

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Certainly the issues that you have raised are very important to people. I know it really created havoc in Ontario last year, and that some people lost fair chunks of cash because they could not take their animals to slaughter. Those kinds of operational issues - because again, it is an operational issue - clearly have to be addressed in such a way that there will be the minimum of disruption.

The Chairman: Mr. Hoeppner.

Mr. Hoeppner: Thank you, Mr. Chairman.

Good morning, ladies. It's interesting to hear you. I'm quite thrilled with your presentation because I think you're calling the shots right from the hip. What surprises me is CFA has always been kind of political, but this presentation doesn't look too political to me, so I congratulate you on that.

What I think is really the problem, and you've hit it right dead square on, is the payer calls the tune. How are you going to get government to realize that has to happen?

Ms Rutherford: Well, I think the message is maybe beginning to come home. As I said earlier, as members of Parliament you personally in some cases have been bombarded by people who are beginning to have concerns about cost-recovery issues. I think we're waiting for the next wave to hit, April 1. As well, many of these are not just agriculture fees.

I think there's a growing realization, as people start totting up what it is that's costing, that is going to actually create a significant groundswell. Again, as I said, coming from where I have this morning, there really is a growing sensitivity to the issue, which government simply isn't going to be able to ignore in the end.

But I think the constructs that are created are going to have to take into account, both politically as well as from simply a management point of view, that if industry essentially goes on strike and says no, we're not going to pay fees to the coast guard for ice-breaking, because we can't figure out how that impacts our business, and if the coast guard realizes it hasn't got any money to do anything, it's going to have to figure out how it operates differently. This is a fairly extreme example, but one that's definitely out there and of concern to people.

I think that same kind of realization will come to most operations. I think we're in a very volatile time, because things are changing. Many of the constructs we're having to deal with right now, including this agency - the ideas were developed but the whole issue of cost recovery and service fees were not developed as a whole. They were developed, I believe, pretty much as two bits that we are now trying to put together. The systems to make it work aren't there.

It is going to take some time for everybody - including industry, frankly - to try to come to terms with this. We know that there are, for example, areas where in another couple of years, when people have more experience perhaps, and a better comfort level with changes in general in terms of the way things operate, industry will pick up various bits and pieces that even this agency now does, and will deliver them themselves.

Mr. Hoeppner: Are you telling us that we're at the point now that the profit margins of producers are so narrow in most industries that they will eventually just have to say this is too costly; we're not going to use your inspection service and we're going to go to something else? How do you initiate some kind of wake-up call to the government: ``Hey, we can't afford it. You're putting us out of business.''

Ms Rutherford: Oh, there's always an election.

Mr. Hoeppner: Hey.

An hon. member: Bring it on.

Ms Rutherford: I think that's coming, frankly. I think that cost recovery will be a really big issue in the coming election.

But in terms of the other point you made, I think this agency will not simply deal with the kinds of health and safety inspection that is front and centre. It's also going to do a whole lot of other things. And certainly I think there is no interest by anybody in clearly privatizing the basic inspection system for meat and poultry, for example, from both a health and safety point of view as well as a commercial and trade point of view.

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It's necessary to maintain a very high-quality government system to do that. There will be under this agency a whole lot of other bits and pieces that are now operated by the food production and inspection branch in Agriculture Canada, which are either not legally required in many cases, or it is not necessarily essential that government provide them. It's simply that over time, for various reasons, and because of changes that have happened, either government has taken on these responsibilities, or the responsibilities that were once seen to be those of government or that it would be more efficient for government to do are now seen in a different light, and industry will want to provide those for themselves.

There will be, I gather, a seeds institute that will essentially certify seed through a private institute funded essentially by the industry. Grading has already been privatized. There is a whole series of these other bits and pieces outside of the basic food inspection system that we believe should be inviolate.

Mr. Hoeppner: That brings another question to my mind. Elections - it's very interesting that you mention that. Throw the idiots out - that's more or less what you're saying.

Some hon. members: Oh, oh!

Ms Rutherford: No, I'm saying that as people go out campaigning it will become clear to them what the issues are and the positions they should be taking in order to represent their constituents adequately.

Mr. Hoeppner: I want to go a little further with that.

A voice: [Inaudible - Editor].

Mr. Hoeppner: Well, nobody will be happier than me if I can go to Arizona instead of to Ottawa next winter.

The private and public good - have you looked into it? How are you going to divide that? If you're going to go to an election, you know who's going to win on that case.

Ms Rutherford: I'm not sure.

Mr. Hoeppner: Well, I'm pretty sure we're less than 3% of the electorate right now, as far as producers are concerned, and consumers have the huge majority. The consumers will say ``This is too much. You've split the dividing line. It's too much on the consumer and not enough on the producer.'' Where do you get the balance, or where do you get the right percentages?

Ms Rutherford: This is only one of all the issues we deal with. The issue of public versus private good does not apply simply to this piece of legislation, nor simply to the Department of Agriculture and Agri-Food. It is an issue that needs considerably more definition.

Again I refer back to the meeting that I've left and will go back to, where there are people from the fisheries industry, people from the informatics industry. Everybody is asking for the same thing - for more definition around public versus private good, including the Consumers' Association, who are also sitting there.

I think there's a basic feeling - and that's pretty much all it is at this point - about what public good should be, and that there needs to be a real and significant debate about what the public good actually is, and what it is that as taxpayers we should be paying for collectively versus what is termed to be private good. Because for this agency or this department, for example, to determine public and private good - if it does not then fit in with what's happening elsewhere in government, it's not going to last very long as a concept.

I think we need to have a much better overall Government of Canada position on what public versus private good is. We certainly need an improved version of the one that is in the present Treasury Board guidelines that were published a couple of years ago, which are essentially the basis for discussions at this point, and essentially say there is no public good. I think the clear message from industry and consumers generally is that people - Canadians generally - don't believe that.

Mr. Hoeppner: I'd like to point out here that if we look at what the food basket costs today, we have the lowest costs in the world, so I don't think the public is getting shafted by paying too much for these services. I think probably the producers are paying more than their fair share right now. But how are you going to find the right percentages? We are exporters, after all, and if you do away with the primary producers by having everything heaped on their backs, in the long run the public good is going to be very...there won't be any public good. We'll be importing food, instead of exporting.

Ms Rutherford: I think that's where there has to be a really good look at it.

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As I said, I have never heard anyone make any statement at all that the basic inspection services should be privatized. There is both a need and a good commercial reason for them to remain part of a Government of Canada system. It goes out with a stamp on it. It makes the customers happy and producers are willing to pay that price.

When it gets beyond some of that stuff, the question becomes larger and what producers are actually willing to pay is an issue. I think from a producer point of view, one of the big problems we have is that many of the fees this agency will charge, as well as other fees, will be cumulative throughout the chain. The guy who is going to get stuck is the guy who can't pass on his costs.

In many cases, it is the farmer and that is one of our big concerns. There is no way of determining at the moment what the cumulative cost of all the user fees from all the departments of the federal government, let alone the user fees from all the provincial governments and the municipal governments, will be, what the overall cumulative effect is. I know there were some numbers published in Manitoba last week or the week before that showed that with the changes in policies and the imposition of fees, average farm income is down $60,000 this year. That's interesting, and begins to bring the point back.

Mr. Hoeppner: I think it's scary actually, because when I see Statistics Canada come out with figures that 45% to 48% of net farm income comes today from off-farm jobs, how much harder can you push the producers? We're looking at a situation here where public and private good has to be defined, because if you heap more than the fair share on your producers you're going to run into serious problems.

The Chairman: Just a point of clarification on the reference you made to something that came out of Manitoba. Are you saying that because of policy and cost recovery those were the two issues that caused the average - was it gross - income to go down $60,000?

Ms Rutherford: It would have been gross income, yes.

The Chairman: And that study says that it was due to policy changes, nothing to do with pricing of commodities, is that right?

Ms Rutherford: No, it was overall.

The Chairman: Overall. Oh, all right. You left the impression with me that it was policy and cost recovery.

Ms Rutherford: I'm sorry. The majority of it was policy and cost recovery, because it took into account the increase in transportation costs for grain transportation.

The Chairman: All right. Mr. Collins.

Mr. Collins: Thank you very much, Mr. Chairman.

Sally, over the last 25 years this has been studied on numerous occasions. I always like to have people tell me what my accountability is. I assure you that when I ran I knew what the accountability was. I don't take that lightly.

When we come through with this act, I'm concerned, from the standpoint that I represent a rural riding in Saskatchewan, that there is some impact. I don't think the government of the day has proceeded on a holus-bolus, rather lacklustre approach and you have indicated that you have some positives on this. I agree with you that maybe the agriculture minister should be identified.

What I want to point out is that as we go through the process, all of us are concerned that whatever we do is in the best interest of Canadians. If we can take four agencies and bring them into one, that's a hell of a big step. I, for one, think there is too much government legislation where we have everybody with a finger on the trigger and nobody really controlling the whole process. I think that's a positive.

You see in this process that the Auditor General is going to have some impact. What are your thoughts about the Auditor General, as he will review it? Do you think he will play a significant role in keeping us abreast of how the act is working, where it should be going in some direction?

Ms Rutherford: I hope so. I don't think they have a system for dealing with this either at the moment, directly. I guess most of what I'm trying to say today is that there needs to be some serious attention given to the systems that are put into place, because there is not a way of accounting for the impact of the fees. There is not a way at this point, seeing there is neither a mandate nor an operational structure for the agency that is apparent. Maybe it's in the private papers you have, but as a stakeholder, nobody has given us anything specific. So we cannot comment on anything of that nature. There have to be systems to work it out.

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To make a comment about your point about streamlining, yes, we hope it's really positive. Our experience with the Pest Management Regulatory Agency was that they combined three departments, but then the budget went up. So there's no guarantee that because you bring things together, the cost goes down.

Mr. Collins: Yet say you're just dealing with cost per se and you're not interested in all the other elements in it.

Let me go back into the process we have evolved. Here's one of the things I would like you to respond to, if you would. Would you agree with the statement that the cost of regulations, financial processes and other things should be borne by the beneficiaries of the regulatory regime?

Ms Rutherford: I think it depends to an enormous amount on what the regulation actually is. There are regulations around meat inspection. If the determination is that, for example, food inspection is a public good in terms of health and safety, then effectively, I say no. The beneficiaries are Canadian taxpayers, who are paying for it through their tax system.

So I think it depends. There should not be a specific fee attached to that. I think it really depends on what the regulation actually is.

Mr. Collins: The reason I say this is that in a September 1992 regulatory review overview, one of the people who is acknowledged is you.

Ms Rutherford: Yes.

Mr. Collins: One of the recommendations is this one. I raise it because on one side we're saying we have problems with this. But this is a recommendation from these people who sat down - you were part of that - and said to improve the way we're doing business. This is one of the ways.

Ms Rutherford: Absolutely, but in 1992 nobody was talking about the kind of agency creation we're talking about now. Nor were we ever talking about the kind of cost recovery and service fees we're talking about now. It was not on the table.

I think that's a big part of the point here. We're going through some pretty massive changes that nobody has had the opportunity yet to think through in terms of operational points of view. That's not to say that we don't want it to happen and that there shouldn't be rationalization, but certainly there needs to be real and serious thought given as to how it happens.

Mr. Collins: Mr. Chairman, if I might, in the province of Saskatchewan - I'm sure you're aware of this - we don't have an inspection agency per se. In Ontario they do have that. So across Canada we have so many divergent groups coming together.

As we work through to describe this box of elements, yes, there are going to be times when it may be a difficult period for you people, but in the end, I'm sure that you can appreciate we are working in the interest of the Canadian Federation of Agriculture, primary producers like Jake from Manitoba and everyone.

Is it simple? Hell, if it was simple, we wouldn't be here. It's difficult, but that's what we're facing. I can assure you that at the end of the day we'll do the right thing.

Mr. Chairman, I have no qualms about saying that I'll be accountable. I think the committee is accountable. We will, at the end of the day, bring forward the kind of legislation that's in the interests of Canadians.

Ms Rutherford: To be honest, I'm not concerned about your accountability. I believe you will be accountable. That's the way the system presently works.

Our concern overall is that there are people who do not have the same kind of accountability as you. They don't have to go to those in the electorate who are going to be making most of the decisions here. That's the real concern. How do you deal with accountability from that point of view?

Yes, there's a whole system of responsible government in terms of who gets elected and who calls the shots, but the way the system is being altered means that there's a great deal more responsibility and power being given to bureaucratic structures with no recourse necessarily through Parliament, except through the electoral process.

That gives us pause, frankly, because it means that we cannot come to you and say that if Mr. Doering gets the job and we don't like what Ron's doing, do something about it. Then you have to say that he's the president of the agency and this is a committee, so go talk to the minister.

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So we go to the minister, who may still be the Minister of Agriculture, and the Minister of Agriculture says, ``Well, yes, but Ron's the president of the agency, and, you know, it's a stand-alone agency and he has a business plan''. How do we deal with this? That's what's happening now, and that's what we're concerned about that we don't want to happen in the future. We want a system that is going to be clearly accountable for the stakeholders, whether it's this agency or any other relating directly to agriculture or not. Whether it's transportation... It doesn't make any difference.

The Chairman: Okay. Thank you very much, Sally. We're going to have to wrap up in a minute. I have a couple of questions.

You discussed in your presentation that this was not the model of choice for the CFA. You've also expressed very clearly the accountability to the minister. If the present legislation had more direct accountability to the minister, other than the way it's indicated at the present time, would that move closer to your model of choice, if it made direct reference to the Minister of Agriculture?

Ms Rutherford: Yes. The reason we haven't made very many other comments about the content of the legislation is that we don't have any huge problems with it.

The Chairman: Okay.

Ms Rutherford: As we stated in the brief, the reason we didn't choose this model was the concern about accountability. So if there was a way of increasing accountability, we would be considerably more comfortable.

The Chairman: All right.

There has been considerable chat this morning and with other witnesses on the subject of cost recovery. I personally have been giving some thought to that. I think I know your answer, but if the committee were to have a round-table discussion with Treasury Board, Agriculture and Agri-Food Canada, the CFA, and maybe the Canadian Meat Council and the Canadian Poultry and Egg Processors Council, to talk about the overall effect and how cost recovery is being dealt with by Treasury Board, and so on, would CFA be interested in taking part in that round table?

Ms Rutherford: I have already something of the sort started, so I'd be happy to discuss it with you if we can find a date that's convenient for the group I've put together and when you people are available.

The Chairman: I can assure you that will be a subject of a steering committee meeting of this committee in the very near future. I can't direct the steering committee, but I'm going to suggest to the steering committee that we have such a meeting before we adjourn for the holiday break.

Ms Rutherford: Thank you, and thank you very much for this opportunity.

The Chairman: Thank you very much, Sally. Again, you have made your views very clear and I think instigated some further thought on this legislation. We thank you for being with us this morning.

Committee members, tomorrow at 3:30 p.m. the officials from Agriculture Canada will be present with us to address some of the concerns, issues, ideas and thoughts that have been presented to us by the witnesses on Bill C-60. I believe this concludes the witnesses and presentations on Bill C-60.

It is hoped that we can have this meeting tomorrow and then give a few days, not a lot of days but a respectable amount of time to everyone to gel their thoughts again before we go into clause-by-clause on Bill C-60 next week.

On Thursday of this week - I know we've all received a notice, but the clerk will be discussing with you the possibility of us changing the time for the meeting on Thursday - we will be going into clause-by-clause on Bill C-38, which is the Farm Debt Mediation Act.

The meeting tomorrow at 3:30 p.m. is in Room 112-N in the Centre Block. It is a different room that we don't usually go to, so please don't come to the West Block looking for the meeting.

The meeting is adjourned.

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