[Recorded by Electronic Apparatus]
Tuesday, June 6, 1995
.1535 
[English]
The Vice-Chairman (Mr. Shepherd): I call this meeting on the public accounts to order. First is a Standing Order 108(3)(d) consideration of chapter 6 of the May 1995 Auditor General's report, regarding federal transportation subsidies, the Atlantic region freight assistance program.
I'd like to welcome you all on behalf of the committee for your attendance today. Presumably based on the order of precedence that we usually conduct in this committee, we'll start with the Office of the Auditor General. Perhaps you could introduce yourself and your colleagues prior to your intervention.
Mr. Shahid Minto (Assistant Auditor General, Audit Operations, Office of the Auditor General): Thank you, Mr. Chairman. My name is Shahid Minto. I am assistant auditor general responsible for the audit of the Department of Transport and the National Transportation Agency of Canada. My colleague Mr. Hugh McRoberts is with me today. Mr. McRoberts is the principal responsible for this audit and he was the principal author of the chapter under discussion today.
Mr. Chairman, we are pleased to be here today to discuss with the committee our chapter on the audit of the federal transportation subsidies. My understanding is that the hearing today will focus on the part of the chapter dealing with the Atlantic region freight assistance program, ARFA, and accordingly I will confine by brief opening remarks to this topic.
ARFA is a program that provides a subsidy to most commodities moving by truck or rail westward out of the select territory, or moving within the select territory. The select territory includes the island of Newfoundland, the maritime provinces, and the south shore of Quebec east of Lévis. Trucking has become the dominant transportation mode subsidized by the program. The program is delivered by the National Transportation Agency; however, the policy responsibility for the program rests with the Department of Transport.
Mr. Chairman, our 1987 audit recommended that the program be evaluated. A study entitled The Atlantic Region Freight Assistance Program, Information Paper was completed and published in 1994 by the Department of Transport. We have reviewed it and found it to be within the limitations inherent in such studies, sound and reliable.
Our major concern with ARFA relates to the control of the subsidies paid to carriers that are operating in a non-arm's length relationship with a shipper. Our information indicates that since the deregulation of the trucking rates in 1988, payments for movements carried out involving non-arm's length shipper-carriers have grown to over 30% of the total program, and that the rates for some of them have grown much more rapidly than trucking rates in general. The ship subsidy is paid as a percentage of the submitted freight charges.
Mr. Chairman, the NTA has felt that it was not able to assess the validity of the freight charges submitted for subsidy because it believed that it did not have the authority to reject a claim based on the level of the freight charges.
The government announced in the February budget that the program would end on July 1, 1995. However, there is often a lag of some months between the time a shipment occurs and the time the claim is submitted to the NTA for payment. This means that at termination there will be a significant amount of money yet to be paid out under this program.
While there is always an inherent risk in the wind-up of any public program, in our opinion the issue of the NTA's authority with regard to the review of the freight charges added to the risk. Accordingly, we made two recommendations to encourage the protection of the public purse during the wind-up of this program.
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Mr. Chairman, we recommended that the agency should seek clear authority to reject claims if it is unable to satisfy itself as to the reasonableness of the freight charges submitted to it.
We also recommended that the NTA should carry out a risk assessment and, based on that, assess identified claims for reasonableness. In particular, we urged that increases in either rates or levels of activity should be thoroughly investigated before the claim is paid. The NTA has stated that it agrees with our recommendations.
That provides a brief summary of this part of the chapter. We will be happy to answer questions relating to this.
The Vice-Chairman (Mr. Shepherd): Thank you very much. Perhaps we can take on all interveners, then we'll be able ask questions of you. The floor is open to the Department of Transport.
Ms Moya Greene (Assistant Deputy Minister, Policy and Coordination, Department of Transport): My name is Moya Greene. I'm the assistant deputy minister of policy in the Department of Transport.
Mr. Chairman and committee members, I'm very pleased to have with me, to help us in our deliberations on this topic, two of my colleagues from the Department of Transport who worked most closely on the Transport Canada study of the maritime freight rates and the Atlantic freight rate assistance program.
Ted Rudback is the director general of economic analysis in Transport Canada. John Lawson is our senior economic adviser and the prime individual responsible for designing and carrying our study. Of course, they are here to answer any particular questions you might have.
With the committee's agreement, I have a few opening remarks, which I'll get to now.
We have reviewed the Auditor General's recommendations in the most recent report. I might add that we are very pleased with the findings of the Auditor General in terms of verifying the work that we have done on this complicated subsidy program.
We are in agreement with the recommendations. As you probably know, Mr. Chairman, the government had already made a decision, however, to discontinue the program, mostly in response to the findings of the study that had been done by the Department of Transport.
The recommendation in paragraph 6.159 is for the agency to seek the authority that might be necessary to enable it in the period of time from now, when it is clear that the subsidy will be discontinued, until the final pay-out date, which will be in December, from the department to ensure that no unreasonable amount is paid under the final months of the subsidy program.
We have sought legal advice from our counsel on how best to address this matter. It had been suggested that perhaps a regulation would be required to give the agency that authority. Our legal counsel has advised us that this is not necessary. The agency, as a quasi-judicial tribunal and as the tribunal in charge of the administration of the subsidy, has the general authority to make sure that payments under the subsidy program are reasonable and proper.
Mr. Young, the Minister of Transport, has written to Mr. Rivard, the chairman of the agency, in response to Mr. Rivard's letter to advise him that there is no need for a regulation and that he should feel completely empowered under the terms of his appointment to that agency and the terms of the statute creating the subsidy, to exercise the necessary degree of diligence to ensure that we don't have unusual claims being processed for payment or that unusual demands are placed on the public purse in the final days of the program.
I'd like to spend a few minutes, Mr. Chairman and members of the committee, to tell you a little bit about what we did in the department to evaluate this program. This has been a program that has created considerable concern over a long period of time. In earnest we set out in early 1992 to design perhaps the most comprehensive review of this subsidy program ever undertaken.
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As you probably know from the historical information provided to the committee, this is a program or a subsidy that is very deeply entrenched in Atlantic Canada and Quebec. It has been around a long time. It has been the subject of several commissions of inquiry and there have been numerous studies of its importance to the region and its effectiveness.
None of these commissions of inquiry or studies, however, has gotten into a detailed examination of the specific movements that were being subsidized under the study. Our study is in fact the first study of its kind to look at a statistically relevant sample of movements.
In fact, the sample was developed in concert with Statistics Canada. It looks at about 75,000 movements to really determine what the origin and the real destination of the goods being shipped are, to look at sometimes handwritten information on literally thousands of waybills and then to computerize this information, so we could have data that was analysable. It would tell us who was receiving the subsidy, under what circumstances the subsidy was being received, how much was being paid out to different commodity groups, so we could get a handle on where these goods were going. I would like the committee to understand that this factual information took a great deal of effort to compile.
Most of the studies have been on the basis of rhetoric and belief about where the money was going. In fact, there was no real analysis done on the basis of specific movements. As you know, from the study we put out there were some findings that were surprising to people who are very knowledgeable of the program, because it's only when you look at the detailed data that you get a sense of where the money is actually going.
What we found most surprising was that the largest portion of the subsidy was going for very short-distance movements; in fact, movements under 200 kilometres. We found that particular commodity groups were getting a large share of the subsidy, but in fact almost everything you can conceive of was being subsidized by one device or another, with the possible exception of the couple of items that we managed to remove from the selective list in 1992.
I mention this just to highlight for the committee's information that if this program was hard to study, it was nothing compared to the difficulties the agency must have faced in administering the program. The program is paid out to carriers on the basis of specific movements that are built up on the basis of individual waybills. Sometimes as many as 2 million movements a year are subsidized.
The program is an agglomeration of several statutory programs and additional statutory instruments that have been grafted into a program that really has its roots at the turn of the century. So when you consider the way in which the funds were paid out, the very confused statutory basis for the program...if I might add a personal note, two statutes, three different sets of regulations - a structure by statute that enabled a committee to essentially add products to the selected list of products that would be subsidized. So when you consider the fact of administration, the confused statutory basis for the program and the critically important changes that had taken place in transportation over the life of the program, that were not reflected in the statute or then regulations or then, by definition, the administration, it was no surprise to us, Mr. Chairman, how difficult it was to do this study.
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I wanted to put that on the record to be sure you had an opportunity to consider what in fact is the statutory basis for this program and how sensible is it to have a program based upon a specific percentage of a rate once rates are deregulated. So we had a program that was put in place when all transportation rates were highly regulated and we had a program that continued in place after there had been significant change in the way in which transportation took place in the region.
The other findings of the study that I think are relevant were probably most important in leading the government to the conclusion that there really was no way nor was there any need to change this program to make it more effective. There was nothing we could think of, given the way this was a program grafted together from several pieces of legislation, several sets of regulations, within the resource constraints that any government faces these days, that you could make the program better.
More importantly, because for the first time we had findings about where the money was actually going and who was actually receiving the subsidy, we were able then to compare that with the stated objectives dating back, I suppose, to the 1920s of the program. Nor was there any need to continue this program. It was on those bases that the government took a decision that the best thing to do here was not to try a cure, which would probably end up being just another graft into that labyrinthine apparatus that was already in place and lead to even more anomalies in the future, but to discontinue the program.
With respect to discontinuation of the program, I think the government was clear it would be very difficult to try to correct it. Not only that, when we looked at the circumstances that were in place in the 1920s that gave rise to the program and we compared them to the circumstances that are in place now, it was clear to the government that the program was no longer serving the objectives for which it had been established and that it probably was no longer needed.
That basically concludes my opening remarks. I wanted to give the committee a little bit of information on what we did and how we did it and why we did it as a backdrop to the government's response, which you know about.
The Vice-Chairman (Mr. Shepherd): Thank you very much.
Mr. Williams (St. Albert): On a point of order, Mr. Chairman, Ms Greene's remarks, although very helpful, are not exactly as printed in the prepared statement. Therefore, I would ask that the statement provided to committee members be attached to the minutes of this meeting as if it had been read in.
The Vice-Chairman (Mr. Shepherd): Okay.
Mr. Chaiman, I am pleased to appear for the Department, in the unavoidable absence of the Deputy Minister, together with my colleagues Ted Rudback and John Lawson.
I expect the Committee is particularly interested in the Department's response to the Auditor General's recommendations, and the extent to which the Department has been concerned about the effectiveness of the program and control of its expenditure in recent years.
First, let me inform the Committee of the Department's response to the Auditor General's recommendations. The second of the recommendations (para 6.159) is the one applying to the Department: The Agency has indeed written to the Minister requesting clear authority to reject claims as unreasonable during the remaining weeks of the wrap-up period (claims will be accepted by the agency until Sept. 1 for shipments made by June 30). The Department sought legal opinion on the issue from Department of Justice Counsel to the Department, which was to the effect that the agency has sufficient authority to reject claims as unreasonable, when acting in its capacity as a quasi-judicial tribunal to decide whether a claim is acceptable. While this could have been made explicit by regulation, there was insufficient time to complete the regulatory process prior to end of the program and repeal of the legislation. The Minister therefore wrote on May 11 to the Chairman of the Agency, informing him of departmental counsel's opinion that sufficient authority exists to reject unreasonable claims; and stating that the Minister expects the Agency to exercise diligence in determining that claims are reasonable, and taking appropriate action. [the Minister's letter is available if committee members wish to see it] my colleague from the NTA will inform the Committee of the actions the Agency is taking.
Turning to the Department's efforts to evaluate and control the program, I can assure the Committee that control of the program has been of considerable concern to the Department, as our recent actions make clear. It prompted the recent departmental review of which you are aware from the Auditor General's report (and I believe copies have been circulated). And that review in turn played an important part in the Government's decision to eliminate the program, as announced in the Budget.
To put the review in context, I have attached to my notes a brief description of the program, and would be pleased to explain it to members in detail if they wish, but I assume the Committee would prefer me to be brief. I will therefore offer just some comments of my own on the program as I found it when I joined the Department in 1991. The program was labyrinthine in its structure, the result of the decades of changes in legislation, new laws replacing and amending the old, regulations piling upon regulations, court decisions and administrative decisions modifying their application. The program was supposed to be selective in applying to shipments of freight important to the development of the region, yet it included subsidizing bread and milk deliveries, shipping household contents of emigrants out of the region, and carting empty beer bottles back to the breweries. And a procedure was in place that allowed the highest subsidy rate to be extended to new commodities effectively on the recommendation of the recipient shippers and provinces.
Moreover, the program had clearly been intended for a period when freight rates were regulated - it paid subsidies as a percentage of freight rates, which was fine when rates were set by governments, but since the early 80's provinces no longer set rates, and carriers set their own, so they effectively set their own subsidy. And the program was supposed to exclude shipper-owned carriers, because of the difficulties of controlling their rates, but court decisions in the mid-80's said that certain sorts of affiliates were eligible, and trucking deregulation had made it easier for those sorts of affiliates to obtain for-hire licences, so it was possible they were expanding fast.
Certainly the subsidy appeared to be growing fast, and was uncapped, in that the government was obliged to pay all eligible claims, which grew with trucking activity and knowledge of the program.
Faced with this complex situation, one of my earliest priorities was to put in place the review, which I was determined would be the most thorough ever undertaken.
Numerous studies had been conducted of the program over the years, notably examinations by various royal commissions, academic studies, and reviews commissioned by the Department. The last major review had been in 1983, including a study of a small sample of claims, and a consultant's assessment of the effects on employment, which included a worst case assessment that 12,000 jobs were at stake if the program were eliminated. That study was widely quoted in the region.
As the Committee is aware, the Auditor General's report in 1987 questioned the effectiveness and control of the program, and recommended an evaluation and improved administrative controls.
The earlier studies were always severely hampered by the lack of data on the specifics of claims. The nature of the claims process is that for trucking claims this information is not available in any summarised or computerised form, but only on individual paper waybills on some 2 million shipments a year, with no common format, and often hand-written. These must be read individually in order to determine such important information as the shipper's name, the commodity carried, and the origin and destination of the shipment. Most studies and reviews have not had the resources to examine these records in detail, and have therefore considered only the summary information published by the NTA, of the total payments by legislation and program component (MFRA, ARFAA, Intra, Basic Westbound, Selective Westbound).
For the 1993 study, we were determined to describe more fully than ever previously the nature of the subsidised shipments, including for the first time details of origins and destinations, shipment weights and distances, as well as commodity. We therefore designed a statistical sample large enough and representative enough to provide reliable estimates. We selected 75,000 shipments by a careful randomised process from the NTA files of claims made during 1992, and extracted the pertinent information from each, including shipper, commodity, weight, origin and destination.
But that simple statement of what we did doesn't come close to doing justice to the effort involved, which I think was extraordinary. The process involved searching through the millions of NTA records stored in the archives in Halifax to choose the required sample, shipping the records by the boxload to the NTA offices in Moncton, then transcribing and coding by hand the details of those 75,000 waybills into computer records, and checking and editing to eliminate mistakes. We employed 17 staff working full time throughout the summer of 1993, supervised by NTA and Department staff worked together.
The resulting database was then analysed by department staff back in Ottawa through the fall and winter of 1993/4, including statistical weighting and estimation from the sample data to reveal distributions of shipments by commodity and mode and routings; and comparisons of the subsidies with output by recipient industries to show the importance of subsidies within their cost structures. The resulting descriptions of the nature and effects of the subsidies contained in the reports published in July 1994 are unprecedented in the history of the program.
The findings of the study were extremely valuable to the policy assessment that followed. Most important among the findings were the continuing dominance of payments for intra-regional freight, despite all the attempts to re-orient the program towards trade with the rest ofCanada; the dominance of very short-distance shipments within the region, or just across the territory boundary; the concentration of subsidies to unprocessed forest and farm products and the relative absence of fully-manufactured goods; and the payment of the higher westbound subsidy rates for shipments across the boundary within Quebec, when otherwise-identical shipments in the Atlantic provinces received only the lower intra-regional rate.
Furthermore, a supplementary analysis undertaken by department staff of truck carrier rates, using Statistics Canada survey data compared by econometric techniques the rates charged on subsidised traffic within the region with rates for unsubsidised traffic within the region and in the rest of the country, and concluded that rates were higher on subsidised traffic, indicating that carriers were effectively capturing part of the subsidy intended for shippers.
I believe the Committee is aware from the Auditor General's report that his staff assessed thoroughly the Department's evaluation, and complemented us on its quality. I can add that we have discussed the findings widely with academic experts, and have received universal acceptance of its authenticity, and indeed a summary of its analysis of freight rates received an award a few days ago at the Canadian Transportation Research Forum.
As members have access to the Department's report as well as the Auditor General's accounts of the study, I will not take up any more time to describe its findings, but I or my staff would be pleased to offer any details we can in response to member's questions.
Thank you Mr. Chairman.
OUTLINE OF THE ATLANTIC REGION FREIGHT ASSISTANCE PROGRAM
The Program pays subsidies to carriers for shipments of freight within or westhound to the rest of Canada from a territory defined as including the provinces of New Brunswick, Nova Scotia and Prince Edward Island, the island of Newfoundland, and the part of Québec lying east of Lévis and south of the St. Lawrence.
The Program is authorised by the Maritime Freight Rates Act of 1927, the Atlantic Region Freight Assistance Act of 1969 and regulations under the latter Act.
Administration is by the National Transportation Agency through its regional office in Moncton. Claims are made annually by some 2,000 carriers for about 2 million individual shipments.
The Program provides subsidies at different rates under three sub-programs, with different eligibility criteria for shipments:
1. Intra-regional subsidy - at a rate of 8% of the freight charge, for shipments originating and ending within the territory, including shipments to territory ports for export by sea. Most internal freight movements are eligible, but specified exclusions include shipments of petroleum products, alcoholic beverages, soft drinks, sand and gravel, and all shipments under 8 km.
2. Basic Westbound subsidy - at a rate of 28.5% of the freight charge from the point of origin to the territory boundary. All shipments with destinations in Canada west of the boundary are eligible, except for those of scrap and waste material or house contents.
3. Selective Westbound subsidy - at a rate of 20% of the freight charge from the point of origin to the territory boundary, in addition to the Basic Westbound subsidy, for shipments of certain commodities specified in regulations. Recommendations of eligible commodities are made by the Federal-Provincial Committee on Atlantic Region Transportation, essentially including all fresh foods and any product having achieved its final value in the region.
The following were intended to be excluded categorically from the program:
- shipments by a carrier owned by the shipper,
- shipments overland to the U.S.;
- shipments of goods imported to the territory;
- shipments of goods eastbound into or through the territory.
In 1993/94, payments were approximately 47% Intra-regional, 38% Basic Westbound, and 15% Selective Westbound; and by mode of transport about 80% was to truck carriers, and 20% to rail carriers, with marine carriers receiving about half of one percent.
Mr. Williams (St. Albert): Can we continue on then with the National Transportation Agency? Mr. Rimmer.
Mr. Doug Rimmer (Director General, Marine, Trucking and Regional Offices Branch, National Transportation Agency of Canada): Good afternoon, Mr. Chairman. I'm the program manager with direct responsibility for the administration of the Atlantic region freight assistance program. With me today is Ron Ashley, legal counsel at the National Transportation Agency.
[Translation]
My presentation today will relate to the Agency's administration of the Atlantic Region Freight Assistant Program, for which the Agency is responsible and which is covered in the second half of chapter 6 of the Auditor General's Report.
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My opening remarks will provide an overview of the Agency's responsibilities for this program. I will then focus on the Agency's response to the Auditor General's recommendations relating to the wind-up of the program.
[English]
The National Transportation Agency has the administrative responsibility for the subsidy program governed by the Maritime Freight Rates Act and the Atlantic Region Freight Assistance Act. We do not carry the policy responsibility. This is within the purview of the Minister of Transport and Transport Canada.
The specific administrative tasks assigned by the legislation to the agency include the certification of carriers as eligible to receive subsidy, the review of subsidy claims and the certification of the amount of subsidy for which carriers are eligible. The Minister of Transport is responsible for making the payments, and successive ministers have delegated this power to the agency.
There is a statistical chart attached to the presentation which indicates the size of our workload. The agency processes each year some 20,000 claims that it receives from over 2,000 carriers. These claims can contain literally hundreds of individual movements, estimated over 2 million in total, and it is at this individual movement level that the eligibility for subsidy must be determined.
Turning to the recommendations themselves, as stated in the Auditor General's report, the recommendations are intended to address the special risks inherent in a wind-up situation. The first recommendation advises the agency to review high-risk claims showing increases in levels of activity or rates to ensure that the claims are reasonable.
The second recommendation advises the agency to request Transport Canada to seek clear authority for the agency, to deny subsidy on the basis of what has come to be called excessive rates.
[Translation]
As you will note from the Auditor General's report, the Agency agrees with both recommendations.
On the second recommendation, I can inform you that the Chairman of the Agency wrote to the Minister of Transport on April 27th and received a response from the Minister on May 11th.
The Chairman has now instructed Agency officials to implement the first recommendation. Agency staff have developed a new process for reviewing claims showing a significant increase in either rates or levels of activity and for determining that the claim is not based on ``unreasonable'' rates charged by carriers.
[English]
This will be done based on the risk assessment performed by agency staff as recommended by the Auditor General. The minister was informed of the agency's plans by letter of May 24. This rate review process is now ongoing as part of the agency's overall verification program. The agency performed the risk assessment as soon as the Auditor General's report was finalized.
Since May 1, we have been identifying claims for further review. The agency is looking at current claims as they come in and has also started to review all those claims submitted since the beginning of the year.
These steps are consistent with the recommendation in the Auditor General's report. As of May 25, we had examined a total of 257 claims for increases in levels of activity or rates. Of those, we have identified 38 for further review.
The agency's review of these claims involves several steps and responds to the two risks identified by the audit: one, that carriers may artificially increase their rates in order to maximize subsidy during the wind-up; two, that carriers may submit artificial movements, also in an attempt to get the highest possible subsidy.
When the agency believes there is reason to question the rates involved in a claim, we will give carriers the opportunity to provide us with more information to demonstrate the reasonableness of their rates. The onus will be on carriers to justify their rates and the agency will review their submissions and reach a decision.
[Translation]
If the Agency discovers during its verification process that carriers have included claims for movements that we believe did not actually take place, the Agency will deny subsidy for such movements.
As with any decision by the Agency, carriers will have their full rights of appeal if the Agency denies payment.
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It must be stressed that the agency does not have the resources to implement this review for every single claim it receives - normally we receive nearly 2,000 claims per month, each containing hundreds of movements. The high risk carriers that we identified in our risk assessment will be subject to this review process.
[English]
The agency will also use a sampling process to randomly select a portion of all other claims submitted. This will act as a useful control mechanism.
You will find more information in the handouts attached to the opening statement. The first paper entitled ``Claim Control Flow Chart'' traces the various paths a claim can take as it moves through the agency's verification and audit steps. This flow chart includes the new rate review process that the agency put in place for the wind-up of the subsidy program.
This illustrates graphically the different audit streams we have established to balance the need to review claims with an economical use of resources.
The second sheet entitled ``Rate and Activity Review'' provides detail on the actions I just described.
[Translation]
The agency believes that the new process provides an effective response to the risks identified by the Auditor General and responds fully to the recommendations. We would be pleased to answer your questions on this matter.
[English]
The Chairman: Thank you very much. Pursuant to our regular proceedings, you will now decline to the Bloc for ten minutes of questioning.
[Translation]
Mr. Laurin (Jolliette): My first question is for Mrs. Greene, and I will refer to her written brief and not her oral statement.
In the third paragraph, Mrs. Greene mentions that before responding to the letter, the Minister sought legal opinion on the issue from legal counsel to see whether he was legally authorized to proceed in that manner.
I would like you to tell me whether there is a risk that the Transport Department's procedure might be challenged. In other departments, there were court challenges a few years after the fact, which forced the government to act retroactively, which was sometimes an advantage for the taxpayer, and sometimes not. What are the risks that subsidy claimants may challenge the procedure?
Mrs. Greene: That is a very good question, Mr. Laurin. To tell you the truth, we don't know exactly what the risk is. According to our legal counsel, the agency is clearly authorized to check the claims for subsidies that have already been granted. The agency has that authority first and foremost because it is a quasi-judicial tribunal and secondly because the legislation clearly stipulates the need to be reasonable.
According to legal opinion, the agency definitely has the power to audit the claims. That does not stop anyone from challenging the process. Everyone has the right to challenge existing or future systems. In light of the advice and counsel we have received, we are quite sure that what we are doing is correct. Individuals always have the right to put pressure on us, even legal pressure, if they so desire.
Mr. Laurin: Could you provide this Committee with the legal advice you received on this matter?
Mrs. Greene: Yes, of course.
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Mr. Laurin: We are making that request today and you can send it to us later?
Ms Greene: Yes, certainly.
Mr. Laurin: The program has been in existence now for a number of years, since 1927, if I'm not mistaken. This legislation dates back to 1927. Why didn't the National Transportation Agency act sooner, when it noticed that some rates were questionable, and why did it wait to seek authorization from the department to refuse subsidies when the agency realized some claims were excessive?
You waited for the Auditor General to point it out. What is your explanation of the delayed reaction, the time it took to ask for authorization or to disclose the problems you were having and over which you felt powerless? Why did you wait so long?
Ms Greene: I would not say we had waited. As I explained to the committee, this is the first real study there has been on the subsidy itself. We were unofficially informed that there could be cases where people asked for a subsidy even though they were not really entitled to one. If the truth be known, we didn't know what fact or arguments we could use to justify a change.
As for the agency's authority, I cannot say anything about what happened before I joined the department. One of the first things the policy group started in 1992 was a clear and detailed study of the subsidy. The group used official and clear information based on data we now have. Those tools are needed to make policy decision.
Mr. Laurin: Do you currently manage other programs? Have you noted similar cases in other programs, or does the NGA not realize that could happen elsewhere?
After all, there are some clues. Your reports indicate that some transportation rates increased approximately 40%, whereas arms' length carriers saw their rate increased by approximately 8 percent. Surely, that must have told you something was wrong, but you had to wait for the Auditor General to denounce it before the National Transporation Agency asked the department for greater authority to remedy the situation.
As for your other program, are you waiting for the Auditor General to comment on them before you act and ask for the authority you need to stop abuses?
[English]
Ms Greene: If I may, I'm going to speak in English because I'm more lucid in English than I am in French.
We didn't wait for the Auditor General - not at all. In fact, the Auditor General's work is based upon our study. This is the first time since this subsidy was put in place in 1927 that there is in fact a study based on actual data of where the money is going, to whom, what was the starting point of the trip, what was the destination of the trip. This is the first time anybody knew, really.
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We've had lots of so-called reviews of this subsidy, and it has figured in several commissions of inquiry in the past. As the hon. member knows, this is a program that is very embedded in the whole history of the glue that is considered to make the federation work. I would go so far, Mr. Williams, as to say even more so. It is older than UI; it really stems out of the sense of no ability in the Atlantic region to export on a competitive basis, unless there was a rate reduction on the rail side at the turn of the century. That view, in fact, led to the failure of the intercolonial railway, so I would say that this was a subsidy that was very deeply entrenched in the way of doing business.
We didn't wait for the Auditor General to point out loopholes. Neither we nor the Auditor General would have had any information to know even what the loopholes were before this study.
I would say, in terms of verifying claims, it's very important to point out that it's very hard to verify claims when the subsidy is based as a certain percentage, a percentage fixed, of a completely deregulated amount. You would have to compare individual movements for the same commodity, moving the same distance over the same period of time, in the same circumstances, with similar movements in unsubsidized areas. Of course, the only unsubsidized area that you would have been comparing it to would have been west of Lévis, Quebec, where, by definition, the circumstances are different.
In terms of other programs, I don't personally have a policy responsibility for very many of them, with the one notable exception being the Western Grain Transportation Act. In that case too, the hon. members will be aware that many distortions have crept in to what is actually being paid out under the WGTA, by simple virtue of the complexity of the subsidy program.
That program, as a result of considerable review that's been done in the department, is also being discontinued by the government, and you're aware of the changes there.
Generally speaking on subsidies, I'd like to say one thing. In my judgment, having worked on UI, which was my previous life before Transport Canada, and now having worked pretty closely on this one in the WGTA, there is no subsidy program that is possible to be administered to make sure that it pays out no more than the estimated amount. The estimates cannot capture the ingenious nature of people and their ability to make best use in a rational legal way of the complexity of rules that make up any subsidy programs.
Mr. Williams: Ms Greene, I'd like to compliment you on your candid remarks, the opening statement you have made, and also the initiative you took upon yourself to perform this massive study of the Atlantic region freight assistance program that resulted in the report of July 1994.
You mentioned in your opening remarks that:
- The program was supposed to be selective in applying to shipments of freight important to the
development of the region, yet it included subsidizing bread and milk deliveries, shipping
household contents of emigrants out of the region, and carting empty beer bottles back to the
brewers.
Mr. Hugh McRoberts (Principal, Audit Operations, Office of the Auditor General): Yes, there are, sir.
In the case of the inter-regional program, section 2 of the regulations includes a number of exclusions. It excludes goods being imported into Canada, goods that are in transit to the point of final delivery, and the movement of goods originating outside the select territory. It prohibits subsidizing the movement of empty freight equipment, and specifically it prohibits the movement of used household goods, garbage, refuse, sewage, and a number of other exclusions. It also excludes the movement of goods that are the property of a carrier or the sole owner of a carrier.
.1615
Mr. Williams: Thank you. Mr. Rimmer, in your opening remarks you gave a review of the fact that, based on the information that you have received, you started to conduct some audits of the waybills or the subsidy applications that you have received. Has there been an ongoing audit process of the applications in the past, in the previous years?
Mr. Rimmer: Absolutely, sir. We have an ongoing audit program. We have about 40 people in Moncton who work administering the program. We certainly have a variety of audit steps that we take, prepayment verification, and then we have a field audit program as well.
Mr. Williams: Why wasn't your audit picking up what Ms Greene's audit picked up, that you are paying to virtually everything without exception?
Mr. McRoberts is telling us the specific categories that are not eligible for the subsidy, and you're saying you have an audit program ongoing. What were you finding in your audit program?
Mr. Rimmer: Certainly we find cases where carriers submit claims for subsidy where the goods are not eligible for subsidy, the commodity is not eligible. It might be an incorrect origin or an incorrect destination, and we disallow payment.
Mr. Williams: Okay, but Ms Greene, I take it you're saying that your audit shows we are paying these things.
Ms Greene: I would like to correct something, Mr. Williams. It was quite legal to pay to subsidize bread deliveries. That's not an excluded commodity under the legal terms of the subsidy program.
Mr. Williams: You talk about emigrants out of the region.
Ms Greene: Household furniture and garbage were only removed from the program in 1992 by a specific regulatory change. Up until then, as long as it hadn't been imported into Canada, it wasn't being exported out of Canada, and as long as they stopped inside the territory and it was on the select list, which it was, that was legal. That only became illegal in 1992.
Mr. Williams: It's rather strange.
Ms Greene: It was as a result of a 10% budget reduction that was imposed on the program.
Mr. Williams: It seems rather strange to me that we would subsidize the movement of used furniture out of a region as part of an economic development program.
Ms Greene: Agreed.
Mr. Williams: Moving onto the problem identified by the Auditor General and the fact that we were subsidizing non-arm's length carriers, was that part of your audit program too, Mr. Rimmer?
Mr. Rimmer: It was very much so.
Mr. Williams: What did you do about it when you found out that you were paying excess subsidies because the charges were too high in relationship to non-arm's length transactions?
Mr. Rimmer: First of all, Mr. Chairman, I must say to the hon. member that I don't know of an instance where the agency has paid a claim based on rates that were ``too high''.
Mr. Williams: If I may refer to the Auditor General's table, which one is it, Mr. McRoberts? It is one of the tables that he had.
Mr. McRoberts: They are at 6.13, 6.14, and following, the ones that deal with the non-arm's length.
Mr. Williams: Table 6.13 suggests that the subsidy was to a much greater degree focusing on non-arm's length transactions, and then on 6.15 he tells us that the cost of non-arm's length shipping on an index basis had risen from 100 to 140, whereas the arm's length transportation had only increased from 100 to 108 on the same index. There was therefore obviously something going on in the in-house situation that perhaps would suggest collusion. Didn't you take any action on that?
Mr. Rimmer: There are two issues here. Perhaps with your indulgence, Mr. Chairman, I could take a minute to try to separate them here.
There is the issue of the participation of non-arm's length carriers, or what we call affiliated carriers in the program. As the Auditor General points out in his report, in one of the free program components, that is the ``intra'' program, there is a specific prohibition of a type of non-arm's length transaction, and it is very specific.
.1620
There have been a number of legal cases about those provisions over the years in which the agency has tried to deny a subsidy based on that provision. The courts have essentially rejected the agency's approach. This has allowed a larger number of non-arm's length carriers to legally participate in the program.
Mr. Williams: Let's just stop right there. You're saying you found out you didn't have the authority to stop these non-arm's length transactions because the courts said you couldn't do anything. Yet you are finding that more and more shippers are moving to a non-arm's length transaction, which would suggest that it is more profitable to them.
As an agency, you say you didn't have the authority. What steps did you take to bring it to the attention of the minister? We now find out that you had the legal authority to intervene as a quasi-judicial body all the way along.
Mr. Rimmer: We certainly brought the question of affiliated carriers to the minister's attention at the time of the court cases in 1984-85. This matter was also referred to in the Auditor General's report of 1987, as indicated again in this year's report. That was certainly an issue that was known and brought to his attention.
Mr. Williams: Did you try to resolve it?
Mr. Rimmer: The agency has tried to administer the law and the regulations, as it was faced with them, and we have tried to take, with respect to this issue, an approach that's as aggressive as the law will allow.
Mr. Williams: But we have Ms Greene of the Department of Transport telling us that her legal opinion was that you had this authority all along. You are telling us the court decisions don't give you this authority.
We are back to this concept of bureaucrat fighting bureaucrat. Tens of millions of dollars go down the drain. It's a $100 million program. According to Ms Greene, the whole thing is killed because it is providing absolutely no beneficial service to Atlantic Canada in the present-day situation. Thankfully, through her hard work and diligence, we have a report to prove that.
What I am trying to ask is who is accountable here? Is it the Department of Transport that didn't supervise the NTA properly, or is the NTA just going ahead and writing cheques with no care and abandon? Ms Greene, what do you say?
Ms Greene: I would say there is blame enough to go around. We have a subsidy that has been embedded in a whole region for a very long period of time. Whatever we might think as a result of a good, comprehensive study now, recipients still like to receive subsidies. We have a very complicated program to administer. We have political decisions that were not taken perhaps when they ought to have been taken. We had important policy changes on the deregulation side that further weakened the utility of this program.
Mr. Williams: But my questions was -
Ms Greene: So if you are looking to assign blame, I would say there is a lot of it.
Mr. Williams: This is the next question I am coming to. When I take a look at these programs, the NTA, according to what you are telling us, maintains virtually no statistical data on what it was doing. You had to go right back to the waybills - many of these were handwritten in warehouses and so on - to try to get a statistically random sample to which you could apply some credibility.
I am very concerned about the fact that bureaucrats don't take the job seriously as they are spending $100 million of taxpayers money every year. I have been very, very critical. I have said before that I think it is time that heads rolled. I want to know whose head is going to be rolling because $100 million a year has been wasted here. Is it the NTA? Do we have to bring the chairman in here and have him account for it?
It seems to me we have just been going ahead and spending the money. Make some amendments, some adjustments. Who cares? Just write the cheques as they come. It's totally built in, as you say, as part of the fundamental character of Atlantic Canada in getting these subsidies. Yet the taxpayers and the rest of the country have been forking out for virtually - if not absolutely - no benefit to the economic development of the region. I was looking at your charts here, and of one of the programs, the inter-regional one, which accounts for $57 million in costs, it says that 78% - let's call it $45 million - is strictly within each individual province, and Newfoundland, obviously the worst, gets virtually nothing out of it. This hasn't been a subsidy in economic development at all; this has just been a plain subsidy.
.1625
It's time the senior officials in the government were starting to be held accountable for what money they spend. Who is going to be accountable here? Is it the chairman of the NTA, you in the Department of Transport, Mr. Rimmer, or who? Who should have blown the whistle?
Ms Greene: That's a very hard question to answer because the administrative data wasn't there until it was compiled, and we compiled it. It was on that basis that we're able to say what we can say to you about the subsidy.
Mr. Williams: Let's ask Mr. Rimmer.
Ms Greene: I should tell you, though, that these are our views of the subsidy.
Mr. Williams: It's my view, too.
Ms Greene: There are many people in Quebec and Atlantic Canada who would disagree. As you probably know, Mr. Williams, when a subsidy becomes embedded, there's a whole feeling of entitlement. It starts to operate at every level. It changes the way that transportation actually works in a region. It changes the way in which plants are built and where they're built.
Mr. Williams: Let's ask Mr. Rimmer what he thinks as to who should be accountable for this. I think the NTA should have been doing the statistical data and analysis along the way to provide them with the information that finally showed up in your report on policy and coordination in July 1994. Mr. Rimmer, who's accountable for this?
Mr. Rimmer: Clearly, the NTA, the chairman and I are accountable for the administration of the program according to the laws and the regulations that exist. We believe we've done that to our best efforts. We intend to be aggressive in doing so in the wind-up of the program.
With respect to your specific question about the statistical data, we did not have that in our possession. We were receiving 2 million movements a year. To have done a data entry to compile those statistics was simply not feasible, given the resources we have.
However, over the past year or so, immediately prior to the cancellation of the program, we had been working to develop a computer system that would have allowed us to have done exactly that. One of the key issues in developing that program was that we wanted to get the data from our clients in an electronic format so we wouldn't again be faced with the data capture.
We can do that now because the trucking industry, like many industries, has matured and is technology-intensive to the point at which most of them, or many of them, could provide that information electronically. Prior to this, they were paper-driven, as were many other industries, and there wasn't an economical way of capturing those statistics without the very detailed, intensive project launched by Transport Canada in 1993.
The Vice-Chairman (Mr. Shepherd): I noticed that the Auditor General's report commented heavily on the study that Transport did, even though, in a previous Auditor General's report back in 1987, he was asking for this kind of analysis.
On page 25 of that report it talks about the fact that the analysis suggests that rates are higher for subsidized traffic by about 40%. If I take the inter-regional transportation expenditure in there - it's about $50 million in subsidies - then 40% of it, as I understand it, is an estimate of over-market rates. I'm not trying to put words in your mouth, but are we saying there's a possibility that the Canadian taxpayers have been defrauded to the tune of $20 million a year?
Mr. Minto: There were different parties involved in these transactions. As would be obvious, the shippers and carriers were really primarily there to look after their own interests. The focus of our audit was to speak to the people and examine the documents of the people who were entrusted with looking after the interests of the Crown, and to make sure that before payments were made from the public purse, there was some reasonableness to the claims.
.1630
That's where we talk about the audit. Whether it was a fraudulent thing or not is something that a legal person would have to decide. We noticed an abnormality here. It was not normal for non-arm's length transactions that the difference would be so great. For arm's length transactions the growth is only 8%. For the others it's 40%. Based on the work that has been done by Transport Canada, we found that to be very abnormal and we brought it to your attention.
Now, whether it is fraudulent or not, sir -
The Vice-Chairman (Mr. Shepherd): I use the word ``possibility'' of a fraud of that nature going on on an annualized basis.
Mr. Minto: Mr. Chairman, I would not really be in a position to say that.
The Vice-Chairman (Mr. Shepherd): Okay. Ms Whelan.
Ms Whelan (Essex - Windsor): I have a bit of a different perspective here. I look at the Atlantic freight rate assistance program and the reasons it came about in the 1920s, the changes in 1969, and the problems when the trucking was introduced. I hate when we use that word ``fraud'' because, correct me if I'm wrong, it's my understanding that the subsidies are paid to companies that are set up. There is nothing in the system or in the law as it's set up right now that prohibits anyone from setting up individual companies, from owning a truck, from doing something else. One person can have three or four different companies. There is nothing that prohibits that within the legislation as it is set up. Is that correct?
Ms Greene: Yes.
Ms Whelan: So to use the word ``fraud'', I think, is a horrible use of the word because there is nothing that prohibits what's being done.
Although this is done on maybe a smaller scale in some instances in the Atlantic region and perhaps there are some difficulties with it...I think we recognized that in light of the fact it's been cancelled. You have to look at a system that's developed over 70 years without computers, without technology, without a lot of different things. It seems to me that in a relatively short timeframe, in the last 10 years, there has been a lot of analysis done since computers and fax machines and a number of other things have come on board, and that as a result, different decisions have been made.
Am I correct in that?
Ms Greene: Yes.
Ms Whelan: I read this and think there are a lot of suggestions here, but I don't believe there's been any ``fraudulent activities'' on the part of a majority of people since 1969 based on the legislation as is provided.
Ms Greene: Mr. Chairman, we have no evidence of fraud. Our study would not have enabled us to pick up fraud, which, as you know, is a legal thing. It requires a legal intent to deceive.
What we found was a program that was full of - ``loopholes'' is too small a word - ways in which you could maximize receipts from the program legally. This being the case and given that the scope of our study would not allow us to make any findings on people's motives, we don't believe we have evidence of fraud in this study.
The Vice-Chairman (Mr. Shepherd): Maybe I could just verify one thing with the Auditor General before we go to Mr. Laurin. If somebody submitted invoices for freight rates that were two times market rate, what justification could there be for that?
Mr. Minto: Mr. Chairman, I guess this is the point at which we started the discussions with the National Transportation Agency about what would happen if they saw high rates. This is the stage at which we became aware in the audit that it was the agency's position that they did not have the authority to disallow claims simply because the rates were too high, and that is what we brought to your attention.
The Vice-Chairman (Mr. Shepherd): Mr. Laurin.
[Translation]
Mr. Laurin: Mr. Chairman, that is essentially what I asked the Agency. The Agency knew that there were questionable rates and claims but, because it felt that it was not able to disallow them, it kept silent. This is what worries me. The first duty of any civil servant who is worried about any possible wrongdoing is to bring the situation to the attention of his or her superiors.
.1635
What we are simply saying here is that, because there was no way of stopping the process, nothing was done.
[English]
Mr. Rimmer: With due respect, Mr. Chairman, I would not concur with that categorization of the Agency's efforts.
Perhaps by way of introduction, until about 1987-88 the rates used by carriers and the rates that were submitted under this program were heavily regulated by the provinces. Following 1987-88, perhaps even starting a bit earlier, that regulation started to disappear. The agency verifies claims, and we do the checks we believe the law requires us to do.
Around 1990-91, allegations were made for the first time, certainly that I was aware of, that carriers were charging more than they needed to - those are the allegations that were made - more than would be required in a competitive arrangement.
The agency did not believe at the time it had the authority to deny subsidy based on the rates that carriers were charging. We conducted a rate study, as is referred to in the Auditor General's report. It was a limited attempt to look at a number of carriers to see if we could find any evidence of inflated rates or rate abuse, however you wish to term it. As a result of that study and some follow-up work we did in 1992, we found no firm evidence of any rate abuse.
Then in 1993 the department began their more extensive work, a much more extensive piece of work than our rate study, and that has led the government to the conclusions it has reached. But we, sir, were not aware of any particular claims, any specific claims that were based on an excessive rate. We must pay based on the claims that are submitted to us. Those are the things that we audit, that we test against.
[Translation]
Mr. Laurin: According to the documentation, claims will be accepted until September 1. Given that there are still $30 million to be spent under the program, what are the savings you expect from the rate evaluation which you have carried out? I would also like to know if the Auditor General has done such an evaluation. So my question is for both witnesses.
[English]
Mr. Rimmer: We have no estimate as to any dollar value of subsidy that might be denied as a result of the new process we have put in place. It is a new process. It began on May 1, and I could not give you a dollar figure on that, sir.
[Translation]
Mr. Ted Rudback (director general, Economic Analysis, Transport Canada): I have a clarification. The subsidies will no longer be paid out on shipments commencing after June 30, at the end of this month. Interested parties have until September 1 to submit their claims. So, what we are speaking of here is a period of less than a month.
Mr. Laurin: That, I had understood, but, when the rates set by the carriers were evaluated, it was discovered that some were exaggerating. An evaluation has been made and some subsidies will be denied. So, given the fact that there are still $30 million to be spent, will any savings be possible? What might be the order of magnitude of such savings? The NTA stated that it had not done an evaluation. What about the Auditor General, has he done any evaluation work?
[English]
Mr. Minto: No, Mr. Chairman, it was not possible for us because this would be the forecast amount of what would come in. The nature of the subsidy is more like an open-ended tax expenditure program, where you don't know what your exposure is until the bills come in, since what it's going to cost you depends on what the take-up is on the other side. For us to have sat down and worked out some kind of forecast of what the savings may be, was impossible.
.1640
We do know there are abnormalities in the way things have happened before. If they are dealt with, surely there will be savings for the taxpayer.
[Translation]
Mr. Laurin: If there were savings, would they be given back to Treasury Board or would they be carried over to other programs? In the latter case, there would be no real savings for Canada.
[English]
Ms Greene: If the program does not spend to its reference level, yes, any extra funds that are not allocated are in the hands of Treasury Board.
I would concur with what my colleague, the assistant auditor general, has said. It is very difficult for us to forecast what the expenditures are going to be, because it is open-ended. We don't know.
Mr. Williams: Mr. Rimmer, I'm looking at exhibit 6.15 of the Auditor General's report, and he talks about the National Transportation Agency files. He has produced this index of non-arm's length carrier rate trends from 1989-1992. Now, that is your own particular index that you are producing through your agency.
I understand that the Auditor General took a look at non-arm's length transactions and found that the price increase had risen by up to 140% of the norm. Were you not aware of that yourselves in the National Transportation Agency?
Mr. Rimmer: Sir, if I can clarify, the index was developed by the Auditor General based on data they extracted from our files. We did not provide this index to them. They developed it based on their analysis of certain claim files, which they extracted from our records.
Mr. Williams: Did you ever think when a large number of your subsidy claimants were obviously becoming non-arm's length shippers, you should develop an index of your own?
Mr. Rimmer: The agency is responsible for administering the act and the regulations. I think it is fair to say that where we see things happening that are not consistent with those, we are required to point them out to the policy-makers, and we've done that. We continue to do that. We did it 10 years ago and we've done it recently. But it is certainly, sir, not our role to be the policy-makers. Transport has done its study -
Mr. Williams: It's not your role to be the policy-maker, but obviously it is your role to be the statistical data collector as well as the issuer of the cheques, and you didn't see fit to develop an index of transportation in Atlantic Canada?
Mr. Rimmer: We did not develop that index. We did not feel we would have the authority to do so.
Mr. Williams: Did you ever seek the authority?
Mr. Rimmer: We did not seek an express authority to do something like that. Our job was to administer the program as it was established by parliamentarians and by the executive through regulations, and we have done that. We have afforded assistance to Transport in the conduct of their evaluation when they asked for it. We have certainly supplied data that we had.
Mr. Williams: If you didn't collect any data and develop any indices, how would you be able to determine whether a claim was acceptable or not?
Mr. Rimmer: There are various regulatory tests that we administer to determine whether a claim is acceptable. Those tests, which determine the eligibility of the commodity, origin, destination and so on, do not require the use of an index such as the one presented in the Auditor General's report.
.1645
Mr. Williams: We have heard various people around the room today talk about if the invoice amount was doubled, you didn't have any control or even any way to determine whether it was a reasonable amount.
Mr. Rimmer: I think, sir, if I understood my colleague from Transport Canada in her opening remarks, she indicated that in reviewing the program they could not identify a way of fixing the program.
Mr. Williams: My question to you was, if I were a non-arm's length shipper and I doubled my freight rates overnight, you had no way of challenging me on my rate increases.
Mr. Rimmer: That has been the agency's position, yes.
Mr. Williams: That you could not challenge me. Yet Transport Canada witnesses today are telling us that you have had this authority all along to challenge that particular circumstance, that as a quasi-judicial body you have had that authority and as a result, because you haven't exercised that authority, you have cost the taxpayers tens of millions of dollars.
Mr. Ron Ashley (Legal Counsel, Legal Services Directorate, National Transportation Agency of Canada): Mr. Chairman, with due respect, as counsel, we're skirting around what is essentially a legal issue. As counsel responsible for some five years on this program, I want to clarify some of the issues that we've discussed. I hope we'll clarify, Mr. Williams, the task faced by Transport Canada as well as the agency.
In the first instance you referred to the issue of fraud.
Mr. Williams: No, I didn't.
Mr. Ashley: There was discussion of fraud, and I would like to make it clear that whenever instances of fraud were drawn to the agency's attention, or on its own motion the agency found out about fraud, it was instantly referred to the RCMP for prosecution.
Mr. Williams: If we drop the word ``fraud'' and introduce ``transfer pricing motivation'' -
Mr. Ashley: Yes.
Mr. Williams: - you didn't do anything on transfer pricing.
Mr. Ashley: We did, sir. As early as 1984, the agency recognized Parliament's codified attempt at dealing with transfer pricing. Parliament codified that transfer pricing is illegal when the carriage is between a shipper and a carrier in instances of outright control.
As early as 1984, the agency denied subsidy in two instances, in instances of not only outright control but something less than outright control. The Federal Court of Appeal said no. It said, Parliament has spoken very clearly. Agency, you are a creature of statute. You have no implied authority. You can only do what Parliament has said you can do. As a result, the Federal Court ordered the agency to pay.
At that time, as a result of those two decisions, the agency sought advice by writing letters to the Minister of Transport, which Ms Greene has referred to, as well as the OAG's report.
As to what will happen in the future, it is fair to say that since that time, and even today, the agency is in the Federal Court of Appeal in Quebec on a $100,000 claim that the agency says arises from a non-arm's length transaction. The court will determine that.
The chairman has also made it very clear, not only in the past but more importantly as a result of the Auditor General's report, that he will continue to be extraordinarily aggressive in instances of affiliation of carriers, because the real problem is not rates. That's just a symptom. The real problem is affiliation, because rates will not be excessive if there's no affiliation.
Mr. Williams: Last comment, Mr. Chairman.
I look at the Auditor General's 1987 report, chapter 13.98, and according to the commission estimates, approximately 150 trucking companies that received an intra-territorial subsidy in 1984 displayed some corporate inter-relationship with a principal shipper.
The problem had been identified. You had run into a legal impediment because the court had said 100% control or nothing, anything less than 100% is not arm's length. Therefore, you have to pay.
Did you advise or recommend to Transport Canada's senior officials that you had a problem with the fact that you were paying out to 150 non-arm's length transactions but the court was restricting you? Also, why didn't you start tracking it to find out exactly how big this transfer pricing problem was?
Mr. Ashley: Perhaps I can deal with the legal question. Then Mr. Rimmer can deal with the other aspect.
The court didn't say it was 100% control. The court said it was majority control. The agency, in many instances, even tried to assert, in 1984 in one case, that it was something less. A minority shareholder had de jure majority control. Now, as of 1987 in the Auditor General's report, I'll have to have Mr. Rimmer refer to that.
.1650
Mr. Williams: My question was: if you knew there was a problem, why didn't you start tracking it?
Mr. Rimmer: The agency has continued to administer the law in an aggressive way with respect to this particular issue. We've done that. We did it in 1984, 1985, and we continue to do it.
We respected the court's decision, but we have constantly looked at the question of affiliation - that is part of our audit check - and where we find instances in which the movement is such that even under the restricted terms of the program it is ineligible, we deny that. We do that on an ongoing basis.
The Vice-Chairman (Mr. Shepherd): Okay, Mr. Williams. Next is the member from Brome-Missisquoi.
Mr. Paradis (Brome - Missisquoi): Thank you, Mr. Chairman.
[Translation]
Mr. Chairman, $100 million a year for a program like this is an awful lot of money. I understand the program is winding down and, like other members of the committee, I have a number of questions. My interpretation of the Auditor General's report is that the agency was lax in administering the fund.
There were many instances that make us wonder why the managers did not intervene and say they were not Santa Claus. I am pleased to say the program is not winding down during the holiday season. We are not Santa Claus in Atlantic Canada, and here are the problems were are grappling with. What can we do? How can we work together to ensure these $100 million a year in taxpayers' money are spent as wisely as possible for maximum economic impact?
Look at what all Canadians were asked to give up in the last federal budget. Now, we have the Auditor General implying the program managers in the Atlantic provinces are lax.
I have heard some explanations. We are being told there is no evidence of fraud: Nous n'avons aucune preuve concrète qu'il y a eu fraude. We hear all sorts of references to the legal aspect of the situation and none about the practical implementation of a government subsidy program in the Atlantic region.
There are other federal organizations - taxation, for instance - where there are two types of investigations or audits. There are audits to see if the expenditures are warranted, if a reimbursement can be claimed; those are not always cases of fraud. There are also cases where expense claims are refused for other reasons, and it is not always because of fraud.
In this particular case, I feel no one has really looked into the $100 million program you were supposed to run.
As for the carriers - apparently there are 2,000 of them - , in this short document you gave us, it says, for instance, that nine trucking firms collect approximately $20 million per year. They are all those getting over $1 million worth of subsidies per year. There are nine of them. If you add those to the list of firms getting over $250,000 or $500,000 worth of subsidies per year, there would be perhaps 50 or 100 others. Given the amount of money at stake, would it not be worth scrutinizing a much smaller group? You are talking about a firm that got $5.6 million:
[English]
Midland Transport, $5.6 million; Day & Ross, New Brunswick, $3.6 million; Sundbury Transport, $2.1 million; Armour Transport, $1.4 million;
[Translation]
Samson Transport, $1.3 million;
[English]
CP Express & Transport, $1.3 million; Transport Cabano, $1.3 million; Refrigerated Carryall, $1.2 million; Transport Suvrac, $1 million; and we can continue...
.1655
[Translation]
If you took the companies receiving $500,000 or more, you could check all the trips. Since the program was run so poorly, according to what was said today, I think, as a member of this committee, that some of the trips did not take place, that the companies just sent in the completed forms: here is the base rate, here is the mileage, here is what we think we did and could I please have my subsidy?
That is what members of this committee and Canadians are worried about. There are programs with budgets of $100 million a year, and we are trying to find out who is really in charge of them. Are they really being managed?
Mr. Chairman, the Auditor General recommends that the program be wound down, but says we should pay particular attention to risk assessment, in other words, that we should compare the claims made between January 1995 and the end of the program. My question is for the Auditor General. Are the current program managers the best people to wind down the program, to loop the loop?
[English]
Mr. Minto: Mr. Chairman, the people who are working with the program now have a lot of familiarity with the program. They know the regulations. They know the details, and more importantly by now they all know the problems. To bring a new bunch of people in to understand the problems and manage them, I think would be perhaps not cost-effective.
Certainly, I think a session like today focuses on the problems and makes the people much more aware of where to go. It's a government organizational question, sir, to my way of thinking right now...that people who are there know what has to be done. There are only a few months left on this. Perhaps there isn't enough time to train a whole bunch of new people and bring them in to run this program.
Transport Canada has certain responsibilities in this respect too, sir, and they may be perhaps taking more interest in the program than they have before and that may help.
[Translation]
Mr. Paradis: I would like to ask a supplementary question, Mr. Chairman.
In paragraph 6.152 of the Auditor General's report, it says the Agency conducted a study. The study concluded that three trucking companies had been established for the sole purpose of freight assistance entitlement under the ARFAP, etc. Whether this perceived abuse amounts to an intent to defraud the federal government is a matter to be decided by Legal Services after further investigation.
My question is for the assistant deputy minister. Have Legal Services carried out those further investigations and what where their conclusions?
[English]
I'm just referring to paragraph 6.152 of the Report of the Auditor General.
Ms Greene: This one I think you must remember is really the NTA study, not the Transport Canada study that you're referring to. The study of the legal -
Mr. Paradis: Of the office?
Ms Greene: Yes.
Mr. Paradis: So, I'll repeat my question for you.
[Translation]
There is reference to further investigation. Were those further investigations carried out and what were the conclusions?
[English]
Mr. Rimmer: This is indeed our study, which was conducted in 1992. We identified three cases that we wish to review further. There was some initial thought that we would have to review these with our Legal Services Branch to determine whether there was in fact abuse or an attempt to defraud.
On further examination, which included some further audit of the carriers, we determined that there was an explanation for the rates they had used, and therefore, there was no evidence of abuse. The matters were not pursued with legal services, but there was certainly follow-up work done that involved an on-site audit of the carriers in two of the three instances.
.1700
[Translation]
Mr. Paradis: It is on that particular point, Mr. Chairman, that I would like to make a comment. In the following paragraph, it says that according to the information examined by the Auditor General, legal services were never asked to provide advice or an opinion on the facts pertaining to these three trucking companies.
It also says that after meeting the truckers, the Agency felt satisfied with the situation. The impression I get from the Agency's relationship with the trucking industry leads me to believe that it has been continuously lax in its administration of public funds.
Thank you, Mr. Chairman.
[English]
The Vice-Chairman (Mr. Shepherd): Possibly I can get one question in here. The disadvantage of being the chairman is nobody lets you talk.
Once again, your own report seems to indicate tremendously unusual activity within this agency compared with normal freight rates. We have problems with the word ``fraud''. I use the words ``right'' and ``wrong''. People who are submitting invoices for mileage that never happened...I'm a member of Parliament. If I tell the powers that be that I travelled 2,000 miles to get here, when in fact I only travelled 100, it seems wrong to me. To what extent is there a case to review the prior year's claims?
Ms Greene: I don't think there is much of a case, Mr. Chairman, to review prior year claims. Let me explain.
My own view is that on the basis of the analysis of this administrative data, what we have here is first and foremost carriers setting a rate. There's no benchmark to judge whether a rate is an appropriate rate, so carriers set the rate. The subsidy is paid as a set percentage of a rate, presuming there is some regulated benchmark that would allow you to say, okay, that's 8% of the rate. There's no certainty as to the rate.
The Vice-Chairman (Mr. Shepherd): In your own study, though, you did a comparison with rates outside the area, so you must have thought that was a reasonable comparison to make.
Ms Greene: We did make comparisons outside the area, because we really felt there was nothing else we could do to get a handle on whether or not rates, on average, were higher or lower in the Atlantic provinces. Intuitively, we would have thought that if carriage is subsidized in Quebec and the Atlantic provinces, the rate that the shipper is paying is probably going to be lower. It turned out that in some cases it wasn't as we expected, that carriers were in fact setting a higher rate than would have been the case if the subsidy was not in place. But I don't think it's illegal, because there was nothing in the law that says the rates shall be thus and so and no other rate.
There was a time when rates were regulated for particular movements, but that hasn't been the case for many years now. From my point of view this is a program that was very complex to begin with because of the way in which it developed over the decades. It was premised on an industry that had regulated rates. It was paid out in a time when there was no regulated or benchmark rate to individuals and commodity groups that grew continuously over the years by adding more and more commodities to the select list. It had gotten a long way away from the objective of enhancing value-added manufacturing and shipments to central Canada.
.1705
So when I look at all that - where it came from, the regulations, how it was based, the fact that there's no regulation any more, the decisions that were made over the period of time, and how transportation has changed - I don't find a presumption, in my mind, of illegality; I find a subsidy that has certainly outlived its original purpose and a program design that is asking for a problem.
The Vice-Chairman (Mr. Shepherd): Your own study went into analyzing even the financial statements of some of these companies. This subsidy had actually impacted their bottom lines by something like 5%.
Ms Greene: Yes, we tried to get a reading on the extent to which the subsidy payment was important to increasing the operating ratios of the industry in that part of the country relative to other parts of the country.
The Vice-Chairman (Mr. Shepherd): Mr. Paradis talked about the individual companies, but I've done a little bit of research and discovered that they're all interrelated. It's really the Irvings and the McCains that owned these companies. Were they the type of companies that required this subsidy?
Ms Greene: Mr. Chairman, I don't think anybody required this subsidy. That's my personal view. They were eligible to receive it.
[Translation]
Mr. Laurin: I'd like to ask at least two questions.
Ms Greene, in your report you say that in 1983, a study was undertaken which estimated at 12,000 the number of jobs that might be lost following the disappearance of this program. Could you tell me if these figures are still valid today and if the study is still available?
[English]
Ms Greene: I don't know whether the studies were valid or are valid today. I'm not an economist, but I have two very capable professionals here with me. The advice that I have received is that it is almost impossible to estimate the actual effect on employment of a program of this kind, given the way in which it's paid out, which is little bits and pieces given to thousands of people.
You can say with certainty that no one could sensibly estimate that job or employment impact. If you were to go on and ask about the employment impact, I have been advised that we don't know. Our suspicion is, however, that it's not great. The study is available if you would like to read it. It's called the Hickling study.
[Translation]
Mr. Laurin: Yes, I think we should read that study. I find that surprising. There are 12 years between 1983 and 1995. It might be that in those 12 years, the negative impact of the disappearance of this program became invisible, but I'm surprised to hear today that the disappearance of $100 million in subsidies in the Atlantic region will have no impact on jobs. In any case, you cannot confirm it and I make a note of that.
The 1995 Budget provides for transitional assistance as compensation for the losses which we will include resulting from elimination of the program. $326 million have been set aside over five years.
Is the NTA committed to share with the provinces any relevant information, including the results of your dependency studies, should the provinces choose to provide that assistance directly to shippers? It would be important for the the provinces to have this information if we want to avoid the mistakes that were made when carriers and shippers were owned by the same people.
Is the NTA willing to provide this information to the provinces concerned?
[English]
Mr. Rimmer: We have not had any communication with the provinces with respect to the administration of the $300 million. The Agency is not going to be involved in that. As far as I know, that's a matter for Transport Canada and the provinces. I'm not aware of what level of discussion they're at.
.1710
[Translation]
Mr. Laurin: Then I will ask Ms Greene to answer.
[English]
Ms Greene: We are in the process of discussing with the five provinces how best to make the transition funding available. Those discussions are not yet completed. As the budget speech says, it is for provinces to decide whether or not a portion of the transition fund will be made available to help the few hardship cases that may exist from an abrupt discontinuance of the program or whether or not they wish to put the transition funds into alternative transportation projects that would improve the overall efficiency of the system.
We're not having discussions with them at the level of detail that you suggest just yet, because the provinces have to come back to us to let us know the plan that they wish to put in place to make best use of the transition fund.
[Translation]
Mr. Laurin: Mr. Chairman, I'd like to make a few comments.
I am flabbergasted to hear that the transport department is putting an end to this program without knowing what the effect of that decision will be. We have no idea how much money we will be saving. There is still $30 million to spend, but we don't know how much of that amount we will be saving. We don't know what will be the impact on unemployment. Will jobs be lost? Will jobs be created? No one knows, but the decision was made nonetheless. It was decided to cut the program.
I hope that all the other departments do not go through the same exercise or that, at least, they didn't do it the same way. If this is the case, it would confirm what we've been saying so far, that too often the government slashes budgets and makes cuts without serious planning.
That would seem to be a good example of that. While the program was being carried out, over the last ten years or so, the government didn't seem to care how those $100 million were spent, nobody seemed to care if the money was being paid to those who needed it.
Today the program is being cut but we still don't know what kind of savings we will be making and what will be the impact on employment. That is very disappointing, Mr. Chairman, as well as alarming.
[English]
Mr. Williams: I've been reading through the summary report of Atlantic region freight assistance program information paper of July 1994, which was the one that emanated from the massive amount of research and data collection that you did, Ms Greene. It seems to me that the whole thing was badly managed from an information point of view. The shorter the distance, the more it was subject to subsidy. I quote from page 18:
- It can also be recognized that much of the Westbound traffic from Quebec is short-distance
traffic that further east in the territory qualifies only for the lower rate of Intra-regional subsidy,
or no subsidy at all.
Am I correct in that assumption? Am I looking at this and reading it properly?
Ms Greene: Yes, there was a defined territory for the westbound subsidy.
Mr. Williams: Getting back, Mr. Rimmer, to your perception of your responsibility at the National Transportation Agency, didn't you think it was within your mandate to collect the data to ensure that there was value for money in the dollars being spent on behalf of the taxpayer through this subsidization program?
Mr. Rimmer: I think there was a very clear understanding for a good many years that the agency was the administrative arm and that the policy and the program evaluation arm was with Transport Canada. They required that data and collected it when they decided to do the study.
Mr. Williams: I'm sorry, but I just can't agree with you. Your agency was charged with the responsibility of collecting all these way-bills, presumably designing your own forms and your own requirements for information before you wrote the cheque. You just say that the statistical analysis and policy formation wasn't in your mandate and you therefore you ignored it.
.1715
Your job was to administer the subsidy. The job of the NTA was to administer the subsidy under the powers delegated by the Department of Transport. It seems to me that there was a very serious lack of responsibility by the senior officers in this program to ensure that the money was spent wisely. You had no basis on which to make these decisions; you didn't collect the data. Am I right in saying that?
Mr. Rimmer: With respect, the decisions we made were based on whether to pay the subsidy on a particular claim submitted to us. We collected - we do collect it today - the information necessary to make that assessment. The assessment as to whether there should be a subsidy program or what the impacts or benefits are of that subsidy program was not ours to make.
I agree with you entirely that we have the obligation to ensure that we have the information necessary to assess whether a particular claim for subsidy should be paid. That is what we do.
Mr. Williams: It's based on the prima facie evidence of the way-bills submitted and having no regard whatsoever to the fact that there may be transfer pricing manipulation going on, that the actual transportation cost is significantly higher than what would otherwise be in an arm's length, competitive environment, and recognizing that that transportation costs.
Remember that the whole idea was to reduce transportation...in the Maritimes, but you were actually subsidizing transportation...that was significantly higher than elsewhere in the country. Didn't you feel it was your responsibility to wave the flag and say what was going on here?
Mr. Rimmer: Our responsibility was to do those tests that are set out by the legislation. We do carry out each and every one of those tests.
Mr. Williams: Don't you think the senior executive officer should have said that something wasn't right and that one should blow the whistle? You can't just go around telling your clerks to write cheques. Surely somebody has the executive authority to report back and say that this isn't right and that it should be changed. Who is that?
Mr. Rimmer: Certainly the agency sees problems with respect to the administration of the program that require legislative change. It should and has pointed those out to Transport Canada on a number of occasions.
With respect to this question of rates, the agency, first, does not believe it has the ability to control the rates.
Is there an issue as to whether we should have been examining those rates and alerting the policy-makers? We did conduct a study in 1992. Based on that limited study, we found no evidence of rate abuse. Therefore, there was no issue. We had no evidence to bring to the policy-maker's attention to say that there was a definite problem that needed to be changed.
The policy-makers, within their role for conducting the broad evaluation of the program, did an extensive study in 1993.
Mr. Williams: Yes, but they came in and did it for you. You weren't collecting the data on their behalf; you allowed them to come in and spend massive amounts of time, effort, and money going back through warehouses of documents to try to come up with the well-researched document we have here.
I'm at a loss. I have just come back from three days of visiting a major financial organization in this country to see how they run their ship. I can assure you that anybody who ran a division of that organization the way this has been run wouldn't be with the organization.
That's the point I'm trying to make. Somebody has been going down the road thinking that this is okay. They think they have no responsibility other than writing cheques and assuring there's no fraud - I'm not suggesting this has happened - within the narrow legal definition involved.
I think somebody had a fiduciary responsibility to the Canadian taxpayer. My question is: is that person the chairman of the NTA, you, or someone else? You were going through $100 million of taxpayers' money every year.
Mr. Rimmer: We certainly have a responsibility in the agency -
Mr. Williams: You or the chairman?
Mr. Rimmer: The agency.
Mr. Williams: No, the clerk and the janitor don't have it. Is it you or is it the chairman of the NTA?
.1720
Mr. Rimmer: It is the members of the agency, sir, who are the quasi-judicial arm of the agency, who approve each and every dollar spent under the subsidy program.
Mr. Williams: Is there a board on this NTA?
Mr. Rimmer: There is a board and when I say the agency, sir, I mean specifically those members who perform the decision-making function within the NTA.
Mr. Williams: How often do they meet?
Mr. Rimmer: They meet as needed. A quorum of two can decide a particular case, and they do not meet specifically to decide these cases. We have a file process.
Mr. Williams: Approximately how often have they met in the last year?
Mr. Rimmer: Sir, there's a file process that we use to bring these decisions to their attention, and they will approve subsidy claims on at least a weekly basis.
Mr. Williams: How often do they meet? Do they meet weekly?
Mr. Rimmer: No, sir. What I was trying to explain to you, and perhaps I'm not being very clear, is that we do it through the transmission of files. A paper file goes around. They're required to review it and to sign, so it's not necessary to meet.
Mr. Williams: How much do they get paid, do you know?
Mr. Rimmer: No, sir, I don't.
Mr. Williams: Do they get paid?
Mr. Rimmer: Yes, they do; these are full-time positions.
Mr. Williams: They're full time.
The Vice-Chairman (Mr. Shepherd): Maybe I can help you with that. The chairman makes a salary in the range of $140,000 to $170,000 a year. I guess it's the committee members you're talking about; they are paid in the range of $88,000 to $103,000. Is that reasonable?
Mr. Williams: Can I apply?
Mr. Ashley: Mr. Chair, as counsel, if I may add a follow up to Mr. Rimmer's point, I think we have to narrow the focus of the debate here.
The problem of so-called excessive rates due to affiliation really came to light in the mid to late 1980s, when the provincial regulatory review of rates ceased. All those provincial regulatory boards stopped their so-called reasonable rate review. That was a decision made by the various provincial politicians, that this type of regulatory interference was no longer required.
The existing chairman, Mr. Rivard, upon immediately coming to office, authorized an expenditure of a considerable amount of money to tool up, to obtain exactly, Mr. Williams, the data base that you think should have been done. It was almost all set to go on line, but then the program was repealed.
The narrow window of time in which I think your concern has to be would be between 1988 and 1992. That's when the agency was first becoming aware of the problem.
It's also fair to say that when the provincial regulatory rate reviews ceased, all the rates on the day after repeal didn't go up 50%, 40%, or 20%. It was a very slow evolution.
With upwards of two thousand carriers and two million claims per year, it was only within the lag time of a year or two that all of a sudden the agency started to recognize that indeed there was a problem. That's when Mr. Rivard came on board and said that there was a problem to be solved.
Mr. Williams: What I'm trying to say to you is that -
The Vice-Chairman (Mr. Shepherd): Does anybody else want to ask a question here? You're out of order, I'm sorry.
Mr. Williams: Can I just get one more?
The Vice-Chairman: No.
Mr. Paradis.
[Translation]
Mr. Paradis: I think the question does not strictly relate to excessive rates. Of course, there is a matter of excessive rates, but if we look at the percentages of the subsidies granted, we are talking 6% or 8% in intraregional subsidy, and 28%. If it is 20% more than the going rate and if we apply 6% to 8% to that, where there is big volume, that does not make a big difference.
What I perceived in reading the documents is the laxness in the administration of the system. We do not have any means of control to find out if the movement on which the claim is based has actually occurred. Did the movement occur? There is so much paper entering the organization that no one took the time to determine if those movements were actually made.
We are told that the Agency receives the claims and keeps on paying all the time. I have a hard time understanding this way of administering public funds. You are managing someone else's money, the Canadian taxpayer's money, and not your own. What makes me mad in all this is the disregard for the taxpayer's money which is being handed out just like that.
.1725
Let me come back to Mr. Rimmer's text. On page 2, he says:
- The chairman has now instructed Agency officials to implement the first
recommendation. Agency staff have developed a new process for reviewing claims showing a
significant increase in either rates or levels of activity
[English]
Mr. Rimmer: At the agency we certainly share your concern for the proper spending of public funds. I can assure all members of the committee that we are not simply writing cheques for everything that comes in the door.
On an annual basis, we deny millions of dollars worth of claims that we receive from carriers. In some of these claims, the carrier may legitimately feel that they are eligible for a subsidy. On our review, however, when we check it against the regulations here, we may determine that a commodity isn't eligible, the origin is the wrong origin, it's not in the select territory, the destination is outside Canada, or something like that. We review every claim that we go through against a number of different criteria, as spelled out in those regulations. Where they don't meet the criteria, they don't get their money. It's that simple.
We also have a field audit.
[Translation]
Mr. Paradis: Is the review strictly based on the from that you received? Don't you check whether the trip occured?
[English]
Mr. Rimmer: The first process that we have in place does exactly that. It looks at information that has come in from the carrier. Often that information includes, for example, proof of payment or other documentation that makes it clear that the third party, the receiver, has seen it, so we have some confirmation that the movement actually took place.
We have a field audit program, which is similar to the kind of audit that Revenue Canada will do. We will physically go out and check a carrier's records and force the carrier to prove to us that rubber hit the road, that a movement actually took place here.
We certainly, sir, are doing more than just checking paper. We have an active program to make sure that these movements actually took place. In our field audit program, which is done after a claim has been paid, if we find that we've paid money when we shouldn't have, we ask for the money back. In most cases, carriers comply; they willingly give the money back. In some cases, we have had to take people to court. We will take people to court again to get the taxpayers' money back when it has been paid mistakenly.
We are very aggressive and have a program. In the documentation that I attached to the opening statement, there are some flow charts that show the various streams that a claim can go through. We use a methodology to review claims against a variety of tests.
In the Auditor General's report, they raise a particular concern about risks that may occur during the wind-up of the program. We have instituted new tests that go beyond what we have done before. That certainly doesn't mean we weren't doing anything before; we are just doing even more than we did before to respond to those particular risks.
I can explain in more detail precisely what we're doing, but it does involve looking at the rates to see if anybody is taking advantage of the wind-up of the program to inflate their rate, or to file claims for movements that may not have actually taken place. We'll be particularly vigilant about that, as we always are. Certainly there's no question that if we have reason to believe that a movement didn't take place, we won't pay.
Mr. Ashley: Not only that, Mr. Chair, but in the past when a claim came forward in respect of a fictitious move, not only were they not paid, but the RCMP were brought in and they were sued for fraud under the Criminal Code.
Mr. Paradis: It is not always cases in which the RCMP has to get involved.
Mr. Rimmer: Absolutely, there are many reasons to deny a claim and many reasons for which we do deny them.
Mr. Ashley: That's correct.
The Vice-Chairman (Mr. Shepherd): I'm going to have to draw this to a conclusion. We may have some questions that we want to ask you, by way of letter, after the fact. We may or may not, depending on the committee, want to hear from you again.
.1730
I thank you all for being here. I think it was a very frank and open discussion, and I thank you very much for that.
There are two little administrative things that maybe we can do very quickly.
Mr. Williams is moving that the written submission from Transport Canada become an official document.
Motion agreed to [See Minutes of Proceedings]
The Vice-Chairman (Mr. Shepherd): There is a second matter of business. You may or may not want to defer this to another day. We have some guests coming from Mexico next week, who want to talk to us. They are very involved in their public accounts committee in Mexico. I thought possibly next Wednesday we could provide one hour of our time to discuss that with them, and then possibly they could sit through the balance of the meeting to see how we conduct it. Would that be agreeable to the members of the committee?
Ms Whelan: Is it a public meeting next Wednesday, or is it an in camera meeting?
The Vice-Chairman (Mr. Shepherd): It would be a public meeting.
The Clerk of the Committee: It starts public, because we decide on the spot, but it'll probably be an in camera meeting.
The Vice-Chairman (Mr. Shepherd): Okay, possibly it will be in camera.
Ms Whelan: I'll leave that to you.
The Vice-Chairman (Mr. Shepherd): Yes, we'll discuss that.
I declare this meeting adjourned.
[Translation]
Mr. Laurin: Mr. Chairman, please...
[English]
The Vice-Chairman (Mr. Shepherd): I'm sorry, it's not adjourned.
[Translation]
Mr. Laurin: Mr. Chairman, would it be possible, to add to tomorrow's agenda the conclusion of today's meeting. We are adjourning but the debate is not over. I would like us to come back to it for five minutes at the beginning of tomorrow's meeting.
[English]
The Vice-Chairman (Mr. Shepherd): Fair enough.
[Translation]
Mr. Laurin: Thank you.
[English]
The Vice-Chairman (Mr. Shepherd): Agreed.
The meeting is adjourned.