[Recorded by Electronic Apparatus]
Wednesday, April 16, 1997
.1520 
[English]
The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): I'll call the meeting to order. I welcome everyone to the committee today, and I certainly want to thank the President of the Treasury Board for coming to the committee.
I don't think I need to, but I will refresh everybody's memory. Earlier this winter we had a discussion at a round table with many participants in the industry on the subject matter of cost recovery, after which, as a committee, we sent a letter to the minister. His response was dated February 14, and everyone's had an opportunity to review that. After that, the minister was so kind as to offer to come before the committee as well.
Mr. Massé, we welcome you here today and look forward to your comments. I understand you have about one hour with us in total. I give the committee members that information so that when you have the questions and comments afterwards we can gauge ourselves accordingly.
Welcome, Minister.
Hon. Marcel Massé (President of the Treasury Board and Minister responsible for Infrastructure): Thank you very much, Mr. Chairman and members of the committee. I have a five-minute statement to make today.
I must say that I feel good. Just now we're issuing a press release on the question of cost recovery, a subject that has created some difficulties in the past months. We've already received comments from a number of organizations, and I must say that most of them are quite favourable. You talked, we listened, and we changed a few things. It will be well received.
[Translation]
I am here to talk about the Treasury Board's new cost recovery policy. Two years ago, the federal government undertook a major overhaul of its administrative structure and the services it provides to Canadians. In this context, there was a need to take a close look at the cost recovery policy.
[English]
For more than ten months now, the Treasury Board Secretariat has worked in close cooperation with a consultative committee composed of representatives of industry and consumer groups and with a number of departments in order to review and develop a new policy on cost recovery.
[Translation]
There is unanimous agreement that it was unacceptable for all citizens to pay for the cost of programs which benefited only a specific group.
[English]
If you asked me to explain in a few words what this new policy is, I would simply say that the users/payers will now have...I was going to say the main word to say, but I will not go that far. They will now have a clear way to input their views, their opinions, their comments, their arguments on the costs that they have to assume.
[Translation]
Under the new policy, government departments and agencies will have greater latitude in and greater responsibility for establishing a cost recovery process in consultation with their respective clienteles.
[English]
The number of cost recovery initiatives that follow program review are numerous, but of course we have to be aware that program review never imposed these initiatives on departments. However, it became clear during program review that certain activities that were being funded by the Canadian taxpayer benefited a specific group, and this led us to ask who should bear the cost of programs that provide specific benefits to clients when these benefits are over and above those provided to the general taxpayer. Nobody seems to be quarrelling with the philosophy that those who enjoy direct benefits should be prepared to pay for them, and nobody objects to paying their fair share. The difficulty comes in the practical application.
Those who are affected by these changes want and deserve a voice in how that happens, and that is what we want to achieve with our new policy. Even where the services are mandatory, consulting with clients may reveal more efficient and less obtrusive ways to carry out functions. In fact, users often have a comparative advantage in determining the most efficient methods of regulating themselves and their competitors.
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Basically, Mr. Chairman, in my own words, there is a first principle, which is of course the efficient allocation of resources. When the provision of a service is free, there is a tendency to use more of it and to use a Cadillac service, but when people are paying for it they are more careful. I think I mentioned in this committee that when I met with some of the cargo owners they indicated that if they had to pay for the navigation aids they were going to determine what level of service they needed, and that a large percentage of what was offered to them they didn't need or could provide for themselves at a lower cost.
That's the first principle, efficiency in the allocation of resources. The second one is one of proper distribution of costs between the general taxpayer, when there is a public good involved, and the specific groups of people who enjoy the provision of services that they can then incorporate in their own services.
The third general principle of the policy is that you need a new mindset - and I'll end on this - in order to have a good policy of cost recovery. That means that the stakeholders are involved, because once again, if they pay they have a right to look at the services and determine the kind and level of services they need. It also means a change of attitude in terms of the civil servants, who were used to just giving out a service because it was asked for, and costs were not sufficiently important an input into their deliberations. Now civil servants have to become partners of those who receive the services. They have to listen to the desires and wishes and requirements of those clients who are being served, and they have to curtail their normal desire to give Cadillac service and adapt to what people are ready to pay.
Basically, Mr. Chairman, that's our policy. Treasury Board got involved because a number of customer groups and clients and you yourselves indicated that it was necessary. We have now drafted policies with stakeholders and clients and the departments, and I think we've come up with a reasonable result for now.
The Chairman: Thank you, Mr. Minister.
Now, that's pretty quick service. I was going to ask if copies of the press release that you had put out were available to us, and just as I was about to say that, the clerk handed me one, and he's going to go around and hand it to all the committee members.
First of all, I would like to put on the record - and I think I'm speaking on behalf of more than myself - a personal thank you for the letter that was sent to the Canadian Federation of Agriculture. I'm speaking as an individual MP and an individual who has been very interested in the subject as far as the Pest Management Regulatory Agency goes. That has not been an easy file for any of us to deal with in as realistic a way as we probably should in many cases, but your recent letter has certainly given some comfort to the industry on that and provides the assurance that the results and the activities of that process will be reviewed and assessed by everyone as it goes along.
So the dialogue is still open to improve the system, to make it even better than it is at the present time and to not affect the industry badly as it goes along that way. I personally thank you, and I know others have indicated to me that they were certainly pleased to see that letter.
I'll now go to Mr. Calder to begin the comments. Murray.
Mr. Murray Calder (Wellington - Grey - Dufferin - Simcoe, Lib.): Thank you,Mr. Chairman.
Minister, words are not enough to thank you for what you've done here. I hold a stakeholders' meeting every year in Guelph, down at the OAC, and one of the things I've heard in the last two years on PMRA and cost recovery in general is that communications with the agricultural stakeholders is imperative. What you have done here right now, from what I can see, is made the process of cost recovery very transparent, and you have also made the stakeholders involved in the process of arriving at what the eventual cost recovery is.
.1530
Quite frankly, as we get into this I see we're going to have to have the bureaucracies and the stakeholders working very closely together so they can concisely explain how a certain fee was arrived at and why it cost that. This is a process right now with PMRA. Is the process of vote netting going to be carried out through other departments? It's not only PMRA. Cost recovery is going to be a very wide-reaching issue within agriculture.
Mr. Massé: I have with me David Miller, who is the assistant secretary for the expenditure management sector. I'm not sure exactly what that means.
The Chairman: I hope David does.
Mr. Massé: I stand to be corrected on this one, but the way I understand what we have done in recent years, we have in fact reduced the amount of vote netting, considered as bringing together a net amount of expenditures departments can do. In order to control the expenditures better, we have set out in the accounts receipts of all kinds of costs and revenues and so on separately. This has had the appearance of increasing expenditures.
You will remember these questions in the House about the program review increases and so on. I think it permits better control of departmental budgets, because we see exactly how much they receive and we can ask questions. Then we see how they make their expenditures, and I think the expenditures reflect more correctly the exact expenditures they make. We intend to extend that treatment of revenues and expenditures all through the government. But I stand to be corrected.
The Chairman: If I can interrupt, would you take thirty seconds and give us a definition or an explanation for ``vote netting''?
Mr. David Miller (Assistant Secretary, Expenditure Management Sector, Treasury Board): I would be happy to do that, Mr. Chairman. The best way to explain vote netting is to give you an example, and I will use agriculture as the example.
Until a few years ago, for example with meat inspection, when meat was processed between provinces of course it required a federal inspection. Someone would arrive and say, gee, I need this carload of meat across the border by tomorrow. They would go up to the representative of Agricultural and Agri-Food and they would say, well, we don't have the money. This individual would say, well, I'm willing to pay; I don't care what it is, bring the people out on overtime, because I have to move the meat. Rightly so, the official would say, well, it doesn't matter if you pay me, because I have no way of using those revenues; I have to go back to Parliament and ask for additional money if I'm going to inspect your meat.
The idea of vote netting was to align those kinds of costs of services departments provide with the revenues that are coming in. So in the case now the minister is correct. The way we display it to Parliament is to show the gross expenditures each department may have. But in getting parliamentary approval, we actually ask in the vote wording that they also have authority to use the revenues generated by specific things. The things they can use the revenues from are fairly definite and concrete in the words that are approved by Parliament. So we would say you can have $100 million for meat inspection and you can use the $30 million worth of overtime costs associated with that, or whatever the right numbers are.
It's the ability of people to react to changes in demand so there's a good relationship between the costs incurred and the services provided and the revenues coming in. We're hopeful we can extend that to other areas. Simply again, it's a good business case of matching demand with revenue.
.1535
The Chairman: If I could continue here, if $100 million was allocated for meat inspection and cost recovery fees were $30 million, there would be a total of $130 million that could be spent in meat inspection.
Mr. Miller: With the way the wording works - and we're using numbers that -
The Chairman: Ideally, we're just picking numbers.
Mr. Miller: If the total gross cost of meat inspection was $100 million and their revenues were $30 million, we would ask Parliament to approve the difference of $70 million, and then $30 million as those revenues came in. So if there was no demand for meat inspection, technically the department could not spend those extra funds.
The Chairman: Thank you very much. I interrupted the answer you were going to give or the comments you were going to make after the minister spoke, so...
Mr. Miller: Well, I was just going to reflect that the way in which the minister described it is how we provide Parliament with information on the total costs of the program, and how we ask for expenditure approval of the net amount in these cases.
The Chairman: Mr. Calder.
Mr. Murray Calder: That would lead right to my final question, because I just want to deal with this on the general issue of cost recovery for agriculture. We're not only getting hit by the Department of Agriculture, we're also getting hit by the Department of Transport and a number of other different departments, so the process of vote netting is what I'm interested in. Instead of just a unilateral way, I want a multilateral way of looking at this so that as we get into cost recovery, we can go back and have the transparency that the stakeholders within the agriculture industry are requesting. I see this as the vehicle to take and to do it with.
The Chairman: Mr. Hoeppner.
Mr. Jake E. Hoeppner (Lisgar - Marquette, Ref.): Thank you, Mr. Chairman, and welcome, Minister.
You mentioned the public good. Are you involved at all in trying to separate what is the public good and what is the private good? How many departments does that involve?
Mr. Massé: That is a difficult question. We have tried to set out criteria to determine what constitutes what we call a private benefit versus what we call a public good. Of course, it applies in all the departments. Technically when it is a public good, it should be paid for by general taxpayers' money. For instance, a lighthouse is the typical example of a public good, because for those who fail to see the rocks and hit them, you can't make those people pay. In fact, you have to hit your general public because that's the nature of the thing. In fact, those who benefit all the time are those who do not show that they need it. This is a typical case in which you have to hit the general traffic.
Even with pesticides, of course, there is usually a public good aspect and there is a specific benefit aspect. The ``public good'' means the fact that the public is protected against the effects of pesticides in terms of health and so on. The state does it and the citizens benefit; therefore, in a case like this, those who benefit from it should not be charged the whole cost of the inspection, labelling, licensing, and so on, of pesticides.
In each case, by the way, defining the exact percentage is a very difficult game.
Mr. Jake E. Hoeppner: Because I've been a farmer, my argument on this issue is always that the public has to start realizing that if we weren't capable of using some of these pest management chemicals, etc., the price of food would be almost prohibitive. We are actually having to bear the majority of the cost in order to bring the food prices down so that the consumer gets a real benefit out of it. That's why I'm always arguing that we are not getting a fair shake when it comes to the public good issue. Really, we're doing it for the public good. It's not really making us much money, because the more we produce, the less the food prices go down, as you know - and this helps Third World countries as much as it does our own.
So I want you to keep that in mind when you do discuss this issue. When it comes to food production, I think the majority of that is for the public good, not for the private good.
The other thing I would like to question you on, Mr. Minister, is harmonization. It seems to be a big problem between the U.S. and Canada with some of these chemicals. In terms of trying to harmonize things, movement has been awful slow over the past twenty years. As the Treasury Board president, could you probably speed that process up a bit? In the seventies, when we could get some more reasonably priced chemicals in the U.S., I know it was almost impossible to get them across the border because of certain regulations, and that still holds true today.
.1540
I want to just bring out one example that I have in my constituency: that of a saskatoon producer. The saskatoon is a new crop that is under the apple family. There's nothing registered for use on that product, but the producer knows what works very well because he's had permission to try some of these chemicals. When it comes to the residue carry-over, though, it's way different in Canada than it is the U.S. You have to grow the saskatoons, export them to North Dakota, and then bring them back into Manitoba. When I brought that up for the first time, nobody wanted to believe me on that issue, so I double-checked it.
So you can see what the problem is in harmonization, not just in research and in declaring pesticides safe, but also in terms of residue in the products. I wish you would take note of that and maybe do some pushing on the issue in order to get a harmonization that is fair to both countries and that will save us some money.
Mr. Massé: You're right that this is a problem that is becoming more acute with NAFTA being implemented and so on, and with the greater freedom of trade. We'll look at that particular example.
Treasury Board is also responsible for reducing regulations, by the way. That's where we can get departments like Environment, Health, and so on, to cooperate on these questions.
Mr. Jake E. Hoeppner: I know the corn growers in Ontario had a big problem with one chemical, I think it was two years ago. More or less, they had to smuggle it in to use it. While it does work for some -
The Chairman: Farmers wouldn't do that, eh, Jake?
Mr. Jake E. Hoeppner: I saw a statement in the press somewhere by the chairman of this committee, saying that we know it's happening but we have to keep our eyes closed a little bit.
The Chairman: We're getting that fixed, Jake.
Mr. Jake E. Hoeppner: Thank you very much.
The Chairman: Mr. Easter, Mrs. Ur and Mr. Chrétien.
Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.
Welcome, Minister and David. I, too, want to thank you for your position on PMRA.Mr. Minister, any time we have tried to talk to you, I think you certainly have tried to listen and tried to do the right thing.
An hon. member: Hear, hear!
Mr. Wayne Easter: But there are still serious problems, I believe. As of yet, I haven't gone through the release totally, but I still do see some problems in terms of looking at the big picture. What we're trying to do here in Treasury Board - and I don't know how you get around it - is deal with numbers to a certain extent. But not everything relates to economic numbers. From the farm community, Murray mentioned the cumulative impact across departments. Yes, I know you say in your press release that you invite dissatisfied clients to contact the President of Treasury Board if those clients feel departments have circumvented the general policy principles. That's going in the right direction.
I'm a former farm leader, so I know that one of the problems you encounter as a farm organization, and especially as an individual farmer, is that you end up going against the department. But the department has its own extensive bureaucracies. Even if you're in negotiations, you tend to find yourselves in the position of having to use the department's own figures. It's very hard to have the figures on the ground, so one problem lies right there.
Secondly, farm organizations and farmers find it difficult to find the time to do the necessary research. We know what's happening on the individual farm. Here's an example here, in terms of one potato operation, with roughly the same annual amount of crop. In 1995-96, they were paying$318 for inspection fees in this operation. In 1992-93, they paid $6,713. In 1996-97, for the same amount of acreage, it'll be about $13,000. Now, that's one area of fee changes.
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I can give another example: I have three individual farmers who have called me now about the inspection of potatoes for export to the United States. Their farmyard inspection at the warehouse is costing more. I will admit that they are fairly efficient operations in terms of equipment, but it costs them more to have an inspector come out to look at their van load of potatoes for an hour than it does to have six people grading potatoes for the full day. So we have a problem here in terms what's a public good and what's a private good.
I don't know how you would win that debate as a farmer. I could argue that for this particular farm operation most of it should be public good, because those potatoes are creating an economy for that farm, an economy for Prince Edward Island in terms of dollars flowing through the community and in terms of our balance of trade, and on and on it goes.
I'll try to ask you how we resolve another problem by giving you another example. In Prince Edward Island potato industry, you basically have three industries within the one. You have the seed potato industry. You have the table industry, which is for table potatoes. And you have the processing industry, which provides to Cavendish Farms and McCain.
We have always been recognized for our quality of potatoes in Prince Edward Island, because everyone grew a potato that they could sell for seed. If processing wasn't available, you could still sell for seed. If export wasn't available, you could still sell for seed. Everybody was effectively growing seed potatoes that went mainly into the two other areas, but they were going with the inspections that are required for seed potatoes. Now, because of cost recovery, those fees have become so excessive that people are not leaving that option open any more. They won't have the option of seed any more.
So the debate we're in right now is this: farmers - in fact, I met with a number of them at the Canadian Horticultural Council - are saying that we have to avoid some of the costs, so maybe we don't need to do that inspection. I'll tell you that if we start avoiding some of those inspections and things looks good in the short term, we'll avoid that cost. But if we start avoiding some of those inspections ten or twelve years down the road, we're going to pay a hell of a price.
I see the public good here, the need for the public to carry some of these costs, as an investment in our future. On the surface, it's easy to say that we don't need it, but it's quality that sells. We've had that quality because the public was willing to pay the cost of those fees.
I guess my question to you, Mr. Minister, is how to deal with those factors that are really not related to short-term economics, when cost recovery is designed in such a way that everything has to relate to short-term economics - although I don't know how you could design it differently.
Mr. Massé: By the way, that type of problem exists not only for agriculture but in quite a number of other areas in which you have cost recovery. The problem is the one that was indicated - how to distinguish between the public good part of what you're doing and the private benefit that accrues to those who use the service.
I'm not an expert in agriculture, so I would know even less than you would know about what the right figures are and how you do this. In terms of process, however, because we became very conscious of the fact that all the sides have to be listened to and all the arguments have to be weighed and reviewed, this is why we put together these stakeholder groups. In terms of the pesticides, this is why we indicated that the fees would be charged for one year and that the stakeholders could then come back and argue their arguments again.
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This is also why we agreed that we had to deal with the cumulative impact of the various fees and that there had to be a horizontal department somewhere - not above the other departments, of course - that could take the studies of the various departments and add up the various impacts.
Finally, once again, it's also the reason why we have constituted not an appeals board but a place where stakeholders could be heard that is not the department itself, so we will avoid the inherent conflict of interest that you quite properly signal in a department where the people who determine the costs are the same people who, in a way, benefit from the revenue that accrues.
I do not have an answer to this specific problem any more than you do, but in this process we have tried to introduce much more transparency, the ability for stakeholders to be heard, and an appeal mechanism.
Mr. Wayne Easter: I have two points. First, I need to know how the appeal mechanism would operate. I don't know whether we might need almost an ombudsman out there to deal with some of these issues, but the stakeholder groups...and I wish that some of the people who were burning my ears late at night at the Horticultural Council meeting were here, because they could explain it better than I.
When they go to these stakeholders' meetings, there is no question that there is a certain amount of horse trading. In my own previous experience as a farm leader, one of the difficulties I found in terms of dealing with Ottawa, and I believe it's even worse today, is that you come into the meeting representing the legitimate interests of farmers, and when you leave the meeting you feel as if you're going back to sell the department's message to the farm community. That's what you feel like.
In those stakeholders' meetings, it's a game of divide and conquer, one region against another. I think the primary production industry in the farm community finds itself at a very distinct disadvantage with the process at the stakeholders' meetings in terms of being able to articulate their arguments and feeling as if they have been understood and treated fairly. That's certainly what has come across to me in my meetings with groups.
I don't have the answer as to how you get around that, and I don't believe they do, because you have to communicate at the stakeholders' meetings... I'm just pinpointing to you what I see as a very serious problem: at the end of the day we have no satisfaction on the ground, no satisfaction from the farm community that these costs are fair. Right now they don't see them as fair. but they see that they're trapped, that they have no other choice. In fact, some of the farmers are taking it out on the farm leaders who negotiated the costs and who are in an impossible position.
The Chairman: Mrs. Ur and then Mr. Chrétien.
Mrs. Rose-Marie Ur (Lambton - Middlesex, Lib.): I too want to echo the sentiments of my colleagues, Mr. Minister. You certainly listened and we appreciate it. Sometimes we feel that it's an uphill battle for us when we bring the concerns of our farmers to the Hill. I appreciate your help on that.
Much in the same vein as my colleague, Mr. Easter, regarding an appeal mechanism, I commend you for reviewing it after one year and not having a flat five years and then taking a look at it. What consideration would you be giving after a year? Should the stakeholders come to Ottawa and say, for example, that this, this and this is wrong? What will your approach be? Will you have a committee set up or will it be an ombudsman?
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As Wayne has said, your department looks after the dollar figures and the farmers come here and look after their dollar figures, as well as the cumulative impact of all the cost recovery, so do you think it would be fair if we, as the government, had someone versed in your department as well as in agriculture working on this system so that they could really look at this in a whole circle avenue that wouldn't be just your department? They could work together to understand all the expenses and all the cost recovery, not just for the producers but for the end user as well. I don't know how you would ever set that up, because the end user really is the most beneficial person...if this product is not meeting standards.
Mr. Massé: Yes. By the way, I am going to make some commitments here that are not included in my briefing notes.
An hon. member: Keep them coming!
Some hon. members: Oh, oh!
Mr. Massé: Yes. The way I see the appeal process evolving is that the stakeholders will have to come to it with their figures and their arguments, of course, and we will have to use the people in the agriculture department who of course also know this field well and who represent experts.
I presume that when there is a clear difference, either in the analysis or in the figures, we will possibly have to hire on contract, because Treasury Board is not a department that has a wealth of experts in these specific fields. We may have to hire the best we can so we can get an idea from a third party that is neither one nor the other as to what makes sense. To me, that would be a fair process.
I've not seen that we have already spent an enormous amount of time defining that appeals process, because we've just come to the conclusion, with some difficulty with other departments, as you can imagine, that we had to assume that role and that it was the fair thing to do. I think that's how it will work.
In terms of MPs and their role in it, not only do I have no objection, but once we have defined what we're going to do and once we set up a draft process, it would make a lot of sense for people in Treasury Board to meet with members of Parliament and fully discuss that process with them. I think it's quite proper.
Is there anything I've overlooked?
Mr. Miller: No, Minister. In one of the areas of Treasury Board, we have what we call program analysts whose job is to work very closely with each department. So we in fact have an analyst assigned full-time, for example, to the Department of Agriculture. In a way, they are both the conscience of the Treasury Board in those dealings and the provider of that understanding of departmental issues and other things to the Treasury Board.
During the development of this policy, we encouraged extending that in order to have outside groups looking at cost recovery from their perspective, although we certainly did deal very closely with the Department of Agriculture and Agri-Food in going through the entire process.
Mr. Massé: What about involving MPs in reviewing the process once it's been drafted?
Mr. Miller: Certainly, we have a lot of experience from our last...in trying to improve reporting to Parliament -
Some hon. members: Oh, oh!
Mr. Miller: - and that would be a very effective way to deal with any procedures we came forward with.
The Chairman: In that light, when we look at page 3 of the package you just handed out on cost recovery and charging policy, and if we look at the letter, Mr. Minister, that this committee sent to you on January 8, 1997, and the points on the last page of that, we said we would like to summarize possible action that might be taken in relation to the concerns raised. I'm pleased to see that as I have been ticking off our points and the points on page 3 here, most of them, if not all of them, are on both pages. We thank you very much. As you said at the beginning, you listened. We appreciate it.
Monsieur Chrétien.
[Translation]
Mr. Jean-Guy Chrétien (Frontenac, B.Q.): Welcome to the Standing Committee on Agriculture and Agrifood, Mr. Massé. Unfortunately, you don't come around visiting often enough.
Mr. Massé: True, but it's because I know less about agriculture than other matters.
Mr. Jean-Guy Chrétien: That's a good reason for coming, Minister.
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I have two concerns, Mr. Massé. The first one has to do with cost recovery on antiparasitic products that farmers use abundantly, while being very respectful of the environment, I'm sure.
In the USA, they're trying to do cost recovery but they keep at 15% of real cost whereas here, in Canada we're looking at 60%. At first glance, you may think that recovering 60% initially and eventually going up to 100% is a good thing but we have to live where we live, which is in the North American context.
As the Canadian market is captive because it's 10 times smaller than the one in the USA and as we're recovering a higher percentage, it's going to become very costly for producers who will inevitably be making us pay for the cost of the 60% recovery. Inevitably, this will lead to an increase in the cost of these products. So it will be more interesting for the farmer to buy American products to the detriment of Canadian ones and this will kill all research in Canada and any development of antiparasitic products for our farmers.
I've already made one of the members of your Cabinet aware of this, the Minister of Agriculture, but it would seem that you're going to continue in the same direction. Is that still your intent? Aren't you afraid this might lead to an increase in the cost of products or even to layoffs?
Mr. Massé: That's an important point. There's no doubt when dealing with economic systems that have such tight linkages as those between Canada and the USA, that you have to pay very close attention to competition between the different economic sectors. Pesticides, which are a major part of agricultural production input costs, are a point we have to be very careful with.
Of course, the situation varies depending on the products. Before coming to the conclusion that 60% recovery as compared to a 15% recovery makes the sale of a product more difficult, you have to look at each product. We can agree on that.
No doubt it will very important in the case of a certain number of products. We have approved cost recovery for pesticides only for a one-year period to be able to have the possibility of reviewing what happens in terms of costs and competition, especially with our American competitors in that area.
At the end of the year, we will have the possibility of reviewing costs. If we see that it's necessary to change the cost recovery level, it would be done.
Secondly, if you take this to its logical conclusion, it means that as soon as you have a competitor on the international scene - and there are a lot already, especially in that area - you have a lower cost recovery level than all your competitors so that not one of them could have an advantage attributable to the fact that cost recovery is located at a different level in each economy.
There are States that don't have the same standards we do, but even the USA is becoming very conscious of product quality. In other words, when they know we have inspection services, especially inspection services for pesticides or antiparasitic products, they appreciate the quality of the product. Thus its quality increases. In other words, the costs for the inspection of pesticides, for example, are not costs that are not balanced out by benefits in terms of the quality of food.
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So, once again, on the substance, I think you're right and we'll have to be very careful. We've set up a process that will allow us to determine the effect of those costs on our competitivity. However, not only do we have to take costs into account, but also the quality of the food resulting from a better inspection system.
Mr. Jean-Guy Chrétien: Thank you, Minister.
My second concern has to do with the group of farmers I met a while back in the Saint-Maurice riding and in Champlain county in Quebec and that have had a serious problem with an antiparasitic product made by the DuPont company that goes by the name of Ultim. On the label, it says that it's marvellous for annual grasses and hasty corn but when you add 2,500 thermal units or more or250 thermal units or less. A good number of farmers used the product and, contrary to what the label stated, it's useful and efficacious only when you have 2,500 thermal units or more.
Official complaints were brought to the attention of the Department of Agriculture, more specifically by Mr. Carol Gauvin, an agronomist, who was seized of them. It would seem the product had not been licensed for sale or that the labels hadn't been changed because there were not enough officials possibly because of jobs being cut at the Department of Agriculture and the result is that those farmers were hit with losses of up to $60,000.
They claimed compensation from the Régie des assurances agricoles du Québec. After analysis, it was determined that all farmers who had used the DuPont Ultim product had suffered losses while their neighbours who didn't use it wound up with an excellent crop. The Régie des assurances agricoles du Québec refused to pay and the dilemma will probably be sorted out by the courts.
I'd like to point out that it's very hard for farmers who often work from 15 to 18 hours a day, seven days a week, when a major block of their income, which is basically their net income, disappears because of improper instructions on a product. They now have to drag a gigantic company, DuPont, before civil courts and pay out of their own pockets. So it's extremely hard.
Personally, Minister, I hope that such dramatic situations won't be occurring on a large scale across Canada. Coincidentally, a number of those farmers are in the Saint-Maurice riding.
I'd like to hear you on that, Minister.
Mr. Massé: As far as the principle goes, the federal government's objective is to protect farmers against this kind of problem. The money we want to spend to vet pesticides and antiparasitic products is to be used to improve inspection and analysis. We want to do such work that will allow us everywhere in Canada, including Quebec, to offer quality service to our farmers.
As for the specific case you're pointing out, Treasury Board isn't a party to that, but I'll have our people at Agriculture check out what went on in that case to see what the details are exactly.
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As for the matter of principle, you are right. We want to provide quality services at a competitive price that will ensure our farmers have adequate revenue in view of the enormous amount of work they do. As a government, part of our concerns is to help them achieve a high standard of living.
Mr. Jean-Guy Chrétien: If you could give me a name, Mr. Massé, I could transfer the matter to one of your officials.
Mr. Massé: Perhaps to the official accompanying me.
[English]
The Chairman: Mr. Collins.
Mr. Bernie Collins (Souris - Moose Mountain, Lib.): Mr. Minister, thank you for your presentation. As I go through it and I look at government agencies, I'm always reminded that if we could only find all those efficiencies in other departments before we proceeded to tell the private sector how it should put its house in order, we'd be in good shape.
One of the tests I think we can put forward is that in meat inspection alone, we had four departments and now we put them under one. That's commendable, but we have to be able to show the public that at the end of the day there are some efficiencies in doing that.
I just need a couple of clarifications of the proposal here. If you use the business impact test, how are we going to ensure that we have a level playing field when you have in here factors such as competitiveness, product development and investment? In whose opinion does this have to pass the business impact test?
Mr. Massé: You would have to get the best experts in the field, and the experts would be people who have actual knowledge of the production field. Producers and associations of producers can usually give you the real situation, for instance on the levelness of the playing field. You know as a producer. Wayne knows in terms of potatoes who the competitors are, at what price they sell, what the quality of potatoes is and so on. Clearly you have to appeal to the people who are actually producing things.
I've met a few associations of agricultural producers in the last few months because of PMRA, and they were quite aware of the most recent studies, of how much the competition was able to sell equivalent products for and so on. I think that's what we must be doing.
In terms of investments, of course, the agricultural banks and agricultural institutes and so on will know best the actual cost.
So to answer your question, I think we have to get the best experts who know exactly the field we want to have here.
Mr. Bernie Collins: I can imagine that people could come along as independents and tell you that they don't think the playing field is fair, and here are the reasons. Would that be considered within this process?
Mr. Massé: The business impact test on any specific problem is one in which we'll use experts rather than just anybody.
Mr. Bernie Collins: Mr. Minister, on this one it says, on prerequisites: ``a cost-recovery regime where the benefits to the government outweigh the start-up and ongoing costs of administering the charges''.
If you start by saying that the benefits to us are the following, and you build in a system whereby over time you ensure that the costs of recovery are there, then you have built in an enterprise that's going to be a success. You're going to make sure the costs are there to offset your expenses.
Mr. Massé: One of the reasons for the stakeholders' group is that the stakeholders' interest is, of course, the reverse of that.
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I mentioned the cargo owners because when we were talking about ice-breaking services... I'll give you one example. One of them, in Port-Cartier, exports iron. He tells me that they used to get de-icing service from the coast guard 30 days a month during January. His argument to me was that they know when they send their boats, and they can stockpile in Port-Cartier. If they're going to pay for it, what they need is four days in January and then they'll bunch their ships during that period.
These are the people who will come to the bureaucrats and say that the type of service the bureaucrats want to give them makes sense if it costs zero, but if they start to pay for it, that's not what they want. I think these stakeholders are one of the main elements that will permit us to rationalize the allocation of resources.
Mr. Bernie Collins: I have one other.
The Chairman: One short question.
Mr. Bernie Collins: You go into note 1, which says: ``While many government activities generate both public and private benefits, differentiating between the two is highly subjective.''
Do you use any other measures that would fall beyond just the subjective measure?
Mr. Massé: I think that there you have a process of arbitration taking place. Normally the department will look at the public good and, because it does affect its resources and so on, will try to define what the public good is in a more restricted way and increase the private benefit. The stakeholders will have exactly the contrary argument. In fact, this is what we had today with exactly that point.
In this case you have to have a referee. The referee will try to justify his or her judgment in the best possible way, but it's like any court. You have to pray that its decision is just and enlightened.
The Chairman: I'm going back to Mr. Hoeppner. We promised the minister that we would keep him for only one hour, so Jake, you have about three minutes for your question and your answer.
Mr. Jake E. Hoeppner: Mr. Minister, I know you have a tremendous job ahead of you. Is anybody in the government waving a stick at the bureaucracy and saying that it has to become more cost-efficient, that it has to deliver service for less cost because the people can't afford to pay that? I would like to see some examples in a year where trimming has been done to the cost of the bureaucracy, and I think that's what the stakeholders want.
The other thing I want to point out is that you have a hell of a job on your hands. I'll just read you a statement that was made during your investigation of the Canadian Wheat Board, and it was made by one Mr. Easter from Prince Edward Island.
Mr. Wayne Easter: Are you sure you have that correct?
Mr. Jake E. Hoeppner: Wayne Easter, MP, who is a dairy farmer from Prince Edward Island, in a tongue-in-cheek comment said that it was the butter that determined the quality of the bread. You know very well, Mr. Minister, that it's the margarine made from canola. So you can see where you're having your problems. What one thinks is right, the other one thinks is wrong.
The Chairman: Jake, you're using up your time and I'm not sure you've said much yet.
Mr. Jake E. Hoeppner: With cost recovery, with efficiency, the opinions vary. You'll have to take the bull by the horns.
Mr. Massé: You will note that we reduced the government, and the figure can vary, by a minimum of 14% and a maximum of 21.5%. During that process we had to reduce the number of jobs by 55,000. I am very conscious of that because 20,000 of the civil servants live in my riding.
At the same time, we did the job, I think. I'm not denying that we have to be even more careful about costs, but I think we've shown that we were ready to take the bull by the horns.
Mr. Jake E. Hoeppner: I'm bringing that up because I noticed when the figures were brought before us that when this whole bureaucracy was harmonized or put together, there was no cut in staff at all. There were still 4,500 bureaucrats working in this agency, and that surprised me a bit.
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The Chairman: Which agency are you talking about?
Mr. Jake E. Hoeppner: The pest management -
The Chairman: No, the pest management agency does not have 4,500 workers. You're talking about the -
Mr. Jake E. Hoeppner: Which one was it, then? It was the one that was reorganizing -
The Chairman: You're talking about the single food agency.
Mr. Jake E. Hoeppner: Right. Well, they are probably the same.
The Chairman: No, they are not the same. They are not connected. One is in Agriculture and one is in Health.
Mr. Massé: In the food inspection agency I remember the amounts of money, because we gave some freedom to departments to reapportion people and jobs, because they know that better than we do. What we wanted was that it would cost less. We saved $45 million - that's the figure I remember - in the amalgamation and diffusion of these four departments. So I think we have saved money on that one.
On PMRA, because we were not sure enough where to go at this point, we gave the authorization to the department for one year only, rather than the five years they were asking for. So at the end of one year we can review this and discuss again exactly the points you mentioned.
The Chairman: Mr. Minister and Mr. Miller, I want to thank you again for coming before the committee today and for the work and effort and attention you've paid to the concerns of the members of the standing committee and others in the agriculture and agrifood industry.
Mr. Massé: Thank you.
The Chairman: The meeting is adjourned.