Canadian Consumer Specialty Products Association
Annual Federal Government Interface Conference 2004

Tuesday, February 3rd, 2004

Westin Hotel, Ottawa, Ontario
Governor General Room, Noon- 1 p.m.

Bill C-212,

An Act respecting user fees

Moving a Private Member's Bill Forward

Ladies and Gentlemen, I am very pleased to be with you here today to discuss my private member's Bill C-212, and how it can be a catalyst in the quest for enhanced innovation and productivity in Canada.

My private member's bill - Bill C-212, An Act respecting user fees, is designed to bring greater transparency and accountability to federal government departments and agencies when they attempt to recover costs through user fees. I believe the passage of my bill will result in a fairer deal for users, both industrial users and Canadian consumers; it will make us more competitive as a nation; and, it will encourage more innovation in this country.

First, a brief word on the progress on Bill C-212 in the Parliament of Canada.

Before Parliament prorogued, my Bill had cleared the House of Commons, where it was approved unanimously at all three stages, and was at the Senate National Finance Committee. With the resumption of Parliament this week, Bill C-212 will be deemed to have cleared the House of Commons and will be restarted in the Senate. I suspect we will have about 2 ? months to pass the bill in the Senate before the writ is dropped for the next federal election. Royal Assent, and Proclamation of the Legislation, at which point it becomes the law of the land, would follow passage in the Senate!

Two additional facts are worth noting. First, the fact that my Bill passed the House of Commons unanimously at all three stages is almost unprecedented. In fact, staff in our Whip's office was unable to remember anything similar. Bill C-212 is a substantive Bill and one that has been attacked at various times in the past by our government through the Treasury Board. This demonstrates the level of support for this Bill by Members of Parliament. I wish to take this opportunity to thank all of you for your voice in support of this initiative, and a special thanks to Shannon Coombs who has been there supporting me and encouraging me at all stages. The encouragement and support of all of you has made a real difference.

So, where do we go from here? My focus, and I would suggest to you that it should be your focus as well, is on the Senate and on the Treasury Board. Why Treasury Board? Well we have a new President of the Treasury Board, Hon. Reg Alcock. Senators, I suspect, will look to Treasury Board for advice on the Bill. I am very pleased to report that I have had discussions with Mr. Alcock and he has been very positive about my Bill. I am working as we speak with himself and his staff on ways we might improve the Bill and ensure its speedy passage. I myself will support amendments to the Bill only if the amended Bill will be expedited through Parliament and supported by the Government. We are currently having those discussions and making progress. Senators will ultimately decide in this next phase.

By way of example, now that Bill C-212 has passed the House of Commons it is attracting much more attention. I suppose that there were many sceptics who assumed that the Bill would get killed in the House of Commons, especially since the Treasury Board was not supporting it. This didn't happen. A number of crown corporations have expressed concern that they might fall within the ambit of the Bill. This is clearly not my intent, and this is very clear if one follows the progress of the Bill through the House of Commons; however, there might be language in the Bill that would make this abundantly clear. Likewise it may be possible to clarify how the Independent Dispute Mechanism - the one that would come into play with the passage of Bill C-212 - will work. In other words, amendments could be considered that would spell out this process in more detail. Fair enough, but amendments such as these, if introduced in the Senate, will require that the Bill return to the House of Commons for debate and voting. This is why I am insisting that with only 2 ? months before a possible election call, any amendments must be accompanied with a commitment by the Government to assist with the speedy passage of an amended Bill. Ultimately however, only Senators can decide whether the Bill should pass as is, or with amendments.

You should know that if the Bill is not passed by both Houses before the writ is dropped for the general election, I (assuming I am re-elected!) would have to start all over again in the House of Commons at first reading following the next election, and following the start of the next Parliament (expected in the fall of this year).

So, as you can see there are many trade-offs and careful assessments to be made in the next few weeks. I am confident, however, that this Bill will be enacted in this session of Parliament. There appears to be a good level of support for the Bill in the Senate, and as I indicated earlier, the new President of the Treasury Board, and indeed our Prime Minister, are generally supportive of this initiative. What better way to provide proof positive that the democratic deficit is being attacked than supporting a private member's Bill like this one - and having it passed by the Parliament of Canada?

I was very pleased to see a reference to User Charging and Cost Recovery referred to in our government's February 18th, 2003 Budget - in the budget speech and in the budget documents. In the Budget Plan, the government reaffirmed its commitment to bring in a revised policy on external charging focused in improved management practices. Treasury Board has come out with its revised policy, and while the policy is much improved in many respects, it does not go far enough, in my opinion. That is why I am still proceeding with my Bill.

Now, to the substance of my Bill C-212.

User fees take many different forms and are meant to defray some or all of the costs of a service provided by government presumably in the public interest, but which also provides a specific service to the client (for example license fees, registrations, etc.)

At the outset I should say that I support the government's objective to recover costs through user fees for private goods or proprietary services. What my Bill addresses, are the following concerns -

• The need for more parliamentary oversight when user fees are introduced or changed;
• The need for greater stakeholder participation in the fee-setting process;
• The need for improved linkages between user fees, and federal department and agency performance specifications and standards;
• The requirement for more comprehensive stakeholder impact and competitiveness analysis when new user fees, or fee increases, are contemplated;
• The need for increased transparency with respect to why fees are applicable, what fees are charged, what costs are identified as recoverable, and whether performance standards are being met;
• The need for an independent dispute resolution process to address the complaints or grievances of the payers of user fees; and
• The need for an annual report outlining all user fees in effect that would be tabled in the House of Commons, and referred to the appropriate Committee of the House (Finance).

Our government has embarked on a very ambitious innovation agenda. We need to ensure that our regulatory environment supports and encourages this very important objective. The government recognized this connection when it launched the Smart Regulation initiative in the last Throne Speech. The government announced that it will "move forward with a smart regulation strategy to accelerate reforms in key areas to promote health and sustainability, to contribute to innovation and economic growth, and to reduce the administrative burden on business." Prime Minister Paul Martin has reaffirmed the government's commitment to innovation and regulatory reform.

I would suggest to you that the government's current cost recovery user fee policy runs counter to the innovation agenda and should be a major part of the smart regulation initiative. Bill C-212 does just that, in my view.

It is time for the Parliament of Canada to take greater ownership of user fees. What began as a legitimate attempt to more fully recover costs for proprietary services has developed into something that is beyond that which was contemplated. User fees currently bring in $4 billion annually in revenues for the federal government. Departments and Agencies of the federal government have, in many cases, expanded the concept and introduced user fees, and increased user fees, beyond what is reasonable, and, more often than not, without any reference to service or performance standards. Let us keep in mind - these are monopolies increasing their prices! I don't need to remind this audience that if a company wishes to have a drug or specialty consumer product approved, for example, they cannot shop around if the price charged by Health Canada and the Pest Management Regulatory Agency or P.M.R.A. is excessive!

It is time to introduce more transparency and accountability into the user fee process.

Companies in my riding of Etobicoke North - companies like Bayer Canada and BASF Canada - who are exposed to such fees for drug approvals, or approvals of chemical products, do not argue about the appropriateness of user fees for proprietary services. They understand that this is required. What they believe is seriously eroding their competitiveness, however, are increasing fees with no corresponding increase in service or performance. Since fees have been on the rise, in most cases there has been no corresponding improved service or response times.

Your industry is acutely aware of this.

In 2001 the P.M.R.A. took an average of 1100 days to review a Standard Category A submission. Its promised performance standard is 550 days. Between 1998 and 2001 average approval times increased across all categories, by as much as 171% in some cases (Category A standard) and 119% in others (Category B). This is simply not acceptable. Hence the reason for my Bill.

Other examples abound. In Canada it takes on average 750 days for a drug to be approved. In the United States, the corresponding time is 500-550 days. In Europe, the time frame is less. User fee charges, however, are as high or higher in Canada when compared with these jurisdictions.

With drugs, chemical, Consumer Specialty products, and agricultural products, competitive advantage often depends on being the first mover to the marketplace. It is easy to understand why our Canadian companies are seeing their competitive position eroded.

In the U.S.A., the United Kingdom, and Australia user fees are tied in some way to service and performance. The Government of Canada does not at present have any such linkage to performance. In Australia, drug reviews must be completed within legislated time frames or the relevant authority loses up to 25% of the user fee.

In the U.S.A., written performance goals tied to the fee collecting authority were negotiated with the industry. The Medicines Control Agency in the United Kingdom sets targets for 'clearance times'.

Not surprisingly, in those jurisdictions where there is a strong linkage between user fees and performance standards, the performance standards are almost always met. Departments and Agencies find the ways to get the results they need. In the business world you are used to this type of discipline. It's time for government to follow suit.

My private member's Bill C-212 contains provisions that result in a reduction in user fees if performance standards are not met.

Bill C-212 potentially affects Canadians from coast to coast to coast because it applies to federal government departments, agencies, boards, commissions or any other body, with the exception of crown corporations, that has the power to fix a user fee or a cost recovery charge under the authority of an Act of Parliament. Thus, in addition to a fee for the approval of a consumer specialty product, individuals paying fees to visit a federal park, or those passengers paying the Air Travelers Security Charge, or businesses paying a fee to access the MERX government procurement system, or individuals paying a fee to the Passport Office for a passport, or provincial or territorial authorities paying fees to the Canadian Coast Guard for ice-breaking services, would also be affected by this Bill.


I introduced this Bill because of a certain level of frustration with the lack of progress on this issue. The House of Commons Standing Committee on Finance some three years ago recommended significant changes to the cost recovery/user fee policy; but progress to date has been minimal. In fact there are concerns that the policy may be moving in the opposite direction!


The following are my lingering concerns about the newly adopted government policy -

• While I am pleased to note that the Treasury Board Secretariat will provide resources to monitor compliance with the policy, there are no apparent consequences should departments or agencies fail to meet performance targets;
• It is unclear whether or not the resources for monitoring compliance will be sufficient to meet the indicated mandate;
• While the Dispute Management process that is proposed may be an improvement over the existing policy, the process is still an internal one which may lack objectivity;
• There is no assurance that a substantial and complete consultation with stakeholders will occur, and that the proposed fees will be competitive with Canada's major trading partners;
• The proposed new policy fails to clarify what is a public and what is a private good or service, and how full costing will be defined and implemented.

Many of the above concerns would be addressed if more parliamentary oversight was in place. This would provide greater transparency and public debate.

To enhance the bill I introduced a number of amendments, and the House of Commons Standing Committee on Finance adopted them, in response to feedback and comments from users, M.P.'s, and the government. Some of these changes were more minor in nature but others were more significant. Allow me to comment on the latter.
Some individuals were concerned that Bill C-212 as it was originally written would compromise the ability of the executive branch of government to implement policies because the House of Commons had a veto power over any new user fees or any increase in user fees.
The amended Bill C-212 removes the veto power of the House of Commons and replaces it with a recommending authority. In lieu of this, however penalties for non-compliance by departments and agencies for the failure to meet stated performance standards have been written into the Bill.
Some were concerned that committees of the House of Commons would be inundated with user fee requests. Although a variety of evidence presented at the finance committee hearings seemed to refute this, an amendment was passed at committee stating that if a standing committee of the House of Commons does not report back to the House within a certain number of sitting days of receiving such a user fee proposal, the committee will be deemed to have approved the proposal. This provides the committees with the latitude they need to manage their workload and priorities.
Crown Corporations were removed from the scope of the Bill on the basis that they already have a commercial orientation.
There were other amendments that were adopted by the House of Commons finance committee, and Bill C-212 is a better bill as a result of those changes.
Bill C-212 will require that before a federal regulating authority introduces, increases, or expands the application of, or increases the duration of, a user fee, it must consult meaningfully with affected stakeholder and client groups -

• It must take reasonable measures to notify clients, and other regulating authorities with a similar clientele of the proposed user fee changes;
• The regulating authority would be required to give all clients or service users a reasonable opportunity to provide ideas or proposals for ways to improve the services to which the user fee relates;
• The regulating authority would be required to conduct an impact assessment to identify relevant factors, and take into account its findings in a decision to fix or change the user fee;
• The regulating authority would need to explain to clients clearly how the user fee is determined and identify the cost and revenue elements of the user fee; and,
• The regulating authority would be required to establish an independent dispute resolution process to address a complaint or grievance submitted by a client regarding the user fee.

On this last point, my Bill is currently silent as to the operation of the independent dispute resolution process; however, my intent is that the recommendations of an independent party who investigate any complaint or grievance would not be binding on the government; but the report would be available to the parliamentary committee who was reviewing the fee.

Nous aurions egalement besoin d'un mecanisme pour ne pas donner libre cours aux plaintes frivoles qui servent seulement a retarder l'application d'un tarif ou d'une majoration de tarif. Il y a fort a parier que cela n'arrivera pas et il se peut que nous ne puissions evaluer cela correctement que lorsque nous aurons acquis une certaine experience du processus.

We would need also to have a mechanism to ensure that complaints that are frivolous, and designed only to delay the implementation of a fee or fee increase, would not be entertained. Hopefully this won't happen, and we may only be able to assess this properly once we have some experience with the process.

To some, the provisions that I just described may appear completely reasonable - to others they may appear to be onerous. I will acknowledge that these measures will not simplify life for these regulating authorities. I make no apology for that. I believe that all these steps are necessary because these fees can have an enormous impact on companies and individuals in Canada. Groups like you will have some constructive ideas about how the service could be improved - especially if they are paying more for the service.

It is also important to understand what costs are proposed to be recovered with the proposed user fee or fee increase. How expansive or limited is this definition? To what extent are direct and indirect costs, like departmental or agency overheads, included in the cost recovery formula? How costs are defined can make a major difference in the level of the user fee. We need more transparency and accountability in this area as well. Bill C-212 provides that transparency and accountability.

Parliamentarians need to understand also how departments and agencies define what is a public good, and what is a private good. These definitions are usually not easy, to be sure. They are typically not black & white, and some are easier than others. But these are important considerations, because user fees should only be charged for proprietary goods and services. There are examples where the government has moved away from this concept, for example, the New Substance Notification Program and its related fees - where proprietary benefits may not be conferred.

Parliamentarians need to be involved in these debates. Bill C-212 allows for that to happen.

Every user fee proposal under C-212 must be tabled in the House of Commons, and referred to a committee of the House, by the relevant Minister. That proposal would -

• Explain in respect of what service, facility, authorization, permit or license the user fee is being proposed;
• State the reason for any proposed change in the user fee rate;
• Outline what performance standard is being proposed, as well as the actual performance level that has been reached; and,
• Provide an estimate of the total amount that the regulating authority will collect in the first three years after the introduction of the user fee, and identify the costs that the user fee will recover.
  

Should the amount of the user fee being proposed be higher than that existing in those countries that are our major trading partners, the Minister would be required by Bill C-212 to give reasons for the difference.

These questions are very important for the competitiveness of Canadian business. A case in point is the New Substance Notification Program. Chemical companies, and those in your industry, when introducing a new product into the domestic market, must appropriately obtain approval from the federal government prior to launching the product. The federal government reviews the application and makes a determination as to whether or not the product is safe and effective. To cover the costs of this approval process, companies must pay a user fee. Companies that I have approached have no difficulty with this, as I said earlier. Companies like those in this association do question, however, why our government will not recognize assessments and approvals from our major trading partners, particularly the U.S.A. In addition, once approval has been given, shouldn't the company that requested the review of the new substance, and paid the fee, be permitted some initial competitive advantage in the marketplace? In other words, if you pay the fee you are entitled to a private advantage; otherwise it is a public good and should be paid for by all taxpayers. Questions such as this should attract more scrutiny from the House of Commons and the relevant committees.

In conclusion, I am confident my Bill will become law before the next election. Thank you for your support.

Mais il reste du travail a accomplir pour faire adopter le projet de loi C?212. Si vous l'appuyez, ecrivez aux senateurs de votre region et demandez-leur de l'appuyer.

Some work remains, however, to ensure that Bill C-212 is passed. If you support my Bill, you should write to the Senators in your area and ask them to support my Bill.

Also, please feel free to contact me if you have any questions or concerns.

Again, thank you very much for the opportunity to be here today. I would be happy to take any questions that you may have.