Government Operations Committee on May 27th, 2024

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Right.

The federal government has a one-for-one rule built into its regulatory framework, which means, as outlined by another witness, that every new regulatory cost must be offset by an equal or greater reduction. Has this government been following through on this commitment, would you say?

[Michel Girard]

Given what you just mentioned before, I'm assuming it has not.

I think the track I'm proposing in the paper would help reduce the regulatory burden. If we take a hard look at compliance to laws through standards as opposed to regulations—and standards are co-designed by industry and academics and regulators—we could probably find a way to reduce the regulatory burden while keeping Canadians safe. That would be my sense. Taking a look at standards as opposed to full-fledged regulations would keep Canadians safe but would reduce the burden on industry.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's correct, because as I mentioned, the cost of regulation, according to the CFIB, was $38.8 billion in 2020, and it took a total of 731 million hours.

Can you comment further on how much Canada's business would be improved by removing the billions of dollars of costs of regulation?

[The Chair, Conservative, Kelly McCauley]

Actually, I have to interrupt, because that is our time.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Thank you very much, Mr. Girard.

[The Chair, Conservative, Kelly McCauley]

Perhaps we can save it for a response the next time the Conservatives are up.

Mr. Bains, it's over to you, sir. Go ahead, please.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to Mr. Girard for being here and of course to all of our other witnesses online.

My first question will be directed to the Richmond Chamber of Commerce. That's no surprise.

Thank you, Ms. Furlong, for joining us today online from Richmond, B.C.

I know you gave a considerable explanation of how many different types of businesses we have in Richmond— land, sea and air. It's a major hub. We have a lot of technology there, and even a moon connection. I know we have a company that put the camera on the moon rover, so let's just add space to that as well.

I know the chamber does a lot of hard work on producing reports, conducting studies and providing feedback, so that is a primary piece of what we try to look for in this committee when we're looking for recommendations.

Last year many of your policies were adopted by the Canadian Chamber of Commerce. Could you briefly summarize for the committee what these policies were?

[Shaena Furlong]

I'd be happy to share that. Thank you so much.

We had two policies that went forward to the Canadian Chamber of Commerce and a third that we were supporting.

The third is the one I'll speak about first. It was focused on Canadian-made supply of sustainable aviation fuel. In Canada we often find that our sustainable aviation fuel is refined abroad and shipped to North America, often at great expense, which actually calls into question how sustainable it is. When we're refining in Singapore and fuelling in Los Angeles, it really challenges Canadian airlines with respect to their green technology and their future sustainability plans.

Another policy we brought forward called for the federal adoption of a permanent transit fund for municipalities across Canada. That is something, MP Bains, that you will know has been championed very hard by metro Vancouver's Mayors' Council. We were firmly in agreement there that workers need to be able to get to their places of employment and that people need to be able to move around the regions.

The third policy we brought forward was seeking greater support for port infrastructure and project approval timelines across the country. In our backyard, we've seen the Vancouver Fraser Port Authority's Roberts Bank terminal 2 project take over a decade to get environmental approval. They are currently in the process of working with the Department of Fisheries and Oceans.

Because the expansion of port capacity at Roberts Bank terminal 2 is so critical to the businesses, not only in our region in British Columbia but across the country, we believe that moving more quickly on significant projects like this will not only help control costs for Canadian consumers, taxpayers and businesses but will also help us create great jobs more quickly and at the time we need them.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Staying with the ports, I had the opportunity to participate in some of the digital technologies that were announced with respect to seamless communication by large commercial shipping companies and logistics companies at the Vancouver port's terminals.

Why are those important? Can you explain how this would improve the port activity and what role the provinces and territories would have in this?

[Shaena Furlong]

Thank you so much. I have to say I am absolutely not an expert on this subject, but I believe I've seen some of the same presentations you have.

What we are seeing with the ports is that we need to move more goods more quickly. We are seeing products reaching Canada with just-in-time deadlines, and those products need to move through our logistics companies into the market very quickly. The use of digital technology to manage the workforce and manage transportation on the ground and in freight is absolutely critical, and I'm very excited to see what's coming forward.

I'm sorry that I don't have more information for you.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

That's totally fine.

I'm going to ask a little more.

You will recall that years ago in the provincial government, while I was working there, we actually had a ministry dedicated to deregulation. Over 80,000 different regulations were removed and changed. Is there a risk associated with that?

For example, we did see a real estate industry in British Columbia that went unregulated for years. We had issues with contracts of homes being flipped, and contracts of homes were being flipped month after month, adding $50,000 in value to each contract before the sales actually were closed.

Maybe you can talk a bit about risks associated with deregulation.

[Shaena Furlong]

Thank you.

I think we would all agree that a perfect regulatory environment is going to balance the public good—public safety—with the interests of business and our broader economy.

I'll give you one example: the way we regulate sunscreen in Canada. If you go to the United States, you can pick up a bottle of sunscreen for much less money, and there are more options. Here in Canada, we regulate sunscreen as a drug or a natural health product, and companies spend quite a bit of money jumping through many hoops with Health Canada to get approval in Canada. When you go into a Canadian drugstore or to a Canadian cosmetics company, you're going to see many fewer options, and those options are going to be significantly more expensive.

Now, that's just a very small segment of the economy, but I think we can see it across all industries. When we have a regulatory burden that, yes, is protecting the individual or the broader social good, is it balanced with other jurisdictions? We have to remember that we are not an island. We are competing with other jurisdictions across the globe for investment and project approval, but there's also the general public interest.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Before we go to Mrs. Vignola, Mr. De Thomasis has managed to come online. If it's okay with everyone, we'll go through Mrs. Vignola and then Mr. Bachrach. Then we'll allow the witness to do a five-minute opening statement before we start again.

[Some hon. members]

Agreed.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Thank you, everyone.

Mrs. Vignola, go ahead, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I thank the witnesses for joining us.

I'd also like to thank those members who are using their earpieces. I'm very grateful to them.

Mr. Girard, we're talking about regulatory modernization. We want to simplify regulations, but we don't want to sacrifice safety, accountability or rigour. There seems to be some resistance to change, though.

I have two questions about that for you.

What are the benefits of modernizing regulations and the tools officials use to enforce those regulations?

How does one change workplace culture?

[Michel Girard]

Thank you, Ms. Vignola.

To your first question, regulatory authorities would have to find a new way to get companies to comply with legislation. If they wanted to use standardization to do that, then they would have an amazing new tool at their disposal that they are not currently using.

One thing the authorities could do is make it easier to set up technical committees with industry, academia, consumers and stakeholders significantly affected by a regulatory regime to engage in a credible consensus-building process. This would open up avenues for regulatory authorities and government officials to explore to find win-win solutions.

There also needs to be a mandatory five-year review of standards, which would make them dynamic, not static. That way, regulators can continue to engage with stakeholders and address issues as they become aware of them. That's how the system works.

Regulatory authorities have been involved in standardization for close to 100 years, so this is nothing new for them. What is new for them is setting standards in new sectors, such as high tech. That's why we're giving them a chance. We're giving them the opportunity to reach out and engage in dialogue so they can produce documents with requirements that we can verify and certify.

So far as cultural change goes, I think this committee absolutely has to look into all of that. Public servants appear to be resistant to change. Maybe that's justifiable, but they're afraid of taking risks. They're afraid of trying new approaches because they're afraid of making mistakes. I think it's best to start with knowledge and awareness and then move on to creating standards. Regulators need our help understanding how the system works, and they need our express permission to use it so they don't have to hide behind the tried-and-true methods and the conventional process for developing regulations that has been in use for almost 150 years now.

There's no way Canada will have regulations governing artificial intelligence before 2028. That's ridiculous. If we had a system for standards, if there were mandatory calls for AI standards, those standards could be in place within a year, which isn't great, but it's better than waiting until 2028.

We can innovate and we can change the culture. I think you should take a good look at that.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Girard.

My next question is also for you, but Ms. Kozhaya is welcome to answer it, too.

Are regulations the only reason a country's productivity might drop? I took a few basic economics courses, and I remember that there are many reasons productivity can rise or fall.

Have the economic theories taught to our teenagers in high school changed? If not, what other factors affect the country's productivity, and which ones are currently having affecting Quebec and Canadian productivity?

Thank you.

[Michel Girard]

I'll let our colleague from the Quebec Employers' Council answer your question.

What I can tell you is that, if the provincial, territorial and federal regulations are not aligned, that causes problems for industry, which then has to develop and certify its standards two, three, four or five times across the country for a small market of 35 or 40 million people. That can reduce productivity, but regulatory alignment is important.

However, the reason we have regulations is to protect people. If people die because of faulty electrical systems, costs will go up elsewhere. That's why we need a balanced approach. Regulation doesn't necessarily mean lower productivity. You really have to focus on one point of view, look at the important things and avoid generalizations.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

So, as you see it, that's not the only aspect to consider.

Ms. Kozhaya, what can you add to that?

[Norma Kozhaya]

Right, it isn't the only aspect to consider, as you said. Productivity depends on a number of factors, such as training, education and human capital. A more highly skilled workforce that can adapt through ongoing training will boost productivity.

Taxation is also a factor. A predictable return on investment is a basic condition for investing capital.

The regulatory environment is one of the factors that must be taken into account.

Infrastructure is another. Ms. Furlong talked about port infrastructure and transportation and logistics infrastructure.

There are many factors, but there's a lot governments can do on the regulatory side at no cost. It is not about tax credits. The point is that regulation needs to be outcome-oriented, not process-oriented. I think that's the takeaway. We have to work with companies upstream to ensure that regulations will not have adverse and counterproductive effects.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Go ahead, Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thanks to our witnesses.

Mr. Girard, I found your presentation interesting in its depiction of standards versus regulations.

When you were finishing up your statement, you were talking about the experience in other countries and how they've established standards in perhaps a more extensive way. Could you complete that thought and share with the committee what other countries are doing that we should look to?

[Michel Girard]

That's a very good question.

The title of the paper is that we need to establish a “New Approach”. That's a reference to the EU approach.

Since 1985, the European Commission has had the authority to make standardization requests to its standards body. I was just out of university in 1985. Some of you were still in high school, I'm sure—or primary school, some of you. It's been a long time.

Think of the example of AI. In Europe, there was a law regarding high-risk AI applications. It was passed in March. Well, in December of last year, the European Commission asked its standards body to develop 10 standards to frame compliance to its new, upcoming legislation. From data collection to ensuring that privacy requirements are met to documentation to conformity assessment, it's all there. The European Union has a mechanism to mandate the development of standards.

The other thing about that is that once the standard is out, there is a presumption of conformity. Once the standard is out.... The regulators have helped design that standard. When it's published, it becomes part of the legislative tools. Industry has to comply with it.

In the U.S., you have executive orders from the White House. The White House regularly asks its National Institute of Standards and Technology, NIST, to develop standards so that products and systems are safer. They've done it for the smart grid. They're doing it for AI now. In the U.K., they've designed a standards institute for AI, and they approve standards in a list of recognized standards. They don't even need a regulation. You can put them on a website, and people know they have to comply with these standards.

That's a long answer to your question.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

It's interesting stuff. I'll try to fit in one more question.

It's a very interesting distinction between standards and regulation. In my mind, it seems that one of the key distinctions is that the standards agencies are entirely at arm's length from lawmakers and the government. The question is around the trade-off when it comes to accountability.

You've mentioned the application to AI. The other safety regulation and legislation that we're currently debating is the online harms act, which speaks very much to safety.

It seems that if we were to empower an arm's-length standards body to come up with standards for online harm, it's going to be making a lot of very subjective.... Already in the legislation there are serious questions about definitions, concepts and society's expectations around online safety. We would now be talking about empowering an unaccountable body to make these determinations. Are there limits to what standards bodies should be empowered with?