Industry Committee on June 17th, 2010

[Mike Wallace, Conservative, Burlington, ON]

You know we'd be willing to move on it today, but some people want to slow it down.

This is the issue I'm hearing about. At one of the previous meetings, an opposition member said that if every pump were out by its maximum, it would be this ridiculous number, which would be correct if every number was out to its maximum variance, to the wrong way, which I think was a ridiculous statement, because it's not reality; it's not going to happen.

Do you have a sense? Maybe you don't, but maybe you have this sense. When I was working in the business, an average decent station in an urban centre sold six million litres per year. I think they're a little higher than that now. I think they've amalgamated, so they might be up to eight million, nine million, or ten million litres per year. There are normally three or four tanks in the ground, and it depends on the size, but they'll have 60,000 litres in them, whatever—it depends on the configuration for mid, high, and low test. Sunoco has more tanks because it has a different variety and so on and so forth. I'm using Esso; that's where I worked.

Would you not say it's a concern to the retailers from an inventory perspective? If they were losing or gaining one half cup of gasoline every fill-up, that is 30 thousand, 40 thousand, or 60 thousand litres on a six-million-litre station per year—well, it depends whether there's more than the one pump, of course. That's one underground tankful of gasoline that they're missing. Would you not think it would be a concern to them from an inventory perspective, whether they're way over in inventory or way less in inventory, and isn't that a concern that you would hear from retailers as to why they want their pumps to be calibrated correctly?

[Alan Johnston]

Yes. As a retailer or as an owner of the device, you want to make sure your profit and loss is based on a number of factors. Certainly if you're giving away product, you should be concerned about it. Most retailers are very concerned about it. They want to ensure that they're not. And they also worry about consumer confidence. It's very important for most retailers that they do not lose the confidence of the people who are spending their hard-earned dollars there.

[Mike Wallace, Conservative, Burlington, ON]

There's been one indication that these inspections were going to be paid by the retailer and it's the same people who are doing their service. I know I got a call from the Library of Parliament telling me what the name of the company was. I had to remember. It's Serv-A-Station Maintenance, with a hyphen between the parts of the name. I don't know if they still exist or not. There was a sense that there might be some collusion between them, keeping them uncalibrated, because they're doing other maintenance work at the pump. Have you had any complaints or experience with that kind of issue?

Also, regarding the licensing of those who are going to be doing the actual calibrations, just to remind my colleagues, could you go over what the process is to be certified and tested to be someone who can calibrate pumps?

[Alan Johnston]

I'm going to turn this over to Ms. Roussy. She explained it better than I could the last time, and I suspect she'll be able to do it again today.

[Mike Wallace, Conservative, Burlington, ON]

So you had to hear it twice. I don't know why.

[Sonia Roussy, Vice-President, Innovative Services Directorate, Measurement Canada, Department of Industry]

To explain the process for the authorization of service providers, first of all I'd like to point out what the dynamic is in the marketplace. These service providers are small organizations across the country. I think we've made available to the committee a map that shows where the ones that are already recognized are, and you can see that they're located right across the country. They're small businesses. Their livelihood depends on their maintaining recognition from Measurement Canada.

Measurement Canada puts them through a qualification process that is very rigorous. It involves that the company must be an incorporated entity, a legal entity. They must have technicians who are going to do work on the government's behalf—it's not automatic that all their technicians can do the work—and these are the ones who are going to be identified as “recognized technicians”, as we call them.

They must attend training at Measurement Canada; it's typically one week of training. They undergo a theoretical evaluation, which they must pass with a minimum passing mark of 70%. They then undergo a practical evaluation on site, where we have them do the work, and we evaluate their work. Again they must have at least 70% on that evaluation. They must use equipment that has been approved; in other words, that meets the specifications of Measurement Canada and has been calibrated by Measurement Canada. They must also document and use test procedures that have been accepted by Measurement Canada.

All of that is an investment that the company makes to become authorized by Measurement Canada, a time and a money investment.

Once they're recognized, their name goes up on our website. Device owners go to our website to select and may call several of them to get the best price possible for the inspection work.

We monitor the authorized service providers. We do annual monitoring as a minimum. This involves audits of their work. It involves surprise follow-up inspections after they have done their work, because they submit data on their work continually on a weekly basis to us so that we know where they've been and what work they've done. We can select randomly where we will follow up on them; they don't know where we will go.

If we encounter problems with the way they've done their work—and our data over the past 10 to 20 years, depending whether it's on the electricity and gas or the weights and measures side, shows that compliance by authorized service providers is extremely high, 97% minimum.... When we do find a problem, we take immediate action. They must take corrective, preventive action.

And they can be suspended. If the non-conformance is severe enough, their authorization can be revoked. This is identified in the website, that they have been suspended or revoked. So again the livelihood of the business is at risk.

[The Chair, Conservative, Michael Chong]

Thank you, Ms. Roussy.

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Yes, Mr. Chair.

Ladies and gentlemen, good morning. It is always a pleasure to see you. Your approach is just as balanced as usual.

Last week, we were to hear from a witness, a representative from Option consommateurs. Unfortunately, because of all kinds of problems, the meeting did not take place and therefore she did not come.

I did, however, have the pleasure of meeting her. She wanted to say that she had participated in the process—you began this process a few years ago in order to review all of the aspects—and that people had ample opportunity to express their views.

In a nutshell, if I were to summarize her conclusion, I would say that they are in favour of Bill C-14, particularly those clauses requiring merchants to ensure that their measurement instruments are in compliance on a regular basis according to the schedule established by the minister. They also agree with using outside service providers, providing that they meet transparent criteria and that their work is periodically inspected by Measurement Canada.

Hence, these conclusions contain two aspects tied to inspections. In her presentation, she told us that in certain places—such as in the United States, apparently—annual inspections are conducted. The frequency of inspections will be established in the regulations. It would appear that these regulations may be calling for more frequent inspections.

What is your position on that matter? Do you feel that there is a real need to have inspections carried out more frequently, on an annual basis?

[Gilles Vinet]

This decision was made further to consultations with the industry and stakeholders, including the representative you referred to. A few years ago, we held consultations and the stakeholders made a unanimous recommendation: an inspection every two years.

In Canada, weights and measurements come under federal jurisdiction, whereas in the United States, this area comes under the individual state. Consequently, every state makes its own decisions. That explains the situation in the United States: in some locations, inspections are carried out every year; elsewhere, this is done every two years. In Europe, the situation varies from one country to the next. In Germany, inspections are carried out every two years, whereas in France, there is a mandatory inspection every year.

We based this decision on our understanding of technology, on compliance rates, the economic situation and measurement techniques. We felt that, for the time being, every two years was appropriate.

You must bear in mind that we will have regular follow-up. Under Bill C-14, the authorized service providers will provide us with the measurements of the equipment following the inspection. So we will be able to assess the situation over the years and determine whether or not the two-year frequency rate is relevant, if ever a review should prove to be necessary.

[Serge Cardin, Bloc, Sherbrooke, QC]

If I were to summarize to some extent the viewpoint of the Option consommateurs representative as regards the external service providers, I would say: Who is going to be monitoring the ones that monitor? Measurement Canada has a frequency rate that should enable it to assess the various providers.

[Gilles Vinet]

As Ms. Roussy mentioned, Measurement Canada monitors the authorized service providers. She explained the process. This is a really detailed process, and the authorized service providers would have a lot to lose if it were determined that there was a problem with their operations. Should they lose Measurement Canada recognition, essentially, they would find it very difficult to win service contracts.

[Serge Cardin, Bloc, Sherbrooke, QC]

I am struck by one thing. We know that the level of tolerance for pumps is 0.5%, and Ms. Roussy told us there needed to be 70%... So, you have a 30% tolerance rate for supervisor training, if you're saying you need 70% to become a certified supervisor.

That discrepancy is striking.

[Sonia Roussy]

When it comes to our assessment, we refer to 70%. On crucial points, you have to have 100%. Not 70% for each exam question. Some points have to do with the way to carry out an audit, and for those you need 100%. There can be no failure.

However, there is some margin for issues like marking or completing documents. These points are less crucial, but they remain important. However, they do not relate to the device's accuracy. That is why it is 70%.

[Serge Cardin, Bloc, Sherbrooke, QC]

I am somewhat reassured. Indeed, I was thinking that if the tolerance level for the passing grade for the assessment of a pump supervisor were 30%, it would be far from the 0.5% at the pump.

At the end of the day, I told myself—and I've already said this in committee—that at first glance, I could not imagine how a supplier, especially a retailer, could tamper with the pumps, because at some point, it would become obvious. The lower the supply, the more there may be attempts to tamper. The gap would therefore increase and there would be a significant risk that people might realize this. I believe there is a low risk of people trying to tamper with these devices.

Earlier on someone referred to a tolerance level of 0.5%. That seems rather normal to me, you need it. You can aspire to perfection, but it is hard to achieve. If members of the House of Commons were supposed to be 99.5% perfect, I can assure you things would be different. Well, we tolerate more. As far as possible, we must aim for perfection.

In terms of fraud, I would be quite surprised. The problem, I would submit, is the price. If the price is $1 per litre—I think 40 billion litres are being sold annually in Canada—one tenth of a cent difference amounts to $40 million. If it is half a cent, it would be $200 million, or 10 times higher than the annual gap noted on these devices on average, which is worth $20 million. On the other hand, a one-cent difference amounts to $400 million. Under these conditions, I think it is far more important to watch prices. Retailers would benefit much more from changing their prices by a few tenths of a cent than by tampering with the pump.

Earlier on I referred to the opinions of Option consommateurs. I would tend to agree, especially given that the audits are carried out by professionals, relatively frequently. A number of comments you made earlier on concerned me. They brought to mind a host of ways in which to tamper with the meter or the products.

I will give you an example. Last weekend I filled up four 20-litre gas containers for maintenance purposes at my farm house, but I realized I had pumped 23 litres into them. Perhaps I could have lodged a complaint. Perhaps you would have done so, given the fact that these 20-litre containers actually contained three additional litres.

[Gilles Vinet]

You have to be careful. These plastic containers are not certified. Often, there is a line on them. It is difficult to judge the quantity on these containers.

[The Chair, Conservative, Michael Chong]

Merci.

Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Just quickly, so that it's on the record, when we talk about the tolerance levels of the pumps that are allowed volume-wise, what does that constitute? Is it a cup of gas in a fill-up?

[Alan Johnston]

We use the term about half a coffee cup. Now, we don't have a standard coffee cup, but it's about that. I used to use five of those little creamers for your coffee, but of course they vary in size as well.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

And it could go either way.

[Alan Johnston]

It could go either way, although the bias is in favour of the retailer.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

The other issue that I want to bring forward was brought forward the last time. You weren't here; it was with the independent petroleum association. A good reason, I think we all have to acknowledge, is that pumps will wear out and eventually you'll start having some problems with them. I think we've pretty much established that it's tough to tamper with these things, so it's a matter of them wearing out. It's also very probable that if a retailer has a faulty pump, if it's costing him money, he's going to call the maintenance man and get it fixed.

On the other side of the coin, it's also very probable—I'm not inviting any aspersions, but it's human nature, we're just talking about human nature—that if you're picking up a buck a fill-up, maybe you'll just kind of turn a blind eye. This could be a logical explanation as to why the slant goes one way rather than towards the other way. It's just a suggestion, but I think overall it's fair to say.

Finally, the last thing I think we need to focus on is that although the focus seems to be on gasoline, you drafted this bill and you said you started this process in 2000 because the legislation was inadequate. We'd moved forward and there were some changes that had to be made.

Let's just forget about the gas for a minute. Although it's important, I think we've beat the thing to death. Can you help us focus on maybe, in other areas, why this bill is so important to Canadians, so important to our economy, and so important to the flow of goods, why it is so necessary and why we need to get it passed?

[Alan Johnston]

Certainly it focuses on a lot more than gasoline. It focuses on eight sectors, plus the Electricity and Gas Inspection Act. We have retail petroleum, obviously, as well as wholesale petroleum, dairy, retail food, fishing, logging, grain and field crops, and mining. The compliance rates in those areas are lower than they are for gas pumps, and that is for a number of reasons.

I'd also say that while it's difficult to tamper with these devices, it's not impossible. A lot of these devices are subject to environmental conditions: they're sitting outside, and there is dirt, temperature variations, and things like that. Why it's important is that internationally Canada needs to be recognized as having a very solid weights and measures system for trade purposes, and we do have that. I think we do. And it's important that we maintain that.

The cost of goods and services to the Canadian public is going up. Food is costing you more. Gasoline was up to $1.50 a litre; it's now down, but we don't know where that's going to go.

We have Canadians who are subject to increasingly higher costs, who expect their government to provide them with accurate measurement. This is what this bill is intended to do. We recognize that because of the different mandatory inspection periods, the devices sometimes wear differently, and we've recognized that in the legislation.

Retailers live and die by consumer confidence. If in fact they lose that—and this was confirmed with Jane Savage and Peter Boag—they would suffer financial loss, and that's not in their best interest as well.

From my perspective, again, we're talking about accuracy and equity in the marketplace. We believe this bill will certainly improve that. We believe it's important for consumers and for the retailers to have that confidence in the marketplace. That's why we're here today, and that's why we hope the committee will support the bill.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

My final comment is that politicians love to be in the spotlight. We take the lumps, but we certainly do get the credit for a lot of this. But in reality, this is a bill that has been drafted by bureaucrats who really aren't siding with one side or another. We're just looking at the best interests of consumers.

In this particular case, this is legislation that is necessary, timely, and certainly needs to be passed as quickly as possible.

[Alan Johnston]

Yes. We firmly believe that is the case.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Van Kesteren.

Mr. Masse.