Industry Committee on Feb. 7th, 2019

[Celina Caesar-Chavannes]

Thank you.

[The Chair, Liberal, Dan Ruimy]

We have time for two more sets of questions.

We'll jump to you, Mr. Albas. You have five minutes.

[Dan Albas]

Thank you.

I have just a quick question for you, Mr. Goodman. You mentioned earlier that the compounding has extra costs. In response to Mr. Lloyd, you also mentioned that for the special access program, ultimately it's the person who pays for it, because their insurance won't pay for it.

Who pays for the compounding in cases where you might have a child who just cannot digest the regular product and needs to have it further compounded? Would that be picked up by the family or would that be picked up by an insurance program?

[David Goodman]

I guess there are really two different things. Special access products are products that aren't approved for sale in Canada. Compounding is a way to adapt something that is approved for somebody else. Who pays for the compounding? It depends on the province and it depends on the person's plan. It could be done by the pharmacist. It could be paid for by the formulary in that province or by the patient. Special access products are not paid for that way.

[Dan Albas]

Okay. I appreciate that. I just wanted to get a sense of whether we were driving up further costs for a particular family that's just trying to access medicine in a way that's sustainable to their child's health.

Mr. Masterson, you mentioned fuel standards and how that would have an extremely detrimental effect for both the provinces that have significant opportunities...for your industry but also the companies themselves. Can you explain what you meant by that?

[Bob Masterson]

It's one thing to say that there's a price on emissions and you have opportunities through process changes, product changes and energy efficiency to try to meet that. What's being proposed for the clean fuel standard is that the fuels themselves will have to have a carbon content. For renewable natural gas and renewable propane, what is that and how much does it cost?

I don't want to disparage my colleagues in the upstream energy industry, but at the end of the day they probably don't care. They're going to have to make a product that meets those requirements and put it in the marketplace, and everybody else is going to have to absorb those costs.

When we've met with the federal government on that particular policy, we've expressed the concern that the potential cost to us will be dramatically above the up to $50 a tonne that we're soon going to see.

I'll go back to good regulatory governance and what looks good. We were especially concerned that when ECCC started down the road to implement or to develop this clean fuel standard, the one thing everybody in the industry asked was where the economic analysis was. They said they're going to let a contract that will start in 2019 get the analysis. That it ought to be done in a couple of years. They're proposing to regulate us today. How can we wait two years for the economic analysis?

I give them credit. They've upped that a little bit and moved a little faster, but I don't think you would have one stakeholder from anyone in the energy-consuming sector that would come before you and say they're comfortable that this is a well-thought-out instrument that will achieve its objectives without significantly harming the economy. That ought to be a test back to the regulatory directive.

When I made my comment that it's a great document, but we're not seeing a zeal to implement it, that would be one of the first instruments that we'd encourage treasury to look at very carefully and assure themselves that it meets the test they put in that directive.

[Dan Albas]

In regard to the Treasury Board cost-benefit analysis from here, that usually has to be all done as one part of the process. Are you saying that they are literally going ahead with a fuel standard consultation, without actually having done any of the economic analysis to see what it would cost the industry?

[Bob Masterson]

I'm saying that when the process started, that was clearly absent. There's been some effort to address that.

[Dan Albas]

Obviously, competitiveness is critical because we are competing with the United States for these kinds of investments. Is there anything like that in the United States?

[Bob Masterson]

No.

[Dan Albas]

Thank you.

[The Chair, Liberal, Dan Ruimy]

We're going to move to Mr. Baylis. Are you sharing your time?

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'll split a bit of my time with Mr. Oliver.

Ms. Proud, you have a unique perspective. If I understand, you worked for the regulator.

[Karen Proud]

Yes, I did at one point.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Now you are subject to the regulator.

[Karen Proud]

Yes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

You touched on an interesting point about packaging and how it's not something that's as simple as that. I know you've had problems in your industry even with something like a lip balm and the amount of packaging you try to squeeze on that.

What are the lessons you could tell us from what you knew as a regulator and what you know now, working for a regulated industry, that can help our regulators? What did you not know, that you learned? How should we make sure that the regulators now are better? How could we help them?

[Karen Proud]

Certainly, the first point I touched on is essential. The people regulating need to understand the sector. Before they undertake a regulation, they need to take the time to meet with the industry that they're regulating and have those conversations, so they actually know what they're talking about.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

That's part of what Treasury Board is asking to task—

[Karen Proud]

That is not what Treasury Board is asking. It's not a requirement of a regulator to actually know the sector they're regulating at all. There's only so much you can do through a formal consultation process to actually get that understanding. I knew that as a regulator myself. I didn't know the industries I was responsible for regulating to the extent I should have.

Ultimately, you end up with much better regulation if the person drafting the regulation or instructing the drafters really understands the sector. That needs to be a requirement.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

We should put a requirement. How should we implement the requirement that you need to know more?

[Karen Proud]

I think potentially the Canada School of Public Service has a role to play. I've spoken to Neil Bouwer over there about perhaps being a conduit to bring together industry sectors and regulators to have very focused, detailed education for people working in those specific sectors. I think that is very key to get the baseline understanding.

I also think following Treasury Board policies and guidelines in the spirit they were put forward is essential as well. We don't see that in all cases. We see consultation being done very differently depending on how quickly one is supposed to get the regulations completed. We see cost-benefit analyses not really being done when they are supposed to be. We've heard of cases where they've already moved forward with the regulations and the cost-benefit analysis happens at the end. I've never actually seen any regulatory initiative where they've done a cost-benefit analysis first to see whether or not they should even—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Although Treasury Board has mandated that, it's not being implemented, is that...?

[Karen Proud]

It's not being implemented to the extent it should be and to the extent that Treasury Board would expect it to be. I think there are two reasons for that. I think one is we have regulators who are not as familiar as they should be with all the steps they should be taking and we have a Treasury Board that hasn't always had the big stick they need to use to ensure departments are following the procedures and guidelines. I think supporting Treasury Board more in their challenge function, and Treasury Board ministers in sending things back that have not been done correctly, is very helpful as well.

I firmly believe the policies that Treasury Board have put forward are excellent policies and the changes the Treasury Board has made are really progressive and would make a big difference. I've just not seen in my history, both inside and outside of government, a real adherence to those laws. I think it comes from both a lack of understanding by the regulator of those policies, but also perhaps a lack of commitment to what those policies stand for.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Okay, thank you.