Industry Committee on Feb. 7th, 2019

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[The Chair, Liberal, Dan Ruimy]

We're going to move to Mr. Sheehan.

You have seven minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

Thank you to all our presenters. That was very informative.

Karen, you had mentioned that you had watched Tuesday's testimony from the Canadian Federation of Independent Business and the Canadian Chamber of Commerce. During that time, I had started some questioning, but I didn't get into this one particular question that I would like to propose to you.

As you know, I used to work a lot with small businesses, helping them start but also scale up and grow. I'd like you to comment on the health regulations as they relate to small and medium-sized business' ability to scale up and, in particular, raise that necessary capital. You're in a pretty capital-intense business in the health business. Would you care to comment on that?

[Karen Proud]

Our sector is highly regulated. The testimony I heard on Tuesday talked about just running any kind of a business and all the red tape that's involved in that. That applies to our sector as well, just the red tape involved in running a business and the CRA and all of that. On top of that, our companies also require approvals for products from Health Canada, depending on whether they're trying to manufacture here. There are all sorts of rules around packaging requirements.

So it is very difficult for a small company to get a foothold in Canada. One of the very difficult things, as well, is with regulations that are not harmonized between Canada and the U.S. In many cases, while they're growing their business here in Canada, it's not easily transferable to then growing globally. If we have different requirements here that are not recognized elsewhere, we can have a good run at the Canadian environment, but not outside of Canada. If we have—which we do now—very different packaging requirements, for instance, for our products, we have to then look at a completely different approach if we're going into other countries.

Certainly in developing the regulations, there is no view to how they affect small business. I think it's important to make clear that health and safety for our sector is the number one priority and we fully agree with that and we think that's highly important. On top of that, there's no look from Health Canada at the economics of what they do, which is why we were so encouraged to see, in the economic update, this idea that even the regulators who regulate in the health space would have some responsibility to look at how their regulations affect companies from an economic perspective. That is not to say that would trump health and safety; it never should, but it should be a consideration, which just doesn't happen in this country.

It's very hard, especially in a highly, highly regulated sector, for any company to start small and grow.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

Sticking on that, then, I'm also on the international trade committee and we're undertaking a study on how small and medium-sized businesses can take advantage of the new trade agreement with Europe, CETA, and the comprehensive and progressive trade agreement, the former TPP.

You made a comment about Canada and the United States. What about looking at Canada-Europe and Canada-Asia? Could you comment on that, please?

[Karen Proud]

We're actually doing a study right now, as I mentioned, with Deloitte. We've just started looking at Canada's competitiveness. It's to try to assess where we are in relation to some of the major trading partners. Our study looks at Canada in relation to the United States, in relation to the U.K. and in relation to Australia, specifically looking at the regulatory burden and the return on investment for companies investing in Canada. While we may have the same types of regulations as we do in other countries, the return on investment is very different depending on which country you're in and where some of the incentives are.

On some of the trade agreements, as we were inputting into them, we were looking for similar incentives as they had in other countries. For instance, in the United States they have three years of data protection for consumer health products—not the prescription side, but the consumer health products. We were looking for something similar so our companies here could benefit from that, but in those trade agreements Canada had the option to opt out of that sort of protection. It's the same with the EU where there's a year of protection; but Canada doesn't have that. If we're looking at how these trade agreements can help, we're seeing that our position was really trying to get the same benefits for Canadian companies as the companies have in other countries so we can work on an even playing field.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

I'd like to turn over my time to the parliamentary secretary for health, John Oliver. He has a quick question.

[John Oliver, Liberal, Oakville, ON]

Thank you very much.

My question is for Brian and MEDEC.

In December, Health Canada released its action plan on medical devices. It had three principal focuses. In part, it came out of the concerns that some media had with complications from some devices.

First—and you've commented on it—is improving how medical devices get to market. Your presentation really hit on that, and the advice that you've given appears to be heard well by Health Canada.

There are two other areas, though. One was strengthening monitoring, and following up that would include increasing inspection and enforcement by Health Canada regulators. The second was improving information to Canadians. Right now, if there's an incident with an existing licensed piece of equipment, it requires an FOI request to get that information released. Health Canada is looking at, I believe, creating a database of information so that Canadians can more readily access it.

Could you comment on those latter two areas of focus by Health Canada to improve safety for Canadians?

[Brian Lewis]

I'll start on it, then Diana will finish.

What we found with Health Canada, with everything that was identified when the International Consortium of Investigative Journalists was looking at this, is that 80% of the work that the consortium was indicating needed to be done, Health Canada had already started. They were well ahead in the process, realizing that there was a need there for all the things you're talking about.

Diana, you have some of the specifics.

[Diana Johnson]

To your point about the surgical database, that went online just at the end of last month, which was actually much sooner than predicted in the action plan. It had quoted December of this year for that to be available.

We know that Health Canada had been working on that database for a number of years and we're really pleased to see that it managed to get brought forward as a result. So that's already in play.

With regard to the inspections, that is a concern, based on what we said earlier. The number of audits, especially for small businesses, can be very stifling because you're using the same resources that you would be using for your innovative product development as well.

We don't know any of the details that are being proposed yet with regard to that. We don't know whether it's more to increase foreign inspections, which is a good thing, or whether it's to increase local inspections, which we're already having a lot of. There is a grey area where we don't know what the plan is as yet.

[The Chair, Liberal, Dan Ruimy]

Thank you.

Mr. Albas, you have five minutes.

[Dan Albas, Central Okanagan—Similkameen—Nicola, CPC]

Thank you, Mr. Chair.

I'd like to thank all of our witnesses for their expertise today, particularly on sharing how red tape interferes or can sometimes take valuable time and resources away from the work we do.

I'm going to start first by speaking with Mr. Masterson from the Chemistry Industry Association of Canada.

Sir, you've pointed out that there seems to be a bit of confusion as to who has responsibility for dealing with your industry and protecting the environment. Obviously, there is jurisprudence that has happened over time, saying that there is a shared responsibility by the federal and provincial government.

Can you give us an example? You said there's about $10 billion of investment that's come in. Can you give us an example, in some of these newer investments, as to where you would have overlaps between the federal and provincial, and perhaps even local government?

[Bob Masterson]

I think the first thing to note is where those investments are taking place, largely in Alberta. I think one of the reasons is that Alberta continues to have a reputation of not having a lot of problems with regulatory competitiveness.

Ontario has historically had a very large and important chemistry industry and it has not seen very much investment for nearly three decades. I think that is one of the reasons we're seeing the Ontario government now being much more focused on that. What happens if they can't make a case with the global investors to put their money into Ontario?

There is a lot of overlap, and it's not to say that all areas go poorly. I gave the example of air quality, but it depends on every issue that comes up. Workplace regulations for chemical exposure would be other examples. Transportation, rail issues...people forget that yes, we have class I railways regulated by the federal government. We also have the provincial railways. They all play important roles in moving products from facilities to customers. There's a wide range.

Right now, if I were given the opportunity to say what's chronic and very concerning for the economic future in our sector, it is the overlap, duplication, lack of collaboration on the climate change file and it goes across all levels of government.

[Dan Albas]

Can you give us some examples? Obviously the national carbon tax, I'm sure would be of interest in Ontario. What other things would you have, because costs are associated with that? However, there could be other provincial regulations that might make it more difficult to see an investment.

[Bob Masterson]

The so-called federal backstop is not as big a concern. I think we can get to the right place. The sectors like ours that had big exposure in Ontario will have to work very quickly after the change of policy in the government, and we're working very closely with officials. We wish they'd take a bit more time so we can get to the right place, but I'm confident that will be there.

But it's the realm of other policies.... Certainly the clean fuel standard is one that you've heard a little about, but I guarantee you're going to be hearing a lot more about in the months to come.

We've had formal submissions to the government from provinces such as Ontario and Alberta, saying they don't understand what you're doing. We need to take our time with this. There are a lot of concerns about that policy. We don't see a lot of engagement on that.

Again, provinces like British Columbia, Alberta and Ontario already regulate fuels. The federal government has a role too, but what is the correct balance of the role? They're uncertain, and that is a very problematic area.

Almost everything on the climate change file—and this was talked about also—is the volume and pace of work. So it's not just the regulation, the price on the emitter. Our individual member companies probably have seven different initiatives under way—emissions from cogeneration, federal and provincial; emissions on boilers, federal and provincial.

It's not just climate change and greenhouse gas emissions, it's also air quality emissions and what you're doing to produce emissions on greenhouse gases could drive up your air quality. Are these two groups of people talking to each other across government and governments? The answer is no.

Even within a department, are the air quality people talking to the climate change people? No. Are the federal people talking to the provincial people? No. That creates a lot of confusion and time.

The gentleman next to me spoke about the costs, paying fees, but when you get involved in processes like this, you're talking about very high costs to the companies involved as well.

Mr. Masse, just to share one example for you in our sector, which would be similar, we have a chemical distributor that has asked a very large client when it is going to bring those biocides to Canada. As we now have all these water-based paints you have to use a lot more biocides in them. We didn't have that problem with solvents.

One of the large companies in the U.S. has a new product; it's environmentally friendly, it's a better product for everybody. The company in question said they'd never bring that to Canada. Why? They said because it's going to take seven years and it's going to cost us way too much money. If they just blend it into the paints and coatings in the United States, where we're already allowed to do it, they'll just ship those paints and coatings into Canada with that product already in them.

All you've done is disadvantage the Canadian producers of paints and coatings, and you have not given any benefit or protection of the public or the environment.

Those are the examples. We're just saying take your time, think about the reality of what you're doing and listen to the good advice from the people who are really affected.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Jowhari. You have five minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for your testimony.

Mr. Goodman, at the outset of your remarks you mentioned compliance audits and you highlighted that Canadian companies go through the audit with Health Canada, and the foreign entities are now audited by foreign regulators and that puts both companies on an equal level. Can you expand on that? I want to make sure I understood it correctly.

[David Goodman]

The majority of the surveillance of foreign companies is done by foreign health authorities, because Health Canada doesn't have the resources to go around to all the countries where the products are made and do the inspections themselves.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Does that mean we easily accept their certification and bring the products to Canada whereas Canadian health standards are much higher?

[David Goodman]

There are a number of agreements mutually recognizing other health authorities' inspections, but when it comes down to whether the foreign health parties are asking all of Health Canada's questions the way that Health Canada is asking those questions, I don't think that's the case.

If Health Canada is going to be very concerned about one issue and come to us when we are producing something in Canada and make us expend a lot more to remain compliant, it's only fair that Health Canada would expect foreign companies to follow the same practices. That's the part where there are differences.

[Majid Jowhari, Liberal, Richmond Hill, ON]

One would say our standard is higher and their standard may or may not be at the same level as ours, yet through the free trade agreements now these products are allowed to come to Canada.

[David Goodman]

That's correct. The example Mr. Masterson gave also applies in some cases to pharmaceuticals and the treatment of excipients or other products that are incorporated in the products. If we do it here, we have to go through a rigorous pedigree and an audit, and the other side will probably not look to see if the other foreign companies are doing the same thing. That gives us a lot of costs and a disincentive to produce the products in Canada.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay, thank you. I'm going to go to Ms. Proud next.

You talked about the consistent application of the policies. Specifically one solution you suggested was sectoral education. Can you expand on that one vis-à-vis the small businesses and the fact that they may not have the ability or the time to do this? How is sectoral education going to help?

[Karen Proud]

I think it's so important for the people who actually regulate industry to understand what the industry does and how it works. We find more and more frequently that while there may be people within departments who have regulatory expertise, they don't actually understand the industries that they're regulating at all. We've run into that problem where in theory what the government is trying to do may make a lot of sense, but in practice it's just disastrous.

[Majid Jowhari, Liberal, Richmond Hill, ON]

In what sense do they not understand the industry? Is it how it operates, the SWOT analysis within the industry, or what the constraints are? What is it that they need to understand?