International Trade Committee on March 19th, 2024

[Ted Gallivan]

As I said earlier, of the $438 million spent, less than half of that, or $182 million, went to Deloitte. They specialize in accounting systems, while we are border experts.

The groups responsible for designing the system have to adapt the accounting system of large multinationals to our current needs and the needs of private sector stakeholders. It is really a process of designing and conducting trials, among other things.

Deloitte also has experience in creating training manuals. The firm provides a basic product that is used elsewhere, and we adapt it to the needs of the agency and our clients.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

So the whole issue of knowledge transfer to ensure that the system can be developed internally thereafter is part of the objective.

Is that correct?

[Ted Gallivan]

Yes, that is part of it as regards intellectual property. We built it. More than half the investment is in the federal public service, and we continue to invest in our personnel and knowledge.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next we have Mr. Jeneroux.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thanks, Madam Chair, and thanks to the witnesses for coming today.

I just want to run down what I've heard here today.

About 14 years ago, your department was given $370 million. You spent $438 million. You're approved up to $526 million and $182 million of that has gone to Deloitte. History shows that 200,000 importers have dealt with Canadians and have imported into Canada. Currently, only 24,000 have enrolled. I guess you're using 56,000 as the current number, but that still leaves about 144,000 potential customers. I think you would agree that they're still potential customers even though, historically, they've maybe not imported for a while.

You say you're satisfied that you got value for money. You also say that 75% of this thing works. Again, colour us skeptical on this side. We've seen ArriveCAN. We've seen the Phoenix system, with spending in the billions of dollars. Now you're putting in a blackout period before the program goes out, from April 26 or 29 to May 13. I suspect you're going to have a significantly higher volume of importers wanting to log on to this.

I think you guys are in a tremendous amount of trouble here. I certainly don't agree with your optimism that everything is going to go smoothly. There are a number of organizations asking for your contingency plan. You've heard it from a bunch of people around this table.

At the end of the day, would you support a full audit of CBSA contracting from the Auditor General regarding the CARM project at this point?

[Ted Gallivan]

I'll come back to the Auditor General in a second.

I just want to correct the record in relation to the 80,000 and the 200,000. There are 80,000 active importers, 56,000 of whom are registered, who represent 80% of commercial business. The deadline for them to be registered is not May 13. It's six months beyond that, and there's an additional six months if they choose to use a broker BN.

In terms of the 75%—

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Are you pleased, then, with how that's going? That seems like it's not going so great.

[Ted Gallivan]

Sorry, I just want to come back to the OAG. I would always welcome—

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I think you picked up on something there, so I want to follow up on what you picked up on. Then you can go back to what you finished on.

[The Chair, Liberal, Judy Sgro]

Can he finish the first question that he's trying to answer?

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Well, I think he picked up on something, so I don't want to waste my time, Chair.

Are you satisfied with this? It seems like it is not going well with enrolment.

[Ted Gallivan]

I've very satisfied with the enrolment progress. We would welcome an audit by the Auditor General if she sees fit to do it.

We have a rollback plan in case there is a catastrophic failure, and the reason the blackout period was extended was feedback from stakeholders.

We find ourselves in a bit of a catch-22. We had a 10-day blackout period, and we wanted to rollover for 10 days. Stakeholders were nervous. They thought that was not enough time. We extended it, and now we're getting feedback that 16 days is too long. We feel a bit like we're in a catch-22, because when there's a request from stakeholders, in an effort to be responsible, we act on it, and then we are criticized for acting on feedback from stakeholders.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

With all due respect, I think you're hearing from stakeholders because—again, this is going back 14 years—there's obviously not a comfort level that this is going to go smoothly. You come here and say, “Don't worry. Everything is going to be fine on May 13, and if it isn't, we'll figure out what happens then.” However, if I were an importer at this point in time, I would be very nervous. Quite frankly, the reputation of Canada is at stake when we start dealing with issues like this in trade. They'll just look for somewhere else to go.

Again, I don't think the optimism that you brought to the committee today is necessarily reflected among a lot of the stakeholders we're hearing from.

[Ted Gallivan]

Part of the reason we did the CES 2 testing was so that there was a clear documented record of the state of CARM. That testing let businesses pick their own scenarios. Ahead of the motion, we prepared information on that.

We did the CES testing to address the exact question you asked us. Our testimony today is that we went through that, and virtually all the issues identified by businesses themselves have been addressed.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Well then what's plan B if technical difficulties happen?

[Ted Gallivan]

We do have a rollback plan.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

You have a rollback plan.

[Ted Gallivan]

That's correct.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

So you would say that if the system isn't operating anymore for those who use it, you'd just roll back to the old system. How long does that happen for?

[Ted Gallivan]

We do have multiple layers of contingency plans. During the blackout period, as we get ready to go to the new system, say we discover there's a catastrophic failure. Of course we've developed a contingency plan for that.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I don't believe you. I guess that's the point. It's been 10 years and this much money. I honestly don't think that coming to this committee with this amount of optimism is helpful to the importers across the country.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Jeneroux.

Mr. Miao, you have five minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair, and thank you to the witnesses for being here today.

I represent the riding of Richmond Centre, which also has the largest airport on the west coast, Vancouver airport. I have stakeholders, customs importers, reflecting their concerns to me about the role of CARM.

Before I proceed to further questions, I'd like to get an understanding of the funding that was allocated 14 years ago. What issue was identified such that a new system was needed to replace the existing revenue assessment and collection system that was being used to levy duties and tax at the borders?

[Ted Gallivan]

I'll give three points briefly.

I think the first is really important, and I appreciate that you're hearing from the business community. ACROSS and eManifest are the systems that allow goods into the country. CARM is the accounting system that affects issues weeks and months after the fact. For people worried about perishable goods being stuck at the border and the speed of commerce being delayed, I think the message to give them is that eManifest and ACROSS are the systems to do that, and we're not changing them.

The business case for CARM starts with a system that's more than 35 years old. It could go down, and we could have nothing. I could be in this chair testifying to you to explain why I allowed a 35-year-old system to go into a 36th year and why we had catastrophic failure and no accounting on $40 billion of government revenue, $40 billion of revenue that the trade chain partners want to be exact.

Exactitude is the third point I would raise. The CBSA itself was concerned with the level of discrepancy in errors. the OAG certainly highlighted that through multiple reports. We want to have a modern tool that gives feedback to businesses on the accuracy of their submissions. We want the government to have control over the calculation of tax and duties, and we want there to be a level playing field within the business community. We don't want a business that short pays the tax they owe to have a competitive advantage over another business.

[Wilson Miao, Liberal, Richmond Centre, BC]

To get a better understanding, how much of the customs duties owed to the government on goods coming to Canada are not accounted for in our system?