International Trade Committee on March 19th, 2024

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

[The Chair, Liberal, Judy Sgro]

You have 40 seconds.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

To turn it around, we've heard a lot about these costs. What are the costs of not doing this? I assume you did some sort of analysis there.

[Ted Gallivan]

Yes. If 1% of the 20% identified by the OAG is correct, that's $400 million a year, and the system will pay for itself in the second year.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'll leave it there. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We have Mr. Seeback for five minutes, please.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I'm going to give you an opportunity to correct the statement you made in my first round of questioning.

You said a contract was signed in 2018 for CARM and it was for $370 million, or whatever the amount was. However, that's actually not accurate. In your own Gazette, which you published, you said, “In 2014, the CBSA began the design and implementation of the CARM project”. Your statement that this started in 2018 is absolutely not accurate. I have access to ATIPs, which I have with me right now, showing that in 2013-14, $32 million was charged for CARM. In 2014-15 it was $24 million, and in 2016-17 it was $12 million. I don't have 2015-16. In 2017-18 it was $6 million.

Sir, you have just made statements to this committee that, at best, are not accurate, and at worst, were an attempt to mislead the committee as we're taking a very serious look into CARM. When did the contract start? It obviously wasn't 2018, because I have the ATIPs. How much has it cost since its inception? If you don't know now, you need to produce that to the committee.

[Ted Gallivan]

I'll just repeat my original statement. I'm quite confident it was correct, because we anticipated the question and we were prepared for it.

The CBSA was provided $370 million for CARM in 2010. The first mention of CARM in the main estimates is in the supplementary estimates (B), 2010-11. We have spent $430 million to date.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

You said a contract was signed in 2018. That's what you said during my questioning, but obviously there were contracts much earlier than 2018.

You said in 2018 there was a contract. I'll go back to your own Gazette from 2014.

[Ted Gallivan]

I don't have a photographic memory, but I believe I said there were multiple contracts, with the largest and most significant from 2018. I'm happy to correct the record. We should have been clear, and I intended to be clear that there were multiple contracts. I believe if we quickly look at the blues, I said there were multiple contracts, the most significant one being from 2018.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Okay, so to be clear, if this started in 2010, which you're saying, although in your Gazette, part II, you say the project started in 2014, so now I don't know if it's 2010 or 2014.... You're saying 2010. To be clear, we want every single contract that was signed from 2010 to the present, including any subcontracts you would have signed or you're aware of, and we'd like those produced to the committee so we can finally try to see the cost of this.

I now want to move on. We know stakeholders are not happy with CARM. They are very concerned. This is a massive IT project. You must have done something internally to see if it's working as you think it's going to work. You must have done some kind of a review, some kind of beta testing, not with outside people but yourselves.

Have you done a review of CARM and how it will perform? Can you tell us what that was like and produce a copy of it for the committee? I'm not convinced, as many stakeholders are, that this is ready to launch in May.

[Ted Gallivan]

I think it is important for the committee to understand that we did both internal and external testing. We actually thought you'd take more comfort in external, which was done with stakeholders freely able to choose their test cases. You want to drive to internal testing, so I'll talk about internal, but I'm happy to come back to external.

We did both system integration testing and user acceptance testing. We have full documentation around the number of tickets raised from those processes and what the dispositions are. We've been testing this for close to two years now.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Will you produce that for us?

[Ted Gallivan]

We have already initiated the process to get that ready for you.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Just to be clear, you're going to produce both the external review results and the internal review results. You'll produce those for the committee.

[Ted Gallivan]

Yes, and the external review has a dashboard. It ran for roughly 12 weeks. The most recent one started in the fall of 2023. It just wrapped up in March 2024. It shows the absolute number of tickets and the breakdowns between critical, high and medium. It will show that, as I sit here, 99% of the issues raised during the process have been resolved. I'm very happy to present that evidence.

I think the important point is that for the external testing, businesses were invited in to use real-world scenarios. I take confidence from the fact that we did identify dozens of issues and repaired them through the process.

I think it would be misleading for me to say we're going to release this system and there are going to be no issues. There are going to be issues. What we're trying to do is prove that we have the discipline and mechanisms to address the inevitable tickets, questions and concerns that come from any big IT project.

We had five critical problems during that four-month period. Our service standard to resolve a critical problem is 24 hours.

What makes me confident is that we road-tested the ability to find a critical problem, get the right people to talk about it and resolve it within 24 hours. When you're running a $40 billion-a-year revenue system, you're going to invariably encounter issues. I take comfort from the fact that we tested our ability to find and fix problems.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sheehan, go ahead for five minutes.

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

Thank you very much to the presenters for what we've heard so far.

I'm the MP for Sault Ste. Marie, and we're on the border. My questions will be for a lot of communities. Most communities are within a few hundred miles of the United States.

A lot of the citizens in Sault Ste. Marie are very concerned about the collection of duties, dumped steel, dumping and whole bunch of other situations. Being on a border, we have land transportation, we have a deepwater port on Lake Superior and we have trains and planes.

I noted that CARM was first introduced in the budget in 2010-11. I'm going to ask some background questions just to help me figure out why it was introduced the first time. The second piece is that when we fast-forward to today, approximately a couple of months from now, CARM 2, if you will, will be launched.

I'll pause there. I'll let you answer some of the questions so far about the duties that have been collected since 2010-11.

How has it functioned over the last few years? How does it lend to the revenue side? How does it help people understand how dumped steel or other things are kept out of this country?

[Ted Gallivan]

I'll start, before jumping to Ms. Lutfallah.

Think about a cash importer, somebody who's a casual importer and doesn't deal with a broker. They do it themselves.

Right now, CARM provides a bit of an online portal, like you'd have with your online bank account. It almost becomes the de facto electronic record-keeping for a super small business. What CARM allows them to do is declare their importation ahead of time, before they get to the border. It allows them to pay electronically up front.

I'll go back to the question about future releases. In a future release, we'll actually produce a receipt, so that small cash importer doesn't have to get out of their truck or car. They'll just present a record that they've declared and paid up front and they'll cross the border.

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

Is it going to expedite wait times at the border?

[Ted Gallivan]

It will contribute to expediting wait times by letting those small businesses not present to secondary to deal with an officer. I think allowing those businesses to pay up front will certainly alleviate congestion.

I'll turn to Ms. Lutfallah for a second.

[Jennifer Lutfallah, Vice-President, Commercial and Trade Branch, Canada Border Services Agency]

I'll just add to what the executive vice-president has already said.

With the CARM system, we're hoping that there will be better compliance with trade-based rules and that the accounting, duties and taxes that are owing are therefore paid right up front. We're hoping that with this system, the compliance will be much better. It would address what you have identified as concerns for your constituents.

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

I'm sorry, Ted. You have your hand up. Go ahead.

[Ted Gallivan]

To elaborate, we're very sensitive, and we're talking to these stakeholders weekly. On some of the issues, what they're identifying as system discrepancies, frankly, we're seeing as features. In other words, they think the system is broken and it's not calculating correctly, but when we take it back and look at it, our legislative interpretation is that we think we're doing it correctly.

Some of the tension around CARM working effectively has to do with whose legislative interpretation is correct. If we're offside from the business community, we have to work together to narrow that gap as much as possible. However, that's a policy and legislative interpretation issue and not necessarily an IT defect or readiness issue.

That is coming out through integrated testing with trade chain partners, and we're not insensitive. Again, we've heard them asking for additional weeks to allow them to fully adjust their own internal systems to be in sync with what we're trying to do, and we're working actively on a plan to give them that. However, the testing has revealed we have different interpretations of how to calculate customs duty in this country.

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

As for cyber-attacks, when I had a company back in the day, it used to work for the first commerce-enabled website in northern Ontario. Everyone has always been concerned about cyber-attacks.

What kind of testing have you done and what would be the backup, if your system went down, to keep the flow going?