Proceedings of the Standing Senate Committee on
Energy, the
Environment and Natural Resources
Issue 4 - Evidence
OTTAWA, Tuesday, June 12, 1996
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 12:15 p.m. to continue monitoring all matters related to the implementation and application of the Alternative Fuels Act.
Senator Ron Ghitter (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we are privileged to have with us the President of the Treasury Board, my friend Marcel Massé. The subject, of course, is Bill S-7.
Mr. Minister, I welcome you. You might wish to introduce your officials. I see you have an opening statement.
Mr. Marcel Massé, President, Treasury Board of Canada: Thank you. I feel welcome, and I must say I am beginning to feel at ease with the various committees now. Thank you for the opportunity to bring you up to date on what the government has been doing in preparing to implement the Alternative Fuels Act.
The Alternative Fuels Act was proclaimed on June 22, 1995, and will become effective on April 1, 1997, the beginning of the next fiscal year. Hindsight has shown the wisdom of providing this lead time to prepare for implementation. We need this time to sort through the numerous and complex issues that must be resolved before proceeding with implementation in an organized way. We are using the time to consult with industry to ensure their concerns are dealt with.
[Translation]
The Treasury Board Secretariat and the operating departments have been working to prepare the fleet and to develop a regulatory and policy framework for the new environment under the Alternative Fuels Act.
Considerable progress has already been made. We believe we are on target for the April 1, 1993 implementation. The necessary working tools will be ready for departments to move ahead confidently once the regulatory and policy framework is in place.
[English]
Over these past months, departments have been rationalizing and downsizing their fleets because of budget constraints. This should increase the prospects for the cost effective use of alternative fuels. Remember, reducing the number of vehicles is the most cost effective and environmentally friendly action we can take. I am now answering a question that I am sure will be asked in any case.
Departments have also been analyzing their fleets with respect to the availability of alternative fuels at operating locations and determining the suitability of various alternative fuel vehicles to meet operational requirements. Natural Resources Canada is conducting a demonstration project with approximately 200 federal vehicles to learn more about using alternative fuels.
[Translation]
As this work was going on in departments, my officials have been working with the Natural Resources and the Environment departments drafting the regulatory requirements and policy framework required by the Act. They extensively consulted vehicle manufacturers, equipment providers, fuel suppliers and associations. We received 48 responses to the draft policy documents that were distributed for comment.
Officials met with several of the organizations that accepted our offer to discuss their proposals more extensively and our direction for implementation. We received many useful comments and suggestions that improved the policy document.
We now believe there is wide support for our current direction, both in and outside government. I have asked that the regulation and policy proposals be ready to present to the Treasury Board no later than June.
[English]
I expect that departments will have the guidance and tools they need by this fall to proceed aggressively with their planning and implementation in the 1997 buying season. The secretariat is in the process of asking departments how the act might affect their fleets up to and including the first year of implementation.
In addition, departments will be reporting to Parliament annually on their sustainable development action plans - which includes vehicle use.
[Translation]
I will be following the implementation closely to ensure that the regulations and policy framework are working and that departments are moving in the direction anticipated. My officials and I would be pleased now to answer any questions you may have.
[English]
Senator Kenny: Mr. Minister, my first question is: Do you now have a database that shows the location, mileage or kilometrage, fuel use and seasonal use of all government vehicles?
Mr. Massé: I have to turn to my officials to get the answer to that question.
Mr. Al Clayton, Executive Director, Bureau of Real Property and Material, Treasury Board of Canada: The data for vehicles is provided through three private sector firms. Each department selects the firm with which they have established contact. One of the prime elements that we are dealing with in this interim period is trying to make sure the data is right. The system includes all of those elements. I would say the data is getting there. I would not say that I would take 100 per cent of the data and say it is accurate.
We have, in addition to those databases, a private contractor who has been hired jointly by Treasury Board Secretariat and Energy Canada that is looking at the data coming out of the databases, doing analyses for us so that we can get an acceptable base line. It is getting there. It is not there yet.
Senator Kenny: You do not have a base line. Do you anticipate having one soon that covers the five points I just mentioned? Will it be before the end of the summer, before year-end, before the end of the fiscal year?
Mr. Rick Andrews, Senior Project Officer, Bureau of Real Property and Material, Treasury Board of Canada: The base line would be, I suspect, available before the end of the summer.
Senator Kenny: Would you be making this information available to the private sector? For example, would fuel suppliers have access to this information so that they could then come forward and assist fleet managers with conversions?
Mr. Clayton: My understanding is the information will be available, yes.
Senator Kenny: So if company "X" had an aggressive plan for Winnipeg, they could go to fleet managers in Winnipeg and the fleet managers would say, we have this number of vehicles, this number of years old, this truck over here uses "X" number of litres of gasoline a year - that information would be made available?
Mr. Clayton: Frankly, if you went to Winnipeg, I am not quite sure whether you could get it. That is something we can work on. How it gets out of departments, yes, it would be available.
Senator Kenny: At the end of the day, this bill will affect one vehicle at a time and one fleet at a time. There is no magic wand for application right across the country. Basically we will be looking at local fuel suppliers contacting local fleet managers and saying, "What works right in your area? What are your needs? How can we show you how to save money and clean up the environment?
It will mean checking the number of litres that the vehicle that is about to be replaced uses to decide whether or not it fits the category for an alternative fuel. If you are not making that information public on a local basis, it will be really tough for the local fuel suppliers, whatever fuel it is, to come and make a pitch. Will you be making that sort of information available?
Mr. Andrews: We will make it available, I am sure. As an aside, a mechanism based on our consultations with industry is being structured in-house. It will allow departments to make the cost effectiveness calculation, using the database and this tool that we are providing to them. That, combined with their operating criteria, should give them a good handle on what vehicles should be converted to alternative fuels. I am hoping that they will be aggressive in approaching the alternative fuel suppliers.
Senator Kenny: Frankly, there is a bit of a feeling that some of the suppliers are sitting back and behaving like order-takers. They are waiting for requests for proposals or RFPs to come out. When they come out they will bid. There is a feeling in some circles that some of the fleet managers are not entirely with the program yet.
One way to make sure or to improve the chances of a good working system is to make sure the data is out there, so that, if you have an aggressive supplier in a particular area, they can assess the data and come in and say, "Look, here is what we think we can do for you." The next supplier will do the same, giving you a variety of pitches. If you do not have the data out, people will be scrambling around for a long time or waiting for the RFPs.
Mr. Massé: Mr. Chairman, I think Senator Kenny is right in this game, because it involves change from traditionally accepted practices. You have a number of people, fleet managers included, who have to be persuaded that this is the right thing to do. What Treasury Board can do is put the right structure, the right regulations in place, then, of course, try to educate the various people involved, including the fleet managers, and that involves getting the data out, which is the point the senator was mentioning. Certainly we will endeavour, first, to get the right data and then to get it out as quickly as possible.
Senator Kenny: Terrific. You mentioned that you were reducing the size of the fleet. When the committee looked at that issue - I just raise this in passing, Mr. Chairman - the figure of 25 per cent seemed to pop into the mind of some committee members. It seemed that there were about 10,000 vehicles in the government fleet, including Crown corporations, that were excess to requirements. Are you folks looking at that sort of reduction over the next few years? We quite agree with you that it is the best form of environmental protection. It will protect Her Majesty's purse as well, if you can unload some of these vehicles. It is the first line of defence, and it makes much more sense to get rid of them than to convert them.
Mr. Massé: I have been looking at that question in terms of the program review and reductions in government expenditures and downsizing. I have received some figures in the past year, excluding the RCMP. The number of vehicles in the federal fleet has dropped from 18,800 to 17,400. That is a decrease of 7.5 per cent in one year, and we hope to continue the process.
On the purchase of new vehicles - I am saying this from memory, so correct me if I am wrong - we went from about 3,420 in an average year to 504 last year. So, clearly the downsizing has been reasonably quick, and we hope to continue that trend in the next few years.
Senator Kenny: Just so that onlookers are not confused with the numbers, minister, the bill covers both the departmental fleet plus Crown corporations, and the total that we had was closer to 39,000 vehicles, not 18,000.
Mr. Massé: This depends on how you define the federal fleet, and I have excluded the RCMP. The RCMP is probably the biggest single user; with 8,600 vehicles.
Senator Kenny: Yes.
Mr. Massé: Do we include them?
Mr. Clayton: No. The 39,000 includes Crown corporations, of course, as well, but not in that number -
Senator Kenny: But they are caught by the bill.
Mr. Clayton: In the act.
Senator Kenny: It is apparent you are keeping the vehicles you have longer. The draft regulations or the cost-effective analysis refer to a four-year payback. Have they been handed off already?
Mr. Massé: I know the basic figures, the cut-off point in six years and so on, but I do not know the regulations well enough.
Senator Kenny: When we were looking at the legislation initially, the fleet seemed to be turning over about once every five years. If the turnover is changing to six years or longer, it seems to me that perhaps the payback period might be a little longer, and that would provide for more environmental benefits. Have you given any consideration to extending the payback period, given that you are extending the ownership period of the vehicles?
Mr. Clayton: The draft policy which you referenced and that we have put out for consultation had four years. As a result of representation, we have removed the four-year criterion. We are not putting in a specific criterion, but are saying that you have to do it in relation to the reality of how you are now operating, so that - and the minister's numbers sort of start to indicate that - as you downsize, you start to get rid of those types of vehicles that you do keep for longer periods. Low usage vehicles are the ones you tend to keep longer.
You can assume that over time as you downsize you will have shorter turn around intervals, so we did not want to put a specific time. We removed that four-year clause.
Senator Kenny: That leads me to - I will not call them road departments but I am tempted to - the question of some of the departments that seem to be either dragging their spurs or to be playing games with the system.
Let us talk cases. The Department of Foreign Affairs, in reply to the question about how they were doing in terms of vehicle purchases this year and how many of them ran on alternative fuel, said that all of their vehicles were capable of running on ethanol and that therefore everything was in terrific shape. As we all know, any gasoline-powered vehicle can run on a 10 per cent or less blend. These folks clearly are not playing ball with an answer like that. I mean, it was amusing, I suppose, but it does not give you the impression that that department has grasped the spirit of the bill yet. Do you have any comments on that situation?
Mr. Massé: I have a general comment, of course. The role of Treasury Board in that bill is to put together the structure, get the data and monitor the departmental performances. We will be monitoring, especially at the time they buy new vehicles, to make sure that they apply the rules. We have asked them to provide regular reports so we can check on how well they are applying the law.
We are also running training courses, basically for people in charge of the fleet, in order to change acquired habits; and that, I think, is the proper way to do it. It may take a bit longer, but in the end it will give better results.
In terms of the regulations themselves, we will make sure that in the fall, which , by the way, is the first buying season preceding the coming into force of the act on April 1, 1997, departments have put in place the regulations, and so on. At that point I am sure we will have serious discussions with the various departments about their fleets and what they can do to implement the law and the regulations.
Senator Kenny: I understand that you are not directly responsible for your colleagues, minister. Having said that, you have a seat at the table, which none of us do, and it occurred to the committee that to get a program like this moving forward, leadership by example would be an important issue.
We are all, obviously, curious as to how your vehicle is fuelled and how your next vehicle will be fuelled. Seriously, we wonder whether you could use your well-known persuasive abilities on your colleagues to persuade them to set an example when they are buying new vehicles and ensure that they do lead by example.
Mr. Massé: There is no doubt that amongst ministers we talk about these things often. I mean, certainly one of the first rules I have learned is that you do not make a promise that you do not know if you can keep or your colleagues can keep. We are in the middle of -
Senator Kenny: A by-election.
Mr. Massé: That is one example.
Last fall Mr. Eggleton and a number of his colleagues, including the ministers of natural resources and the environment, organized an industry-government forum to promote alternative fuels in the federal fleet. We are making an effort to show leadership. Also, the group at the official level has become more and more convinced as they have developed the law and the regulations, that this thing makes sense. Like all converted people, they are even more enthusiastic than the creators and they want to persuade their colleagues that they have to apply the law.
Also, once the policy and regulations are approved by Treasury Board - and I think it may be next Thursday, June 20; at least, it is on the draft agenda - I will send a letter to my colleagues to inform them that the law has been passed and the regulations are in place and that they have to show by example that we want to protect the environment.
They will, of course, apply the law as drafted in terms of cost effectiveness, operational feasibility and so on. There is no doubt in my mind that all those interested - including you, senator - will have to continue to use persuasion in order to implement the purposes of the law.
The Chairman: You did not have advance notice of that question, Mr. Minister; did you?
Mr. Massé: No, but it makes sense to ask such a question.
Senator Taylor: I have three fairly short questions. I was a little puzzled when you were talking about your database study and what you are putting together for the cars because, in my experience, the only limiting factor is location, whether or not you can access it. There is no such thing as an automobile that pollutes less on gasoline than alternative fuels or an automobile that runs more efficiently. In other words, it is a case of accessibility.
That should be very easy. Just putting pins in a map should be able to tell you. At the end of the summer you may need that map. Why you are going through all the rest of the steps.
The second question is on capital cost. My impression is that bureaucracy, maybe because of the incessant push of trying to reduce the deficit, is stuck with trying to keep capital costs down. There is no such thing as an alternative fuel vehicle that runs cheaper than an ordinary vehicle. It seems to me you have put your bureaucracy in a tough spot if, on the one hand, you want them to reduce capital costs and cut so that you can show, in the short term, less expenses, and, on the other hand, you are nagging at their heels to buy the alternative fuel equipment, which has a greater cost.
Have you put anybody to work on a system whereby the bureaucrat can show that cost without it coming out of his hide in the budget; it comes out somewhere else. Maybe you should set up something like the National Housing Act, another act that will flounder, but dealing with converted automobiles. Has any thought been given to that possibility so that the capital cost of buying alternative fuel equipment will not come out of the current budget of the department working on it?
Mr. Massé: I will give you a partial answer, and I am sure that my colleagues will want to complete it. I asked some of the same questions - how do you affect the size of the fleet, is it through budgetary items, do you buy vehicles expecting them to last for a long while? Basically the fleet manager uses a formula to calculate the average life of the vehicle. He looks at the costs and includes, of course, cost of fuel at the pump.
The calculations show that if you use your vehicle for more than six years - of course, it depends on technology and change - it becomes cheaper to buy and use an alternative fuel vehicle. Therefore, in terms of the capital cost formula that is used by fleet managers, given certain assumptions, it makes sense in purely cost terms to use an alternative fuel car.
There is, however, in your question, another aspect: Is this formula the right one because it only takes into account the costs and not a number of other factors such as the cost of cleaning up the environment or the cost of respiratory diseases, or whatever. These things should eventually be taken into account, but we certainly do not have the formulas at present to be able to take these various sophisticated elements into account.
Mr. Clayton: If I may get back to your first point about information systems. The reason for the more complex information systems is, first, related to the Alternative Fuels Act itself. Of course, you have to make decisions about individual vehicles. Those decisions, including not only the decisions of the individual manager but also private industry, have to do with questions about consumption of fuel, kilometrage and so on. On top of that there is a separate initiative which is compatible with the government, to reduce CO2 emissions in its fleet by 30 per cent by the end of the decade. That is not only through alternative fuels but through a lot of other factors, better driving habits and so forth. The way to get those numbers is also through that individual data by vehicle. Essentially, the data are collected when a car goes into a garage through the use of a card. There is a whole system for compiling that sort of data. Again, it is standard practice for large fleet managers.
On the question of capital costs and purchasing new vehicles, departments tend to have the same manager dealing with both capital expenditures and savings in operating expenditures, such as those that would come through using alternative fuels. The managers have control of that pot and can monitor the types of trade-offs to be made over a period of years. To use the Treasury Board language, they can then cash-manage the types of trade-offs that have to be made between those two types of expenditures.
Senator Taylor: I think, with all due deference, that you are really complicating the thing. I think it is quite simple. Alternative fuels are cheaper, period. I have seen no evidence anywhere to the contrary. Nobody has even been audacious enough to try to suggest anything else. You are using all sorts of computations, measurements and so on. If you can find just one article, anywhere, that shows that the other fuels are better, I would be most interested in seeing it.
Let us go on to the next question. Alternative fuels are supposed to be more economical and better for the environment, and a vehicle with a motor built for alternative fuel is even more efficient. Has your department thought about bulk purchasing that type of vehicle from the automotive industry? I know we have spent a lot of time on submarines and helicopters, and maybe we should spend some time on old-fashioned, four-wheel cars with two seats. I am just wondering if we have thought about it at all, because the manufacturers are not in this because it is a spot market here and there. If your department were able to say to the Big Three, "We can purchase 3,000 or 5,000 cars next year or over the next few years that are specifically built with motors for alternative fuels. Have you thought of that at all?
Mr. Massé: I have some thoughts on that, but obviously they would have to be refined. We already get a discount on the fleet we buy because we buy -
Senator Taylor: That is the old, dirty cars, naturally. They should give them to you free, really.
Mr. Massé: We get a discount of about 30 per cent below manufacturer's cost. If we were to order vehicles that are manufactured in much smaller runs, such as cars with a special engine of that type, I am not sure, first, that we could get them at a comparable price and, second, that we would get such a discount. However, it is a good idea to investigate that possibility and to see if we could get better prices for that.
Senator Spivak: You have been talking about learning how to walk, and I want to know if you will learn how to run. The point is that, as you have said here, this whole exercise has to fit into a sustainable development plan. Some of the elements of that sort of plan are the issue of climate change and the draft framework convention which has to do with direction of emissions.
I want to know: Quantitatively, what are you expecting? What is the share of the federal government fleet that is your objective, your goal, in going through this whole exercise? Do you have those kinds of figures? Do you know what you are aiming at?
Mr. Clayton: I am not sure whether previous comments apply to your question, but the government has established also, through Treasury Board policy - the policy which the minister mentioned will probably be approved next week - a 30 per cent emissions reduction target for the federal fleet, which will be incorporated in the government's sustainable development action plan.
Senator Spivak: Is that in CO2?
Mr. Clayton: Yes, that is in CO2.
Senator Spivak: Is it in nitrogen oxide?
Mr. Clayton: That is in CO2 emissions.
Senator Spivak: What is it?
Mr. Clayton: That is CO2 emissions.
Senator Spivak: Just CO2 emissions?
Mr. Clayton: Yes, just CO2 emissions.
Senator Spivak: Mr. Chairman - and you may rule me out of order - the sustainable development action plan is to be reported to Parliament annually. "Sustainable development", of course, usually means to most people "sustained development in business", but that is not the latest thinking - it requires resource productivity and total or full cost accounting and total quality management.
Has Treasury Board developed any such guidelines? What are the objectives and goals for the departments with these sustainable development plans, and are those plans available to us? We are also an environment committee.
The Chairman: You are moving slightly off Bill S-7. However, if the minister wishes to respond, it is at his discretion.
Mr. Massé: Mr. Chairman, you are right, the answer to that question lies much more in the realm of the Department of the Environment.
Senator Spivak: So, the Treasury Board is not dealing with these sustainable development action plans, it is Environment Canada?
Mr. Massé: Yes.
Senator Spivak: They are not going to Treasury Board?
Mr. Massé: No. Environment Canada will set the norms and the definitions. As you say, there is a fundamental difference between "sustained development" and "sustainable development." You have all kinds of guidelines to develop in this field, and with use you will have to refine your guidelines.
[Translation]
Senator Nolin: Mr. Minister, approximately one month ago, we met with the automobile manufacturers and I was personally very surprised to find that they were not aware of Treasury Board's existence; they didn't know what role Treasury Board played in the development of all the regulations necessary for the implementation of Bill S-7.
Taking into account that car manufacturers play an important part in that chain since they are the ones who, at the end of the day, will provide the equipment necessary for the implementation of the objectives of the bill, have you been in contact with them over the last month? Did you ask them some questions since I read in your notes that you consulted with them?
I think that those who got in touch with them were mostly your officials. It came as a surprise to me since we are talking about the three main car manufacturers in North America and they are, by the way, probably your three most important suppliers.
Mr. Massé: Yes. It depends what elements of those companies you are talking about. Since I met with them when they were doing some lobbying, I am convinced that they are very well aware of the existence of Treasury Board.
Senator Nolin: I am mostly referring to people in charge of alternatively-fuelled vehicles.
Mr. Massé: I was going to answer that some people in those companies are obviously very familiar with government since they interface regularly with us.
I think that you are right to state that manufacturers, particularly those who deal with the technical aspects of manufacturing or marketing, were probably not aware of the details of what was being done. That's why we met with that sector of the industry and I mentioned that we have met with 48 people who not only belong to the three big companies you referred to but also to various sectors within those companies. We briefed them extensively mainly on the alternative fuels policies and on what was being done by Treasury Board.
We also had some information meetings on that topic because we agree with you that they were not sufficiently well informed.
Senator Nolin: The people we heard are those who are commercially in charge of the promotional activities with the departmental vehicles buyers and I saw them as being that industry's stakeholders; they are essentially front line stakeholders.
They do have to deal with the buyers of the various departments. Isn't it your feeling that the people who were talking with each other are not the right ones?
Mr. Massé: No, because, obviously, we are trying to give the industry a better understanding of the situation with the seminars I mentioned but we also hold seminars with our fleet managers in order to make them aware of their responsibilities.
We therefore work on both ends. We are trying to provide information to the companies which, as you put it, interface with the people in the departments. We are also trying to make the people in our departments aware of the new obligations they will have when the law takes effect or that they will have to implement starting on April 1st, 1997.
Senator Nolin: If I may, Mr. Chairman, my last question will be about the manufacturers who expressed their interest in being given advance notice or even in being able to share in the development of those famous regulations. Did you specifically receive any comments from those manufacturers and what was the general thrust of those comments?
[English]
Mr. Andrews: The manufacturers are regularly involved with PWGSC on an annual basis and the discussion of alternative fuels is continuous. With respect to the actual policy documents that were distributed for review, including to the manufacturers, they were supportive, but there were no in-depth comments provided.
[Translation]
Mr. Massé: If I may give you an additional answer, the regulation will normally be submitted again to Treasury Board, to the ministers who make up Treasury Board, for their approval on June 20th.
Following that, they will be finalized before their insertion in the Gazette or, in other words, before being made public. At that time, you will receive the companies' responses in addition to the responses we already obtained because, in accordance with the normal process, as you well know, you may then get all kinds of comments that may result from changes to the regulations.
Senator Nolin: Are the consultations you recently had with...
[English]
Is that a recent intervention or exchange that you had with the manufacturers?
Mr. Andrews: I am not sure what you mean by "recent".
Senator Nolin: Less than a month?
Mr. Andrews: No. It would be during the consultation process that took place over two months ago. Then it was a case of consolidating the information we received and making the necessary changes. They were involved in the normal course of the distribution of the information we sent to everyone.
Mr. Clayton: For more information, senator, there are 32 basic types of vehicles in the government's catalogue and in nine of those types are alternative fuel vehicles that have been submitted by manufacturers as part of the government tender process. That is run by the Department of Public Works and Government Services.
Senator Nolin: Yes. Somebody is listening to the question and sending the answer.
The Chairman: Mr. Minister, I am heartened by the fact that, by this month, Treasury Board will have the regulations for review and that they will be made public no later than the fall, resulting in purchase contemplations by various departments to meet our objective of April 1 of next year. That is excellent progress.
That process is also very important in terms of what is in your guidelines, particularly in terms of your definitions of what is cost-effective and operational feasibility. Those definitions, in a sense, can make or break the bill. As a result I am wondering where you the input for those definitions is coming from, what approach you are taking, what parameters you are utilizing in order to come to those definitions. We would urge you, of course, to have the broadest type of definition and one that is not restrictive, because that will be the out for the departments, if they choose to act contrary to the spirit and intent of the legislation.
Can you or your officials enlighten us as to those definitions, which are so fundamental to our exercise?
Mr. Massé: I could ask my officials, but they will tell you that they have looked at costs in terms of the normal standard definitions that economists use, including the most important one, cost of fuel, being the cost of fuel at the pump.
The Chairman: That worries me when we turn it over to the economists. I do not see many negatives in the sense of what we have been talking about. To me, it is not a very complicated matter. We know it is environmentally friendly. We know that it is cost-effective. We know, depending on the length of time that you want to allocate to the life of a vehicle, that even conversions are economical. I am interrupting, but I am trying to make a point here which is obvious.
Mr. Massé: I think your point is right. The role of Treasury Board in this exercise is to try to redefine cost effectiveness and operational feasibility in ways that are closer and closer to the government objectives. There is no doubt that in the course of discussions with departments to get agreement on, for example, exactly what the formula means or what factors are taken into account, there will be a refinement of definitions and, therefore, a positioning by departments that has to be more reasonable in the end than at the beginning. I am not naming any departments, but you probably know them.
There is no doubt in my mind that as we proceed we will reach a point where we will be able to use much better - I think the term we used was "social criteria." They are not exactly social, they are also economic - the effect on the environment, the effect on health, and so on. At present it is extremely difficult to quantify these elements and we need much more information. With regard to the definition of "cost effectiveness", which is to be applied to the whole government, we need to be able to justify the changes in formulas to be in a position to ask departments to put them in place.
The point that you are making is correct, that there may well be a tendency at first to have a purely economic definition of costs and benefits and so on, that after a while it will become clear that we have to change the definitions to give more relative weight to the environmental effects. In order to do that, we must be in a position where we can quantify them reasonably well.
The Chairman: I would hope, Mr. Minister, that you would put the most liberal interpretation on these guidelines that will be effective and encouraging to the departments. Are there any other questions?
Senator Kenny: Following on your point, Mr. Chairman, I have one question, and let us use operational feasibility as an example. In hearing the RCMP's testimony before us on the last two occasions, we know that they have access to propane just about everywhere. The Bronson study showed us that. We know that probably a third of their fleet has access to natural gas.
We put the question to them: What do you do when you go into a remote area and you do not have access to a fuel? The answer was, "Well, we go to a fuel supplier and have them set up a gasoline tank, and we refuel our vehicles." The question is: Will there be anything in the regulations that says, "Well, if you have to set up a remote fuelling station, set up an alternative fuel remote fuelling station."
Mr. Clayton: There is nothing to that effect in the regulations or the Treasury Board policy at this stage, I do not believe. I look to Mr. Andrews as the author who has gone through 55 drafts.
Mr. Andrews: I just have to remember which one I am talking about. There is something in there relative to this possibility. It does not quite address your question, but it does say that the inconvenience, or slight inconvenience to get alternative fuels is no excuse for not using it. That is the extent of it.
Senator Kenny: In fairness, there will probably be a lot of inconvenience to these folks starting up. We are bending people out of shape with this bill, but once it gets going it will become increasingly convenient. The trick is how to draft your regulations to get people to cope with the initial inconvenience to achieve the savings that are down the road.
I would like to come back to cost effectiveness. I took a fair bit of comfort from your earlier iteration in that you had four years for payback. I was afraid that you might come up with three, and when you came up with four I thought, "Well, this is terrific, these guys are on side." Then I started thinking more about keeping the vehicles longer, and I must confess to a sense of unease given that you do not have a guideline saying that you have got to get the payback within a certain period of time. I can see folks saying, "Well, let us have a two-year payback then since Treasury Board is silent on this." That is the loophole we will drive through, so we can keep the status quo. How will you stop folks from sticking with the status quo if you do not have a numerical payback period?
Mr. Massé: I do not know whether that is feasible, but we will look at it. However, I would like to give you a bit of reassurance. There is more and more acceptance that alternative fuels will be one of the options of the future. It is difficult to change large bureaucracies because they are set in their traditional ways. In this case, what I hear from my colleagues and what I see in the various parts of the bureaucracy is a greater and greater acceptance of the fact that they have to consider this option, that they have to make the calculations, that they cannot use cost effectiveness and operational feasibility as escape clauses. They are looking at it in much more realistic terms now. They have accepted that alternative fuels are coming, that they have to look at that option, that there are targets to be met and that they cannot avoid the problem. Then slowly you start them on the road to co-operation.
Senator Kenny: If I can end on a note that would warm the minister's heart, Mr. Chairman, yesterday we heard testimony from the City of London Police Department which has had experience with alternative fuels since 1984. Over a decade of use with 60 vehicles, they have saved an average of $200,000 a year for the citizens of that Ontario city. That is two million bucks for 60 cars. Think of what you could save with 8,000 RCMP vehicles.
The Chairman: Mr. Minister, Mr. Clayton, Mr. Andrews, may I thank you very much for sharing your time with us. It is always nice to see you. We look forward to seeing your guidelines and maybe having the opportunity of chatting with you in the next year or so.
The committee adjourned.