Health Products and Food Branch Management Council Workshop
"THE ROLE OF THE REGULATOR"
September 23, 2003

Speech by Gaétan Lussier, Chair
External Advisory Committee on Smart Regulation

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Introduction

Thank you for that kind introduction.

Thank you also very much for inviting me to open your Branch Management Council Workshop. As you may know, being the Chair of the Committee is not a full time appointment. So I will not be able to accept to meet with all the Regulatory Branches of the federal government. However, when I received your invitation, I thought it was important to meet with you and here is why.

First, you have a very complex and challenging mandate and I want to acknowledge the important contribution that you have in making Canada a healthy and safe country. Second, the corner stone of the vision that the Committee is proposing is that whatever changes are brought to the regulatory system, they must lead to citizens and consumers trust in Canadian products and services, markets and government institutions. I believe that your work is extremely important to ensure this trust. Second, I think that your work is going to become more and more complex as the pace of change, particularly in science and technology, continues to increase. Third, because you have an impact on both the health and safety of Canadians and this is the core of your mandate, but you also have an impact on the economic life in Canada and the concept of protecting and enabling are the essence of what smart regulation is about.

I am very honoured that the Prime Minister has asked me to take up the challenge of chairing this committee. And I accepted because I believe that renewing the Canadian regulatory system is important work for the future of the country and because there was an opportunity to make a meaningful and transformative contribution.

Whatever job or task I have accepted, I have always considered myself as a change agent. This is no different. My objective is to instill enduring and sustainable changes in the way Canada regulates so that it fully recognizes 21^st century life.

Overview of the speech

Today, I would like to speak to you in three capacities:

1. as chair of the External Advisory Committee on Smart Regulation;

2. as a manager who has led change and is passionate about it;

3. as a person who had scientific training and is watching with a lot of interest scientific and technological developments.

I will therefore briefly present to you an overview of how and where our Committee will be deploying its energies over the coming months, as we move to implement the ambitious agenda we have received from the Prime Minister.

I will then share with you some of my experience and my own "commandements" with respect to change management and finally, I would like to leave with you some reflections and questions on what I see are the challenges facing the regulator of the 21^st century that may give you food for thought during your retreat.

But what exactly is our mandate, and what precisely is meant by "smart regulation"? Let me briefly answer these questions, before providing you with a summary of our work program and a status report on our progress to date.

EACSR Mandate

The terms of reference our Committee received in May of this year from the Prime Minister, and which we have been asked to complete by next summer, has three distinct components.

The first component is to develop a regulatory strategy for the 21^st century, supporting Canada as a sovereign trading nation offering a high quality of life to its citizens.

The second component is to identify priority sectors and areas requiring regulatory reform that are critical to maintaining a "Canadian advantage".

And the third component is to review and provide an external perspective on current regulatory issues identified by departments and stakeholders.

For now I want to focus on the first component of our mandate - Creating a 21^st century regulatory strategy for Canada.

Pressures

There are many pressures that are affecting the regulatory system, and I want to highlight three that are of particular importance.

The first is coping with the rapid pace of change. As you know, this is particularly an issue with respect to science and technology developments. The regulatory system will be impacted at a number of levels. Advances in areas like the life sciences and biotechnology pose increasingly complex challenges for legislators and regulators, including how to address risk and how to resolve the inevitable ethical dilemmas to which these advances give rise.

We will also need to ensure that the existing stock of regulation is continually renewed to reflect new knowledge. This is essential not only for enabling innovation and growth but also to ensure that when better, safer or cleaner ways of producing things or delivering services become feasible, Canadians obtain the benefits as quickly as possible. I would also add that the speed at which regulatory decisions are made need to increase. I have not met a single industry that says that it wants less regulation. Very often it also agrees with the policy objective being pursued. But it wants speedy decisions and implementation.

The second area is the need to align the Canadian regulatory system more strategically and deliberately with our trading partners. We are one of the most trade-dependent nations. As a country whose prosperity is directly linked to our exports, we will also need to reflect on the degree of fit between our regulations and those of our trading partners. Not only is this one of the most important issues for industry, but as I have just said, in a world where knowledge evolves fast, it is becoming increasingly difficult for a single country to do everything by itself. I know that Federal Departments, including yours, are already cooperating with other countries.

And the third area is the need for better integrated regulatory institutions, policies and tools. Regulating is an act of public interest. It should be developed from the citizen's perspective. At the same time, this should be done with true care to make it simple, streamlined and not overly costly for the regulated party to comply. This calls for the different orders of governments and different departments to work more closely together and take a more holistic approach to policy issues and policy instruments.

Smart Regulation

But what is a "smart regulation" or more appropriately, what does smart regulation entail?

Let me start by stating, for the record, that this is NOT a deregulation exercise.

What we have been asked to do is to recommend ways to make the practice and process of regulation in Canada, relevant to the changes inherent in 21^st century life.

This means:

• that in addition to its traditional role of protecting the health and safety of Canadians and of the environment, regulation serves to enable innovation and entrepreneurship.

• that consumers can enjoy more choice and make more informed decisions.

• that our markets remain dynamic, flexible and responsive.

• that businesses can more easily export our goods and services to global markets.

• that investors see Canada as a desirable place to invest.

But if those are the ends, then what are the means? How can we achieve the profound cultural change that will be needed to enable all of the actors in this field to move forward together?

Vision and Principles

Our Committee's initial views are expressed in a Vision and Principles statement that we have developed to guide our activities. The statement is premised on ensuring regulation continues to both protect Canadians and enable innovation by making the practice more effective, flexible, collaborative, transparent, and accountable.

You will notice that at the core of the vision is the notion of collaboration. I truly believe that the transformation of the regulatory system will happen only if governments, business and citizens work more together.

Let me take you quickly through the three components of the vision.

As I mentioned in my introduction, whatever changes are eventually brought, the regulatory system must instill trust, confidence and credibility at home and abroad in Canadian products and services, markets and government institutions. This is important because I would argue that this trust has both an economic and a social cohesion value but also because, if the trust is lost, it leads to an increased demand for regulation.

The regulatory system should enable innovation. It should make it easier for entrepreneurs to develop and sell new products and services. In the regulatory world, there is no difference between perception and reality. Canadian regulation must not only be conducive to innovation; it also has to be perceived as such both domestically and abroad.

Finally, the regulatory system must be effective in protecting the public interest, and it must be clearly demonstrated to citizens that this is not at stake as governments find new and innovative ways to regulate, particularly as international regulatory cooperation increases.

We have identified 5 principles that we believe are at the heart of an effective regulatory system and are key to the cultural change that will be required if we are to be successful:

1. EFFECTIVENESS - Ensuring that regulation in achieve the intended results.

2. FLEXIBILITY - The regulatory system should be "just in time" if not one step ahead. Decisions need to be made on real time for both the citizens and the regulated party and regulation should be regularly reviewed. It should also be recognized that in our days and age, one size does not always fit all

3. TRANSPARENCY - Increasing the transparency of the system has a lot of transformative potential. Governments need to explain in a more open manner their decisions. I would also argue that industry must be more transparent with its consumers.

4. ACCOUNTABILITY - Results must be measured, reported and communicated. This is necessary to maintain the trust of the citizens and regulated parties. This is also necessary to ensure that we continuously learn and improve.

5. COOPERATION - This is my "dada". The nature of the issues in the knowledge age requires different - more collaborative-relationships, whether it be with other countries, between levels of governments, with industry and consumers.

These are all elements of what we believe to be a "smart regulation" agenda. I have brought copy of the document for your information.

EACSR Workplan

I will now share briefly the core elements of our work plan.

Since we cannot possibly address every challenge confronting Canada's regulatory system, or every issue that is brought to our attention, we felt it imperative to focus our efforts on a limited number of areas where we feel we can have a real impact.  To that end, in addition to the Vision and Principles statement that we have developed to frame our efforts, we will focus our research and fact-finding on six over-arching issues:

• The first is Defining the Public Interest. How have Canadian values and interests changed over the last 10-15 years and what does this mean for a Smart Regulatory Strategy? What will the public interest mean in the coming decade given the stresses of new technologies, globalized markets, new environmental and health risks and the demand from stakeholders for greater speed, responsiveness and transparency?

• The second is International Cooperation. We want to address such dimensions as regulatory cooperation, harmonization and mutual recognition, with respect to the free movement of capital, services and goods. The issue is therefore how we do this more strategically and more deliberately. In which circumstances do we align our regulatory regimes? With whom, on what, and how?  In which circumstances should there be a Canadian-made solution?  Where would it be beneficial for Canada to be a regulatory leader? What process is required for determining when and how we should adopt or recognize the regulatory standards of other countries?

• The third is Federal-Provincial-Territorial Cooperation.  What new mechanisms or approaches are needed to make faster progress in this area? What are key priorities for inter-jurisdictional cooperation? Where a project or undertaking requires regulatory approval from multiple jurisdictions, how can they work together to streamline the process that proponents have to go through to meet all of the legal, technical and operational requirements of each jurisdiction?

• The fourth is Process Efficiency. How can we improve the quality, timeliness, efficiency, and the transparency of our regulatory system? How can we ensure the regulatory system has the human and technical resources necessary to keep abreast of scientific and technological advances?

• The fifth is Risk Management. How do we regulate in the absence of full knowledge of the potential effects of very promising, but recent technological advances? What could be innovative options to effective and proactive formulation within a Smart Regulation Strategy?

• The sixth is Instrument Choice. How do we implement a proactive government-wide approach to choosing the most effective instrument mix for achieving policy and regulatory objectives?

I have mentioned that the third component of our mandate is to provide an external perspective on specific regulatory issues.  One interest for the Committee is drug approval and we hope to be able to support your efforts in this area.

At the end of our mandate, we will propose strategy for a new regulatory system. We will also be making concrete recommendations on how to improve the regulatory process. And I also want to consider carefully implementation.

Change Management

This will mean that change will need to happen: changes in processes, in policies, in roles. Change in organizational culture. I would like to share with you some of my experience in managing change which stems from 18 years of experience in the public sector and as many in the private sector.

It is in 1982, when I became Deputy Minister of Employment and Immigration that I decided that I decided to commit to implementing excellence in the public service. I was heading a department of 27 000 employees who annually were having tens of thousands of face to face interactions with the citizens and answering millions of telephone calls. At that time, I became seized by the fact that we had to change how we were doing our business and became closer of the persons I was then calling our "clients".

But how can we implement change?

I developed my own equation: C I = A + C. Continuous improvement is function of attitude and competencies.

Attitude - or organizational culture- becomes the heart of change. Let me quote George Bernard Shaw, "Progress is impossible without change and those who cannot change their attitude will never change anything".

I also adopted a management philosophy based on values. It is essential that staff develop a sense of mission rooted in a value system which has to be nurtured and sustained. Values become then our guide. This is the cement - or what I like to call the crazy glue - that enables an organization to have very solid roots and a strong sense of direction. As Seneque said: "The wind direction does not have importance if first of all you do not know where you are going". The public service has always been guided by a strong set of values. These values define the institution and are at a source of pride and commitment for public servants.

I want to encourage you to read the paper "Strong Foundations", which was developed under the leadership of the late John Tait, a former colleague of mine. It is still very current and presents the cores values of the public service and the challenges of living up to them in a very inspiring manner.  This document is what I would consider the "bible" of the public service. It can be found on the Canadian Centre for Management Development Web site.

So I challenge you to bring change to your organization. The competencies you already have a lot and you will need to develop new ones. And this is important but I would argue that the competency part of the equation is easiest to work on. Changing the attitude - or the culture- is usually the biggest challenge.  I am convinced that you can make it happen.

The regulator of the 21^st century: roles and challenges

This leads me to the role and challenges of the role of the regulator in the 21 century.

The role of the regulator will become more and more complex.  In addition to being a rule maker -this will not go away- you will increasingly have to be more a communicator and information broker, a negotiator, a conflict manager, to mention a few.

I believe that regulating will be transformed over the next years. With the advancement of science and technology, the manner in which the protection of the public is ensured will have to be transformed. This will be necessary, not only to ensure timeliness in the regulatory system but also to ensure its effectiveness.

As you enter these two days of reflection, let me share with you some challenges that I believe will be inherent to your role of regulator in the 21^st century.

How to ensure that the best ad latest science is used in a timely fashion when making regulatory decision?

In a time when citizens have increased access to information and, want sometimes to make their own choices, how do you ensure the right balance between providing the general level of protection to the public and individual choices? Where is it appropriate for government to intervene?

Which risks have to be managed by the regulator? Which ones should be managed by industry or the individuals?

What are the values and ethics that you need to obey by to ensure that you have a deep understanding and care about the industry your regulate and other interested organizations while keeping the necessary arm's length relationship with it?

Which networks, whether in Canada or internationally, do you need to be part of? How to use those networks more strategically?

How do you work with other countries to improve the performance of the regulatory system?

I could add more questions but let me finish here.

Conclusion

Before concluding I want to let you know that our interactive web site is up and running: www.smartregulation.gc.ca. I encourage you to check the site periodically for updates on our activities, to review our research and share with us your views and advice.

In closing, I would simply make the observation that the regulatory system we currently have in Canada was largely developed for an industrial economy, and it has served us extremely well. But Canada now needs a regulatory approach designed for the knowledge age.

We are determined to produce a final report that makes a real contribution to our quality of life and to our international competitiveness.

Being part of the regulatory community is going to be an even more exciting in the future than it is now. Implementing a smart regulatory strategy will require your support and continued hard work. I know the public service and I know that it has all the creativity, commitment and energy to make it happen.

Thank You!