Proceedings of the Standing Senate Committee on
Issue 7 - Evidence
OTTAWA, Tuesday, June 18, 1996
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-20, respecting the commercialization of civil air navigation services, met this day at 3:30 p.m. to give consideration to the bill.
Senator Lise Bacon (Chairman) in the Chair.
The Chairman: Honourable senators, we welcome representatives from the Canadian Owners and Pilots Association. We will adjourn at 4:15 so members of the committee can be in the chamber to vote.
Mr. Peppler, you have 15 minutes to make your presentation and we will use the other 15 minutes to ask questions.
Mr. Bill Peppler, General Manager, Canadian Owners and Pilots Association: The Canadian Owners and Pilots Association greatly appreciates this opportunity to appear before the Standing Senate Committee on Transport and Communications. I must admit this is quite an honour and a privilege for me. I have been working with the association for almost 40 years and this is the first opportunity that our association has had to appear before this very distinguished body.
With me is Mr. Ken McNeill, our vice president. He is our chief delegate at this hearing so, with your permission, I would ask him to present our case. With us also is Mr. Garth Wallace, editor of our aviation related newspapers and magazines, which have a circulation of some 20,000 plus. He is also on the staff of the Canadian Owners and Pilots Association,
Mr. McNeill, Vice-President, Canadian Owners and Pilots Association: I assume that the committee has received and read the submission we made to the house standing committee on transportation.
As Mr. Peppler has said, we are very appreciative of this opportunity to appear before the Senate committee to make this submission. We feel it is important for the private citizen users of the air navigation system and pilots in Canada to have this issue thoroughly aired before Bill C-20 is passed.
We stand by our submission to the house and we are disappointed that some key recommendations that were made in respect to private, non-commercial pilots have not been incorporated into the bill. Our intention is to ask this body of learned and reasoned second judgment to consider doing what the elected legislators did not do.
We ask that you consider returning this bill to the house with a request that fair and equitable treatment for private, non-commercial pilots be incorporated into the bill for their nominal use of this formerly public facility. We do not ask for free access, but we do ask for fair access. We ask for acknowledgment of the direct and indirect taxes already imposed on these pilots and for elimination of the proposed double taxation for those least able to recover such costs.
As you recall, the initiative for commercialization came from the commercial air carriers through the Airline Transport Association of Canada, from the unions through the Canadian Association of Air Traffic Controllers, from the Canadian Business Association and from the Canadian Airline Pilots Association.
Later on in that process they approached COPA and asked if we would support this, because it was their intention to press for a not-for-profit enterprise instead of a Crown corporation. After some debate, COPA, who are the only non-commercial users of this system -- our membership is made up of private citizens -- agreed to support that based on some assumptions and some provisions.
Our assumptions were that real efficiencies in operating costs might be realized through professional business management and that significant capital cost savings and technological improvements might become possible by going away from the public service procurement processes. Our provision, however, was that private, non-commercial pilots should not incur increased costs from this transfer.
We are somewhat dismayed at the results to date of the process. As a public facility, the air navigation system was costing about $800 million a year to operate. About $600 million of that was for operating and maintenance costs, and some $200 million was for non-recurring capital items.
Many of those capital items, such as RAMP, CATS and Microwave landing systems in particular, are of little or no application to our recreational flyers, and the major control centres do not handle many private, non-commercial aircraft.
To the $800 million in operating and capital expenses will now be added some debt servicing costs of, say $350 million, if they are to reduce the debt; and at least a $185 million if they just pay the interest on the debt, plus the cost of about $1.4 billion in operating capital.
During negotiations, the government's position was that they incurred a shortfall of $200 million a year in the operation which had to be supported by income tax or other non-aviation taxes. We found this, perhaps at best, a little misleading. We believe that aviation and the jet fuel taxes provide some $200 million a year from all aviation sources, and some $6 million to $8 million from general aviation recreational pilots alone. Not only that, new overflight charges which were a known source of revenue at the time -- we were charging, as you may recall, only for the North Atlantic routes -- provided something in excess of $200 million in additional revenues.
The combination of airline ticket tax, $600 million to $700 million per year, fuel taxes of $200 million a year, and new overflight fees of some $200 million, should have provided the system with about $1 billion in revenues each year. Under the agreed sale terms, even this might not be enough to operate the system without reductions in operating costs and capital spending.
COPA is somewhat disappointed that no suitable arrangements were made during the negotiations between the government and NAV CANADA in respect of the private citizens who use or are brought up in this system. They did, however, manage to exclude the state and military aircraft from fees under Bill C-20 as it is now proposed, and these aircraft are significant users of the system.
As it now stands, the government denies any responsibility to apply income from aviation fuel taxes to NAV CANADA, and NAV CANADA proposes to make up this shortfall by charging an access fee to recreational pilots. Private citizens have no means of recovering or of offsetting such fees. They are the only users who would pay with after-tax dollars as they do for fuel taxes and for their licence fees.
As a result, upon the final phase-out of the airline ticket tax and two years from the date of closing, firstly, the Government of Canada will retain all aviation related tax income, including air fuel taxes, and may use it as general revenues for whatever priorities they deem fit. Secondly, NAV CANADA will begin charging private, non-commercial citizen pilots for their nominal and often obligatory use of air navigation system services. At least initially the system may cost more to operate than before.
Under the present terms of Bill C-20, we will be prohibited from appealing any established fees or new fees approved by the Minister of Transport during the first two years of operation. Even if appeals were permitted, you will note from Bill C-20 that the terms of those appeals are quite narrow. If this is not illegal, we believe it, at best, is somewhat immoral.
COPA's 17,000 members, and all those who rely on general aviation to supply commercial aviation with trained pilots, are watching with some interest for an appropriate response to this unfair development. It is our position that the Government of Canada should utilize the direct taxes paid on our fuel to compensate NAV CANADA in full for the nominal non-commercial use of ANS services. Based on the average member's flying time, even 50 per cent of all fuel related taxes would amount to some $200 to $250 per year per aircraft.
If the government declines to do that, it is our position that they should withdraw the excise and airport fuel taxes from the system. That is consistent with what has been done in other jurisdictions. It is consistent with what the civil aviation authority in Great Britain is now contemplating with the introduction of their <#00A3>85 annual fee for private recreational aircraft. We see no evidence forthcoming from any source yet that that is happening, and we hope this body will ask the federal government to shed some light on that.
Since the federal government no longer has responsibility for the ANS system and they are in the process of divesting their interests in federal airports, we feel that they have no right to collect and retain taxes for their operation.
That is a very brief summary, Madam Chair, ladies and gentlemen, but I think those are the pertinent facts as they relate to our association. We feel that we are unique in being private citizen users. A good number of our members, in flying from Estevan, Saskatchewan to a small airstrip in Alberta, exemplify the kind of flying we are talking about. We are very concerned that the grand total of all fees is becoming large and it is adversely affecting not only our members, who are private citizens, but also the flying clubs and non-profit schools.
We do hope that there is a reasoned second judgment on this issue and that there will be some accommodation. I have not listed all the fees pilots are paying now. Mr. Peppler, or our associate, Mr. Wallace, will deal with that.
The Chairman: My first question relates to safety. We would like to know how your association will ensure that your members will operate safely in a commercialized system.
Mr. Ken McNeill, Vice President, Western, Canadian Owners and Pilots Association: All the materials that we publish and all the seminars or sessions that we conduct have very much to do with our strong bent towards aviation safety. We do not ask for rights which conflict with major commercial carriers. We do not believe that there is room in the line-up of 747s for our "Spam cans," if you will pardon the expression, to have right-of-way or to interfere in any way with commercial carriers.
The safety regulations are well enunciated by Transport Canada. If our members follow those and follow our own rules of VFR flight, we will be living up to our responsibilities of safety. We have no intention of denigrating anything to do with safety.
Certainly, we are pleased that there is nothing in Bill C-20 that says we will pay for the use for safety related items. That is, however, built into the recovery of $5 million to $15 million from recreational pilots. That number is too significant and we think it will severely denigrate not only us but the flying schools as well.
Senator Roberge: You mentioned Great Britain. Do you know the history and the status quo of other countries such as Australia or New Zealand which have moved to the new system?
Mr. McNeill: Sir, I am not an expert, but Australia, for example, waives terminal fees for piston-driven aircraft and, in light of a 15-cent excise tax on gasoline, they waive the en route fees. What we are talking about principally here is en route fees. We at the moment pay about 10 cents for excise tax and 5 cents for federal aviation fuel tax at airports in Alberta -- and I assume it is the same across the country -- plus GST. In our opinion that is a 15-cent wash, the same as it might be in Australia and New Zealand.
Canada is a vast country with great application for small aircraft. People in the north, in the west, in Quebec, and in Labrador can make excellent use of small aircraft, and we do not want to see their use outside the major commercial systems denigrated or charged for unnecessarily when we feel that they are paying a fair tax contribution.
CBAA and others do not want to see anything that will suppress the quality training activity that is going on in the world, including the IFR training activity.
Senator Roberge: I have had difficulty in getting some figures from the Ministry of Transport, and I hope to get some figures this afternoon from NAV CANADA. Where did you get your figures and your estimated NAV CANADA costs of $600 million operating, maintenance and capital costs?
Mr. McNeill: They came from the early number crunching that was done by the advisers to both Transport Canada and NAV CANADA as they were assessing the viability of commercialization of the system. Whether it is $550 million and $250 million, the total number was $800 million in operating costs for the system. That is directly from Transport Canada numbers or NAV CANADA numbers.
Senator Roberge: Would you have any idea what the capital costs will be per year for the next five years?
Mr. McNeill: No, sir, I do not, because we do not think that there is any reason to go ahead with Microwave landing systems. However, perhaps RAMP is nearing completion, and I am not sure of the status of the automated traffic system. Those are very highly complex systems. They have already spent a good deal of money on them, and there is more work to be done.
It all depends on what NAV CANADA views as a necessity for the safety of the system, for future enhancements of the system, and for bringing together that system across this big country. If they discard one safety feature, they may want to pick up another radar enhancement for weather detail, and so on. That, we would consider to be a safety related item which we would like to see.
Senator Forrestall: How, up until now, has the Government of Canada taxed you? Has it been through take-off and landing fees? What has been the principal method of separating the private owner from some dollars? Has it been through aviation fuel taxes?
Mr. McNeill: It is basically done through aviation fuel taxes and other licensing fees. If we fly into Pearson, in Toronto, for example, we are charged a landing fee irrespective of size. In most airports they have, as they have in other countries, waived that fee for small private aircraft of four to six seats.
Senator Forrestall: Would that account for the bulk of it, that is, 75 per cent or 80 per cent?
Mr. McNeill: Those numbers are very difficult to determine. I am not sure that I am qualified to answer that question.
Senator Forrestall: How do you understand they propose to collect this money in the future because, of course, these taxes are excise taxes and the private corporation will have no authority to raise money through excise taxes.
Mr. McNeill: As far as NAV CANADA is concerned, it is my understanding that, in the interests of safety and economics, they do not want to charge a per-activity charge. We would agree with that. That would make no economic sense at all. As it is now, we pay $50 to renew our private licences. Until they get our $50, they will not give us the licence, so it goes back and forth twice, and I am very much afraid that they spend $100 sending out our $50 licences.
As I understand it, they are contemplating a flat fee per aircraft. The terminology of Bill C-20 it is "for making it available," it does not say for using it. If you are going to fly an aircraft in Canada, in my judgment, it will mean that the system will be available to you and therefore they will have a right to charge you for it.
They will not at this point contemplate what that fee will be. The only numbers we have seen were in the initial work-ups of the cost recoveries. Those numbers were somewhere between $5 million and $15 million per year. If we assume a fleet of 15,000 to 20,000 private recreational aircraft, sir, that will amount to somewhere between $350 to $750, or perhaps up to $1,000 per aircraft. It makes no sense to us to recover those kinds of fees from these kinds of users.
Senator Forrestall: Have you discussed your dilemma with the department?
Mr. McNeill: Yes, sir, we have. We met with the former Minister of Transport and explained our situation to him. The response was that our concerns would be taken into consideration. The stumbling block that we inevitably run into is that the Department of Finance says that it will not attribute the use of funds. We found that a little unusual in that they were attributing the airline ticket tax, and still are, to the air navigation system. We do not see anything particularly unusual in that.
Senator Forrestall: Obviously you did not need any help because that is in the act.
Mr. McNeill: We would not have been pestering this fine body if we had, sir.
Senator Forrestall: Do you now have about 18,000 or 20,000 members?
Mr. McNeill: Yes, about that. It varies from year to year. They take a while to sign up.
Senator Forrestall: How have they told you what they want?
Mr. McNeill: At the COPA annual general meeting last year, which will again take place two or three days from now, there was a motion from the floor, that the members felt it was unfair and unreasonable for private non-commercial citizens of Canada to pay both these taxes and a fee, and that NAV CANADA should not apply a fee, and that, as we have suggested, there should be some accommodation on the taxes collected.
Senator Forrestall: How much are you prepared to pay?
Mr. McNeill: All taxes or just the fuel tax? Should I include that funny tax, the GST?
Senator Forrestall: Be careful. You are talking to a united front.
Mr. McNeill: I am excluding Alberta, so I will include the excise tax and the federal fuel tax which comes to about 15 cents a litre. Our average member flies 50 hours a year, at about 10 U.S. gallons an hour. There are 3.8 litres to a gallon. I would say it should be about $300 a year in taxes.
Senator Forrestall: Do you consider that to be fair? You must remember that, if you drive a car, you pay taxes.
Mr. McNeill: We see nothing unfair about that, sir. We are just a little uneasy about paying that and then paying NAV CANADA again.
Senator Forrestall: The commercial operator is allowed to deduct that as a legitimate operating expense; is that so?
Mr. McNeill: Yes, sir, if he cannot pass it on to the customer, he will deduct it as an operating expense.
Senator Forrestall: How much does it cost to buy the cheapest commercial category of licence? I am wondering whether it might be better for 20,000 flyers to incorporate themselves, pay the tax and deduct it from their income.
Mr. McNeill: I have a small business of my own, sir, and having paid all my accountant's and lawyer's fees, I am not sure I would recover the tax quickly enough.
Senator Forrestall: I did not realize that there was a question of double taxation in this matter.
Madam Chairman, my concern is that this is Tuesday afternoon and the bill must be returned to the House of Commons. How do you see the committee proceeding in this matter?
The Chairman: We will complete our meeting and then we will made that decision.
Senator Forrestall: I have some concern about this proposed legislation. I just recently learned of this. I believe my staff called somebody in your office to ask if there was anything new.
Senator Spivak: It is about what it will cost to operate NAV CANADA. Obviously it will cost more because of the purchase price and the operating costs. Why are we always told that it will cost much less if we hand it over to some commercial enterprise, yet, always costs more?
Are you suggesting that that is the reason, or one of the reasons, they will have to charge you for the services? That has nothing to do with the major issue, I know, which is that it is unfair to both tax you and charge you for a service, which I think I agree with.
Mr. McNeill: I may have to speculate somewhat, senator, to answer that question. Clearly, the airline ticket tax is a flow-through charge by the commercial air carriers which is put on the purchaser's bill and then passed on to the government. While the airline ticket tax, per se, will disappear, they will still have to charge something to support their activities under the air navigation system. In my opinion, whether it is called an airline ticket tax or a NAV CANADA tax, it will exist.
There is now a facility to charge cargo carriers who never paid fees before. These are commercial operators who carry cargo. They can now charge the Canadian Business Aircraft Association. Although Mr. Newall may find my remarks disconcerting, they fly Falcon 50s and we fly Spam cans, but they have a business purpose and they can recover those costs.
There is every incentive for NAV CANADA to recover all the costs that it possibly can because it will reduce the cost to the other carriers. In our first submission to the standing committee of the house I commented on some of the research that had been done by Transport Canada where they assessed what would happen if the en route fees were waived for private, general recreation aircraft. The implication was that the impact on the other participants or the other users, the commercial users of the system, would be 0.6 of 1 per cent. We have asked them why they would want to treat private citizens in that way if that is the extent of the cost implications. We will pay for it anyway. We are the users, whether we ship a parcel or fly on a commercial airplane.
I do not know whether I have answered your question, senator, but those are our views on it.
Senator Spivak: Am I correct that you estimate that about $260 million will be their operating loss here?
Mr. McNeill: Senator, that depends on whether they attempt to pay down the debt. They use the number $185 million, but that is only repayment of interest with no repayment of principal. We say that if they are going to repay interest and principal, it will be this number.
Senator Spivak: I have not looked at what took place in the house, but we have been told that the Auditor General had some problems with the financing. Do you know anything about that?
Mr. McNeill: No, senator, I do not.
Senator Adams: I live in a small, remote community where some small aircraft are based. If you live in the community, it does not matter where you take off or land, the community will charge take-off and landing fees. How does the system work now?
Mr. McNeill: Presently there are no take-off and landing fees, whether the airports are Transport Canada airports or district, territorial or municipal airports. We do not think there will be a great change in that.
The issue that is of great concern to us, senator, is privatization, commercialization of the airport system.
The air navigation system deals with en route costs. We still do not know how much the pilots of small airplanes will be charged. We have some concerns about the service to northern territories and remote areas, and we mentioned those in our proposal to the house.
It was put in economic terms. They said that the majority who contributed the highest economic return to the corporation would decide whether a navigation or other facility would be opened or closed. That seemed unfair to us. We believe the users, the citizens, should have some input into those decisions.
As yet, we do not see any signs that that will change. However, we have not dealt with it yet. It is not clear what will happen with some of those airports.
Mr. Peppler, do you have anything further to add?
Mr. Peppler: If NAV CANADA is going to charge the general aviation users, the recreational users, how will they do it? It should be fair, right across the board. For instance, right now Canada Customs tells me that approximately 50,000 United States tourist itinerant light aircraft come into Canada every year. On the basis of the average expenditure in Canada, that means that they are adding $50 million to the economy as tourists in vacation areas.
We want ensure that, when 20 per cent of the aircraft flying in Canadian airspace at any one time are US registered aircraft, they also contribute to the system. The only fair way they can do this is if there is a tax on aviation gasoline that is dedicated to the ANS, because we would not want to start charging US aircraft coming into Canada a fee, since that would discourage them from coming into Canada. They will fly around their own country or go to the Bahamas, Mexico or some other place.
We would be in a precarious situation if NAV CANADA were to impose an annual fee on Canadian general aviation aircraft and allow American aircraft to land in Canada, use our airports, use our air navigation system, use our lakes and rivers, free of charge. The Canadian taxpaying citizen would, undoubtedly, say they are obliged to pay a fee.
We have to be careful that whatever NAV CANADA decides is fair. We should all pay our fair share. The fees should be shared with our American friends who come in here in quite large numbers.
Senator Adams: Unlike southern flights which carry mostly passengers, the majority of flights to and in the north are cargo-carrying flights. There are very few passengers on most of those planes. If Bill C-20 is passed, will the weight of the cargo on board the plane be a consideration?
Mr. McNeill: Senator, they have not drawn any conclusions on that as yet. As you probably are aware, under Bill C-20, collection of the airline ticket tax will continue for two years. The proposal is to give NAV CANADA a two-year window in which to go out to the communities, go out to the users, commercial, private and others, and contemplate what charges will apply to what situation.
On the issue of take-offs and landings, the most common rule of thumb is based on some component of maximum take-off weight. Therefore, a 747 would pay proportionately more. That is all they have told us so far. It has yet to be determined, senator.
Senator Spivak: Is it your understanding that they will impose a fee on all cargo shipped?
Mr. McNeill: Yes. The airline ticket tax does not include a fee for cargo. There was no fee generally applicable to cargo carriers as they would use the system. Those people do use the system. They are constantly in the IFR environment. Under the new rules, they will contemplate a charge for those commercial operations. However, I do not know what the basis of that charge will be, senator.
Senator Forrestall: Did you make this same basic presentation to the standing committee in the house?
Mr. McNeill: No, sir. It was a broader presentation. It included these components as they applied to us but, because Bill C-20 incorporated some other aspects, we dealt with those in our comments.
Senator Forrestall: What response did the distinguished members offer to your concerns?
Mr. McNeill: I have received no formal response from the distinguished members on our concerns.
Senator Forrestall: Have you had any follow-up response from the department itself?
Mr. McNeill: No, we have had no response from them. The key elements in this shortened version, sir, were incorporated in the longer version of our presentation on Bill C-20.
Senator Forrestall: You had no reaction?
Mr. McNeill: Not to our knowledge, sir, no.
Senator Forrestall: I found a rather serious deficiency in the bill, and that was the absence from the board, with one exception, of women. Your association has 17,000 members. Do you have a couple of names you might put forward to NAV CANADA to serve on that board?
Mr. McNeill: Yes, we do. We probably have some excellent candidates, and we would be more than delighted to nominate them.
Senator Forrestall: NAV CANADA told us that they could not find any candidates and that they had searched high and low. I would suggest that you put some names forward.
Do you agree that, generally, the bill is headed in the right direction?
Mr. McNeill: As we said before, we support many of the initiatives in this bill, with the exception of those we have addressed here, sir. We do not have many problems with Bill C-20.
Senator Forrestall: Would you term this as blatant, outright double taxation?
Mr. McNeill: Yes, sir. We do not think it is fair. That is the bottom line. We are such distinctly different users. By regulation we are obligated to use the system.
Unlike the United States, where you can about fly wherever you want within the continental United States without filing a flight plan, we are obliged to file a flight plan or a flight notification. However, we do agree with that as a safety measure, and we will support that. We will encourage our members to do that.
The Chairman: Thank you very much, gentlemen, for assisting our committee.
Upon our return from the chamber, we will hear from the Privacy Commissioner of Canada.
The committee recessed.
The Chairman: We now have before us the Privacy Commissioner of Canada, Mr. Phillips, who is accompanied by the Executive Director, Mr. Julien Delisle and Ms Martine Mantel, legal counsel.
Mr. Phillips, do you have a brief?
Mr. Phillips, Privacy Commissioner of Canada: No. I will speak from notes, if I may.
Just by way of reminder to this committee, I am appearing here as an Officer of Parliament. One of my functions is to bring to the attention of Parliament matters that I feel affect the privacy rights of Canadian, particularly if they are affected in a way that touches upon any federal laws. That is what brings me here, generally speaking.
As a consequence of government privatization and downsizing, there has been some unintended but nevertheless adverse effects on the privacy rights of a substantial number of Canadians, I think. This includes the bill that is now before this committee for consideration, but there is a more general issue here that affects other operations as well.
I appeared before the transport committee in the other place when it was considering this bill. I now come before you with the same purpose in mind; that is, to draw to your attention that when the air traffic control system of this country is transferred from the Government of Canada to non-governmental operation and control, the privacy rights that are contained under the Privacy Act applying to several thousand federal employees, as well as the many thousands of pieces of personal information that are generated by the air traffic control system by the users of that system, presently protected by the Privacy Act, will no longer enjoy that protection.
Briefly stated, that means that the information that is collected will not be required to meet the tests that are contained in the Privacy Act. Potentially, about 5,000 or 6,000 federal employees are involved, who, for the last 17 years, have enjoyed that protection, and will no longer. The same thing applies to the users of the system.
I wrote to the Deputy Minister of Transport about this issue many months ago -- last November, I think. It was referred to the Department of Justice, and although they conceded the importance of the issue that I raised with them, nothing was done.
There has been a curious history to the issue that I have raised. When I took this to the transport committee in the other place, in its subsequent deliberations, it voted four to three in favour of amending the act to include a provision that would make the federal Privacy Act apply to the operations of NAV CANADA. When the committee's report was taken to the House of Commons, the government moved to strike down that clause.
That is regrettable, from my point of view. I do not know whether the matter can be rectified at this late stage of the game, but it is an important issue and will continue to be an important issue beyond the NAV CANADA exercise because there are other government operations that are likely to be subjected to the same treatment.
The objections that were raised both by the company in one of its letters filed with the Commons committee and by the Department of Transport included the following: First, NAV CANADA was being singled out as the only private-sector entity in the country that would be made subject to the Privacy Act; secondly, it would impose undue costs. They also raised the point that the Government of Canada was not yet in the business of legislating privacy in the private sector, and so on.
I would say, in answer to those observations, and I am sure you will hear them again from the minister later today, that it is not without precedent to have the Privacy Act extended one way or another to non-governmental or quasi-governmental operations. When Canada Post's corporate structure was dramatically altered to make it a profit-seeking enterprise as opposed to a government department, it was required to comply with the Privacy Act.
It is a common feature of government contracts that when business is done with the private sector, if there is an information-gathering activity associated with it, many of these contracts contain clauses requiring the contractor to abide by the provisions of the Privacy Act. So there is no precedent involved here particularly.
I feel that the people of NAV CANADA may have misunderstood or misinterpreted part of my proposition. In their letter, they objected to the exposure to the courts that might arise as a consequence of being subject to the Privacy Act, and also that they were being singled out. I think I have answered the latter case. In respect of the courts, the Privacy Commissioner has initiated one court case since the office was open ten years ago. We are not in the habit of litigating unnecessarily. I think that is a needless worry.
Second, we are concerned only with personal information. We are not concerned with general records of NAV CANADA. They would not be exposing all of their corporate records to general public access. They would be exposed respecting the provisions of the Privacy Act which, generally stated, require people not to collect information without telling people why they are doing it, not to disclose it without consent, and not to use it for unrelated purposes. That is the basic thrust of the Privacy Act.
At this stage of the game, it may be that you will not wish to recommend any change. I would hope otherwise. However, it is important, at least, that you be sensitized to this issue, to know that NAV CANADA is not the only exercise that concerns us and that I will be back here every time this comes up, because I think this is important. That Government of Canada has an obligation to protect the rights of people, not to see them diluted the way it is happening under these privatization arrangements.
It is no great trial for any company to live with the Privacy Act. Many do it already. I might add that I observed that Mr. McDougall, one of the deputy chief negotiators in this transaction, on CPAC the other day make the observation that it would have been easier, from their point of view, to negotiate if the Privacy Act were made to apply, because they would not require the consent of every employee to the transfer of that employee's records from a government entity to a non-government entity. He added the observation that it was not a deal-breaker. Having heard all of that, I wonder why, in that case, people are so resistant to the notion. It can still be fixed if it is the disposition of this committee to do so.
Senator Roberge: Can it be fixed by a grandfather clause, carrying it over just like you did with the union negotiations?
Mr. Phillips: The bill requires a clause saying that the company will be required to comply with the federal Privacy Act, as, I might add, it is already required to comply with the Official Languages Act. I presume that it would be subject to legislation such as the Canadian Human Rights Act. I have a great deal of difficulty understanding what the obstacle is in this particular case.
Senator Forrestall: Mr. Commissioner, you touched on the nature of matters that would likely require the subject of the existing act. Are we talking here about medical information? Are we talking about air incidents and individual flight personnel involvement in that type of report? What are we talking about?
Mr. Phillips: The answer to that question is yes, possibly. We are certainly talking about the personnel records of the thousands of people who are involved here. NAV CANADA is going to want some personal information from those records. How much, I do not know; but certainly the records of most government employees include a lot of sensitive, personal information. Under the existing law, this cannot be disclosed to third parties without violating the Privacy Act.
Similarly, Senator Forrestall, yes indeed, it could include information about customers' usage of the air navigational system. We heard from the previous witness that the private pilots of this country, for example, file a good deal of information with the traffic control system. A lot of that could well be personal, yes indeed.
If I were a private pilot, for example, and I filed a flight log saying that today I am flying from Ottawa to Mattawa, that is personal information. I might very well object to that information not being protected by a disclosure law, because it is personal information; I might not want people to know I had gone to Mattawa. So, yes indeed, it can cover a lot of information.
Senator Adams: I fly in a lot of small aircraft and usually I know the pilot by name. Do you mean that with Bill C-20 you have to have the name and question your pilot? Is that what you are saying?
Mr. Phillips: No, I am not saying that, Senator Adams. In fact, I am not sure I can give you a specific answer to that because I have not gone through the files of Transport Canada to see precisely what is there. I can tell this committee that I will exercise my authority to look at those files before they are transferred, and I intend to notify the minister of that fact today.
Senator Adams: It sounds like you are saying, before you land there, I want to know who you are. It sounds like you are saying that.
Mr. Phillips: No, I am not saying that. I just use that as a hypothetical example. That is all.
Senator Roberge: Do you have a legal position as it pertains to the government or to the ministry in that situation?
Mr. Phillips: I am not sure I understand your question, senator.
Senator Roberge: Well, could you go to court and say, "Look, you are not following the rules and regulations of this statute"?
Mr. Phillips: No, I cannot go to court in those circumstances. Under section 37 of the Privacy Act, I have the right to conduct an audit of government information holdings to satisfy myself that they are being managed in compliance with the act. In these circumstances, I think I have no other alternative but to look at these files and ask what it is that the government intends to transfer to the control of NAV CANADA, to satisfy myself regarding the compliance of the Privacy Act.
Senator Adams: My concern, too, is safety. I think Canada has a very good record with our airlines. What happens in the future? Say the government has a job looking after all the private aircraft and we are cutting down on regulations. Could it happen in the future?
Mr. Phillips: Senator, those questions are outside the proper realm of my responsibility. I am not here to offer an opinion on the desirability or otherwise of the transfer of this function from the government to a private-sector enterprise. That is the business of the government and Parliament. I am only concerned with what happens to the personal information that has already been collected by the Government of Canada, and to draw to your attention the fact that when this does become a fait accompli, privacy rights previously enjoyed will no longer apply, unless, of course, some action is taken in the meantime.
Senator Forrestall: Mr. Commissioner, is there a process by which employees of Transport Canada today can give in writing or otherwise their permission for these files to be transferred to the new entity? Is there a process for that in place?
I ask the question because I assume that regardless of what the individual employee might wish or not wish, the proprietor of that information is the federal government. What are they going to do with it? Will they burn it or turn it over?
Is there a process? And in that process, with respect to my right to privacy, is there a procedure that you know of that would protect my capacity to continue in my job if I said that I do not want them to have that information, that they can interview me and I will take my chances? Is that process in place?
Mr. Phillips: There are others better equipped to answer this question. However, my understanding is that there is an agreement between the government and NAV CANADA by which the consent of each employee will be sought before any information is transferred. That is an agreeable circumstance.
I am informed that if consent is not granted, it will not affect their prospects for employment. That is -- I believe I quote him correctly -- the position of the representative of the company whom I heard on this subject.
That is not the end of the issue though, senator, because once the person becomes an employee of a private-sector enterprise which is not obligated to observe any legislated standard, then the company is free to do whatever it likes by way of information-gathering and usage, subject only to the conditions of employment that exist.
If I may spread my wings a little bit here, it has been my contention for some time -- and I have said this in annual reports to this body -- that it is time the government took note of the changing nature of the Canadian informational world and acted at least within its own jurisdiction to extend privacy law to cover commercial operations, as it now does in the province of Quebec, for example. I am very glad to say that the government is taking note of this and is considering it.
Senator Forrestall: Are there sufficient provisions, that satisfy you, in the various provincial labour laws to guarantee this type of protection or some form of protection with respect to privacy?
Mr. Phillips: No, sir.
Senator Forrestall: Is that a serious deficiency?
Mr. Phillips: Yes, I think it is. The privacy of personal information in provincial jurisdictions, with the single exception of Quebec, is limited to government information holdings. It does not cover the private sector, Quebec being the lone exception. They extended their privacy law three years ago to cover private as well as public-sector information-gathering.
I might add that to the extent that NAV CANADA in any way comes under Quebec law, it might well be required to pay some attention to Quebec's law. I have not really studied that question.
Senator Forrestall: I have the feeling that if one is an air traffic controller in British Columbia or in Nova Scotia, there are two different sets of laws -- actually, probably three.
Mr. Phillips: Yes, that is true at the provincial level.
Senator Forrestall: This gives me some concern. When you are raising your concerns, it broadens mine with respect to contemplating ten jurisdictions at least, and then perhaps the problem becomes very compounded; whereas, a simple amendment extending the consequences of the Privacy Act, as we did with language, would solve the problem.
Mr. Phillips: Indeed, it would provide instantaneous relief. A more comprehensive solution would be the federal government legislating privacy law for all of those enterprises that come under the jurisdiction of the Parliament of Canada. However, we are some distance from that.
In the meantime, we have these problems; and they are going to multiply. As an interim solution to this, I feel that companies who take over enterprises previously managed by the Government of Canada should be required, at a minimum, to abide by those basic laws of the Parliament of Canada that have to do with human rights. Privacy is a basic, fundamental human right. It is not covered here.
Senator Forrestall: Why not move an amendment and see what they do with it?
Senator Adams: If NAV CANADA takes over those personnel who are currently with Transport Canada, are NAV CANADA going to tell them that their qualifications are not good enough and therefore they cannot hire them. Are concerned that they might find something in the government records?
Is it your concern that for those people who are employed with Transport Canada, there was some kind of guarantee for future employment but that a newcomer will now take that job? Is that what you are concerned about?
Mr. Phillips: No, I am not concerned with employment qualifications. That is not a matter that is a concern of mine. I presume that NAV CANADA, as the Government of Canada before it, is perfectly competent to decide who to hire and who not to hire. My concern is with people who are there, people who generate personal information in the course of their employment, and what protections are offered for keeping that information managed properly. So no, it is not a question of qualifications.
The Chairman: Thank you, Mr. Phillips, and your colleagues.
We now have before us from NAV CANADA, Mr. Crichton and Mr. Copeland.
Mr. Crichton, Chairman, NAV CANADA: We filed with the clerk of the committee approximately a week ago a brief which I am sure all of the senators have seen.
For the record, with respect to some of Senator Forrestall's concerns, I would like to indicate that these matters are covered in the transfer agreements that exist between NAV CANADA and Transport Canada, both in the employee transfer proposal and in the DOT agreement.
NAV CANADA has undertaken, in addition to seeking the consent of all employees to come over, to have personnel files transferred and to not base job offers on a refusal. NAV CANADA has further undertaken to keep all those records confidential into the future, pursuant to government policy in that regard. Hence, that information is protected and will remain protected.
The Chairman: Do you have any more items on your agenda that you would like to cover?
Mr. Crichton: No. I just wanted to make that comment for the record, Madam Chair. Mr. Copeland and I will be happy to try to answer your questions on any subject.
Senator Roberge: Would you object if the transfer agreement stipulated that the Privacy Act applies to the corporation as if it were a federal institution?
Mr. Crichton: Yes, we do. We object to the Privacy Act; we think it is inappropriate. I noticed the one of the precedents that the Privacy Commissioner named was in fact a Crown corporation. The simple fact is that there is no private corporation in this country to which the Privacy Act applies. It does not apply to Air Canada; it does not apply to CN. One of the fundamental principles of the commercialization of the ANS is to take the service out of government, put it in the private sector and let it run on private-sector principles. So we feel very strongly about that. We are a private-sector company and we want to operate under private-sector rules.
Senator Roberge: All the private corporations which are Quebec corporations are subject to Quebec law, which stipulates a privacy clause.
Mr. Crichton: NAV CANADA is a federally regulated corporation. It is not subject to provincial labour laws; it is subject to the Canada Labour Code.
The Chairman: How do you intend to finance the purchase of ANS? And how will you guarantee the same or higher levels of safety than people already have?
Mr. Crichton: The purchase will be financed in the public debt markets. We are a non-share capital corporation. We do not have any shareholders; therefore, there is no share equity. We have retained investment bankers. We are well down the road of obtaining a credit rating from Standard and Poors, Moody's, Dominion Bond Rating and Canadian Bond Rating.
We will be going to the public debt markets over the course of the next few years, as conditions dictate, in as favourable a fashion as we can. We have a bank syndication for bridge financing to enable us to close and operate. This will end up in the public debt market as NAV CANADA bonds, sold probably largely within Canada, and a bit in the U.S. Hence, it is a debt offering that is similar to many other large utilities, because in many respects we are similar to a utility.
In terms of safety, Madam Chair, I know that this has come up a number of times. I would submit to the senators that in fact NAV CANADA should be a safer operation because we are now dividing the function between the regulator and the service provider. There will be an arm's length relationship between Transport Canada, the regulator, and the provider of the air navigation system. Currently, Transport Canada does both. As a number of studies have provided out, at least in theory, being both the policeman and the person performing the function can structurally create problems.
Transport Canada is a very effective regulator. The Aeronautics Act is a very strong tool in that regard. A whole new set of aviation regulations has been developed with respect to air navigation services, and Transport Canada will enforce those regulations in respect of NAV CANADA and the services we provide. There will be an extremely high level of safety, as well as a good and solid division of responsibilities.
Senator Carney: I want to deal with the issue of the AWOS systems which you met with some of us to discuss. The Chair has allowed me to raise this in this committee because it was before the Energy and Environment Committee in the last parliament.
In the letter you sent me, which I will table with the Chair, you state:
In negotiating the Agreement to Transfer with Transport Canada, it was agreed that the contract to supply AWOS units to the federal government would not be transferred to NAV CANADA. This contract remains with the federal government and is, I believe, to be administered by Environment Canada.
You indicated some dissatisfaction with the performance of AWOS, and as you know we have had letters from premiers, towns, municipalities, airports and flying clubs about the deficiencies with AWOS. Are you not taking over that contract because you have some concerns?
Mr. Crichton: Senator Carney, the short answer to your question is yes, we did not want to take it over because of the demonstrated flaws and the concerns that existed there, and we are not sure that it is an appropriate technology for the future yet.
Senator Carney: Your judgment concurs with that of the many people who have written us, including airports which have said that AWOS is wrong in some respects 100 per cent of the time in some of its deficiencies.
You say that you will be entering into an agreement with Environment Canada to supply NAV CANADA with aviation weather observations, forecasts and other miscellaneous aviation weather data, that in essence, NAV CANADA will set the service standards and levels, including the nature and the extent of observations to be made by AWOS units, and that you will have the discretion to require Environment Canada to remove the units and replace them with human observations or supplement AWOS observations with human intervention in an auditing role.
The questions we have been getting from airports are: Who will do these observations? Who are the humans who will do the observations? The letters we receive say there that if they are done by Environment Canada personnel, the fear is that they will not be suitable for aviation use. Since this concern comes from your users, I thought I would ask it of you.
Mr. Crichton: Currently in the system, there are -- I have forgotten the exact number of regular aviation observation points, but it is several hundred in the country, primarily at airports, obviously. For the observations that are performed by humans, it is a mixture of people who work in the ANS right now, people who work for Environment Canada and private contractors.
Senator Carney: Right. Are they trained in aviation weather forecasting?
Mr. Crichton: They are all trained and they are all certified; they are all certified weather observers. Again, that is another regulatory requirement that exists and will continue to exist. In the event that NAV CANADA decided that it wanted to replace AWOS at any particular points, and wanted it to be replaced with human observations, those would have to be by certified weather observers who are qualified.
Senator Carney: Aviation weather?
Mr. Crichton: Aviation weather.
Senator Carney: You say in your letter:
NAV CANADA will make its decisions as to the eventual quantitative and qualitative use of AWOS based first on safety considerations and second on the preferences of the aviation community including airlines, commercial and private pilots and general aviation.
Is there a difference? I mean, most of the concerns about removing humans and replacing them with AWOS technology as it presently exists is because the system is considered unsafe. So why would you make the distinction between making decisions first on safety considerations, and second on the preferences of the aviation community?
Mr. Crichton: All of that is simply indicating that safety is an overriding guiding principle in any decision. However, questions of flight safety are frequently not black and white. Aeronautics is not that simple a function. So I think that inevitably, there are areas where judgment comes into play.
For instance -- I do not want to get into the whole AWOS technical issue -- there are certain things that AWOS does very well. It measures barometric pressure very well. It measures wind speed and direction very well. It measures temperature and dew- point very well. These are all critical things, to a pilot, to know. It is having a little bit of trouble in measuring ceiling and visibility from time to time.
On the other hand, there are situations where having those four critical elements could be very important if you otherwise could not have them. We are not saying that the thing is completely unsalvageable.
There is also a joint Transport Canada user committee that has been running tests, blind tests and so on, for the last six months. They are going to be conducting a symposium this summer and reporting on it. Ultimately, we will be guided by what the users want to do. I do not want to predict what the outcome of that study is going to be, other than to tell the committee that if the users give it a thumbs down, then that is what NAV CANADA would be doing, all other things being equal with respect to safety.
Senator Carney: It was just that I was worried, from the tone of your letter, that you were qualifying your reluctance to use AWOS. We have heard a lot in the Energy Committee about how safe AWOS is, when the users say it is not. So you are basically saying that you will listen, but that safety will be the consideration and will be determined in part by the users.
Mr. Crichton: Indeed, although ultimately, safety, strictly speaking, will be determined by the regulator. However, the regulator sets a minimum standard; many people in the aviation business have a policy of operating above the minimum standard, and certainly NAV CANADA will have. With respect to AWOS, assuming that the basic safety baseline is not in issue, we will be guided by what the users prefer.
Senator Spivak: In the presentation from the Canadian Owners and Pilots Association, they represent an operating loss for you based primarily on debt servicing costs and operating costs. Do you agree with that kind of analysis of what your books are going to look like?
Mr. Crichton: No, senator. Mr. Copeland and I only saw it a few minutes ago, but it is not our statement. NAV CANADA will operate on a full cost-recovery basis. Over the long run, our revenues will equal our expenses. I do not know where these numbers came from, but they are not NAV CANADA's numbers.
Senator Spivak: You are, then, not in agreement with their position that it is unfair both to charge the fees and also to be taxed?
Mr. Crichton: I think, with all due respect -- I understand COPA's concerns with respect to the fuel tax. I should point out that the commercial carriers have the same concern. In 1995, the Canadian commercial carriers paid over $150 million in jet fuel tax, which was not allocated in any way to aviation activities of the government. That tax will continue, notwithstanding NAV CANADA commercialization, the same way the tax on private aviation fuel will continue.
Senator Spivak: But they are not going to be charged fees as well?
Mr. Crichton: The commercial aviation industry will be paying over 98 per cent of the cost of operation of NAV CANADA. The privately owned aircraft or small aircraft generally, at NAV CANADA's request -- in fact, the legislation contains specific provision, which is unusual in the international sphere in these areas; I am not aware of any other jurisdiction that has it -- to enable the corporation to assess a flat annual fee against light aircraft and to make that as painless as possible.
In addition, as you will know, the legislation has a specific requirement under the charging principles that NAV CANADA not assess charges that are unreasonable or undue in respect of private or recreational aircraft. That very special clause in the legislation prohibits us from imposing onerous charges.
Senator Spivak: Is there a definition of "unreasonable" and "undue"? It is not in the legislation; is it?
Mr. Crichton: I believe it is defined in numerous reported cases in the courts of Canada. It is a fairly well-known phrase in law.
Senator Spivak: In that presentation as well, there was some mention of cargo plane fees. Will there be charges to cargo planes, or did I not understand that information correctly?
Mr. Crichton: To put it in context, presently, the ANS is funded through the air transportation tax, which applies to passengers.
If you are operating an all-cargo aircraft, let us say for Federal Express, you obviously are not collecting any air transportation tax because you are not carrying passengers. However, you are using the air navigation system just as much as an airplane carrying passengers, because there is no difference between the type of ANS service you receive. If it is a DC-10 full of passengers, or a DC-10 full of freight, you still use the ANS system going from A to B.
So because the air transportation tax will be phased out and repealed, NAV CANADA will be introducing user fees to the commercial carriers for the use of the system. That will apply both to cargo and passenger aircraft.
Senator Spivak: Is that subject to the unreasonable and undue restraint clause?
Mr. Crichton: No. The unreasonable and undue clause is a specific admonition to the corporation with respect to private and recreational aircraft. However, the charges to commercial carriers are subject to a whole section of charging principles, including the international agreements that Canada has entered into in ICAO with respect to non-discrimination, and limits the amount NAV CANADA can charge only to meet its necessary costs. As well, there is an allocation methodology.
Senator Spivak: In other words, you do not anticipate that those charges are going to be higher than the taxes they now pay?
Mr. Crichton: When the board of directors of NAV CANADA conducted extensive negotiations with the government, trying to arrive at a purchase price was a very major part of those negotiations. One of the guiding principles the board used was a rate index that was set up with the computer models we were using to ensure that as various purchase prices were plugged into the computer model, those carriers who now collect and remit the air transportation tax would not end up, through the working of the model, depending on the purchase price you picked, in a position where the user fees would exceed the air transportation tax. We tried to make sure that there would be a seamless financial transition from the tax-driven one to the user-fee driven one. We are satisfied, taking all of the various parameters into account, that we have achieved that.
Senator Spivak: Where is the appeal from that? Is there an appeal system? You are basically a monopoly service. Where can they appeal the fees if they deem them to be excessive? Would it be appealed to the courts?
Mr. Crichton: No. The appeal -- and it is set out in the legislation -- would have to be made on the basis that NAV CANADA failed to observe any of the charging principles set out in the legislation or some of the notice requirements. The appeal is to what is now called the Canadian Transportation Agency. Until a couple of days ago, it was the National Transportation Agency.
Senator Spivak: Is it your intention to downsize in order to keep your operating costs proper? What are your intentions with regard to the 6,400, I think it is, employees?
Mr. Crichton: I will let Mr. Copeland comment more specifically. However, I will just make one brief comment. All through the commercialization process, the advisory committee, it was acknowledged and understood by all concerned that there would be a restructuring.
That has never been something that was not contemplated. In keeping with the tradition of those ANS systems in other jurisdictions that have been commercialized and have been very effective, yes, there will be, over time, a restructuring of the organization.
Senator Spivak: Can you give us some indication of what that would mean in terms of employees? Is that 30 per cent, 20 per cent, 50 per cent? What do you anticipate?
Mr. Kenneth B. Copeland, President & CEO, NAV CANADA: Senator, there is no specific target that has been set at this point in time. We would see this happening over a period of time when we get experience with the system. Our first objective in taking the system is to provide stability of service and to provide integrity of the safety. While we look at the number of options, which include a great deal of technical options that come with that, not just people, the two play in the system together. So we would be guarded in our approach to this.
Ultimately, we would see fewer people in the system. That, of course, is per unit of work. There is also the mention of the growth of air traffic. So those two will play together. We have no specific target at this point in time.
Senator Spivak: Nor a specific period of time over which this restructuring will take place?
Mr. Copeland: Not a specific period of time. I am not delineating a long period of time either, senator.
Senator Roberge: I would like to go back to the financial package. I had some difficulty in trying to get figures from the Ministry of Transport when we met last week. I asked them for a five-year projection, which they probably have done with you, and there was some hesitation on their part. He said that they have signed a non-disclosure agreement with NAV CANADA and therefore cannot give it to us. I am going to have to verify with our legal advisers. I have not heard from him, nor did I expect to hear from him.
Let me ask you the same question: Can we have a five-year projection?
Mr. Crichton: Senator, reluctantly, the timing of being able to release those types of projections is not good. We are, as I indicated earlier, in the midst of major financing and the preparation of the prospectus that is to go with that financing. We are in the final stages of our due diligence prior to closing and formulating the projections that will have to go into public prospectus.
Those require the approval of an audit committee of our board, and also our board. They need to be submitted through the securities commissions and based on national policies applicable to the securities commissions. We are not in a position to release that type of information. I certainly could not release it in respect of the fact that it is still before our own internal board committees for approval.
It is just a matter of timing. All of this will be made public in due course. Air Canada will operate on a very transparent and full disclosure basis, but the timing of trying to release those kinds of projections at the moment is not good. However, I would reassure you that there is a significant user representation on this board. They are very concerned about price elasticity. Indeed, one of the fundamental principles they put into play in purchasing the system was the rate index I referred to earlier; to make sure that this deal was going to work in a way that was going to keep costs under control and that the flying public was not going to have to pay more as a result of it.
Senator Roberge: In order to go to the market for your borrowing -- you are talking about borrowing $3 billion -- more than likely you will have to go also to the United States for some funding. Is that correct?
Mr. Crichton: It is more than likely, yes, although it is not certain. We may be able to raise it in Canada.
Senator Roberge: It is a pretty large sum for Canada.
Mr. Crichton: That is our preference, to raise it all in Canada, but we may need to go to the US.
Senator Roberge: However, with the size of the offering, more than likely you will have to go to the States. What happens to Canadian control if you default? I do not have any information to be able to pass judgment; for example, for our committee to find out your financial projections.
Mr. Crichton: The bylaws provide that if NAV CANADA, to use your word, defaults -- I would use the term "goes broke" -- all of the assets of the system revert to the Government of Canada. This company cannot be owned by other than either NAV CANADA, as it is constituted under its bylaws, or if that fails, the Government of Canada -- the net assets will automatically revert to the government. It cannot fall into foreign hands.
Senator Roberge: If that is the case, we would not have done our job here in the committee in trying to find out some information.
Senator Johnson: Particularly as the Auditor General did not have access to any of the financial side. The Auditor General has publicly stated that he would be more comfortable with this whole thing if he had had a chance to look at the financial situation, which he did not. Being that this was not a Crown entity, they did not allow him access to it. That is, of course, one thing that is bothering us and something about which we will also question the minister. Is there anything you can enlighten us on in that respect?
Mr. Crichton: With respect to the Auditor General?
Senator Johnson: Yes, his comments on this whole undertaking, financially?
Mr. Crichton: We think we overpaid -- you can tell the Auditor General that for me, for the board. However, we have nothing to do with the Auditor General. That is an internal problem.
Senator Johnson: I understand that, but it is public moneys that are still involved here in terms of this whole deal.
Mr. Crichton: We are the purchaser, and we have to raise the money and put on the table a cheque for $1.5 billion on closing; the users have to pay for it afterwards in terms of the fees. I can assure you that we think we overpaid. That is the only comment I can make at this point.
Senator Adams: You mentioned that you do not have shareholders; just yourself, the president and another group. Right now, it sounds like it has been a kind of trial of how the system is going to work, how you are going to reduce costs. Presently, NAV CANADA is setting up a company and concentrating more on administration, et cetera.
I would just ask whether you are going to have a better system than Transport Canada, or it is going to be about the same, while trying to cut down the costs.
Mr. Crichton: Certainly, the vision that I think everyone shares, including Transport Canada, is that the federal government, not through any fault of its own, simply by the fact that it is a government, is not cut out to be a service provider in a dynamic commercial environment; that the various government policies, which are all there for very good reasons, relating to what governments do best, in fact get in the way of these types of services; that the industry has matured, as well as the economy that we all live in; and that the whole process of reinventing government dictates that now is the time to do this.
Certainly when you look around the world in other jurisdictions where this is done, you see some very successful results. So we think that by running the system as a customer-oriented, user-driven operation, using best private-practice principles in a corporate structure, we will in fact deliver a better service in the long run, one that is more responsible, will get out from underneath government policies, whether they be personnel policies or they be procurement policies, and so on. Decisions will be made on what is best for the ANS in a very narrow sense of what is best for the corporation.
Senator Adams: You have been a director for First Air, and you know the cost of freight to Baffin and Keewatin. If NAV CANADA administers an airline, how much do you think freight will cost? For example, my restaurant has products shipped to it almost every week from Winnipeg.
Will there be additional administration costs to administer how many kilos people are transporting to other communities?
Mr. Crichton: Senator, I can assure you there will not be any ANS charges related to per kilos of freight or anything like that. The ANS fees will simply replace the ticket tax, which is a more equitable way to pay for it. I do not think there will be any more administration for the carriers; in fact, considerably less because there will be fewer entries to make. They would only get one entry for one flight instead of per passenger to deal with it.
Air fares in the north are traditionally much higher than they are in the south, both because of the longer distances and the much higher operating costs, as you well know. Therefore, when we go to a system that is based on ANS costs, which are not necessarily that much higher in the north, plus the legislation that protects that the charges have to be the same as in the south, there will be, in fact, I think less of an impact of the ANS charges on a per person basis in the north than there will be in the south. The way the economics are going to shake out on it, I believe that is probably what is going to happen.
Senator Adams: Are you going to raise the taxes and charge landing fees in the communities? What will the future hold for the remote communities?
Mr. Crichton: NAV CANADA does not have any jurisdiction in terms of the operation of the airports themselves, anywhere. That is being dealt with through another program in Transport Canada.
In terms of the Northwest Territories and the Yukon, they have agreed to turn over all of the airports, including the larger ones, to the territorial governments, and they are administering those airports.
Our involvement is through what they call the CARS program, the Community Aerodrome Radio Station program, where NAV CANADA will be paying part of the cost of employing people in the communities to act as radio operators and weather observers, and so on. Part of our commitment in the deal is to continue that program, to financially support it and to expand it as necessary.
We are also in the midst of discussions with the major Inuit groups in Canada, including Inuit Tapirisat, Nunavut Tungavik and the Inuvialuit to explore contracting out opportunities for them in the land claim areas.
Senator Spivak: I want to go back to the financial question again. I guess I did not make myself clear. It would appear to me, based again on the previous presentation, that it is going to cost more to operate this system, based on debt-servicing costs and operating costs. That may not be reflected in the figures here, but is it an accurate assumption that it will cost more?
Mr. Crichton: Not over time, no.
Senator Spivak: But it will initially. You are intending, since we cannot see the statements, to cut your costs by downsizing and to replace the $600-million operating and maintenance costs through fees and overflight; is that correct?
Mr. Crichton: There are a number of issues, not just downsizing. It is also smarter procurement. It is also better value for money.
Senator Spivak: You are talking $600 million here.
Mr. Crichton: We are talking very large amounts of money, but there are people who will tell you that -- and I can point you to some professional accounting firms -- as a rule of thumb, a well-run private business will make major acquisitions of capital equipment or services at half the rate that governments traditionally do. We are talking very large sums of money here, and so it is not just downsizing.
Senator Spivak: Half the rate.
Mr. Crichton: Half the rate. That is a rule of thumb.
Senator Spivak: And the same quality.
Mr. Crichton: I am not saying that that is what NAV CANADA has put in its projections at all. I am simply making the following point: Do not focus only on the downsizing of people; there are also going to be private-sector business procurement principles brought to bear.
Another point, of course, is that on the revenue side of the equation, a very significant amount of revenue will be coming to the corporation that has heretofore not come into this equation; that is, the overflight revenues, which are very significant. They are higher than what is shown on this analysis.
Senator Spivak: Higher?
Mr. Crichton: Yes. So it is the operation of all of these various factors.
Senator Spivak: Just let me get this clear. You need to replace about $600 million. What I am trying to get at is: What is that going to cost us in levies and fees? You are going to downsize, you are going to do better procurement, you are going to have overflight. Is it not going to cost the public more?
Mr. Crichton: As I indicated earlier, the board of NAV CANADA was very careful about putting this deal together so that when you, senator, fly home to your riding, the total ticket price that you pay, after commercialization, allowing for the tax that you have to pay on that ticket now, will not be more than you pay today, all other things being equal, inflation and what not. The commercialization of the ANS should not increase the gross cost of flying.
That is what we are working on and that is what the users expect us to work on; indeed, over time, reduce it from what it otherwise would have been. We are confident that we will achieve that goal.
Senator Spivak: Great. Of course, you are on the public record now. You said it here.
Mr. Crichton: I have been on this particular public record for several years.
Senator Spivak: In your presentation, you say that Bill C-20, in its present form, is very important to you to get credit rating and ultimately financing. You are suggesting, delicately, that inappropriate material amendments to this bill could jeopardize the credit ratings in financing. You are not seriously saying to us that if we see things wrong with this bill, we should not amend it because it could jeopardize your credit rating in financing? Surely you are not.
Mr. Crichton: No. What we are saying is, think very long and hard before you amend bills. We are being realistic. This is a parliamentary system. You are holding committee meetings, as did the house. People come before you with various suggestions. Maybe they sound good. That is simply an indication to the committee that this bill strikes a certain balance of interest. Quite frankly, I think that it is one of the greatest pieces of consensus that Parliament usually has to deal with.
Senator Spivak: I think the major problem, at least for some of my colleagues and myself, is that we do not have all the information. It would be nice; we would like to support you in all of this. You are asking us to trust you, yet we do not really have all the information. That is the problem. We do not have the information as to your future business plan or the details of your prospectus. We do not have that information.
As a businessman yourself, you must admit that you would not like to be in our shoes. You would not like to approve something that you do not have the entire handle on. That is all I am saying to you, in terms of responding to what you are saying about material amendments and so forth.
Mr. Crichton: Senator, I respect that, but I must emphasize to you that the people who are going to pay for this system, primarily the commercial air carriers, are 100 per cent in support of this proposal.
Senator Spivak: Oh, I do not doubt that.
Senator Johnson: I am sure they are.
Senator Spivak: I am sure they are.
Senator Forrestall: It is kind of cosy. Why would they not be?
Mr. Crichton: Senator, it is not cosy at all. It is a recognition that the government could no longer fund the deficit. It is an attempt by the industry -- if they have to pay for something, they want to have some comfort and some say in how it is going to operate.
Senator Forrestall: You are the one who said to call a spade a spade.
Mr. Crichton: Indeed.
Senator Forrestall: You are the one who said let us be realistic, let us be honest and open. This is a cosy arrangement. Come on! Where in this legislation would anybody take any great comfort, for example with respect to the easing of standards? The language is vague, adequate. What is adequate?
Mr. Crichton: In respect of what matter, senator?
Senator Forrestall: The safety in flying.
Mr. Crichton: The safety is provided for under the Aeronautics Act. This bill in a number of places makes it clear that the Aeronautics Act prevails in matters of safety. This legislation itself is not about the safety regulation of the ANS, other than it refers back to the supremacy of the Aeronautics Act. This is an enabling statute to allow a business transaction to occur and to protect the public interest through the structure of the organization.
Senator Forrestall: Is there anything in this bill that would require you to come back to us for any reason, return to Parliament, once you are up and running with the appropriate authority that the legislation will give you?
Mr. Crichton: I do not believe so, senator.
Senator Forrestall: We would simply say goodbye to you, then; this is our last kick at it?
Mr. Crichton: Parliament has the discretion to come back and revisit any piece of legislation, whenever it wants.
Senator Forrestall: Any piece of legislation, but not necessarily this one. You are not obliged to report to us or to any body.
Mr. Crichton: Oh, I am sorry. In terms of our accountability, from a safety point of view, we are accountable every hour of the day to the regulator. In terms of the business operation, there are very specific provisions regarding our accountability. We have bylaws, which the act preserves and says cannot be changed, regarding public annual meetings, publishing annual reports, full financial disclosure, the very deliberate process for attempting to change user fees or to change or make any material changes in levels of service or policies. The structure of the board of directors includes three members who are nominated by the government, by the Minister of Transport of the day, to sit on that board.
So there is a strong and comprehensive chain of accountability in reporting that the corporation must comply with under this legislation on an ongoing basis.
Senator Forrestall: Were you here when Mr. Peppler and the chief executive officer were here?
Mr. Crichton: No. But we had a chance to glance at their brief, senator.
Senator Forrestall: I wanted to deal with the second paragraph of their submission to this committee, which states:
We ask that the bill be returned to the house with a request that fair and equitable treatment for private, non-commercial pilots be incorporated into the act for their nominal use of this formerly public facility. We do not ask for free access but for fair access. We ask for acknowledgment of the direct and indirect taxes already imposed on these pilots and for the elimination of proposed double taxation for those unable to recover such costs.
What reason would there be for COPA to raise that issue; do you know?
Mr. Crichton: In terms of the access issue, I am not sure. That is the first time I have heard that. The bill does not impair access to the ANS system for anyone. There is no access issue that I know of.
In terms of the taxation issue, as I mentioned earlier, yes, NAV CANADA agrees with their point. NAV CANADA, or NAV CANADA's predecessor during the advisory stage, in fact suggested, when COPA raised this subject earlier, as indeed some commercial carriers, that one way of funding -- partly funding, at least -- NAV CANADA was to divert that tax revenue from aviation fuel taxes to the corporation. And certainly, as COPA indicated, that would be their share. That was not accepted.
I gather there are some problems in the Department of Finance with turning over tax proceeds to private corporations; I am not exactly sure of all the technical reasons. However, this was certainly discussed. Again, the commercial industry is paying Canadian carriers alone over $150 million a year, and they are not getting that. Certainly we agree with that issue. However, we have been told that it is not possible to do, that that tax cannot be transferred. NAV CANADA would be happy if there were a levy on the sale of aviation gasoline to private aircraft owners and we got some proceed of it. That would be fine and we could call it a day. Unfortunately, senator, it is not within the realm of possibility, I have been told.
Senator Forrestall: It is rather strange, because that is precisely what we did about 20 or 25 years ago when we proposed the landing fee principle. They said that depending on the fuel tax, they would pay the costs that way. I agree with you, I wish it were shared; that there were some other method of doing it.
If I understood correctly what COPA were suggesting with respect to access, they were not suggesting that they did not have access, but that they wanted to pay a fair amount for that access and to pay it in a reasonable way. They did not want it free. They are prepared to do that, as indeed their 18,000 or 20,000 members would admit to you.
Coming back to the great bulk of your revenues, let me ask a question about the fuel tax. How will you recoup the equivalent? How does that come to you? Could you explain that to the committee?
Mr. Crichton: The air transportation tax?
Senator Forrestall: The fuel tax. How will it come to you?
Mr. Crichton: There is what is known as a transition period payment agreement between NAV CANADA and the federal government for the first two years after closing.
Senator Forrestall: Do they collect it in the first instance, or do you?
Mr. Crichton: The government will continue to collect the air transportation tax during that two-year period. We have agreed on an amount, a projection of what that will be, so the government is only committed to that much. That will be transferred to NAV CANADA in monthly payments. As part of the phase-in of user fees, the agreement provides that NAV CANADA can give the government notice during that two-year period to reduce the tax by a given gross amount for the remainder of the period. That amount must be roughly equivalent to the user fees that are being introduced.
There will not be any double-dipping once we introduce the user fees. If we introduce user fees, for the sake of argument, that are estimated to be about $300 million a year, then the government, on notification from us, will arrange to reduce the ATT by $300 million a year.
Senator Spivak: If your initial public offering, or your debt issue, is $3 billion and part of that is operating costs in the neighbourhood of $1 billion plus, how does that square? You might have enough money to operate. How does that square with the tax? There is $1.5 billion in the initial price, and then the operating expenses.
Mr. Crichton: The $1.5 billion is long-term debt. That is not expense.
Senator Spivak: That is long-term debt, right. How does that relate to the other arrangement that you have with the government for the transition?
Mr. Crichton: The air transportation tax in the first 12 months after closing is estimated to be in the range of $700 million. That will be transferred to us. There is presently approximately $170 million annually being collected in overflight fees. There is also approximately $30 million being collected in North Atlantic fees. That is $900 million in revenue right there, in year one, just from those three sources.
The user fees will be gradually introduced in keeping with the international principles of gradualism. The tax will be reduced accordingly. And the tax, of course, is sensitive. The revenues of the corporation will be very sensitive to growth, traffic growth and movements; in the international field particularly, traffic has been growing.
Senator Spivak: Again, Madam Chair, it is very difficult to look at this business plan without having all the information, because a number of questions in terms of the actual figures do arise.
What is your deadline on the debt issue? When is this debt issue to be issued?
Mr. Crichton: I indicated that, on closing, we will be paying the government $1.5 billion. We will be arranging operating credits. This is not all drawn cash. We are going to attempt to pre-borrow our first five years estimated capital expenditures in the form of credits, having those credits available. We are going to have working capital, which we are going to need in the first few years for cash flow. We are going to have debt service reserve accounts to maintain our high credit ratings and keep our interest and borrowing costs low.
We are working with a syndicate of banks now, led by the Royal Bank of Canada, in terms of arranging bridge financing to cover all of those issues. We will then go to the long-term debt market in an orderly fashion to put out public issues; tranches of debt when the market conditions are most favourable to us, without deadlines, in an orderly fashion with the best possible rate.
Senator Spivak: The timing of that issue is flexible; correct?
Mr. Crichton: Yes.
Senator Forrestall: Will you pay the government a service fee to collect this money for you over the next two years; if so, what is the amount of that fee?
Mr. Crichton: I do not believe so. It is an agreement for a set amount of money, based on an estimate of what the ATT would be. It was a mutually agreed estimate.
Senator Forrestall: There is a manpower cost, if nothing else. Would Mr. Copeland be able to shed some light on that? We do not collect these kind of fees free; somebody has to be paid to do it.
Mr. Crichton: The airlines collect the tax.
Senator Forrestall: Yes, but the money is coming to you.
Mr. Copeland: In a predetermined schedule.
Senator Forrestall: That is down the road. I mean in the interim period. Somebody has got to continue to keep the revenue coming to you. Are you paying for that service? I hope you are not; I am just wondering whether or not you are.
Mr. Crichton: No, senator. The vast majority of the cost of collecting the air transportation tax is borne by the airline industry. They assess and collect the tax; they simply send a cheque to Ottawa once a month.
Senator Forrestall: And they write you a cheque once a month?
Mr. Crichton: The government, not the carriers; the government, in terms of the transition period on the tax. Ultimately, as the tax disappears and the carriers no longer have to collect it from every passenger, presumably they will get a bill once every two weeks or so from NAV CANADA for each flight movement for the user fee. However, the tax will be gone.
Senator Forrestall: There will be a bit of a gap. The question of coming into force and proclamation, all of that is very key here. My understanding is that there will be a gap between the time of transfer of certain authorities and the entering into of international arrangements; you are going to have some shortfall in the capacity to recapture that. The amount is some $207 million during 1996-97. How are you going to recapture those funds?
Mr. Crichton: Senator, I do not know where those figures came from.
Senator Forrestall: You do not?
Mr. Crichton: No.
Senator Forrestall: These are annual revenues from overflight and oceanic charges.
Mr. Crichton: I do not know where the specific figure you mention came from. There will be a shortfall in cash flow in the first two or three years, as the company spools up, as we bring in the user fees and get them to full cost recovery basis. Yes, there will be an operating loss cash flow, negative cash flow during those periods. That has all been taken into account. That will be financed and amortized over the life of the debt. It is there to avoid shocks to the user community, to passengers, to phase it in gradually as part of the transition. That will be amortized over the long term of the debt.
Senator Forrestall: The other area that concerned me, and we discussed this privately, is the make up of the board and the virtual absence of women on your board, with one notable exception.
What can you tell us about your intentions, keeping in mind that the road to hell was paved with good intentions. Surely the industry has a number of very competent women who would love to have one of those directorships. I do not know what you pay your directors -- and I will not ask; I presume that is private -- but if you divide 15 into the total amount of money, it is a healthy sum, it is a nice directorship. Can you get some more women? Can you find some interested women, either in the industry or in business, with a good capacity for this type of work?
Mr. Crichton: Yes, and it is certainly our intention to do so. The timing was very short for putting the board together last summer and fall. The nominating committee went to some lengths; in fact, there were two or three women who we thought would be able to sit on the board, and who could not. We literally ran out of time in terms of needing a quorum.
Directors, in the initial years, are appointed on staggered terms, and it is the highest priority of the nominating committee to bring some more women on the board at the earliest opportunity.
The Chairman: Thank you very much, Mr. Crichton and Mr. Copeland. We have kept you a long time, but all the questions needed answers.
Our next witness is Mr. Anderson, the Minister of Transport and Communications. He is accompanied by Mr. McDougall, chief negotiator.
The Honourable David Anderson, P.C., M.P., Minister of Transport and Communications: I would like to welcome the opportunity to appear before you today to talk about Bill C-20. Senator Perrault has already provided an excellent overview of this bill at second reading and my officials have also had the opportunity to speak to you within the general framework of the bill. I will try to concentrate my remarks on one particular aspect of the commercialization initiative, which is my role as Minister of Transport in the system in the future. I realize that you have posed some questions on this, and I hope that my statement will answer some of those questions at this time.
First, the transfer of the ANS to a private-sector corporation will remove the government from the business of financing, of operating, maintaining and developing the air navigation system. NAV CANADA will be free to operate the system on commercial terms within a safety, economic and accountability framework established in the legislation, contractual agreements with the government and the bylaws and letters patent of the corporation. However, this does not mean -- and I would like to stress this -- that as Minister of Transport, I or my successors will no longer have a role to play in air navigations.
The minister continues to have several responsibilities. the focus of these responsibilities is to safeguard the public interest. The most important is with respect to the safety of the air navigation system. The Minister of Transport will remain the regulator of safety of the ANS.
Bill C-20 confirms that the safety of the ANS is of prime importance. It points to the paramountcy of the Aeronautics Act, which also comes under the authority of the Minister of Transport. Pursuant to section 5 of Bill C-20:
Nothing in this Act affects the application of the Aeronautics Act.
The Aeronautics Act, and the attendant regulations, govern aviation safety in Canada.
Since Transport Canada currently supplies as well as regulates civil air navigation services, it guarantees the safety of the ANS through a series of internal policies, standards and practices which it applies as part of the departmental management process. Since the ANS will be commercialized, these internal requirements will become legal by virtue of Part VIII of the Canadian Aviation Regulations. Adopted pursuant to the Aeronautics Act, these regulations have been the subject of consultations with stakeholders. The ANS will not be transferred to another authority until these regulations are in effect.
The Minister of Transport will monitor, verify and apply these regulations. Once the ANS has been commercialized, operational and regulatory responsibilities will be separated and there will no longer be a non-arm's length relationship between the regulatory authority and the regulated body. This measure associated with the regulation of air carriers, aviation personnel, aircraft manufacturers and other commercial aviation companies, has proved to be in the public interest. Transport Canada will be vigilant in taking up the task of regulating the new ANS corporation.
So a key part of the minister's safety responsibilities will concern reductions in service -- another of your concerns, Madam Chair -- proposed by NAV CANADA. Bill C-20 establishes a requirement for any changes in service proposed by NAV CANADA to be consistent with the Aeronautics Act and the associated regulations. In this regard, I, as minister, will have the authority to request NAV CANADA to conduct an aeronautical study to demonstrate how safety will be assured. If the minister is not satisfied that safety will be maintained after the proposed changes, NAV CANADA can be directed to continue the service. The minister can also order NAV CANADA to increase the level of service in the interest of aviation safety and of the safety of the travelling public.
I should say, however, that the responsibilities of the minister will not strictly be limited to safety regulation. User charges is another responsibility which concerns the approval of NAV CANADA's user charges during the first two years of its life. It is likely that NAV CANADA will opt to follow the "special approval of charges" procedures set out in clauses 39 to 41 of the bill during this initial period, as it introduces its system of charges which replaces the air transportation tax currently being paid.
So in this case, the role of the minister would be to review NAV CANADA's proposed changes in relation to the charging principles which are set out in Bill C-20 and to consider at that time any representations that may be made by users or other interested parties to the proposed change. That would be done before allowing NAV CANADA to implement any such proposal. The involvement of the minister in this formative stage of NAV CANADA's charges ensures that the charges get started in an appropriate way.
Furthermore, Bill C-20 confers upon the Minister responsibility for the delivery of services to remote regions which are heavily dependant on air transportation. The Minister will award a special status to ANS services currently provided to northern or remote regions. A list of these services has already been drawn up with the help of all provincial and territorial governments. If NAV CANADA wants to eliminate or reduce one of these services, it must first notify the interested parties if the change is likely to affect a sizeable group of users or residents in any significant way. By acknowledging the impact of such a change on residents, the government is demonstrating that it remains attuned to the needs of remote communities.
Either the government of a province or territory affected or a certain number of users may veto a proposal of this nature. When this happens, NAV CANADA can ask the minister to overturn the veto. Consequently, ultimate responsibility for reducing services to northern or remote regions rests with the Minister of Transport.
The minister may also order NAV CANADA to provide additional services to northern or remote regions. However, NAV CANADA will receive financial compensation for any financial loss resulting from the enforcement of this order.
Mr. Anderson: The Minister of Transport also has authority with respect to changes in NAV CANADA's letters patent and certain articles of its bylaws. Key articles of the bylaws dealing with matters of governance and accountability cannot be amended without the approval of the Minister of Transport. Among the matters covered are the numbers and qualification of directors, the process for appointing directors, public notice and consultation in respect of changes in user fees, facilities and levels of service, the requirement for an advisory committee, and the business at the corporation's annual meeting.
Madam Chair, honourable senators, I believe, taken together, these responsibilities demonstrate that while the government is turning over operation of the air navigational system to a private-sector corporation, it is reserving for the Minister of Transport an important role in key public interest issues. I think that this is another example of how the ANS commercialization initiative reflects an appropriate balancing of commercial interests on the one hand and the interests of Canadians generally on the other.
If I may, I would urge you respectfully to support the bill to ensure that in the next century we continue to have an air navigation system in this country that meets the users' needs, as well as those of the public at large.
Thank you, Madam Chair. I will be available for any questions that you may have.
The Chairman: I would like you to discuss the amendment to the bill which delays the coming into force of certain provisions until the transfer date. I think it is designed to correct the bill that we have before us, and I would like you to explain that to the members.
Mr. Anderson: Madam Chair, I think you have correctly described the purpose of this amendment. It is in fact a relatively technical issue, and it deals with financing. It basically concerns the hiatus between Royal Assent and the coming into force. Wording in the bill would have meant that we were referring to the hiatus rather than the previous period when the previous act was in force. Therefore, to correct this, this amendment has been proposed
I think I had better turn that technical aspect over to Mr. McDougall. He will comment further, in case I have missed some salient points.
Senator Forrestall: This is precisely the point. Mr. Crichton said he had no knowledge of the numbers I was quoting. I am not sure whether or not we should be proceeding with this. You are the minister. I guess you can deal with whatever you want to deal with.
Mr. Anderson: If I may, I will just add, in terms of substantive effect of the legislation, that this change would not alter provisions of the legislation except with respect to this relatively short period. The problem relates to that effective date. Bill C-20 does not contain a specific coming-into-force clause, meaning that all clauses become effective upon Royal Assent. So we have the problem of overflight and oceanic charges which were currently collected by the Civil Aviation Authority of the United Kingdom on our behalf.
The CAA collects these charges. It has separate regulations in the United Kingdom authorizing the imposition of these charges on Canada's behalf. Overflight and oceanic charges could be imposed in the interim period on the basis of those British regulations. However, NAV CANADA would not be able to impose them on the first day as the operator because clause 33 of Bill C-20 states:
...charges imposed by the Corporation on or after the transfer date for air navigation services shall be the charges that were imposed by the Minister immediately before the transfer date.
That is our dilemma with that particular concern. In fact, it would applied by the British CAA rather than the minister.
There is some legal discussion of this, and it might be possible to try a different way of doing it. This proposal was considered to be the safest way of proceeding.
Senator Roberge: If we have so many specialists at the Ministry of Transport, so many specialists with NAV CANADA and so many outside consultants, how can we miss something like this? This is sloppiness.
Mr. Anderson: Senator, the tenure of your comment is quite correct. There are indeed many specialists. I do not know the drafting pressures that might have led to this. I do know, however, that this is not unique; that we picked up an error later in the process of the bill. I guess all I can do is ask your indulgence and say that Transport Canada tends to have perhaps more people on the side of inspecting aircraft, trains, accidents, trying to ensure safety in that regard. Perhaps we have too few people on the other side correcting pieces of paper. Nevertheless, you are right. It is something for which I apologize and am embarrassed about. It is an error for which I am willing to take full responsibility.
Senator Roberge: I have been trying to get some financial from the ministry, and to no avail. They have signed a confidential letter of understanding with NAV CANADA, they have said, about which they cannot give us the projections for next five years. Also, I am not able to get the information from NAV CANADA.
How are we to judge if the government is being paid enough for NAV CANADA, if we cannot get these evaluations, these projections?
Mr. Anderson: There was some discussion as you will recollect, senator, about throwing this open to any commercial operator who wished to bid. Indeed, you might have had another country's air navigational authority bidding to take on the work in Canada. It was decided not to proceed in that fashion and to have a board which was composed essentially of the users to a certain degree, the public representing different government interests, as well as union interests on that board; in other words, we created a board, which obviously meant that you could not have full open bidding to the highest bidder.
This was felt to be more appropriate in terms of the important aspects of public interest that had to be protected. You are correct in the general thrust of your question. We did not try for the highest bidder that might have been out there. We instead tried to craft an organization which would be responsive to a number of different concerns, and this may in fact have resulted in the price being less than we otherwise would have got.
With respect to direct projections, we do have projections with respect to hopeful savings that we may get. We are comparing ourselves essentially to the New Zealand and Australian experience, which is not entirely on all fours with our expected Canadian experience because they do not have the overflights through Australia or New Zealand airspace to a country like the United States which would be adjacent. It is difficult to give correct comparisons because we are in a sense in somewhat uncharted territory financially.
Senator Roberge: Why cannot a senatorial committee get proper information to be able to judge the bill properly? It escapes me as to why we cannot get this information.
Mr. Anderson: I am unaware of the questions that had previously come. We had some financial information sent to the committee on June 14th. I do not have it in front of me at the moment. I could check with my officials as to what it was.
Senator Roberge: I asked the question last week to the Minister of Transport, to your people who were here, and I have never received anything.
Mr. Anderson: Again, senator, I do apologize if that were the case. We have some information here which we understood did come. There must have been some error on our part. This is a memo to Mr. McDougall of Transport Canada from Nesbitt Burns, the latest financial model for ANS commercialization which includes instalment, sales structure, discussed, et cetera. Opening revenue is set for $800 million in year one of the entity, which would be 1996/1997. This amount is $700 million of terminal and en route revenues and $100 million of revenues from international flights.
Future revenue growth comes from three sources: annual traffic growth of 2 per cent projected, another 2 per cent projected for inflation, and a phase-in for the additional overflight revenues. We have assumed that the additional international overflight revenues would be phased in at a rate of approximately $50 million a year in year two, another $50 million in the year three, for a total of $200 million.
Senator Roberge: That was not sent to this committee, was it?
Mr. Anderson: I understand that this was sent to the committee. I can pass this down to you.
Senator Roberge: Is there an intention for us not to receive this? Is there a hidden agenda for us not to receive this?
The Chairman: We cannot say we received it when we did not.
Senator Roberge: He just said it was sent to you.
The Chairman: No, no, no.
Mr. Anderson: I can only assure you, senator, that we in fact are quite proud of what has been put together. This is an unusual comment for me because I generally find myself like the ancient mariner, tugging at lapels telling them about the virtues of the system, and generally people trying to escape my remarks rather than encourage me to tell them about what I think is a very good development.
So indeed, all I can do is apologize for any error. I assure you that it was unintentional. We are rather proud of what we think this organization will do, the financial structure that is set up, and we generally find that people complain of too much information rather than too little, as we attempt to persuade them of its virtues. I do apologize, because obviously there has been some error, if you have that view.
Senator Forrestall: While the minister, Madam Chair, is in the mood to give things away, would it be possible for us to see the proposed amendments with respect to these deficiencies?
The Chairman: I tabled a letter from NAV CANADA.
Mr. Anderson: Gordon Wilson may have that here.
The Chairman: It is the same thing that was included in the letter from NAV CANADA.
Mr. Gordon Wilson, Legislative Assistant, Transport Canada: The amendments, Senator Forrestall, that were being proposed are slightly different.
The Chairman: Are they different from the letter we have from NAV CANADA?
Mr. Wilson: Not in effect.
Senator Forrestall: I would like to have a copy of the amendment as it is going to be proposed.
Mr. Anderson: We have the amendment now, I understand, before you.
Senator Forrestall: Does this achieve all of the problems that you perceive with respect to this bill?
Mr. Anderson: Senator, it does. We believe that this will deal with it very satisfactorily. If you have further questions about the specifics, I would be happy to have Mr. Gordon Wilson speak to that.
Mr. Wilson: The proposed amendment in front of you reads:
Sections ll, 13 and 100 come into force on the transfer date.
The primary issue is proposed section 100. That is the one that strikes down the minister's authority to impose charges for civil air navigational services. With the current construct of the bill, that would take place upon Royal Assent, putting us in the situation that Minister Anderson previously described. This amendment would rectify that situation by retaining the minister's right to impose those charges up to the transfer date, which means that from the NAV CANADA point of view, and in respect to clause 33 of the bill, which says they may impose the charges that were imposed by the Minister of Transport immediately prior to the transfer date, there are in effect charges for civil air navigational services imposed under the authority of the Aeronautics Act immediately prior to transfer, and those would then become the charges that they in fact inherit upon transfer. That is the key provision of this amendment.
There are two other proposed section references in there. The first is proposed section 11, which deals with the designation to ICAO of the Canadian authority for air traffic services and aeronautical information services. As a member state of ICAO, Canada is responsible for designating who will provide those services on its behalf. This does not have to be in the legislation. It is something that would be done by way of a letter from the government to the International Civil Aviation Organization, but it was inserted in the bill to provide further evidence to lenders that the Government of Canada was serious about transferring this business and putting NAV CANADA squarely in charge of operating the business. So it was put in.
If that letter that the government would send would indicate that NAV CANADA would be designated as of the transfer date, and if we are in the process of making an amendment, it would be more precise to state that that designation takes place upon transfer.
The third reference is to proposed section 13, which deals with the planning and management of the airspace. It says that NAV CANADA has the right to plan and manage the airspace, subject to the Governor in Council's right to classify the use of the airspace.
Again, there would be nothing for NAV CANADA to manage until such time as the transfer takes place. Given that the authority to designate the airspace remains with the Governor in Council permanently, there is no need to do this. Once again, it is more precise to state that that authority to plan and manage takes effect upon the transfer date.
Senator Forrestall: I wish you could have made this available to us a bit earlier. However, we now have it. Will that preclude your forecast loss of some $207 million?
Mr. Wilson: I was present when you asked that question of Mr. Crichton, and I believe that he understood that question to relate to a shortfall in revenues that exist at the present time. The amount of revenue that is in question here, if we were not to make an amendment, is substantially less than that. It would be the amount of daily collections from overflight and oceanic charges in the first 11 or 12 days that NAV CANADA was in business. If the transfer were taking place around September, the shoulder season of the year, you would be looking at about $600,000 of revenue a day. So, you would be in the $7 million dollar range for loss of revenue in that period.
With respect to the $200 million, it is a coincidence, in that it is a figure that has been used in the past for shortfalls that have existed and the finances of the air navigation system. It also happens to be the approximate annual revenue from oceanic and overflight charges. I sense there was some confusion, but the revenue loss is the figure I mentioned.
Senator Forrestall: Mr. Minister, I just had one other item here that concerns me very much. It is all part of what we are trying to do. We are trying, I think, to get out of the regulatory government process into the competitive process. We are trying to move, trying to become more efficient, with more and more limited capital and equity resource, and I think we are doing a reasonably good job.
I cannot help but wonder as I look at it whether or not in this case we are not as well responding to a need, created or allowed to fester as a result of that fact that our Aeronautics Act was written back in the 1930s; that this being the 1990s, we are amending it out of existence.
I would like the minister's comments on whether or not the government feels that there is any need for a national Aeronautics Act; if so, what would he suggest is a reasonable way of getting rid of a 60-year old piece of legislation and bringing it up to date for the millennium?
Mr. Anderson: Senator, I agree with the general thrust of what you said, with the proviso that we are indeed maintaining the regulatory role and maintaining the safety role.
If I may, I would like to address obliquely a concern that I know Senator Spivak had on many occasions; that we believe safety can only be enhanced by separating out the operator's role and the regulatory role. Safety is the most important responsibility of my department. If you have a structure where you are operating various elements of your transportation system, and at the same time you are regulating them, inevitably some of the people involved will wind up either in superior positions or perhaps subordinate to someone else in the system.
In other words, you run the risk of people pulling punches, saying, "I really should go after that person, but he or she will not be cheerful about being picked up on such and such a minor infraction." They are in our organization. The culture of our organization is such that we do not cause grief for one another.
What we are doing now is separating out that operating role, giving it to the private sector or the private sector not-for-profit corporation, such as we have here. It clarifies our regulatory role. It makes it more effective in conceptual terms.
In no way would I suggest that the safety or the regulatory aspect is being diminished. That is, after all, our most important responsibility. Ultimately, when our department is reduced in size to 4,500 people, a full 2,000 of those 4,500 people will be safety inspectors, safety people. When you have that preponderance of individuals on the safety side, I think it can only improve and enhance safety.
With respect to the legislation you referred to, we are, within the department, improving, amending and consolidating various pieces of legislation. Currently, of course, it is the Marine Act, recently introduced in the House of Commons. You will, of course, also be discussing before that legislation before this committee. We look forward to your observations.
The Aeronautics Act, however, is necessary now for our regulatory role. It may be that in the future we will be altering it and improving it. However, we do not see the need for immediate change of that piece of legislation at this time. The Aeronautics Act certainly will be looked at closely, but it is not something that we see as being eliminated by the change that we have made. In fact, it is necessary in view of the regulator responsibilities that we retain.
Senator Forrestall: I gather from what you just said that there are no plans afoot, that no work is being done, with respect to the development of the new national Aeronautics Act; is that correct?
Mr. Anderson: We indeed will be looking at that with a view to making any amendments that are necessary, but we have no plans at the current time, senator, for the complete revision of the legislation, as we have just done with the Marine Act.
Senator Forrestall: Minister, have you had a briefing of the Aeronautics Act? Have you had one, specifically, one that you asked for, that you paid attention to?
Mr. Anderson: No, I have not asked for it, senator. It was inflicted on me by the department, who thought I needed that education. I agree with you. It is a difficult act.
Senator Forrestall: I would say to the department, through you, Mr. Minister, that I wish someone would sit you down for an hour and say, "We perhaps should get on with it." This is nonsense. The act is 60 or 70 years old. Hours of work, for example: The parameters for allowable time on duty in a discretionary sense are far in excess of anything that even remotely approaches safety. Because of your concern for safely -- every minister that I have known for 30 years who sat in your office and everybody who has been responsible in that department has been dedicated to the question of safety. As Canadians, we can be very proud that we are the beneficiaries of that. However, you have allowed to continue an act that is imbued with sections allowing discretionary acts by the carriers that border on dangerous. Provisions relating to this are in the Aeronautics Act, and now they can come out.
Sooner or later you will have to rewrite this legislation. I believe that you should write it sooner, rather than later. This is not a bad bill. It is a good one; it is a good step. I know what you are talking about; I burnt the midnight oil with some people discussing this.
Mr. Anderson: Senator, from your experience on this area, I would like to thank you very much for the suggestion, which I will take very seriously. I am inflicting legislation on both this body and the House of Commons at a rate which some people regard as excessive. We have many pieces of legislation which fortunately or unfortunately you have been required to spend a great deal of time on. I certainly am not adverse to a revision of the act, and I accept your representation.
Senator Forrestall: Do not revise it; rewrite it.
Mr. Anderson: Sometimes one should not encourage the enthusiastic. We are keen to modernize the transportation system, and we are intending to do it sector by sector. I will certainly bear in mind your suggestions. If indeed I am able to achieve success in persuading the government that transport should continue to have its leading role as a generator of legislation, I will no doubt be relying upon your assistance in getting it through.
Senator Forrestall: Minister, I have not looked at this closely, but I suspect that if NAV CANADA said to an air traffic controller, "You are going to have to work 92 hours this week because everybody has got the flu," they can probably do it. The Aeronautics Act should prohibit that. My example was an exaggeration, of course. I am just saying that, presently, the Aeronautics Act does not prohibit that. It may be covered under a provincial labour law, or perhaps in Part IV or Part V of the Canadian Labour code, I do not know. I know that that is intolerable. The impression that is left is that the act needs to be torn up and rewritten.
Mr. Anderson: Senator, again let me say that I appreciate your representation there. There are some protections existing at the present time. One, of course, is collective agreements; second, the presence on the board of representatives of unions. I think we have worked in protections against such activity. There are also, of course, standard proceedings around the world. Air traffic controllers are regulated in virtually all countries, and standard practice and standard periods of work and fatigue is a very well-studied issue. Indeed, it is extremely easy to protect air traffic controllers compared to, for example, truck drivers who have so many different employers and so many different situations, where again fatigue can be a serious risk to the travelling public.
I will bear in mind your comments as they relate to the legislation. I hope we can in fact have a look at that in due course.
Senator Forrestall: Have a look at truck safety, too. I came around a corner about 15 miles this side of Rimouski around mid-morning today and saw a tractor trailer drive over a car. So safety is very, very important. It is a plea; it is not a representation. Please do it. It is most important.
Mr. Anderson: I may rely on your support, senator, to make sure we achieve that.
Senator Spivak: Mr. Minister, in listening to the representations both from NAV CANADA and the Canadian Owners and Pilots Association, certain bits of information came about, and again they reflect the fact that we have not been privy to the kinds of information that maybe we should have in order to give this legislation a proper review.
I have a couple of very simple questions. First, when I asked NAV CANADA about the restructuring plan -- they said that it was always planned that there would be restructuring -- they would not tell us how many of the 6,400 employees they intended to downsize or the time period for this downsizing. I wonder if you can shed any light on that, because we do not have a business plan; as well, it did not seem possible to obtain the information which would tell us what the bottom line is in terms of fees. It is one thing for the government to offload this to the private services -- the budget statement looks better -- but in the end, the users have to make up that difference. So, really what has been accomplished? For example, they said they would be charging fees to cargo planes, and, of course, to the private owners and pilots, who felt it was unfair to be taxed as well as paying a fee.
Will it cost NAV CANADA more to operate, given the fact that there are debt-servicing costs and operating costs? There is a way now of compensating that -- and I understand how that is being done. However, in the end, will that be a greater cost?
Also, in term of their public offering or their debt issue, is there something in the legislation that would -- I am sure there is other legislation -- keep this very vital service Canadian to a great extent?
What is the extent of the restructuring, and what in terms of their business plan are going to be the charges that the public and the users are going to have to pay to cover what looks like increased costs of operation?
Mr. Anderson: First, with respect to the employees and the restructuring, essentially, we have a verbal agreement with the board members that there will be no substantial change in numbers in the first two years; in other words, it will be a transfer which is more or less direct. That does not, of course, preclude beyond two years' time. Also, in an area of development where technology can rapidly make whole segments of employee groups redundant, we just do not know what the future may hold in terms of new technology. So, this two-year agreement is not something that one should in fact think will be there for 20 years.
On the other hand, if there is any change, we fully expect in the initial period that any rights that these people would have as civil servants will be protected in the new organization. In other words, they would have the same equivalent at least to the government's early departure and retirement incentive programs. So they would not be disadvantaged from the switch to NAV CANADA. They would in fact, if they become redundant for technical reasons, be subject to the standard government downsizing. They will not, as individuals, be disadvantaged by that switch.
In addition, we have the collective bargaining process that will be taking place, and that will, of course, be there and allow for some flexibility, with the proviso, that with union representatives on the board of directives, we believe there is some protection built in. So we do not believe that the employee should be any more concerned and fearful as a result of the switch to NAV CANADA than they would be had they remained as civil servants within the Government of Canada, which as you know we sadly and unfortunately, but necessarily, had to lay off many excellent people from the public service.
Senator Spivak: These are part of the 45,000. That is what we were told by your officials.
Mr. Anderson: Yes, that is right. There are, of course, people who have lost their jobs in this city and elsewhere in the country. It was not a question of incompetence; nor was it a question of lack of merit on their part. It was the effect of downsizing. If there is downsizing within NAV CANADA, but for a number of reasons, improved efficiency, change in technology, we expect them to be treated honourably and with dignity and respect as we are trying to do within the federal service.
With respect to fees, again we would expect, given our financial projections, that there would have been an increase in fees in any event in a general sense to pay for navigational services in Canada, even had navigational services remained with the Government of Canada and Transport Canada. This simply appeared to be in the cards because of the cost factors and our effort to make user pay a major principle in government delivery of services. That would likely have happened.
On the other hand, we are looking -- and this is where NAV CANADA becomes a very attractive development from the point of view of the consumer -- at savings due to efficiencies comparable to those in New Zealand, which were 15 per cent, and Australia, which were 30 per cent -- or the other way around; I forget which. What we are talking about is quite substantial improvements in operating efficiencies as a result of a more flexible management system. So there will be reduction in costs for that reason.
Yes, with respect to transport planes, currently, we only tax passengers. We have a tax on each passenger. Since a cargo plane has no passengers, it is not taxed in that way. However, it receives the same services as a passenger plane. The cost to the system of those two configurations, one in passenger configuration and one in cargo configuration, is the same. They escape fees at the present time.
With respect to the general aviation that you raised, senator, we are quite aware of the concerns they do have. On the other hand, neither this government nor any other in recent memory, I think in living memory of your oldest senator, would ever have found a government that said that taxes are related specifically to services provided. Finance departments, regardless of liberal or conservative regimes, have always insisted that taxes are taxes are taxes. If you try to link taxes to specific services directly, you will wind up with large gaps in your system because there is no one to tax, for example, for social security or something like that.
So you have general taxation and the gasoline tax paid on aviation fuel is a general tax. That is the position not only of myself, but also of the Minister of Finance; not only of him, but also of every one of his liberal and conservative predecessors.
We do believe, however, that even though services should be paid for by the user, this is equivalent to the motorist who would pay a toll on a bridge, even though they have paid the gas tax. It is that type of situation. They are using a specific element of the system which they know requires the extra charge. We do not expect, however, general aviation to be severely impacted by the change. NAV CANADA does not wish to make them a major funding source. They know that the services they need are often substantially less than the commercial aircraft, and it is inappropriate to charge them full commercial rates.
Finally, we have the provisions in the legislation which allow the minister to intervene in situations where there is unfairness, perceived unfairness; indeed, even before the minister, an application can be made to the National Transportation Agency to intervene.
Senator Spivak: In this information which we have not received, but which you indicate has been sent, is there information there about a business plan for NAV CANADA which would enable us to examine and evaluate all of these figures that they are talking about? Otherwise, we cannot really review the legislation.
Of course, NAV CANADA are very concerned about having an appropriate credit rating and their financing. They asked us not to make amendments, in case it would jeopardize their credit ratings in the financing. However, our role is to protect the public interest, and the public interest cannot be protected without all of the knowledge. I must say that in the bill we went through with the CNR, we passed it very quickly; we did not look at it very carefully here in the senate. It seems to me that we should be able to do that; otherwise we are not doing our job properly.
Hence, I do hope that all of that information is in what you are sending us; if it is not, will we be able to get whatever information we need to look at the financial picture very carefully? I think that is probably some of our concern here on this side.
Mr. Anderson: Yes, senator, certainly information will be readily available. One of the major developments in recent months has been our insistence on public accountability, for example, in airport authorities. One of the areas where we have had some discussion with the local airport authorities set up in 1992 was on the issue of accountability and the availability of public information.
So, yes, you can be assured that you will be receiving that information on request. Certainly, with respect to the information provided earlier, the reference you made to the document, there is not in a sense a formal business plan, but it does include forecasts, quite clear forecasts. In fact, I made reference to one or two of the paragraphs dealing with the amounts of money. I think indeed that you will find that adequate with respect to the money involved.
Senator Spivak: Apart from the issue of money, that is to say to get 6,400 public servants out of the 45,000 and to get this off the budget books, what was the reason for this privatization, even though it is a not-for-profit? Was there any other cogent and compelling reason to privatize this service?
Mr. Anderson: Certainly, senator. I am being careful not to launch into a lengthy dissertation on this, but efficiency is one. We believe that we can improve efficiency of the system; we can create more service for less money. In addition, I mentioned earlier that the issue of safety has come up, and again it is a difficult item to put numbers on. We have noticed that safety is improving. And senator, you yourself over the years have frequently raised this issue; you were involved in the questioning on Bill C-18 back in 1987.
Senator Spivak: You read a long way back.
Mr. Anderson: You questioned a predecessor of mine, Mr. Mazankowski, quite sharply on that, and I am happy to report to you that we have improved the system. We have now 45 per cent less aviation accidents than we had in the year that you were referring to. We have made improvements. We think this will lead to more improvements as we clarify our role as regulator. We believe that the person who has the sole responsibility and the organization which has the sole responsibility for safety and regulation will be more efficient in handling that task than one who also has the responsibility for operations.
When the assistant deputy ministers get together, the safety person may not be quite as vocal as they would be if there was no assistant deputy minister operations there. So we think it tends to clarify the roles effectively, and thus the concern that you have expressed, indeed, over many years -- which I applaud you for and which I trust you will continue to question on in the future. We think it has improved.
I trust that this will not put your mind to rest, because we always need the inquiring mind, but will at least assure you that it goes beyond simply saving money or eliminating people. We think this makes it more efficient and that it will ultimately have an impact on safety.
The Chairman: We will make copies of this document. I asked Mr. Wightman to go through it. I am told that it is a projection by Nesbitt Burns, done for the Transport and Communications before the price was agreed; it is a computer projection to show the viability of the company. It is not real data because it is estimated only. We will send all members of the committee a copy.
Senator Adams: I live in a small community. With respect to department cutbacks, especially inspectors, will the same people who do marine and railway inspections be responsible for aviation safety? I am wondering how they are going to cut staff and still have safety, or are the cuts being made to field workers only?
Mr. Anderson: Senator, the concern is a very legitimate one. As I said, the majority of our employees will be safety people. I do not believe that we are cutting any of the safety people. I will turn it over to my two departmental assistants to confirm that. There may be some areas where we are able to make advances in safety, through coordination with the United States or international authorities, and there may be some areas where we are able to create a more efficient system. By efficient, I also mean a safer system, which allows fewer government people to repeat the process that has been done by the company. It is possible sometimes to make improvements of that type.
Sometimes you can improve safety, of course, by licensing and training of the actual employee. If that level is raised, the level of surveillance can be somewhat reduced. Those things having been said, I personally know of no reduction in any individual involved in safety that will come from the downsizing in my department.
If there is anything that I have repeated time and time again since I have become minister, it is that if there is any way of improving safety and having it go up, we will be looking for that. The figures that I gave Senator Spivak are an indication of that. We look at past figures. We want to make sure that we improve them.
You become a hostage to fortune if you say, "Of course we are going to have different, better figures next year." The gods then make sport of you; you lay yourself open as a hostage to fortune. That having been said, we are going to make sure that safety remains a primary responsibility of Transport Canada.
I can only assure you that there is nothing that I know in any of this which would reduce safety and a great deal that I know which will increase it.
Senator Adams: A small aircraft must be inspected after 40 hours of flying. I do not know how the system works with private aircraft. Right now, with 24 hours of daylight, it will not take much to get 40 hours. I know that some people who own airlines have to fly down to Winnipeg for the inspection, to make sure that the aircraft is still running in good condition. Is that a private thing? When you fly from Rankin Inlet to Winnipeg, you are talking about 900 miles every second week to get the safety check. Is the inspection paid by Transport Canada? Transport may not be charging to inspect that aircraft, but now NAV CANADA is taking over, will there be an inspection fee?
Mr. Anderson: With respect to the actual engine maintenance, that concern, that will continue to be done by the regular inspectors of the department. The concern you have expressed, which is charges, we do expect, with the principle of user pay, to have charges for such services more closely related to the actual cost. This will inevitably result in some charges going up; and in fact in some instances, rare unfortunately, some will go down, as we have determine that we have charged too much.
I do not have the overall figures for the services that we provide for checking out aircraft, but I believe that we collect no more than 15 per cent at the present time of the amount of costs that we have in this area. So the general taxpayer is paying a very substantial portion of that. We will make it more realistic, in the sense of user pay, and I am sure you will hear complaints when we do this. It seems only fair that the user-pay principle does apply. I can assure you that even if we do our ultimate most, we will probably not get to 20 per cent of recovery of costs.
Senator Roberge: You said earlier that any rights that the employees have right now would be carried over. One of their rights is a right to privacy of their own dossiers. Would you be agreeable if an amendment would be included which would stipulate that the Privacy Act applies to the corporation the same as if it were a federal institution?
Mr. Anderson: I would not, not because of any dislike of privacy legislation or right to information legislation, or many of those other valuable pieces of protection that exist, simply because it is so unusual in the private sector to have that type of legislation. As you move something to the private sector, it seems to me that the normal provisions with respect to the public sector should fall away. If indeed you believe that you should have right to information or privacy law action applicable within this general sector, you should not just restrict it to one organization which by historical accident is out there because it happened to have originally been a federal responsibility.
It would be inappropriate, for example, to say that because CN used to be a government Crown agency; they should be treated differently from CP. If you want to have a generic application of the legislation, I think is something that could be looked at and no doubt could be argued on both sides.
To apply it to this specific organization that is passing from the public sector, it appears to me to single them out for an extra cost inappropriately.
Senator Roberge: I do not think it would be a cost. For example, in Quebec, that law was passed three years ago. It is very smooth and operational. It does not create any conflicts or anything.
Mr. Anderson: With respect to costs, I believe I am correct in saying that the charges for information under the Access to Information legislation constitutes some 3 to 4 per cent of the total costs to the government of providing it, but privacy may be different. I am not aware of that figure. Perhaps my departmental assistants may have a word to add on that.
Mr. Wilson: The only thing that I would add to that, in addition to a feeling that it would be inappropriate to make this applicable to NAV CANADA, is the thought that it is unnecessary because of the protections that are provided for through the contractual arrangements between NAV CANADA and the Minister of Transport; that there are assurances in there of the continuation of the privacy of information, assurances that practices in respect of the handling of this information will be determined by policies that would be developed in conjunction with the Minister of Transport.
So we believe that the protections are being afforded in another way, that perhaps is more appropriate for this type of transaction in the business that the ANS is being transferred to.
The Chairman: Thank you, minister. I would ask the members to remain, please.
Under normal circumstances, we would try to report this bill to the chamber tomorrow, if it is at all possible. I am ready to accept any proposals to that effect, if there are any, with or without amendments.
Senator Poulin: Madam Chair, I would like to move that Bill C-20 be amended by adding immediately after line 28 on page 51.
The Chairman: That is the amendment that we had?
Senator Poulin: I would like to move it:
Coming into force
109. Sections 11, 13 and 100 come into force on the transfer date.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: Shall I report the bill, as amended, tomorrow?
Hon. Senators: Agreed.
Senator Forrestall: Senator Davey raised the issue of highway safety, truck safety, vis-à-vis interprovincial problems and law. I would like to make this the subject matter of a study that we could start next fall and follow it up with a report.
The Chairman: Do you wish to chair the subcommittee, Senator Forrestall?
Senator Forrestall: What is important is that we do it.
The Chairman: From the replies I received from all members to a questionnaire, transportation safety is a concern.
Senator Roberge: I so move.
The Chairman: We will discuss it at the steering committee.
Senator Forrestall: Thank you very much, colleagues.
The committee adjourned.