Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 10 - Evidence
OTTAWA, Tuesday April 11, 2000
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to examine Bill S-17, an Act Respecting Marine Liability, and to validate certain by-laws and regulations.
Senator Lise Bacon (Chairman) in the Chair.
[Translation]
The Chairman: We are examining Bill S-17, an Act Respecting Marine Liability, and to validate certain by-laws and regulations.
Our witnesses are Mr. André Pageot, Director General, Marine Policy and Programs from Transport Canada; Mr. Gerry Rysanek, Director, International Marine Policy and Liability, and Mr. Mark Gauthier, Senior Council, Legal Services.
We will hear your comments, after which the members of the committee will be putting questions to you.
Mr. André Pageot, Director General, Marine Policy and Programs, Transport Canada: It is a pleasure to be accompanied by a team that can discuss a rather technical bill in the area of marine insurance.
The importance of bills, even those of a technical nature, is always great. Like for any building, each brick and stone has its own importance. For the marine industry, the bill on marine liability responds to a very clear need.
[English]
Thank you for taking the time to discuss with us what the maritime industry considers to be a very important bill that will govern liability insurance regimes for most of the sectors in the maritime mode.
It is important to modernize our passenger liability regime. You will find in this bill that Part 4, which deals with the transportation of passengers, the cruise industry and the tourism sector, is the most critical new section. Contrary to the systems for airlines and other modes, we do not have a properly defined liability regime for passenger transportation when we deal with the cruise industry, tourism and ferry vessels; we do not have an appropriate liability regime for these passengers in case of accidents. We are fortunate that, with a fairly solid safety regime, we have never had a major accident in recent years, but we could have major difficulty in future without this liability regime for passengers.
When you board a little cruise vessel, for example, for whale-watching or a tourist activity, some companies will have written right on your ticket a disclaimer saying that they are not responsible for the passengers. This bill will facilitate putting in place an insurance regime to protect all passengers aboard commercial vessels and in various activities in Canada.
Over the years, we have done extensive consultations about that proposed legislation. We have been talking with the Canadian Maritime Law Association. We have been talking with the shipowners in Canada. We have been talking to foreign shipowners that bring in cruise vessels. We have very solid support across the industry about the new provisions of the bill.
The second element in the bill deals with the rules that will apply when there are shared responsibilities. There may be occasions when not just a single group or a single company will be responsible for the damage or the negligence, and so on. The bill is proposing a regime that will allow some apportionment of risk and payments in case of accidents. There could be cases where more than one person may be responsible for the damage, and this legislation will allow possible charges against the persons who have contributed to the losses.
This regime requires national legislation. We have had court cases, including the Bow Valley case in 1998. While there may be some provincial legislation for some of these regimes, they are not considered by the court as being adequate. So the second new element of the bill that we are proposing today is to cover some apportionment of the liabilities in case there has been a sharing of the risk between various persons.
Another dimension I need to highlight is that in the Marine Liability Bill we are integrating all the liability regimes that were previously scattered throughout various pieces of legislation and through the Canada Shipping Act itself. We are including here legislation that has been passed before. Some sections of the Canada Shipping Act are included and we are including the Carriage of Goods by Water Act, which was passed a few years back. We are regrouping under this bill the liability and compensation regime for pollution damage.
Senator Spivak: Could you just name the bills that you are including here? I see only one, which is Bill S-4. Which other ones are included?
Mr. Pageot: We are regrouping mostly sections of the Canada Shipping Act. As the text in front of you shows, we are bringing in the pollution damage part of the Canada Shipping Act -- well, you fundamentally, there are acts -- the Canada Shipping Act and the Carriage of Goods by Water Act -- that are being integrated into this new liability bill. Those are the two source documents.
We are transferring many clauses from those acts into this liability regime and providing for only minor new adjustments in the regime that existed.
For example, on the oil pollution damage caused by tankers and other ships, we are clarifying a few points, one of which is the floating storage unit. In offshore oil activities and in activities in Canadian waters under the territorial seas, some tankers with platforms are imported and used for storage. We will add this little clause so that the floating storage units are included in the liability bill.
The advantage of regrouping is that we will have other initiatives over the years. For example, at the international level a convention is being developed for bunkers, which are the fuel storage units inside the hulls of the ships for the engines, and a regime is being developed for pollution caused by bunkers and spills, and so on.
Having a one-stop shopping bill will facilitate our legislative work and the upgrading of the present legislation. Essentially, we are proposing housekeeping changes for many clauses, and we are proposing two new major regimes for passengers and the apportionment of risk in court cases. We have used the opportunity to clean up a couple of situations that were brought to our attention by the joint committee studying regulations.
When we had the old National Harbours Board in the 1960s and moved to a new Canada Ports Corporation in 1983, they made a mistake in the issuing of decisions on harbour use. The same thing happened a few years back. In 1994 there was an appeal on pilotage rates on the St. Lawrence, and a mistake was made because of a fundamental misunderstanding about the events and the pilotage rates. Therefore, we have Part 7 of the bill to clean up a few honest mistakes. The charges that were being implemented were quite legitimate, under a regime delegated to individual ports for harbour use and pilotage rates that should reflect self-sufficiency of the corporations; so we had to make these adjustments. Over the years, we have dealt with thousands of foreign shipowners, but the Canada Ports Corporation no longer exists and we need to correct some of the honest mistakes that were made a few years ago.
My colleagues are much more familiar with the legal aspects of the bill, but I can indicate that in this bill we are seeking to modernize the liability regime. We have a booming industry in passenger transport by ship. Whether it is Alaska cruises or excursions for whale watching on the St. Lawrence, or cruise activities in the Thousand Islands area, we need to protect the many citizens who are travelling, and we need to give them a regime under which they will be treated fairly by the courts. This bill will put in place a regime more in line with what we have with our international trading partners.
Senator Callbeck: You spoke about not having an appropriate liability regime for cruise vessels, and you gave the example of whale watching. The passengers' tickets often state that the shipping lines are not responsible. I take it that with this legislation they will be responsible. Even though they state on the ticket that they are not responsible, with this legislation they will be.
Mr. Mark Gauthier, Senior Counsel, Legal Services, Transport Canada: Yes, precisely. The practice of contracting out of liability would be abolished; it would not be permitted.
Senator Callbeck: You mentioned talking to shipowners and other groups about this legislation. Did you also have discussions with the provinces? If so, are they happy with this legislation?
Mr. Jerry Rysanek, Director, International Marine Policy and Liability, transport Canada: Yes, we had consultation with all provinces. It was done on the basis of a discussion paper that we published when this policy proposal was adopted, and there was a broad response from the provinces. Some of them asked very specific questions, particularly whether this legislation will apply to public vessels, or publicly owned vessels, or vessels owned by provinces where provinces provide the service, and the answer is yes. There is uniformity, and the regime will be universal in its impact and in its protection of passengers, regardless of with whom they travel.
Senator Callbeck: Are they happy with the legislation?
Mr. Rysanek: Yes.
Senator Callbeck: I am sure you recall the sinking of the Irving Whale and all the discussions and negotiations that took place regarding that. If this legislation had been in effect then, how would things have been different?
Mr. Rysanek: Senator, that is a legal question, and you are referring to a particular legal case. I would defer to Mr. Gauthier to provide you with the information on those points, but the Irving Whale situation is not changed by this legislation. The part that would apply to pollution or pollution cases is simply being transferred from the Canada Shipping Act into the Marine Liability Act. Thus, there is no change in the law before you.
In terms of the application to a particular case, such as the Irving Whale, I will defer to Mr. Gauthier.
Mr. Gauthier: You can take what Mr. Rysanek has indicated as the foundation. The answer really is that what we find in Bill S-17 is a carryover of existing law. It is not in any way changing the rules that would have had an application, shall we say, retroactively to a situation that occurred in the past. I believe the sinking of the Irving Whale was in 1970 or 1971, long before any statutory pollution regime existed in the act. The Government of Canada, as I understand it, is pursuing a claim at common law basically under the notion of public nuisance, and that is common law, which is not abrogated by this in any way, shape or form. As I understand it, the litigation is at fairly early stages; it is still at the Examination for Discovery stage, I believe.
Senator Callbeck: I understand that. After this legislation goes through, if we had another Irving Whale situation, how would it be different? Does this legislation change anything? I am not referring to the one that happened, but if there was another similar situation with a vessel sinking in the future, would there be a difference?
Mr. Rysanek: The legislation that is already in law and that we are transferring to the Marine Liability Act provides for situations such as the Irving Whale, in terms of the incident, in terms of the consequences of the incident, in terms of the action that has to be taken to prevent damage or to the measures that must be taken to remedy damages, particularly environmental damages, and all the associated costs. The regime is in place. It is based on international convention, and it would have application to future ships like the Irving Whale.
That is, as far as I see, the effect of the legislation. The dispute to which Mr. Gauthier referred today is still in progress. That might be as a result of the fact that we did not have the legislation in place when the incident actually happened, but we certainly have it now; so I would think that this regime will be such that it would function to deal with cases such as Irving Whale in the future.
[Translation]
Senator Poulin: Your presentation does help us to understand the importance of the legislation. The accountability of the owners of small and medium-size ships is the most important aspect of it.
This is the year 2000 and Canada has many lakes and rivers. There is also the St. Lawrence and the two oceans. Why did it take so long to legislate? Second, whether for business or for pleasure, according to your statistics, are people using the seaway more often than 25 years ago?
Third, how much should a tour company from Rimouski spend to insure its ships?
Mr. Pageot: As for your first question as to why it took so long to legislate, you have to realize that the tour industry is seasonal. To be financially viable, the ships must often go to Bermuda or other better climes during summer.
Canada's very elaborate ship inspection system stressed security first. We also emphasized the international conventions and standards on marine safety. However, the insurance side was never looked at because there were very few Canadian owners of passenger ships; most of them were registered in Norway, where international standards applied.
The increase in marine passenger traffic was very swift. The Quebec Ferry Corporation reported exceptional growth this year. They are thinking of buying a ferryboat for Newfoundland because there is a big increase in services there and that is also the case for the Magdalene Islands.
In British Columbia, the cruise industry is in the middle of a growth spurt. There is definitely a major increase and that is why we must act quickly to set up a marine insurance system.
Marine safety was never neglected because from our Canadian safety record, our standards are recognized as being in the forefront. Finally, your last question had to do with the cost of marine insurance.
Senator Poulin: Yes, for the small businesses.
Mr. Pageot: The cost of insurance is a bit like ensuring a car. It does not cost much to buy an extra million dollars in liability coverage. The big ferry companies already have insurance which, for the most part, is adequate.
For cruise ships, where a ticket can cost over $2,000, the cost of insurance is still low. There will be a bit of an extra for insurance, but this insurance is not so much for the passenger who has exceptional costs. It is actually based on losses and accidents, that have not been very frequent in Canada. There will be an adjustment to the cost of insurance, but nothing that could wreck the competitive position of the companies.
Senator Poulin: Can you give us an example?
[English]
Mr. Rysanek: I do not think I could add much to what Mr. Pageot said. It is a very difficult figure to estimate. The issue of insurance has to be kept in perspective. Normally, in large ships, the cost of insurance represents a small percentage of a ship's operating costs. It is estimated that they are around 1 per cent. Thus, it is not a major proportion. In a small ship, of course, I fully appreciate --
Senator Poulin: I was thinking mainly of small businesses.
Madam Chairman, perhaps we could receive something in writing that could give us an approximation of the costs.
Mr. Rysanek: We can do that. However, what I was suggesting, Madam Chairman, is that the insurance industry will be invited to speak to the committee. I think they are better qualified to give you a current market response.
Mr. Pageot: The only point I would add is that we have managed some of these ferry vessels, like those in Newfoundland and Prince Edward Island. Usually, 25 per cent of the costs for large ferry vessels is for fuel. Another 25 per cent to 40 per cent of the costs can be attributed to crew. For some of our ferry vessels, out of a budget of about $2 million per year, we would have costs in the range of $25,000 for hull insurance. When you consider that in terms of the cost of a ticket, it is small, but you will be able to ask the question of the experts in the industry.
Senator Poulin: Does this law apply to ships that are not registered in Canada? As we know, it is easy to register anywhere in the world.
Senator Perrault: Such as Liberia.
Mr. Rysanek: Broadly speaking, yes. The reason I say "broadly speaking" is that this law deals with various liability situations. If we limit ourselves to the regime we were discussing, and on which you have questions about the cost of insurance for passenger vessels, certainly, that regime applies regardless of the registry and regardless of the flag of the ship. Speaking conversely, it protects Canadians regardless of the registry of the ship.
Senator Poulin: If a Canadian is travelling in Bermuda, but on a different ship, surely he or she is no longer protected? Is that not right?
Mr. Rysanek: Senator, that is a question on which I will be holding hands with Mr. Gauthier, because it involves policy and legal issues at the same time. If the contract of carriage or the ticket that you have purchased was issued in Canada, let us say from a travel agent in Montreal, you have the protection of this law, even if you are on a ship in Bermuda. Of course, the question then is: Where do you bring forward the action to pursue the shipowner for damages? Mr. Gauthier will address how that actually works.
Mr. Gauthier: As Mr. Rysanek pointed out, where the contract of carriage is concluded would be a determinative factor. It is now being sought to make the Athens Convention part of Canadian law, although it is a treaty that is not necessarily signed by all other states, such as Bermuda. The application of where you can raise your action and how successful you will be in recovering your damages will, of course, depend on whether we are dealing with a state that has ratified the treaty. If Canada were to ratify the treaty, then it would be very simple. For example, if Bermuda and Canada both ratified the treaty, then you could raise the action in Bermuda without any problems.
The other issue, of course, has to do with where the assets of the ship are. It is a lot easier when you have victims suffering damage in your own country, because then, under the principles of maritime law, you can arrest the vessel and demand security, along with a whole host of things. However, if you are sailing somewhere in the Caribbean and you are injured, you might still be able to bring your action under Canadian law. If you were to find, however, that the shipowner had assets somewhere else, then you would be in no better position, for example, than a businessperson in Canada recovering a judgment against a foreign debtor. You would then have to see to claiming your judgment in that jurisdiction. It becomes more complicated.
The nice part about these treaties is that, as more and more states become party to them, these mechanism for enforcement of claims will become more simple.
Senator Spivak: I am afraid I have not perused the material thoroughly, so my question may seem a bit naïve, but in terms of the consolidation of existing marine liability regimes will this measure apply as well to inland waters? What is the scope of the consolidation?
Mr. Rysanek: It is certainly of very broad scope. It applies to all waters of Canada, including inland waters, yes.
Senator Spivak: Nothing has been strengthened, then, in terms of the consolidation. Whatever was there before is now being consolidated, but it is not being changed. I am talking about existing marine liability, not passenger liability. Is that correct?
Mr. Rysanek: That is correct. The consolidation has a value in the fact that it is all in one book: they are integrated regimes and they can be easily referenced.
Senator Spivak: In some recent environmental legislation -- the name of which escapes me at the moment -- there was a provision concerning emissions. Are you familiar with that act, which deals with toxic substances? There is a provision in that legislation concerning emissions from vessels, and it includes penalties.
Is there any connection? Did you look at that at all? There is a provision in that act for pollution as well.
Mr. Rysanek: I am afraid, senator, I am not familiar with that act.
Senator Spivak: The provision had to do with vessels on water.
Mr. Rysanek: The issues we are dealing with in the Marine Liability Act are issues of civil liability, as opposed to penalties.
Senator Spivak: That is precisely why I am asking.
Mr. Rysanek: I am not aware of the legislation to which you are referring. I know we have a provision in this law that establishes the relationship between the Marine Liability Act and the Canadian Environmental Protection Act. That provision says something to the effect that the shipowners cannot be pursued for damages under the Canadian Environmental Protection Act if they are covered by this act. That may be the interrelationship.
Senator Spivak: I remember that. There were certain exemptions at the time, which some of us did not think were very good, but I know that that has been carried forward. In the Canadian act governing toxins, there are penalties for emissions from motorboats or other vessels. Does this act also cover those emissions? Is there a duplication? Are there stronger penalties under that other act or are the penalties stronger here?
I ask that advisedly, because, of course, the pollution in our inland lakes is approaching serious levels, particularly with the introduction of personal watercraft that cause pollution in many different ways. Maybe you could look at that question and get back to us. I know there are penalties in that act to address the emissions from boats.
Regarding ballast waters, I do not recall the exact provisions of the Canada Shipping Act, but are the penalties sufficiently severe to prevent further introduction of exotic species, like zebra mussels, into our waters? Such problems have cost us millions of dollars and the destruction of our indigenous species. Does this act provide for enforcing, policing and preventing the ballast water problem?
Mr. Gauthier: Senator, the short answer to that question, as well as the previous one you asked, because they are related, is that this statute in no way addresses that issue. This is a civil liability statute.
Take the example of someone who suffers personal damage from air pollution. If you were injured by a puff of some chemical from a ship, then you would take action and the shipowner would be able to exercise rights under this act. However, if a rule were violated by that emission, that would lead to a penalty in either the regulatory or the quasi-criminal sphere, but it would not involve civil liability. It would be -- let us call it criminal liability for sake of simplicity, although it is not quite criminal.
In any event, these are very different subjects. This statute will deal with the financial consequences of a tort or a wrong, whereas you are describing an event relating to the imposition of penalties -- fines, perhaps even jail, or things of that nature -- for the violation of a particular rule.
Those provisions for ships are found either in the Canada Shipping Act or in the CEAA, I believe.
Senator Spivak: So it would be the Canadian Environmental Assessment Act and not the Canadian Environmental Protection Act.
Mr. Pageot: The Department of Transport has organized itself to put a separation between the economic regulatory issue -- the civil regime, the registration, and the economic aspects of shipping that are covered by the bill -- and the Coast Guard and the Department of Fisheries and Oceans and our own Marine Safety, which handle the more technical issues.
For example, you raised important issues on engine emissions, containment tanks and the disposal of waste waters. We are reviewing with the industry the issue of waste water by ships. The state of Michigan is proposing legislation. Ontario is looking at its options. An international joint commission regime deals with disposal of waters. These are very important issues. The solutions to some of these issues will probably be quite technical. A new containment tank may be designed for the ships. Stations may be built along the shores to unload the old waters or new manufacturers' emissions standards may be designed.
Because of the nature of the problems, we are keeping the technical aspects under a different regime to be handled under the Canada Shipping Act or by the Coast Guard under the Canadian Environmental Protection Act. We do not mix that up with the commercial tools that we have in this bill.
Senator Spivak: I understand that completely. I am speaking of enforcement and penalty only. That is what I am talking about. You have here liability and compensation for pollution. Are you saying that civil liability is covered here and criminal liability is covered elsewhere? Is that the simple answer?
Mr. Gauthier: Yes, that is the simple answer.
Senator Spivak: Why?
Mr. Gauthier: It is in the same house, of course, as Mr. Pageot will explain. All this legislation belongs to the Department of Transport, which has sought to organize it in a certain way. The Canada Shipping Act, for example, would address the example you have given of oil in the water. That is an illegal discharge that may violate an international treaty and that certainly violates domestic law. The penalties are very high and are found in a part of the Canada Shipping Act.
Senator Spivak: Are those the criminal provisions?
Mr. Gauthier: Those are the criminal, quasi-regulatory provisions.
Senator Spivak: The civil remedies are found in here?
Mr. Gauthier: Correct.
Senator Spivak: For the same action, can there be both civil and criminal liabilities?
Mr. Gauthier: Most assuredly, yes.
Senator Spivak: For one incident, you might have two different actions going on?
Mr. Gauthier: Yes.
Senator Roberge: In my estimation, this legislation is not contentious, but it is unfortunate that it arrived so late. We signed the Athens Protocol many years ago.
Regarding your housekeeping matters, you say that, between 1983 and 1985, Orders in Council were made through incorrect procedures to raise the pilotage fees. How could that happen? Secondly, what are the procedures in your department to prevent that situation from recurring? Were the Orders in Council ever submitted to the review of the joint commission on regulations and statutory documents? If not, why not?
I guess the same questions could also apply to the Laurentian pilotage error that occurred in 1992 .
Mr. Pageot: Everyone acted in good faith on these issues. With respect to pilotage, you should remember that the domestic shipping industry, during the review of the Marine Act, was aggressively pursuing a debate on pilotage and eventually appealed some of the rates. We went to the Governor in Council to implement a rate increase of 8.9 per cent rather than 10 per cent. That was probably a first in terms of modifying a recommendation. They ended up collecting the extra fees right away, and eventually we realized that, under the Pilotage Act -- or perhaps it was the National Transportation Act; I would have to check -- they had to give proper notice. However, these were done in good faith.
In the meantime, we have had two reviews on pilotage. One was conducted under the Marine Act, which was passed a few years ago, and another was just terminated last fall by the National Transportation Agency and will provide better dialogue on some of the issues. We are very hopeful that there will be no repetition of previous mistakes.
The same holds true for the ports. We now have 17 major ports established under independent port authorities with delegation of pricing issues and so on. Fundamentally, correcting the errors in legislation is probably cheaper than instituting a retroactive mechanism for reimbursement, when the files for thousands of vessels are not even properly available many years later.
I do not have much information on what we could have done three or four years ago, but those circumstances were such that honest mistakes are just now being corrected.
Senator Roberge: I understand how an honest mistake can occur; it can happen to anyone, but what are you doing to change your procedures in order to ensure that mistakes do not reoccur?
Mr. Pageot: With respect to pilotage, I could check with my colleagues, but the regime we have now is much more cordial because we had the review last fall and review mechanisms have been discussed. As to mistakes at the ports, I do not think they can be repeated, because the autonomy of the ports, the rate-setting and harbour use is such that you would no longer have to deal with the Governor in Council. With the pilotage reform, now that we have a much better dialogue established with the industry, we seem to have a much more cooperative approach between industry and the pilotage authorities. We should be able to prevent a recurrence of appeals and so on.
I guess the mechanism we have is that, in reviewing the business plans of pilotage authorities and reviewing their pricing recommendations, we just exercise much more vigilance, which is possible under the current regime because it is much more cooperative.
Senator Adams: My question is about marine liability. In my area, we have many small business that deal in tourism. I want to find out a bit more about tickets. There may be only four or five people that go whale watching. As you may know, there was an accident in which a boat was destroyed. The owner survived, but other people died. Americans especially like to sue people. Has the system changed as far as liability and lawsuits are concerned?
Mr. Rysanek: From my standpoint, senator, I can certainly tell you that the scope of the regime will include all these vessels, definitely, regardless of the activity. Whale watching vessels are included. It will provide a basis of liability, which is not there at the moment. As you heard Mr. Gauthier say a moment ago, it will certainly disallow contracting liability, so it will be illegal to put any disclaimer on a ticket, obviously.
In terms of its application, it would certainly apply to all passengers on board, whether they are Canadian or American. I think the benefit here for the owner of a whale watching operation is that it provides predictability and a measure to assess exposure based on the capacity of the vessel and the frequency of operation and the number of trips and so on. It is not a one-sided approach to the benefit of the passengers only. The owners of the vessels are able to measure and assess exposure and hopefully obtain appropriate insurance against that liability. That is what we would expect prudent owners to do. That is the application, as I see it, to whale watching vessels.
I am not sure whether Mr. Gauthier would wish to add anything to the aspect of application to foreign tourists, particularly American tourists.
Mr. Gauthier: Well, no, I think your answer is fulsome. Whether the individual on board is an American or someone else, the Canadian law would apply. It is the same result if the whale watcher is a U.S. citizen or a Canadian. If it happens here, under our law, this regime will apply.
Senator Adams: We get many tourists in the North, both Canadians and Americans. There could be accidents involving rough water or ice or many other things, and people could die. Who has the responsibility? Is it the guide or the owner of the small business? Does that change? Should the tourist take out insurance before getting on the boat? I would like to know how that system would change.
Mr. Rysanek: The only thing that changes is that it is made absolutely clear as to what is the liability of the owner of the vessel, and it is up to him or her to seek appropriate insurance against that liability. That is the only thing that changes here. The passenger may have all kinds of insurance for all kinds of purposes, including perhaps going whale watching, but that is a private matter. The issue that is changing here is that the owner is now specifically liable up to a specific limit, and I would think a prudent owner had better insure against the limit.
Senator Adams: What would happen if the owner has insurance for only a few million dollars and the person sues for $20 million?
Mr. Rysanek: The owner knows that each passenger can sue only up to a particular limit that is established in law.
If a whale watching vessel has a capacity of 10 passengers, and the limit per capita is approximately $350,000 Canadian, the owner would be well-advised to have a minimum insurance of $3.5 million. That is how the system should work.
Senator Furey: My question follows somewhat on Senator Roberge's, but it pertains to an issue that Senator Angus raised in the chamber in his reply to the bill when he referred to the retroactivity of Part 7. As legislators, honourable senators, we all know that the mere mention of retroactivity conjures up all sorts of draconian images. My question, therefore, would probably be best put to Mr. Gauthier.
I am wondering what impact, if any, this will have on the current users of the former Canada Ports Corporation and the Laurentian Pilotage Authority?
Mr. Gauthier: I do not know a great deal about Part 7. I would be the first to admit that. However, as I understand it, concerns had been raised with the standing joint committee to the effect that these charges had been unlawfully levied. In order to set the record straight, this device has been chosen here in Part 7 of the MLA to, in effect, as you quite rightly described it, retroactively validate procedures and practices that are considered by the standing joint committee as inappropriate or unlawful. It is to meet that particular request that this legislation is being brought forward. It will wipe the slate clean, so to speak, within the confines of what is being retroactively repaired, and definitely not something outside that. It does have four squares, if I can put it that way.
Senator Furey: It would indeed be safe to say, then, that there is no impact on current users with respect to this legislation, that it is really meant, even though retroactive, to correct only technical errors.
Mr. Gauthier: That is correct.
Mr. Pageot: If I may add to that, the figures I have are from the 1980s and are of the amounts collected over a few years by a variety of ports, like Vancouver or Montreal or other ports. The total amount comes to $1.5 million, but that is spread over many ports -- some run by the old Canada Ports Corporation and some run by Crown companies.
In the case of pilotage, the fees for the Laurentian Pilotage are in the order of $450,000. Reimbursing those sums of $2 million would create technical problems, because now that we have modified the port regime we no longer have a secretariat that would know which users were which.
In the case of pilotage, after two or three reviews of pilotage you would have a shortfall in a Crown company that has in its legislation a requirement to be self-sufficient. We are not overly happy to use a legislative mechanism, but the other mechanism would create some hardships for one Crown company and would create an impossible situation now that the old Canada Ports Corporation is closed.
In any case, as soon as the individual ports or groups involved were aware of the technical error, it was dealt with -- and the error was not big in the case of ports. The GIC used to set the rates. When we got a new regime we had a new Crown corporation established and they were setting the rates, but it had to be endorsed by the GIC, and what happened was that they just used the old form, which existed in the days of the National Harbour Board, and realized only after the fact that they had not used the proper form and so were in a technical mistake.
We apologize for using that mechanism, which is not our preferred tool, but we have an involvement here and a situation that is such that we are in difficulty if we try to resolve the issue in another way.
Senator Furey: Thank you very much.
Senator Perrault: Madam Chairman, we appear to have come a long distance between the days of the Titanic and the Empress of Ireland, where the settlements were outrageously unjust according to counsel on those disasters. We seem to be making progress.
I live on the West Coast and we feel particularly vulnerable to accidents on the sea. We have one of the most prosperous cruise ship industries in Canada and it is good for the whole country that that revenue keeps on pouring in. Therefore, we have a vested interest in keeping those waters safe and protecting the passengers on the ships that ply the waters.
Is there a specific improvement over the status quo with this new legislation as far as passenger safety is concerned and the liability of the various cruise companies?
Mr. Rysanek: Certainly, I would think from the standpoint of passengers that this is a major improvement, because in case of an accident today they are looking at a blank cheque, if I may put it that way. There is nothing in law that would indicate what they are entitled to, so it is a major step forward.
Senator Perrault: There is some certainty established.
Mr. Rysanek: There is certainty, yes. In terms of the issue of safety, which you mentioned, this legislation does not deal with safety per se, but, as with any liability regime, there is a powerful incentive for safety. We would certainly think that shipowners, large and small, will be very careful.
Senator Perrault: You are suggesting that, if a shipping company were to install double-hauled vessels, they might have a lower premium for their insurance. Is that the case?
Mr. Rysanek: Again, when it comes to the question of cost of insurance or the effect on the cost of insurance I would defer to industry witnesses who will appear before you. I think that would be a very proper question to ask them. As I believe Mr. Pageot said earlier, it is always a matter of record. If the loss experience is good, certainly that would have a positive effect on the premiums in the future.
Senator Perrault: You may recall that in Alaska there was a disastrous oil spill, with all the problems that that involved. Well, now there is talk of drilling for oil on Canada's West Coast, where there are indications, without question, of oil deposits. Ships will be stationed out there drilling on site. I think we discussed that earlier. There will be an exemption. Can you describe what that exemption entails? Does the program apply to the men and women working on those platforms which they establish for drilling?
Mr. Rysanek: Again, here we are dealing with accidental pollution as a starting point. The exemption to which Mr. Pageot referred in his opening remarks deals with operations that involve drilling ships when they are in a stationary mode, in which case we are not talking about transportation.
Senator Perrault: We are talking about platforms in this case.
Mr. Rysanek: That is right. The modification that we are introducing in this bill is to catch up with new technology -- something called floating storage units and offshore platforms, which could be a ship or a box holding oil. We are saying here in the act that, just as in the case of a drilling ship, this law does not apply to those platforms when they are stationary. However, when they move as a ship the law applies and the liability applies, and that follows international law.
Senator Perrault: Technology has developed in that direction.
Mr. Rysanek: Exactly, and we must catch up with that technology.
[Translation]
Senator Maheu: The department has not seen the need to review this Act for almost 40 years. A few moments ago when Mr. Rysanek said, in answer to a question, that owners of small vessels will have to buy liability insurance, I had the impression that they would be obliged to buy it regardless of its cost. Now there are many many small businesses in Canada, particularly along the Saguenay River, offering low-budget cruises. You did not think about what this would cost them. The notion of letting insurance companies and business people find ways of paying their costs is just great, but in my view, after 40 years, you could have thought about the costs this move would entail for small business. Do you have any comments?
[English]
Mr. Rysanek: Thank you, senator, for your question, which is critical. I agree with you that it is a very important point. We considered it carefully and at length. At the starting point, which I wish to stress, the legislation does not include a compulsory insurance provision. If I have left that impression, I apologize. What we are saying here is that we legislate the liability but leave the insurance to the owners. We hope prudent owners will insure. We hope prudent owners will look at the liability and see how best to protect themselves, but they are not compelled to do it.
Some of the small shipowners, I can tell you from our experience, and since that is the particular emphasis of your question, operate their ships as if they were personal cars. Some of the liability insurance that they obtain to carry 15 or 20 people on board provides less insurance than I have on my personal car in terms of liability insurance.
There is a time for reflection at some point to see where the public protection stands and what it involves. We have had long discussions with the associations, particularly with small owners and their representative association. That is where most of these concerns arose. We are taking a gradual approach, as I see it. We are starting from zero, from a common practice of contracting out liability, introducing liability, but not going all the way to also introducing compulsory insurance.
It was on that basis that the association was able to give support to the legislation or at least not to object to the legislation.
Some owners may not insure. That is the best response I can give. Some owners may not insure. Some may ignore the legislation.
Senator Maheu: I read somewhere or had it pointed out to me that the maximum limit of liability on a small vessel is $350,000. Is that the zephyr that you get in the Saguenay region? If a father were killed on that boat and left a few children behind, I think $350,000 would be an insult. Why is the limit so low? Our courts are not known for going to the maximum. You could put in $50 million and they would not necessarily go to that amount. It is not a habit in Canada to go to the maximum. So why put it as low as $350,000? It sounds like a lot of money, but it is not to a father of a family when it is divided among all of the dependants.
Mr. Rysanek: That is a tough question. The regime we are bringing forward seeks to bring some form of protection for the Canadian public, moving from the 19th century to the 21st century. It is based on an international convention which Canada would aspire to ratify in due course. That convention establishes a uniform regime in terms not only of the rules of liability but also of the amounts of liability.
This $350,000 figure you mentioned is a conversion of the amount in the convention; that is quite correct. In some cases, it may not be enough. I do not know whether there is any amount that is enough. It is a balancing act between a form of protection, or protectability, and the grounds on which you receive the protection, and, at the same time making shipping still commercially viable. There is a balancing between the interests of shipowners and the interests of passengers.
If it is of any help, I can tell you that as the convention has been developed by the International Maritime Organization in London, there is already work underway to revise the convention and to increase substantially the limit of liability. I do not know what the figure will be eventually, but that figure will be proposed for adoption by Canada.
Certainly the view you have expressed is shared by others. Canada is participating in the work of the revision, but it will take some time before the revision makes its way here.
Senator Maheu: I cannot believe the United States would be a signatory to that agreement with such low rates.
Mr. Rysanek: They are not at the moment.
Senator Spivak: Could you briefly cover Part 6 in terms of the civil liability? Also, in following up on Senator Perrault's question, where is the liability for an oil spill from a stationary vessel or platform? Where is that covered for civil and criminal liability? If it is exempted here, where is it covered?
Mr. Gauthier: Perhaps, senator, I could answer the last question first. The Canada Shipping Act has exemptions to allow it to deal with the technical aspects of shipping and transportation.
This bill deals with civil liability in respect of transportation shipping. That has led to this carve-out where a semi-submersible oil platform that is drilling and accidentally spills oil is not covered by the fines in the Canada Shipping Act or by the civil liability provisions under the Marine Liability Act. Rather that situation is covered by legislation that is under the control of the Department of Energy.
Two examples spring to mind immediately: the Canada Newfoundland Offshore Petroleum Board Act and the Canada Nova Scotia Offshore Act.
Senator Spivak: What about British Columbia?
Mr. Gauthier: I am speculating here. I do not work in that department, but it is probably somewhere in the energy act or in some Canada-wide legislation run by the Department of Energy. Those carve-outs were put in a long time ago and are now being carried forward. I recall the acrimony at the time the original legislation was being put forward, where these other departments told the Department of Transport to stay away from this, that they would cover it.
Senator Spivak: Is that both civil and criminal liability, do you know?
Mr. Gauthier: I know it covers civil. For criminal, I do not know.
Senator Spivak: Obviously, I am wondering about other acts. Is there duplication or overlap or omission in terms of other acts, such as the Canadian Environmental Assessment Act? I am also concerned about the scope here. What is the level of liability?
I know it is covered in other acts, but could you just briefly summarize it?
Mr. Rysanek: Part 6 of this bill contains the entire regime of pollution caused by ships, which up to now has been in the Canada Shipping Act. It deals with civil liability, as we heard. It is a fairly broadly based regime based on international conventions that Canada adopted some time ago. It establishes the liability of owners of vessels for pollution caused by oil as cargo, so its principal application is to oil tankers in cases such as the recent incident you might have heard of in France. This is the regime that deals with it and it introduces fairly substantial limits of liability.
Just to give you an impression, Part 6 at the moment covers all pollution incidents in Canada up to about $270 million per incident; so the protection is fairly substantial. It deals also with pollution from commercial ships, where they pollute by discharge or spills of bunker oils. That is also an important element. It deals with environmental damage in the sense of the obligation of the shipowners for environmental measures that are taken following pollution. The scope is wide. It stretches all the way through our EEZ, in the economic zones, so it is up to 200 miles off shore. It is a regime to which roughly 50 other maritime nations in the world subscribe, with the exception of the United States. All I can say about it is that it is a very important aspect of this bill.
There are no changes in the bill, no changes to the regime, with the exception of the floating platforms that I described. It is also currently being discussed within the International Maritime Organization for possible increases to these limits in the future.
Senator Spivak: Have you any idea of the number of cases of enforcement under the Canada Shipping Act? How many have been prosecuted? What have been the penalties?
Mr. Rysanek: Well, pollution incidents caused by tankers are very few and far between, but in terms of pollution caused by ship's bunkers, I believe the Coast Guard handles approximately 300 to 400 spills a year where this law has an application.
Senator Spivak: Have they been prosecuted?
Mr. Rysanek: They have been prosecuted in terms of recovery. I am not sure of the details, whether each case went to court or whether there was a settlement with the shipowner out of court. It is a very large piece of legislation for application.
Senator Spivak: I wonder if we could get some information on that, Madam Chairman, to see the size of the penalties. We do not need detailed information, but we should have some idea.
Mr. Rysanek: You mean how many cases are involved?
Senator Spivak: And the size of the penalties.
Senator Callbeck: I want to come back to the insurance aspect. You mentioned the limits of liability, and $350,000 was the figure mentioned. Certainly, we all know that that is low compared to settlements you see in automobile accidents. You say it is based on a certain convention, but why would that figure be so low? Is it because insurance costs are so high? What would be the main reason for having it that low?
Mr. Rysanek: I think it is an attitude, to be truthful to your question. The figure is one that we adopted on the basis of the international convention last reviewed in 1990. In 1990, that figure seemed to have been acceptable to some 70 member states, and it was adopted. We brought it forward, and today it is before you. I do not think it was a matter of insurance as such. Certainly for large vessels that carry hundreds or thousands of passengers, I do not think it was a matter of the impact on the cost of insurance. It was a negotiated settlement or negotiated treaty, with all the pluses and minuses that come with that. That was the figure on which the international community settled.
Senator Callbeck: That was ten years ago. Do you think the figure would be the same if you had that meeting today?
Mr. Rysanek: I can assure you that it would certainly not. There is enough dissatisfaction now. There are concerns about the figure in the international marine community, and the International Maritime Organization is already working on a revision. I would expect that the figure that will come out of the next negotiation will be substantially higher.
Senator Callbeck: What figure do you anticipate?
Mr. Rysanek: At the moment, I know some member states are not prepared to talk about anything less than $500,000, which is the special drawing price. That would translate to about $1 million in Canadian currency. It is a substantial change that the community is discussing.
Senator Callbeck: I understood you to say that the owner of the ship is not required get insurance. That means that a passenger could go on a vessel for whale watching, or whatever, and have no protection whatsoever. I know he could sue the owner, but what if the owner does not have any assets?
Mr. Rysanek: That is the balancing act, senator. That is correct. The law does not compel him to take out insurance. There is no compulsory insurance in this legislation. We hope that prudent owners will protect themselves. If they do not and passengers get on board and there is nothing left after an incident, then the passenger is not protected by this legislation. I certainly would agree with that.
Senator Roberge: Is there not some provincial legislation that obliges the owner of a boat to get insurance as a condition of getting a licence?
Mr. Rysanek: To our knowledge, there is no provincial legislation or regulations dealing with compulsory insurance in the marine mode as opposed to automobile and other. There is nothing at the provincial level.
Perhaps I should have mentioned in my earlier remarks that there is a provision in this law before you for regulations to be adopted in the future, if necessary, by Order in Council, to establish what is adequate insurance. It is there to be used if we see that problems are developing, if we see that owners are operating in a manner that is not satisfactory, if there are unsatisfied claims. That provision in this law could be applied to introduce some measure of compulsory insurance or some measure of checking the adequacy of insurance. That is only a provision at the moment.
Senator Roberge: Are we to wait until we have a disaster on our hands before implementing something like that?
Mr. Rysanek: Hopefully we will not have that disaster and hopefully shipowners will act in a prudent fashion. They will look at the law and see that the writing is on the wall, that there is a liability and that they had better insure against it. It is a gradual approach, senator, and it may not be the perfect approach, but we are bringing the shipping industry from zero -- from a situation where Canada's Shipping Act in the past expressly permitted contracting out of liability. Some of them still live in that world, and so the gradual approach is what we propose.
Senator Roberge: I just want to go on record as saying that I think it is a mistake. It may be a sad mistake in the future, and we may get our fingers tapped for that in the future.
Mr. Pageot: I want to make a remark about the overall marine policy in the country. Each measure in isolation may appear inadequate, but we made a deliberate decision to have an open international shipping regime with freedom of navigation and freedom of registration. That having been the case since the Second World War, we decided to harmonize with other nations, especially the OECD and partners who are supporting our trade and our activities. Having made the decision to work in harmony with the rest of the world, we are not able to go alone and take on a regime that is out of step, even when we know that it is not ideal. Also, we have prominent Canadians involved in the International Maritime Organization and with the legislative committee of the IMO.
You have to realize that there is an accumulation of regulations in the shipping industry. One day you may have a regulation on pilotage, the next day you may need two pilots for large passenger ships. We have a ratified convention and Port State Control inspections, which means that they must be more vigilant about costs. After disasters on ferry vessels in Europe, the new SOLAS Convention, the International Convention for the Safety of Life at Sea, has set a standard for tighter doors to prevent flooding of the ship. You must have a compartment for waste water, and so on. We have to be careful, when we assess the overall impact on an industry, that we do not go overboard with a multitude of regulations that, at the end of the day, may reduce the competitiveness of the industry.
Like Mr. Rysanek has said, this is a balancing act. When you add the multitude of requirements that we have placed on the quality of ships, on Port State Control inspections, on the regulations at the design and construction stage, we believe that Canada has a great competitive environment with a great potential, especially for passengers. Unfortunately, though, because of the overall approach of being a corporate citizen in a very global and international industry, we may sometimes need to compromise on some of the issues.
Senator Roberge: I agree with you on international treaties. I think that is part of the negotiation process and it is part of the commitment we make internationally on the treaties we sign. However, I think that, within our own borders, we must do better than that for Canadians; we must do better, for example, than buying a boat, going to visit the whales and having no insurance. I do not believe that that is acceptable.
Mr. Pageot: Again, we do not necessarily disagree. You are making very valid comments. Keep in mind, though, that tourism is a highly mobile industry. The options include cruises outside of the country, travel by car to the United States, travel to Europe and other choices. We must be reasonably balanced. As I have indicated many times, with respect to the efforts the department has made on the quality of the ships themselves, we have a much more aggressive Port State Control inspection regime.
On the West Coast, the cruise industry to Alaska is a good example; perhaps options there would be for some of those ships to go to Seattle or other ports on the United States side. One reason Canada has provided first-class options is that we have been reasonably flexible on the offering of infrastructure. In the Port of Vancouver, for example, the offering of quality and flexible rules means that Vancouver and the West Coast have a booming industry.
Yes, it is a question of degree. This bill will give us a much better instrument to develop those industries. If there is a consensus in a few years to move more aggressively in the limits, such as on compulsory insurance, this bill will give us an instrument to adjust. The danger in trying to have the ideal regime is that you may find some operators actually resisting and rejecting what we are proposing.
Senator Perrault: First, insurance protection suggests that this could be a tiger without teeth. I am told that we will appeal for fair play from the owners and that they will see their responsibility. Tell that story to the Greek freighter that came into Vancouver Harbour last summer. The crew had not been paid for weeks, there was hardly any food aboard, and the owner abandoned the ship. I think many other countries would have sent the army on board to get those people, but the crew literally needed to be saved and helped out of their food deficit. What would have happened if, on the way into Vancouver Harbour, that ship had collided with another ship going out? Who would have been responsible then? Obviously there was no insurance. People operating that kind of transport line should be barred from entering Canadian ports if they cannot provide us with reasonable assurances of safety. That incident last summer was horrible. The crew had not been off that ship for weeks and they were starving. Where does the responsibility lie there?
My second question is this: Did we model these reforms after those enacted in other countries? If so, which countries were chosen as the models?
Third, are there any countries today with a compulsory insurance program feature?
Mr. Rysanek: Currently, there is compulsory insurance in respect of commercial shipping under the provisions of all the political conventions, which I have just described, among roughly 45 countries. All maritime nations basically adopted that regime, including compulsory insurance against pollution claims.
Senator Perrault: We do not have that.
Mr. Rysanek: That is certainly right here.
With respect to other types of claims, whether collision claims or crew claims and so on, there is no compulsory insurance anywhere in the world that currently would deal with that. The principal organization that is involved in this -- the International Maritime Organization -- has already done some work to introduce compulsory insurance in fields other than pollution. The third one that is under discussion is the convention right before us, the Athens Convention, which relates to the passenger regime. It is a discussion not only of a new limit in the future but also of compulsory insurance for passengers.
Senator Perrault: What about the crew?
Mr. Rysanek: With respect to crew, with respect to other claims, with respect to property damage claims, with respect to claims of other ships, the only thing that has happened so far is a great deal of discussion in IMO and some interest. I do not wish to mislead you. The international community is not ready, as far as I can see, to adopt compulsory insurance, with all the trimmings, for other types of claims.
Senator Perrault: In Vancouver Harbour we have Chinese ships streaming in -- there are a number of others due to arrive in the next 30 days -- with no insurance, no coverage. They will be lucky if they arrive without some of them sinking. It seems to me that we must be tougher on them. Why should they be given entry to a port on the West Coast? In case of the Chinese, of course, it is illegal, but why should they be allowed in the harbour if they do not meet any of our basic conditions for fair operations?
Mr. Pageot: As officials we share the concerns of senators and others. These ships create major issues for the immigration policies of the country. Unfortunately, in our modest bill on civil regime, we cannot resolve all the issues and abuses that may exist in a sector. We do not deny there have been a few cases that we would have preferred not to see.
Earlier Senator Maheu was talking about four years. I am probably one of the few who did cover that time span. I have been here many years. I can attest to the fact that the passenger sector in Canada is very responsible. We have ferry operators like B.C. Ferries and national companies like Marine Atlantic Inc. and then we have Holland America and a bunch of private companies on the West Coast that provide some of the best, first-class vessels offering cruises in Canada. On the St. Lawrence, new ships are being built.
The community has been responsive. I would suggest that the major ports -- whether or not they offer terminal facilities like those at Vancouver, Halifax, Quebec City and Montreal -- are all finding that the partnerships they have with the cruise and tourism sector are very serious, very responsible. Associations have been formed such as the North West Cruise Ship Association. I would ask senators not to necessarily put in the same bag with the emotional trips done by a few illegal immigrants the very vibrant and vital industry that we have in the tourist sector.
Mr. Gauthier: Senator, I believe one of your questions regarding your scenario of two ships colliding is still outstanding.
Senator Perrault: One of the ships may be a beaten-up tramp steamer.
Mr. Gauthier: There are such ships. As far as the relevant owners of those ships and the people on board are concerned -- say the non-cargo interests -- the common maritime law would apply. Whoever is at fault would likely be found liable. If both are found liable, then we have the apportionment rules that are being set out in this statute. It is a mug's game as to who, at the end of the day, would be liable.
Senator Perrault: Before you leave that, in this case the owner just abandoned all responsibility and refused to fly the crew back to Greece or wherever they came from.
Mr. Gauthier: If you are referring to the treatment of the crew, that is another matter. That is covered by a series of conventions that I believe Canada is a party to. Those conventions are not administered by the Department of Transport. They are international treaties adopted by the International Labour Organization, the ILO. Various other treaties are administered by the Department of Labour here in Canada and they have an impact on repatriation of seafarers, medical conditions and so on.
The Department of Transport would be concerned only if the rustbucket you described was trying to come into our waters and either was not seaworthy or contravened a particular international treaty covering international voyages. My colleagues at the Department of Transport who look after the technical aspects have inspectors who can detain vessels and ensure that they stay detained until they are made seaworthy. The Department of Transport does have a role to play in that area, but the Department of Labour would have a major role to play in the area you have described.
Mr. Rysanek has answered that, as far as mandatory or compulsory insurance is concerned, Canada has that only in respect of oil spills for tankers as set out in part 6 and nowhere else.
[Translation]
Senator Poulin: Mr. Pageot, you mentioned the department's goal of taking a balanced and reasonable approach to all issues relating to the seaway, since the tourism industry has been growing rapidly, and companies along the seaway have always been very responsible and done top-quality work for the past 40 years.
In Sudbury, the Cortina does cruises like the ones available to tourists on the Saguenay River. If I wanted to start up a business in Sudbury, where would I go to get a licence to carry passengers?
Mr. Pageot: Generally, it is a free market. The federal government does not limit such activities with licences. You have to find a boat that meets all of Transport Canada's safety standards. Once you have met safety standards and sorted out your financing, you can operate pretty much as you like. Under the Coasting Trade Act, vessels operating between points within Canada are required to fly the Canadian ensign, but there is generally no licensing system. In Quebec, between two points on the St. Lawrence River, the Quebec government has instituted a licensing system for cruise vessel operators. Operation of vessels on lakes comes under provincial legislation. In general, however, the federal government has no licensing system.
Senator Poulin: Do I need to go back to my province, Ontario, to obtain an operating licence for a passenger vessel operating on an Ontario lake or river?
Mr. Pageot: I cannot answer that.
Mr. Gauthier: The authority to allow operation of commercial passenger vessels within a province is granted by the province, provided there is no interprovincial or international carriage involved. That is a purely constitutional issue. The federal government has no jurisdiction in that area. I do not know whether the province of Ontario has similar legislation.
Senator Poulin: When Senator Callbeck asked you whether you had consulted the provinces, you answered that you had, and that they were all in agreement. If you remember what I said at the outset, the federal government asked all provinces to assess the number of boats and businesses that would be affected by this bill. This is why I find your answer somewhat surprising.
Mr. Pageot: The talks with the provinces do not go into such detail. In many instances, provinces would be unable to provide you with a specific number of vessels. In general, consultation consists in informing provinces of the purpose of this bill, and of the federal government's role. It does not consist in going beyond that, and encroaching upon areas of local or provincial jurisdiction. The provinces have been properly informed of the federal government's role, and of international agreements, and have not raised any objections.
Senator Poulin: My question is somewhat political. I would like to have a better idea of how the bill will affect Canadians in northern Ontario. When I put my first question, I talked about the types of businesses involved. I was thinking about fishing camps in northern Ontario. There are many of those, because the rivers there are clear and provide excellent fishing. I was worried about the impact of this bill on small businesses. And again, when I asked the question on insurance, I was thinking about small businesses too.
I realize that I did not get satisfactory answers to the questions I managed to ask. You said that the purpose of this bill was to make companies accountable. Can you tell us how small companies will be impacted? How much will it cost, because we have learned that they will not be required to pay?
First, we don not have any background figures to tell us how many Canadian companies will be affected by this bill; second, how they will be affected; and third, what their costs will be.
[English]
Mr. Rysanek: I will try my best to respond to your questions. It is, of course, not only through the provinces but particularly through the various industry associations that we have disseminated the information about the proposed bill. I would think that awareness that legislation is pending and of the scope of the legislation is fairly widespread, including among the outfitters, the small operators, and those who are members of various industry associations.
Regarding the number of vessels or number of companies involved, I do not have that information with me. We will be happy to provide it. We know the membership, for example, in the association that represents particularly the small vessels. There are roughly 80 companies at the moment. However, we will verify and supply more complete data.
The final question is most difficult. What will be the impact on the small owners? For those who are insured already today and operate vessels, there will be no impact. They will find nothing new about the insurance cost. Those who will now have to go for a totally new insurance policy will see something, but I am not equipped to provide estimates. This is a matter of the market and the insurance industry providing some estimates and some broad outline. It may mean something to owners who have never been to an insurance market and who have done it in ignorance of insurance, but they are very few and far between. I do not think we are talking about a large number of owners. There are some, but, from what we can see at our end, most of them already operate in a reasonable fashion and are well protected. For them, there will be no impact.
[Translation]
Mr. Pageot: I will add that in the evidence we received, the only reservations expressed dealt with small pleasure craft operators, for activities on lakes or in outfitter camps. Generally speaking, that group expressed the most reservations with regard to a universal and mandatory regime. Try to understand their position, there is always a decision to be made with respect to the role of the State. One week you ask them to take a course to operate an outboard motor, a week later another course on how to handle a firearm if it is a hunting expedition, et cetera.
Here again, it is a question of striking a balance. The system, with this option, makes it possible to strike a balance for small operators. Moreover, commercial operators who invest more heavily in more costly vessels have reacted very well to the proposed system.
Senator Poulin: In southern Ontario, the tourism industry around the Great Lakes is extremely important, be it in Niagara, Toronto or Sault Ste. Marie. My colleagues from southern Ontario will have a number of questions on this bill and how it applies to small commercial enterprises.
Mr. Pageot: Cruises in the region are growing rapidly. The owners of ships with large passenger capacities are, for the most part, reacting well to the proposed system. But limits have been set for marina owners in Toronto, where there are ships that belong to corporations or individuals. The question we asked ourselves was where to set the limit. If someone goes out on a Saturday afternoon with a few friends on board, we do not want to subject activities of that type to an essentially commercial system.
[English]
Senator Callbeck: You mentioned getting a boat or a ship and having to satisfy the safety requirements. If you are operating just within the province, those are provincial requirements. If you are operating outside the province, they are federal requirements. Is that correct?
Mr. Gauthier: No. In effect, safety requirements are an integral requirement of shipping, and that is federal law.
Senator Callbeck: Therefore, a person who wants to have a small operation taking tourists out to see the whales or whatever will have to meet the safety requirements. What else?
Mr. Rysanek: From the standpoint of this bill, senator, the owner need not meet anything. From the standpoint of this bill, the owner needs to know there is now a liability regime and then should insure against it.
Senator Callbeck: I am just wondering outside this bill. If someone wants to set up a small operation, he or she goes and gets a boat. In order to put that boat in the water and charge to take people out to see the whales, that person must meet safety requirements. Is there anything else?
Mr. Rysanek: I am not competent to respond to your question, senator. I am sure there is a plethora of requirements and regulations on the safety side, the technical side, and loss prevention side, for which I have no affinity. It is not my field. I was trying to answer your question only from the standpoint of this bill.
Senator Callbeck: Are some of those regulations and requirements provincial or are they all federal?
Mr. Gauthier: I think that follows from what I said earlier. If it is a safety matter, they are all federal rules adopted under regulations under the Canada Shipping Act. For example, a passenger vessel will be required to have watertight compartmentalization in the structure of the hull, a certain number of lifejackets, perhaps lifeboats. I think my colleague described that there is a plethora of rules. My understanding is that there are about 100 to 115 regulations adopted under the Canada Shipping Act. They will include regulations on dispensing food and a whole host of areas that are covered by the technical half of the Department of Transport, the group that deals with safety and security. Pollution prevention is another example. Bilge pumps have to be installed and so on. There is a host of regulations, all federal, and they all must be complied with. Some regulations not only have to be complied with but also require some operators actually to have certificates. You have to be inspected. You need a piece of paper that says you can apply and so on. It depends on the size of the ship and the voyage that it is involved in. It is quite a story. An awful lot of rules apply; I can assure you of that.
Senator Callbeck: If you buy a boat to take people out to see whales, are all of your requirements federal? Do you not have to go to the provincial government at all?
Mr. Gauthier: I am not 100 per cent clear. If the whale-watching were in the province of Quebec, in internal waters like Lac Saint-Jean, for example, or some such place, if there were whales, or if you were going to see the salmon jump, that is intraprovincial water, and there may be a requirement on the commercial or enterprise side for an operator trying to put a boat in the water to obtain a permit from some department in the Quebec. I am not aware of any such requirement in the province of Ontario, although it is feasible there could be such.
When it comes to the safety of the operation of the craft and of the persons on board, that is the area of navigation and shipping, which is federal.
Senator Furey: My first question follows from the comments of Senator Poulin. From discussions that officials have had with small craft owners, do we have any statistics on the average insurance cost as a percentage of total operating costs?
My second question is this: In the small craft business, is it not more likely that the marketplace will eventually police many of the concerns that we have heard expressed here this morning? For example, if I am considering booking with company A, and I know company A is advertising insurance for passengers and that company B is not, then I know who I am going whale-watching with. The marketplace, over a short period of time, would look after many of the concerns raised about these insurance issues.
Mr. Rysanek: I will deal with your last question first.
There is certainly the expectation that over time, when the regime is well in place, when the industry gets used to it, when it has had a chance to get quotes from the market for insurance premiums, owners will act responsibly. Those who will not act responsibly will leave the market. Over time, we have a reasonable expectation of that. I do not know whether the industry will actually advertise compliance or response to the law as part of its marketing technique; but such would be a reasonable expectation.
With respect to your first question, senator, the only thing I can suggest is that we will try to get back to you following the appearance of the insurance industry. If you do not find the insurance industry has provided sufficient response to the cost of insurance today and the cost of insurance in the future, we will do some research.
Senator Furey: It would be good to know, on this particular issue, whether we are talking about 5 per cent, 10 per cent or 15 per cent of total operating costs.
The Chairman: Thank you very much for the answers to our questions. We will have more witnesses as there are so many questions to be answered.
The committee adjourned.