Proceedings of the Standing Senate Committee on
National Finance
Issue 36 - Evidence
OTTAWA, Monday, March 25, 2002
The Standing Senate Committee on National Finance, to which was referred Bill C-49, to implement certain provisions of the budget tabled in Parliament on December 10, 2001, met this day at 1:00 p.m. to give consideration to the bill.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Our first witness today is Mr. David Menzies of Hawk Air Aviation Services, British Columbia. Mr. Menzies, please proceed.
Mr. David Menzies, Hawk Air B.C.: Hawk Air B.C. is a small, scheduled airline. Our main base is in Terrace, British Columbia, which is, on a clear summer's day, about an 18-hour drive from Vancouver. In the wintertime, it is anyone's guess how long it will take you to get there. Flying in our area is not a luxury, and it riles us somewhat when we hear comments such as the one expressed on CBC radio a few weeks ago by a professor from Kingston. He said that flying in this country is a choice. That may be the case if you are in Kingston, Windsor or other similar locations, but in many areas of this country, the choice not to fly is a choice to stay put. That is just not an option for many of the activities that we want to carry on.
However, the important question for me is this: Who are the uses of the air travellers' security system? Mr. Martin has said many times that the primary users of this system are the airline passengers. I am afraid that I consider that statement to be obviously untrue.
Security is a societal responsibility, and we ought to treat it that way. The proposed method of funding through user fees is the wrong method, beyond a token amount.
I will use September 11 to illustrate the point. The two aircraft that flew into the World Trade Center Towers took off with 157 passengers on-board. If the security system had been working properly, those 157 people would have been delivered to their destinations, and life would have gone on. Would those 157 people have been the only users of that system? Obviously not. The 3,000 people who died in the towers were users of that system; the tens of thousands of people in New York who had their lives disrupted were users of that system; and the tens of thousands of people working in the airline industry and the aircraft manufacturing industry were users of that failed system.
It does not stop there — it goes on and on. What has been the cost of the war in Afghanistan? By extension, the Canadian taxpayers who are paying to have their soldiers in harm's way in Afghanistan were users of a failed security system in another country.
Apply a user fee to those 157 people and calculate how much it would have cost those 157 passengers to pay for that bill. It is a societal responsibility and should be treated that way. The airport security authority should be no less a public institution than the Armed Forces and should be funded by the same mechanisms. That is one of several points that I hope we will get around to discussing in greater depth.
I should also like to talk about the appropriate application of these charges. I was at a hearing on Monday, February 25 in respect of the proposed Air Travellers Security Charge, ATSC. The briefing was presented by Mr. J.P. Bouchard of the CCRA, the Canada Customs and Revenue Agency. It was very interesting, although somewhat discouraging.
I found it most interesting that the net being cast by the ATSC is extremely wide. There are many kinds of operations caught up in the ATSC net that should not be, and I was quite surprised about that. I have a copy of a letter signed by Minister Martin that was written to Mr. Cliff McKay, President and CEO of the Air Transport Association of Canada, dated January 5. The letter states that passengers boarding aircraft at and departing from airports where these services are not available will not be subject to the charge. I produced this letter at the CCRA meeting, and Mr. Bouchard looked at it as if the letter had come from Mars. He said the legislation did not state that, but rather it stated that if you board an aircraft that weighs 6,000 pounds or more and you fly from one airport on the list to another airport on the list you will be subject to the charge. He was quite unabashed about the charge not having anything to do with fee for service. We were not discussing transportation policy; basically, we were discussing tax policy.
There are a number of situations where there is no regulatory requirement for security. I operate in one of those. We will not be receiving enhanced services, yet we will be subjecting our passengers to this charge.
Next door to me at the Terrace airport is Terrace-Kitimat Air Charters. Trev Bowker is the owner. He has a Piper Navaho that can carry a maximum of seven passengers. Unfortunately, it weighs 6,400 pounds. He does some contracting. He has a job where he takes a heli-logging crew from Terrace to Campbell River once a week and picks up the other crew. These guys come through his hanger with their bush axes and cork boots, and they get on the plane and off they go. There is no actual or real requirement for security in this case. However, because he is flying between two airports on the list in an airplane that weighs more than 6,000 pounds, he will be levying these charges. It is inappropriate.
We have conducted surveys, asking people their opinion of this, and I found something very interesting. I am from Terrace. It is a town where the blood of the B.C. logger runs reddest. These are very independent people. They are very accustomed to paying their way and taking care of themselves, pulp markets and softwood lumber deals be dammed. They will just get along. If you go anywhere in this country to find support for the concept of user fees, you will find it in Terrace.
When we started asking people about the user fee in regard to security, this concept of civil society responsibility came up, with security being everyone's problem and to everyone's benefit. Generally, loggers do not talk like that. In this case, we do. People recognize that we are talking about the security of the state. People want to participate in the security of the state.
With a straight user fee, people are only required to participate at the time they buy a ticket. They buy the ticket and they pay their $12. That is the end of their responsibility as a citizen for the security of the air transportation system. The idea that it puts in people's heads is that if they are not riding on that airplane, security is not their problem. Obviously, history tells us that it is our problem and we ought to participate on an ongoing basis in the security of our air transportation system.
That is my rationale. What we ought to do to is fund this system through general revenues, perhaps with a token user fee, not a $12 or $24 fee.
Senator Kinsella: Mr. Menzies, I take it that you are concentrating on the part of Bill C-49 that deals with the security charge. Have you concentrated on other parts of the bill?
Mr. Menzies: I have not read the whole bill myself. Specifically, is there a clause you would like me to speak to?
Senator Kinsella: Perhaps the Africa fund.
Mr. Menzies: I am not familiar with that. One part of the bill I do support as a concept is the creation of the proposed Canadian Air Transport Security Authority. This is a good idea.
There are some problems with the way we are handling security at airports. The proposed new authority will be an opportunity for us to get it right, if we seize the opportunity. Once this authority is up and running, it will take over security, as opposed to working with a hodgepodge group of contractors under a central authority. We could do much better.
I have some immediate knowledge of problems in our present system. I have a sister who has worked in outdoor security at the Winnipeg airport for the last 14 years, which is a tough job in the wintertime. Over the past 14 years, with private contractors providing that service to the airport authority, she has seen the responsibility for outdoor security pass from one contractor to another and the wages fall from $17 an hour to $9 or $9.40 an hour, depending on the shift they are working.
Senator Kinsella: As an operator of an air service, you must comply with a number of Transport Canada regulations, is that correct?
Mr. Menzies: That is correct.
Senator Kinsella: Do you think that if the Department of Transport were to apply itself to the setting of standards in the whole area of air transport security, it could come up with a good set of norms that would apply across the country?
Mr. Menzies: Yes, that was one thing I did suggest to the regional director in the Pacific region. I wrote a letter regarding this matter back in December.
Senator Kinsella: What do you think he did with your letter?
Mr. Menzies: From what I was told, it went to the ADM level. Although I received no formal notification of that, I was told by his assistant in Vancouver that once a letter goes to the ADM, it is protocol that the response must come from there and not the region. That was the last I heard of it.
Senator Kinsella: Do you have any concerns as an operator that the proposed Canadian transport air security authority will not have the same standard-setting authority as the current Ministry of Transport?
Mr. Menzies: I have no concern.
Senator Kinsella: Do you think they will be able to set the standards to the level of detail, and provide commonality across the country?
Mr. Menzies: Provided that they are adequately empowered and organized, yes.
Senator Kinsella: Do you have any concerns on that very point?
Mr. Menzies: No, I do not.
Senator Kinsella: You believe they will be well organized, well funded and do a good job, so you are in favour of that. It seems that your real concern is simply the security charge.
Mr. Menzies: My concern is how this new agency will be funded, how it will be paid for.
Senator Kinsella: You do have a concern about whether it will have appropriate funding to do the kind of a job that you as an operator want to do.
Mr. Menzies: If we are going to be paying $12 every time we have a passenger get on an airplane, the organization will certainly be well-funded.
Senator Kinsella: Those funds go simply into the Consolidated Revenue Fund.
Mr. Menzies: That is true, and that is a problem. In surveying people on-board and informally polling people at the flight deck restaurant, which is in the Terrace Airport, when we mention ``general revenue'' with respect to user fees, they roll their eyes. If the proposed authority were to be funded exclusively by user fees, there would be much less resistance to it. In other words, if it were set up like NAV CANADA, where the fees accrue to it as a corporation and not into general revenues, there would be less resistance.
Senator Kinsella: Is there a difference in the cost of clearing the passengers who get on your aircraft and those who are cleared at Pearson and get on the 747s or 767s?
Mr. Menzies: Yes, there is a difference. The regulatory requirements for security screening vary, depending on the type of operation.
Our aircraft departing the Terrace Airport — incidentally, we serve Terrace, Smithers and Prince Rupert with daily services to Vancouver — operate into the south side of the Vancouver airport, an area called the south terminal, which is actually the original airport terminal. It is about two miles from the domestic and international terminals that you would fly into when you come from here on Air Canada, for instance.
The south side of YVR is referred to as an ``unsecured airport.'' Our security screening requirements are very different for us to fly from Terrace to the south side of Vancouver airport than if we were to fly to the north side or the main terminal. There is security and then there is security screening. As an air carrier, our responsibilities for security are governed by the Canadian aviation security regulations, or CASRs, which we cannot discuss in detail because it is a confidential document. However, it exists and it outlines our requirements.
We exceed the minimum requirements at Hawk Air, but that is simply a company policy. We check carry-on baggage. We check laptops and cell phones. We do not permit knives in carry-on baggage, the regular sort of thing. However, we do not X-ray people or X-ray carry-on baggage. We do not wand passengers as is the case when you go through normal security. There is no regulatory requirement for us to do that.
We have eight flights a day that move through the south terminal. There are no X-ray facilities there. However, there is good security at the south terminal, having a relatively large group of security guards there. They ensure that there is no activity going on out there on the ramp that should not be. They will not let you get away with it. They keep an open and sharp eye on what goes on out there. We find that all the time, even with our own staff coming and going. However, there is no screening. There is no equipment for it. There is no regulatory requirement for it.
Senator Banks: My first question is one of information. You spoke a moment ago about your friend who is a charter carrier. I thought this bill designated ``air carrier'' under Part II of the Canada Transportation Act to operate a domestic or international service and was not inclusive of the kind of charter operation you described your friend having. Am I wrong?
Mr. Menzies: That is not what the CCRA told us.
Senator Banks: That is an interesting question.
Mr. Menzies: I took pains to make sure that I was clear on that myself.
The Chairman: CCRA is Canada Customs and Revenue Agency, formerly known as Revenue Canada.
Senator Banks: We will pursue that. I have an argumentative question to ask you, which I am sure you anticipated, that concerns the rightness of costs being loaded on to those of us who fly often.
Would it be the best thing, in your view, if the NAV CANADA surcharge, landing fee surcharges and airport improvement taxes were paid for by everyone, since, as you have carefully and clearly argued, ``everyone'' uses the air transportation system?
Mr. Menzies: Those arguments have been made. There has been some dissent on that. In terms of NAVCAN, for instance, if you have spent the last 20 years living on the 40th floor of 55 Nassau Street in Winnipeg, or living between 55 Nassau Street and the airport, and you have not yet been hit by an airplane, you are probably a user of NAV CANADA.
Senator Banks: Agreed.
Mr. Menzies: We had some dandies over the NAV CANADA charges. The NAV CANADA system was bought, built and paid for, and the expertise was developed, at public expense in Canada. It was a public system. The airports are the infrastructure. In this country, we used to have a system of airports where the profitable airports, the airports that generated a lot of revenue, could support the smaller airports. That exists no more. Now we have a bunch of sink- or-swim little operations around the country, and, credit to us, we seem to be making it.
The difference — this is where security comes in — is an emotional one. By providing an airport security system you are participating in the defence of the state. It is easier to get people to look and to accept their societal responsibilities or their responsibilities as citizens when that is what you are talking about as opposed to a proposal for a Tim Horton's in a terminal or a proposal to put up another sculpture in Vancouver. That is the difference to me.
Senator Banks: Do you not see the dichotomy that I do in saying it is okay for NAV CANADA to take that but not security?
Mr. Menzies: I understand that. However, do not misunderstand me. I was dead set opposed to the downloading of the airports. I fought very hard against the creation of NAV CANADA for exactly the reasons that you mention, that those were national systems that existed for everyone. In the NAV CANADA situation, I was making the same sorts of arguments in Terrace. I was having people say: ``Why should I pay for this? I never get on an airplane.''
Perhaps the reason you have a job is because your boss does get on an airplane. That makes you a user of NAV CANADA. It makes us all a user of NAV CANADA. People in Terrace like getting their newspaper the same day. Guess who got it there — it was NAV CANADA.
Senator Banks: Pursuing that argument, you would be in favour of socializing, if that is the word, all those charges because we all benefit from them.
Mr. Menzies: I would be in favour of that. However, that will not happen. We all know that.
We are talking about national defence as a different issue. The defence of the state is a societal responsibility.
The Chairman: Thank you, Mr. Menzies.
I will invite the Air Line Pilots Association to come to the table please. We have with us Captain Hardisty and Captain Adamus. Please proceed.
Capitain Kent Hardisty, President, Canada Board, Air Line Pilots Association: Good afternoon Mr. Chairman and committee members, in the package we have distributed to you, you should have on the left side items for your review and interest at your discretion. The first one, dated November 8, 2001, is the presentation that the Air Line Pilots Association, ALPA, made to the Transport Committee in the House of Commons. The second document, dated September 20, 2001, is a presentation from our ALPA president, Captain Dwayne Worth, to the U.S. Senate on aviation security. On the right side the documents to which will be referring today, in both official languages.
Besides my involvement with the Air Line Pilots Association, I am a pilot for Air Canada Regional.
ALPA represents more and 64,000 pilots who fly for 45 airlines in Canada and the United States. As a representative of employees whose lives depend on the safety and security of the air travel system, ALPA has, since its inception in 1931, devoted itself to insuring that air travel is both safe and secure. ALPA has developed extensive knowledge and expertise in aviation security areas.
Although ALPA is concerned and will comment on the damaging effects that will result from the proposed Air Travellers Security Charge Act, the debate on this part of the bill has overshadowed the proposed act to create the Canadian Air Transport Security Authority, or CATSA. As the effectiveness of this authority will play an important role in the safety and security of Canadians, ALPA remains very concerned with what it deems to be serious deficiencies with this bill. On behalf the professional pilots on the front lines, ALPA appeals to the members of this committee, in the tradition of the Senate as chamber of sober second thought, to give careful review to the provisions of the CATSA bill.
ALPA has long been a leader in working with other parties in the United States and Canada in developing improvements in aviation security. These efforts have been stepped up in recent months. Our president, Captain Dwayne Worth, led the U.S. rapid response team on aircraft security that was tasked with developing recommendations to be delivered to the transportation secretary Norman Mineta. Additionally, the U.S. Federal Aeronautics Authority appointed ALPA security committee chairman Captain Steve Lucky to chair a committee examining new security technologies. Captain Worth and other ALPA representatives have provided testimony before Congress on numerous occasions since September 11, 2001.
Meanwhile in Canada, security representatives from the ALPA have been meeting with senior officials from the security directorate of Transport Canada in Ottawa to discuss the vital issue of our nation's aviation security and to begin the development of a new aviation security blueprint.
ALPA pilots and staff have participated in the newly formed aviation security advisory committee, as well as the aircraft security working group and the airport security working group. Especially in light of these positive steps already taken to deal with this critical problem, we are troubled by the direction that the proposed legislation has taken. We are gravely concerned about what we believe to be serious deficiencies in the proposed Canadian Air Transport Security Authority Act.
The proposed legislation, as it is written, does little but create an additional bureaucracy that will be unresponsive to the insights and interests of the people on the front lines of aviation security. It will accomplish little more then transfer screening authority from the airlines to the airports.
Moreover, the proposed security authority would work in an operational and fiscal bubble that would not reflect the fact that aviation security, both in terms of its importance and in terms of its complexity, is an issue that transcends the immediate use of airports. Most significantly, we are disappointed that the planned legislation does not adequately address the core security issues in Canada.
Before turning to a more detailed assessment of the proposed legislation, we wish to express that our most serious concern with the proposed legislation is with what is not there. There is no substantive attempt to address the core issues of security of the air transportation system.
Given the critical importance of the issue, we believe that the government ought to address the issue of the security of air travel legislatively, in a comprehensive manner, establishing enforceable standards for the secure operation of air transportation.
The proposed legislation does not do this. Instead, it proposes to delegate responsibility away from government, both for the setting of standards and for the delivery of security services to the public. The creation of yet another bureaucratic layer to deal with the issue of airport security will reduce the likelihood of it receiving the public attention that it deserves. More important, it would preclude the necessary public scrutiny of proposed solutions.
This issue deserves to be the subject of public debate on an ongoing basis. We are concerned that the creation of an authority will serve only to deflect the government's responsibility for maintaining a secure air transportation system. In fact, we view this proposal as an unacceptable step backwards.
Turning to the specific legislation before the committee, ALPA is deeply concerned that the new authority would not have sufficient scope for its operation to deal with aviation security issues in a comprehensive manner. We are particularly concerned with the apparent restriction on the proposed authority's mandate to the screening aspect of air transport security.
When the Minister of Transport announced the proposed legislation in December 2001, he stated that the new Canadian air transport security authority would be responsible for the provisions of key security services. The minister's news release of December 11, 2001 stated that, in addition to pre-board screening of passengers and belongings, the authority would be responsible for the deployment of explosive detection equipment at airports, federal contributions for airport policing and contracting for on-board armed police.
We do not believe that this intention has found its way into the legislation as it is presently drafted. Clause 6 of the bill makes express reference only to the screening function in the security system. From our reading of the remainder of the proposed legislation, it is apparent to us that only that single aspect of the security process is specifically contemplated to be within the new authority's competence.
The absence of a mandate to provide a uniform, reliable, technologically enhanced identification media for use by employees, transient crews and travellers at airports is another glaring deficiency of the bill. This absence would continue to unnecessarily complicate all our shared efforts to further enhance aviation security.
As indicated in our ongoing discussions with officials from the Transport Canada security directorate, ALPA has made it clear that Canada needs a new aviation security blueprint. We need global thinking to address this critical issue.
The handing over of the screening aspect of the security problem to a separate authority with a restricted mandate is a piecemeal solution. It will be an ad hoc exercise that will be unable to address the core issues related to security. It is far from clear whether the proposed new security authority could meaningful deal with broader security issues such as the use of air marshals in aircraft, passenger information systems and the creation of a national pass system utilizing technology, including biometrics.
ALPA has outlined its proposals for the changes that need to be made to the security system in its November 8, 2001 submissions to the House of Commons Committee on Transport.
The proposed legislation's silence on these issues appears to indicate that these and other important issues may not be fully addressed by the authority. We therefore urge the committee to recommend that the authority be provided a global mandate to deal with all aspects of aviation security. ALPA recommends to the members of this committee that the language of clause 6 be amended to more specifically state the authority's mandate for the provision of security services. Otherwise, ALPA is concerned that the security services provided, other than screening, will be at the whim of the bureaucracy within Transport Canada. We reiterate: The key security provisions that Canadians expect and require need to be mandated by Parliament in the legislation.
While we have serious misgivings about the proposed authority's ability to deal with security issues, we are nevertheless heartened to see that at least some provision has been made for stakeholder representation on the proposed authority's board of directors. However, the provision is insufficient in that it does not reflect the contributions and the interests of front-line personnel such as pilots. The men and women who work directly in the industry have the most at stake when questions of aviation security arise, and they are the ones who will be best positioned to provide realistic solutions to security problems.
ALPA has decades of experience in dealing with security issues. Because our members' lives are on the line everyday, we believe that they have and should have a great deal to say on the issue of aviation security. To create a body that is truly responsive to the critical front-line issues of security, ALPA believe that at least two board members should be drawn from front-line employees in the industry. Moreover, we are deeply concerned that the qualifications criteria for non-representative board members in subclause 12(1) are both vague and insufficient. Security is a highly complex, technical area that cannot be quickly mastered. For the board of directors to be effective in this area, many years of direct professional experience in the area is a prerequisite.
Accordingly, were this committee to accept the proposal to create a security authority, we urge you to require that each member of the board of directors have an extensive professional background in aviation security. We also recommend that a more substantial proportion of the authority's board originate directly from the aviation industry, including front-line personnel such as airline pilots.
Turning to the issue of the proposed Air Travellers Security Charge Act, ALPA objects in the strongest possible terms to the assessment of what can only be characterized in the present economic climate as a punitive and highly regressive levy on the Canadian domestic airline industry. Canada has seen the disappearance of numerous airlines in the last several months, and only recently attempts at a restart of Canada 3000 were abandoned for economic reasons. The imposition of a $24 surcharge on domestic flying will serve to further erase the operating margins that remain in the Canadian industry. It will be particularly crippling to short-haul domestic carriers such as Air Canada Regional and WestJet. We find it ironic, to say the least, that legislation intending to improve security of air travel in Canada could assist its very demise. The events of the last six months have illustrated the critical importance of the aviation system to the overall functioning of the national economy. Its support, particularly at this critical time in its history, is patently in the broader public interest.
The attempt to place the aviation security issue in a fiscal bubble, as Bill C-49 proposes, constitutes, in our view, an abandonment of the government's responsibility over a critical part of the nation's infrastructure. The user-pay concept is entirely inapplicable to the current circumstances and is based upon an apparent misunderstanding of the nature of the terrorist actions, the recurrence of which we are now all trying to prevent. It is critical to understand that on September 11 terrorists did not target the air transport system. Rather, they utilized the air transport system by turning aircraft into weapons of mass destruction. With that in mind, we do not see the basis for targeting airline passengers as the sole group in our society to pay for enhancements to the security system.
Moreover, the application of the user-pay concept is completely unfair in its proposed application. At best, it is a blunt instrument, generating revenues far in excess of what will be required to fund the authority and taxing passengers the same amount, irrespective of whether they are travelling 200 miles or across the country, and irrespective of whether the airports — for example, northern and remote airports — that they are using will obtain any tangible benefit from the security enhancements.
We therefore strongly urge that the entire security charge scheme be abandoned in its entirety. However, if the committee is to retain the self-funding concept, we urge you to provide for a graduated fee reflective of the length of the trip and reflective of whether the airport in question will benefit from the security enhancements.
Thank you for the opportunity to appear before the committee to outline ALPA's views on this critical issue and to set out our serious concerns in respect of this legislation. The association looks forward to working with Parliament, Transport Canada and other participants in the airline industry to ensure that there is a safe and secure aviation system in Canada. We would be pleased to take your questions.
Senator Tunney: As I was following your presentation, I was thinking back to the days before September 11 and wondering how many people might have anticipated anything such as what happened. We are now between that episode and, one hopes, not another, but possibly so. Would you have considered something entirely different rather than a repeat of this kind of an occurrence? Would you be concerned that our security funding might be looking at too narrow a possibility?
Mr. Hardisty: To answer the last part first, yes, we are gravely concerned that the legislation is not a global approach to the concept of security. It appears at this point in the legislation to us to be very narrow in respect to pre- board passenger screening only, and that is only one layer of security. Many layers of security are important to ensuring the national security perspective. The funding, of course, is an issue that we have addressed and object to forcefully.
As to whether or not anyone could have foreseen the events of September 11, that has been open to debate, but I think any reasonable person in either the United States or Canada would have to assume that no one had contemplated the type of actions that were undertaken on September 11. However, it has demonstrated that the system is open to abuse and attack, and we must defend. To defend, we must be effective, and we need effective legislation in place to do that.
Senator Tunney: We were informed in a recent presentation that the charge or fee of $12 or $24 represents only part of the cost of this security thrust.
Mr. Hardisty: We are not entirely sure how the figures were derived. There was no real stakeholder input that I am aware of, that the association is aware of, with respect to setting the fees. The costs, in our opinion, are not properly reflective.
Again, this is an issue of national security. The previous witness spoke on this issue forcefully as well. We are not talking about airline passengers being the targets; we are talking about citizens of Canada, citizens of the United States, and indeed citizens around the globe, being at risk by the use of the aviation system as a weapon. We have to guard against that, and we must consider that in the appropriate light. I am not sure if I was totally responsive to your question.
Senator Tunney: Yes, I think so. Thank you.
Senator Banks: I have heard arguments to the opposite of yours. You argued that the government ought to have a bigger hand in this and that it is too restricted. I have heard arguments that the reverse is true because the minister in this proposed legislation is left wide open to simply determine whenever and whatever he wants this authority to deal with. I refer you in particular to subclause 6(2) of the bill, which says, in part:
It is also responsible for air transport security functions that the Minister may assign to it, subject to any terms and conditions that the Minister may establish.
We have heard from the minister that those are contemplated as being pretty broad. Could you help us find a way between the two ends of that teeter-totter?
The Chairman: Look also, senator, at subclauses 4(2), (3), (4) and (5), in which the minister is given carte blanche and the authority is told it must obey.
Senator Banks: You talk about independence here, and we are hearing that the government has too much to say in this. You are saying it has too little.
Mr. Hardisty: We cannot agree to that. The legislation, as we have determined from reading it, fails to address any of the issues the minister has made comment on in the media and otherwise. He has indicated that he would like to apply various parts of the security apparatus to this body. However, the legislation fails to address any of these parts. The only part that is addressed in legislation is pre-board screening, which is one part of a whole package. Our concern is that under that circumstance it becomes subject to the whims of the various bureaucratic processes and budget processes. At some point, the issues may not receive proper consideration although they merit such. That is our concern. They should be legislated.
Senator Banks: If specific measures are put in an act then the application of the act is limited to those specific measures. If an act is a broad thing, which enables the minister to determine whatever needs to be done, it permits almost anything to be done. That is the nature of my question. If an act gets specific and says that this and this will be done, then there is a constraint to do only this and this, and certain contingencies down the road that cannot be foreseen could not then be acted upon under this act. Would you comment on that, please?
Mr. Hardisty: Certainly we see this as evolving, and issues involving the air marshal program and other programs that are before us today that must, in our view, be legislated to be properly addressed and properly put into action. As we evolve, there may be issues that are directly under the purview of Transport Canada or under other legislative apparatus that can be applied. Certainly if there are matters that come to light through the consultative process, we envision in the future those would become future legislation, but there are any number of areas right now that are being ignored, or could possibly be subject to oversight in the real term if they are not legislated properly.
Senator Kinsella: As a pilot, would you explain more about the air marshal idea? How would you see that working in Canada? What are the risks or dangers that are associated with such a program? What kind of firearms would they be using? Would that firearm penetrate the skin of the fuselage causing decompression? Has your association considered the possibility of other passengers being injured should a row break out? If someone is carrying a grenade and a marshal is there with a firearm, has your association reflected from a technical standpoint on the cost and benefits of that technique?
Mr. Hardisty: Yes, we have, and from the start we have been advocates of the air marshal program. We believe it is an appropriate deterrent. Used properly, it can be very effective. Other countries currently have the air marshal program in place, and in the United States the air marshal program has been ramped back up to beyond its original mandate. We would look to that program as being a model for the same in Canada.
We understand from the minister's comments that that program is in fact operational. At this point, however, although we are strident advocates of the program we have not been involved in the consultative process. We are not aware of any protocols or coordination at this point, and that is a concern for us. That is something we have brought to the attention of Transport Canada.
Senator Kinsella: The protocol, in your view, would necessarily have to include the captain on the flight knowing who is on his flight, and right now is that missing?
Mr. Hardisty: The rules of engagement for the back-end and front-end crews with the air marshals are missing. We are working towards having an understanding on that issue. It should be clear to anyone that we must, if we are to have an event in the back.
Senator Kinsella: If this afternoon there is a flight going into Dulles or some place from a Canadian airport and there is an air marshal on-board, does the pilot know whether that marshal is on-board?
Mr. Hardisty: In that specific circumstance they do because that route has required that program to be in place from day one. We are aware that the marshal program is becoming operational, may be operational as we speak, and those who should be aware of when it is present will be aware. However, there is obviously a great deal of confidentiality attached to the matter at this point, so it is limited in the scope of discussion.
Senator Kinsella: Would you tell us a little bit about cockpit security? What are the Transport Canada regulations regarding the cockpit and the cockpit door?
Mr. Hardisty: The Transport Canada regulations have been amended to ensure that the cockpit door is locked at all times when in flight. The Air Line Pilots Association has supported that position and made that recommendation as well. There are also recommendations that are being acted on to strengthen the cockpit doors to ensure that there is an impenetrable means through which people cannot access the flight deck.
Senator Kinsella: Are the pilots following these regulations?
Mr. Hardisty: They are.
Senator Kinsella: I was on a transatlantic flight about 10 days ago and the door was wide open for half the flight. That was not following procedures then.
Mr. Hardisty: No. In fact, that would be in violation of the Transport Canada regulations.
Senator Kinsella: I certainly agree with the principle that there is a social responsibility to security, and I am not sure that the government has really thought through the public policy principle of downloading air security, which affects those on the grounds as well as those in the air in the hasty manner of putting together this bill. I share those concerns.
Also, there are many social considerations. My grandparents fly your airline; they get seniors' discounts. Should there not be some kind of discount for the security cost?
Mr. Hardisty: Again, in our view, this is a matter of public interest and one that is national-defence oriented and therefore should be drawn from general revenues. That should be the appropriate discount, I would assume.
Senator Kinsella: It is my assessment as a member of the travelling public that the brunt of the response to the September 11 tragedy has been borne by the air travelling public, and it is further my impression that the travelling public is bearing far more of it than those in the industry, whether pilots, mechanics, baggage handlers, or the airport authorities. How will we be able to reduce some of the hardships imposed on the travelling passengers? They have taken it in good cheer, I might add. It seems to be way out of proportion.
Mr. Hardisty: Are we talking specifically about the pre-board screening process?
Senator Kinsella: Yes. I will give you an example. I transferred from Terminal 1 to Terminal 2 the other day, and in the tunnel I had to take my shoes off. I have done that in American airports. They swab, and then put the swab in a machine to look for explosive residue. There was no problem. I was able to sit down while I took my shoes off, and then put them back on.
At Pearson, your shoes are taken from you and are sent down a conveyer belt. One is required to walk in stocking feet over a filthy floor to retrieve them. There is no standardization that is factoring in public health standards. The thing seems to be a horrible mess. Do you have a comment on that?
Mr. Hardisty: There are several issues that are involved in your question. We sympathize because aircrews are currently subjected to the same if not more rigorous screening, and it is problematic in a number of areas for us. The fact that we have been identified as low-risk and so on makes these areas necessary to address. We need to have a proper authority that we can deal with these matters, and also this authority must be able to standardize and provide a product that will work, not one that is piecemeal with all these contracted parties. That is part of the problem we are experiencing.
Senator Mahovlich: Your presentation was very enlightening. You say that another bureaucracy is being set up. We must be careful. We do not want another bureaucracy because we will not be able to get rid of it.
There will be a number of directors on the board for this authority. How many directors will be from your organization? You represent 67,000 pilots. I am sure you were approached to mention at least two members. Is that correct?
Mr. Hardisty: No. The structure of the board is such that labour — or front-line workers, as we prefer to call them — has not been included in the legislation. We are working diligently along with various departments and with others to ensure that there is a front-line worker presence. This is where a great area of expertise is being overlooked. Again, within our own organization, not speaking for the others, our president undertook the chairmanship of the rapid response team on behalf of Secretary Mineta. We are involved in all areas of security in the U.S. and Canada; yet we are finding difficulty making our voice heard. If this proposal goes forward as written, we will not see a way to communicate our interests in any form.
Senator Mahovlich: Yet you have 67,000 members.
On another topic, I fly often. Would it bother you if I had a pass that would allow me to board an airplane without being frisked?
Mr. Hardisty: No.
Senator Mahovlich: Would it bother you if I had a reputation of doing a lot of travel and I was a preferred traveller? This would not bother a pilot, would it?
Mr. Hardisty: We have commented on that. For frequent travellers who are identified as low-risk and have gone through the proper process, as well as flight crews and other workers who go airside, the technology exists today to allow them to access airside through the use of certain applications.
For example, we have a smart card. It has a PIN number that is specific to the individual, is registered, and can be put in a door. We see that as a viable alternative.
Senator Mahovlich: I will not have to take my shoes off or loosen my belt?
Mr. Hardisty: Keep in mind that people who have such access would be under proper scrutiny.
Senator Taylor: I fly 10, sometimes 11 hours a week. Why can I not get a pass like the one the crew has?
I notice the Ottawa airport has something that makes it a little faster.
I want to build on the question about how you tell who the flight marshal is. I have flown for years into Tel Aviv. I could tell who the flight marshal was because he was out smoking in the non-smoking section, flirting with the stewardess.
All that is necessary for the 9/11 terrorists to accomplish their aim is to slow down traffic, not only in trucks across the border but in airlines and everything else, so that it costs us billions of dollars a year. It is therefore incumbent on us to think of vast systems and maybe even err on the side of business. If someone is a dedicated suicide terrorist, to try to put in a system that stops him or her dead may do us irreparable harm in trade down the road, as well as for aircraft.
Mr. Hardisty: Again, to comment briefly, there are layers of security. We must ensure that we have given proper consideration to the various layers of security, not just the pre-board screening process that is incorporated into this bill. We must look at all of them and move forward.
Senator Cools: I would like to thank the witnesses and say that there are many of us here who fly often. We have an inkling that airline pilots are pretty important and we trust them a great deal.
The purpose of my intervention is twofold. The first is to call the witnesses' attention to clause 28(2) of the bill, which reads:
The Authority may enter into agreements with Her Majesty represented by the Solicitor General of Canada or by the Royal Canadian Mounted Police for the provision of services, including services on aircraft, and may make payments in respect of those services.
There is a wide range of capabilities that the authorities have been given. I am speaking to your concerns about security of the airline business or the aviation business in general. There are other aspects of security that are covered in other legislation. I would caution you to consider that.
My second point is in respect of the composition of the board of directors. Clause 12(1) speaks directly to the qualifications of the directors:
The directors must be persons who, in the opinion of the Governor in Council, have the experience and the capacity required for discharging their duties and functions.
One could accept that, within such a range of the description of the qualifications, several airline pilots, or former airline pilots, or people involved in the airline industry would be deemed to qualify, I should think.
Mr. Hardisty: Senator Cools, the only parties that we are aware of who will be acquiring seats on the board will be the airports and the airlines.
Senator Cools: They are the owners and the operators.
Mr. Hardisty: That is fair enough. Again, in the broader application, we have front-line workers who are excluded who have a great deal of expertise. At this point in discussions with the Transport Canada Directorate, it is our understanding that at best we could determine that we would have someone who is sensitive to labour who may be appointed to that body. In our view, that is not where we are going with this.
Senator Cools: I wish to introduce a note of caution. I do not think it is consistent that a staff of the business can also be a director. Those interests and that knowledge must be represented by someone such as Max Ward, for example — I do not know if he is still alive — who certainly knows a lot about the airline industry.
Senator Kinsella: He is a Tory.
Senator Cools: I am saying that the minister will have wide powers to be able to scan the entire field and to bring forward the best in the field.
Mr. Hardisty: Our hopes lie with your approach. However, I would bring to your attention that the House of Commons Finance Committee did put forward an amendment that would include front-line workers and it was denied. Our concern remains.
Senator Cools: There are traditions around confining appointments that way.
The Chairman: Thank you, Mr. Hardisty and Mr. Adamus, for appearing here today.
We will move on to Mr. Baydala. He represents the Air Industry Merger B.C. Consortium and the B.C. Aviation Council. He is also on the board of directors of the Council of Tourism Associations. His West Coast Air operates a float-plane service between Vancouver and Victoria harbours.
You are qualified to represent a number of interests here, Mr. Baydala. We welcome you and invite you to make an opening statement.
Mr. Alan Baydala, Representing the Air Industry Merger B.C. Consortium and the B.C. Aviation Council: Honourable senators, I am here today wearing a number of hats. I am the owner of a small airline and the director of the British Columbia Aviation Council, which represents the aviation interests of both operators and airports in British Columbia. I am a director of the Council of Tourism Associations of British Columbia, which represents the various tourism associations and operators. In connection with that, I am chair of the B.C. Air Industry Merger Consortium, which is the voice for the B.C. tourism industry on aviation issues. I am here today representing tourism in British Columbia. Tourism is British Columbia's second largest contributor to the provincial economy and its largest employer.
The proposed new Air Travellers Security Charge will have a negative impact on the tourism industry. It will raise the cost of air travel and will deter tourism in British Columbia and across the country. However, reconsideration of some of the provisions of the legislation could mitigate those impacts. Honourable senators have before you a lengthy document, and I will present some of the highlights of our issues and some recommendations.
First, all Canadians benefit. We have heard speakers' submissions today, and I am sure in previous sessions you have heard submissions that all Canadians benefit from the enhanced security, and therefore air travellers alone should not bear the full cost of the new security measures.
The level of charges are too high, making Canadian tourist destinations less competitive in the global marketplace. They are also too high when we consider our Canadian tourists travelling within Canada. It will have an impact on the industry. It will result in reduced domestic leisure travel.
The proposed fee will increase domestic leisure fares by roughly 6 per cent on average for all leisure tickets in the country. Obviously, the percentage impact will be much higher on the short haul, but it will be an average of 6 per cent. We expect that to result in a 10 per cent decrease in leisure travel. We can apply a common multiplier for leisure that is different than business, about a 10 per cent reduction in leisure travel. That will result in reduced short-haul tourism travel, as the proposed transportation security charge will have a disproportionate impact on such flights.
It will reduce inbound tourism. If we apply similar multipliers and look at the percentage of the fee on inbound and outbound international travel, we calculate that it will reduce demand from international flights by about 2 per cent, again, tourism-related. It will result in a higher cost base for certain niche tourism products, such as helicopter, ski tours, ecotourism and hunting and fishing charters. It will have an adverse impact on the viability of these niche tourism products.
This fee will reduce access to remote communities. The viability of tourism development in remote communities is potentially damaged by the fee. Many of the communities, particularly in the North, have no alternate forms of transportation to draw visitors. Consequently, it will result in an unjustified burden on the economic lifeline for tourism and businesses in these towns and villages.
The proposed flat charge is economically inefficient and regressive. It has much greater impact on the prices and traffic levels on the short-haul markets compared with the long haul. We have seen the impact of that, and I am sure it has been presented to honourable senators.
The proposed security charge is not based on security risk assessment. The question of whether security is the same for a remote community as it is for Toronto Pearson has been asked. Certainly, it is not. It is not based on that at all. No provision is made for the mitigating impacts on those small communities. The new U.S. Passenger Civil Security Service fee was accompanied by a grant package to small airports. The package is intended to help mitigate some of the introduction on the new fee on air service.
There is no voice for the tourism industry with this new organization. The current government does not provide any forum where the views of the tourism industry may be represented. Again, we would be dependent on appointments being sensitive to the impact of tourism in British Columbia and Canada to the board.
In some of our recommendations, we conclude that the proposed security charge should be implemented with the least effect on the overall demand for air travel, preferably via a charge based on a percentage of the fare on the ticket. That would solve the disproportionate effect on the short-haul travel as well as solve other problems that are appearing. We have not begun to see some of the problems, such as the multiplier effect of someone paying $12 and $12 and $12 and $12. If a traveller buys a ticket on the Internet, on WestJet, he or she will pay the $24. If a traveller walks up and pay Mr. Menzies $24 to come down from Terrace, they will pay the $24, and none of them will know they have paid. That could be multiplied across the country, except on the Air Canada system where someone is buying a ticket from Terrace all the way to Ottawa. That effect is largely eliminated or certainly mitigated when the charge is on a percentage of the fare.
The proposed security charge should only be charged on flight tickets where passengers are subject to screening. We are calling this a fee — sometimes a tax — but it is a fee. Fees are normally provided for service. If there is no service, the travelling public and the tourists will see a great deal of difficulty in paying a fee for no service.
The governance of the proposed Air Transport Security Authority should consider the views and needs of the tourism industry with a direct appointment to the board.
Finally, the impacts on small communities throughout British Columbia and Canada must be considered and must be mitigated.
I would be pleased to answer any questions honourable senators might have.
Senator Banks: Mr. Baydala, with respect to the point on page 2 of your proposal about which airlines will or will not pay, it is clear in the bill that the charge will be applicable on flights between two airports, each of which are named in the schedule here. If that is not the case, then there is no charge.
For example, in answer to a question Senator Carney raised, a flight from Thetis Island to Vancouver would not be chargeable, nor would a flight from Vancouver to Thetis Island be chargeable.
Mr. Baydala: That is my understanding.
Senator Banks: Down the line, do any more airports get added to the schedule?
Mr. Baydala: Often the tourist is not travelling just from Vancouver to Thetis Island. The tourist may be travelling from Vancouver to Campbell River, doing some fishing or sightseeing in Campbell River, then continue on, possibly by road, to another destination and then take an aircraft to Thetis Island.
Senator Banks: In none of the cases that you just mentioned would a charge be applicable.
Mr. Baydala: From Vancouver to Campbell River there would be.
Senator Banks: From Thetis Island to any of those other places a charge would not be applicable?
Mr. Baydala: That is correct.
Senator Banks: I wanted to ensure that we understood that it is only between two of the designated airports.
Mr. Baydala: There are 20 such designated airports in British Columbia.
Senator Banks: I have flown to all of them except Williams Lake, Sand Spit and Campbell River. I am sure that you have looked at this British Columbia list. Is screening applied at all or some of these airports? Are there some of these airports at which no screening is applied?
Mr. Baydala: Some of those airports have no screening applied. Mr. Menzies mentioned the Vancouver south airport, which has grown as a regional airport. The bulk of those airports have some form of rudimentary screening now. The problem is that we do not believe that there will be an increase in money spent at any of those airports. For example, at Victoria International Airport, the current cost to the airlines, and, ultimately, the passenger, for passenger screening is 70 cents per departure.
Senator Banks: That, however, includes many departures on smaller aircraft. Would you not agree that, in respect of at least the way terrorists have used airplanes so far, there is a difference between the risk of a Dash-8 and a 747 as to the likelihood of their being used in such a way?
Mr. Baydala: That is a matter of supposition. Certainly a 747 will do more damage. We can go that far. Is it more likely? Accessing a 747 is more difficult. There are not many 747s flying around in the regions. That is part of the problem. The fare on a 747 is much higher than the fare on a Dash-8, and yet a traveller is paying the same security fee.
[Translation]
Senator Ferretti Barth: When we talk about transportation, that includes road, marine and air transportation. This bill provides for national security but not only in air transportation. Terrorists can launch an attack from land or at sea. They are unpredictable. They can strike from anywhere and at any time. Everybody must pay a fee to ensure national security. We already pay a tax on services. When it was introduced, everybody was against that tax, but people got used to paying it. I think it's unfair to have only air travellers pay such a huge airport fee. I'm thinking here of old age people who, after having made sacrifices all their lives, take a trip each year. It's totally unacceptable. What do we mean by national security? People who don't fly don't have to contribute to national security? Will the new fees applicable to plane tickets have an impact on your fiscal situation?
[English]
Mr. Baydala: You have covered quite a significant amount of ground. The tourism industry and the aviation industry support a safe and secure transportation system. That goes without saying.
The issue then becomes: What must we do to attain that in regard to the transportation system and not just the air system? You mentioned the other modes of transportation. We believe that there should be a safe system. We then ask: How should it be paid and who should pay for that safe system?
There are many taxes collected generally. However, we have seen a direction to a specific entity to provide specific security for air transportation and a specific fee. That is the way the government has gone to this point. They are planning other measures, for example, the Nexus system that is being put in place for biometric screening and pre- approval at border crossings for automobiles. That is something with which the government is moving ahead quite quickly. They have said that they hope to have that system in place at the border crossings south of Vancouver. There is already one in place in Windsor. However, the users are not being asked to pay for that because, in that case, it is considered an item of national security.
If the government looks at air security and decides to create a national entity, there are many arguments pro and con for that. The issue then becomes: How do we pay for that to ensure that it is fair and equitable? This legislation does not do that.
Senator Taylor: I have a comment on the identification issue that Senator Mahovlich raised, which is a good idea.
Going through the Calgary airport yesterday, as usual, I had to show my identification twice, check my bag and then go back through security to get on the plane. Stephen Harper was there and the investigator shook his hand and said: ``Congratulations. Great fight.'' He then added: ``Now, can I see your identification.''
Senator Mahovlich: I wish to bring to Mr. Baydala's attention that if the Olympics take place in British Columbia in 2010, then all your security will be new. I am sure that all of the smaller flights will have security all around British Columbia. Is that correct?
Mr. Baydala: We have not seen the details for security. You are introducing rail security and road security up to Whistler in addition to air security. The issue will then be: Who will pay for that? Will they make it a surcharge on every ticket for every event, or will the Governments of Canada and British Columbia recognize that British Columbians and Canadians as a whole are benefiting? The government has already pledged significant funds, including measures for security.
Senator Banks: Mr. Baydala, putting on your tourism hat, will you look us in our collective eye, please, and tell us that you really believe that someone flying to or within B.C. for tourist purposes will be deterred from doing that by a $24 cost? Is that really so?
Mr. Baydala: That is a common argument.
Senator Banks: It is not an argument; it is a question.
Mr. Baydala: As a question, absolutely. The issue becomes one of families within Canada. It would now cost another $100 to take that trip. It might be a small trip, of several hundred miles.
For the wholesaler who is bringing more than one person into the country, it is not $24. When these wholesalers outside of Canada are selling destinations in their market, they are talking about 10 or 1,000 or 10,000 people in their program coming to Canada. It is no longer $24, it is $240,000. That certainly is enough to send people to Australia, New Zealand or to some of the other countries that might rival Canada in the perception of airline safety. We do have that even after September 11. Will they spend another $240,000 to come to Canada? I think not.
The aviation industry has been very hard hit, and this is enough to make people in Canada choose other modes of transportation. Mr. Menzies mentioned an 18-hour drive. Perhaps they will not go at all. Between Vancouver and Victoria, our primary run, people will choose to take the ferry, for example. It will have a detrimental impact on small carriers who provide service on shorter routes where there are alternative modes of transportation.
Senator Kinsella: Should you persuade our colleagues opposite, what kind of amendment are you looking for in this bill?
Mr. Baydala: There are many. You have to look at what is reasonable. I do not think there is any point in saying that the federal treasury should pay 50 per cent, 75 per cent or 100 per cent.It is a mistake to move away from a fixed single fee. It would take into account the lower fares of the short-haul carriers, and it would solve the problem of multiple charges when travelling on a number of small carriers. That would be at the top of my list.
Senator Kinsella: In order for us to deal with this legislatively, that would require a fairly specific amendment, which may have implications on other clauses in the bill. Given that, do you think we should hold this part of the bill in abeyance until we go back to the drawing board? That would be an easy amendment to craft. There are other parts of the bill that many of us think should go forward, such as the Africa fund and some other items.
The minister said he recognized that the costing was based upon the traffic volume immediately after September 11, and they have admitted that traffic has gone up. Therefore, they would be generating far more money than they would need for the purposes that they have identified. There is an undertaking to revisit that.
Mr. Baydala: The genesis of the bill took place during a state of emergency. I do not think we are at that same level of urgency or risk.
Senator Kinsella: ``Sober second thought'' would mean to hold this part in abeyance for a period of time.
Mr. Baydala: To allow for proper consultation with the users and interested parties, yes.
Senator Tunney: Do you have a recommendation for any exemptions, for instance, children below a certain age who are travelling with their parents? In that case, one person is going to be taxed several times because only the father or the mother will be paying. Have you given any consideration to exempting any children below a certain age?
Mr. Baydala: The airline industry has done a good job of providing lower-cost fares for children and minors, and certainly that would be a useful and well-received amendment. On a percentage-of-the-fare basis, some of that would be taken care of if an infant were travelling on a free ticket or a child's fare.
The Chairman: Thank you, Mr. Baydala, for your expert testimony on a number of areas.
Colleagues, the time has come for us to move to a clause-by-clause study of this bill. I note the presence of several government officials. I would invite them to come to the table for the clause-by-clause study.
Mr. William Elliott, Assistant Deputy Minister, Safety and Security Group, Transport Canada: I am here on Part I of the bill, Mr. Chairman. With me are Serge Dupont, Jacques Pigeon and Arlene Legare.
The Chairman: You understand, colleagues, that we have two people from the Department of Transport who are here for Part I of the bill, and two from the Department of Finance who are here for Part II of the bill.
We had the ministers here the other night to discuss the policy; these officials are here to clarify and elaborate on details. I will tell you in a minute how I propose to proceed with this clause-by-clause study.
Senator Kinsella: Perhaps the officials could provide clarification on the testimony that we heard. The ministers were asked the cost of the airport security program. I do not remember the exact amount, but I believe it was about $2.5 billion. One of the ministers said that is not the total amount for the new security, that the Government of Canada was spending two thirds of that amount more. I think the minister's answer was applicable to the total cost of increased security, broadly speaking, since September 11, and not simply the increased costs for air security. I was wondering whether colleagues recall that exchange. It came up today.
Indeed, the increased costs for airport security will be funded, if Bill C-49 passes, by the proposed Air Travellers Security Charge. It would be erroneous on our part to assume that that represents only one third of the cost for airport security. It is supposed to pay for all or most of it, but it certainly was not one third of the cost. Is that the understanding of the testimony of others? Do you recall that exchange, Senator Cools?
Senator Cools: I must say that I missed the last few minutes of the exchange, but if you could put the question to me again, I would be happy to respond.
Senator Kinsella: The question is whether the cost of the increased air security is basically being met by this air security charge — in the direction of 100 per cent of the new cost. When the minister was asked that question, the response was that the Government of Canada is spending an additional two thirds. However, I think the minister was actually speaking to other security issues, and the airport security cost would be the $2-billion amount covered by the proposed Air Travellers Security Charge, while the total for increased security in general would be $6 billion. I believe that is what the minister said.
Senator Cools: That is what I heard him to say. What is your question, Senator Kinsella? We have with us here today the Deputy Minister of Transport.
Senator Kinsella: I just want to have our exchange on the record, and I know the minister was not intending to mislead us. That is how the cost information came out in the record. It is our common understanding that they are probably spending around $6 billion on increased security in general and the airport security is covered by the $2 billion from this proposed security charge.
The Chairman: If officials have some light to shed on this, they will do so at the appropriate time.
Colleagues, I propose, with your cooperation, to proceed with the clause-by-clause study. Bill C-49 is an omnibus bill, as you know, that amends a number of existing statutes and that will enact a number of new statutes. I will refer to the groups of clauses in that way. I will ask you whether you wish to adopt the clauses that enact new statutes or amend existing statutes.
Honourable senators, shall the title stand and shall clause 1 carry?
Hon. Senators: Agreed.
The Chairman: I have not been given any specific information from any of you in respect of amendments that you may wish to propose at this committee stage. If you have amendments in your back pocket, now is the time to present them.
I will begin with the clauses that will enact the proposed Canadian Transport Security Authority Act — clauses 2 to 4. I will put the question, colleagues. Shall clauses 2 to 4 carry?
Hon. Senators: Agreed.
The Chairman: Is that agreed on division?
Senator Kinsella: On division.
The Chairman: There is another group, clauses 5 to 11, that will enact the proposed Air Travellers Security Charge Act, which comprises clauses 1 to 84 in Part 2 of the bill on page 13. I will put the question. Shall clauses 5 to 11 carry?
Senator Doody: I have an amendment to propose on clause 2, Part 2. In view of the fact that it appears the government has not had —
Senator Cools: We just voted on clause 2.
Senator Kinsella: Senator Doody is referring to clause 2 of Part 2, and we are still in Part 1.
Senator Doody: I thought we carried Part 1.
Senator Cools: We are still in Part 1.
Senator Doody: I thought we carried Part 1. I was wrong.
Senator Kinsella: We are only up to page 2 of the bill.
Senator Doody: I thought we carried clauses 1 to 4.
Senator Cools: We passed clauses 1 to 4 of Part 1, and we are now on clauses 5 to 11 of Part 1.
Senator Doody: It says Part 2.
The Chairman: I am sorry, please forgive me. The chair has perhaps inadvertently misled the committee on this matter. When I put the question on clauses 2 to 4, it was in reference to the proposed Canadian Air Transport Security Authority Act, which comprises clauses 1 to 39, Part 1 of the bill. If you will bear with me, I will put that question to the committee again, if I may.
These clauses will enact the proposed Canadian Air Transport Security Authority Act, and they number 1 to 39 of Part 1 of the bill. I must put the question. Shall clauses 2 to 4 carry?
Some Hon. Senators: No.
The Chairman: I hear ``no'' from one side of the house. Do you have an amendment?
Senator Johnson: Mr. Chairman, I have an amendment to clause 2 on page 6, to replace lines 5 to 9 with the following:
10.(2) ment as directors, two must be nominees submitted by the representatives of aerodrome operators designated under that section whom the Minister considers suitable for appointment as directors, and two must be nominees submitted by the bargaining agents for screening officers employed at aerodromes in Canada whom the Minister considers suitable for appointment as directors.
The Chairman: Do you have a copy of the amendment for the chair?
Senator Johnson: I do.
The Chairman: Do you have copies for the other members of the committee?
Senator Johnson: Yes. They are being circulated now.
Senator Cools: Senator Johnson's amendment is to clause 10 at page 5.
Senator Johnson: It is on page 6, clause 2.
Senator Banks: The amendment is to subsection (2).
Senator Johnson: I said amendment to clause (2) on page 6. I did not say ``subsection.''
The Chairman: This is the problem with omnibus bills. We had a discussion about this the other night, colleagues. We are talking about, as Senator Johnson says, clause 2 of the bill because a clause enacts. This clause will enact the Canadian Air Transport Security Authority Act. Then we proceed to the proposed section of the act, which, as Senator Cools has pointed out, in this case is proposed section 10, subsection (2) of clause 2 of the bill. I suspect that Senator Johnson may have obtained expert advise from the parliamentary counsel or her colleague on her right.
Senator Johnson: Yes, I received extremely good advice.
The Chairman: Do you understand the purport of the amendment? Is there any discussion? Do you wish to address it, Senator Johnson, or other colleagues?
Senator Johnson: I want to mention that labour has asked for representation on the boards of authority.
The Chairman: They want that representation guaranteed, as we heard from the United Steelworkers here the other day.
Senator Cools: I should like to oppose that amendment on the grounds that the content and substance of the proposal of Senator Johnson can be met without an amendment to the bill and actually without a statute. It is pretty clear that, if we read the bill, that the minister has the power to make these appointments.
The minister, in exercising his discretion, and with due regard to the politics and state of the nation, is quite capable of bringing forward and advancing the interests of different aspects and dimensions of the community, labour being one of them. At this particular meeting, he made an undertaking to do exactly that. His words were something to the effect that he would be bringing forth recommendations that would be sensitive to labour. I think that was the exact word he used. I would just like to begin the debate.
Senator Johnson: What were the words he used?
Senator Cools: When he was here, the minister said that he would be among the other seven directors, and would be willing to recommend to the Governor in Council the appointment of at least one person sensitive to organized labour's goals and ideals. What we have before us is a non-legislative undertaking from the minister to respect and honour the labour sector of the community and the unions. To that extent, it seems to me no statutory requirement is needed.
Senator Johnson: Would it be possible to get that in writing from the minister?
Senator Cools: Very possible.
Senator Mahovlich: It is in his speech.
Senator Cools: It is very possible to get that from the minister. I am in ongoing conversations with the minister in an attempt to secure that in writing.
Senator Johnson: A letter would be necessary. Otherwise, it would be an ad hoc situation all the time. He could choose or not choose to consult with them.
Senator Cools: That is true, but the word of a senior minister as we had before us is pretty much his bond. In any event, it is my intention to secure from the minister such undertaking in writing, such that it could form part of the record and the debate in the Senate chamber.
Senator Johnson: It may be his bond, but I would rather have an amendment made, if possible. A letter in writing, at a minimum, would be our fall-back position.
Senator Kinsella: I should like to speak in support of the amendment. There are several elements to it. First, while this minister, who could be well-disposed to the importance that labour plays in making our social enterprises operate effectively, may be willing to make a commitment, his successor, however, might not.
I do not wish to argue from a position of the principle that labour ought to be an integral part in the delivery of this airport security system, especially as much of it is resting on those individual employees who make the judgment calls on the line. If they feel they are part of the security system, they will buy into it if they see themselves represented in the decision making of the authority itself. It speaks to the quality of work that will be done, and it is not tokenism because the amendment says ``two,'' not one but two.
It struck me as tokenism when the minister, with whom I have nothing but the highest regard, said he would consider having one representative from labour without any statutory obligation. If this goes forward there should be a statutory requirement to have two members representing labour because this whole system is not going to be effective and efficient because of the equipment there; it will be effective and efficient because of the men and women who are actually on the line.
Senator Cools: Absolutely. I have no problem with what Senator Kinsella is saying in terms of the substance of the issue and to the extent that the board of directors should be able to embody and execute the knowledge that would be embodied in any members and directors.
What we must make clear is the essential difference between the two senators and myself. We believe the matter should be governed by ministerial discretion, the politics of the nation and the politics of the situation, while he believes that it should be governed by statute. I am of the strong opinion that we should use statutes as rarely as possible, and to that extent I am prepared to go along with the minister in his undertaking to honour what he said to this committee. I submit it would be very difficult for a later minister to change his or her mind, honourable senators. Having said that, honourable senators, I propose to vote against the amendment.
The Chairman: Senator Johnson moves that Bill C-49 be amended in clause 2 on page 6 by replacing lines 5 to 9 with the following:
[Translation]
In the French version, on page 6, to substitute line 11 of section 2 with the following: [...]
[English]
...ment as directors, two must be nominees submitted by the representatives of aerodrome operators designated under that section whom the Minister considers suitable for appointment as directors, and two must be nominees submitted by the bargaining agents for screening officers employed at aerodromes in Canada whom the Minister considers suitable for appointment as directors.
You have heard the amendment. Is it your pleasure to adopt the said motion?
Some Hon. Senators: No.
Some Hon. Senators: Agreed.
The Chairman: All those in favour the amendment, please raise your hand.
We will record the vote by senator.
Mr. Tonu Onu, Clerk of the Committee: Senator Beaudoin.
Senator Beaudoin: En faveur.
Senator Johnson: Yes.
Senator Kinsella: Aye.
Senator Doody: Aye.
Senator Murray: Move on please, I am not voting.
Senator Cools: Against.
Senator Taylor: Against.
Senator Banks: No.
Senator Ferretti Barth: Non.
Senator Mahovlich: No.
Senator Cook: No.
The Clerk: There are four in favour and six opposed.
The Chairman: I declare the amendment defeated.
Senators, before I put the question as to clauses 2 to 4, I remind you that these clauses of the bill enact the Canadian Air Transport Security Authority Act, which is Part 1 of the bill, clauses 1 to 39. Do you have any questions on any aspect of Part 1 that you wish to put to the officials?
Senator Banks: I have a general question. It would be reasonable to assume — and we have heard arguments to this effect — that this surcharge, fee, will within a couple of years cover the main capital expenses that will be undertaken for the buying of new equipment, et cetera, for the purposes as set out in the bill. Is it reasonable to presume that once those are covered and the costs have been recovered from this fee the fee will be lowered?
Mr. Serge Dupont, General Director, Tax Policy Branch, Department of Finance: The profile of the expenditures and revenues associated with the air security package was laid out in the budget documents. What occurred is that there were already, in this fiscal year ending March 31, some expenditures undertaken by Transport Canada. There will be expenditures projected in the next fiscal year that will exceed the amount of the revenue that is projected, and the same in the following fiscal year. In other words, in the first two years in which the charge will be in place, the numbers in the budget show that revenue is insufficient to cover the level of the expenditures because of the capital that will be required during those years.
The budget essentially proposes to balance the expenditures and the revenue to 2006-07. If one looks at the numbers in the outer years, one will notice that because it is mostly then operating and maintenance, it is less than the revenue that is brought in by the charge. The charge is insufficient in the first two years, and the amount is recovered over the subsequent three.
Senator Banks: Is it contemplated at all that, once the original capital cost and a reasonable amount for maintenance of that capital equipment is recovered, whenever that occurs, a reduction might then occur in the charge?
Mr. Dupont: The charge is there only to fund the security enhancement. If over the long term the ongoing capital costs were of such an amount that it was not necessary to have a $12 charge to cover those costs, then the charge would be lowered.
The Chairman: Mr. Dupont, do you understand why your minister has undertaken to review the charge or the fee in eight months?
Mr. Dupont: Our minister has been very clear that he does not intend to see this charge generate net funds for the federal treasury. The charge is to generate funds strictly to pay for the security enhancements. When we developed the budget last November and December, it was difficult to get a firm grasp of what air travel trends would be like over the horizon and what this new charge would generate as revenue. It is a new charge, so, by definition, there is not a good fix on exactly how much money it will generate. We worked with Transport Canada in developing estimates of what the charge will generate.
Understanding that there is an issue with the base of revenue and then the growth of revenue over time, it is important for the minister to review it in the fall, having had by then some months of revenue come in, and also to assess one year after September 11 the growth in air travel that one can reasonably expect over the horizon. Therefore, we would be in a better position at that time to estimate whether the charge should be lowered, to ensure that there is no net revenue going to the federal treasury.
The Chairman: That is consummation devoutly to be wished, as they used to say.
Honourable senators, I will ask the question: Shall clauses 2 to 4 carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chairman: Carried on division.
I will now put clauses 5 to 11. These clauses enact the Air Travellers Security Charge Act, which comprises clauses 1 to 84. What honourable senators have before them now, for approval or otherwise, is Part 2 of the bill, starting at page 13.
Senator Doody: And ending at?
Senator Kinsella: Page 76.
Senator Doody: I have an amendment, Mr. Chairman, related to Part 2, the air security charges section. In view of the fact that the government seems to have rushed into this and has not given itself a full opportunity to measure various types of possible assessment or revenue raising, whichever way you want to phrase it, perhaps the government could reintroduce this proposed legislation in the fall, after it has had a better opportunity to look into it more deeply so that they can give us more information.
With that in mind, I move:
That Bill C-49 be amended
(a) on pages 13 to 76, by deleting Part 2;
(b) by renumbering Parts 3, 4, 5 and 6 as Parts 2, 3, 4 and 5 and any cross-references thereto accordingly; and
(c) by renumbering clauses 12 to 47 as clauses 5 to 40 and any cross-references thereto accordingly.
The Chairman: I think the nub of the issue is in the first line of the amendment, which is to delete Part 2.
Senator Doody: That is the heart of the matter.
The Chairman: Honourable senators have heard the motion. I should like to have a copy of it.
Senator Cools: We are against the amendment.
Senator Kinsella: With or without reason?
Senator Cools: With good reason, however Senator Doody did not offer many reasons in favour of the amendment.
Senator Kinsella: The witnesses offered reasons.
Senator Cools: The honourable senator has moved essentially to delete Part 2 in its entirety. He has not offered any reasons for each individual clause. I oppose his proposal to delete the entire part and I intend to vote against it. Whatever inadequacies there may be in Part 2 the senator has not been prepared to share with us, even though he is saying that the entire thing is so undesirable that it should be dropped entirely from the proposed legislation.
That places me in a most interesting position where I do not have to examine individual proposals to improve what he thought were the problems.
We have had the ministers appear before us and we have had undertakings from the ministers, especially Mr. McCallum, about the review that will take place in the fall. The amendment moved by Senator Doody is irresponsible because he is saying that there is nothing worthwhile in the entire part. Senator Doody has not proffered a proposition to reduce the amount to be charged or to alter the charge to accommodate families or different individuals. Senator Doody has just said that he cannot tolerate the thought of a minister making such a proposition. I find that intolerable. I will vote against the amendment.
The Chairman: Are you going to take this lying down, senator?
Senator Doody: No. I said clearly that I wanted to give the minister an opportunity to think this through properly and to reintroduce it in the fall in an amended form, or in this form if he thinks it is appropriate.
I was more swayed by the testimony of the witnesses than by Senator Cools' oratory, although both were impressive. Nevertheless, the reasons that I have given are valid reason, and I stand with them.
Senator Cools: I remain opposed fundamentally. If the senator had moved an amendment to reduce the charge to $5, I thought it would have been a problem.
Senator Doody: I did not come here to give you a problem, Senator Cools.
Senator Cools: Clearly, the honourable senator, and I have no doubt for good reason, disagrees with the reasoning of the government and the reasoning of the minister. Their reasoning is that air travellers should bear some of this cost.
That is a valid reason. Many opinions have been expressed around the table as to the quantum and the level of the charge. It seems to me that the minister has addressed those concerns ably by proffering that a review would take place.
Having said that, honourable senators, we have no choice but to vote against Senator Doody's amendment.
The Chairman: Are there other comments? If not, I will put the motion.
Senator Doody moves that Bill C-49 be amended on pages 13 to 76 by deleting Part 2, by renumbering Parts 3, 4, 5 and 6 as Parts 2, 3, 4 and 5 and any cross-references there to accordingly, and by renumbering clauses 12 to 47 as clauses 5 to 40 and any cross-references there to accordingly.
Will those honourable senators in favour of the amendment please signify.
Some Hon. Senators: Agreed.
The Chairman: All those opposed.
Some Hon. Senators: Against.
The Clerk: Four in favour and seven against.
The Chairman: I declare the amendment defeated.
I shall now ask whether this group of clauses will carry. Effectively, we are being asked to approve the entire Part 2 of the bill, starting at page 13 through to 76, clauses 5 to 11 of this omnibus bill. These clause, however, enact the Air Travellers Security Charge Act, which comprises clauses 1 to 84.
I will put the question, and then we can have a discussion or put any questions you may have to the officials on any detail of this part.
Senator Kinsella: Honourable senators, in light of the debate that has just concluded and the support that we seem to be having from the other side, I move that Bill C-49 be amended in clause 11 on page 76 by replacing lines 30 to 33 with the following:
11. This Part comes into force on September 1, 2002.
That is my motion, to which I will speak after you put the question.
Senator Banks: Did we not defeat that?
The Chairman: I do not have a written copy of the motion before me.
Senator Kinsella moves that Bill C-49 be amended —
[Translation]
That Bill C-49 be amended at section 11, page 76, by substituting lines 32 to 36 with the following:
11. This part comes into force on September 1, 2002.
[English]
Senator Kinsella: Honourable senators, the majority has established that the principle of that clause of the bill ought to carry. We respect the majority vote on that. This is not a question of throwing out the principle of that mechanism at all.
We heard witnesses who have raised concerns. The minister has raised the issue of the amount of revenue that will be generated based on the charge of $12 per section or $24 for a round trip in a typical case. That was based upon air traffic right after September 11. The minister testified here that air traffic has picked up. They did not expect it to pick up as much as it has, but it has picked up. Therefore, more revenue will be generated than they need, probably.
Second, witnesses have pointed out the issue of principle. That clause has carried. User-pay should be the cornerstone to the law. That is the government's policy now and will be included in the bill.
Witnesses have said to us, indeed in direct response to some questions of my colleague Senator Ferretti Barth, that there are groups in society who ought to have a reduction, for example, senior citizens. That makes sense because that is the practice on the selling of tickets in the airline industry. That principle is not foreign to the airline industry.
It seems that if the government had some time, knowing that we would have this system, it could make a number of these corrections and come back in the fall with a bill that would stand the test of time.
This is the argument that Senator Cools seemed to be inviting. We advance that argument at her behest and present it to honourable senators in this amendment. Unless these committees are a charade and we do not listen to witnesses, which I hope is not the case, I would hope that my colleagues opposite would take a hard look at this one.
The minister would lose nothing. This is a question of time. Time has a way of allowing people to get things right. If we should get anything right, we should get the safety of the airline system in Canada right.
Senator Banks: I agree that we should get it right. However, as we have heard this morning, it is likely, if not certain, that once the initial heavy costs of what has to be done are paid, it is possible, and I believe likely, if not certain, that these fees will be reduced.
We have heard, too, that the concept that is in place, as tough as it is, is biting a bullet now. Given the fact that a reduction in the fee might follow, the idea is to front-load the recovery of the cost, which we are doing. We will front- load the recovery of the cost whenever this comes into place.
The Government of Canada has been spending money on fixing these problems, for all intents and purposes, since September 12 of last year. It is entirely appropriate that we should start getting some of that cost back now, on the understanding, which we have, that once those capital costs and reasonable maintenance is recovered we can anticipate a reduction in the fee. For that reason, I believe the bill ought to come into place now.
Senator Cools: I should like to say that I oppose Senator Kinsella's amendment, and I shall be voting against it. Senator Kinsella's amendment does an interesting thing. It purports to bring the bill into effect, but it delays the date that the bill would come into force. Clause 11 reads as follows:
This Part comes into force on the day on which it receives royal assent or is deemed to have come into force on April 1, 2002, whichever is the earlier.
I should just like to say that I oppose Senator Kinsella's proposition in principle. It would be nothing short of sinful to pass a bill, give it Royal Assent, and then not let it come into force until a later date.
Honourable senators, I caution to remind us that this bill, as large as it is and as involved as it is and as complicated as it is, is a part of the Government of Canada's major initiatives following the events of September 11. It represents a part of a very enormous, expensive and involved initiative in the business of guaranteeing air security in this nation and security in general. To the extent that this is such a major initiative, it would be quite a slap in the face, quite frankly, to the government if we were to pass and approve this particular proposition of Senator Kinsella.
We all here sitting at this table know very well that the government is under a severe and tight deadline with this bill and that the government has been targeting April 1 as the major date to operationalize many of the initiatives contained in Bill C-49. In addition, the bill is entitled ``An Act to implement certain provisions of the budget tabled in Parliament on December 10, 2001.'' It also represents major initiatives of the government. To that extent, honourable senators, I support the government in this matter. I oppose Senator Kinsella's motion.
This is a major bill. This is no laughing matter. Many people have seen flaws in the bill, but we must exist in the situation in which we are at present, which is to allow the bill to go through, pass the bill and then await the reviews in September.
I was in the United States of America during the events of September 11. I was stranded for five days. I could not get out. I do not think that we are exaggerating when we say that those events have changed the airline industry and security in this country forever. I do not think we are exaggerating that at all.
Honourable senators, in honour of many of the individuals who have put together this bill, working with what they had, quite frankly, there was no time to test some of the propositions contained in this bill. We have not faced these situations before. We have not faced these conditions before. To the extent that the government has responded as quickly as it has and has been able to respond in a rational and well-organized fashion, I support the government, honourable senators.
Senator Kinsella: Honourable senators, this amendment is only dealing with one part of this bill. We have been quite supportive of all of the other sections. In particular, I am very enthused about the Africa fund section.
I believe, and I am supported in the belief by many of the witnesses whom we have heard here, that the government did not get this quite right yet. By the minister's own testimony, they still need to do some tinkering with it. This amendment proposes that we give the government the time before this part would come into force. The other parts all come into force as provided for in the bill. However, we would give the government a few more months to get this part right.
An area I hope they would look at very carefully over the next couple of months is to build on what Senator Banks has said in terms of the front-end capital investments. Two or three of the witnesses have made the suggestion to us that taking an amortization approach to it makes an awful lot of sense because that money can become available. Apart from the increase in air travel, which should cause the charge to be reduced, if the capital investment is amortized over the life of the capital equipment that will be purchased, that charge could be brought down to maybe $2 or $3.
I spent time as a deputy minister in this town. I know about pressure, particularly where there has been a reduction over the years in the number of public servants. I agree with my colleague Senator Cools that they do good work. They have been assiduous and have been under the gun, as all countries have been under the gun to respond to the tragedies of last September. We are going through a little bit of a lull and a cooling-off period. A few more months on this part would afford the opportunity to look at these issues and, as I say, to get it right.
I do not think we are that far apart in terms of the principles here. It would be a shame if we did not take the opportunity to say that we are approving 90 per cent of the bill, we are approving the principle for the airports' security enhancement, but we just want to give you the time to do the tinkering that you have said you will do. It would make eminent public-administration sense to do it that way.
Senator Cools: One last point to Senator Kinsella's proposition in this motion is that Part 2 of the bill, which is the subject of this motion and debate, is very much related to Part 1 of the bill, which is the proposed Air Transport Security Authority Act. Honourable senators, Part 1 of the bill cannot go into operation without Part 2. Part 2 is critical to the existence of the authority. I hinted at that when I said that the government had targeted April 1 as the operational date. I thought I should spell that out more fully for members.
Quite frankly, honourable senators, Part 1 cannot go ahead without Part 2. It is a total bill. Bill C-49 is divided into many parts, but in these aspects, it is one integrated initiative. One part cannot go forward without the other.
The Chairman: Apropos something Senator Cools said earlier, let me ask one of the officials to volunteer to state the position of the government on the following matter: In order to begin collecting this charge on April 1, does Royal Assent have to have been given to this bill?
Mr. Dupont: Without question, senator, the air carriers who will have the liability for the collection of the charge will certainly expect to have the certainty of the law to impose the charge on their clients, to collect the charge and to remit it to the Government of Canada. Yes, it is fundamental to the operation of the charge on April 1 that it receive Royal Assent before that date.
The Chairman: Would that be your advice to the carriers? If the bill does not receive Royal Assent before April 1, you will not expect the carriers to collect the charge; is that correct?
Mr. Dupont: We would need to assess at that time the legalities of the situation, but the budget plan certainly anticipates and counts on the revenue flowing as of April 1. The government would have to take that into consideration in developing a response.
Senator Banks: My question is exactly on the chairman's point. The bill says that it will come into force upon Royal Assent or be deemed to have come into force on April 1, whichever occurs first. That would cause me to think that in some retroactive way, notwithstanding when Royal Assent might be given, if it is passed by Parliament the government will regard this bill as having come into effect on April 1. Am I misreading that?
Mr. Dupont: Your reading is perfectly accurate. I was commenting that the air carriers would expect Parliament to have spoken definitively in order to be fully comfortable in levying the charge, explaining it to their customers and remitting the amounts of money to the Government of Canada.
Senator Banks: This is an academic argument. The effect of the bill is in respect of the collection of charges by airlines, assuming that Parliament passes the bill on April 1, regardless of whether Royal Assent has taken place. Is that correct?
Mr. Dupont: The legislation, once adopted, provides that the liability starts on April 1 to collect and remit the charge. The legality is clear as of April 1, once the bill is passed. I am saying that in order to ensure that there is clarity and certainty for the carriers they would certainly expect there would be a definitive word from Parliament before being fully comfortable with the operation of the charge.
The Chairman: What would happen if Senator Kinsella's amendment passed?
Mr. Dupont: Perhaps I can ask the senator who has put the motion, in order to understand what is anticipated with the amendment, whether the charge would not apply as of April 1 or would apply as of April 1?
Senator Kinsella: It could be either.
The Chairman: The senator's motion is to substitute lines 30 to 33 of clause 11 with the following:
11. This Part comes into force on September 1, 2002.
It would just change it and that would certainly clear up any question.
Senator Taylor: I should like to ask the officials about the situation of purchasing a ticket in Los Angeles to go to Calgary, and changing planes in Vancouver. You can change planes in Vancouver without passing through security, but if you change in Toronto, because of the different terminals, you have to pass through security again. In such a situation, do you have to pay the $24 fee?
Ms Marlene Legare, Acting Director, Sales Tax Division, Tax Policy Branch, Department of Finance: Senator, I need clarification on your question. In the situation you describe, is the traveller returning or is this one-way travel?
Senator Taylor: The traveller could be returning, but my question concerns the $12 charge each way. A person embarking in the U.S. and landing in Calgary does not pay the Canadian tax. However, if the individual changes planes in Vancouver to continue to Calgary, he or she does not have to pass through security; the individual was in bond coming from the U.S. What happens in that situation?
Ms Legare: The charge is not a function of where you go through security, as you know.
If we are talking about a one-way ticket coming into Canada purchased by a Canadian resident outside the country, the individual would pay on the travel where there was an embarkation in Canada.
Senator Taylor: How would the charge be collected? Will the airport authority have someone collect the $12 between gates?
Ms Legare: The charge applies at the time of the sale of the ticket.
Senator Taylor: Do you mean in Los Angeles?
Ms Legare: That is right.
Senator Taylor: They do not even know Canada exists. I cannot imagine them collecting a fee from Canadians.
Ms Legare: I am assuming that the example is that the travel agent outside the country is selling the ticket as agent on behalf of the Canadian carrier.
Senator Taylor: No, I would be travelling partway on United Airlines, which is part of the Star Alliance Group. However, United does not fly to Calgary from Vancouver. Air Canada does.
I think you gave me your answer when you did not know.
Ms Legare: The airline that is used to transport the passenger within Canada would still be within our realm of designated carriers responsible for collecting the charge and are responsible for having that charge collected through their agent at the time of the sale of the ticket, regardless of whether that sale occurs inside or outside of Canada.
Senator Taylor: I see. Well good luck.
The Chairman: Honourable senators, it is moved by Senator Kinsella that Bill C-49 be amended in clause 11, on page 76, by replacing lines 30 to 33 in the English version, and 32 and 36 in the French version, with the following:
11. This Part comes into force on September 1, 2002.
Is it your pleasure, honourable senators, to adopt the motion?
Some Hon. Senators: Agreed.
Some Hon. Senators: No.
The Chairman: All those in favour, please raise your right hands.
The Chairman: Four in favour.
All those opposed, please raise your hands.
The Clerk: Seven.
The Chairman: I declare the amendment defeated.
Honourable senators, shall clauses 5 to 11 carry? These clauses enact the Air Travellers Security Charge Act, which comprises clauses 1 to 84, which is page 13 to 76, Part 2.
Do you have any questions to put to the officials on this matter?
Senator Kinsella: Would the officials tell the members of this committee who will have liability if during the security clearance process a passenger is injured? Who would the passenger sue? Would the individual sue the new security authority, the Department of Transport, the local airport authority or the company that has the contract to do the screening? Supposing, for example, that someone has turned the radiation up too high in the metal detector tunnel through which passengers walk, and it is demonstrable that someone has been radiated. Who does the individual sue? Who has liability if this bill passes?
Mr. Elliott: To answer the first question the honourable senator asked, in my experience, everyone would get sued.
With respect to liability, it would very much depend on the facts, but the mandate of the authority includes responsibility for the acquisition and deployment of screening equipment. If that were carried out in a negligent manner, the authority would be liable, and as the authority is an agent of Her Majesty, Her Majesty in right of Canada would be liable.
Senator Kinsella: There is a transfer of liability. Today if it happens, it would be the operator of the security equipment. I am trying to understand. Will there be a shift in liability from the situation as we know it today to the regime that will be new should this bill be enacted?
Mr. Elliott: If I understand the honourable senator's question, yes, there is to be a shift in liability. Screening today is the responsibility of air carriers, and that screening is carried out on behalf of the carriers, so in the honourable senator's example, the liability today in normal circumstances would rest with carriers.
I would note that the issue of liability and the lack of availability of liability insurance in the events of September 11 has caused the government to take decisions to provide protection to those involved in the air transportation industry on a temporary basis because of the cancellation of previously existing policies of insurance.
The Chairman: Colleagues, I will now put the question to you. Shall clauses 5 to 11 carry?
Some Hon. Senators: No.
Some Hon. Senators: Agreed.
The Chairman: On division.
I draw your attention to clauses 12 to 19, which amend the Employment Insurance Act and make related amendments. Before you for your approval or otherwise is Part 3 of the bill, pages 76 to 81.
Are there any amendments, may I ask, to this part?
Hearing none, I will then ask you if you have any questions to put to anyone. I presume the officials from the Department of Finance have some knowledge of these amendments.
Mr. Dupont: We have officials from Human Resources Development, and as we go through the other clauses, we have individuals able to speak to each one.
The Chairman: Thank you, Mr. Dupont. Are there any questions, colleagues? Hearing none, I will therefore put the question to you. Shall clauses 12 to 19 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
I invite your attention to Part 4 of the bill, pages 82 to 109. The clauses in question are clauses 20 to 44, which amend the Income Tax Act. Are there any amendments to be proposed to Part 4?
Mr. Dupont: We have Mr. Gérard Lalonde with us.
Senator Banks: There is a provision in this part of the bill that will allow an automobile mechanic apprentice — I think that is the word used — a deduction for certain of his tools. Is that catching that person up to the rest of the labour force who are able to deduct tools of their trade, or is this putting him out in front of the pack? The analogy has to do with tools of the trade as they apply, for example, to a symphony musician whose tool is likely to cost $65,000 or $80,000? Would the musical instrument be deductible? Is the auto mechanic apprentice joining others, and is this taking him where he ought to have been before, or is this a special case?
Mr. Gérard Lalonde, Senior Chief, Tax Legislation Division, Department of Finance: As is often the case with questions involving income tax, the answer is a more complicated than just a yes or no. There is an existing provision allowing musicians to claim capital cost allowance in respect of their musical instruments.
That is unusual in the case of employees. There is a very restricted number of items that employees can claim capital cost allowance on, such as musical instruments for musicians and automobiles and aircraft that are supplied by an employee in the course of his or her employment duties.
This particular amendment for apprentices' mechanics tools is designed to recognize, in part, the educational nature of this particular policy, which is to provide some assistance for those employees who are in that part of their career where they are learning their trade as opposed to the later part of the career when they are licensed to carry on a business or to be employed as an automobile mechanic.
The second feature that this amendment recognizes is that, in the case of apprentice mechanics, the cost of the tools they are required to acquire to participate in their apprenticeship is often quite high in relation to their apprenticeship income.
Senator Banks: This is a little different from a capital cost allowance as it applies to a violin; is it not?
Mr. Lalonde: It is different in that it is provided as a deduction in computing income, and it is subject to a threshold, that being the greater of $1,000 and 5 per cent of one's employment income.
Senator Banks: Are there other similar trades and crafts to which this kind of putative tax exemption applies?
Mr. Lalonde: No.
Senator Banks: Therefore automobile mechanics as apprentices would be a peculiar circumstance, if not unique?
Mr. Lalonde: That is correct. This measure was proposed because the particular industry brought to our attention that, in the case of apprentice automobile mechanics, the cost of the tools they are required to acquire in the context of the educational portion of their training is very high in relation to the income they get as an apprentice motor vehicle mechanic.
The Chairman: Are there other questions relating to the amendments to the Income Tax Act in Part 4 of the bill? Hearing none, I will put the question to you.
This relates to Part 4, pages 82 to 109 inclusive. Shall clauses 20 to 44 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
I now draw to your attention Part 5 of the bill, which enacts the Canada Fund for Africa Act. Honourable senators, shall clauses 45 and 46 carry?
Is there someone here to deal with the Canada Fund for Africa?
Senator Kinsella: What kind of program evaluation do you have set in place to evaluate the effectiveness of the program once monies are made to developing countries? How will you determine that the money will not go to the local dictator but, rather, will go to support the combating of AIDS, et cetera?
Mr. John Davies, Senior Economist, International Finance and Economic Analysis Division, Trade and Finance, Department of Finance: As with all government programs, the responsible minister will be accountable for the use of the funds. We are creating a government program.
Senator Kinsella: What kind of program evaluation are you doing? Is there a unit of program evaluation?
Mr. Davies: There is no specific evaluation program set up for this fund. The evaluation programs that apply to whoever is named responsible minister are the evaluation programs that are normal for his or her department.
Senator Kinsella: Do you have a program evaluation branch?
Mr. Davies: Again, the minister responsible for this fund has not been named yet.
Senator Kinsella: Is there any machinery in your department that can do program evaluation?
Mr. Davies: The Department of Finance will not likely be managing this fund. This fund will be managed by a minister who will be named later. This person will likely have the experience or the capacity to administer these kinds of funds. Any time there is administration of public funds there are normal evaluation functions. The Auditor General will audit it.
I think the question is about aid effectiveness. There are normal mechanisms to ensure the money is used properly and that the minister responsible is accountable for those decisions.
[Translation]
Senator Ferretti Barth: We have CIDA which is present in Africa. How come is it urgent now to allocate 50 million dollars to Africa? What motivates the government to give such a substantial amount of money for the development of Africa? Is there an agency that supervises all that money that we give to developing countries? What have we achieved so far? What results did we obtain? On one side, we're going to tax air travellers to recover money for national security and on the other side, we give 50 millions to a country that already receives money. If I do not understand, I will note vote in favour of that provision.
[English]
Mr. Davies: It is important, first, to be clear that the $500 million fund is a distinct amount of money to support Canada's commitment to Africa in Canada's summit year. This has been given legislated certainty. One of the purposes is to put aside a separate amount of money to be used.
Behind what is going on in the preparations for the summit is a focus on governance in Africa. It is the focus of the new partnership for Africa development that defines the purposes of how the money will be used. That focus will be given higher focus by the G8 Africa Action Plan.
I have worked at CIDA, but I am not here to defend the results of aid in the past. There is recognition by G8 leaders that aid has not been as effective as possible in the past, in particular in Africa. The new partnership for Africa's development is recognizing that and looking at the issues of when aid works. Aid works best when it goes to countries that are well-governed. These issues will be defined in the lead-up to the summit. Things will become clear with respect to the Africa Action Plan but the new partnership for Africa exists here and now. It was presented to G8 leaders last year in Genoa.
As a result of the focus on governance, political accountability and ownership of the reform process, G8 leaders decided to devote this year's summit, the Kananaskis Summit, to Africa. All the meetings that I have attended and all the work that I have seen has been about the issue of selectivity in aid allocation and about ensuring that aid goes more to countries that are committed to the ownership reform process and committed to good governance. That is what the action plan is all about.
[Translation]
Senator Ferretti Barth: I would like to understand. On one hand, we must recover money to ensure the security of the country and we tax air travellers, and on the other hand, in order to fulfill the commitments made by the government towards those countries, we give them 50 million dollars for their development. We also have a moral commitment to Canadians who need social programs and so on. Charity starts here before taking commitments towards foreign countries. That, I do not understand. On one side of the equation, we ask for money and on the other, we are playing Santa Claus for other countries. We have to start looking at our own reality here in Canada.
The Chairman: You are dealing here with political questions, issues that are the ministers', the political authorities' domain.
Senator Ferretti Barth: I am a senator, I represent many citizens from different cultures. Sometimes, people on the street ask me what the government does and I would like to be able to answer their questions.
The chairman: You have the right to express yourself on this issue, but public servants are not allowed to give their opinion on political issues.
Senator Ferretti Barth: If they cann ot answer me, so be it.
[English]
Mr. Davies: I do not wish to add anything. I cannot comment on that.
The Chairman: We will have to put the question.
[Translation]
You will have to ask the minister these questions.
Senator Ferretti Barth: Are you referring me to the minister?
[English]
Mr. Dupont: I would be pleased to pass that on to the minister.
The Chairman: Thank you.
Colleagues, I will put the question to you. As you know, clauses 45 and 46 will enact the Canada Fund for Africa Act, which comprises clauses 1 to 5, Part 5 of the bill, on pages 109 and 110.
Shall clauses 45 and 46 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
I draw your attention to pages 110 to 112 of the bill and clause 47, which will enact the Canada Strategic Infrastructure Act. We have officials if you have any questions about the proposed Canada Strategic Infrastructure Fund. Are there any questions for the officials?
First, are there any amendments to Part 6 of the bill? Are there any questions for the officials from Infrastructure Canada?
Senator Banks: When does the proposed Canada Strategic Infrastructure Fund Act come into force, and where does it say when it will come into force?
Mr. Robert Hilton, Senior Program Advisor, Office of Infrastructure and Crown Corporations Canada: In answer to your question, once the budget bill is passed into law, we still have a lot of work to do. Essentially, we will present the proposed terms and conditions of this new program to the Cabinet Committee on Economic Union. Beyond that, this program must be vetted and approved by the Treasury Board ministers. As it is a contribution program, there are specific requirements to ensure that the program will meet the transfer payment policy, which is the policy of the Treasury Board, and to ensure that there are particular requirements for audits and program evaluation. Similar to any new program, we must pass through a process to ensure that there will be results-based reporting to Parliament in order to measure the results achieved and whether the objectives were attained.
Senator Banks: When does the proposed act come into effect and where does it say that?
Mr. Hilton: I believe that with the passing of the budget bill, this bill comes into effect at the same time.
Senator Banks: Ordinarily, an act named separately has a coming-into-force provision. However, I am new to this, so perhaps that is not always the case.
Senator Doody: Never be surprised by what you find in an omnibus bill.
The Chairman: Mr. Hilton, I wish to ask you about ``eligible recipients,'' which can be found on page 111. Proposed subsection 3(3) reads as follows:
(3) The following are eligible recipients:
(a) a province...
(b) a public sector body that is established by or under provincial legislation or by regulation or is wholly owned by a province or a private sector body that is in partnership with a province or a government referred to in paragraph (a)...
Mr. Hilton, are post-secondary institutions, such as universities, eligible; yes or no?
Mr. Hilton: I cannot answer that question at this time. Cabinet must vet the terms and conditions. Until we get clarification from them, we will not be able to specifically identify whether or not post-secondary education would be included as part of this.
The Chairman: This is an important matter to this committee.
We did a special study not too long ago of deferred maintenance costs at Canadian universities. One of the things we had hoped might happen — I believe we put it into the body of our report or our recommendations — was that the federal government and the provinces might agree that, just as municipalities will be eligible, the provinces and the federal government would deem post-secondary educational institutions to be eligible recipients.
The municipal and regional governments are there under proposed subsection 3(3)(a), ``a province or a municipal or regional government.'' If you read (b) carefully, it will be difficult for the minister to exclude universities and post- secondary institutions.
Mr. Hilton: Mr. Chairman, it is important to recognize that with respect to the nature of investments in this program we are talking essentially about very large infrastructure investments that cannot be accommodated under the current Infrastructure Canada program.
The Chairman: Mr. Hilton, I appreciate that. What we are talking about here is large enough in anyone's language. Those people have a report that suggests that the deferred maintenance costs at Canadian universities is in the order of —
Senator Kinsella: $5 billion.
The Chairman: Whatever it may be, it is big enough even for the Department of Finance or the Deputy Prime Minister to take notice of.
Senator Taylor: I would hate to disagree with the expert, but I think universities could come under the definition of ``public sector body that is established by or under provincial legislation.''
The Chairman: Mr. Hilton's point is that it is the minister who will decide.
Senator Taylor: Is that not always the case?
The Chairman: Let me read further. Proposed subsection 3(3)(b) reads as follows, in part:
...if the body
(i) carries out or, in the opinion of the Minister, is capable of carrying out an eligible project in Canada, and
(ii) has legal capacity...
Et cetera. The minister must still decide.
Senator Taylor: I have only been here six years, but I did learn in the first six months that a minister decides anyhow.
The Chairman: You do not have to comment on that, Mr. Hilton.
Are there other questions?
Senator Cools: Are we going to vote?
The Chairman: Just a moment, senator.
Are there other questions for the witnesses on this part?
I will put the question: This clause enacts the Canada Strategic Infrastructure Fund Act.
Shall clause 47 carry?
Hon. Senators: Agreed.
The Chairman: Honourable senators, shall the title and clause 1 carry?
Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chairman: On division.
Shall I report the bill to the Senate?
Senator Cools: Without amendment, yes.
The Chairman: Senators, this meeting is now adjourned. I shall report the bill. We will proceed in camera.
The committee continued in camera.