Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 28 - Evidence
OTTAWA, Wednesday, May 1, 2002
The Standing Senate Committee on Transport and Communications met this day at 5:36 p.m. to examine issues facing the intercity busing industry.
Senator Donald H. Oliver (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Honourable senators, I welcome Mr. Blair and Mr. Saul to this meeting of Standing Senate Committee on Transport and Communications. Tonight's hearings will be a continuation of the study we have been doing on intercity bus service in Canada.
In May 2001, the Honourable David Collenette, the Minister of Transport, asked our committee to look at changing conditions in the extra-provincial, intercity and charter bus industries. Extra-provincial includes intra- provincial and international. He made this request because he noted that ridership in busing had been dropping steadily for many years and the result of this decline in the industry might mean a reduction in service and accordingly less choice for travellers.
Anyone who has looked at federal and provincial laws, as I know the two witnesses before us tonight have, can quickly conclude that the regulatory patchwork in Canada inhibits the industry. We have too many different laws and regulations in too many jurisdictions.
In September, the Senate authorized this committee to undertake a study and report back no later than December, 2002. We had our budget approved for the completion of our study this afternoon in the Senate. We started our work last year, and we have heard witnesses from Ottawa, Montreal, Halifax, Vancouver, Calgary, and Toronto.
This evening, we will have one witness, the Canadian Transport Lawyers Association, a national body of lawyers working in the transportation field, including bus transportation. In preparing for tonight, I noted that one of the association's several committees deals specifically with bus issues. Tonight we are very fortunate, honourable senators. This will provide us with an opportunity to learn more about how economic regulation works on the ground as well as the impacts of this regime on both service and ridership.
Much of the evidence we have heard to date addresses the question ``what is economic deregulation and how does it work?'' Who is in favour of deregulation, and who is against it? We have heard strong evidence on both sides to date. The existing carriers are generally in favour of the status quo. Those who support deregulation are those companies who would like to enter the market or offer new service at competitive prices. Also in favour are some users who do not believe the present system delivers or protects the service they would like to have as well as those who ideologically favour less government involvement.
I do not know how this Senate study will come down in the end. It is difficult to provide any definitive assessment. However, certainly most economists would argue that the efficiency gained from deregulation would likely be a net benefit to society. I hope that the witnesses tonight will, among other comments on safety and so on, comment on this issue so that he we might benefit from their wise counsel and advice.
Mr. Dean Saul, Lawyer, Canadian Transport Lawyers Association: Honourable senators, I am from Toronto with a law firm by the name of Gowling Lafleur Henderson. Mr. Blair is from Quebec City with the law firm of Gagné Letarte. We are two of the four-member bus committee of the Canadian Transport Lawyers Association. We have been charged with the responsibility of bringing to this committee the brief of the association.
As I have indicated in the opening, we carry no brief with respect to the specific issue of economic regulation or deregulation. During the course of truck deregulation debates, we made a number of submissions, but none of those were in favour of economic regulation as a superior system. We focused on safety as a principal issue and harmonization as another issue. We are not here to say that we support bus regulation, nor are we here to say that the industry should be deregulated. However, we do have some comments we would like to make.
I will say two things at the outset. First, you have our brief as filed. I do not propose to deal with it. I will take it as read. For the sake of brevity, we will try to deal with some issues in a thumbnail fashion, if we might. Mr. Blair and I have had the opportunity of briefly looking at the list of questions. We are prepared to deal with some of them in our comments, and we would be delighted to deal with all of them, time permitting.
Together with the balance of our members, we have very substantial experience in terms of bus and truck regulation in all Canadian provincial jurisdictions, with the federal government and with the deregulatory program in the United States. Our experience is very much ground level: participation in hearings, participating with the bureaucrats of the various ministries and with the board members. We hope to provide you with some assistance in your deliberations.
I will talk about the bus industry in terms of three or four sections and, in a very short time, tell you where I believe they are from a regulatory or non-regulatory point of view. Since I have more grey hair than my friend, I can say I go back a lot further than he does. I do recall regulation when it was regulation.
The school bus industry is an enormous industry in Canada, much of which is in the public domain; that is, the school boards themselves run school busses. However, where they exist in private hands, there is no regulation by any provincial board. Ontario is a good example and a good standard for Canada. In Ontario, all school boards call for tenders for contracts. Anyone who wishes to tender on a contract may do so. That includes the equipment, the driver component, the safety and maintenance programs and their rate offering.
The school boards decide who will receive a contract and for what term. When that decision is made, the contract goes to the Ontario ministry, which issues the licence. There is no regulatory oversight from the point of a board. That is the end of the matter.
The Deputy Chairman: Does the minister have discretion after the recommendation comes from the board?
Mr. Saul: If he has one, he has never exercised it. Ministerial discretion had existed in truck and bus transportation in the past, but ordinarily in appeal provisions. In the ordinary course when a contract is filed, unless there was some allegation of fraud in the form of the tender as filed, the minister normally leaves it to the bureaucrats to issue the licence. I have never heard of a school bus licence going to the minister for a subsequent decision or by way of appeal, even in the regulated days.
Appeals to the minister over my span — which is over 30 years — there might have been three or four in that period of time.
The school board then becomes the one most concerned with the safety issue, for example. They must look at the tenders they receive and the offering of the safety program from each operator. The boards have no function in the matter. With a school bus licence goes the right to carry charters for the schools within the board. In some circumstances, the licence may be worded in such a fashion that it will include charters or municipalities that are unrelated to the work of the board.
As a general rule, when a licence is issued, even though the operator is subsequently not renewed as the contractor, the licence is not generally cancelled. The licence grows over time and so do the rights within it. You may not have a contract to do something under a given licence, but you may have some ancillary rights for charters under the licence as it continues to exist. It is not regulated in that sense.
Charters remain regulated in most jurisdictions. By ``regulated,'' I mean minimally. A charter authority is authority to take an affinity group as a group from a location to anywhere else on a single fare basis. The group is expected, generally speaking, to come back to the point from which they originated. There are other forms of charters that now exist, but that is generally what a charter is.
Most provinces will require the filing of an application. The application will be filed with a transport board. In Ontario, that is the Ontario Highway Transport Board, there is a Quebec Transport Commission, and there are various agencies in other provinces.
The focus of the applications is generally on a business plan. The requisite applications are much more sophisticated than they had been historically. Maintenance and safety plans are required. There is a fairly stiff examination by the board — again, I will speak for Ontario — of the application as filed. The board must be satisfied that the application they have received is an application they are prepared to grant if there is no objection to the application.
Generally speaking, applications for charter authority are not opposed, and the board grants the authorities as applied for or as the board may choose to amend them.
The only support given for an application at the outset is the filing of some half dozen statements by public witnesses who would say, ``Yes, I need additional charter service, and I support this company and will use their service if they are licensed.'' That is not sworn; it simply is statement.
The Deputy Chairman: What about other charter carriers already in the field?
Mr. Saul: Because of the manner in which the boards have functioned, the extent to which objections are filed has significantly diminished. In Ontario there may be half a dozen hearings a year on charter applications. For the most part, the board will grant an application, even if it is opposed, without a public hearing.
I will give you an example. A year ago, I was involved in an application for charter authority from the metropolitan Toronto area. That is probably the biggest charter market in Canada. The applicant was unrestricted in the application. One carrier opposed the application. The objection stated that they were involved in providing charter service in the marketplace and were doing a good job and it would affect their business.
The board, having received that objection, granted the application without a hearing. The board granted the application on the basis that unless a responding carrier can demonstrate in its objection filed that it will suffer significant detrimental harm to its business operation and the service it provides to the public, the objection would not carry.
When you get the metropolitan Toronto market on the basis of the application as filed, with a major objector and without a hearing, then you can see that deregulation has moved a long way forward.
There may be objections to charter applications that are tenable where the charter application is not a charter application but a poorly disguised application for a scheduled line run. We can return to that, if you wish, later on. On rare occasions will that occur.
What I say for Ontario is generally true for the balance of the provinces. Some provinces, such as Alberta, may be further down the path towards no regulatory oversight. The one thing that is interesting about the applications as they go in is that the board still maintains a safety and business acumen oversight of the application. If the application is either devoid or unsatisfactory in how it deals with safety and maintenance of its vehicles, the board will not proceed those concerns are dealt with. Alternatively, it may dismiss the application and indicate the reasons for dismissal.
I will now turn to the subject of extraprovincial charters. Extra-provincial charter applications, such as one in Ontario to serve everything west, east and south of the province, once granted, is generally given full faith and credit by all other provinces. If I obtain an operating charter authority in Ontario and it says I can take charters from Ontario to the Ontario-Quebec border for furtherance and return, I do not even have to apply in Quebec. In other jurisdictions, my application would be granted upon filing. It would be a rare occasion to see an application opposed. The charter operator, in any jurisdiction, who wishes to leave his province and take his charter from British Columbia or Alberta on to Manitoba or through to Ontario — all of the circle tours they do — moves forward quite easily and largely without objection.
A dozen years ago, or so, the Ontario board used to have one or two bus applications heard every day. The board now sits periodically, perhaps one day a week or one day every two weeks. They might hear from six to eight applications in the course of a year. Ordinarily, those applications are motivated either by a line run application — of which there are few — or some problem with the applicant's material.
With respect to inner-city scheduled services, most provinces are on the same basis. They apply a test of ``public necessity and convenience,'' which is the language from 1933. That requires the applicant to demonstrate a public need for the proposed service. The application is the same: It must contain a business plan, indicate the anticipated number of passengers in the first few years, describe the schedule, state the payroll for the employees, what the drivers will be paid, what safety program will be in place, and what training program for the drivers. If it is opposed, there will almost certainly be a hearing.
There are very few scheduled service hearings in Ontario, or elsewhere in Canada. Nor were there many a dozen years ago. One may see that as proof that the hurdle is too high — or very high — to get the authority. However, there is another aspect of that which warrants some consideration: The service requires a schedule. The service must be supplied in accordance with the schedule and its filed rate, and if nobody gets on the bus, the bus must still go.
Until recently, many of the provinces regulated that schedule and rate requirement by requiring an operator to provide information with respect to any particular service that was cancelled. If a single bus did not go, that would require a report. Some have loosened somewhat on that, but it is still a service that requires much oversight and can be very costly. It is premised on people getting on your bus. If they do not, your full cost is there in any event.
That is distinguished from the charter service. If I calculate it will cost $900 to go from Toronto to North Bay and back and someone offers me $600, or someone says they cannot get a large enough group together, my answer is: ``My fee is $900. If you do not have $900, I do not go.'' If I get 11 people saying they want to go on the scheduled service and only three of them turn up, I will go anyway.
The boards will state quite publicly that they are concerned with introducing a new service in circumstances where the existing service may be on the edge of viability. In many cases in the past, scheduled services were designed to get a charter authority. I recall scheduled services from nowheresville to metropolitan Toronto or to London, Ontario, where there was nobody to ride the bus. The object of the operator's application was to get the line run and have the charter authority. That has disappeared.
To the extent there are line run applications, there are not many and they are tough.
The Deputy Chairman: You talked about the ``public necessity and convenience'' test. To ensure that I understood, are you saying that test is very old and it has been applied in so many cases that the law is now clear in all jurisdictions in Canada?
Mr. Saul: Public necessity and convenience was the initial term. It came out of the inter-state commerce commission. A number of provinces adopted that language.
Others use different language, but the application of the test for a long period of time was the same thing. The public had to come forward and state that the existing service is unsatisfactory for any variety of reasons including frequency, cost or reliability or that there is no service at all and it is needed because they have to see a doctor regularly. The boards will examine that.
The real test is: ``Does there appear to be some reasonable indication that there is a ridership that will use that service, or are we putting in another service that will be competitive?'' That is premised on the fact that it will have very few riders and will have to take them from the other guy. That is a major factor because there are very few city pairs in Canada and the United States that have more than one scheduled service operating between the city pair.
The United States deregulated buses in 1982 with the bus act. In Ontario, there were a number of situations where a second service was licensed between Toronto and London or between Sudbury, Barrie, Toronto and the Niagara Falls area. In a short time, the services were either discontinued because they simply were not viable and the incumbent remained there — the incumbent was not in a position to go into a predatory pricing program because the rates were very much controlled — or those in competition went into a pooling arrangement where they effectively created one service out of their programs. The competition that was put it in place disappeared because they functioned using each other's buses, drivers and rates.
There has not been a significant history of competitive scheduled bus services plying the roads against each other and offering the public a choice between service A and service B. That is a simple fact.
The other factor is that the scheduled service in a number of Canadian markets is VIA Rail, which is very much a competitor with the bus industry.
That is a thumbnail outline of the regulatory regime in Canada. There are variations and Mr. Blair will speak to some of those.
The last comment I would make is that there remains a regulatory regime in terms of safety. At the present time, I think Transport Canada would admit, as will most if not all of the provinces, that they have not achieved their target of having a national safety code and creating a bus-sensitive safety system including standardization and harmonization with respect to driver training and other aspects of operations.
One question with which the members of the committee will have to wrestle is whether there is enough compelling reason to look at the regulatory issue, or whether its focus should be on first things first. Let us look at what can be done to deal with the safety issue and how can we move the federal government, Transport Canada and the provinces forward so that they can achieve what they would want to do in terms of that harmonized, uniform, implemented and enforced program.
I might say if that were in place, Mr. Blair and I would not be here. We would have no brief. The only debate here is economic regulation.
Mr. Blair will comment on some of the differences in the jurisdictions because that will be of use to you in your consideration.
Mr. David Blair, Lawyer, Canadian Transport Lawyers Association: Mr. Saul has covered the main points. I will make two or three comments and then perhaps invite you to ask questions.
A regulatory regime is in place generally for an objective. We do have a regulatory regime with an economic component for the bus industry. The question, ``Shall we deregulate?'' is, in fact, ``Shall we change the regulatory regime to remove or vary that economic component?'' Prior to taking such a decision, it is important to look at what you want the regulatory regime to do.
The regulatory regime that we have now was created to ensure a level of service — in quality and in the area served — throughout a territory. That model in the bus industry is still relatively in place.
I think all honourable senators would agree that the safety objective is now of primary concern. That is, to what extent is the existing regulatory regime dependent upon the safety issue and supportive of an environment of safe bus operation?
I will speak particularly about Quebec where the Quebec Transport Commission does have a mandate and applies the mandate to look at the economic entry of a carrier. At the same time, one of its major considerations is whether that operator will be able to provide a safe service. Will it meet the safety requirements for hours of service, mechanical condition of vehicles as well as scheduling requirements and so forth?
Prior to deciding whether we should get regulate or deregulate, we must determine what is the ultimate objective of the regulatory regime. We have heard much about safety and different types of systems that are in place. For example, you have heard about the presence of van operators competing in the market. In many circumstances, van operators are completely unregulated and escape the scope of the safety monitoring mechanisms. On certain routes, you will have competition coming from completely unregulated entities that pose a significant safety threat. The question of deregulating must be looked at all the time with respect to the safety issue.
In Quebec, there used to be an attachment between Charter service and intercity service. It was something that came together. If you had an intercity service, necessarily Charter was an accessory privilege. That was divided and split off in the early 1980s. Since that time, the charter market has developed independently — some in both markets some in one or just in the other. There is not an attachment of the two. Generally, while not being deregulated, the charter market is much more open. Many new entrants have come in, and there is a large range of charter service offerings throughout the province.
Those comments complete what I have to say at this time. I will be happy to answer any questions.
The Deputy Chairman: You have both indicated that you have read the transcripts and are aware of what the minister asked us to look at when he appeared before us. You know what our mandate is, and it is more than safety.
Having said that, on page 18 of your report, I should like to read one of your sentences. I would like your proposal on how we as a committee — public policy makers — might wish to frame a response and an answer to this. You state:
There is however, a growing industry of unregulated passenger services through the use of van-type vehicles whose passenger size falls below the regulated industry threshold. These vehicles operate without hours of service obligations, vehicle maintenance obligations and driver training programs; and collectively do pose a public safety risk.
We are concerned about this. What advice and what kinds of obligations do you suggest we look at from a national perspective that we might wish to recommend on all of the issues that you raise: hours of service obligations, vehicle maintenance, training obligations, driver training programs? What is your specific advice to this committee on that?
Mr. Saul: Honourable senators, the opening for the van operator comes out of the definition of what is a bus or, in some jurisdictions, what is a public vehicle. They are ordinarily defined, amongst other ways, in terms of the numbers passengers it can carry, including the driver. That number might be 10, including the driver. A van, then, is not a bus or a commercial vehicle as defined in the regulations that deal not only with that vehicle in terms of licensing as a bus vehicle, but also in terms of the safety regulations, the hours of service regulations, that would apply to commercial vehicles whether they be trucks, highway coaches or school buses. I have had some personal experience with some of those vehicles involved in some hearings. The witnesses who had travelled on some of those vehicles, one running down Highway 7 between Ottawa and Toronto, where, on three occasions, the driver fell asleep at the wheel and the vehicle was off to the shoulder or off across the centre white line.
The Deputy Chairman: Was that an issue of driver training or hours of operation?
Mr. Saul: As I am told, the driver later said, ``I am sorry. I am just too darn sorry. I have been driving for a long time now.'' The passengers took the driver out of the driver's seat and the passengers drove the van on into Toronto.
In another situation, there was a van in the Cornwall area that did not make it all the way. There were several deaths involved in that. During the course of the examination, we did searches on the Quebec and Ontario vehicles that were plated. We found some of the plates issued for certain vehicles were not the vehicles on which these plates appeared. Addresses of the owners of the vehicles were not just tough to find, but could not be found. When the board finally disposed of the matter by issuing orders and fines against a number of the parties, that was the last we heard of them.
They still operate. They are operating in Nova Scotia, Quebec and Ontario. I am not sure what is happening in the western jurisdictions. However, they continue to operate. Unless someone says that we must go below 10, we must go down to a point where what we are talking about is the inner-city transportation of passengers by road for compensation. You can give them a licence like that. That is not the issue. However, in giving them the licence, they must then honour hours of service. They must honour vehicle inspection and maintenance requirements with respect to a vehicle that is so licensed.
If they cannot compete complying with those stipulations then they should not be on the road. If they can compete and comply, then we have no further comment. They do not comply now because they are not obliged to comply.
The Deputy Chairman: The main thrust of your entire presentation tonight is to stay away from regulation and economic deregulation and deal more with safety. Would it not make more sense to have safety concerns dealt with by the relative transportation department in the provinces rather than an economic, regulatory board? Is this not where these concerns belong?
We are public policy-makers with a federal mandate. The minister of transportation has asked us to look at the federal mandate. The issues that you raise sound to me to be provincial. Surely, provincial transport departments should be looking at that rather than the regulatory agencies.
Mr. Saul: I do not quarrel with that. I know that in the past, regulatory agencies had been very effective when operating licences were difficult to obtain. In Ontario, for example — and Ontario is hardly alone — the board had every licensed carrier's operating record, truck and bus. When you got to a point, the chairman had a red line drawn across your operating record, and you got a notice that you were coming in on a show cause hearing to explain why your record was what it was and what you would do to improve that operating record. It might be vehicles out of service. It might be violations of your operating licence. It might be any number of things. They would often put authorities on a temporary basis.
If you are in a business that depends on holding an operating authority and someone has put you on a temporary basis, you better sharpen up because otherwise your licence is gone. No licence, no business.
From a regulatory point of view, the object of the exercise is that if you are to deregulate, fine, do so. However, the federal government, working with the provinces, must come together on a uniform understanding of what form of safety regulation will be in place.
The vehicles are operating from New Brunswick through to British Columbia; they are operating between Ontario and Quebec. There should be a reasonably level playing field so that no carrier from one jurisdiction has an advantage over another, because it is a little easier in my jurisdiction. They should have all have the same sort of test.
I refer to some of the transcripts. Brian Orbine, who was before you during the course of the Ottawa hearings, was asked about safety. He said
With the passage of Bill S-3 last year and with the eventual proclamation in the regulations, the effort behind that is to strengthen the safety regime for both bus and truck operations ...
Then he says: ``The process has started.'' He testified this year. He then says that he hopes it is ``something we can see by the end of this year.'' He ``hopes.''
If the provinces and the federal government are working on a program and hoping to be able to say they now have a safety regime that works in all provinces, then let them do that. I do not know that it is appropriate to say that they ``hope'' to see something.
I am somewhat disappointed by that. I do not think anyone will tell you that they are where they want to be. There is a cost involved in it, and there is a debate about who will pay the cost. The provinces are quite prepared to put everything in, but they want the federal government to pay.
When the governments decide how they will divide the cost and are satisfied that the cost covers what is required to be done, then it will be done. If it is not done, then one recommendation this committee can make is to ask, ``Why is it not done? Why are they not doing it?''
I have been a member of the Canadian Conference of Motor Administrators for some time. I have attended many of their meetings. They were at the forefront when the deregulation of trucks began. I remember being in Saint John when the Alberta chairman came in and said. ``You transportation lawyers better change whatever script you have to give us because I think we are going to deregulate and you better tell us what you think.'' We had a couple hours to tell them something. We did not come out in favour of deregulation, I might say.
That organization meets three times a year. It has dozens of regulators from every province. Transport Canada is a sponsoring party. I have been going to those meetings for 15 years. It astonishes me that they have not reached the point where they realize that it is incumbent upon that group to bring together the requirements so that this committee could say, ``Mr. Saul and Mr. Blair, go home, we are satisfied that the safety regime that you think ought to be there is there.'' We would be on our way.
Senator Callbeck: You mentioned the school buses in private hands, and that there is no regulatory oversight there. You said that for any one contender, the board makes a decision and then it goes to the minister. You said there is no regulatory oversight, but there must be safety regulations and so on. Is that correct?
Mr. Saul: With respect to van operations?
Senator Callbeck: No, school buses within private hands.
Mr. Saul: School buses fall within the definition of a bus. There are regulations for school buses in every jurisdiction. There are hosts of regulations to be met by school bus drivers in terms of training, the licence they hold and so on. They are more regulated from a safety point of view, perhaps, than any other ground passenger transportation interest in Canada.
Senator Callbeck: I misheard you on that item.
You mentioned extra-provincial charters. If they get a licence to travel in Ontario, you said most provinces will give them a licence. You mentioned that there are rare occasions when that is opposed. Do other provinces oppose that? What situations might there be when that would be opposed?
Mr. Saul: I will give you an example of an actual case of a bus operator based in Buffalo, New York, coming in on a charter licence. A review of the charter licence is ordered because the group coming in is not an affinity group. It is a group of 38 different people all coming in on a per capita basis. It is now a per capita service. The advertisement for this service is: ``Visit Toronto. Do your shopping. Have a wonderful time. Buses leave at 8:00 a.m. and 10:00 a.m. and return at 4:00 p.m. and 6:00 p.m.'' You now have a scheduled, per capita service.
At that stage, someone says, ``If you want to run scheduled per capita, apply for the appropriate licence. Do not pretend you are running charters.''
Senator Callbeck: I refer to your answer to the deputy chairman's question about the small vans, and what you would suggest that we recommend for small vans. Do you feel that they should be licensed or regulated? What exactly did you say in regard to the small vans?
Mr. Saul: There is a definition for taxicabs in most municipal bylaws that is a lower number than 10 seats. If this committee can satisfy itself that a van operating on the highway that has capacity for more than six people — a driver and five — where that van is operating to carry these passengers for compensation, it should be required to have a licence. Frankly, the operator could obtain a licence provided he also complied with all the regulations that include the insurance obligation. When you see such a van going down the road and you ask, ``how much insurance has the operator put on this vehicle for those passengers?'' The answer is, very quickly, ``Zero,'' in terms of the passengers.
You can decide that is fine, but your driver has to operate within certain hours of service requirements and your vehicle must meet certain standards. The ministry will have the right to come in and audit your records — your log books for your drivers' times, your maintenance and insurance records — and then you will have taken the step of protecting public safety with respect to that style of operation. Frankly, if you do all that, you will get the licence and not have to apply to anyone. If you follow that regime, you will go a long way without having to play with regulators, in that sense.
The Deputy Chairman: You are advocating a highly regulated regime.
Mr. Saul: It is not economic control other than in the sense that if it costs you to meet the safety requirements, you will have to meet the price. You will not be permitted to operate and not pay the price that we say you must pay to meet the safety requirements — the insurance costs and the maintenance costs.
If you can use a driver that runs Ottawa-Toronto-Ottawa twice in one day, it will not cost you as much as having two or three drivers do that at a reasonable wage scale.
Senator Callbeck: You mention in your brief on page 14, under Nova Scotia, a new line haul licence that has been granted from Charlottetown to Halifax. Is that an intercity bus licence? What do you mean by that?
Mr. Saul: Since the establishment of the bridge link, ferry services have been mostly replaced by bus services. In the circumstances, new licences have been issued to provide a new service that previously could not have been provided without the bridge.
Senator Callbeck: There was a bus service from Halifax to Charlottetown, but after the bridge link was built, they had to obtain another licence because you were substituting the link for the boat. Is that correct?
Mr. Saul: P.E.I. is now deregulated and Nova Scotia is in the throes of deciding what to do with respect to vans and other matters. Prior to the link, there would have been no licence to operate a bus from Nova Scotia to Prince Edward Island because you cannot get there on a bus unless you put it on a ferry. They would have been ferry-bus operated. Charter buses would have gone on to the ferries headed to Newfoundland.
When a new link comes into place, no one has the licence to operate over that bridge. I am not sure how many new services were put in place, but there would have been new licences issued to use that link in terms of passenger service.
Senator Forrestall: Your credentials are impeccable.
Mr. Saul: My mother will be pleased you said that.
Senator Forrestall: However, I am confused as to whom you represent.
The Deputy Chairman: I think we know now.
Senator Forrestall: We are learning. However, I am still uncertain.
Are you here to serve us or are you here to protect some segment of the industry? How do we interpret the information that you are providing?
Mr. Blair: First, we act for the bus carriers. We are in the industry and our relation to the industry is in the capacity of acting for the bus carriers.
Senator Forrestall: Let me be clear. You are not acting for them tonight.
Mr. Blair: That is correct.
Senator Forrestall: I do not quite know how you lawyers do this, because I am not a lawyer. If I make a faux pas, please excuse me. Are you here at your own expense this evening?
Mr. Saul: Yes, I am.
Mr. Blair: Mr. Saul is here at his own expense. Your committee has generously provided for my transportation here from Quebec City. The tradition of the Canadian Transport Lawyers Association, intervening before government agencies on any type of hearings of this nature, has been primarily to provide a perspective on the legal issues that are in front of you and not to try to favour one way or the other. Our position is to inform you of the consequences of your decisions. Respectfully, we are here to provide a service to you so that you may ask us questions and we can possibly throw some light on the consequences of the decisions that you might take.
Mr. Saul: In terms of the industry, I do not act for any bus companies. I used to act for a company known as Voyager Colonial and they have long since been sold. I do not have any bus clients. If I attend a hearing, it is because someone has called me at the last moment because they have a problem. With the charter application to which I referred earlier, I was involved for one-half day to give them advice and the application was granted.
Of the membership in our association, a number of whom are from the United States, very little of what we do involves bus application proceedings. I have been involved in only two or three over the last five years.
There is so little for us to do in bus regulatory matters because charters are substantially deregulated and applications for line-run services are so few and far between. I know one counsel in Ontario who may do a fair amount of the work. However, if you were to ask across Canada, you would find that most of our members have nothing to be earned in supporting regulation. They are not involved in that. We certainly are not here on behalf of any organization other than our association.
Frankly, when the board of directors and the executive looked at what we proposed to do, the understanding was that the association would submit the brief in the usual fashion. We will not take a position in favour of regulation or in favour of deregulation. We only want to answer questions.
We have spoken to regulation on a number of occasions and frankly, we thought some of the offered regulatory programs were asinine because, from a procedural point of view, they did not do what the minister had wanted to do. We suggested options for them in consideration of how they chose to proceed, not to change the intent of what was to be done but rather more to give appropriate notice and be procedurally fair.
Senator Forrestall: I appreciate that. The mandate of the committee is to examine declining ridership and its causes and whether that decline can be stopped in a regulated or a deregulated environment.
Is there a future — a safe, efficient public ridership for Canadians over the next 20, 30, 40 or 50 years? How do we answer the minister's concern about whether this is a concern?
Mr. Blair: My information is to the effect that ridership decline has been quite unsubstantiated in the last four or five years. I understand, however, that there is an accepted given that there has been a ridership decline. There has been a change of ridership and patterns for a variety of reasons including, for example, the change in providing urban service, which is now almost exclusively provided by government agencies and then also what we call ``suburban service.'' As an example, Quebec has the ``Conseil intermunicipal de transport,'' or CIT. That is a contract service provided by private carrier under contract with a group of municipalities. There are 16 of them in Quebec and they carry more than 13 million passengers a year. However, up until recently those passengers were not even considered by Statistics Canada because they simply escaped through the cracks.
It is also my understanding that other presenters have advised you that the ridership decline issue is not necessarily substantiated. There has been a change of passenger transportation models and there has been a change of patterns, but there is not necessarily a decline.
I would say that the intercity industry is very healthy and not on the decline; I would say that people are increasingly choosing bus travel. There has been an increase in the urban and suburban use of buses, because buses are a much more efficient way of moving people around than are private cars, for example.
Senator Forrestall: That is interesting. If you take the contracted area and the public area out of metro transit and the transportation of school children, what group would largely make up the 13 million riders about whom you speak?
Mr. Blair: I did not understand your question.
Senator Forrestall: You had suggested that by contract there are 13 million riders that had sort of slipped statistically through the cracks.
Mr. Blair: Those riders would have previously been on the short haul intercity bus service. However, because those carriers could no longer exist or operate efficiently from a purely private unsubsidized situation, the CITs were established as a new initiative in Quebec to provide commuter service and suburban service. There are 13 million passengers in Quebec.
Senator Forrestall: Who pays for it, the individual rider?
Mr. Blair: The individual rider pays, but the government subsidizes it. It is not a commercial risk by the operator in that the operator is paid on a contractual basis regardless of the number of passengers.
Senator Forrestall: Had the government not intervened with this form, can you envision what the service would be like today?
Mr. Blair: Very likely it would be non-existent or a much poorer service.
Senator Forrestall: This would cater to senior citizens, people having to go to a larger or another centre for health or professional purposes, for example?
Mr. Blair: It would normally cater more to people travelling every day on a commuter type service. It would be a worker-run thing.
Senator Forrestall: Is this the way of the future for the non-government bodies? Will Greyhound have to go this way?
Mr. Blair: Greyhound provides a certain type of service. This is another specific type of service that is designed in large part to get people out of cars and into buses to reduce traffic congestion on the highways. A typical intercity service is responding to a market that is different from that to which Greyhound caters.
Senator Forrestall: Presumably, if the subsidized program were not there, there would be car ridership or, as we are experiencing in Atlantic Canada, van service. They would not have gone to cars; they would have gone to some other form of transport.
Mr. Blair: Yes.
Senator Forrestall: That is more preferable in terms of the amount of axles and rubber on the road with the wear and tear and cost?
Mr. Blair: Definitely.
Senator Forrestall: Obviously this was a need. It did not just occur. Is there a similar pattern developing in Ontario, Alberta or British Columbia?
Mr. Saul: In Ontario, OC Transpo has certainly expanded their service. An outfit called Charterways used to provide a cost-effective commuter service from Richmond into Ottawa. Then OC Transpo moved out and began running the line at a lower rate — and, I might say, a subsidized rate — and that was the end of Charterways. Charterways was permitted by the board at that stage to abandon their service because they simply could not operate against a fare service at half their price, without prejudice to continuing their charter licence here in Ottawa.
When GO Transit service began and moved up into the area north of Toronto, there were a number of small scheduled line services that operated. When GO Transit began running over the top of them, they began initially by contracting those services with the operators. As those contracts expired, they put their own vehicles and their own employees on the service. They then began to contract, until a short while ago when they began to expand again because Mr. Harris decided to get back into GO.
That form of service is expanding, and it is expanding as a government service. It is more attractive to the public because they pay directly a part of the cost and, indirectly, perhaps they do not feel the other costs are paid until April 30 each year.
It is like VIA Rail. At one point, someone said that if the 13 million passengers travelling by bus had available to the bus industry VIA Rail's annual subsidy, all the passengers could travel for free. Subsidization is a factor. The bus industry cannot compete with the government any more than any other type of industry can compete with the government when the government wants to pick up the tab. I am not saying the government should not pick up the tab. There may be a very good public interest issue to be served by doing that, but it must be recognized that that is the case.
Senator Jaffer: You mentioned school buses. As I have listened to the discussions, I have been wrestling with the issue of the use of buses for farm workers. I come from British Columbia and, as you may know, we have had a big problem there as we have had many accidents with immigrant farm workers. Have you had any experience with that? Have you looked into this issue of buses being used for work purposes?
Mr. Blair: I know that every year in Quebec school buses are used for transporting farm workers. I am not aware of a safety issue to any great degree. All the school bus operators in Quebec would be subject to the safety monitoring programs that apply as a bus operator. Generally speaking, whether they are working in the summer transporting farm workers or transporting school children during the year, they would be subject to the same safety-monitoring regime.
Senator Jaffer: I read your paper with great interest. On page 19 in the last paragraph, you indicate that safety regulations should be a matter of concern. Throughout your presentations, you spoke about safety. When you speak about safety, do you have a checklist? I am not talking about looking at the engine. I do not mean it that way. When you talk about safety, what do you mean? Could you define it for me?
Mr. Saul: Let me try to respond. There were studies done for Transport Canada as far back as 1994 and earlier, which laid out a series of matters that ought to be dealt with. Many of those matters were safety related. Many of them involved the question of accurate information gathering so that in making decisions regarding the future of the bus industry, accurate information would be available and a safety program would be understood and could be implemented. To the extent that that is something that as a matter of public interest should be regulated, they knew what the regulation should be. They knew what the impact of the regulation was. They knew who they wanted to catch in the regulation.
I am familiar with that report. I think, given some time, I could pull out the recommendations. However, I have an impression that many of those recommendations that were made to Transport Canada have either not been acted upon or have not been brought to a point of fruition.
I wish to return to the information about the data on passenger ridership. I read with some considerable interest the evidence given by the witness from StatsCan. They had to change their bus survey data. Some were lost. There would be 30 people on one bus, and then suddenly there were only 20 and 20 had gone over to a GO transit, but they were not caught in it, and then there were 40 passengers, not 30 any more, but they showed a decline.
Frankly, I think StatsCan is saying that we have a significant amount of work to do — ourselves, Transport Canada and the industry — if we are going to have some meaningful numbers to give to you so that we can say, ``Yes, there is a decline,'' or, ``The decline is not as apparent as it should be. In fact, there is an increase.''
As a lawyer, it would have been wonderful to say, ``Now, cross-examination.'' He really did not say anything. I am not critical of him for that. I am simply saying that the system they had put in place was not designed to give you what you were looking for during the course of that testimony. I do not think it gave you very much in terms of hard information that you could rely upon to say that the industry is falling apart; there are so many holes in it.
I made a comment earlier about CCMTA. I was interested in the safety impact issue. In 1998, there was a proposal for deregulation of the bus industry by Minister Collenette. During that period of time, the ministry sent a letter to the provinces saying, ``What do you think? Please respond.'' Over a period of time, I saw some of the responses that were given by the provinces. I have a copy of the responses from British Columbia, Manitoba and Saskatchewan. The responses were, in many cases, quite specific. Saskatchewan said quite clearly, ``We see 300 communities losing all or substantially all of their scheduled service.'' That may be unfortunate, but it may be a necessary step along the way.
The interesting thing was that when representatives from Transport Canada appeared — and I mentioned CCMTA — Senator Jaffer asked: ``...some provinces are regulated, and some are not. Should they all be regulated, or deregulated?'' The answer was that no personal opinions were to be given. I understand that. I would not want to do that myself.
The witnessed posed questions such as ``What is the impact on the industry? Is there an impact?'' and went on to say, ``This is really what the ministry is looking for from the committee.'' Senator Jaffer asked, ``Do you have any idea of the impact when there is deregulation?'' This was the response:
... the committee has scheduled meetings with provinces. I would suggest that you might want to look at the impact of the regulations in provinces where there is regulation. You would get the information right from the provinces where there is a regulation. In those provinces where there is partial deregulation, you can look at the impact there as well. It is better to ask the provinces directly what they have seen as an impact of deregulation.
That was a statement made earlier this year.
In 1998, when deregulation was proposed, Manitoba spoke about safety; Saskatchewan and British Columbia were not in favour of the deregulation. CCMTA is going on, as I mentioned.
I would have thought it might have been incumbent upon Transport Canada — with the interplay they have three times a year with their associates across the country — to look at the issue of impact. If I were to propose deregulation and were meeting with those who were either in favour or opposed to it, that I might have gathered some information from them regarding the regulation.
They have missed the opportunity to have that information for you when they appeared. They should not suggest that now the committee ought to go to the provinces and get the information when there has been a constant conversation amongst all of these people over the years and that is where the information should have been gathered to be available for you now.
Senator Jaffer: I am sure that you may be able to get the information, but afterwards, may I please impose on you, if you can get the information to the committee, I would appreciate it.
Senator Phalen: I wish to follow up on Senator Callbeck's question on vans. In Nova Scotia, they have told us that they were drafting regulations in respect of vans. Are there any provinces with regulations in force respecting vans?
Mr. Blair: I can speak for the Province of Quebec. A vehicle that carries fewer than 10 passengers is not considered a bus and therefore completely escapes the application of that regulation. I know the issue has been raised at several levels.
Mr. Saul: Occasionally you will see a van that seems to have a crease all the way around it, and it looks longer than the others. A number of those are operating in Ontario. However, they will have a passenger capacity of perhaps 12. They are operated in many cases by scheduled services that serve the airport. If you are going from London to Pearson airport, those services are out there. They are fully compliant because they have expanded themselves to be caught.
If you are not in that group, then the only thing you have to deal with at that stage — and this is one of your questions — is what form of licensing is required to be an airline transport service. That is another question all together.
Senator Phalen: In Nova Scotia, we are talking about seven-passenger vans. It was a problem. They are planning to regulate them. Are any provinces regulated in respect of seven-passenger vans?
Mr. Saul: I may send something to the clerk in that regard. The Province of Ontario has a definition of a ``pool car.'' There is a Barrie-Toronto pool car. It is, as I understand, in part subsidized by the government. Effectively, a group will buy a van. There is a government subsidy to it. That van will have a regular group of passengers who pay for the transportation service. They get the insurance they are supposed to have. It operates, in a sense, outside of the licensing regime. However, it is caught within the system that Ontario has established for a pool car operation. There are not many of them. You need seven neighbours who all work in roughly the same area. As I drive down every morning, I can see the bus along the way, dropping people off.
Senator Phalen: That is somewhat different than what I am referring to.
Mr. Saul: It is. I commend Nova Scotia for moving in that direction. Not everyone will love it, but it is an important step.
The Deputy Chairman: I want to follow up on the van service once again. On several occasions tonight you noted that van service should be included in the definition of a bus. You have both said that, and it is probably a good idea. Would you also be in favour of a regime where the only test for entry to the market would be fitness?
Mr. Saul: I have no problem with that. The question is, what is ``fitness''?
The Deputy Chairman: As a lawyer in the field, what is a good definition of ``fitness''?
Mr. Saul: The tables are turned very quickly.
I believe that an applicant, to demonstrate fitness, must be able to demonstrate the financial ability to put the proposed service in place and to maintain it at a level that serves the public interest safely.
The applicant must be able to demonstrate that fitness includes safety consciousness, that is, knowing the drivers must be trained, knowing the vehicles must be maintained, knowing the hours of service regulation that apply. An applicant must demonstrate knowledge of all the things that we have talked about so that when you say this person is fit, you are really saying this person has met what we regard as the regime that should be met if you are going to carry people on the road for compensation in a vehicle.
The Deputy Chairman: They would have to meet the standard of the status quo. That is fine as long as your test of fitness would not be a barrier to entry.
Mr. Saul: I would not regard that as a barrier to entry. I would simply say that that is a public safety requirement which, if you meet, you are licensed.
The Deputy Chairman: Fitness may well be a proper definition.
Mr. Saul: Fitness is basically the test for truck operations in Canada, but it is getting more difficult all the time. There is more enforcement. I believe they are discovering that hours of service are a problem. One cannot read anywhere without discovering that they cannot decide what to do with hours of service.
[Translation]
Senator Biron: In short, you maintain that service should be regulated by the bus industry or regulated much like the taxi industry is regulated. Is that correct?
Mr. Blair: The problem is that this service falls somewhere in the middle. Operators are not subject to any kind of controls. There are no controls in place governing hours of operation, mechanical checks and regulatory regimes, which means that they can offer much cheaper fares than regular bus companies. In most bus markets, the main customer draw is the cheapest possible fare. Travelers who fly do so because they want to arrive at their destination sooner. People who travel by limousine want to travel in comfort. Bus travelers generally choose this mode of transportation for its affordability. If an even more affordable, albeit illegal, mode is available, a market will materialize immediately.
Senator Biron: Would you not agree that the decline in the number of passengers is much more apparent in rural areas?
Mr. Blair: Yes, according to the information I have received. The situation in rural areas is affected by a variety of factors. Many sectors of the rural economy are in crisis. Residents are moving away because of economic problems. Automobile use is also a factor. The service already provided by one company in certain areas is profitable when compared to others. Rural services are not profitable, but generally the services are maintained. If rural markets are opened up to competition, non-profitable rural services will be abandoned.
[English]
The Deputy Chairman: Senator Bacon is not here as she is in Europe. If she were here, she would pose the following question to which I would like to have you response: Under the present economically regulated regime, judging from the information this committee has received to date — road maps, timetables and so on — there are many points in Canada that do not have any service at present. How can service to these points be achieved in the present economically-regulated regime? What is your opinion on that?
Mr. Saul: I would expect that many of the points that are not served would not be served under a regulated regime. They are less likely to be served under a deregulated regime. The only manner in which service would be provided would be in a subsidized regime.
There are simple circumstances where you get a point that is 12 miles off line. It is problematic for a bus to go in and out on a scheduled basis and find no one there who wants the bus at that time.
My experience over the years tells me that bus ridership can be very difficult to manage. I was involved in an application to connect Blenheim with Chatham. That is rich farm country. Blenheim is not a small community and Chatham is sort of the centre of the Kent county area. Dozens of witnesses attended to support an application for a scheduled service. The prize of the application was the charter authority that the operator wanted at Chatham, which he did not otherwise have. The application was granted.
In the following weeks, the disgruntled operator, who had opposed and lost, followed the bus around on the route. Over a two-week period discovered that the average ridership per scheduled run was 1.73. The fact is that Mrs. Jones was quite honest about needing to go to Chatham to see the doctor, but the day she wanted to go on the bus, her cousin gave her a ride. That becomes a difficulty for the operator.
I recall another service being offered by a company out of Collingwood down to Toronto. It took the route through Ottawa and Duntroon and down through Angus, a route where you would be hard-pressed to think anyone would get on the bus. The fact of the matter is that almost nobody got on the bus, but it included a charter right at Toronto.
Can you put a service into a place that will not use the service? The answer is, you can, but someone will lose money on it.
The Deputy Chairman: What about our obligation as public policy-makers to ensure that all Canadians, irrespective of where they may live, should have access to some sort of public transport?
Mr. Saul: You would have to speak to Mr. Martin about how far he and the other treasurers across Canada would go in supporting that proposition in fact.
Saskatchewan transit has an extensive service and has been designed to do that so far as it can be done. That is a costly service for the province. In Manitoba, they have the Greyhound and Greyhound-related companies such Grey Goose, which operate through areas towards Flin Flon and the north.
In relation to the 1998 proposal, it was felt that if there were deregulation, it would be a matter of perhaps months, perhaps weeks, before those services were discontinued. If there is no obligation as a scheduled operator to provide the service, then like any businessman, you will not provide a service that is guaranteed to lose you money unless it is a loss leader; but if every leader along the way is a loss leader and there is no way of recovering the money, what do you do? Then you are turning to the operator and saying, ``It is our nation's obligation to ensure that every Canadian has a transportation service available. You have been selected to provide it regardless of the cost.'' That does not work and never has.
Many schedules have been established where there is one bus in on a Friday night and one back on Saturday morning. Two trips a week, instead of five a day as had been planned.
Senator Forrestall: Is part of the problem the inability of the provinces to come together in a uniform approach to these various problems? Does that contribute to the problem? There are different regimes from province to province, regarding the hours of work, licensing and the standards.
Mr. Saul: You would want to look at the numbers. This is where numbers become important. You can look at any given jurisdiction. For example, look at the bus ridership in British Columbia. How many of the people who ride a bus in British Columbia begin and end their trip in British Columbia and do not leave the province? That is a British Columbia regulatory issue for them. Of the percentage of those who get on the bus in British Columbia, how many of them leave the province to go to Alberta? Until you look at that sort of number, it may be that the lack of harmonization is due, at least in part, to the fact that they each have their own significant ridership to deal with.
The Deputy Chairman: That is more than a 15-hour drive, too.
Mr. Saul: Clearly, vans do not do it, I hope. That may be one of the issues. I speculate on that. I know something about bus ridership. Bus ridership includes GO Transit and the CIT and you have enormous numbers of people travelling short distances. They are Quebec's interest or Ontario's interest. The harmonization between what CIT does and GO Transit does is really of no consequence.
Senator Forrestall: Except as it impacts from a federal point of view.
Mr. Saul: It is the intercity that is more consequential in that regard.
Senator Forrestall: I was pleased to hear you use the word ``healthy'' and suggest that there might be some shortcomings with respect to the gathering of data and its proper storage. The analysis and dissemination are important if we want to draw the right conclusions when we are preparing our comments on disparate basis and we are not able to come to a common agreement.
Thank you for coming. Thank you for sharing virtually a lifetime's worth of your interests in the issue.
The Deputy Chairman: Mr. Saul and Mr. Blair, that brings to an end our deliberations tonight. I thank you both very much for coming. Your comments have been very helpful and useful. We will certainly use many of your responses when we begin to draft the report to the minister.
The committee adjourned.