Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 9 - Evidence, November 23, 2016
OTTAWA, Wednesday, November 23, 2016
The Standing Senate Committee on Transport and Communications, to which was referred Bill S-2, An Act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another Act, met this day at 6:45 p.m. to give clause-by-clause consideration to the bill.
Senator Michael L. MacDonald (Deputy Chair) in the chair.
[English]
The Chair: Honourable senators, we have some documents to distribute. There is a response here to Senator Boisvenu. It only arrived here this afternoon. It is in English. With the indulgence of the committee, I would like to distribute it to the committee and the French version will follow, if that's okay with everybody.
Today our committee begins clause-by-clause consideration of Bill S-2, An Act to amend the Motor Vehicle Safety Act. The proposed legislation aims to keep roads safe, protect Canadian consumers, and would give the Minister of Transport the power to order a company to issue a recall, make companies repair and recall a recalled vehicle at no cost to the consumer, and prevent new vehicles from being sold in Canada until they are repaired.
I remind members that the committee has held two meetings on Bill S-2, hearing from the Minister of Transport and 10 separate witnesses.
Before we begin, I want to advise members that we do have officials from Transport Canada who can be called to the table to answer any technical questions that honourable senators may have.
I would like to remind senators of a few points, terms and mechanics of the process. When and if more than one amendment is proposed to be moved in a clause, amendments should be proposed in the order of the lines of the clause. Some amendments that are moved may have consequential effects in other parts of the bill. We will endeavour to keep track of these places where subsequent amendments need to be moved and will draw your attention to them if necessary.
Because no notice is required to move amendments, there has been no preliminary analysis of the amendments, so if any member wishes to propose an amendment, please allow your colleagues and our staff sufficient time to review them before opening the floor for debate.
Finally, I wish to remind senators that if there is ever any uncertainty as to the results of a voice vote or show of hands, the most effective route is to request a roll call vote which obviously provides unambiguous results. Senators are aware that any tied vote negates the motion in question.
Are there any questions on any of the above? Seeing none, we can now proceed.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill S-2, An Act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another Act title?
Hon. Senators: Agreed.
The Chair: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause one, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 7 carry?
Hon. Senators: Carried.
The Chair: Shall clause 8 carry?
Hon. Senators: Carried.
The Chair: Shall clause 9 carry?
Senator Greene: I have a small amendment. I move:
That Bill S-2 be amended in clause 9, on page 5, by adding after line 26 the following:
"10.52(1) In this section, dealer means a person who is engaged in the business of purchasing vehicles or equipment directly from a company and reselling it to another person who purchases it for a purpose other than resale.
(2) If, on the date on which an order is made under section 10.5 or 10.61, a dealer still owns a vehicle or equipment that it purchased from a company that is the subject of the order, the company shall, without delay, either
(a) provide the dealer, at the company's expense, with the materials, parts or components required to correct a defect or non-compliance in the vehicle or equipment, in accordance with the terms and conditions specified in the order; or
(b) repurchase the vehicle or equipment from the dealer at the price paid by the dealer, plus transportation costs, and compensate the dealer with an amount equivalent to at least one per cent per month of the price paid by the dealer, prorated from the date on which the order was made to the date of purchase.
(3) If the company provides materials, parts or components in accordance with paragraph (2)(a),
(a) the dealer shall install the materials, parts or components in the vehicle or equipment without delay after it has received them; and
(b) the company shall compensate the dealer for the cost of installation and with an amount equivalent to at least one per cent per month of the price paid by the dealer, prorated from the date on which the order was made to the date the dealer has received the materials, parts or components.".
The idea for this came out of a question that Senator Eggleton asked the dealers' association last week. It struck me that in the interests of harmonization, that essentially is what that particular bill seeks to do in many ways.
With the American approach, it empowers the minister, and only the minister, to make these payments. It's a fair way to do things because that's the kind of thing that the American dealers are able to get.
Now these payments aren't triggered at all if the recall is a voluntary one that an automobile manufacturer makes. It's only triggered when there is a recall mandated by the minister. So it flows from the minister's powers, which is what the bill is all about.
Senator Eggleton: I take it this is really the same as the U.S. provision.
Senator Greene: Yes. In effect it is the same, although the overall powers of the Secretary of Commerce are slightly different than the overall powers of the Minister of Transport, but the effect is the same.
Senator Harder: I want to express concerns about the amendment. If I need help, I think the committee might want to ask the officials.
In anticipation, I met with the dealers' association, and I thought it made a lot of sense. I have just had a meeting with the minister as well as the officials to help me better understand the concerns about the amendment. I thought I would share them with the committee. If more details are desirable, I think we should pause to at least have the officials give us an understanding.
The Canadian legislation is framed somewhat differently than the U.S. legislation. The Canadian legislation is all about vehicle safety. The American legislation is actually about the relationship between dealers and consumers. The Canadian relationship is about safety and getting cars that are unsafe off the road, and the relationship is with the manufacturers. The balance between the manufacturers, the dealers and the regulator or the minister in our regime is somewhat different.
Therefore, the minister is of the view that what he is putting in place is strengthening the recall provisions and the obligations of the manufacturers, and that the bill does provide, with the amendments, sufficient authority for the minister to achieve that safety objective. In Canada, the practice has been that the relationship between the dealers and the manufacturers is under their contractual relationship and is therefore not part of the minister's responsibility. In other words, the minister is, as a result of the safety preoccupation, dealing with the manufacturers directly and is ordering the manufacturers to take action to ensure the safety of vehicles.
The American analogy would be right if we had the same regime, but we don't have that regime. We have a safety focus in our regime, not a consumer and dealer relationship. Therefore, the minister would oppose the amendment as presented. I think it's important for senators to be aware of that and why.
It's entirely logical, in my view, for the Canadian regime to have a different framework but to strengthen the tools the minister has for safety compliance. That's what the bill seeks to do. It is all about safety.
Senator Black: I have a question for Senator Harder, but I want to understand Senator Greene.
You indicated that the proposed amendment would not relate to voluntary recalls, just mandatory recalls. I'm not sure I understand that difference and how it would impact this.
Senator Greene: There is a difference between the two because when the minister becomes involved in the process, it's a major change in Canada from what has been before. The dealers' association in particular has made the point very well that the intrusion of the minister into the process requires an arrangement in order for it to be compensated.
Under a voluntary approach, which has been the case and which still may be the case — and I think it's likely going to be the case more often than the minister being involved — the free enterprise relationship between the two are preserved.
Senator Black: So the amendment only applies then to mandatory recall.
Senator Greene: Only those. It's those recalls that the minister would have put into motion.
Senator Black: Got it. Very well.
Senator Eggleton: I just want to say what Senator Harder has said, we have already heard that because we had the minister here. We had the officials here. I questioned both of them. As far as I'm concerned, they haven't given us satisfactory answers as to why we shouldn't put this provision in as put forward by Senator Greene. I think it is fair.
There is a cost involved with all of these recalls. The recalls are required because of the defects in the manufacturing. Not all dealerships are small business, but some of them are, and they should not be stuck with the carrying costs, having to hold an inventory for some period of time. That's recognized in the United States.
You say that the safety provision here is what is important. But it's also important in the United States. This is what the recall is all about.
So I think it's a reasonable proposition and I intend to support it. I have heard from officials. We have had them here. They already talked to us.
Senator Mercer: The fundamental issue here is this doesn't affect the safety issue at all, but what this does is to protect the small retailer. Our job is also to protect the people in remote and rural communities where there is one dealer, who is not the owner of multiple dealerships, as we see in the bigger cities. They are important businesses in those small communities. In some small communities, if the car dealership closes, it closes the small village that they might be in. We know that in Eastern Canada. You know it in rural Quebec. You know it in rural Ontario and rural Western Canada.
This protects the dealer. I think it's a worthwhile protection to put in. The dealer is a stand-alone dealer. This is his business. He or she is protected by this. It doesn't cost the government a nickel. I don't know why the government would object to this. This doesn't cost the government anything. It is a protection put in there to protect the small businessman, and particularly in small and remote communities.
All across this country, or in Senator Lang's territory, small business is important. The whole place is built on small business other than the big mines. In the community where I live, small business is the heart and soul of the community, except in big cities like Halifax.
I think this is a good amendment and I'm going to support it.
Senator Runciman: I support the amendment as well. I don't see this as in any way, shape or form jeopardizing the intent of the legislation in terms of safety. There is another element here too that could in some instance have a positive impact in terms of safety because I think it puts pressure on the manufacturers to move quickly with respect to this before it falls into the minister's hands. If the minister is compelled to get engaged, then they are obligated under this amendment. So I think that there is a safety element here, but it's a positive one from my perspective.
Senator Lang: I would have one question. If you don't accept this amendment for this legislation, in deference to Senator Harder, where would you put this amendment? Obviously I don't think there is other legislation that it would apply to.
Senator Harder: If I could respond to that, under clause 9, proposed section 10.5, the minister can order a company to correct the defect and the minister can order the manufacturer to cover the cost of that remedy. These provisions I'm led to believe can be directed to including dealers in that regard.
Senator Eggleton: That's not the cause. That's a separate issue. That's what this is doing.
The Chair: Anybody else?
[Translation]
Senator Boisvenu: I have a quick question for Senator Greene. Does your amendment, senator, correspond in part to clause 10.61 of Bill C-62, according to which, practically speaking, if there is a defect or a recall, repairs must be made before the sale, while it is being proposed today that the word "before" be replaced with the word "after"? For the protection of both the dealer and the consumer, clause 9 of the present bill states that the repairs must be made after, while Bill C-62 says that the repairs must be made before the sale. Is that what you are saying?
[English]
Senator Greene: I'm sorry, but I'm just trying to find what you're reading.
Senator Boisvenu: I can read it for you, if you want.
Senator Greene: Yes.
Senator Boisvenu: The minister may by order require a company to ensure that any defect or non-compliance in a vehicle or equipment is correct before the vehicle is offered for sale.
Senator Greene: Yes.
[Translation]
Senator Boisvenu: In today's amendment, yes, it is "after."
Senator Greene: Yes.
Senator Boisvenu: So it has to be done before.
[English]
Senator Greene: I believe it's entirely consistent.
[Translation]
Senator Boisvenu: That is very important.
[English]
Senator Greene: Then it's retail. That's right, in that gap.
Senator Mercer: Question.
The Chair: That's the end of the debate.
Honourable senators, is it your pleasure to adopt the motion and amendment?
Some Hon. Senators: Agreed.
Senator Harder: On division.
The Chair: I declare the motion adopted.
Shall clause 9 carry as amended?
Hon. Senators: Agreed.
The Chair: Shall clause 10 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 11 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 12 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 13 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 14 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 15 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 16 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 17 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 18 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 19 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains a short title, carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill as amended carry?
Hon. Senators: Agreed.
The Chair: Does the committee wish to consider appending observations to the report?
Hon. Senators: No.
The Chair: It is agreed that I report this bill as amended to the Senate.
Hon. Senators: Agreed.
The Chair: That's it. The bill is carried as amended.
(The committee adjourned.)