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TRCM - Standing Committee

Transport and Communications

 

Proceedings of the Standing Senate Committee on
Transport and Communications

Issue No. 11 - Evidence - February 14, 2017


OTTAWA, Tuesday, February 14, 2017

The Standing Senate Committee on Transport and Communications met this day at 9:31 a.m. to continue its study on the regulatory and technical issues related to the deployment of connected and automated vehicles.

[Translation]

Victor Senna, Co-Clerk of the Committee: Honourable senators, I see a quorum. As clerk of your committee, it is my duty to inform you of the unavoidable absence of the chair and deputy chair, and to preside over the election of an acting chair.

[English]

I am ready to receive a motion to that effect.

Senator Eggleton: I move that Senator Mercer take the chair.

Mr. Senna: Are there any other nominations?

Senator Saint-Germain: I wanted to support him.

Senator Eggleton: Do you want to question him?

Mr. Senna: It is moved by the Honourable Senator Eggleton that the Honourable Senator Mercer do take the chair of this committee.

Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

Mr. Senna: I declare the motion carried, and I invite the Honourable Senator Mercer to take the chair.

The Acting Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order. This morning, the committee is continuing its study on the regulatory and technical issues related to the development of connected and automated vehicles.

Appearing before us today, we have officials from Innovation, Science and Economic Development Canada. I would like to welcome them: Martin Proulx, Director General at the Engineering, Planning and Standards Branch; Krista Campbell, Director General at the Digital Policy Branch; and Charles Vincent, Director General of the Automotive and Transportation Industries Branch.

I invite you to begin your presentation, following which we will have questions from the senators.

Charles Vincent, Director General, Automotive and Transportation Industries Branch, Innovation, Science and Economic Development Canada: Good morning, Mr. Chair and honourable senators.

My name is Charles Vincent, Acting Director General of the Automotive and Transportation Industries Branch at Innovation, Science and Economic Development Canada. I am joined this morning by my colleagues Krista Campbell, Director General of our Digital Policy Branch, where she deals with issues of privacy and cybersecurity; and Martin Proulx, Director General of our Planning and Standards Branch, where he deals with issues of spectrum management.

[Translation]

On behalf of my colleagues, thank you for the invitation to meet today as you study issues associated with the deployment of connected and autonomous vehicles.

If I may, I will take a few minutes to provide some context for how we are thinking about this evolving policy area, including specific areas that touch on the department's mandate.

[English]

Canada's automotive industry is the second largest contributor to Canada's manufacturing GDP and employs almost half a million Canadians, both directly and indirectly.

While automotive manufacturing continues to play an important role in Canada's economy, the automotive industry is increasingly being defined by technological innovation. Driven by a combination of environmental regulations, efforts to enhance vehicle safety and rising consumer expectations for connectivity, automotive manufacturers and suppliers are dedicating resources to designing, developing and deploying new vehicle technologies. In fact, Goldman Sachs estimates that the top five automotive manufactures globally spent $46 billion on R & D in 2015, an 8percent increase year over year.

[Translation]

In this context, Canada is uniquely positioned to play a leading role in the development of connected and autonomous vehicles. Not only do we have an established automotive manufacturing base, but Canada is also home to the largest IT cluster in North America outside of Silicon Valley, including world-renowned experts in technologies that will be key to the development of connected and autonomous vehicles, including artificial intelligence.

[English]

Some of these companies like QNX are well known and are already established names in the evolution of connected vehicles, but it is a much deeper ecosystem of small and medium size companies, university researchers and engineering graduates that is attracting the attention of global automotive companies like General Motors and Ford as they increasingly look to Canada for innovations in connectivity.

Through a focus on attracting and developing talents in Canada, on promoting the design and deployment of advanced technologies in Canada, and on growing and strengthening Canadian companies, ISED's efforts to advance innovation are aligned to advance Canada's position as a leading jurisdiction in the evolution of connected and autonomous vehicles.

[Translation]

My department, also known as ISED, also has a number of specific policy and regulatory responsibilities that will be important in the deployment of connected and autonomous vehicles.

As with any new technology, there are risks associated with the speed of deployment and adoption. Issues associated with cybersecurity and privacy will be particularly important in the deployment of connected and autonomous vehicles.

[English]

The combination of computer-based controls and connectivity in vehicles and intelligent transportation systems exposes these systems and the vast amount of data generated by these systems to a growing number of threats in both of these domains.

Addressing these privacy and security challenges will require a collaborative effort by all levels of government, both domestically and internationally, as well as multiple industrial stakeholders, to help to enable an environment that can address these challenges.

The success of connected and autonomous vehicles will also depend on spectrum availability. ISED is working with Transport Canada and the automotive industry to ensure that the needed spectrum and equipment regulations are in place to enable the development of these innovative technologies.

While I focused these opening remarks on the deployment of connected and autonomous vehicles from an ISED perspective, allow me to finish by emphasizing that success will require a coordinated effort across levels of government, both domestically and internationally, and across sectors. Some of the players, such as Transport Canada, Infrastructure Canada and provincial transportation regulators, have been obvious and early participants in this policy discussion, but we will be remiss if we do not recognize that these technologies have the potential to disrupt labour markets, to alter urban planning priorities and to change our environmental footprint, to name a few of the policy areas likely to be affected by the deployment of these technologies.

In short, like most technologies, the potential impact of connected and autonomous vehicles is far reaching and will require a concerted and coordinated effort.

[Translation]

Thank you for allowing me to provide these remarks, and we look forward to engaging in this discussion.

The Acting Chair: We will now have our question period. Senator Doyle.

[English]

Senator Doyle: Focusing on the last page of your presentation, you said that the technology has the potential to disrupt labour markets, to alter urban planning and what have you. Do we have a handle on the net job gain or loss associated with this type of vehicle?

Mr. Vincent: We are early on in our analysis of understanding a lot of these issues. There are some various researchers who have started to look at these net gains and net losses from that standpoint, using various models. I don't think we have a definitive understanding of it.

That said, on the one hand we have areas of innovation where we can already see companies that are growing into the space and adding jobs. In fact even existing companies are growing further into the space and adding jobs in that area. We need to understand and appreciate that there are other elements of the economy. You can see that in areas like the shared economy, where we are starting to see disruption in various industries.

I don't think we have what I would call a definitive understanding, but there are a number of research papers out there that have looked at it.

Senator Doyle: Not knowing a whole lot about the technology except what you are telling us, how would local operations of a mechanic in a community, for instance, be affected? Would he have to start his business all over again if this comes on stream?

Mr. Vincent: On the example you drew of a mechanic, at one level there is recognition that over time the technologies associated with vehicles have become increasingly complex and growing in nature. Fixing a car today is probably very different from fixing a car 20 years ago. That probably continues at a certain level.

There is ongoing dialogue between the associations representing people who fix cars and those who build cars to make sure information is being provided in a way that allows everyone to choose where they get vehicles fixed at the time.

Senator Doyle: Our notes a few days ago indicated that in a couple of decades from now there would be no need for taxi drivers, long-haul truckers, and what have you. They will be replaced by intelligent, self-driving cars. How close are we to that? Is that a possibility at some point in the future?

Mr. Vincent: In some ways it is a logical conclusion to this line of argument. How close we are is a matter of speculation. I've seen reports where people argue that some of that future is within a decade to 15 years. Others have said it is quite a bit further out. I wouldn't want to state definitively how quickly that is coming.

In some ways it's the logical conclusion to some of these arguments but technologies have a way of evolving over the decades, so it's hard to say for sure.

Senator Doyle: Has anyone estimated how much new electronic infrastructure might be needed in the future, what it will cost and if money is currently being earmarked for that at the government level?

Mr. Vincent: On an infrastructure perspective a lot of conversation has been happening both domestically in Canada and internationally. Canada lives in a very integrated world when it comes to transportation with the United States. Ensuring that there is a common set of infrastructure standards and understanding across borders is important.

Maybe this is an opportunity to allow Martin to talk a bit about the spectrum management side of things, given that spectrum and the infrastructure associated with spectrum will be an important part of this conversation.

Senator Doyle: Yes.

Martin Proulx, Director General, Spectrum, Information Technologies and Telecommunications, Engineering, Planning and Standards Branch, Innovation, Science and Economic Development Canada: Spectrum is a finite resource. There is only so much that we know how to use technologically at the moment. Therefore my department must be disciplined about determining each slice of spectrum, for what purpose it's used, and what type of technology. That is what my area looks after. Certainly the use of spectrum when it comes to automated vehicles is no different from that.

There are already all sorts of wireless technologies in the car. There are cars that communicate through GPS and connect through wireless networks. There are also wireless technologies in the car to check for lane changes, automated braking and so on.

We are in the midst of introducing in Canada the first technology for vehicle-to-vehicle communication. That is actually starting this year on a high-end model of Cadillac cars.

In terms of infrastructure the wireless infrastructure would certainly be a subset of the overall infrastructure but you can anticipate that there would be devices at intersections or at different parts of the highway. There would be some physical infrastructure that would be collecting information with respect to what is going on and then communicating with the cars to help with the automated transportation.

[Translation]

Senator Saint-Germain: Thank you for your presentation.

I was struck by two interesting points in your statement. You mentioned that according to Goldman Sachs estimates, the top five automotive manufacturers in the world spent $46 billion two years ago on research and development. You also pointed out that the potential impact of connected and autonomous vehicles is far-reaching, and will require a concerted and coordinated effort. In that context, the portfolio of Innovation, Science and Economic Development Canada includes the National Research Council and two granting councils, the Social Sciences and Humanities Research Council, and the Natural Sciences and Engineering Research Council.

What are the current research priorities regarding connected and autonomous vehicles? How are these different organizations within your portfolio coordinating their activities?

[English]

Mr. Vincent: I'm not in a position to speak definitively about the National Research Council or some of the granting agencies and their folks. We engage regularly in particular with the NRC because there is a lot of interest on their part around connected and automated vehicles. I encourage senators to speak directly to them because they probably have a lot to offer to this conversation.

When we look at the program we have within the department proper, we've been leveraging and using programs like the Automotive Supplier Innovation Program to try to recognize that we need to broadly define suppliers within the automotive community because many different companies are starting to contribute directly into the supply chains for the construction and manufacture of vehicles.

We have a number of companies that are applying and have received funding in areas such as the security of data and the development of applications that are receiving funding from that program to help develop their technologies.

The focus of that program is very much on what I would call the middle levels of innovation. We have a number of organizations, including granting councils that are providing funding at what I call earlier basic levels of research. Once you get into proven technologies that are well understood, then tier-one organizations and automotive manufacturers are willing to take those technologies and finish their development.

It's in that middle stage where small companies need to demonstrate and prove their technologies. We focus the funding around the Automotive Supplier Innovation Program to ensure these companies get access to the funding they need to help risk manage, demonstrate that their innovations will work, and then hopefully will be picked up within the supply chain.

Another element that is interesting to understand is recognizing where these companies are in their own evolution and development. Many of them are coming from an ICT world, a technology world.

The automotive industry is a well-established, long-standing industry. Entering into that supply chain is not easy. It is not easy to understand how the supply chain works. It is not easy to understand and make the connections to successfully integrate within it. In that context, part of what we're hoping to do with the Automotive Supplier Innovation Program is to ensure as we fund those innovations that we are then helping them integrate into the automotive supply chain. From that standpoint they can successfully bring those technologies into the market.

[Translation]

Senator Saint-Germain: You spoke of the need for a concerted and coordinated effort. Do you think it would be beneficial for you to be aware of the projects subsidized by the two national research councils, either in universities or in the private sector? Do you think that public funds could have more impact if we avoid duplication?

[English]

Mr. Vincent: Yes, that is absolutely the case.

We are looking at the kinds of innovations to be brought into the market. It's important to understand where we can most effectively use public funds within that. There will be large companies with the capacity to risk manage these innovations and bring them into market.

Hopefully in a fairly coordinated fashion organizations such as the NRC, the granting councils or the program I described focused on small and medium size enterprises will be helping to ensure that funding is getting into areas where innovation can grow, develop and ultimately be seen and adopted within the marketplace.

Senator Griffin: In your presentation you spoke about the potential to alter urban planning priorities. I would like to hear more about that. For instance, I assume the roads will be busier and maybe there will be less need for parking if vehicles will be shared by more people and always on the go. I would like to hear more of your thoughts about what impact this will have on urban planning.

Mr. Vincent: I will preface my comments by saying it will be less a departmental view than my own understanding, given that urban planning is not my expertise. It is another area where I would encourage the committee to bring in witnesses who have greater expertise in these areas.

How busy the roads will be is up for debate. On the one hand, they may be busier because in some ways vehicles will be in constant motion and not taken off the road and parked. On the other hand, you can imagine a world where vehicles are being used more efficiently and therefore fewer vehicles are on the road moving from point A to point B.

I draw an analogy with the airline industry that spends a lot of time trying to figure out which airplanes get into which airports to efficiently move the maximum number of people to the next location. From that standpoint a lot of discussion could be had as to whether or not it will lead to more or less congestion.

When we start to link technologies associated with automation with technologies of connectivity between cars, hopefully we are in a world where vehicles on the road are moving more efficiently through the urban landscape. Vehicles could probably be moving closer together and through intersections in a more efficient manner.

A potential argument could be made that these technologies actually reduce congestion rather than increase it, but it depends on a lot of factors moving forward. I encourage you to talk to other urban planning experts in that space.

Senator Griffin: We will do that. It has been mentioned that Ontario has done some testing of AVs on public roads. I would like to know more about that. Are you aware of those details?

Mr. Vincent: Absolutely. I will give the level of detail that I understand. Ontario has made it legal for companies to get a licence to test their automated vehicles on public roads. Last year the first of those licences was effectively issued to a combination of QNX, the University of Waterloo, and another company whose name is eluding me right now; my apologies.

This is important from a couple of different aspects. First, it sends a clear message from an industry standpoint that Ontario and Canada are welcoming these technologies and encouraging their development. Second, it ensures that companies developing these technologies in Canada don't have to leave and go somewhere else to test and understand them. A number of states, including Michigan, California and others, have put laws in place to allow their testing.

In some ways there is almost an ongoing competition between jurisdictions to attract the innovations we are talking about and the economic benefits that come from them.

In many ways Canada is uniquely positioned to help and succeed in that space. We are one of a few places with strong manufacturing and information technology bases. In developing the car of the future, Ontario and Canada have certain natural advantages. Ontario's opening up public roads is an important signal to the industry that we are looking to leverage and build on those natural advantages. Ontario and Canada represent a strong home for the development of these technologies for both small and medium companies that are growing and for larger multinationals looking to position their capital in developing these technologies.

I am hopeful those signals are the reasons General Motors, for example, has raised its engineering staff to approximately 1,000people and why QNX is increasing its activity in this space.

Senator Eggleton: You have made passing reference to the technologies having the potential to disrupt labour markets. Some people think it might be a bit more serious than a passing comment. For example, Professor Stephen Hawking says:

The rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.

The White House report published a month ago under the previous president said:

About 83percent of jobs where people make less than $20 an hour will be subject to automation or replacement.

They also estimate that between 2.2 million and 3.1 million car, bus and truck driving jobs in the United States will be eliminated by the advent of self-driving vehicles.

Have you looked at what the numbers would be in Canada and the impact that this would really have on the labour market? These sound alarming but they come from reliable sources. Could you comment on that, please.

Mr. Vincent: Certainly any reference in it was not meant to diminish or minimize the potential impact on labour markets from that standpoint, so please don't interpret it that way.

I reiterate part of what I said beginning. A lot of these impacts are still to be understood. No only Mr. Hawking but a number of research papers have projected the potential of fairly significant disruptions within the labour market at various levels as a result of artificial intelligence and deeper learning.

I will ask Krista to provide some comments as well.

Krista Campbell, Director General, Spectrum, Information Technologies and Telecommunications, Digital Policy Branch, Innovation, Science and Economic Development Canada: I will speak more broadly about digital skills given my responsibilities for ICT information, communications technologies and digital policy.

We do some work with the OECD, a well-known international think tank that has been looking at questions about displacement as a result of the growing need for digital skills. It is hard to imagine what kinds of jobs will not be impacted by digital technologies in the future. For example, in fast-food restaurants now everything is on high-end touch screens. For those who can't operate them the basic service jobs will be very challenging.

Some of the preliminary findings are interesting in the sense that for many service jobs it is likely they will want continued human interaction and interface. There is a whole series of thinking around what jobs could be outsourced as a result of digital skills and what ones could become even more important because they want that human connection. We are thinking about how to increasingly embed digital literacy and skills into education from the very preliminary level so that young people are ready for the jobs of the future.

We are helping people accept technology more readily, whether it's workplace training over time. Their careers will evolve, change and need to keep pace with evolving technology. How can the government, private sector and academics step in to help address some of the issues we are seeing in terms of the spectre of there being large-scale displacement as a result of technology? How do we work with that as opposed to hoping for the best?

I would be happy to point the clerk to some of the critical work on digital skills development.

Senator Eggleton: Let me turn to what your department is investing in terms of automated and connected vehicle research.

I would like to know what you do in the Automotive Innovation Fund and the Automotive Supplier Innovation Program. What is your involvement in these programs in the automotive industry? How are they proceeding? Are automated and connected vehicles, AVs and CVs, covered by those programs? Do you have more information on QNX, operating out of Kanata?

The industry, in terms of dealing with this research, seems to be well underway in the United States and in Europe. We seem to be behind. What are we doing to catch up? What are we doing in terms of the investment in the specific programs I mentioned?

Mr. Vincent: I mentioned earlier the Automotive Supplier Innovation Program. We are trying to ensure that there is good opportunity for small and medium size enterprises with innovations in the connected vehicle space to come forward.

We have defined the term supplier quite broadly to ensure that we are not limited to traditional suppliers but recognize a broader array of companies that are playing an increasingly important role in the supply chain and bringing together connected technologies that will be shaping the future of those cars.

We are quite encouraged that a number of companies in the connected vehicle space have received funding through the program to date.

As a quick aside, I recognize the Ontario government, through the Ontario Centres of Excellence, has a connected vehicle program. We talk quite regularly with them because potential recipients of the supplier innovation program and Ontario's program for Ontario-based companies are similar. We are actively talking with them about how to best align the programs to ensure companies have the most efficient access to the capital needed to succeed in that space.

We are looking to the Automotive Innovation Fund to target and promote advanced and connected vehicle technologies that are shaping the future of the vehicle. We recently made changes to the design of that program. Within those criteria we explicitly reference the interest in strategic investments in connected vehicle technologies. We are trying to send a strong signal to the larger multinational companies that often apply for the program to recognize the strategic investments we would like to see in Canada. The program should be focused around future facing technologies and that kind of space. We are trying to leverage both of those programs.

Senator Eggleton: How much do you invest in them versus the industry, dollar-wise or as a percentage?

Mr. Vincent: For the Automotive Innovation Fund the sharing ratio tends to be 7.5 to 15percent for the investments we've made historically in that space. The companies are still making the vast majority of that investment, but we are providing some incentive to pull that forward.

Since the supplier innovation program is focused at an earlier stage of innovation, for smaller companies with less risk tolerance we have provided up to 50percent of the funding in that program. The programs were designed with slightly different target audiences and as a result are designed slightly differently from that perspective.

I will not claim to be expert on what QNX is doing. I would encourage you to talk directly with QNX, one of Canada's anchor firms in this space. We saw recently the announcement it made. It will be investing additional $100 million and hiring 650 additional people. QNX is well known globally and internationally. Its market share has been estimated at as much as 50percent when it comes to infotainment systems and effectively being the operating system that helps drive the connected vehicle technology.

This is one the great advantages that Canada has that we need to continue to build on, which leads to your final question about where we are within Canada and how far we have advanced. It is fair to say that in some respects we are at early stages in understanding our strengths, how to leverage them and how to position ourselves. I can't help but make reference to our natural advantages. Whether it is companies like QNX that have a clear space in the world already, a combination of manufacturing and information technologies that a lot of jurisdictions don't have, or the ability to work seamlessly with the United States and other jurisdictions, at the end of day, we have to recognize that as much as we want to push forward and be leaders we can't do it in isolation. The kinds of standards and technologies we adopt will have to be done in close collaboration with the United States. Colleagues at Transport Canada with whom you have spoken and others are working actively across borders to ensure Canada is well positioned from that perspective.

Senator Eggleton: I think representatives of those groups will appear before us.

The Acting Chair: While you were asking the question I was checking with the researcher, and they are on the list. We haven't invited them yet, but we may even visit them, which might be a good idea.

Senator Bovey: As a new member of the Standing Senate Committee on Transport and Communications, I guess one might wonder why transport and communications are put together. The historian in me goes back to the beginning of the radio tied in with the railway in Canada. Decades later it seems communications and transportation are coming together again.

The communications industry and the automotive industry are two of the most regulated industries in the world. I don't know enough about the relationship between the two of them now. One of the major differences seems to be the protection of personal information, with the auto industry being relatively new to the concept of privacy of information.

I would like to know more about how the communications and automotive industries are managing to communicate between themselves about their respective concerns.

Mr. Vincent: You raise a very good question and point around the privacy of data. I will ask Ms. Campbell to provide a few comments on that.

Ms. Campbell: It's a very interesting area to be thinking about. We are seeing that many companies are now turning into digital companies. They're communications companies, regardless of what they started out to be. These companies now have to increasingly spend time, energy and effort on a real strategy to think through some of the pieces of legislation that were not as obviously applicable to them or as central to their thinking.

It is becoming critically important for an automated vehicle company or company getting into intelligent transportation to know federal and provincial legislation like PIPEDA, the private sector privacy legislation at the federal level. These companies need to make sure they are thinking about privacy and cybersecurity at the outset. It's not something that you just tack on at the end. Once you have the car built and the wheels on is not the time to be thinking about privacy.

We have referenced repeatedly QNX, a star Canadian company in the area, is stellar at thinking through in the early stages what needs to be done about privacy and security. In addition they need to make sure that they are thinking about it at the CEO level.

It not just a technology issue. It is a whole issue for the board to think about and to direct the entire company to evaluate what they are doing from a privacy and digital security standpoint so that they really understand the implications.

At the end of day you may not be able to put the product on market because it is not compliant with what needs to happen if you didn't think through or understand your responsibilities on privacy. You must obtain consent and inform people why you are collecting data about them. You must ensure that it is clear how you are prepared to use and disclose the data it if you're asked to do so.

Companies need to think about these things early. They can go to organizations like the Office of the Privacy Commissioner to seek advice. Many companies have chief privacy officers or information officers with a privacy mandate embedded into what they are expected to do.

You are very right that the convergence of these technologies is driving a whole new set of thinking. Businesses have to be strategic in the early stages of what they are designing so they are not caught at the end with a non-compliant product.

Senator Bovey: You're talking about individual companies. I am talking bigger than individual companies. I am talking about the interrelationship of the wider or broader regulations both in Canada and internationally.

Interestingly in Israel, about 500 companies are involved in the AV industry. Michigan has 376 according to our research and we have 3 in Ontario. Are the industries in other nations looking at the convergence of national standards and regulations between communications and the automotive industry? Are we lagging behind there too? I don't think leaving it to the individual companies is sufficient.

Mr. Vincent: Just to clarify, I am not sure of the number. We certainly have more than three companies in Canada and Ontario focused on that. In fact, we have quite a number of them. I had the privilege of going down to the Detroit Auto Show. Part of the show called AutoMobili-D was focusing on showcasing companies working in this space. There were 12 Canadian companies showing what they were doing.

Senator Bovey: In the pilot stage?

Mr. Vincent: Some are commercially providing goods. In fact our minister had the opportunity to go to the Consumer Electronics Show as well. At that show there were over 100Canadian companies, not all of them working in the automotive space.

As you said, with the overlap and connection between the transportation vehicle space and the communications space, the convergence is an interesting historical loop we have come back through.

From that standpoint maybe I will ask Mr. Proulx to comment. When you talk about the bigger question of regulation and where things fit together, it is interesting that spectrum starts to tie them together.

Mr. Proulx: From a regulatory point of view we definitely go a long way in reaching out to the transport industry to understand, first, their requirements and plan their needs with respect to spectrum and, second, to manage them both internationally where decisions are taken in terms of homogeneous allocations of spectrum around the world and of domestic decisions.

Another part of reaching out is to make this new segment of the industry aware the components they put in cars have to be certified for use in Canada, which means they must comply with the specifications we identify.

It's not as challenging as you would think because most the components end up being reused in very similar technologies in other applications. The process happens quite smoothly but it's something we need to work at all the time. The regulation alignment in terms of communications and transport is occurring fairly well.

Senator Galvez: In reality AV and CV are coming very fast. My concern is safety and security. We have to worry about the transition to both systems: the old cars plus the new electrical ones.

The risk will be reduced and managed through regulation. We are here for regulations. We know that the pace at which technology advances is much faster than at which regulations come.

There are three different sectors of regulation: commercial, because there are private companies; technology, because technology is evolving very fast; and the transportation rules. How do you see the regulations? What are the priorities, the lags and the gaps?

Mr. Vincent: When we start thinking about regulation it becomes a complicated conversation because different regulations start to apply and come together. You mentioned at the beginning the dynamic of this world with some very connected vehicles that have a lot of technology simultaneously being on the roads with vehicles that do not.

I suspect you have had this conversation with colleagues from Transport Canada. They're consistently thinking about road safety and ensuring that vehicles on the road are able to work together and be connected. No doubt there will be a period of transition and ensuring that the technologies on board are in a position to safely move the occupants through a rural or urban landscape, avoiding accidents and the like.

I say with great confidence that there are many people in the transportation area, whether it's Transport Canada or their colleagues in the United States, thinking through a lot of these issues and making sure they have the ability to do so.

The safe movement of vehicles is supported in many ways by other regulations and other regulatory frameworks which ensure that it can happen. Martin's comments a moment ago about spectrum are an important element. We need to make sure that connected and non-connected vehicles have the ability to talk to each other. Even the connected vehicles out there have different manufacturers. If they are not using the same technologies and communications protocols, connected vehicles will not be able to do so.

Having spoken with a number of folks working on these technologies, there is a very active ongoing discussion within the industry to get ahead of the regulations in some way and to recognize that sometimes regulatory frameworks take time to catch up to technology. These companies are talking to each other to ensure there is a common language they can use so that one company produces a series of technologies that can talk to other cars, including cars that they don't make.

The industry is doing that on a voluntary basis and is actively engaged in conversations with governments in both the United States and Canada about ensuring that the regulatory framework will continue to allow that to evolve and develop.

You are exactly right that a number of regulatory pieces need to come together. Krista's comment on privacy framework and associated regulations is another important element. I'm not an expert on this area, but you should be looking at the security of data, cybersecurity, and making sure vehicles moving through the space are secure.

From an innovation standpoint Canada may be well positioned. We have a number of companies with a great deal of global expertise in the security of data, one of the things we bring to the table. It may be a niche area where we are able to develop a lot of benefit not only for Canada but globally as well.

Senator Galvez: I cannot help but make a parallel in history to when tramways were taken away and replaced by individual cars. Much has been said about how positive it will be for the environment. It has been talked about in the environment committee. Senator Bovey has talked about communications and transport, and I can add environment, energy and natural resources.

Much has been said about AVs and CVs being very positive for the environment because they will use electrical energy or green energy. Because we observed the transition between the tramways and individual cars many years ago, could you please tell us what the future is? Is this for individual transport or is it for mass transport?

Mr. Vincent: I wish I could tell the future, but I will make a couple of comments because you raised two interesting points that I encourage you to continue exploring.

One was on the environment. There is a lot of very important discussion within the automotive policy around zero emission vehicles, electric vehicles and hydrogen fuel cell, but fewer people are talking about the environment in the context of connected vehicles. I believe strong environmental benefits can flow from a stronger and broader adoption of connected vehicles.

You will see more efficient use of vehicles within the system. You will probably fuel economy savings as the cars are used more effectively and efficiently. There is an environmental element that should not be lost. It is separate and apart from the electrification of these vehicles. I encourage you to continue looking down that path.

Whether this is mass or individual transit is a good question. It may end up being hybrid. A lot of early movement is toward ride-sharing programs.

Are we looking at fewer people owning vehicles or more people simply accessing a service to move from one place to another? That will depend a lot on the environment they live in and their own personal situations.

You may have other countries and/or regions in Canada where that type of model makes a lot of sense to people don't want to own a vehicle. If they had ubiquitous access to a shared vehicle, they would be perfectly happy. In other areas that may not work but maybe they will go from owning two cars to owning one. They can have regular access to one vehicle, but if and when they need a second vehicle they can access one.

Will it be mass transit versus individual? I wish I had the answer to that very good question. From that standpoint there are a couple of different futures that could play themselves out.

Senator Hartling: I found your presentation fascinating. Could you tell me about other leaders in the world in this domain, other than the U.S., that Canada might look to for information and where they are with that?

Mr. Vincent: You won't be surprised at some level that many of the leaders in this space are other nations that are heavy automotive manufacturing jurisdictions. Some countries like the United Kingdom and Germany have invested heavily in connected vehicle research, connected vehicle technologies and the like. Sweden has also done so, based largely on testing Volvo is looking to do. Gothenburg has also invested heavily in the space.

It's not exclusive. Other jurisdictions are recognizing the potential innovation value associated with connected vehicle technologies and trying to draw those together as well.

A number of different international comparison papers have already looked at some of that. I would probably point you to the work by the Conference Board of Canada and by Professor David Ticoll that have both looked at international comparisons.

Senator Hartling: Are we partnering with any countries at the moment? Are you working with any of those countries?

Mr. Vincent: The most collaboration and cooperation is more on the regulatory front. Whether it is in spectrum management, privacy or in vehicle safety, a lot of international dialogue and engagement happens to ensure a shared understanding of that moving forward. I would say it's less so from an investment attraction and innovation standpoint.

The Acting Chair: Have we developed a public policy checklist of things that will need to happen? If we knew that on day X all these cars were coming on the road, is there a checklist of what we need to have taken care of before the roads become populated with these types of vehicles?

Mr. Vincent: I don't know if there is a definitive global list. In various regulatory areas there is a lot of understanding of the work plan necessary to ensure we are in position to use these technologies as they become available, commercialized and adopted for roads, but I'm not aware of a single definitive list.

The Acting Chair: Are we promoting the development of technology that we need, and are we doing it with Canadian companies?

Mr. Vincent: Yes, we are actively looking to understand the technologies that are shaping the future of these vehicles. Within the department right now we have an ongoing technology road map exercise to understand the technologies that are most important for the future and a number of other automotive areas.

The Acting Chair: From the point of view of public policy development, which is one of our concerns, it seems to me that successive governments have talked about having Canadians connected to the Internet and having high-speed Internet available. It has not happened.

We know governments are continuing to offer incentives, but are we ready for this? Do we have the technological infrastructure that will allow these vehicles to operate in all ten provinces and three territories?

Mr. Vincent: There is no doubt a fairly significant infrastructure investment will be required, not in any one place but right across the country. If you start looking at the testbeds for some of these early technologies, whether they're sensors in the roads or various technologies embedded in the infrastructure, there is a heavy infrastructure investment required to do that.

The Acting Chair: We were in Edmonton where we took a ride on a connected bus. As we went along they were giving an account of the technology we were passing. It was obvious that technology costs money. There was labour involved in installing it and, one would assume, labour involved in maintaining it.

One of the concerns of many people is the effect this would have on jobs for people like taxi drivers, truck drivers, etcetera. As the department examines everything we need to be thinking of a phrase that every politician uses in every campaign: jobs, jobs, jobs. That's what it's all about. If we're to lose jobs because of technology, we had better be able to create jobs because of technology as well.

Mr. Vincent: That's a fair comment. If I come back to the comment around the cost associated with this and the infrastructure I think that's very true, but we will have to look at the broader picture of the costs and benefits to our society of these types of technologies.

There is no doubt capital investment will be required to bring in some of the technologies and the infrastructure to enable them. At the same point there will hopefully be fairly significant savings when it comes to reduced accidents and various other benefits. A cost-benefit analysis will have to be done at the end of day to understand economically how it will benefit the country.

[Translation]

Senator Cormier: Thank you for your very instructive and interesting presentation. I am from a small town, and I can easily imagine the arrival of these vehicles in cities, but have you thought about the impact of these vehicles in rural areas? What would their impact be on provincial legislation and relationships with small municipalities? Have you any thoughts to share with us on this?

[English]

Mr. Vincent: I hearken back to part of our earlier conversation about how this may evolve. In some regions there will be a natural evolution, for example, in a dense urban landscape where people are looking to not own vehicles and that sort of thing. The evolution may be different when you start moving into other dynamics within the country and the world.

A lot will depend on the technologies that some companies are pursuing. Some companies are pursuing technologies that are reading the environment around them. It doesn't really matter whether they are in an urban or rural environment, the technologies are effectively mapping what is around them and able to move through that environment. It shouldn't make a difference where one is living and how one wants to use the particular technologies in those vehicles.

In other cases where companies are depending heavily on effectively mapping a geographic region and ensuring a vehicle can move through it, it will take a long time to map the entire country. You will probably see those types of technologies in denser urban corridors where they will make economic sense.

Many technologies are being developed in Canada around lidar and imaging technologies. They are helping vehicles understand the world around them and will make it so it doesn't matter whether the setting is urban, rural or otherwise.

It is important that you mentioned the municipal level. We talked about what the federal government could do. There is a natural linkage to provincial transportation agencies and the like. A lot of these investments, as the chair mentioned earlier, will have to be made at a municipal level. We need to ensure the policy dialogue goes right up and down across all levels of government to serve the interests of various communities that might be interested in making these types of investments.

[Translation]

Senator Galvez: You mentioned that to realize this transport automation project, we will need considerable investments at the municipal level. However, we know that today's municipalities can be stubborn, and their priorities are in the main the renewal of urban infrastructure such as waterworks systems. All of our municipalities are currently at that stage. Do you think that the more intrepid municipalities will try to go forward and use their own means, or will they need financial incentives from the provincial or federal governments?

[English]

Mr. Vincent: This is an excellent question to help understand the dynamic of how this will eventually roll out and the costs and benefits associated with it. We're seeing some municipalities such as Stratford, Ontario, and Windsor, Ontario, position themselves early on to be testbeds for these technologies. We saw the work in Edmonton. There is some ongoing work in British Columbia.

Some municipalities are seeing the strategic advantage of trying to position themselves as testbeds partly to draw some of the innovative companies developing these technologies into their communities. In other cases they are trying to recognize there will likely be health benefits, reduced congestion or other things that will benefit their municipalities down the road.

We will see some early adopters interested in doing that. If we look at other jurisdictions around the world within that context, I suspect some of those testbeds end up being jointly funded across all levels of government interested in learning what can come out of them. It will be an important phase to understand what technologies and infrastructure are required to effectively ensure that vehicles, as I suggested, can actually go back and forth across borders.

Windsor is focused on trying to position itself so that it is not only testing the technologies but doing so in a cross- border way. The Province of Ontario and the State of Michigan last year signed a memorandum of understanding to help grow and develop their joint region from an automotive manufacturing standpoint and to collaborate across those jurisdictions to test the infrastructure investments required to bring it forward.

You raise a very good question, and I invite Martin to add a couple comments.

Mr. Proulx: A colleague looks after a program called Connecting Canadians. It is about bringing broadband Internet to all Canadians. The rollout of the technology tied to automated driving may follow a similar pattern where it's easy in the city to justify private investment because there is good revenue to pay back the investment but harder in rural areas.

There is a need today that has been taking place over the last few of years where in some cases the provincial government and the federal government put money on the table to supplement the business case of private operators to enable the rollout of the technology in those areas. A similar pattern could be taking place when it comes to these technologies.

The Acting Chair: I want to talk quickly about the potential and some of the challenges that Canada brings to the table.

We haven't talked about the ability of this technology to work in two languages. We work in two languages here. The Canadian public works in at least two languages. In many communities they work in more than two languages. I assume the development of the technology is an advantage for Canadian developers because we work in both languages.

I will give you the list of what I see as some of the potential. When you leave here today, a snowstorm may have already started. I come from Nova Scotia where we had about 60centimetres of snow over the last 48 hours. I see that as an advantage but also a great challenge in developing this technology.

The great distances in Canada from sea to sea to sea also provide great challenges but also potential in development because we have to develop for distance when perhaps many people around the world do not. The accessibility of reasonably priced energy — and I don't use the word cheap — whether it be petroleum or electrical is another advantage as well as a challenge for our developers.

Could you comment on that, please?

Mr. Vincent: I would be happy to comment. I invite my colleagues to jump in at any point.

When you talk about the bilingual nature it is one of the great advantages of the digital backbone to a certain extent, namely that it is language neutral. We have a certain sensitivity and understanding in Canada of the need to be able to turn those digital signals into multiple languages. I agree with you that there is an advantage that Canada can build on and benefit from.

We are probably competing on that front with many of our colleagues in Europe and elsewhere who also work in a fairly multilingual environment. From that standpoint there are certainly advantages to be had in that respect.

The notion of weather and snow are often cited in the Canadian environment. Most testing, whether it is Google, Apple or others, tends to happen in places like Arizona and California where the weather is really nice and they don't have a lot of the same challenges.

Technology is evolving to the point, though, where people are starting to recognize that if they are to make this a reality they need to move into more challenging conditions. This is where Ontario opening its roads is of major importance, where Uber has gone to Pittsburgh, where General Motors has recently announced some work they are doing in the Michigan area, and where a combination of Fiat Chrysler working with Google is using technologies to test in the Michigan area as well.

Absolutely it will be a challenge. Some of the different technologies will handle it better or worse. Some technologies are reading the environment around them, independent on being able to see lane markers, will struggle when all of us are driving and there are no lane markers. Other technologies that are mapping the world around them may be in a better position because the lane markers won't move regardless if they are covered with snow. Those technologies are important.

Ms. Campbell: With respect to your first point about Canada having a natural advantage because we have many different languages spoken here and two languages embedded into much of the work we do.

The National Research Council does interesting research on language and language recognition. A whole series of companies in Canada have specializations in that regard. It is linked with a lot of the ongoing work across the country on artificial intelligence and being able to have a better seamless interface between a natural speaker in a variety of languages and machines.

Quite apart from the connected vehicle, in general this language technology is an area where Canada has some real strength. It is a competitive advantage for us.

The Acting Chair: I thank the officials from Innovation, Science and Economic Development Canada for participating in our hearings today. I think I speak for my colleagues when I say that we have learned a lot this morning. We would like you to keep us up to date on what is going on so that as we go through this study we don't miss anything along the way. Perhaps you could monitor and get in touch with the clerk if you have something you would like to add in the future.

Honourable senators, tomorrow's meeting may be cancelled because of the Canada-United States Inter- Parliamentary Group assembly which will be taking place. The clerk will be in touch with your offices and there will be an official yes or no notice if we are going to proceed.

With that, I declare the meeting adjourned.

(The committee adjourned.)

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