THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, June 4, 2019
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to study the subject matter of those elements contained in Divisions 11, 12, 13 and 14 of Part 4, and in Subdivision I of Division 9 of Part 4 of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures; and, in camera, for consideration of a draft report (drafting instructions).
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: I want to welcome witnesses, and I call the meeting to order.
Senator MacDonald: Chair, I have a point of order.
The Chair: Go ahead.
Senator MacDonald: Yesterday in the house, we gave to the Senate the seventeenth report of the Standing Senate Committee on Transport and Communications. I was looking at the front page of this report, and it doesn’t seem to have followed the instructions that the committee gave in regard to the report. I have some material that the clerk can circulate.
I’d like her to circulate it, please.
Senator Galvez: Senator MacDonald, can you speak into your microphone? I cannot hear anything you are saying.
Senator MacDonald: Yes, I will. As the report reads now, it says:
By a vote of 6 to 6, your committee recommends that this bill not be proceeded with further in the Senate for the reasons that follow.
But the vote of 6 to 6 was on whether or not we were going to pass the last clause in the bill.
When it came to reporting this to the committee, it was on division. It was not a 6 to 6 vote, but that’s not the way it reads in the report.
So I asked for the transcript from last Wednesday and how we wanted to handle the report:
The Chair: We are back in session. Is it agreed that the draft report be adopted?
Senator Miville-Dechêne: On division.
The Chair: All in favour?
Senator Plett: On division.
The Chair: On division? Okay. So it’s adopted.
Is it agreed that the Subcommittee on Agenda and Procedure be empowered to approve the final version of the report, taking into consideration this meeting’s discussion, with any necessary editorial, grammatical or translation changes required?
Hon. Senators: Agreed.
The Chair: Is it agreed that the chair present the final version of the report in the Senate?
What we have tabled in the Senate is not what we agreed to in the committee. It did not follow the instructions of the committee, and I think we have to revise it or amend it. Discussion?
The Chair: I have some comments to make. Any discussion?
Senator Manning: You’re saying there was a difference in what was reported and what was said in the meeting with regard to the vote on the bill versus the vote on the report. The question, Mr. Chair, is why would we have a difference? What happened? You reported yesterday, correct?
The Chair: What happened was I reported yesterday —
Senator Manning: Just hang on for a second. You reported yesterday, so I guess the question would be: The report seems to be different from what we agreed on here at committee. Why would you report something that wasn’t agreed at committee?
The Chair: On Friday I phoned and said there was a problem with the report, and I was told that’s the way the library was interpreting it by what was said at the meeting. But that’s not the way I interpreted what was said at the meeting. So I said I’ll bring the matter up at steering, which I did yesterday. I tried to point it out, but steering was determined that any changes to the report not be made at all. Then there was a motion in steering saying that I had to report the bill or the report yesterday, which I did. That’s what happened. I was not happy with what happened, but that is what happened.
That’s what took place. Even though the report by itself, doing that is wrong. There was no question at our meeting, when we were talking about the report, that the 6 to 6 vote was to be mentioned in concurrence with the fact that was on the adoption of the bill, not the report, and that the report was on division.
The way it reads now, it’s simply not correct and that’s not what the senators agreed to. I don’t know how we change that, but I think maybe an amendment in the chamber would have to take place. I’m just telling you what transpired in committee. In the steering committee, there were no changes allowed by the majority.
Senator Galvez: Chair, my recollection was that we gave power to steering to finalize the report, and if you decided whatever, it was the form and it has been tabled. If you want to put a minor amendment, I think it’s your prerogative. However, we have witnesses here and again we are disturbing the agenda. I think it’s impolite in front of our witnesses. Why don’t we discuss this after the meeting?
The Chair: I understand that, Senator Galvez, but he raised the point of order, as he has the right to. I think it’s a valid one.
Senator Simons: I am concerned that the report be accurate. I don’t think I see the same problem that some of my colleagues are seeing because, as it reads now, it says, “By a vote of 6 to 6, your committee recommends that this bill not be proceeded with. . . .” This language does not speak to the report; it speaks to the bill. Isn’t it correct? We decided by a vote of 6 to 6 that the bill not be proceeded with. We approved the report on division, but is that not an accurate statement of what we decided about the bill?
I agree the report should be accurate when it goes to the chamber, but I don’t see the difference. If this said, “By a vote of 6 to 6, your committee recommends that this report be accepted,” then it would be wrong. But it says, “By a vote of 6 to 6, your committee recommends that this bill not be proceeded with. . . .” Is that not correct?
The Chair: No.
Senator MacDonald: If I considered it correct, I wouldn’t be raising it.
The Chair: The 6 to 6 vote was not on the bill to be proceeded with. The 6 to 6 vote was on the adoption of the bill, and the bill was then defeated. That’s what happened. It has nothing to do with the report, and then when the report was decided, it was on division.
Senator Gagné: I have a problem with this discussion because everything was done in camera.
The Chair: The report’s not in camera. The report’s here. The report was tabled yesterday.
Senator Gagné: I know, but the explanation of the interventions were made in camera, so how can we bring back that discussion that was made in camera here in public?
The Chair: We haven’t talked about the discussion. I haven’t mentioned anything that Senator Miville-Dechêne said or Senator Dawson said. I haven’t said anything. All I’ve done is point out —
Senator Manning: My concern is accuracy and, with all due respect, I just want to make sure that, as a committee member, we’re representing a report on the bill. We all agree this has been contentious at times, but we have to make sure that how we communicate our report to the chamber is how we communicate it to the public and the country. While some of us may not believe the fact, but there are people watching the proceedings and watching this bill very closely.
Mr. Chair, as it reads now, in relation to the proposed language, what do people who put this together, is this —
Senator MacDonald: How difficult is it to amend?
Senator Manning: Where do we go from here if we want to make this correction? Do the legal people understand what we’re trying to do here and is this fine?
The Chair: I don’t know. I don’t know what they think. We’re in charge of ourselves, so we’re trying to determine the right thing to do here.
Senator Dawson: Rightly so, we are in charge of ourselves. The steering committee, of which I’m a member and Senator Miville-Dechêne is a member, decided yesterday, under the guidance of this committee, that we would have the final word on tabling the report. We think that the wording was okay. I don’t think it’s a big issue that you’re bringing up.
You will remember, because all of you would have agreed — the same people who are here — that we would be going to clause by clause by April 13. We are now in the month of June. We have been having these neat ideas of amendments and changes for more than six weeks.
It’s a few words. If you’re not happy about it, Senator MacDonald, you can yell about it in the house, if you want. The report has been tabled. I don’t think we have the power as a committee to amend the report tabled in the house if it accurately represents what was said at the committee. If members want to vote on your amendment, I would hope that it is defeated because the steering committee did what it did under your guidance.
Senator Miville-Dechêne: I would add that in the French and English versions of that particular paragraph, I don’t see anything that says that the vote of 6 to 6 referred to the report. The 6 to 6 vote refers to the fact that we would recommend that the Senate not proceed with the bill, which is the direct consequence — if I can just finish —
The Chair: I’m not saying anything. I’m listening to you, Senator Miville-Dechêne.
Senator Miville-Dechêne: Which is the direct consequence of defeating the bill. Because the bill was defeated in committee, the direct consequence is that we do not ask the Senate to continue the study of this bill. There’s absolutely no mistake there. We’re not saying at any point that it’s a 6 to 6 approval of the report. As you well pointed out, the report was adopted on division, which is a different matter altogether.
I think this is accurate. This may not be to the liking of some, but it’s accurate.
Senator McCoy: We haven’t really dealt with Senator Gagné’s point. I think the vote was in camera.
Senator Gagné: The discussion.
Senator McCoy: The clause-by-clause vote was not in camera?
Senator Gagné: No.
Senator McCoy: Then we have dealt with your point.
Senator Gagné: Pardon me?
Senator McCoy: I misunderstood your point.
Senator Gagné: The point is that the discussion around the changes to the report pertaining to the vote was discussed in camera.
Senator Dawson: We have witnesses here, and I think the committee is ready to vote. I propose we vote on Senator MacDonald’s amendment.
Senator MacDonald: I didn’t move an amendment.
The Chair: He raised a point of order, and I take his point of order as valid. That’s the way I rule.
Senator Dawson: When I read proposed language — I would think that is proposed language — that’s an amendment. Unless there’s something I don’t understand.
Anyway, let’s close this issue with a vote and then we can go back to the issue of the day, which is Bill C-97.
The Chair: What are we voting on?
Senator Dawson: On rejecting his proposal. He proposed language —
Senator MacDonald: I didn’t propose anything.
Senator Dawson: It’s written on here on the paper you sent us that spontaneously came out this morning.
The Chair: It’s not spontaneous. He has a right to do that, Senator Dawson.
Senator Dawson: I agree. He’s allowed to propose, and I’m allowed to reject.
The Chair: He raised a point of order, and I accept his point of order. Therefore, I don’t know what that means —
Senator Dawson: We wasted 20 minutes. That’s about it.
The Chair: We didn’t waste any time.
Senator Dawson: We’ve wasted six weeks so far.
Senator MacDonald: I raised the point of order because you have to raise a point of order as soon as you come into the committee. That’s why I raised it now. It’s not an amendment. I raised this point of order to identify this because I think it’s a mistake. I just wanted to get it on the record. We can vote on it if we want but it’s not an amendment.
The Chair: If I accept the point of order then I accept that it’s valid. Therefore, I accept your point of order as chair and, therefore, it is valid.
Senator Dawson: As a member of the committee, I propose we reject your ruling on it. I know as a member I’m allowed to do that.
The Chair: Yes, you can do that.
Senator Dawson: I propose that we reject the ruling.
The Chair: There’s a motion on the floor to reject the ruling of the chair. All in favour? Is there any debate?
Senator Manning: Can you just explain to me what exactly we’re doing? This is new. I’ve been around over 10 years here and I’m not sure exactly what’s happening here.
Senator MacDonald raised a point of order in relation to the report that was presented in the chamber yesterday. He disagrees with the wording. Just to make sure — correct me if I’m wrong.
So if he wanted to change the wording, is there any process where he could propose to change the wording? Do you know?
The Chair: It has to be done in the chamber.
Senator Manning: Can you move an amendment to a report?
The Chair: Yes, you can. In the chamber.
Senator Manning: That’s new to me. Okay. He raised a point of order with you. You ruled on the point of order.
The Chair: Yes, I think it’s a valid point.
Senator Manning: Senator Dawson disagrees.
Senator Dawson: I’m saying it’s not valid. I’d like the committee to vote on it, reject his opinion and hear from the witnesses, some of whom came from far away to be here today, on something that is as important as Senator MacDonald’s wording.
Senator MacDonald: It’s not my wording. It was included in the report. It’s not my wording.
The Chair: Shall the chair’s ruling be sustained? All those in favour of the chair’s ruling being sustained, which means you would agree with me. Do you want a recorded vote?
Senator Cormier: Can I ask a question? I just want to understand what it means. You raised a point of order and the chair accepted it. I just want to be sure I understand what we’re voting on here.
The Chair: If we sustain my ruling on the point of order, I will then move — I think I will anyway — a motion in the chamber with the support of the committee. That is what I would like to do in the chamber to change that particular reference.
Senator Gagné: Again, I’m going to repeat that the intentions around the wording was discussed in camera, so I can’t even discuss that in public because the intentions behind the wording were discussed in camera.
The Chair: Well, you know what the results are, Senator Gagné. Do you agree that’s what it says? Do the results reflect what was agreed to?
Senator Gagné: As it reads now?
The Chair: Yes.
Senator Gagné: It does.
The Chair: Really? We can go back to — We’re going to ask if the chair’s ruling be sustained. Do you want a recorded vote? I think it would be a lot simpler. Is that good? Let’s do it. We’ll do a recorded vote. Please proceed.
I, of course, vote for sustaining the chair’s motion.
Joëlle Nadeau, Clerk of the Committee: I just want to confirm two membership changes. I have Senator Busson for Senator Dasko and Senator Neufeld for Senator Plett.
The Honourable Senator Tkachuk?
Senator Tkachuk: Yes.
Ms. Nadeau: The Honourable Senator Boisvenu?
Senator Boisvenu: Yes.
Ms. Nadeau: The Honourable Senator Busson?
Senator Busson: No.
Ms. Nadeau: The Honourable Senator Cormier?
Senator Cormier: No.
Ms. Nadeau: The Honourable Senator Dawson?
Senator Dawson: No.
Ms. Nadeau: The Honourable Senator Gagné?
Senator Gagné: No.
Ms. Nadeau: The Honourable Senator Galvez?
Senator Galvez: No.
Ms. Nadeau: The Honourable Senator MacDonald?
Senator MacDonald: Yes.
Ms. Nadeau: The Honourable Senator Manning?
Senator Manning: Yes.
Ms. Nadeau: The Honourable Senator Miville-Dechêne?
Senator Miville-Dechêne: No.
Ms. Nadeau: The Honourable Senator Neufeld?
Senator Neufeld: Yes.
Ms. Nadeau: The Honourable Senator Simons?
Senator Simons: No.
Ms. Nadeau: Yeas, 5; nays, 7.
The Chair: So the ruling is not upheld. We will go on to the witnesses.
This morning we’re continuing our study of the subject matter of those elements contained in Divisions 11, 12, 13 and 14 of Part 4 and in Subdivision 1 of Division 9 of Part 4 of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures.
I apologize, panel, for the 20-minute wait. I think when I briefed you I mentioned that there may be something going on for 20 minutes. I think I’m right on the number.
We’re pleased to have appearing before us, from the Chamber of Marine Commerce, Bruce Burrows, President; from the Canadian Marine Pilots’ Association, Tristan K.-Laflamme, Executive Director and General Counsel; from the Corporation des pilotes du St-Laurent central, Alain Arseneault, President and Marine Pilot; from the British Columbia Coast Pilots Ltd., Roy Haakonson, President (Licensed Pilot). By video conference we have Michael Broad, President from the Shipping Federation of Canada. Welcome, and thank you for attending.
Michael Broad, President, Shipping Federation of Canada: Good morning. The Shipping Federation of Canada was established in 1903 by an act of Parliament to represent the interests of international shipping in Canada. We are a national trade association with offices in Montreal and Vancouver, and our members are the owners, operators and agents of ships trading between Canadian and overseas ports. Their ships operate in all four pilotage authority areas from coast to coast. Ships operating internationally shoulder, by far, most of the pilotage costs in Canada.
The existing Pilotage Act has remained largely frozen in time since 1972, despite changes in navigational technology, ship design and communications. We strongly believe that Bill C-97 will provide a solid basis from which to continue the much-needed task of modernizing pilotage service in this country. We therefore urge members of this committee to ensure these amendments are passed into law as soon as possible.
In Canada, pilotage services are mandatory and delivered under a legislated monopoly with a for-profit component. More specifically, under the existing Pilotage Act pilotage authorities are solely responsible for the administration of pilotage service, while pilots are responsible for delivering those services either as employees of the authorities or as for-profit corporations linked to the authorities on a contractual basis.
Before going any further, we wish to note that the existing act has served as an excellent tool for ensuring safe navigation in Canadian waters, and the bill’s proposed amendments in no way detract from this essential value of the pilotage system. Unfortunately, the present model lacks accountability, transparency, responsiveness to user needs, the pursuit of continuous improvement and cost competitiveness. As a result, the uptake of new technology has been less than optimal and the system has been unable to control costs.
In view of these concerns, we are pleased to note that the amendments in the Pilotage Act proposed under Bill C-97 will provide a number of important tools for addressing the above-noted issues and modernizing the delivery of pilotage services in Canada.
One of the key tools provided under Bill C-97 is the addition of an explicit purpose and principles clause, which will directly shape how pilotage service is delivered and how legislative, administrative and judicial powers are exercised. Given the important role this clause will play in the way service is delivered and enforced, we have proposed a handful of amendments, in the form of additional wording, to strengthen the framework Bill C-97 provides. These amendments can be found in our written submission.
To further strengthen the implementation of the act, we also respectfully request the committee to consider providing comments to ensure Transport Canada continues to work towards greater transparency and accountability from pilot corporations, given their status as legally imposed monopoly service providers.
We have several other requests of the committee, in no specific order: First, to ensure the Government of Canada provides Transport Canada with the resources to develop regulations previously under the purview of pilotage authorities; and, second, as the regulatory framework is consolidated under Transport Canada, ensure pilotage authorities are provided with the necessary management tools, particularly in their dealings with pilots.
Finally, there is one element of Division 11 to which we object, and that is the transfer of the full costs of administering the legislation from Transport Canada to the private sector. We are unaware of any other activity-specific legislation that would allow the minister to pass on these costs to industry. In addition, it would seem that any cost recovery initiative should be subject to the Service Fees Act, which comes with its own set of guidelines and standards. This proposal also fails to acknowledge the “public good” component involved in legislating pilotage services in Canada.
Let me take a minute to summarize our requests. We strongly support the amended pilotage framework proposed under Division 11 of Bill C-97 and urge the committee to ensure that it is passed into law as soon as possible. In doing so, we are asking you to consider one set of very targeted amendments to the purpose and principles clause, which will further strengthen the framework from a user’s perspective without detracting from its essence.
Finally, we ask the committee to consider the removal of the extraneous clause with respect to the transfer of Transport Canada’s administration costs, which goes beyond mandatory pilotage and, in our opinion, differs from government-wide policies.
We thank the committee for the opportunity to comment and I look forward to answering any questions you may have.
The Chair: Thank you.
[Translation]
Bruce Burrows, President, Chamber of Maritime Commerce: :
Good morning, honourable senators.
[English]
Thank you, Mr. Chair and honourable senators, for the invitation to appear before this committee.
[Translation]
I am Bruce Burrows, President of the new Chamber of Maritime Commerce, or CMC.
[English]
I suspect many of you are now familiar with the CMC, so I will be brief in explaining who we are. We are speaking to you today in particular on behalf of the Canadian shipowner members and the shipper users of the chamber. More broadly, the chamber is a coalition of over 130 stakeholders in the marine sector, also bringing together ports, terminal operators and others in the logistics supply chain on both sides of the border.
On today’s subject matter, I can’t stress how fundamentally important these reforms are to Canada’s pilotage system. The Pilotage Act hasn’t seen a major overhaul since the 1970s, and it shows. After 45 years, we are finally seeing changes in Bill C-97 that will set out a framework to encourage greater objectivity, transparency, consistency and, we hope, impartial decision-making. All of these are essential elements to good governance, which has been lacking in today’s monopoly pilotage system.
The Pilotage Act will now have clear purposes and principles to guide decision making and pilotage services, and they are to be provided in an efficient and cost-effective manner. Use of evolving technology and sound risk management are also brought to the forefront.
In addition, it’s important for us to note the following critical changes: Separating regulatory authority from the delivery of pilotage services; transferring responsibilities for regulating and issuing pilotage certificates from the authorities to Transport Canada; giving Transport Canada regulatory responsibility for risk assessments and for the establishment of compulsory pilotage areas; ensuring service contracts can’t be used to address regulatory matters, circumventing the regulatory process; and finally, requiring that service contracts be made publicly available.
These are all key to ensuring objectivity in decision-making and avoiding potential areas of conflict, and to ensure that services are provided with efficiency and cost effectiveness in mind.
To build on the cost-effectiveness aspect, we are keen to work with Transport Canada on the development of a national certification system that promotes on-board training and certification of a company’s masters and officers to pilot their own vessels — similar to what we already have on the Great Lakes, where it works very well. Pilotage is all about ensuring safety, and we believe that building on the system in place in the Great Lakes will only improve the safety of navigation. Our certificated masters and mates have an excellent safety record.
While these changes are positive, we do note that one issue was not included for reform in the bill. Pilotage authorities still will not have the full control over service delivery. Authorities do not have the ability to choose the hiring model that meets their needs, often locking them into costly contracts with monopoly pilot corporations instead of being able to hire employee pilots or contract with individual pilots.
This lack of flexibility will hamper pilotage authorities from being able to choose the service delivery model that is right for them and one that will result in higher charges for their customers, while at the same time not providing any service improvements.
I know there will be a 10-year review of the act should this pass, and we will continue to seek this reform in future reviews. We are cautiously optimistic at this point. While a great suite of reforms has been proposed per this division, passing Bill C-97 is half the battle in reforming Canada’s pilotage system. The heavy lifting to reform the system will now take place, hopefully, in the transition of the regulatory framework in supporting policies and programs from the pilotage authorities to Transport Canada.
The updated system must take the clear direction provided by this bill and that provided by the Pilotage Act review report and apply it based on the new purpose and principles contained in this act.
Once again, thank you for the invitation to appear, and I’d be more than happy to answer questions.
Tristan K.-Laflamme, Executive Director and General Counsel, Canadian Marine Pilots’ Association: Good morning, Mr. Chair and members of the committee.
Our association represents Canada’s licensed pilots, from St. John’s to Victoria.
For many Canadians, pilotage is a well-kept secret. The general population is largely unaware that, every hour of the day, every day, local marine pilots climb aboard commercial vessels to safely conduct them through areas that have been designated as compulsory pilotage areas. They do so because of the navigational risks that exist.
Pilots are the most senior mariners on the planet. They typically have years of experience as ship captain before starting the process to become a pilot. That process is rigorous, and it typically takes years before a pilot is allowed to conduct the largest vessels transiting the specific parts of the waterway for which he or she is licensed. Pilots are licensed by the federal government and are dispatched under the government’s authority so as to ensure, first and foremost, safe navigation.
[Translation]
Although this profession plays a key role in the welfare of all Canadians, they are, as I mentioned, often not aware that it exists. The reason is simple: pilots do their work well. About 50,000 pilotage assignments take place each year, and each year, the record of safety is more than 99.9 per cent.
[English]
Pilotage exists to protect the public interest. The best way to achieve this is to make sure pilots operate in an environment that allows them to exercise professional judgment without undue external pressure with safety as the first consideration.
Canada’s pilotage system has been highly effective because its foundation is rock solid. I’m glad to say that the amendments proposed to the Pilotage Act respect this strong foundation. These amendments are the result of a long process of deliberation and, in our view, they reflect great balance between the interests of various marine stakeholders. They reflect accommodation made by all parties, with each party able to see their interests represented in the result. Because of this, we are not suggesting changes to the proposed legislation. We think other parties should also respect the integrity of the proposed amendments.
The amendments can enhance safety and efficiency.
[Translation]
They make up a whole that cannot easily be amended without also disturbing the balance that has been achieved.
[English]
In closing, one outcome of the Pilotage Act review that is most gratifying is the clear conclusion reached in the independent studies commissioned by Transport Canada that Canada’s system performs remarkably well, not only in terms of delivering safe navigation but also in supporting the country’s international trade — for example, by bringing our natural resources to market in a manner that reflects the preoccupation of Canadians for practices that protect the environment.
Thank you.
[Translation]
Alain Arseneault, President and Marine Pilot, Corporation des pilotes du St-Laurent central: Senator Tkachuk and honourable members of the committee, the Corporation des pilotes du Saint-Laurent central brings together the pilots on the St. Lawrence between Quebec City and Montreal, including the port of Montreal. With 112 pilots and 14 apprentice pilots currently enrolled in the rigorous 24-month training program that the corporation provides, we have one of the largest memberships in the country. I personally am a pilot between Trois-Rivières and Montreal, and Vice-President, Laurentian Region, of the Canadian Marine Pilots Association. I also chair its committee on research, innovation and pilotage techniques. I therefore invite you to ask questions on those subjects specifically.
During the review of the Pilotage Act, there was a lot of talk about the costs of and need for a piloting system in terms of Canada’s economic competitiveness. So let’s look at the facts.
In the last five years, the consumer price index has increased by 12 per cent. In that time, pilotage fees on the St. Lawrence have increased by only 8 per cent.
In the same period, the volume of cargo in the Port of Montreal increased by 28 per cent, reaching 39 million metric tonnes in 2018. This is the fifth consecutive record year. In those five years, there were approximately 110,000 pilotage assignments on the St. Lawrence River, with no significant incidents; 99.8 per cent of those assignments took place with no delay attributable to the pilots. This is against the concurrent backdrop of ever-increasing average vessel size. Between 2007 and 2017, the size of the vessels between Quebec City and Montreal increased by 45 per cent.
In Canada, pilotage is a judicious and essential investment. In a context where shipowners pass their costs on to consumers, pilotage costs about $6 per year per Canadian consumer. A cost-benefit analysis of pilotage showed that the return on that investment is about $120 per year per Canadian.
St. Lawrence pilots welcome the amendments to the act. The proposed compliance regime offers the promise of greater impartiality in decision-making and more systematic enforcement of the act.
Another very interesting question is the emphasis on technology. This is already a major strength of the system. Canadian pilots are recognized internationally for their leadership in navigation electronics and innovative pilotage technologies. On the St. Lawrence, we played a key role in the establishment of initiatives allowing safe transit of ever-larger vessels in situations that could not have been foreseen only a few years ago, such as two-way night-time traffic into Montreal in the winter.
These successes can be attributed to our expertise in rigorous risk analysis studies, comparative analysis, and simulator trials, as well as to our consultations with government bodies and users. We also welcome the fact that the Pilotage Act, 2019, recognizes the environmental concerns of Canadians.
On the St. Lawrence, the complexity of local issues such as winter navigation, high tides, ever-present shallows, the narrowness of some sectors in relation to the size of the vessels, traffic density, and the proximity of riverfront properties, require a very high level of knowledge of local waters.
The act maintains a rigorous approach, with the result that those navigating commercial vessels demonstrate great skill. This is true not only for the pilots, but also for the captains of Canadian vessels who want to obtain a certificate allowing them to pilot their own vessels.
On that point, contrary to what some have suggested, a certification program for pilots on the St. Lawrence already exists. The program has been updated over the years to make it more accessible. However, it is important to remember that the program includes a requirement for a command of French, since communications on the river are mainly done in French. This requirement exists to serve the public interest, not the interests of the pilots and the industry.
This is our raison d’être. We are independent experts, mandated by the government to ensure that the public interest is predominant on the waters of our river. The act reaffirms that responsibility and we humbly accept it.
Thank you.
[English]
Roy Haakonson, President (Licensed Pilot), British Columbia Coast Pilots Ltd.: We are honoured to be here today. Thanks again for allowing us to represent the British Columbia Coast Pilots Ltd.
B.C. Coast Pilots have been protecting our coasts since the mid-1800s by supplying unbiased, independent expertise on behalf of the government and the people of Canada to foreign shipping. British Columbia is home to one of the most pristine and ecologically sensitive marine habitats in North America, but it is also the country’s largest economic portal.
As Canada moves towards modernizing the Pilotage Act, pilots strongly support the introduction into the act of a clearly defined statement of purpose and principles. This addition to the act declares that navigational, public and environmental safety be at all times the primary focus, not only when it is deemed adequate or practical. There is no value in a strongly worded economic policy if the public and First Nations do not trust the government or industry in protecting their inheritance. These are the basic principles that all Canadians live by.
The proposed purpose clause will clearly show that the government recognizes that the pilotage system must ensure the highest standards of public and environmental protection. This is especially important at a time of great public concern about safe navigation and the marine environment, especially with the proposals to significantly increase tanker traffic on the West Coast.
The public grows steadily more risk averse. The Pilotage Act has undergone an extensive two-and-half-year review. There are some interests, however, that continue to press for deregulation and reducing costs above safety in statements that are not always grounded in fact.
In closing, through the review process the pilots have repeatedly emphasized the need to refer to the independent Transport Canada studies which state:
In 2016, total pilotage costs at the Port of Vancouver amounted to 0.018 percent of the value of their maritime trade.
The report clearly stated that pilotage does not negatively affect Canada’s competitiveness, and further analysis of the benefits of pilotage indicates that it contributes to competitiveness by helping Vancouver and Prince Rupert increase their share of container volumes over U.S. ports like Seattle and Tacoma. The economic well-being of Canada relies on a strong, safe and secure pilotage.
The British Columbia Coast Pilots support the amendments as they uphold the safety and independence of pilotage. This is critical to ensuring a safe western trade corridor. The economic well-being of Canadians demands a safe, secure, environmentally responsible pilotage. It must also be innovative, both socially and economically.
I am glad to say that under the modernized act, if enacted, Canadians can continue to expect benefits from exactly this type of system.
Thank you, honourable senators.
The Chair: Thank you, Mr. Haakonson.
[Translation]
Senator Gagné: My question goes to Mr. Burrows and Mr. Laflamme. I will start with Mr. Burrows. I will ask the same question, but I would like you both to comment. Mr. Arseneault, if you want to join in the discussion, it would be much appreciated.
The Chamber of Maritime Commerce has stated that one of the most significant changes in Bill C-97 is to allow Canadian crews, and I quote:
that have similar knowledge and expertise as pilots…to navigate their own ships in compulsory pilotage areas.
I would like your comments about that. Mr. Burrows, what are the repercussions on the maritime transportation industry in allowing those with knowledge and experience comparable to pilots to pilot their own vessels in compulsory pilotage areas?
Mr. Burrows: If I may, I will answer in English.
[English]
I will review the system as it works today. We essentially have mandatory pilotage in almost all of the St. Lawrence and Great Lakes region. We have, in referring to this, a very robust certification system in the Great Lakes. Most of our “piloting” is done with certified captains and masters who know their ships and have years of experience and local knowledge. The system works well. The professionally piloted ships, particularly international ships, also have a safe system, let me be clear. If you look at the Transport Safety Board statistics, it is just as good if not an even safer system with certified pilots. We are very keen.
As the report by Marc Grégoire and this proposed legislation acknowledges, we are keen to see that certification system expanded. It would be very good for the system. It would bring even more cost containment and cost efficiency to our system to allow continued competitiveness.
[Translation]
Mr. K.-Laflamme: First, pilotage exists to serve the interests of the public, not of the industry or the pilots. In terms of the industry in Canada, the legislation is flexible and allows officers working on Canadian vessels to work without a pilot — and these are the terms used in the next version of the bill if it is passed — if the officers in question show that they have a degree of…knowledge…similar to that required of a pilot. The goal is to provide the public with a higher level of assurance, that the people having the conduct of commercial vessels on Canadian shipping routes are duly qualified and have an appropriate knowledge of local circumstances. So that is the point of reference. They must have knowledge of local waters.
However, a certification system is in place on the Great Lakes and the St. Lawrence. As Mr. Arseneault mentioned, requirements do not always come from industry representatives. On the St. Lawrence, one must demonstrate a knowledge of French. That’s not just our preference. It is because traffic on the St. Lawrence navigates in French. Just as it would be astonishing to have a unilingual francophone as a pilot on board tankers in the Port of Vancouver, a command of French is part of the local knowledge on the St. Lawrence. My industry colleague did not mention in his brief that, during the review of the legislation, he suggested abolishing that requirement. Clearly, we have a different point of view.
Senator Gagné: Thank you. Mr. Arseneault?
Mr. Arseneault: Thank you for the question, Senator Gagné. Actually, our colleague Mr. Burrows is perhaps forgetting to say that the system that ship owners would like to see as the basis of the certification system — and would be their common denominator — has unfortunately been described as “deficient” by the Auditor General of Canada on two occasions. It’s a system on the Canadian Great Lakes that comes from a grandfathering system, an exemption from pilotage; it is not a certification system.
Over the last five years, we have seen a significant decline in the number of certificates issued, since the Great Lakes Pilotage Authority had to increase the level of the certification exam. Unfortunately, on the St. Lawrence, we would be extremely concerned to see a certification system replaced by a system that the Auditor General has described as “deficient”.
Senator Gagné: Thank you.
Senator Cormier: My question follows on from Senator Gagné’s. You answered the question about the use of the French language. Transport Canada has to comply with the Official Languages Act. The department must comply with its obligations and the status of the French language on the river. My question is for Mr. Arseneault and deals with research, innovation, and pilotage techniques. At the moment, what are your issues in ensuring that pilotage techniques are current, given the innovations and the new technologies, and the fact that you presently have 14 apprentice pilots?
Mr. Arseneault: Thank you for the question, Senator Cormier. Yes, new technologies in all means of transportation — as we have seen in aviation with the problems with Boeing — must indeed be mastered by the experts who operate them and will be using them appropriately. That is what we have been doing on the St. Lawrence for a number of years. Of course, all the trends in autonomous navigation, as we see in automobiles and aviation, are tools that help with decision-making. Possibly, some equipment could replace a human presence on board a ship, an aircraft, or an automobile in the near future. As experts, we must be sure, in terms of navigation on the St. Lawrence River and in Canada, that the new technologies are used to improve not only the efficiency of the traffic, but also safety. At least, we must ensure a level of safety that the public accepts. In that light, Canadian pilots are recognized internationally for their spirit of innovation because they specifically have introduced new equipment to help with decisions and that helps us every day to improve the effectiveness and efficiency of transportation and the fluidity of traffic on the St. Lawrence River. I don’t know if that answers your question properly.
Senator Cormier: Is the language issue a factor in terms of integrating new technologies?
Mr. Arseneault: For the most part, the new technologies and software available to us can be used in French and in most languages internationally. At the moment, in terms of new technologies, language is not an issue.
Senator Dawson: I have been following the topics of the St. Lawrence pilots and the St. Lawrence River for a long time. Rarely have I seen —
[English]
— if this level of disagreement between both sides is as hard it gets, I’m satisfied we can have a good compromise. As you can see, we can have acrimonious debates here that are not as well controlled.
That being said, there is one thing I would like “both sides” to comment on: the 10-year review. With the progress in technology and the changes in the size of ships, is 10 years too much or should it be a smaller number? It’s not that we will be changing it, and I know you negotiated this and it took you a long time to get to this agreement, but why 10 years?
Mr. K.-Laflamme: I think 10 years strikes the right balance on that particular question. First, to get where we are today, if we count the Canada Transportation Act review panel, took us about four years. We have been through a lot of discussion already about pilotage.
There is also a lot of work to be done over the next few years in terms of reviewing regulations across the country. That is likely to take at least a couple of years before being in a position to evaluate the impact of this development. Therefore, the perspective of reviewing the act a few years thereafter makes sense.
Mr. Burrows: I would also reiterate the same comments from Mr. Laflamme. Ideally, a five-year review sounds better. We had initially preferred a five-year review but, as my colleague points out accurately, the lead time required and the amount of regulatory review we have to do, before that work is finished — or maybe not before — in five years, we would be into another review. That does not make a lot of sense. Thereafter, though, after 10 years another review at 5 years would work but, for the time being, I would support 10 years.
Senator Galvez: I’m happy to have the testimony of our witnesses. I think we should have heard you during our study of Bill C-48. I don’t understand why you were not invited during those hearings. We heard Mr. Burrows only.
It is extremely important that the pilots know the waters, the geography and the landscape. It is so important.
Mr. Laflamme, you mentioned issues with tankers and ships are becoming bigger and bigger. Is there a limit to the size of these tankers? There is also the fact that we have very strong weather events — the storms. We have been to British Columbia and Newfoundland, and we have heard about icebergs moving and the very strong storms. I’m happy to see this new focus on environment and security, but I want to hear your opinion, because you are pilots. What are the changes, the risks and your issues with respect to the changes we are seeing?
Mr. Haakonson: Something we deal with every day, senator, out West, is vessel size. For the most part, waterways remain relatively the same but with ship size, we are seeing an explosion on the West Coast.
Technology is a day-to-day innovation for pilots, the same as it is for the aviation industry. We are now navigating ultra-large cruise vessels under the Lions Gate Bridge that exceed air draft limits by electronic navigation. We also now have innovation with berthing velocities and approach angles. Again, with the size of vessels we are seeing, it is getting beyond the human eye’s ability to judge speed. When something is 1,000 feet ahead of you, you can’t tell whether you are at 5 metres per second or 10 metres per second. Again, the pilot’s PPU is a day-to-day event.
One thing that is never mentioned is that for the last 10 years out West, the ports — U.S., Canadian or European ports — are struggling to the keep up with the advancement in ship size. The pilots have continued traffic going into the Port of Vancouver and the Port of Prince Rupert over and above the ability of the terminals to sustain the loads required upon them. This has allowed the ports critical breathing room to try and catch up. We are now moving 366-metre, ultra-large container vessels. We are preparing for 400s.
The ports are still trying to catch up, but the pilots, through technology and innovation, have allowed the ports and Canada to grab their breath and start planning for this explosion. Our history with shipping is that we get up to six weeks’ notice that a ship has doubled in size. In a port like Prince Rupert, even with the new terminals, we are talking 366s to 400s — a pair of them going in at the same time or one coming off.
When you talk technology, it’s a day-to-day for pilots. It would be incorrect to think that the marine pilot is any different from the aviation pilot.
Mr. Burrows: Just to pick up on your point, senator, from a Great Lakes and St. Lawrence perspective, there are natural restrictions because of lock size and so on in terms of oil or oil products that are moved right up into the lakes.
A key testament to our success in protecting the environment is the decline in the number and magnitude of oil spills. The world has really changed upside down since the 1970s. Given the changes now and the design the ships — double hulling and a whole range of restrictions and changes to the carriage of oil — all is governed by the International Maritime Organization in London, which is the UN agency. Even while the carriage of oil has doubled, the number of incidents is down tenfold. In fact, a recent study confirmed that, compared to pipelines and rail, marine tanker transport is found to result in the fewest number of accidents per million barrels of oil. That really is the mode of choice today in terms of moving oil products.
Senator Busson: My question is for Captain Haakonson. On the West Coast there was talk about mandatory pilotage zones. Is the whole coast covered by the mandatory pilotage zone requirement?
Mr. Haakonson: Yes, it is. On the West Coast, it’s compulsory pilotage from the Washington State border to the Alaska State border. Seaward up Vancouver Island and the Queen Charlottes or Haida Gwaii is not as much as we would like to see, but three to twelve miles offshore. The inshore waters are all compulsory pilotage.
Senator Busson: Who enforces whether there is a pilot or if a sea captain has a classification or certification that they can pilot their own ship? Who decides and enforces that decision in certification?
Mr. Haakonson: At present, it would be the Pacific Pilotage Authority.
Senator Busson: They do the policing on how, who and when?
Mr. Haakonson: In British Columbia, I have no knowledge of a vessel coming into compulsory pilotage water that requires a pilot that does not take a pilot.
Senator McCoy: Thank you for being here. It is a delight to have everyone in support of a bill.
I still have some concerns. I have been following this, although not as long as some senators. The entire marine management system, I suppose, in Canada is rapidly changing, all at the last minute of a government’s mandate. One begins to pay attention to these matters to see how it all works.
One of things that you are suggesting will happen is consistency. I recall someone saying that the pilots in Placentia Bay actually accompany the ships 23 kilometres out to sea. You’re saying that on the West Coast it’s 12 kilometres.
Mr. Haakonson: Up to 12.
Senator McCoy: Up to. I’m sure there are some very good marine management reasons for that, probably based on local knowledge. I am concerned that if you centralize the regulation-making power — that would be a regulation — that we will endure this tendency of policy-makers in Ottawa having one-size-fits-all. To me, that is seemingly inconceivable. I cannot quite compare Placentia Bay and St. Lawrence and Prince Rupert.
Can you explain why you think there will be consistency?
Mr. Haakonson: Senator, in regard to the compulsory pilotage offshore, that’s a good question. The pilots have boarding stations presently on the west coast of Prince Rupert, the top of Vancouver Island at Port Hardy or Pine Island, on the west coast off of Cape Beale at Port Alberni inlet and again at Victoria.
I think in our discussions with the authority over expanding the district was the ability to serve the district. Our district goes from border to border. It’s a fairly large district with designated boarding stations. We would be more comfortable with the advent of helicopter transfer, which we do on the north coast. We discussed that with the advent of helicopter pilot transfers, was there now a need to review pushing out the pilotage districts on the B.C. coast?
There’s also a concern with the First Nations, particularly the Haida, with some sort of an exclusion zone on the West Coast. These are two issues that are being actively discussed now.
I think for pilots, if you were to expand the compulsory district, we need the ability to access the limit. If we were to say 12 miles off the Haida Gwaii, we would need a process set up so we could service that 12 miles.
Senator McCoy: So you’re saying you’d take a smaller boat out with the ship, or to meet a ship?
Mr. Haakonson: Presently that’s what we do.
Senator McCoy: And if you went further than 12 miles, you would need a larger ship?
Mr. Haakonson: You would either need a larger offshore vessel or a helicopter.
Senator McCoy: I see. I believe I’m right that when you say the four pilotage authorities are going to be made one and they will basically be run by the minister, which is a form of politicization, and he presumably is going to delegate to somebody in his department. How will that person, who is now in charge of all of Canada, know that it should be 12 kilometres on the West Coast and 23 at Placentia?
Mr. K.-Laflamme: Just to be clear, the four pilotage authorities will not be made one. It’s really just the regulation making that is centralized back to Ottawa.
I have a couple of thoughts on that issue. You’re right, madam senator, pilotage is local by nature. One size clearly cannot fit all from Placentia Bay to Vancouver. Fortunately, the process leading to decisions is based on an analysis of risk tailored to local circumstances, so a case-by-case process. With the suggestion to consolidate the regulation-making power in Transport Canada, we are concerned that there is a need to maintain strong regional voices at that table so local circumstances are heard. I think Transport Canada officials are aware of that and they’ve shown good faith so far in accommodating this concern moving forward.
Perhaps as a last thought, there is already a blueprint, and we should remember that. There are general pilotage regulations that are already administered out of Transport Canada. Those set a certain number of general requirements applicable to all regions, but also have the flexibility of having regional chapters that put forward local requirements adapted to the requirements of each region.
Mr. Burrows: Just to give the senator some reassurance on this point, Transport Canada has ample experience in administering national regulations on a regional basis. The pilots may not be aware, but under the Canada Shipping Act, for example, there are over seven examples of various regulations that are standardized nationally but that all accommodate and have local components. This can easily be managed. I’m not concerned at all, quite frankly.
Senator McCoy: The chair is not wanting me to ask one simple question.
The Chair: Is it a simple one? Go ahead, Senator McCoy.
Senator McCoy: I recently read the accident reports for two spills on the northern B.C. coast. One was the B.C. ferry, the Queen of the North, and the other was a tug, the Nathan E. Stewart. Neither of them had a pilot aboard, yet it’s a mandatory pilotage area.
Mr. Haakonson: That’s a good question. Nathan E. Stewart is still on the front burner of the stove out west, senator. The Heiltsuk Nation has a lot of questions that are yet to be answered. You are correct, the Nathan E. Stewart was not under compulsory pilotage. It was a U.S. articulated tug and barge unit that grounded and spilled oil up in the Seaforth Channel.
I think one of the issues with the amendments is certificates and waivers, which are two separate issues. A waiver is granted to a crew or certificated officer to operate the vessel by the authority. I think it shows weakness in the present system. With the new amendments, certificates and waivers are again on the front end to be dealt with. I hope — and we have had assurances — is that it will become a more robust system.
The present system that the Nathan E. Stewart was working under dated back to the early 1970s. What was appropriate in the 1970s certainly is not appropriate in 2019.
The Chair: With that, thank you to the witnesses. Thank you, senators.
For our second panel this morning, we are pleased to have appearing before us from the National Airlines Council of Canada, Massimo Bergamini, President and Chief Executive Officer; from the Canadian Airports Council, Daniel-Robert Gooch, President; from Hope Air, Doug Keller-Hobson, Chief Executive Officer; from Air Transport Association of Canada, John McKenna, President and Chief Executive Officer; and from NAV Canada, Andrew Norgaard, Vice President of Communications. Thank you for attending.
Massimo Bergamini, President and Chief Executive Officer, National Airlines Council of Canada: Good morning, chair, and members of the committee. My name is Massimo Bergamini. I am president and CEO of the National Airlines Council of Canada. I want to thank you for the opportunity to speak on Bill C-97 as it relates to the security screening services commercialization act, which enables the transfer of security screening from CATSA to an independent, not-for-profit entity.
[Translation]
The National Airlines Council of Canada represents Canada’s four largest airlines: Air Canada, Air Transat, WestJet and Jazz Aviation. In assessing this bill, it is instructive to remember that, when CATSA was created in 2002, it replaced a non-profit, independent entity, the air transport security corporation, itself created just five years earlier. That alone should disabuse us of the notion that the transfer of screening functions from a Crown corporation to a nonprofit corporation alone will address the delays and other problems that travellers face each day. There is no magic bullet.
This is why it is important to drill down into this process, avoid arbitrary deadlines, and get it right.
[English]
Yet here we are, five months before a general election, with the government expecting the whole process to be signed, sealed and delivered by April 1, 2020. Let there be no mistake: Any suggestion that this process mirrors the successful transfer of air traffic control functions to NAV Canada in 1996 is disingenuous.
It may be true that the Civil Air Navigation Services Commercialization Act that created NAV Canada was also embedded in the enabling legislation for Budget 1996, but the similarities end there. The success of the NAV Canada model was the result of almost two years of tough negotiations, with almost weekly meetings where everything was on the table. The legislation that transferred air traffic control to NAV Canada followed and enshrined the outcome of those negotiations.
The bill we have in front of us today, on the other hand, sets the terms for the transfer of airport security screening functions before any due diligence or negotiations have taken place.
In 2017, when Transport Canada surveyed industry stakeholders on governance and business model options for CATSA, our industry supported in principle the transfer of its functions to a not-for-profit entity. We did so with a number of questions and caveats, which remain today. These concerns are not administrative in nature, as they relate to budget and fiscal framework considerations. This means that the answers will be found at the cabinet table, not at the negotiating table. This is why we are here to propose amendments to the bill.
We recognize that it would be unrealistic to expect to resolve all of our outstanding issues and concerns in this manner, but we believe that there are two that all parties can rally behind. Both aim to protect air travellers’ pocketbooks.
The first amendment would repeal the Air Travellers Security Charge once the new screening authority is operational and can set its own charges and collect its fees. As you know, the ATSC fees are now collected by airlines directly from air travellers and are remitted to the Government of Canada as general revenues. While the ATSC was intended to fund airport security screening, between 2010 and 2017 it generated a windfall of hundreds of millions of dollars for the Government of Canada. Canada is already one of the highest cost jurisdictions in the world for air travel. We do not want the ATSC to remain on the books as a legacy tax hidden behind a glass window with the inscription, “Break glass in case of fiscal shortfall.” Air travellers do not need more federal incursions into their pocketbooks.
The second amendment is designed to provide compensation to the new screening authority for additional costs in the event of ministerial security-related directives. It is well understood that real and potential security threats can cause the imposition of new screening requirements, resulting in additional costs. CATSA itself was created in response to such an event.
This amendment, which closely mirrors a disposition found in the legislation that transferred air traffic control functions to NAV Canada in 1996 would protect travellers and other system users from shouldering the burden of airport security alone.
Given the nature of the bill, we recognize that any successful amendments must be introduced by the government. This is why we have written to Minister Garneau and Minister Morneau, urging them to protect air travellers by amending the legislation. This is why we urge you to support these amendments in your report. Thank you.
Daniel-Robert Gooch, President, Canadian Airports Council: Honourable senators, on behalf of the Canadian Airports Council and our 54 members that represent 90 per cent of the commercial aviation traffic in Canada, thank you for the opportunity to appear today in support of the security screening services commercialization act contained in Bill C-97, the Budget Implementation Act, 2019.
Canadian airports are pleased with the direction government has chosen to take for the future governance model of aviation security screening services in Canada. The private, not-for-profit delivery of services to air travellers is part of the Canadian model that has proven very successful.
With this proposed transfer of security screening services out of government and into a new private, not-for-profit entity, Transport Canada would continue to maintain regulatory and oversight responsibilities for aviation security in Canada. However, the operational responsibility for this critical part of the air traveller experience will be transferred to a new organization whose mandate will be aviation security screening, delivered more efficiently, effectively and with leading standards of professionalism.
In 1996, Transport Canada made similar moves to commercialize air traffic control by forming NAV Canada. Today, NAV Canada is a respected world leader in its field and its 23-year history has brought an entrepreneurial spirit and greater operational vigour to air traffic control, removing taxpayer responsibility for funding the system and ultimately lowering costs to users.
The proposed model for a new CATSA also mirrors the transfer of 21 of Canada’s major airports to local, private, non-share capital corporations with mandates to serve users, including air travellers, our shared travellers and other stakeholders in the community. As with air traffic control, airports are independent, operate without shareholders and are fully responsible for covering the cost of operations and capital investment.
The government is proposing a very aggressive timeline for the transfer of CATSA to this new model, with the stated goal of having the new organization up and running within a year. As airports, we are ready to engage with our air carrier partners and government towards this ambitious goal, but we will also be taking the time to get this right. We are building something important here; too important to be rushed. We will not cut corners.
The need for a model change for CATSA is by no means a comment on the hard-working team of professionals who work there. Rather, the organization’s structure and funding as a Crown corporation is simply not responsive to the demands of a fast-growing air transport sector and the millions of additional travellers passing through Canada’s airports each ear.
Security screening of passengers, employees and their possessions is an essential service for commercial aviation today, but while Canada’s airports have confidence in the security value being delivered by CATSA screeners and equipment, we are relying on annual appropriations to fund a service air travellers are already paying for through the Air Travellers Security Charge. This simply does not work in a fast-growing, volume-based business centred on the care and comfort of human beings.
Moreover, this model significantly impedes CATSA’s ability to plan long-term and make investments in innovations that can deliver improvements in both security outcomes and the passenger experience. As such, the organization has not been able to deliver service levels that are globally competitive and acceptable to the industry and our air travellers, nor does it have the prospect of being able to, as long as it’s structured the way it is today.
This frustrates travellers, industry and government alike, which is why Canada’s airports have worked with our air carrier partners for several years through an industry-led screening working group in a bid to improve the service for travellers.
The culmination of this work between the CAC and Canada’s two largest air carriers was a recommendation for the creation and delivery of internationally competitive service level standards for screening that would see 95 per cent of passengers being processed through high-volume checkpoints in under 10 minutes, with no passengers waiting more than 20 minutes.
Having worked for years to convince the government of the need to reform CATSA, Canada’s airports were pleased to see the commitments made in Budget 2019 to transition CATSA to a not-for-profit entity using the non-share capital corporate model developed to transfer NAV Canada and National Airports System (NAS) airports. It is with the memory of these earlier endeavours in air traffic control and airport management, and a shared conviction that we can do so much better for travellers, that Canada’s airports seek to work together with air carriers and the federal government to transition CATSA into a new, more innovative, accountable and responsive organization that serves the needs of travellers with a motivated team of professionals who understand that high security and professional service are not mutually exclusive but, rather, go hand-in-hand.
Though supportive of the security screening services commercialization act, we would like to see greater clarity provided in clause 26(1)(d), which states:
(d) that charges may be used only to recover costs for security screening services . . . .
The CAC and our members have concerns that this language is too restrictive and may preclude the new designated screening authority from being innovative and entrepreneurial in the execution of its mandate. It may also prevent the new entity from accessing preferable rates to raise capital on the financial markets.
We do not believe that the provision of greater clarity in this charging principle would alter the original intent of the legislation. Rather, it would provide greater certainty to this new entity, regulators and the financial markets in years to come.
We also agree with our air carrier colleagues on the need for a financial backstop to protect the DSA against regulatory changes that create cost shocks to the system.
Thank you for your time this morning. It’s my pleasure to take any questions you may have.
Doug Keller-Hobson, Chief Executive Officer, Hope Air: Thank you and good morning. I appreciate the opportunity to appear before this committee today and to share with you our proposal for a very specific legislative change that would improve access to health care services for low-income Canadians.
Hope Air is the only registered charity in Canada providing free flights for those who are in financial need and must travel long distances to reach specialist medical care. Hope Air helps low-income Canadians of all ages who are suffering from a wide range of illnesses.
Hope Air is not an airline. Rather, we are a lifeline for many fellow Canadians who need to access the advanced medical technology and specialists that are typically available only in larger urban centres across our country.
Since its founding in 1986, Hope Air has arranged over 142,000 free travel arrangements for low-income Canadians, including over 11,500 arrangements last year. Without the assistance of this charity service, many patients say they would have to cancel or delay important treatment.
Our proposed amendment is to clause 24(2) in the new security screening services commercialization act contained in Bill C-97. Our proposed amendment would provide an exemption from the imposition of charges under the new security screening services if a person has been issued a ticket for no consideration by a registered charity and that person is travelling to a medical appointment authorized by their provincially funded health program.
Why is this amendment necessary? A primary objective of Canadian health care policy, as spelled out in the Canada Health Act, is:
. . . to facilitate reasonable access to health services without financial or other barriers.
However, in a country as vast as Canada, physical access to core health care services can require overcoming the barriers of distance and/or the cost of travel. Fellow Canadians face enormous challenges accessing specialist health care treatment because of where they live and their financial situations. They frequently face long-distance travel to get to their medical appointments at their own expense and, in winter, risk dangerous, long drives.
To bridge this gap between home and health care and, ultimately, strengthen Canada’s public health care system, it has fallen at times to the charitable sector to provide low-income Canadians with free travel to their medical appointments when such care is only available a long distance from their home community.
There is currently an exemption under the ATSC legislation for certain medical charity flights: namely, those given by airlines to Hope Air but not those purchased by us directly.
Unfortunately, the new legislation in Bill C-97 does not include this exception. That’s why we think it is important at this time to include an exemption for charity flights with the new screening structure. This should be a full exemption of screening charges for both flights given by airlines and those purchased by a charity.
If granted, what would be the potential cost in lost screening charges? The projected annual cost of screening charges foregone, based on today’s current ATSC rates, is around $90,000. I suggest this is a small cost to ensure that financially disadvantaged Canadians have equal access to health care regardless of where they live in Canada.
In closing, I urge that the proposed amendment be included in Bill C-97 so as to help thousands of Canadians in financial need access crucial health care services and improve the quality of life in rural and remote communities across our country.
I thank you for your time today and appreciate your consideration of this important issue.
John McKenna, President and Chief Executive Officer, Air Transport Association of Canada: ATAC is celebrating its eighty-fifth anniversary representing Canada’s commercial air transport industries. We have approximately 180 members engaged in all levels of commercial aviation operating in every region of the country.
We thank you for this opportunity to offer comments on Bill C-97 and, more specifically, on the privatization of passenger screening in Canada. Let me state from the outset that we support the transformation of CATSA, or the creation of a new designated screening authority, on the condition that it be granted the necessary tools to maximize efficiencies in the short term and be able to keep pace with the growth of our industry.
We caution, however, against high expectations of great efficiency gains at the operational level, as the benefits of privatization will be greater autonomy for the DSA in its long-term planning, staffing and financing.
[Translation]
The Air Transport Association of Canada supports the amendments proposed by the National Airlines Council of Canada with regard to compensation for the cost impact of ministerial directives related to security and the abolition of the air travellers security charge.
The government is anxious to apply the solution which led to the successful privatization of air navigation services and the creation of NAV CANADA. A very short deadline, however, has been set, which some would even qualify as unrealistic if the commercialization of airport security screening is to produce a net advantage in terms of cost and efficiency which would improve the passenger experience.
[English]
A price tag of over $500 million is being shamefully attached to this privatization in an effort by the government to cash in on the CATSA book value. This is totally unacceptable, as the travelling public has already paid for any capital assets of the existing screening authority. In fact, passengers have already paid for them twice, because the ATSC has generated well over $500 million in surpluses over the CATSA budget allocations in the past five years alone.
Transport Canada is not clear on the price tag issue. One day we’re told that the book value price is non-negotiable, and the next day we are told that everything is on the table.
Allow me to remind you that every year the Government of Canada imposes on our industry a fuel excise tax, collecting over $100 million; airport rent, $350 million, the ATSC, over $700 million; and now the carbon tax.
[Translation]
The government collects well over $1 billion each year, not even including consumer, corporate and income taxes, but does not reinvest any of it back into aviation. Airport infrastructure is entirely paid for by the passenger, as is aviation security. Airlines assume all costs of air navigation systems in Canada.
Not only is no other mode of transport left to completely finance its infrastructure and operations, the Canadian air transport industry has been made into an important revenue stream for the government, seriously impacting our competitiveness, domestically against other modes of transport and internationally against foreign operators.
[English]
We believe that anything other than a nominal price of $1 for CATSA’s assets is unacceptable and could very well compromise the process. A clear precedent was set when the government divested itself of hundreds of airports across Canada in a previous Liberal government.
Another concern is that to pay for this outrageous price tag, the new designated screening authority will have to include the debt payment when setting the new passenger screening charge. Need I remind the members of this committee that Canada already has one of highest aviation security charges in the world?
Finally, when asked, the government did not deny they would probably seek compensation for the loss of the hundreds of millions generated by the ATSC surpluses. This is why the bill does not abolish the current ATSC. If not through the current charge, how would the loss of this revenue for the government be compensated, if not by additional fees and charges to our passengers and carriers?
[Translation]
Containing the cost to the public is critical to maintaining Canada’s competitiveness and to address the leakage to the US market. It is the government’s responsibility to ensure that its policies support rather than hinder the competitiveness of the air travel services to Canadians. Further milking the air transport industry and its passengers is unacceptable and detrimental to our industry.
[English]
Once set, the new DSA will be in place for the next 10, 20 years. Canadians deserve that this process not be governed by electoral agenda, that travellers not incur increasing costs and that all concerned take the time required to develop a strong, efficient, autonomous, transparent and well-governed model. We are not in the least satisfied at this point that this is the case.
Andrew Norgaard, Vice President of Communications, NAV CANADA: Mr. Chair and senators, thank you for the invitation to share elements of what we view as a success story in moving a critical government operational function out of government. I’m happy to share some context for NAV CANADA’s privatization with the committee this morning, but would note that NAV CANADA does hold a position related to CATSA privatization.
On November 1, 1996, NAV CANADA became the owner and operator of the Canadian civil ANS, purchasing the system from the Government of Canada for $1.5 billion. Today, NAV CANADA remains one of the only fully private companies in charge of air traffic control and related services typical of an ANS provider. History has shown the effectiveness of the NAV CANADA model as the organizational and corporate basis for safely and efficiently managing what is the world’s largest ANS in terms of air traffic movements.
What was the driver for privatization? Simply put, by the 1980s, Canada’s ANS was not working as well as it needed to. While there were areas of excellence, such as its operational people, the ANS infrastructure needed renewal and major system projects were falling behind with escalating costs. System delays were increasing and efficiency was decreasing.
[Translation]
None of the stakeholders, including the airlines, the employees and the government, were satisfied. A change was therefore required.
[English]
An analysis of the issues found a department with highly skilled and motivated people, operating under standard government rules and constraints, attempting to deliver an essential service in real time to a vital and hyper-competitive sector of the economy. Quite simply, it could not keep up. Nor, in fairness, was government designed to deliver this type of service under these conditions.
For example, the ANS was subject to the budgetary process within Transport Canada and the federal government. It had to compete with financial demands for all other government requirements.
Over time, the ANS became chronically underfunded and the result was an inability to manage a system that lived up to its requirement as an essential 24/7, 365 high-tech business, a critical enabler to the air transportation sector and all who depended on it.
[Translation]
Participants in the air navigation system examined the problems and came up with the following conclusions:
[English]
Band-aid solutions would not work. A fundamental paradigm shift was needed. The ANS was, in fact, a commercial service provided to customers, which should be operated and guided by commercial and not government principles. There was no reason that the ANS could not operate safely through independent safety regulation by government, just as the airlines do. By separating the operator of the system from the regulator, an inherent conflict of interest between those separate functions could be eliminated. Finally, the ANS needed to have certainty of adequate funding and the ability to control its costs.
There was a consensus that change needed to happen, and this included not only commercial carriers but also air traffic controllers, airline pilots, business aviation, general aviation and the bargaining agents of other ANS employees. These groups were central to the collaboration that led to privatization. Together they made fundamental decisions that formed the cornerstone of the Canadian ANS commercialization process.
These were that the ANS had to be taken out of government, the key stakeholders had to ensure that aviation issues were understood by the new entity, whatever it was to be, and each group had to work together for the common goal and respect the other’s legitimate but sometimes differing interests at all times.
[Translation]
Here is what NAV CANADA’s basic governance structure looks like today.
[English]
This governance structure works in concert with two other core elements. First, legislation: The Civil Air Navigation Services Commercialization Act, or CANSCA, was brought into force at the same time. This facilitated the transfer of the system and established the service and rate-charging mechanisms we use today.
The bill before you today is markedly similar to CANSCA. The final essential element complementing corporate governance and the legislative framework is the regulatory framework, and it’s a framework focused on performance and results not on prescribing how the system and the business should be run.
Fast forward to today, and NAV CANADA is unique in the world, as I mentioned. We represent the first separation of an ANS operator from the regulator. We are a private non-share capital organization whose governance reflects the very stakeholders we serve. Our secure, stable financial model gives us the agility to mobilize funds and seize opportunities in real time. We sell our technology and our data. We invest in game-changing initiatives like Aireon and Searidge Technologies, and we continuously invest to maintain Canada’s ANS infrastructure at the cutting edge.
NAV CANADA has built a reputation as global leader in terms of safety, innovation and technology and people. We are recognized as a top employer in Canada and our customers consistently rate us high in terms of the value we provide.
Finally, while the structure we built gives us purpose, focus and a system of checks and balances that enable success, I cannot overstate that, at the end of day, it is really our people, given the opportunity to perform, who deliver results.
Mr. Chair, I would be happy to take questions from the committee.
Senator Dawson: Some of you — I know Senator MacDonald and Senator Boisvenu — will remember we issued a report on airports and airlines called Toll Booth or Spark Plug? Again, I see this as a toll booth action. The government is trying to see the creation of the new CATSA as an opportunity, according to Mr. McKenna, to get a cash prize of a few hundred million dollars; they did that the last time.
I see that, yes, we will have a board formed with aviation and airport representatives, but what about the consumers? They are being left out and I’m worried that in the interim between the disappearance of CATSA and the appearance of the other, we have to operate on faith. We have to trust the people who have not always lived up to their word in the past. We know there are surplus funds at CATSA. We don’t know how much, because it is not transparent. We don’t know what is done with it, but we are told it is spent on other things that are important.
I want all three of you to address this issue: How are we supposed to have faith that this time around it will be a spark plug approach where they will be using this to stimulate air travel and not use it a source of revenue? I think this is the philosophical problem at Transport. Decisions are not taken at Transport.
I would like all three of you to comment on that situation and what you think should be said if we are to mention something about that?
Mr. Bergamini: Thank you very much, Senator Dawson. I think you hit the nail on the head. That is exactly the reason that we’ve introduced the amendments that we have, particularly the one related to the repeal of the ATSC. We view that as a signal by the Government of Canada that it is serious about improving air travel, that it is serious about working collaboratively to make air travel in Canada more affordable for all Canadians and that this is not another exercise that has been telegraphed by Finance Canada to round out les fins de mois. Unfortunately, over the last 20 years, that has been the history of aviation policy-making in this country, that the real nexus of decision-making and authority rests not at Transport Canada but with Finance Canada. These amendments, these changes, are very important from our perspective so that we may sit at the table with a sense of confidence that we share the same objectives.
Mr. Gooch: I wouldn’t say that we believe that profit is driving this decision. I think if the government wanted to make money off of other assets they could have moved on and moved more quickly than they have. That being said, we share the concerns of our air carriers that this be done properly so we are not unfairly burdening air travellers going forward. We have not yet seen under the hood. There is a certain amount of impatience in getting access to the data on how the operation is structured and the final numbers the government wants to get out of the entity in terms of book value of the assets.
We are cautiously optimistic. We share the air carrier’s concerns, but the actual discussions with government and access to the data that tells us what this business is in terms of what it is collecting and paying out, we have not had that yet.
I will say that the plan does not have an end date. There is no transfer date in the legislation. So we’re cautiously optimistic because we know that airports and air carriers are part of the conversation about this going forward, and we are not going to sign off on anything that will not set the industry up positively for the future or unfairly burden travellers.
Mr. McKenna: While I endorse what my colleague just said, particularly what Massimo said about the attitude in the past, we are hoping that we will find in the Minister of Transport a champion for aviation in this cause and not a champion for Canada’s finances. Thank you.
The Chair: Just for precision, did you say it was $500 million?
Mr. McKenna: Yes, $500 million.
The Chair: That was over five years? How much would it be over the last 10 years that they have taken as a profit on airport security?
Mr. Bergamini: I have a backgrounder on that.
Mr. McKenna: The ATSC collects between $100 million and $200 million more than is allocated to the CATSA budget every year.
The Chair: Per year?
Mr. McKenna: Yes.
Mr. Bergamini: This is a driver. I caution the committee on one thing. As Senator Dawson said, one problem is that this is not a transparent mechanism. As far as we were able to determine, the windfall, the level of the gain, the difference between the amount of money that the Government of Canada collects through the ATSC and the appropriations for CATSA has, over the last two or three years, actually decreased. Remember, ATSC charges have been frozen since 2010. So we are seeing a trend line that, if continued, would require the Government of Canada to subsidize CATSA operations in order to maintain the status quo in terms of service levels. We believe that this is one of the drivers for this move to commercialize airport security screening services.
Mr. McKenna: If I could add, however, it’s true that the fees have been frozen since 2010, but I would like to remind the members of the committee that in 2010 they were increased by 52 per cent over 2009. We have, if not the highest, among the highest fees in the world right now in Canada.
The Chair: There are two issues. One is that the government has not said that they are going to get rid of that particular tax when the new entity imposes its own fees, so it’s a possibility of two fees. Two, the new entity will be forced to pay for the security assets that we have already paid for. Just so I’m clear.
Mr. McKenna: Yes.
[Translation]
Senator Boisvenu: Thanks to all those who have come to testify this morning. Mr. Bergamini and Mr. McKenna, your testimonies confirmed some of my concerns. My question is for both of you. I have followed what has been happening recently at the Aéroports de Montréal very closely, when they decided to sub-contract security services. The employees were forced to take a 33 per cent reduction in salary. In the security area, salary is a critical factor in the workers’ honesty. It means that they do not find themselves in situations where they may go looking for additional income from their activities, because they control the way drugs come into the country and oversee baggage and parking lots. Fifteen years ago, Dorval was the area of Montreal where most vehicles were stolen. A special sting operation was conducted and the criminals were arrested. Even some employees were implicated. What concerns me is that we are transferring the cost of security onto the users.
Mr. McKenna: That is already the case.
Senator Boisvenu: Yes, but we will go further with this bill. First, do you think this bill will make the quality of security services worse? Second, will what we have experienced at ADM also happen at other airports, where they will decide to outsource those services to subcontractors to reduce costs? Canadian airports, especially those in the Montreal area and Quebec, have the highest costs in Canada. We know there is leakage to Plattsburgh and Burlington. It is cheaper to go to Boston or New York if you go through Burlington than through Montreal. It makes no sense. In Quebec, there has been a major change in airport administration. Executives have been laid off. The administrative costs are huge, and the users are the ones paying the price. Is this bill a step backwards in terms of security and protecting jobs and workers, or is it a step forward?
Mr. Bergamini: There should be no question about our industry’s commitment to air transport security. It is an unquestionably ironclad commitment. I have no concerns about that.
That said, what you say is true and highlights what we have stressed. No major savings or new efficiency gains will magically occur as a result of this offloading. Ultimately, users of the current system will be forced to pay those fees, as is the case today. That is why, in the negotiations and with those amendments to the framework law, we must ensure that the new organization is not burdened with charges. For example, for the transfer of CATSA’s assets, we must ensure that the federal government does not —
[English]
— does not burden this new agency with additional costs that will be borne by air travellers down the road.
[Translation]
Mr. Gooch: I can’t really talk about a situation that is unique to Montreal, but overall, our reports indicate that they have trouble finding employees in most markets. Tim Hortons employees often work at CATSA. It is not really a sort of race to the bottom for a secure wage. I fully agree with my colleague that the work done to ensure passenger safety is very well done.
[English]
In terms of costs of delivering the service to travellers, we believe that the private sector can provide the service more efficiently than government can, certainly when we see the example of airports. Airports are operated with far fewer employees than they used to be in terms of getting a lot of efficiency out of the system when you go back 20 or 25 years to when they were run by government. We have seen similar efficiencies with NAV CANADA as well.
All of that being said, we still have not been given access to the data room that will give us the actual figures for the cost of the business and the revenues being raised, nor has the exact book value of the assets that government wants to get from the new entity been confirmed. A lot of this is speculation until we actually get into the room and understand what the business looks like from a revenue and cost perspective, and that has not happened.
[Translation]
Senator Boisvenu: Senator Dawson referred to the committee’s study on airports from a few years ago. The U.S. government has created the regional airport clusters, which considers regional airports as economic drivers in a region. The U.S. government is investing heavily in infrastructure to ensure that those airports have a competitive edge over Canadian airports.
Is it not a mistake for Canada to offload just about everything... I understand that public and private partnerships can be more efficient, but by completely abandoning infrastructure and leaving those airports to fend for themselves, is that not a mistake in comparison to the U.S., which has taken a somewhat opposite approach?
Mr. McKenna: They are not incompatible. Government can still play its role by ensuring that the governance reflects the best interests of the government and Canadians. Those assets belong to Canadians. I do not see any incompatibility, but I think the government must do more to assume its oversight and governance role.
Senator Simons: At our last meeting, Mr. Bergamini said that I could ask my question in French. I apologize. I’m not perfectly fluent in French. You know full well that this bill deals with taxes and that it plans to distribute a lot of money. It’s not up to the Senate to comment on that. From your discussions with Minister Garneau and Minister Morneau about this amendment, what was your understanding of what the government said? We do not have the power to make this amendment, even if you are right.
Mr. Bergamini: Thank you, senator. We are fully aware of the legislative context. That being said, I must assure you that we have made representations on those same issues. We shared the same concerns in 2017 and again in 2018 with Minister Garneau and Minister Morneau in a very specific way. We have asked to sit down with ministers and officials to find a solution to the concerns that have been raised. I can also tell you that our letters have remained unanswered. Today, we are in this situation five months before the election, which means that bills cannot be amended by the committees that study them. We have written to the ministers this morning. We have submitted to them the two amendments that you have received and we have urged them to show good faith in their commitment to travellers. We have asked them to propose these amendments when the bill comes before the Senate finance committee. That being said, it would be politically preferable for this committee to recognize in its report the validity of the point we have been making for the past two years.
Senator Simons: The same is true for Mr. Keller-Hobson. We do not have the power to do that.
Mr. Bergamini: Yes.
[English]
The Chair: We are in pre-study, as you know, so that’s why we can’t, but once the Finance Committee gets hold of the bill in the Senate it can make amendments and send them to the government. We can recommend to the Finance Committee that they do it.
Senator Neufeld: You have all reinforced that we have the highest fees for security in the world, at least that’s what I understood. Can you give me some idea why? Is it because we do better security than the U.S. or European countries? Why are we at the top of the list? I go through security often in many different parts of the world and it’s all different, but I would like to know your viewpoint on why that is.
Mr. Gooch: One of reasons, as we have said, is this country puts all the costs on users and a little bit more so. The other thing to keep in mind is there are 89 designated screening points in Canada. They’re not all active, but we have a low population relative to the need.
I think the level of service from a security perspective is being delivered effectively. They certainly have quality control in terms of ensuring that the organization is catching the prohibited items that it’s supposed to catch from the prohibited items list. But there is a bit of one-size-fits-all approach to all the screening points and how the service is delivered in major cities versus smaller ones.
The organization doesn’t have a lot of flexibility in how it does its job and is spreading itself quite thin. In terms of not only the way it’s funded, which is rather inflexible and provides no ability to do long-term planning or innovation, the organization has been constrained in how it does its business. It is only getting enough money to barely keep up with the demand for service.
Mr. McKenna: If I may reinforce that, in most other jurisdictions of importance the government assumes the bulk of those costs. In the United States, for example, the consumer’s share is less than 25 per cent of the total cost of aviation or airport security. In other jurisdictions it varies, but Canada has the distinction of having it entirely financed by the passenger.
The Chair: Thank you, witnesses. We appreciate it.
We will go in camera so we can give instructions as to writing the report.
(The committee continued in camera.)