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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 10 - Evidence

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Ottawa, Wednesday, June 6, 2001

The Standing Senate Committee on Transport and Communications met this day at 3:30 p.m. to hear the Minister of Transport in order to receive a briefing on busing regulations; and to give consideration to Bill C-14, respecting shipping and navigation and to amend the Shipping Conferences Exemption Act, 1987 and other acts.

Senator Lise Bacon (Chairman) in the Chair.

[English]

The Chairman: Mr. Minister, we welcome you this afternoon. You might have to leave suddenly, but we do appreciate your asking to meet with us to brief us on busing regulations. I am sure the honourable senators will be happy to hear you.

Hon. David Collenette, Minister of Transport: With me today are Guylaine Roy, Director General, Surface Transportation Policy and Emile Di Sanza, Director of Motor Carrier Policy, who is currently on leave from the department as Executive Director of the Canada Transportation Act Review. These are the two people who will be working here today.

As you know, we are in Committee of the Whole on the salaries bill which covers members of both Houses. You will understand if I am called away quickly. That is a contentious debate.

I welcome the opportunity to attend and to give a longer explanation to you and the other senators as to why I asked you to review the issue of bus regulation and deregulation. I have taken the liberty of expressing my views about the industry in the form of a number of key questions that I hope will be helpful to you. These questions are also raised in the orientation document that was forwarded to you, Madam Chairman.

I asked the committee to examine the issues facing intercity and charter bus operators in Canada. There are a number of definitions we could use, but probably the simplest is that we are referring to bus operations that move paying passengers over medium-to-long distances.

I will put intercity and charter bus operations into perspective among Canadian intercity passenger carriers. Total revenues from intercity and charter bus operations were $630 million in 1999 compared with $450 million for VIA Rail - that is revenues and subsidies combined - and $12 billion for the Canadian air carriers. In terms of numbers of people moved, airlines carried 25 million domestic intercity passengers in 1998 compared with 4 million for rail and 14 million for domestic bus passengers. Clearly, the intercity bus industry is still a major player in the domestic passenger transportation scheme.

Until 1987, the bus mode carried more domestic intercity passengers than the airlines. In the 1970s it carried more than the airlines and the railways combined. Over time, intercity bus ridership has shrunk from 46 million in 1970 to 32 million in 1980 and today, to under 14 million. That is a great cause of concern to everybody, in particular to those in the bus industry, but also to us as policy-makers here in Parliament.

[Translation]

Of course, public inter-city transportation has been losing ground to the private automobile since the end of the Second World War. At present, we estimate that 90 per cent of all domestic inter-city travel is by car, and the other modes share the rest. This shrinkage in bus ridership is unfortunate for a number of reasons.

First, bus is by far the most flexible of the public passenger modes. A bus can go anywhere there is a demand and a road, which is virtually everywhere in Canada except the Far North. In many Canadian communities, including some quite large ones, bus is the only alternative to the private automobile. Moreover, compared with rail or air, it is relatively expensive to set up a bus service.

Second, bus is an environmentally-friendly mode. Bus pollutes least, of the passenger modes. It achieves the lowest-cost consumption per passenger kilometre. This also means that it has the lowest level of greenhouse gas emissions of the passenger modes.

Third, even though it runs on the road, bus usage can ease highway congestion. Every full coach can get anywhere up to 55 people out of their cars.

[English]

This is a very crucial means of transport in this country. It is one that we really should assist, in any way possible, to play a more useful part in our transportation system.

Here we have a useful, environmentally friendly, flexible, widely available service, yet it has lost ground in the competition for intercity passengers. The decline raises two questions that the committee might want to consider investigating: What are the prospects for reversing this long-term decline in scheduled bus ridership and what should be the role of the bus industry in Canada's overall strategy for dealing with environmental issues relating to transportation? These are the two key questions with which you might be wise to start off your considerations.

I also want to speak about the federal role in intercity bus regulation. This committee has recently dealt with the proposed amendments to the Motor Vehicle Transport Act, Bill S-3, which is the federal legislation that deals with extra-provincial bus operators. These amendments create a safety fitness certificate for extra-provincial truck and bus operators which reflects their safety performance. When the amendments come into force, the Motor Vehicle Transport Act regime for buses will consist of two main components: the safety fitness regime of the Bill S-3 amendments and bus-specific provisions that have been part of the act since it was first passed in 1954.

These bus provisions allow the provinces to make economic rules for extra-provincial bus operators. Specifically, these bus provisions of the Motor Vehicle Transport Act allow each province to regulate extra-provincial bus carriers that operate within it using its own legislation and regulations.

For years, the provinces all regulated the bus industry in the same way and they all controlled entry and regulated fares, tariffs, schedules and frequently, exit provisions. That has changed in the last 15 years. Some provinces still have strict economic controls. Others have relaxed them. Others have eliminated them. This has created the interesting situation where the Motor Vehicle Transport Act supports very different provincial regulatory regimes, sometimes in adjoining provinces. For example, in the Maritimes any extra-provincial operator that meets carrier safety requirements can offer bus service anywhere in Prince Edward Island, but once it crosses the link it needs a licence to offer service in New Brunswick or Nova Scotia. Moreover, it stands a greater chance of getting a licence in New Brunswick, which has relaxed its economic controls, than in Nova Scotia, which has not.

I say parenthetically that this is an interesting issue of jurisdiction. There was a company in New Brunswick that contested the New Brunswick government's right to regulate interprovincial buses in 1947 and it sought rulings from the courts because that was before the Supreme Court had ruled. The judicial committee of the Imperial Privy Council rendered, in one of its last decisions, I believe in 1952, something that stunned the St. Laurent government: interprovincial bus and trucking were constitutionally the preserve of the federal government. Parliament at that time and the government did not want this and in the Canadian way said, "We will legally legislate the Motor Vehicle Transport Act but we will let the provinces do all the regulation. We will push it back to the provinces."

This is creating a big problem. Although it is not in my notes, this is an issue that concerns me as we engage in this blueprint exercise for transportation. I met with key trucking industry stakeholders last Friday in Montreal. The trucking industry is imploring the federal government to assert its jurisdiction over interprovincial trucking matters so that we can create a national regime because there is a disparity of regimes.

One of strongest proponents is the trucking industry in Quebec. In Quebec provincial jurisdiction is respected. This is a case where the federal government has a jurisdiction, historically did not want it and gave it to the provinces, but now the stakeholders want the federal government to assert something it has never asserted. With regard to the bus industry, we have the opposite. We have a myriad of regimes across the country. The essential thesis of the department is that if this continues the bus industry and travelling public will suffer. We need a national regime on safety, as well as on the whole issue of regulation. I want your views on that because there is a divergence of opinion within the bus industry.

[Translation]

Since this sort of situation exists because the Motor Vehicle Transport Act allows it, the federal government cannot avoid taking an interest. However, we have always made it clear that we had no intention of changing the rules at the federal level unless there was consensus among the provinces and the industry as to what the changes should be.

We have occasionally come close to achieving consensus on solutions for the bus industry, but we have never resolved all the outstanding issues. The inconsistencies among the provincial bus regimes remain and, it is quite likely, will grow with the passage of time.

Your committee will be primarily concerned with that part of the industry which is directly affected by the federal legislation. So, if I may, I would like to add two further questions which your committee might want to consider: Are the differences between the provincial bus regimes which have developed over the last decade detrimental to the industry and the travelling public? And, if they are, what is the appropriate remedy?

[English]

I must tell you, Madam Chairman, from my philosophical perspective, I do have a predisposition here. We need more and more national treatment of our transportation system. In rail we have a national regime. In air we have a national regime. In commercial marine we have a national regime. On surface transportation, however - intercity, interprovincial, international - we defer to the provinces out of courtesy but not out of constitutional necessity. This is an issue that must be examined and examined extremely closely.

There are other bus issues that deserve mention and perhaps some of the committee's time should be spent on them. For example, you might want to consider the policy implications of the growth in industry concentration over the last 10 years. The industry itself will probably ask you to examine the federal passenger policy framework and the place of the bus industry within it. You might well hear conflicting views from the bus and transit operators on commuter service, or from the bus and rail operators on intercity service.

If I were to characterize in one sentence what the committee is being asked to do, I would say it is to come up with a prescription for the problems that face the Canadian bus industry. How do we arrest the slow decline of a useful transportation mode? "Useful" almost seems commonplace. I feel it is essential. Bus transportation, as I said earlier, is probably the most flexible means of transport and, in most cases, is the most efficient, from a corporate point of view. Yet we have seen a startling decline in its use. Even though we have been cutting passenger rail service - yes, it is subsidized - the decline in passenger rail is minuscule compared to the decline in bus service over the last number of years.

In the past, discussions on the future of the bus industry tended to focus on evaluating the elimination of economic controls - deregulation - as the means for dealing with the industry's problems. The federal government has been caught up with the deregulation mania of the last 15 years, which has actually proven to be quite appropriate overall. It is not the be-all and end-all. We have had problems.

We had deregulation in the air industry at the same time that we had the privatization of the number one air carrier. Some of the things we have been playing out in air transport in the last year, with the mergers, have been a result of deregulation and not thinking it through properly. However, deregulation has worked on the railways. By and large, the feeling of the government is that we should consider deregulation as perhaps being part of the solution to the bus industry's dilemma.

As long ago as 1992, the government was advised by the Royal Commission on Passenger Transportation to amend the Motor Vehicle Transport Act, MVTA, to deregulate extra-provincial bus operators because the commission saw deregulation as a tool to reverse or at least slow down the current decline in bus ridership.

[Translation]

However, the federal government has also consistently signalled that it wanted to secure consensus from the provinces and stakeholders before making any changes in the federal regime. Beginning in 1994, my department sought to reach agreement with the provinces and stakeholders on the future of bus regulation in Canada.

It quickly became apparent that the provinces, and indeed much of the industry, were concerned about the continuing decline in bus use. There were some things which everyone agreed on: for example, the need to modernize and streamline industry regulation. Most provinces and most of the industry agreed that charter bus services could be deregulated. However, the difficult issue was and is the regulation of scheduled inter-city service.

Occasionally it has seemed that opponents of change might be reconciled if allowed a long-enough transition period. However, in the end, divisions remain, among both stakeholders and provinces, on whether or not to deregulate the bus industry.

[English]

Although it has been difficult to come up with an answer that all parties will accept, the following question remains: Is economic deregulation of the industry still the appropriate regulatory tool? The industry currently serves small communities, rural areas and many of the remote regions of the country. Indeed in many of these areas the bus is the only form of public transportation. However, these are also the most fragile parts of the bus network.

The industry tells us that these services are generally cross-subsidized by higher density routes. I heard the same thing about the airline industry. This has not proved an impediment to companies' at least providing service to various small communities. It may not be the frequency or type of equipment that people like, but the fact is that someone will fill the void. Therefore, I am not sure we need to buy this particular argument.

We must be sensitive to the potential impact of policy changes on Canadians in small communities and remote and rural areas. The difficulty is in finding the best way to protect service in these areas. We must ask the question along the lines of whether the traditionally scheduled bus service industry is the appropriate tool for providing public mode rural and small community service and what alternatives to traditional bus service are available.

This is scandalous to those people from the bus industry in the room, but everyone with an interest in the bus industry agrees on what the industry ideally should be. We all want it to be healthy economically and we want it to serve Canadians in all parts of the country. We need an industry that provides an alternative to the automobile in those parts of the country where there are no other alternatives. We need an industry that moves people between our cities and connects the regions of the country together. We need an industry that is affordable to Canadians. We need an industry that can attract new riders and renew itself.

[Translation]

I want to thank you again for this opportunity to speak to you on bus issues. I am now ready to answer your questions. I would ask you to study the issue seriously because this is a very serious matter in the field of public transport in Canada.

[English]

The Chairman: I have one question. You stated that the stakeholders would agree to having the federal government try to settle their problem.

Mr. Collenette: I was parenthetically talking about the trucking industry across the country. I was saying that the opposite seems to be the case here and that the bus industry agrees with the status quo of having differing provincial regimes. Quebec, British Columbia and Saskatchewan highly regulate the bus industry. Ontario and Alberta want to proceed with deregulation. Unanimously across the country, the trucking industry maintains that the federal government has to assert jurisdiction that it never thought it had but that it was given and did not want.

The Chairman: Has the bus industry been discussed at the Canadian Council of Ministers?

Mr. Collenette: This has been on the agenda at just about every meeting I have had with provincial ministers and there is a divergence of opinion. Quebec, British Columbia and Saskatchewan state that they cannot have deregulation because service to smaller communities would suffer. This is the cross-subsidy argument. Then provinces like Ontario want to move. In fact, we thought we had a deal a couple of years ago with a phasing-in and that is why we introduced Bill C-77 with the safety provisions and the deregulation provisions. There was an outcry from certain parts of the industry and from certain provinces, so we said that we would go back, not to the drawing board, but to think this through a bit more. We split the two issues. Thankfully, the safety issues are being dealt with, but this issue is still to be dealt with and I am prepared to introduce the bill again in the fall, if necessary. We want a group like this in the Senate to seriously consider the policy.

The Chairman: We certainly will.

Senator Forrestall: This is a large subject and it has been on the table, as the minister has indicated, for a considerable period of time. Minister Mazankowski was seized with it, Minister Crosbie was seized with it. Every time they raised their hopes they ran into similar problems to the ones that you have run into. In principle, I accept the thrust. It is the way to go.

Having said that, do you believe that effective federal capacity to intervene could help turn around the decline in the fortunes of buses in this country?As train passenger capacity disappears, seniors, rural Canadians, university students - lately hockey and other sports teams wishing to travel around intramurally in their province to compete in regional and provincial province-wide games - are having to rely on buses and there is difficulty with them.

In terms of longevity, you are now a very substantial Minister of Transport in our recent history. I do not know how you have been successful in hiding so long and avoiding the gun fire.

Do you think that if there were an effective federal regime that it could be used as a tool?If you believe that, could you let us in on how you envision that might happen?

I will only ask that one question, but I assure you that, when Madam Chairman is ready, we will take great interest in calling witnesses and looking very closely at this matter.

Mr. Collenette: Senator Forrestall, obviously the status quo is unsatisfactory. If the market share of an industry has declined drastically, something is wrong. It may be that the industry is still trying to apply a service in a regime that really is out of date.

Part of the problem is due to the love affair with cars that has happened. We have had economic prosperity, per capita income has risen, the core bus market has changed. The young, the old and the economically disadvantaged are disproportionately represented among bus riders. In other words, many people who are not able to drive or afford a car take the bus.

We think that competition among the public modes does not appear to have been a factor in the decline. The bus has always been primarily a short-haul mode - under 200 kilometres for the average trip - so air travel does not directly compete in most of the country. Bus and train ridership fell through most of the same period, but bus more than train. Urban growth appears to have been a factor in places such as Toronto, Vancouver and Montreal. Even in smaller cities such as Halifax, journeys that were done by intercity bus 50 years ago are now done by municipal transport system. There are a number of reasons.

Our analysis is that when the airlines were deregulated the number of people who travelled, the number of new markets that were opened up and the reduction in price all followed. There are other issues that we had to deal with. As I mentioned, the privatization of the main carrier at the same time caused policy problems. However, there is no question that for air travel today, versus 20 years ago, there is greater choice, more routes and cheaper fares. We believe that if deregulation is pursued that will occur in the bus industry.

Senator Forrestall: I will pass because if I start down another path we will be here for an hour.

Senator Callbeck: Madam Chairman, I wish to welcome the minister.

Most provinces agree with deregulation. However, you mentioned there are some that do not want deregulation and I would like to know which ones. You also made the comment that the bus industry agrees with the status quo. Why does it agree with the status quo? To me it would seem to be an awful hassle for the bus industry.

Mr. Collenette: I think you should ask the bus industry. I have enough trouble explaining government policy. Industry representatives will be called and they will have to tell you. I have had lots of meetings with them and our officials have met with them and their views do not really square with our thinking. They are fearful that they will be unable to compete. I do not think that will happen. They think there will be instability created. The three provinces that are opposed are British Columbia, Saskatchewan and Quebec. In Alberta and Newfoundland, which have moved towards deregulation or partial deregulation, it has been done without any serious effect to service in smaller communities. It has been done widely throughout the United States.

The federal and state governments were involved heavily in regulation of the bus industry and, yes, there was a shake-out period. There will always be a shake-out period where some services will decline and some will be augmented.

The bus industry in the U.S. is as healthy today as it has been. It has stabilized. That is the key. Here we have a decline. Ridership stabilized in 1977, but it has declined in the last couple of years. Another thing that will happen is the bus industry will be a victim of predators, or what I call jitney services. For example, Senator Callbeck gets a high-occupancy vehicle - a Suburban van - and starts driving around Prince Edward Island picking up passengers. It is tough for the provinces to regulate. There are safety issues involved. This is happening across the country where freelance operators are circumventing the regime.

What is needed is flexibility on the part of the bus industry. Maybe 48-seat buses are not required on all routes. Perhaps there could be sport utility vehicle types of operations or smaller buses such as those of the Senate and the House of Commons on the Hill. Flexibility is required, but that will only happen in a deregulated environment where other players will come in. Yes, the other players will challenge the existing operators. The large operators in the country are Laidlaw and its subsidiaries, Voyageur and Greyhound.

I mean no disrespect to them - and they would probably crown me for saying it - but why should we protect Laidlaw, which is having financial difficulty? We can suggest another way that they could make money in the bus business and, as a result, help the bottom line of the parent company.

Senator Callbeck: You mentioned that in the United States the number of passengers has stabilized and yet we have seen such a decrease. Why is there a difference?

Mr. Collenette: There is deregulation, the freedom to compete, innovative marketing and flexible services that are being offered to various communities. It is the old issue: if you have an environment where the rates are set and the services are set, it becomes pretty inflexible.

The airline industry is the greatest example of deregulation in the country in the passenger mode.An example is WestJet which is very successful and it is targeted on intercity trips in the west. If these companies do not make money they will pull out of the market. They constantly test new markets.

By and large, if they pull out someone else will fill the void with a smaller airplane. That happens in the airline industry. If it is happening in the air industry in Northern Canada, which is extremely remote, surely that could happen in populated provinces such as Ontario and Quebec in the bus industry.

Senator Callbeck: That is why I do not understand why the bus industry does not agree with deregulation.

Mr. Collenette: I am certain that they will give you some reasons.

Senator Finestone: Minister Collenette, in a March 2001 departmental document, which was submitted earlier, concerning the Canadian intercity bus industry orientation, a comment was made about the fact that the bus industry is not subsidized, whereas VIA Rail is subsidized. Is there any payment by the busing people for the roads? Do they pay a road tax like trucks do?

Mr. Collenette: They would argue that they pay through fuel taxes and registration fees to the provinces. They would argue that.

Senator Finestone: I wonder if the small amount of subsidization of VIA Rail, vis-à-vis the kind of fees it has to pay for buses to compensate for the use of roads, is not offset. It is not a solid argument. I ask that your department provide us with a comparison at a future date.

Mr. Collenette: We can provide more information on this. Yes, VIA Rail is subsidized. I only know of two passenger service operations in the world that have made money without subsidies. Those are the Gatwick Express and the Heathrow Express. All rail service requires a subsidy. Amtrak, the state railways in France and even the privatized railways in Britain require subsidies.

In the whole blueprint exercise that we have on transportation policy, we will have to make some modal choices. For those of us who live in the Montreal-Toronto corridor, as you and I do, we have to ask ourselves what the appropriate mode is, or whether there can be shifts in modes. This is a particular debate among trucking companies and the railways.

The trucking companies and the railways are developing alliances whereby trucks are now carried by rail cars. In fact, Canadian Pacific just made a deal to take carloads of parts from Brampton to Windsor. That is only about 300 kilometres by rail. Normally, those parts would be trucked, but the roads are so congested that it is faster to ship the parts by rail.

The same argument can be used with respect to passenger service in that corridor. Should there be a deliberate attempt to shift more passengers to rail, but encourage the bus industry to operate in alliance with rail, in some cases providing off-peak services in certain corridors? That occurs in and around Montreal and Toronto where the rail services do not operate and the bus services fill up in off-peak hours.

Although we have asked you specifically to look at the bus industry, much of the work that you do will help us to shape transportation policy. Perhaps we should, as a policy, agree that bus has a role, rail has a role and trucks have a role.

Senator Finestone: You read my mind, Mr. Collenette. I looked at the documents to find the level of use of bus versus train and airplane. Certainly, it is the low income groups and the elderly who use this mode of travel most frequently. Being part of that crowd, it struck me, when I considered the $121 million subsidy to VIA Rail - which is not a lot of money for serving the population - perhaps you would be open to some kind of subsidy to ensure rural and small community services. That could be a big bugaboo for us in terms of a social policy.

I could see that happening. We could say there will be competition, however, there is a sector of our society that is not to be tampered with and that sector requires service. That sector of society could be helped or enabled through a subsidy program.

Mr. Collenette: You make a good point. We would not be prepared to do that but perhaps the provinces might be more prepared. In Quebec I met with Mr. Charest last week. He told me that the Quebec government will pay a subsidy to a Quebec regional airline so that service to certain communities will improve.

I return to rail service in Britain where the government pays subsidies, but allows private companies to operate the routes. In other words, the subsidy tops up the cash flow and allows the company to enter the business and to compete. We could deregulate the bus industry. If service to certain small communities were to become problematic, then the provinces may agree to pay a subsidy to help with an improvement in the service. That could be done.

Senator Finestone: Minister, I remember the tremendous hardship that was caused when we closed down the Montreal-Halifax route that went to the North. The cost of flight was very high. People who came to Montreal for medical treatment once per week or once per month found the cost prohibitive. They were uncomfortable, but they had to travel by bus. I am glad to hear that maybe at least regional airlines will be financed.

If we could obtain graphs that would describe the differences between the various provincial bus regimes, it would be helpful to our study.

I do not want to be pressured by the American experience. I read about the American experience and they are not like us. There is not much regard for the lower and middle-income groups. I am not interested in looking at that model. However, if there are specific success stories in the American model, those would be helpful to us in the course of our study.

In consideration of the loss of passengers, you have to examine the growth of urban transit. Montreal will become a mega-city that will gobble up the North Shore, the South Shore and everybody in-between to create a lumpy and uncomfortable kind of mega-city. It happened in Toronto where the responsibility was to enlarge the circle of service and that, therefore, would cut the number of passengers down.

On the other side of the coin, today's society is most concerned about the well-being of its children. The use of transport buses for children has, obviously, increased. There are not the same number of children walking to school because it is no longer safe. Thus, that charter service is on the rise.

I do not know what accounts for the loss. Perhaps it is because people have more money now and own cars. How do you expect us to look at reliable, flexible, less expensive, environment-friendly, small community services and come up with an answer, ignoring the American experience, with cross-subsidies thrown into the whole picture? I find that very interesting. Is that what you are asking us to do?

Mr. Collenette: You are absolutely correct. The bus industry here does not speak with one voice. Certain members of the Canadian bus industry believe that deregulation is not really the answer. I do not want to put words in others' mouth. I can be corrected. However, you might want to get the Ontario Motor Coach Association here, or others from Ontario, to see where there is a difference in attitude.

Because this is regulated by the provinces, I do not have all the details. I do know from my experience around Toronto that there are private operators like PMCL out of Penetang. Trentway-Wager offers scheduled services. There is a scheduled service that connects with the GO Train at Oshawa and the VIA Rail train at Coborg and goes north to Peterborough. I believe there are examples in Ontario where private companies actually make money. Perhaps Mr. Di Sanza can answer this.

Emile Di Sanza, Director, Motor Carrier Policy, Transport Canada: With respect to why the numbers are decreasing, in fact, it is the ridership for scheduled intercity services that is dropping. The tour operators under charter have been increasing steadily over the last 10 years.

Senator Finestone: It makes sense that they would have increased, given the nature of change in society. It is not a big surprise that it has changed in certain directions if you take into account other issues.

However, all of us are interested in environmentally-friendly services, so this is a big incentive, from my point of view, in our study.

You stated something, Mr. Collenette, that triggered a thought. Are these big cars and small buses all subject to the safety standard we studied in the last bill we had here?

Mr. Collenette: Under 10 passengers, including the driver, they are not. This is a loophole. It not unlike the mini-cabs in London where one can have four people in the car and undercut the black taxicabs that are regulated by the London police. In effect, that is a pirate industry. In Santiago, Chile, for example, you will find that Mr. and Mr. Jones can have a couple of jitneys and they run them on the street unregulated. This is a loophole. In fact, these services are being offered. Recently there was a nasty accident on highway 401 west of Montreal where four or five people were killed. The operator was unlicenced.

If we move to deregulate the industry, we can have the Canadian Bus Association and others offer a more flexible service with smaller vehicles and use their weight, under the existing safety regimes, to carry forward to the smaller vehicles.

Senator Spivak: Senator Finestone touched on the area I wanted to ask about, which is the relation between the rail and bus modes of transport in a general transportation policy. You have answered that question. I assume you are looking at Europe and the way in which it has rationalized its system, how Europe has figured out where bus, rail and air should go. I assume that is what you are considering.

Mr. Collenette: That will have to happen in certain parts of Canada, such as Montreal to Windsor, where most of the population lives. What applies there will not necessarily apply in your province, where communities are more remote.

Senator Spivak: On the other hand, you say bus is the least environmentally polluting. It is not less environmentally polluting than rail.

Mr. Collenette: Yes, it is.

Senator Spivak: How do you figure that?

Mr. Collenette: We will give you the statistics on that.

Senator Spivak: I would like to see them. My province had rail service years ago and it was very popular. It was discontinued because it was uneconomical, or for some other reason I do not know. Certainly, in the northern part of my own province, rail is accessible and road is not so accessible.

Mr. Collenette: Perhaps I could give you answer. We will give you this graph. It is in the book. The ranking is 110 kilometres per litre for bus, 42 for school bus, about 25 for transit, about 22 for train; 21 for automobile, 20 for air and 15 for urban car. The most polluting mode is to drive your car around Ottawa, Toronto, Montreal or Winnipeg. The bus is way ahead.

Senator Spivak: Of course, if you will use Ballard fuel cells, we could do business here.

Mr. Collenette: This is using existing fuel.

Senator Spivak: I know. We are coming into the era, hopefully, of fuel cells being used in buses. They are already being ordered in Europe. I assume if they are successful and if they come down in price, they might be successful here.

I take it that you want this to be looked at in the context of a national transportation policy. It is one thing to examine whether economic deregulation is good, but another thing to look at the perspective of the bus in a national transportation policy. Is that what you are interested in? Are you interested in a more narrow perspective?

Mr. Collenette: Madam Chairman, this issue has hung around so long it has caught up with the overall review. We have the CTA Review panel reporting in several weeks. We have the blueprint exercise that I have started. Once we agree on an overall policy approach in cabinet, I will submit it to this committee and to the House committee for its views so that we can have a comprehensive review. The work you do specifically on the bus issue will help us. I see, in effect, September 2001 to September 2002 as being the year of transport in answering tough issues on bus, air, international air policy, intermodal application, trucks, rail. The House committee was looking at hours of service in the trucking industry. I know you have an interest in that.

Senator Spivak: All Canadians have an interest in that.

Mr. Collenette: This is all coming together.

Senator Spivak: I must say I compliment you. I think that is the way to go. It is a forward-looking approach rather than looking narrowly at how the bus fits into the total system. I was in Europe with a House committee some years ago specifically to look at the transportation system. Of course, Europe has different levels of population concentrations so it is not exactly the same thing, but in some senses it is very rational. I look forward to this study.

Senator Taylor: You were discussing pretty well what I was going to ask, in particular, intermodal transportation. I am a westerner. Loaded trucks are put on flat cars. There are trucks with mechanical methods that can, at any level crossing, leave the road and take off. They transport long-range on the railroad and then use a bus to get off the intermodal, using this intermodal undercarriage to take them around.

I will be talking to some of your members. I am one of those westerners who believes that rights-of-way on the railroad should be separate from the railroad. Are you getting any co-operation from the railroads, or is it very grudging, on use of this intermodal set-up?

In the West our rights-of-way are very wide. We can put down pipelines or anything else on them. Why could we not create a special bus route so we would not need to have them on the highway?

Mr. Collenette: Are you talking about trucks rather than buses?

Senator Taylor: No, there are trucks now. Why could it not be buses? There are now trucks riding on the railroad. For quite a while there have been freight cars that use a tractor to take them off the flatbed. I have seen a few with a mechanical undercarriage that attaches to the tires to put them off. If it can be used for moving chickens and cattle, why not move people that way?

I get the impression that the railroads do not want that system. In the farming business they would say you are trying to marry a cow to a horse. Neither one likes each other very much. However, there are railroad rights of way, so there is the possibility of using intermodal systems. I do not think there is much co-operation from the railway.

Mr. Collenette: There are a number of different questions within your question, senator. On intermodal versus freight truck to train, there is more of that happening, whether it is containers being hauled from truck to train or the truck itself. The expressway system that Canadian Pacific Railway, CPR, uses is phenomenal. They are taking trucks off the road.

Senator Taylor: The only trucks allowed are those owned by CPR or Canadian National Railroad, CNR, though.

Mr. Collenette: No. They have deals with all the biggest trucking companies.

Senator Taylor: Must the companies sell a half interest in the company to the railways?

Mr. Collenette: The railways and the trucking industry are marrying a horse with a cow right now and it is amazing to see. It is in both of their interests to have this intermodal application. You are extrapolating that to the bus industry. I do not believe anyone has ever thought of that. I am not sure that would be practical.

I take your suggestion to be one of taking a bus that comes from Rouyn, for example, to Montreal, then hops on the back of a freight train in the freight yards in Montreal with people sitting in the bus while it is sitting on top of a train. That is a scenario you would need to submit to the bus industry. Maybe they can talk to CPR and CNR. It is a novel idea.

Senator Taylor: I think you would have difficulties in the large cities but not in the small towns.

My second question refers to your complaint about the provinces, which I cannot quite understand. Railroads are not maintained through gasoline taxes and by the provinces. They are maintained by the railroad. A bus travels on a highway that, in most cases, the province has paid to have built, therefore the provinces feel that they should be regulating those modes of transport. How does one get around that? Will Canada suddenly adopt the U.S. system and start spending more money on major highways in this country?

Mr. Collenette: The need to improve Canada's highways is another issue that really must be addressed. We put $600 million in the last budget and we are now working our way through deals with the provinces. I hope the Minister of Finance and the Prime Minister will agree to put more money into the highways, but that really does not have any bearing on the issue here about the health of the bus industry.

Most bus trips are short haul trips. People do not take a bus from Toronto to Vancouver unless they are retired and going for a three-week trip so as to have the option of getting on and off along the way.

The notion about applying to go on rail is not very practical. In the example I gave about putting a bus on a train in Montreal, I wonder why that would be done when the bus can be driven to the central railway situation and people can get on VIA Rail, where there are 10 trains a day running.

Senator Taylor: The last time I was in Toronto I was in a taxi that was just barely moving along. I was travelling north to Markham and the trains were streaking by at a great clip.

Mr. Collenette: If you were to take the downtown service you could have been in Markham in 20 minutes.

Senator Taylor: I thought at the time that the right of way is not used. If you really want to get public transportation underway there should be a right of way, like there is for pipelines.Why not do that for bus transportation?

Mr. Collenette: I have asked the Canadian Transportation Act Review panel to make specific recommendations on an urban rail corridor. They will be reporting in a few weeks and I will make that report public. They will come up with some ideas on this. In the meantime, through Bill C-34, on which you sat last year, we slipped in a provision which delays the abandonment process a little longer. We can then get through the whole CTA review process to see whether or not the abandonment provisions in the 1996 act should be continued.

We are digressing from bus deregulation, but I would say that the railways see the writing on the wall. I met with them recently. They also realize they can make money hauling passengers, whether it is through VIA Rail or commuter services in the larger cities.

Senator Taylor: My information, from talking to many people while travelling by bus, car or train, has been that it is not the efficiency and how much pollution they are putting in the air that influences the decision. The decision is based on comfort, which is tied to availability. The train is great but it only goes twice a day. With your own car you can go anytime. Many people feel the bus cannot compete with the train because it does not accommodate as many people. That is true. If they left every 20 minutes, or every half an hour, we might be surprised at how many people would switch from their cars. Two things influence people about taking public transportation: How fast can you go from A to B, and how often can you go from A to B?

Mr. Collenette: Those questions would need to be addressed to the bus industry. You are talking about frequency, capital investment and private companies that do not receive any subsidies.

[Translation]

Senator Gill: Minister, my question is about services offered in the regions versus those offered in the big cities. National policies are based on the big cities. Densely populated areas make up a small part of the country. We live in a huge country with a thinly spread population.

We make national policies in a number of areas, including transport, based on the needs of people in the south or urban centres. We try to extend those policies to other areas, and it seems to me that this does not meet the needs. You subsidize railway transportation. Is that actually to respond to the needs of the population or to an industry that is not working and needs a subsidy?

Prices in Northern Canada are exorbitant. People cannot afford transportation by air or other modes. Companies serving those communities have a hard time making their regional operations profitable. Canada is a Nordic country. We have not yet come up with - unless you think you have hit on it - a way to serve Canadians who live in the regions. In my opinion, the current system is not the greatest.

Mr. Collenette: You are quite right. We are a Nordic country, but we cannot ignore the fact that most people live in the big cities. Canada is much better organized than the United States, for example, so it is natural that its policies reflect the needs and aspirations of the majority of the population, that is, those living in the big cities.

However, in reviewing this particular policy, we must take note of the needs of Northern communities. It is possible to have a general policy that is dictated by the majority of the population, those living in or near the large urban centres. However, this policy can also reflect the aspirations of communities located in more remote areas.

It is in that spirit that we are currently considering air policy. At NAV CANADA, for example, we have made changes solely for services in Northern Canada. As for rail policy, the federal government does not give any subsidies. The subsidies are only for VIA Rail and passengers. In Quebec, for example, a subsidy is given for service between Montreal and Senneterre, which serves the small communities of the Mauricie, Abitibi, Rouyn-Noranda and Senneterre.

You have raised an important point. It is easy for people like me, who live in the big cities, to disregard the needs of Northern communities. The Senate contribution to these issues is quite important.

Senator Gill: I am happy to hear that senators can make a difference in national policy. In Quebec, for example, in Saguenay-Lac-St-Jean, on the North Shore, et cetera, there are too many vehicles on the road carrying mine, forest or other products. Perhaps we could try to redirect traffic away from trucking and toward other modes of transport.

[English]

Senator Spivak: The minister mentioned funds for highways in your consideration of transportation. I am curious whether in the West that would equal the Western Grain Transportation subsidy? It seems to me that we have now switched from subsidizing rail to subsidizing roads - something that was not exactly envisaged at the time.

Mr. Collenette: Since 1919, federal spending power has been used to build highways across the country. It is one area where the provinces were quite happy to have federal involvement. We have established 25,000 kilometres. Generally the deals are 50:50 and, from the point of view of nation building, we agree that money should be put in. You can say the railways might object to that because we do not put money in rail. There are other things we can do - faster depreciation, the capital cost allowance - to help the railways compete.

Again, we are drifting away from discussing bus transport here. The problem we run into is that there is no question that the trucking mode enjoys marginally more favourable treatment than railways, largely because of the access to public roads. Now operators argue that the fuel taxes and the licenses that they pay cover their contributions, but it is not quite the same cost base as the railways have.

Senator Spivak: Some time ago I saw figures which compared the two and there is no comparison. My point was that short-line railways are disappearing and roads in the rural parts of Manitoba, Saskatchewan and Alberta were never made for huge trucks and the huge increase in traffic. The issue is not only building roads. There has to be subsidizing of those roads so the traffic is manageable. It seems that policy is coming full circle. We did subsidize rail and now we will subsidize roads.

Mr. Collenette: That will not be on an ongoing basis, senator. Through the Western Grain Transportation Act, WGTA, reforms, an amount of money was put in to deal with rural roads in western Canada and certainly $175 million was applied for grain roads as part of the Bill C-34 package. That was a one-time deal. Provinces such as Saskatchewan basically got off the hook for 50, 60, 70, 80 years on maintaining and building roads because they relied on branch lines which were either subsidized by the shareholders of Canadian Pacific or the taxpayers of Canada.

Senator Spivak: What is wrong with that?

Mr. Collenette: It turned out to be inefficient. Western Canada was totally overbuilt from the point of view of branch lines. It was something that could be justified 100 years ago but not now. That is why, in the 1996 Transportation Act, CTA, the abandonment provisions were loosened up. Some would say they are too loose. We will see what the panel recommends. We are getting off the bus topic again.

Senator Callbeck: I have a short question on the National Safety Code we had in the Motor Vehicle Transportation Act. Will buses be subject to that act?

Mr. Collenette: I apologize to honourable senators, but I have to go to the other place now. Mr. Di Sanza and Ms Roy will answer your questions.

The Chairman: We will be working hard.

Mr. Collenette: I always have faith in this committee.

Senator Moore: You are going for a good cause.

The Chairman: Thank you very much for your presence here.

I will ask Senator Forrestall to chair the meeting now. Unfortunately, I have to leave.

The Deputy Chairman: Perhaps Mr. Di Sanza could answer the question.

Mr. Di Sanza: Mr. Chairman, I would be pleased to answer the question.

The National Safety Code provisions as provided in the bill also cover buses as the safety fitness requirements apply to both buses and trucks.

Senator Callbeck: When do they come into effect?

Mr. Di Sanza: There are provisions related to both trucks and buses that apply currently under the National Safety Code. There are specific provisions as part of that bill that will come into effect once the bill is implemented. But on a practical level the standards attained under the National Safety Code currently apply to both truck and bus. There are provisions in the current legislation and in the current safety code that cover both the truck and the bus industry.

Senator Callbeck: Are there some provisions that are still different in every province?

Mr. Di Sanza: There are some instances. Perhaps I can qualify my comments. You have met officials from the department who are responsible for that area.

In the interests of responding to your question, there are instances where safety codes may vary from province to province. Officials from the department who are principally responsible for that can probably comment in a more substantive fashion on the extent to which those are significant variations..

Senator Callbeck: Do vehicles that carry 10 people or less not have to meet safety standards? If someone has such a vehicle - a van perhaps - and charges people to take them places, do they require a licence?

Mr. Di Sanza: As the minister indicated, there are, in most provinces, situations where someone who wishes to operate a van service for fewer than 9 passengers, the driver would not be covered under the same rules that would govern the larger buses. They would fall under the threshold of the National Safety Code. They would not be licensed, necessarily, as bus operators. That is not to say that the province could not licence a carrier operating that kind of service, if it wished to do so.

Senator Callbeck: If I have a van and I want to taxi people around, I do not have to meet the safety standards. Do I have to get a licence or is this under my driver's licence?

Mr. Di Sanza: The licensing requirements will vary from province to province. In some provinces you could apply to operate a range of different bus sizes and be licensed to do so. Depending on the province, you could be subject to a series of safety inspection requirements as well. As pointed out by the minister, in some cases there are operators who wish to operate outside the scope of the safety requirements. They can easily fall under the threshold governing the operation of a bus: i.e. fewer than 10 passengers, including the driver.

Senator Sparrow: What provinces are you referring to when you say that some have no regulations? I understand that every province has safety regulations for any passenger service that charges a fee for service. Is that not correct? The regulations are not necessarily less than any federal regulations. Are there provinces where regulations are less stringent than federal regulations and, if so, could you indicate which provinces?

Mr. Di Sanza: The issue has to do with the National Safety Code, which governs equipment that allows for carrying of 10 passengers or more. There will be variations from province to province in terms of how a bus can be licensed. We would be pleased to obtain the technical details for you. I do not have the information ready at hand. As I indicated, there are officials from the department who are responsible for the safety aspects of that legislation.

Senator Sparrow: There are regulations. Is it simply that someone with a driver's licence can go out with a van and haul passengers for a fee without coming under some provincial safety regulations and licensing?

Mr. Di Sanza: They could fall under licensing, registration requirements and/or mechanical inspection requirements. That is governed by the regulations of the provinces at this stage. There have been instances where operators try to avoid being subjected to the same type of safety requirements as the larger buses.

Senator Sparrow: They are circumventing the law.

Mr. Di Sanza: That is correct.

Senator Sparrow: The minister referred to British Columbia, Saskatchewan and Quebec disagreeing with proposed deregulation. Can you tell us why those provinces are not in favour of this and are opposing it?

Mr. Di Sanza: The reasons why certain provinces may oppose a more liberal market entry, if you will, will vary from one province to another. In fact, Manitoba and Nova Scotia can be added to that list.

In Saskatchewan, the primarily concern is about the level of service to a range of communities that are considered to be lower density. Only the major corridors may receive new entrants and competition. The same typically applies in most of the other provinces. The primary concern is that the new entrants will target the markets where a reasonable rate of return can be sustained. Other communities could possibly lose service, in some instances.

Senator Sparrow: I am confused. If it is only extra-provincial it does not affect interprovincial travel. Mr. Di Sanza, your comment does not apply in Saskatchewan, as an example. You said that Saskatchewan is opposed to it. The province controls the bus service.

Mr. Di Sanza: That is right.

Senator Sparrow: There is no control over the extra-boundary, so why would the province feel that it is necessary to oppose this legislation?

Mr. Di Sanza: Most companies that provide bus service in Canada, whether that be across a provincial boundary or within a province, fall under federal jurisdiction. They are extra-provincial carriers. Indeed, a carrier would only have to cross a provincial border once per year, either in a charter operation on a tour basis or on a scheduled service, to fall under federal jurisdiction. It is not the operation itself, but rather, it is the actual company or carrier that falls under the jurisdiction.

The province is concerned that the carrier could fall under one regime - federal, which hypothetically could be deregulated - but provide most of its operations within a province on a local basis. There would be concern about having different types of regimes applicable to the carriers and a carrier could presumably choose the one that would be most suited to its interests.

Senator Sparrow: I still do not understand. The Province of Saskatchewan services, under a Crown corporation, provincial bus travel. The buses do not leave the boundaries of Saskatchewan. Greyhound buses travel through the province. They only serve a certain route on their way through the province. That is a provincial regulation, I presume. If this changes, how would that affect Saskatchewan?

Mr. Di Sanza: The province could be concerned that a carrier falling under federal jurisdiction could cherry-pick a particular market in the province. A carrier could be extra-provincial operating both interprovincial services and services within the province and regions.

Senator Sparrow: Under this deregulation, Greyhound buses could move into the province and travel between cities within the province.

Mr. Di Sanza: Any carrier could do that.

Senator Sparrow: A Crown corporation in the province is trying to protect that local entity.

Mr. Di Sanza: That could be one explanation for its concerns related to deregulation.

Senator Sparrow: Is there another reason?

Mr. Di Sanza: I suppose there would be concern about services to some of the smaller communities if the larger markets were taken over by competing interests, since they have a system that is run by the province. There would be concern about services to lower density markets.

Senator Sparrow: I would think this type of deregulation would greatly affect the province of Saskatchewan. I cannot speak for other provinces, but we have a problem in servicing smaller communities. It is done by a Crown corporation. If deregulation happened, Greyhound bus lines would move in and take the good routes to Saskatoon, Regina and Lloydminster, et cetera and destroy the possibility of feeder lines into the smaller communities.

Has Saskatchewan officially objected to this, or did the minister make that statement off the top of his head? Is there an official objection from the province?

The Deputy Chairman: To intervene briefly, nothing is happening now. This is a brand new initiative. We should get the proper witnesses from the province in tandem with the carriers themselves to hear what they have to say.

Senator Sparrow: If the witnesses have a report from the province now, there is no reason why this committee should not see that report.

The Deputy Chairman: You will have plenty of information on busing by the middle of October.

Senator Sparrow: I do not want a lot of information. I want to know what is happening in Saskatchewan. If one report has been made, I want to see it.

The Deputy Chairman: We cannot properly ask the federal witnesses for that. We should ask the provincial people for that. That was my only observation.

Guylaine Roy, Director General, Surface Transportation Policy, Transport Canada: We have heard which provinces are interested in regulation and deregulation in the scope of the bills. Several years ago, as the minister mentioned, he tabled legislation that would cover bus regulation but included a transition period. In that way, we were able to identify the stakeholders for and against deregulation. It was in that context that the minister explained which provinces are in favour of deregulation.Perhaps it is best to discuss this with the provinces themselves.

Senator Sparrow: If the province has made a presentation on previously proposed legislation, then this committee should be able to request that report. We can proceed from there. That report would give me a base to work from on the total subject matter.

Senator Taylor: I want to make a comment. I spent a number of years in the Alberta legislature. One reason we wanted to regulate bus traffic was that we paid for the roads. If we could get the federal government to pay more in that respect, the provinces would probably be quite willing to let the feds do the regulating. It did not make sense to have the federal government regulating traffic on a transportation system that was built largely by the province.

I know there are combined funds for the Trans-Canada Highway, but the smaller farm-to-market roads are all provincial. That was the raison d'être - if you will pardon the two French words - for the Alberta legislature's reasoning at that time. I would be interested in knowing how far this could proceed. I have a sneaky hunch you could make a good deal with the provinces if you agreed to put a little more money into building highways. You could do a swap.

Senator Callbeck: You said Saskatchewan does not want to be regulated because a major bus company could come in and cherry-pick the routes. Why does that not apply in Alberta?

Mr. Di Sanza: Alberta has already streamlined its regulation to a large extent. It offers more flexibility for competition in some markets. It has already largely deregulated the charter market. Competition is a function of market size to some degree. It is a function of the level of services already provided and of demand. It could vary from province to province in terms of how the carriers will react and the effect on demand by passengers, who may also react to changes in service levels either for better or worse. The statement could apply to Alberta in some instances.

There has been a series of studies done by both provinces and industry in terms of the potential impact of going to different forms of lessened regulation. Those studies are available from the department.

The Deputy Chairman: Thank you for a very interesting intervention. I know we will be talking to you at a later date.

We will turn now to Bill C-14.

The Deputy Chairman: As I indicated, our purpose this evening is to commence discussion on Bill C-14, respecting shipping and navigation and to amend the Shipping Conferences Exemption Act, 1987 and other acts.

We are very pleased to have with us witnesses from Transport Canada and the Department of Fisheries and Oceans.

I might indicate to members that this is a massive step in the reorganization of the legislative structure that surrounds shipping conferences and so on in Canada. It is a major step forward. It has been in gestation in one form or another, to the best of my knowledge, for in excess of 20 years.

With that formidable task behind you, please tell us what we have to look forward to in the future.

Bud Streeter, Director General, Marine Safety, Transport Canada: I thank you for the opportunity to allow me to make a few introductory remarks. I will not go through the long title of the bill, Mr. Chairman, as you did a very good job of that.

In defence, I have not been involved for 20 years, and I would hope that it will not take us 20 years more to get the act and the regulations into place.

I would like to stress some of the key points of the bill, to summarize the bill for you and the key changes that we have made to the existing legislation. After that the team, the people from other departments implicated by the changes and I would be pleased to answer questions that you may have.

The Canada Shipping Act, which is the major part of Bill C-14, is the principal piece of legislation in Canada that governs personal safety and environmental protection in the marine sector.

We, in Canada, must recognize the value of the shipping industry. Transportation remains essential to our lives and our economy. Transport Canada is examining every aspect of our transportation system of recent years to determine what tools the economy needs to thrive. In turn, the government has worked to improve the legislative framework governing air transportation, railways and ports. Now it is time to bring Canadian shipping into the 21st century.

[Translation]

Canada is a port nation with access to three oceans and major in-land waterways. We are also a trading nation that depends on shipping for the transportation of a large part of the goods we trade.

The shipping industry carried 334 million tons of imports and exports worth some $83 billion in 1999.

Over 90 per cent of this tonnage was shipped in bulk, including coal, minerals, oil, grain and forest products. International shipments make up about 84 per cent of the overall traffic, and this percentage should increase in the future. In order for the Canadian shipping industry to be able to compete internationally, we need to establish transportation policies that are based on strong, modern legislation and that are consistent with the policies of our main trading partners.

There is no question that transportation is essential to Canada, that shipping is of vital importance to our economy and that the Canada Shipping Act is obsolete and in need of reform.

[English]

The objectives of Bill C-14 are stated clearly in Part 1 of the bill. They are to protect the health, safety and well-being of individuals, to protect the marine environment, and to encourage viable, effective and economical marine transportation and commerce.

Industry has expressed support toward a major reform-overhaul of the Canada Shipping Act. It agreed that amending the act, section by section, would make restructuring difficult and would fail to address the underlying problems with the organization of the act and all of the related regulations.

In June 1999 the cabinet authorized the release of a draft bill. This was an unprecedented move but reflected the government's commitment to an open approach to public consultations on this proposed legislation. This openness has resulted in a number of improvements that were made to the bill. Key changes included improvements to provisions that were made to protect and support efficient crews to ensure passenger and vessel safety and to protect the environment.

It is important that the bill also clarifies the marine responsibilities of the Minister of Transport and the Minister of Fisheries and Oceans. We believe the bill is well organized. It updates terminology and streamlines substantive requirements to make the law much clearer and easier to understand.

I have been told by at least one of your colleagues that we may put one or two Maritime lawyers out of business. Believe me, that is an unintended side effect.

A new administrative penalty scheme will provide Transport Canada with an alternative to the courts for dealing with certain contraventions through a graduated series of fair and appropriate penalties, while retaining prosecutions for serious offences. This bill is a crucial step toward ensuring that the Canadian shipping industry has legislation that reflects modern industry practices and permits us to keep up with technological advancements.

Honourable senators, we have made many changes to accommodate many stakeholder requests. None of these changes compromise safety or the environment.

I will now speak about Part 15 of the bill, which deals with amendments to the Shipping Conferences Exception Act, or SCEA, as it is commonly known. This part of the bill deals with the movement by ship of Canada's overseas containerized trade as well as general cargo. This is known in the industry as the liner trade whereby international shipping lines offer regularly-scheduled services between ports around the globe.

[Translation]

A number of these shipping lines operate within a shipping conference. A shipping conference is a group of ocean shipping lines that collectively set rates and provide services. The Shipping Conferences Exemption Act exempts shipping conferences from the application of certain provisions of the Competition Act and sets the rules governing their operations in Canada. Shipping conferences can have operations throughout the world and provide reliable services and stable rates to shippers. Canada's main trading partners have similar legislation to fit the needs of these conferences. A number of those countries, including the United States, have recently reviewed and amended their legislation.

[English]

Amendments to SCEA are now required to keep Canada's shipping conference legislation in harmony with these trading partners. The amendments are designed to encourage a more competitive climate within conferences and to streamline the administration of the act. These amendments are the result of extensive industry consultation with both shippers and carriers that started at the beginning of 1999. They strike a balance between these groups and also support Canada's major container ports, such as Montreal, Halifax and Vancouver.

During review of the bill by the House of Commons Standing Committee on Transport and Government Operations, and as a result of additional consultations with Canadian shippers, the section of the bill on service contracts has been amended. This change, to reinforce confidentiality, was achieved by refining the language of the provision to better address the concerns of shippers. Therefore, the amendments will result in keeping Canadian legislation on a par with other nations; the amendments will benefit shippers from the injection of pro-competitive provisions, and they will enable conferences to continue to serve Canadian ports in support of our international trade.

Bill C-14 will make Canada's waterways a safer place for both seafarers and the public and will ensure a competitive industry. The bill balances the needs and concerns of different sectors of the maritime industry and, at the same time, provides Canadians with a safer marine environment and a safer work place for those who work at sea.

[Translation]

Thanks to the efforts we have made, we now have an effective piece of legislation that modernizes shipping legislation and will meet the needs of the entire shipping industry and of Canadians for many years to come.

We therefore ask honourable senators to support this important bill, which we badly need, and to give Canada's shipping industry the legislative framework it needs to operate successfully.

[English]

Senator Spivak: I do not know whether I want to open this line of questioning on SCEA because it is so complicated. I cannot quite grasp the notion of confidentiality, which is necessary, and the arranged rates and the pro-competitive aspects. Can you comment further? I have a basic understanding, but I am from the Prairies. I do not know much about shipping, but I understand the concept.

Mr. Jerry Rysanek, Director, International Marine Policy and Liability, Transport Canada: The issue of confidentiality here is a new feature of the act. It relates to the extent to which an individual member of a conference line can enter into a contract outside the conference with a shipper, probably a very large shipper, to establish a specific rate and specific conditions. The provision which allows that kind of contract to take place in the future is the pro-competitive aspect of the bill.

We are now telling conference members that while they are operating as a member of a conference under a collective deal, they can also step outside of that and operate as an independent line under possibly more competitive and more beneficial terms to the shipper. As long as the member operates within the conference, it obviously must share information within the conference. That is why the sharing of information is protected. When that member steps outside the conference that information need not be shared and the confidentiality of the contract with the individual line shipper is preserved by the new provisions.

Senator Spivak: I may have more questions on that, but now I want to ask Mr. Troy some questions on boating regulations, in which I have some interest.

I refer to sections 562(4) and 561(1) of the existing act. The wording will be changed and I have questions about the new wording. Does the word "environment" include noise? What exactly is the meaning of "in the public interest," because I understand that, in the past, the Coast Guard has placed far greater weight on public safety when considering applications from municipalities or cottage associations than on the "protection of the public," or sections dealing with the public.

In the new wording, public safety becomes safe and efficient navigation of vessels, and protection or convenience of the public is lost. The question is why do we have the new wording. How would public safety of swimmers or others who are not in the vessel be captured? I have already said what is meant by public interest. What criteria would be used to determine protection of the environment? Would that include noise pollution? Would the new wording allow for restrictions or bans on personal watercraft?

Mr. Steve Troy, Director, Safety and Environmental Systems, Department of Fisheries and Oceans: In trying to respond to the points you have raised, the starting point is to recognize that Bill C-14 deals with navigation and shipping. To address the points you have raised, in the context of the position of the words and the terms, certainly, on environmental and public interest, the definition of environmental could cover noise. It can cover shoreline erosion due to wake.

Senator Spivak: Will that be in the regulations?

Mr. Troy: It would certainly be part of the process of consultation for development of the regulations that will come into place in support of clause 136(2) with regard to the boating and restriction side of things.

With regard to the boating safety and the safety of Canadians engaged in water activities, the focus is not on swimmers per se. The focus is on navigation and vessels and small craft. From a safety perspective, we are examining such things as safety requirements with regard to volume of traffic in a confined waterway as, for example, is the case at False Creek, in the city of Vancouver, where there are many different types of craft, including boating craft at play.

As far as dealing with the question of personal watercraft, the answer is that both under the current boating restriction regulations and under what is envisaged in the proposed regulations in Bill C-14, the answer would be yes. If there was a proven case, from the community perspective, in terms of restrictions with regard to a category of vessel, would that be considered to be put in place? Yes. My colleague Mr. Saheb-Ettaba has some qualifiers he wanted to put on the language points you raised.

Senator Spivak: Could we return to your words about this not being primarily a bill which is concerned with the safety of swimmers? Unfortunately, all the inland waterways of Canada are regulated by the Canada Shipping Act and therefore those issues are of particular concern to people on inland waterways that are not necessarily commercial. These are the responsibilities of the federal government and so I am a little alarmed to hear you say that.

Mr. Troy: If I misled you on that senator, I apologize. The context I am addressing is basically dealing with safety of vessels and navigation. Certainly swimmers in the water come into play on this. That is one of the drivers for substantiating safety cases where you are actually seeking restrictions such as no vessels or power restrictions.

Senator Finestone: Perhaps I could be advised as to whether my municipality has rights which leads into a major waterway? Can a municipality issue rules and regulations? Do those fall under provincial or federal jurisdiction? How does that work?

Mr. Streeter: Shipping and navigation, under the Constitution of Canada, is a federal undertaking and that includes three types of navigation. Mr. Troy was responding to the fact that there is a provision for municipalities, which wish interests in their jurisdictions to make representations to the system that is in place, to impose restrictions with approval of the federal department.

The bill will impact on the public and the public interest is in fact that. The reason for the change in language is for public consultation to determine what the public interest is.

Mr. Aziz Saheb-Ettaba, Counsel, Legal Services, Department of Fisheries and Oceans: The wording is intended to cover the same wording that we have in the current Canada Shipping Act, so there is no change there. It is only a modernizing of the wording in clause 136(2) of Bill C-14.

The question of municipalities and the safety of swimmers was an interesting one. As stated in section 8.(1), the initiative for boating restriction regulations comes from the local authority, from the municipality, and there has to be consultation. Once they have consulted and delineated the area where they want restriction, a proposition is made to the Department of Fisheries and Oceans and to the Coast Guard. I confirm that it is not up to municipalities to legislate on shipping and navigation, which is an exclusive federal jurisdiction, but municipalities ask for it.

Senator Spivak: I have reviewed the instructions to the public as to how that can be done. My understanding is that, at any stage, any bureaucratic official can say, no, this is not allowed. Actually, it is in the instructions to the public.

It is also the case that both in the memoranda of understanding between the Minister of Environment and the marine associations as well as in court cases, personal watercraft are identified as unique craft; yet they are not mentioned, except for age restriction, in any of the currently existing schedules.

Under the existing legislation could the minister, if he wished, put in schedules which might be slightly different for unique, personal watercraft than for boats generally? In other words, would it be possible for a cottage association to bypass the provincial government, do local consultation and go directly to the minister if the minister wanted to do that in this legislation?

Mr. Saheb-Ettaba: The question is two-fold. First, with the current boating restriction regulations, it is possible to impose a limitation or a restriction for some types of motorboats, so the personal watercraft, PWC, will be included as motorboats. There is no schedule that is specific to PWCs, but the regulations may be amended in that case to provide for such.

Senator Spivak: Does the minister have the power to set down schedules for personal watercraft which could be not identical to the rest of the boating regulations? Does he have that power or is legislation needed?

Mr. Saheb-Ettaba:Yes, the power is there.

Mr. Troy:The power is there. With regard to the point on consultation, there are steps. In other words, for the clearance level for municipality to provincial, at the current time you do have to go through the designated provincial authority. In every province there is an organization that is identified as being the clearinghouse for that province for applications.

Senator Spivak: If you wanted to change that, if you wanted to not have that particular designation, the minister does not have the power simply to put in new schedules. The legislation would have to be amended. Is that correct?

Mr. Troy: The consultation process is an administrative step that is laid out. On the schedule side there would be to be changes in the regulation context.

Going back to the point about consultation, that is an administrative process. As far as schedules are concerned, the minister does have the authority, but there would have to be regulatory changes made.

Senator Taylor: Can foreign ships pick up and deliver to two ports in Canada? Is it like the airlines where you can pick up and deliver, but you cannot transport between the two?

Mr. Rysanek: The short answer is they cannot.

Mr. Streeter: Under the Coasting Trade Act, cabotage trade is between Canadian ports. It is exclusively for either Canadian vessels or vessels that are permitted to trade by permission under the act and that meet Canadian requirements.

Senator Taylor: Is that tougher or easier than in the U.S?

Mr. Streeter: It is much easier than it is in the U.S. The Jones Act is very exclusive in the United States. You have heard the saying that you do not discuss politics or religion at a formal dinner. With the Americans the Jones Act is a religion.

Senator Taylor: Will this act cause more people to register in Canada? Even some of our leading lights register their ships in Panama or Liberia. Will this proposed legislation encourage Canadians to come back here and register their ships under the Canadian flag rather than the flag of Liberia or Panama?

Mr. Streeter: There are no economic incentives to encourage Canadian owners to register. However, there are important provisions in the registry to ensure that people cannot hide beyond the corporate veil of a company. We do know through the auhorized representative who is responsible for the safety and operation of a vessel if there are problems with pollution or any other safety issues. It will not encourage people to re-flag into the Canadian market.

Senator Taylor: Does this proposed legislation cover in any way, shape or form the double hulling of tankers or the length they can be or the rate at which they can turn around and so on?

Mr. Streeter: No, the proposed legislation will give the Minister of Transport the enabling authority to make regulations relating to those. We do have regulations in place that specify dates by which all tankers in Canada must be double hulled. We also have safety regulations in place for the operation, construction and manning of tankers. With our partners in the Coast Guard, there are liability regimes in place to ensure that they are accountable for any mistakes or accidents.

Senator Taylor: That is good. In many areas of world you can have a cut-rate Korean tanker with a Liberian registry, a Canadian captain and a Malaysian crew stumbling around the shoreline.

Mr. Streeter: That is precisely why we are trying to use the concept of the authorized representative: so they cannot hide. Ultimately, there is one person we would hold accountable.

Senator Taylor: In the U.S. you cannot discharge your tanks anywhere in the water. In Canada, you can usually do that in a port. Will that change at all? I charter boats in Europe and the Mediterranean. In no place in Canada, until a couple of years ago, could you discharge offshore. Will that still be the case?

Mr. Streeter: We are currently working on regulations with the pilot project on the West Coast. One of difficulties that we have is specifically on the West Coast.

Senator Taylor: In the middle of summer, some of those places on the West Coast stink pretty badly.

Mr. Streeter: We are working with the provinces and municipalities for a holistic approach to clean up the water, as we did on the Great Lakes a few years ago. We are working with the various levels of government to put in place the necessary environmental studies that we must do on things like flush rates in areas where there is a negative impact of discharge. We expect that we will have regulations in that regard in the next two years.

The bill is an enabling framework. It lays out the authority that we require to modernize regulations, to be able to react through incorporation by reference of standards.

In the shipping industry and even the yachting industry, yachts are built to International Standards Organization, ISO, standards. Rather than duplicate a regime or create a unique Canadian one, we would have the ability to incorporate by reference and add any Canadian changes that would be necessary. This is an enabling framework. We tried to keep it simple. It lays out the authorities and duties of the safety inspector. It lays out the penalties. The regulations and guidelines and standards would be part of a process that can be readily amended as conditions change, as the next design of personal hovercraft shows up to frustrate us when we regulate personal watercraft.

Senator Callbeck: I want to ask about pollution prevention and response. For what is the Department of Transport responsible? For what is the Department of Fisheries responsible?

Mr. Streeter: For the onboard activities aboard a ship, the regulation of those activities, the carriage of equipment onboard ships to prevent pollution and for the investigation of incidents where ships are involved, the lead responsibility is the Ministry of Transport.

The response to an oil spill, or the regulation of operations for shore-side terminals where refuelling of vessels are transferred to oil terminals is the responsibility of the Coast Guard.

We partner with the Coast Guard and Environment Canada to track down mystery spills on the East Coast, for example, to share resources for pollution overflights, the objective being to deter by letting people know that we are out there.

If pollution is reported, if cleanup is necessary, that is the responsibility of the Coast Guard. If it is an investigation - where did it come from, who to charge - that is marine safety and is the responsibility of Transport Canada.

Senator Callbeck: How does that differ from what we have now?

Mr. Streeter: Now the act says it is all the responsibility of the Ministry of Transport. We work by memorandum of understanding between the two departments since the Coast Guard was devolved to Fisheries and Oceans in 1995.

Legislatively, we have bureaucratic hurdles to overcome. For example, to appoint pollution prevention officers, the Coast Guard trains and it sends a list to the Minister of Transport. The authority to issue those appointments is delegated to the chairman of the Board of Steamship Inspection, which is old honourary title that I hold. I sign cards and appoint pollution prevention officers for the Canadian Coast Guard. We have other bureaucratic arrangements that are in place to address the legislation, but basically we wish to formalize that in legislation so the bureaucracy is minimized. The partnership will be as strong as ever to ensure that everyone who has any role in the prevention of pollution plays that role.

I sign cards and appoint pollution prevention officers for the Canadian Coast Guard. We have other bureaucratic arrangements that are in place to address the legislation, but basically we wish to formalize that in legislation so the bureaucracy is minimized. The partnership will be as strong as ever to ensure that everyone who has any role in the prevention of pollution plays that role.

Senator Callbeck: I was asked whether this proposed legislation dealt with floating cottages. The other night on television there was an interview with a gentleman who had a scheme to build a floating island where 100,000 people could live, simply to avoid taxes.

Mr. Streeter: If it is simply to be rid of taxes it also sounds like the Grand Cayman Islands.

This legislation permits the minister to define what is not a vessel. That may sound like a convoluted approach, but the basic definition of vessel would permit people to build houses on a floating object and tow them around to say they are capable of navigation. They could, therefore, register houses as vessels and not have to pay municipal or provincial taxes, shipping being a federal undertaking. Of course there is no income derived from that so they may not have to pay for municipal services. We have one case of registry of a playhouse that was built in the shape of a ship, however, it is so far from water that it cannot get there to beat the building permit requirements.

This act permits the Minister of Transport to define what is not a vessel so that cannot be done. In other words, municipalities can approach us, we can define what is not a vessel and they can then deal with those people who take up the waterfront property or who do not pay taxes but use all the services. It was a solution that needed to be found because of the jurisprudence for the definition of a vessel.

Yes, indirectly, it does. We will have regulation to deal directly with that, senator.

Senator Finestone: I understand this is enabling framework legislation. Does that mean the standards will appear in the Standing Joint Committee for the Scrutiny of Regulations?

Mr. Streeter: Yes. I would hope that we will do such a good job they will pass through your system quickly.

Senator Finestone: Why is the Coast Guard not part of the Department of Transport? Why is it divided?

Mr. Streeter: In 1995 it was decided that the most effective way to operate a large fleet of vessels is to rationalize it within one organization. You may recall that we were in the midst of aggressive protection activity for our fisheries, and we still are. It made sense at the time. Transport Canada's mandate was also to get out of operating and into economic policy and safety. It seemed to be a conflict to be regulating safety, especially in the marine mode, yet being the biggest fleet operator in the country. That conflict was resolved, and many other efficiencies gained, by management agreeing to send the Coast Guard to the Department of Fisheries and Oceans.

Senator Finestone: Do you believe that, if we find this to be good legislation, the committee should examine the regulations, guidelines and standards afterwards, or should they just go to the Standing Joint Committee for the Scrutiny of Regulations?

Mr. Streeter: That is probably a personal opinion into which I best not venture. As I mentioned in a side conversation with Senator Forrestall who talked to me about the bill the last time we were here for the first part of the Canada Shipping Act reform, I believe that regulations will be developed in consultation with industry and the public, in accordance with Government of Canada guidelines and requirements, and will be passed through that process. You will see them, I am sure, in the standing joint committee. Because this is a living document, I hope that in five or 10 years, when we return for the first set of amendments to the bill, that we will have another chat about what we should do with that.

Senator Finestone: On page 4 you talk about certain impediments to the ability to compete internationally. Could you tell me what the major impediments seem to be?

Mr. Streeter: The major impediment, in terms of safety, is the simple fact that the present act - I say tongue in cheek - was written by Admiral Nelson on his way to trounce Napoleon in Egypt. It is that old. It has been modified piecemeal and it is extremely difficult to understand. Therefore, the shipping companies, inspectors, governments and builders spend an inordinate amount of time obtaining interpretations. The Government of Canada has not had a holistic examination of equipment and regulations to be put on vessels for a number of years. The bill will force that process to take place. We believe that we will be able to come up with a streamlined regime that is easier to understand, easier to implement, easier to enforce, yet will not compromise safety. The simple fact that people spend time considering duplication of different parts of the act is, in fact, a cost to the industry.

Senator Finestone: There is no major reform, it is just a re-jigging of the decks on the ship.

Mr. Streeter: The existing act sets out a $10 fine for molesting a passenger. I believe there are some major changes.

Senator Finestone: I wondered whether the major impediments, apart from language and occasional upgrades, would be found under the regulations or is it really substantive in some way?

Mr. Streeter: It is very substantive. The old act is three times as thick as the new one. There were 800-plus sections. We have reduced that to under 300. There were 200 definitions, some of which were different and were for one part only, versus the entire act. We have reduced the definitions to 30.

We have very prescriptive arrangements as to what qualifications people on board must have, what number of people can be carried on board, the various arrangements that ships must satisfy, as well as voyage limitations that do not make sense with modern technology. It was inhibiting in terms of designing and building ships and, certainly, in terms of operation.

Senator Finestone: The modern, competitive international advantage we seek is not the language. There must be major issues. What are the major issues?

Mr. Streeter: If we sought a competitive advantage for shipping in Canada, we would have to deal with everything - decisions that Industry Canada considered as to whether shipbuilding should be subsidized, for example. We would have to evaluate what other countries have done, which would include, perhaps, considering tax breaks for seafarers. That is beyond my responsibility.

Senator Finestone: It is beyond the parameters of the bill.

Mr. Streeter: That is right. This is a safety bill. Safety too must be cost-effective, and it also must have emphasis on "effective." The requirements to be complied with must be easily understood so that a ship is not tied up, at $10,000 a day, for a frivolous misunderstanding. It must be clear that if a ship is tied up - and we tie up 110 foreign ships a year that do not meet requirements - we must ensure that it is clearly understood why that is being done and what owners can do to avoid that.

We want shipowners to be part of the safety equation in Canada. Therefore, they must understand what is expected. It is difficult to understand what is expected by referring them to the existing Canada Shipping Act. In the bill we set out what is required. We set out the responsibilities of the master, for example. We have made the legislation easy to understand.

Senator Finestone: Can we refuse docking rights to ships that are an absolute danger to our environment?

Mr. Streeter: In the bill we have the right to ban shipping that does not meet certain criteria. What we do now when we do our port state control inspections of foreign vessels, for those who are not in line with international standards, is detain them until they are compliant.

Senator Finestone: Do you allow them to come in and dock?

Mr. Streeter: We have no legislation that permits us to ban them. As a matter of fact, if there is a safety concern we would have concerns about the crew on board.

Senator Finestone: Are there concerns for illegal immigrants in containers?

Mr. Streeter: We have concerns about that as well. We are part of a multi-departmental group that deals with that issue. However, the lead is Immigration Canada.

Senator Finestone: Will that be covered in some way?

Mr. Streeter: It is not covered by our legislation, but it is covered by other Canadian legislation. We have removed any duplication that is evident in our legislation and other legislation.

Senator Finestone: For us to be able to do a substantive job, could you provide us with a list of those with whom you have consulted? You said that the government's commitment to an open approach to consultation on the proposed legislation has resulted in a number of improvements being made to the bill. Could we have a list of those you consulted?

Mr. Streeter: I could provide that to the clerk of the committee for distribution. There are 300-plus organizations and individuals on that list.

Senator Finestone: That might help us to determine whom we would like to see and eliminate duplication.

Mr. Streeter: If you have a question about recommendations for witnesses, I could leave that to the clerk. I would obviously be disposed to give you all the names of the people who agreed with everything that we did. I do not say that everyone agreed with everything.

Senator Finestone: My next question has to do with comparative legislation. You mentioned that Canada's major trading partners accommodate shipping conferences through similar legislation and they have recently reviewed and amended their legislation. Do we have a list of where the amendments took place - a comparison between our proposed legislation, the existing legislation and new legislation in these other countries?

Mr. Rysanek: Senator, we can provide a comparative paper on legislation that launches the changes that are before you, which is similar legislation in the United States. On the issue of ensuring that our legislation is reasonably well harmonized with that of the United States, we certainly have a fair amount of detail that we can provide. We could also, through our contacts, obtain detailed information on legislation in the European Community, which was also a guiding principle. That is where we are harmonized as well.

Senator Finestone: That is well and good. Canada's growing international trade on the Asia Pacific Coast is also important. How do we compare on that legislative coastline? I am pleased that we will harmonize with the United States, although it is not always in our best interests. I would like to compare all of those.

Page eight contains exemptions. It says that SCEA exempts shipping conferences from certain provisions of the Competition Act and sets the rules for their operation in Canada. What is the relationship? Why do we use SCEA instead of using the Competition Act? We use it for everything else to make determinations. Why would we use a different methodology in this case? What rules have been changed?

Mr. Rysanek: The very existence of the Shipping Conferences Exemption Act is a framework that provides protection for activities that are normally prohibited by the Competition Act. Obviously, another legislative framework is required to sanction and permit behaviour or business conduct, which otherwise is prohibited by the Competition Act.

In this case, it is the framework of the Shipping Conferences Exemption Act. It exempts the conferences from two or three key principles that the Competition Act normally safeguards: the right to collude and agree on prices, on services, on ports and on routes which are served by the Conferences. Those are the principal activities of the conferences that are allowed by SCEA. Therefore, they are protected from any infraction of the Competition Act.

Senator Finestone: Senator Spivak asked a question that related to pro-competitive activity in respect of special rates, conditions and discount services, depending on the size. What type of pro-competitive activity, but which protects the privacy of information, would be in place?

Mr. Rysanek: I partly responded to the same question. In the future, following this amendment, when an individual line enters into a private contract with an individual or shipper outside of the conference agreement, it will not be compelled to share information on that private contract with the members of conference. We seek to preserve the confidential nature of the private contract in the legislation.

There has been discussion on whether, in fact, the member of the conference who acts in that fashion should be specifically prohibited from sharing the information. That is where the amendment, which actually was achieved during the committee on transport and government operation, clarified the language that while we cannot prohibit the member from sharing the information we can certainly put enough restrictions on the conference not to ask the question.

It is an issue of how far the legislation can go in terms of controlling disclosure of information, which in itself, of course, is not an infraction of the Competition Act.

Senator Finestone: There is strong personal privacy protection and business protection under the e-commerce bill, Bill C-6, of John Manley. Bill C-6 brought about the Personal Information Protection and Electronic Documents Act, which passed and came into effect January 1 of this year. Why can we not use it?

I do not know if I am in the correct field of activity, but it seems to me that wherever there is competition, and to prevent the potential for raiding and misinformation, there has to be a certain degree of privacy. It is a business privacy clause, in a sense.

Mr. Rysanek: I admit that I am not familiar with the act or whether the activity is of an identical nature. We were guided by the spirit of the Competition Act. The sharing of information is not illegal. It is acting on the sharing of information that is illegal under the Competition Act. That is where we thought our provision was consistent with the spirit of the Competition Act.

The Deputy Chairman: For the senator's own information, it is the largest, uncoded piece of legislation in existence in Canada. It contains about 800 pages on only one level. The volumes of law that are affected would fill this table.

Senator Spivak: I know that we will have the officials back because this is a complicated bill.I will address myself to a very narrow point of interest now.

Does the bill contain anything about ballast water? The most serious threat to our waterways is exotic species. Is that a question of law, or is it a question of enforcement? Is there anything different in the bill?

Mr. Streeter: In this bill, for the first time, there is our ability to regulate ballast water relative to pathogens, such as cholera.

We currently have the authority to prohibit dumping of ballast water in certain areas. We now have guidelines in place. We were waiting for international legislation. We are now working with the United States Coast Guard, Environment Canada and the international joint commission to come up with a testing protocol. What we lack is a testing protocol for ballast water.

Senator Spivak: It seems to me that in the Marine Liability Act that there is something where liability is exempted. Is it pathogens that are exempted?

Mr. Streeter: They are exempt from the present provisions of the oil pollution concerns.

Senator Spivak: Why are they exempt?

Mr. Streeter: They are exempt because they are not, at this point, defined as pollutants.

Senator Spivak: Why are pathogens exempt? Inclusion of pathogens would be a powerful disincentive to playing fast and lose with ballast water.

Mr. Streeter: We could not even try to frame the potential liability, which is always a difficulty with any liability conference, if it is an international conference that we are embodying here.

Senator Spivak: I will take your word for it, for the time being.

Mr. Streeter: Certainly we regulate the management of ballast water on board ship to minimize the introduction into Canada of non-native species. I am sure you are thinking that is, at this point in time, putting the horse after the cart, if we consider zebra mussels.

Senator Spivak: There are other exotic species as well, such as lampreys.

Mr. Streeter: We try to prevent the introduction of further species and to prevent the spread of existing species now, which we do through ballast water management standards, and which we will also be doing through testing and discharge.

Senator Spivak: We are speaking broadly now; we will get it into in more detail later. I cannot remember it all, but there were things transferred from or eliminated from CEPA that came under one of these acts. I do not know which one. The memorandum of understanding between the Canadian Marine Manufacturers Association, or something like that, is a voluntary kind of memorandum dealing with reduction of emissions of pollution. The Minister of Environment hinted very broadly that under CEPA there would be stricter regulation.

Again, it is the same question that Senator Callbeck asked. What is the relationship between what the legal responsibility is under CEPA and what this act involves in terms of pollution of marine vessels, especially of those not more than 15 tonnes gross - in other words, various kinds of recreational craft?

Mr. Streeter: We have colleagues from the Department of the Environment here.

Senator Spivak: I would be very interested in an answer.

While you are answering that question, in terms of pollution, does the Canadian Environment Assessment Act come into play here at all? I am thinking, for example, of the impact on wildlife from personal watercraft, which is tremendous. I imagine CEPA would deal with the gross amounts of pollution from two-stroke engines.

Mr. Morrie Kirshenblatt, Head, Off-Road Regulations Section, Environment Canada: Just to back up a little, the memoranda of understanding you referred to were developed at the time CEPA was in its infancy and going through the parliamentary process. That is an attempt to fast-track engines designed to meet U.S. federal emission standards in this country.

Minister Anderson has recently announced that as part of a broader policy objective within the department that we are going through and in certain cases updating the existing motor vehicle emissions regulations. Those would be the ones that apply to cars. As well, under the new authorities under CEPA, we would be examining other categories of off-road engines such as marine engines, pleasure craft such as outboard engines and personal watercraft.

Senator Spivak: Does that include lawn mowers?

Mr. Kirshenblatt: That includes lawn mowers as well as off-road diesel engines. The particular amendment that is contained in CSA is an attempt to redress or correct, since CEPA has been passed. On careful review by our counsel we have learned we do not have that authority as CEPA is currently written, so this is to reset that with respect to marine engines.

Senator Spivak: We knew that when we were going there.

Mr. Kirshenblatt: That is the big picture as to why CEPA is here. As well, our minister's policy direction is that we are moving to, if you like, "back stop" and put into place regulations respecting emissions from those various categories of off-road engines.

Senator Spivak: Even though we have section 136(h) of Bill C-14, it is really the CEPA act that governs the emissions. It governs not even by legislation but by regulation.

Mr. Dan Blasioli, Legal Counsel, Environment Canada Legal Services, Department of Justice: I would like to make a small qualification. The regulation through CEPA is for a small subset of pleasure craft, not any ship of a greater size. That remains with Transport Canada.

Senator Spivak: This says, I understand, not more than 15 tonnes gross tonnage. That is for pleasure craft. Are you thinking of CEPA applying to even for smaller craft than that?

Mr. Streeter: Senator, there are small commercial vessels of less than 15 gross tonnes; for example, whale watchers. The difficulty that we had in terms of defining was the cut-off. Therefore, what we have done with the amendment you will see here for CEPA is to permit the Department of Environment to regulate all small engines irrespective of application. After a certain horsepower, however, Transport Canada regulates larger marine diesel engines. Our partners in Environment Canada will regulate small diesel engines and all spark ignition engines that are used in shipping. We will continue to regulate. We regulate aircraft engines; we regulate rail engines.

Senator Spivak: If I understand you correctly, you are offloading the enforcement or whatever of small pleasure craft to the Department of Environment under CEPA.

Mr. Streeter: No, we are partnering for them to provide rules or regulatory framework. Enforcement will be undertaken by pleasure craft inspectors, by police agencies, by steamship inspectors for Transport Canada and, if necessary, by environment-compliance testing.

Senator Spivak: What I am concentrating on like a laser is under which schedule this is going to come about to regulate two-stroke engines, particularly personal watercraft. There are various kinds of engines. I will give you an example. According to Environment Canada, one hour of a 70 horsepower two-stroke engine is the same as 8,000 kilometers for a new car.

It is on the Web site of the Environment Canada Technology Centre; that is where it is from.

Mr. Kirshenblatt: To respond to your question, the way CEPA is designed, we would be in the business with this amendment. This is an enabling authority to allow us to regulate the manufacturers of those engines. For a frame of reference, when passenger-car emissions regulations are set, a manufacturer or an importer can import vehicles for first retail sale only after meeting prescribed standards.

With reference to the two-stroke engine, our approach is one of establishing performance standards. An engine in a given category cannot emit more than X grams of hydrocarbons per hour, for argument's sake.

Senator Spivak: Are these carcinogens?

Mr. Kirshenblatt: In this case, it refers just to gaseous emissions, such as hydrocarbons, carbon monoxide and so forth. From there, we would leave it up the industry and the individual manufacturers to develop an approach.

Senator Spivak: I want to have one answer, yes or no: Will you introduce regulations in addition to that memorandum of understanding which is voluntary? That is my final question.

Mr. Kirshenblatt: That is our intent, assuming Parliament deems to pass this law and, therefore, amendments to CEPA. Our direction is to go forward with regulations.

Senator Spivak: Perhaps I could deal with my other questions by writing to these officials and they would be good enough to answer?

The Deputy Chairman: Send the responses to the Clerk of the Committee who will then distribute them.

Senator Callbeck: Someone involved in the shipping business complained to me that it is very difficult to find anything in this act. Is there a new table of provisions in this act?

Mr. Streeter: This table is not in the existing act. There is in our office consolidation an index, but, because the existing act was amended piecemeal, it is a difficult and convoluted document. That is why we wanted a new format.

Senator Callbeck: This bill should solve the problem?

Mr. Streeter: Our stakeholders are very happy with this and would very much like to see it passed as quickly as possible so that the provisions which impact on registry will soon be enabled.

Senator Callbeck: You mentioned that not all stakeholders were happy. Where was the major criticism?

Mr. Streeter: The major criticism was with the administrative penalty scheme. Many felt that we would be overly zealous in applying those penalties. We have assured them that will not be the case. They remain sceptical because it is new. As I am sure Senator Forestall would attest, mariners by nature are generally small-c conservatives.

The Deputy Chairman: Gentlemen, we appreciate your help. This is a good start to a long journey.

Honourable senators, we will meet here Tuesday next at 9:30 a.m. to hear from the Shipping Federation of Canada and the Canadian Marine Manufacturers Association.

The committee adjourned.

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