Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 24 - Evidence (morning session)
VANCOUVER, Monday, March 25, 2002
The Standing Senate Committee on Transport and Communications met this day at 9:00 a.m. to examine issues facing the intercity busing industry.
Senator Lise Bacon (Chairman) in the Chair.
[English]
The Chairman: I want to welcome the witnesses, observers and members of the committee to these public hearings here in Vancouver of this Standing Senate Committee on Transport and Communications. The subject of our hearings is the committee's special study of intercity buses. We are pleased to be in the province represented by Senator Jaffer, who is a member of our committee, and Senator Lawson, who is joining us today for our meeting.
As the third-largest city in Canada, Vancouver and the Greater Vancouver Regional District have important passenger transportation issues we wish to become more familiar with.
The province as a whole probably also has issues of concern such as we have heard elsewhere: declining populations in small communities; an overall aging population; and important issues of the need for public transportation to give older citizens access to health care and to give youth access to employment opportunities. The federal Minister of Transport asked this committee to undertake this study.
[Translation]
The committee met in Montreal and in Halifax and we will be in Calgary and in Toronto in the next few days. We will report the results of our study to the Senate before the end of 2002.
[English]
We have already started our research and have benefited from numerous commissions and studies on the topic undertaken by the federal government and many of the provinces, as well as from reports from foreign countries; however, essential to our study is hearing what the population has to say and that is why we are here today.
Occasionally in transportation studies, it is possible for those inquiring to get caught up in the operational problems and even in the details of the equipment of a carrier or to get caught up in the merits of different regulatory regimes before fully understanding what the users of the service actually want.
Our view is that the primary responsibility of our inquiry is to understand the wants and needs of the user of intercity bus service — what the economists would call the demand side. After all, that is what the carriers are there for, to serve the users. We believe that if that demand side is understood, designing a responsive service and appropriate regulation may become straightforward.
Because of time constraints, we have not always been able to group our witnesses together as users, carriers, regulators, but I think that it is the most useful way in which to consider the testimony we will hear today. Concerns over equipment, business competition, administrative priorities, et cetera, should always be put to this test: What do the users want?
Before we hear from our first witness I will say a few words to review why we have been asked to study intercity buses. The essence of the problem is that intercity bus ridership has been steadily declining for several decades. This decline is troubling because the bus mode is an important part of the passenger transportation system. The bus mode can go virtually everywhere, it is environmentally friendly, and traditionally it has been inexpensive.
There are several possibly explanations for the decline. I will mention a few. It could be that people are better off than before and are travelling more by automobile. It could be that more people are living in big cities. It could be that there is too much government regulation and that the regulations vary too much from one province to another. This is what we hope to find in the days and months to come.
Questions will follow each presentation, and I would also add that the questions we hope to answer appear on our Web site.
We will hear first this morning from Mr. Michael Cafferky from Gray Line Victoria.
Mr. Michael G. Cafferky, General Manager, Gray Line Victoria: I thank the Senate committee for this opportunity to be present today and to discuss a topic that is of importance not only to the committee but to the communities that we serve, to my colleagues and to me personally.
I am the general manager of both Gray Line Victoria, also known as Island Coach Lines, based in Victoria, and of Northland Bus Lines, based in Prince George.
I have been employed in the intercity bus industry for nearly 25 years. During the course of my career, I have worked for five different bus companies in five different cities, ranging in company size from small to large. This has provided me with perhaps a broader insight than most. In the next 10 minutes, I will do my best to share some of these insights with you.
Gray Line Victoria and Northland Bus Lines operate 101 passenger vehicles, 50 motor coaches, 11 transit buses, 25 double-deckers and 15 minibus or vans. We employ directly 150 people at low season and 250 people at high season and also cause some added employment at our 14 passenger parcel agencies. We operate a total of 3.5 million vehicle miles annually, of which 1.2 million miles are involved in the provision of scheduled services. We are owned by Laidlaw, but we do not report through the Greyhound Canada management organization because our tour/charter/ sight-seeing business is larger than our scheduled services business.
Our lines of business are varied. I have them listed here, and I will leave them for you to read on your own for the sake of saving some time in the presentation.
Our scheduled services network, both passenger and parcel, connects 40 communities, not including the approximately 20 flag stops that are provided as a courtesy to local travellers. Of this 40-point network, three depots are operated by the company, another 14 are operated by agents and the remaining 22, as well as our highway stops, are so small that the bus driver acts as the sales agent.
Apart from Victoria and Nanaimo, no community that we serve has a population greater than 50,000. Our scheduled services, both passenger and parcel, are unprofitable. They constitute about 35 percent of our total revenue base, but they only recover about 95 percent of their direct costs and contribute nothing towards overheads.
We estimate that our scheduled services would only recover about 80 per cent of the costs if they were operated on a stand-alone basis. However, they do contribute partially towards shared infrastructure, and without their presence we would be forced to radically downsize infrastructure, thereby affecting our ability to continue to serve our other lines of business. Moreover, our operating authorities specifically require us to operate this scheduled network in order to retain the charter/tour/sight-seeing portions of our licence authorities.
Unlike Greyhound Canada, which is predominantly a scheduled service provider, or unlike Pacific Western Transportation, PWT, which is predominantly a contract bus service provider with school bus, transit and shuttle bus contracts, we are a generalist bus company. Our lines of business are interwoven; they are interdependent and insufficiently large enough to be separable, with one exception. That exception is our charter/tour/sight-seeing business in Greater Victoria. It is large enough and profitable enough to operate on some form of stand-alone basis. All of our other business lines have some degree of mutual interdependence such that the cessation of one threatens the others.
From my own experience in the industry, I know this situation is unusual. When transport policy-makers talk about cross-subsidy, they are usually thinking in terms of the cross-subsidy from profitable scheduled routes to unprofitable scheduled routes and/or cross-subsidy from scheduled parcel service to scheduled passenger service.
We are unusual because we are a provable instance of cross-subsidy from charter/tour/sight-seeing services to scheduled service, both passenger and parcels. To the best of my knowledge, this is not a common phenomenon within the intercity bus industry. In that sense, we are an odd duck compared to most other scheduled intercity bus carriers.
If passenger bus deregulation occurs, then the greatest likelihood is that scheduled bus service will only continue to five of the 40 communities that are now served. Our contingency planning analyses have indicated that some scheduled bus service will likely continue for a stripped-down semi-express bus route on the Island, connecting Victoria, Duncan, Nanaimo, Courtenay and Campbell River. It is doubtful that the other Island communities will continue to receive service, especially since the completion of construction of the new Island Highway bypasses many of the smaller communities. There will certainly not be any scheduled bus service to Fort St. James on the mainland, a community of only 2,100 people, with insufficient traffic to justify even a van service. After any bus deregulation, it is probable that we would attempt to operate this stripped-down scheduled service to the five communities, although even with the simplified network operation the potential for profit is small. Indeed, this profit potential is so small that we believe competition over the route is not sustainable, and it is difficult to imagine a competitive situation that would justify the capital risks involved should we face sustained competition.
Accordingly, there is a reasonable probability that we would walk away from such an unsustainable competitive battle before it were ever waged. Even though we are confident of our ability to win such a battle, it is simply that our business, like many others in our industry, does not have the capital to invest into negative cash flow business situations. Even a relatively quick victory of defeating the competition within 12 months would still incur significant operating losses that then must be added to our overall investment costs. The markets on the Island are too small to justify undertaking this added investment risk.
So the end result of passenger bus deregulation will likely be that 35 of the 40 communities that we currently serve will lose connecting bus service. Our knowledge of the bus traffic associated with these smaller communities leads us to believe that there is little opportunity for connecting van services somehow taking up the slack. These markets are simply too small. People from these communities will have to arrange for private car transportation to travel to the nearest connecting node within the stripped-down network. Moreover, trip frequency will likely be reduced from the current four to five daily trips over major corridors. Also, equipment used to operate the stripped-down service may not offer the same amenities, such as washrooms, that are now available. As well, of course, passenger tariffs will likely be higher, as is often the case whenever an unregulated carrier controls the market. As well, bus parcel services to any location on the Island other than Victoria will either be non-existent or severely impaired.
To return to the issue of our rather unique intertwining of lines of business, what sets us apart is that the preceding description of what will likely happen after a total passenger bus deregulation is equally accurate in describing what will happen if only charter bus deregulation were to be implemented. We realize that this is not a common problem within the Canadian intercity bus industry, but it is certainly the case on Vancouver Island. Whether total passenger bus deregulation were to be implemented or only charter bus deregulation were implemented, our actions and response would be virtually identical. For the purpose of survival, we would immediately move to minimize our fixed costs by shedding infrastructure. Garage facilities and depot/agency facilities would by necessity be closed or dramatically downsized. Total full-time employment will be reduced from an average of approximately 200 employees to an average of less than 50 employees. We would reduce our fleet from 101 to less than 40 vehicles, and these assets would be moved to where a greater return on investment could be achieved.
We would focus our energies and our resources to protect our more profitable charter/tour/sight-seeing in the Greater Victoria markets. Even here it will be more difficult to remain profitable with these downsized operations, but this clearly represents the best opportunity for our survival.
The losers in this process will be our employees, most of the small communities that we currently serve, as well as those remaining passengers that will continue to receive scheduled bus services but probably of a lower quality at a higher price.
It is my unwavering view, based on 25 years of experience in the motor coach business across Canada, that deregulation will destroy scheduled bus services to many small communities. It is a myth to believe that somehow they will remain connected by van services provided by enterprising local entrepreneurs. There will be isolated attempts in this regard, but most will fail, especially when they discover that the summer travel peaks are followed by months of sparse traffic. We attempted such an experience in Manitoba in the years I acted as the general manager for Gray Goose Bus Lines. Here, we turned over operations of unprofitable, low-traffic routes to interested van operators. We went so far as to provide and maintain the vans and asked only that the operators take their fuel and wages out of the revenues. In the end, we were forced to subsidize even these costs. Where replacement van operations do arise, experience and common sense warrant that such operators are unlikely to operate to the same safety standards that are currently adhered to by the intercity bus industry.
I further submit to you that throughout Canada deregulation will not lead to lower scheduled bus tariffs on any but the largest bus routes, where competition is sustainable. Again, drawing on my own industry experience, it is not clear to me that any scheduled bus competition will survive within British Columbia after deregulation, with the possible exception of the Vancouver to Victoria corridor. Either the markets throughout British Columbia are too small or the current service provider has too strong a grip on the facilities necessary to operate those few large bus routes that exist in the province. In the end, we will end up replacing the current framework of regulated exclusive carriers with unregulated monopolies, except that, clearly, the number of communities served will be reduced.
In my career, I have also worked in the very large bus markets of Toronto and Vancouver and understand how these large markets work. The potential for some positive results emerging from deregulation in these ultra-large markets may be attractive in the minds of some, although many of these benefits already exist because of de facto charter deregulation. However, policy-makers are making a serious error in judgment if they anticipate that the same potential for benefit can be extended to the smaller bus markets. The competitive forces at work in small towns are negligible and more often than not are replaced by community cooperation. If government decides to pursue bus deregulation, it is really deciding to confer some possibly greater benefits on the large urban populations at the expense of small-town Canada. My opinion is that any resulting benefits to big-city Canada will not even be noticeable, but the harm to small-town Canada will be extensive.
What distresses me the most is that the federal government was on the verge of introducing passenger bus deregulation without even examining the likely impacts. No government has yet contacted us to request information about our network service and the likely changes to this service after deregulation. More recently, the B.C. government has signalled that it intends to examine the issue of passenger bus deregulations as it prepares a provincial transportation strategy over the next three years. We are cautiously optimistic that they will solicit both our views and our network service data during this process. With any luck, their approach to the issue will be more inclusive and more informed than the recent past federal efforts.
I cannot emphasize too strongly how important the role of your committee is in this regard. If nothing else, it is hoped that your efforts will encourage government to do the policy research that they should have done in the first place. If after proper research the decision is still made to implement passenger bus deregulation, then so be it. I will not agree with that decision, but at least I will have the comfort of knowing that the proper attempts were made to understand its implications in advance.
The Chairman: Mr. Cafferky, you say that Fort St. James, having a population of about 2,000, would be too small to justify van service. We have found that small communities in P.E.I. and Nova Scotia are very happy with their van service. Why do you think it would not work here?
Mr. Cafferky: On a passenger-alone basis, a van operation, in my view, could not produce the revenues needed to sustain it. Our passenger ridership on that run is very, very poor.
The Chairman: So it would not work here.
Mr. Cafferky: In the Fort St. James example?
The Chairman: Yes.
Mr. Cafferky: The Fort St. James example is similar to experiences in Manitoba, where even when we put vans on there was not enough passenger traffic to support the service and they had to be subsidized. This is another example of that.
When you operate a van service, you have to pay the driver. The driver may be the owner of the company, but he expects a wage, or expects to make something out of his efforts. Like the rest of our industry, that service is very cost- intensive, capital-intensive, labor-intensive, maintenance-intensive and fuel-intensive. The margins in the motor coach industry are small because the costs are so intensive in so many areas.
The Chairman: I took note of the comments you made at the end of your presentation, but are the differences between the provincial bus regimes that have developed over the last decade detrimental to the industry and the travelling public; and if so, what is the appropriate remedy? Which level of government should implement it?
Mr. Cafferky: There would be a benefit gained from having consistent rules across the country. Having said that, however, I serve on an advisory committee to the Motor Carrier Commission of British Columbia and recently we have asked ourselves how the commission can better serve the industry. While there was agreement between the operating companies that, particularly on the charter side, there might be a benefit gained not from deregulation but from streamlining of regulations, even at that committee, with scheduled carriers involved, the necessity of having schedules and tariffs controlled by the commission was understood and accepted. Hence, while I see some room for streamlining in some areas, our advisory committee concluded that scheduled services continue to need to be regulated.
Senator Forrestall: You seem, without any hesitation, to make the case for some form of regulatory regime to protect you; otherwise, you would have to resort to the other law that governs you, that being the law of profit, investment and profitable return.
I realize that the Island is a unique piece of Canadian geography. Nevertheless, if you could not serve the Island would people be stranded; and if so, who would they be? I am thinking of the elderly, the college kids, young people and people with marginal incomes. Do you have any sense of that? What would the government be left to cope with?
As well, there are various nations up and down the coast. How would they travel?
Mr. Cafferky: In my view, we would be stranding people. I wish you had not led me to what I am going to say, but in reality the people we would be stranding are the youth and the aged. Our service on Vancouver Island runs through a number of very small communities, many of which have many seniors.
I also worked in Manitoba, and the situation there is very similar. The only difference there is that those small communities are further apart.
On the Island, at certain times of the year, those seniors who rely on our service need to get to a doctor's appointment in a major center. They want to continue to reside in their family homes in Qualicum or French Beach or some other location on the Island, but they rely totally on our service to get into Nanaimo or Courtenay to do their shopping or to go to the doctor or the dentist. There are students who commute weekly using our service.
Our service has very large peaks. At the end of session or during spring break we carry large numbers of students. As well, a large part of the traffic we carry is kids going back and forth to dentist appointments, et cetera.
Would we have to abandon that service? In my view, we would. We would have no option.
Senator Forrestall: Given your lengthy experience in the industry and your knowledge of problems within the industry, would the government have to step in? Have you explored with government some type of use-it-or-lose-it proposition, some form of subsidy, perhaps a bit of a break on gasoline taxes or some other form of encouragement to maintain the service? If not, sooner or later it will be a burden on the taxpayer.
Mr. Cafferky: I am not sure what the resolution is to re-establishing bus service to communities that have had bus service taken away because of deregulation.
On Vancouver Island, the provincial government funds transit services. In some cases, the communities are so close together that perhaps that transit service could be expanded to provide a continuum of service between some of the communities. I am thinking of the mid-Island area. However, currently that service is being provided without subsidy.
From a personal perspective, it makes no sense to abandon that service only to replace it with a subsidized service.
In Fort St. John, for example, the cost of re-establishing those services under a subsidized service would be horrendous.
Senator Forrestall: In what way? What are you suggesting?
Mr. Cafferky: I am thinking along the lines of a transit-funded operation.
Senator Forrestall: Someone coming in. I see what you mean.
Mr. Cafferky: Another option is to fund carriers to continue to operate those routes. However, I do not understand the logic of dismantling something that currently does not have to be funded in place of something that does.
Senator Forrestall: Have you entered competitive bids, for example, for school bus service?
Mr. Cafferky: Gray Line used to operate a school bus service in Greater Victoria. On the last contractual go-round, we lost that. We also operated schools buses in Prince George.
Currently, we have many contractual arrangements. We operate a man-haul contract for a mill out of Prince George. We operate a man-haul contract for a mine out of Campbell River. We operate transit services in Cowichan Valley on the Island. We also operate a transit service in Cranbrook.
Over the years, as decline in ridership has increased, in order to survive we have found new sources of revenue, through contracts such as the BC Transit contract, the man-haul contracts. We also have substantial contracting-out through our maintenance facility on Vancouver Island. We found new sources of revenue to make up for the loss of revenue on our line haul so that we could continue to maintain the infrastructure. Hence, contracting-out has become very significant to us; without it, our line haul could not survive.
Senator Forrestall: Are the pressures sufficiently strong to warrant your consideration of withdrawal from some of this in the next year, two years, 10 years?
Mr. Cafferky: Each year, I have to submit a financial analysis of our services on Vancouver Island to the people I report to. The purpose of that is to demonstrate the current losses on our scheduled passenger service. Many times, I have been asked why we still operate that service. The answer is that the line haul, as I said in my presentation, does provide some support to infrastructure, and in reality we gain a benefit in being able to operate our transit contract in Cowichan Valley, for example. We use our agent there to manage it, so we do not have to pay a full-time manager.
We use our depot in Duncan as our office. The staff that answer the phones for our scheduled service information answer the phones for the transit side. There are synergies there, allowing us to compete for those services that give us the contribution to service the overheads that are created by our scheduled services.
Senator Forrestall: Keep up the good work.
Senator Jaffer: You said that no one had requested of you the information on your network service and the changes that would result with deregulation. Could I ask you to forward that to our committee clerk; it would be very helpful to us.
Can you do that?
Mr. Cafferky: Absolutely.
Senator Jaffer: Do you have any special services for the disabled?
Mr. Cafferky: We do. For the physically disabled, we have one of the most unique vehicles in Western Canada. It has up to 14 wheelchair positions. We use it frequently. On average, we probably carry four to five passengers a week using our lift-capable vehicles. It is a well-used service.
Today, coaches are manufactured with Braille built into the window signage. We accommodate sight-disadvantaged people. A visually impaired person can bring his or her dog onto our vehicles. We offer special rates for those with physical or other disadvantages.
Senator Jaffer: You said that your company provides services for students who commute. Is that a weekly commute? You do not operate school buses on a daily basis; correct?
Mr. Cafferky: We are not currently operating any school contracts. Those contracts are primarily operated through our owner, Laidlaw. However, we have been involved in school contracts.
Both in Cowichan and in Cranbrook, a good portion of our service is to schools. Many of those services are designed to connect to our service that runs up and down the Island.
Senator Jaffer: In the event of deregulation, could you expand into school services, to make ends meet? Do you see that as a possibility?
Mr. Cafferky: In the event of deregulation of scheduled services, we would expand wherever we could. We would work hard to take advantage of every opportunity possible, because the margins in our business, as I said earlier, are pretty weak. We try not to miss too many balls.
Senator Jaffer: Let me ask you to wear your Motor Carrier Commission hat for a minute. Has your bus service looked into providing services to farm workers, especially during seasonal times?
Mr. Cafferky: I have not been involved in that. My experience in that is that those services for the most part are unregulated. It is a matter of the farm owner or the workers buying a school bus or a van, whatever the case may be, and operating it on their own. We have not been involved in that.
Senator Lawson: I wish to make a passing comment on the use of vans for farm workers. There is the problem of vans carrying 25 or 30 or 40 people when they were built to carry 15 or 20. We have had many complaints about those kinds of violations.
Given your balancing act — the fact that you are subsidizing services, keeping things going, and maximizing every dollar of revenue by maximizing buildings and staff — have you considered a career in government? You might find enough money to subsidize your operation, if you worked on commission for the government.
In your presentation, you said that the fact that the federal government was on the verge of introducing passenger bus deregulation was very distressing. Do you understand the status of that now? Is the government still planning to do that without any consultation?
Mr. Cafferky: No. As I understand it, this committee is now part of the process.
Senator Lawson: So it is delayed somewhat.
Mr. Cafferky: Yes.
Senator Lawson: What happens is that the bureaucrats do not go out and talk to the people in the field; instead, they sit in their offices and work it all out on paper.
I say that because I lived through deregulation in the transportation industry, particularly the trucking industry in the United States, which flowed across the border. When they started looking at deregulation, they had the most efficient, best run transportation system in the world. Led by people like Ralph Nader, they thought that it would be a wonderful idea to change it all; that it would make for better competition, that rates would be cheaper and that we would live happily ever after; that it would put an end to the concentration of major companies.
When the smoke cleared, the reverse in fact happened. They have ended up with hundreds of thousands of independent owner-operators who keep themselves going by working 16, 18, 20 hours a day. They have to stay awake by popping pills. The accident rate has increased tenfold or more as a result.
At a meeting in Toronto sometime after all of that, to my amazement Ralph Nader, who was one of the speakers, spoke out against deregulation. I told him that not that many years ago he was one of the loudest voices in favour of deregulation. He argued that the industry did not deregulate in the way he and other conceived it would be done.
We also have problems with respect to airline deregulation.
If we deregulate you, you will have to abandon 25 or 30 of the 40 or 50 communities you serve. This does not make sense to me. Where is the benefit in doing that? I do not understand.
I am one of those who agree that rushing into deregulation is a serious mistake. There should be some consultation with people like you who have a knowledge and understanding of what is happening. How is it helpful to Canadians, to people in British Columbia, if 30 or 40 communities cannot be served?
You are not obligated to subsidize an unsuccessful operation. How long could you do that?
Therefore, I share some of your concerns. I would urge the committee to recommend to the government that, before doing anything as foolish as automatically deregulating, it consult with the people on the ground, the people behind the wheels, and so on, before it deregulates.
The Chairman: This is what we are doing, senator.
Senator Lawson: It is marvellous that you are doing this; however, to think that these small companies were close to being wiped out without any consultation is shocking. The fact that the minister had the good judgment to have the committee here is a major step forward.
Mr. Cafferky: I appreciate that.
Senator Phalen: The chairman talked about the use of vans in Atlantic Canada. You operate vans. Are they not profitable?
Mr. Cafferky: Our vans are operated primarily in charter service or in utility operations. We will occasionally put minibuses on our scheduled services. However, the reality for our operations is that approximately 25 percent of our scheduled service revenue comes out of parcel express. Therefore, we need to have vehicles that have sufficient cargo space to be able to handle both passenger baggage and express. Hence, where occasionally we will put minibuses on, it is not a general rule, and vans certainly would not work.
In the Manitoba experience, we operated both vans with and without trailers, so that the trailers could handle the parcel express side of the business. That is extremely cumbersome. As well, in the end, it was not profitable, or did not turn those routes into profitable routes from unprofitable routes.
Again, in my experience, most of rural Canada would be a similar.
On Vancouver Island, we have had a number of new entrants either enter into the market or apply to enter into the market using van services. Clearly, the motor carriers recognized that those are not working.
Senator Phalen: Is there a reason for that?
Mr. Cafferky: I am not sure of the reason. When I say vans are not working, I mean that ridership on them is low. I can only assume that ridership is low because customers do not want a van service on a long trip. I would also suggest that they are not working because, as I stated earlier, no matter how you approach it, operating a bus, small or large, is cost-intensive.
An operator has to have capital, has to fuel the vehicle, has to pay wages and has to maintain the vans. The scale is just smaller. The profit margins do not necessarily convert to a more profitable operation; as well, the ability to provide express service is lost.
Senator Phalen: In Nova Scotia, there is an indication that vans are used as feeders for the mainline. Do you do that? Is any consideration being given to doing that?
Mr. Cafferky: Our mainline on Vancouver Island currently goes through all of the small towns. Therefore, in some areas on the mid-Island, with the new highway, there is an opportunity to move onto the main highway and off of the small routes, and then double up by providing feeder service. However, in my view, we would only be increasing our costs, not our revenues.
Senator Phalen: Are there government regulations respecting vans in British Columbia?
Mr. Cafferky: Yes.
Senator Phalen: You say in your written presentation the following:
Our scheduled services network (both passenger and parcel) connects 40 communities (not including the approximately 20 flag stops that are provided as a courtesy to local travellers.)
Is the parcel service not profitable?
Mr. Cafferky: The combined passenger and parcel express service on Vancouver Island on a stand-alone basis would not be profitable. Even with our analysis today our, other operations have to support about 5 per cent of the total revenues required to break even on that service.
Senator Phalen: In Nova Scotia, they are dealing with Canada Post and are looking at delivering the mail. Have you looked at that option?
Mr. Cafferky: We try to get parcel express business wherever we can. We have a dedicated salesperson on Vancouver Island trying to get that business. However, there is a great deal of competition from the deregulated trucking industry. The market for our business on Vancouver Island, as I think is fairly common throughout Canada, tends to be a station-to-station, bus-depot-to-bus-depot, type of service; it is used by small businesses because of frequency of service. For example, if the automotive store in Parksville is working on a vehicle and in need of a water pump, they know that they can call up the supplier in Victoria and the water pump will be on the next bus out that afternoon. That scenario is a huge part of our parcel express business.
However, like our passenger service over the years, since deregulation of the trucking industry, our express revenues have declined. We do not have Canada Post, I am not sure who does, but we compete for any parcel express we can get.
Senator Phalen: How large are the vans we are talking about?
Mr. Cafferky: They are what you would probably think of as a 15-passenger van, but the Motor Carrier Commission regulations here stipulate that a van can carry a maximum of 11 passengers. The back seat comes out, and that becomes a cargo area.
Senator Phalen: Are there seven-passenger vans in use, the minivan?
Mr. Cafferky: Only in taxi services. Under the motor carrier rules here, seven passengers and under is a taxi; seven passengers and over is a bus.
The Chairman: It seems to me that you are providing a social service to communities, vis-à-vis cross-subsidization from your tour activities. Can you think of a better way to provide this sort of service?
In Nova Scotia, they offer door-to-door service, which has improved their ridership. Would that be possible here?
Mr. Cafferky: In Eastern Canada, are you saying that small vehicles pick up passengers at the door and take them to the bus depot?
The Chairman: No. They pick up passengers and take them to doctors' appointment; or they take youth to school.
Mr. Cafferky: It is a shared-ride taxi-service type of thing.
The Chairman: Yes.
Mr. Cafferky: It may work, but it is not an intercity bus service, so it is only handling a portion of the market. It is not handling all of the market. If we dissect the markets of the intercity bus service and take away a particular portion — in other words, these people can be served in this manner and those people can be served in that manner — we take away more of the margin of the intercity bus service, and certainly on Vancouver Island it could not survive that. In my experience, it could not survive in a lot of other areas.
Senator Gustafson: Canada has become the most urbanized country in the world, according to the latest statistics I have read. The trend is going to continue, according to what the experts tell us. In fact, I was told just the other day that Saskatoon, having a current population of 250,000, will become 400,000. The same thing will happen in Regina. However, the total population in Saskatchewan will not change from what it is today.
Nevertheless, the rural industries are very important, especially natural resources. The lumber industry in B.C. is a good example of that. Agriculture is also important, and so on. Less and less services are directed at the rural community.
We have to think carefully about the kind of country we are and what will happen to the rural areas if they are not served. A lot of pressures are put on the rural areas. There are health issues to consider.
A lot of what I have to say has been already said here, but I think it is important for us to look at our resource areas. Take our fisheries, mining, lumber, gas and oil, agriculture, potash, you name it — it all comes out of rural Canada. It seems as though less and less is going back into rural Canada. We are heading for serious problems. We do not seem to be taking a broad approach to this whole area.
Do you have any comments with respect to what I have just said?
Mr. Cafferky: We serve rural Canada and we are fully aware of the problems that exist in those communities. As the country becomes more urbanized, it is my view, and I think I have said this, if the bus industry is deregulated we will end up with an uncontrolled monopoly serving large centres and there will be no service in rural Canada.
The Chairman: Mr. Cafferky, thank you very much for your attendance here today. We look forward to receiving the information you agreed to send to our clerk.
Our next witness is Mr. Bill Waters.
Mr. Bill Waters, Professor: Honourable senators, you have a copy of my slide presentation in front of you. I am here because I was one of a five-member panel of the Canada Transportation Act Review, the CTAR. Your staff thought it would be beneficial for the committee to have me answer some questions.
Briefly, the terms of reference for the CTAR were wide; indeed, the bus industry could have been one of our topics. However, because it was assigned to your committee we chose not to look at it in detail. The CTAR panel disbanded on July 1, 2001.
Nevertheless, I am here today to see if there are any questions I can answer for you.
Although our panel did not undertake a comprehensive review of the bus industry, we did recommend that the process you are engaged in is important and needs to continue because of the regulatory fragmentation. We certainly heard complaints from people about the diversity of the regulations across Canada. Given that the CTAR mandate was to look at the national system, this was a matter of concern.
Our second recommendation was that work on the National Safety Code be structured such that all vehicles carrying paying passengers are subject to a consistent pattern of safety regulation, one that takes into account the scale of the operation and risk exposure, that does not rest entirely on vehicle size.
We also said that these things could be accomplished without changing the delegation of regulatory powers to the provinces, that is was a matter for this committee to decide.
Our panel did not make an explicit recommendation about the desirability of regulation versus deregulation, other than to encourage a more consistent framework. However, if you look at our report, we note that, where it is possible, we think that reliance on competition and market forces are more likely than government control to result in efficient and effective services reflecting shipper and traveller preferences. The latter is the explicit goal of the Canadian transportation policy.
Nevertheless, I think the bus industry is a particularly difficult one.
The previous speaker made a good case about the historic need for some sort of cross-subsidy. Our panel heard many voices — and it was quite split, I would say, between those who called for greater market freedoms and those who argued that the market could not work in the case of the bus industry. There are still many who advocate retaining some sort of regulatory control, in contrast to what has been the trend in most other countries.
This has been the historical rationale for regulation; this is, the need to achieve certain social and economic services by a quid pro quo where you allow firms to make money in certain markets on the grounds that to be in that market they have to provide other services.
An important point is that to achieve goals of cross-subsidy a fairly elaborate regulatory system is necessary. If you are going to take this approach, the suppliers have to have somewhere to make their money. If the market is profitable, then others will want in. The suppliers will have to have an edge, some rights to that market that prevent others from coming in and undermining it. An implication, of course, is that it means that you rely on the incumbents to come up with innovative services because you are closing the door at least partly to allow newcomers in.
On the other side, even though you are regulated and providing cross-subsidized services, there is too little incentive for these companies to get out of that business. No one wants to be in a money-losing market. You need some sort of regulatory controls over minimal levels of service, prices, et cetera, because you are looking across many industries. If you are going to require them to provide uneconomic services, you need to do something to prod them, to keep them there.
The CTAR report notes that the proposed road transport management funds could be extended to include identification of services or routes that might warrant public subsidy, and thus subsidies could be direct rather than cross-subsidy and on a mode-neutral basis. However, that is not going to happen very soon; as such, I do not know that it will be any help to you in your deliberations.
A second concern about the economics of the bus industry is the presence of VIA Rail. Obviously, VIA is only present in certain markets; however, where it is present, the arguments are, with considerable validity, that many of its prices are uneconomic, which in turn hampers the bus industry.
VIA of course has the right to be in certain services; they are authorized to do so. The only way they can be there is to charge these kinds of prices. However, it does mean that you have an entity that has a mandate to provide some unprofitable services, although we were quite critical that the legislative and policy mandate for VIA remains quite unclear.
Our recommendation regarding VIA takes us out of your immediate concerns, but if VIA Rail's mandate were clearer — and indeed our recommendation was to relieve them of some of these burdens of uneconomic services, give them an opportunity to try to make it where they can — it would open up opportunities in some locations for the bus industry.
There is another issue that I think we discussed in our committee but which is not in our report, and I wanted to mention it. There is an overlap or conflict, as I see it, between the commercial intercity bus service and some of the longer distance commuter services being run by urban transit agencies. There is a fundamental difference between them. Intercity buses, whether they are regulated or not, are basically commercial undertakings. They have to get cost recovery and pay their way. For various legitimate reasons, urban transit agencies are subsidized operations. So where these markets overlap we have a conflict.
There are agencies whose mandate is to lose money competing with services whose, in order to survive, must make money. Where these services overlap, there is a threat or one more problem facing the intercity bus industry, that is, facing a competitor that does not face the same bottom line emphasis.
What can we do about this? There is a possibility that the urban transit agencies will have to look at possibly subcontracting some of these services to commercial carriers. Even if a commercial carrier is a subsidized service, it may be possible to actually use competitive bidding or whatever to allow it some access to this market.
In our report, we were quite critical of the performance of many of the urban transit agencies. However, in the urban areas, it has been recognized for decades now that one of the basic problems is that the urban automobile use does not pay a price reflective of the full social costs they impose on the system. If we were to move towards a system of pricing urban cars more appropriately, we would see a decrease in the need to subsidize urban transit; it would also relieve some of the subsidy needs for the bus industry.
That whole issue is a hot potato.
Your committee, thankfully, I am sure on your part, does not have to address that issue.
In summary — and I will be quite frank here — we had so much work in the CTA review that I confess we welcomed the opportunity not to have to deal with some issues, and you are dealing with one of the more difficult ones.
I missed one of my slides on the way through here. We emphasized the problem that Canada faces with low-density markets. We are a big country geographically, and one with a limited population. Australia is a good parallel for us. Consequently, many markets will not sustain more than one supplier, and perhaps not even one. The bus industry has traditionally served many of these thinner markets. So it is really a dilemma whether to go for deregulation and hope that the market will solve our problems in the long run, or whether to maintain the current regime or even expand the regulatory apparatus to help us achieve our goals.
Many of the groups who appeared before our panel indicated that they want the federal government to take some leadership. Many people expressed the point that if we wait for the provinces to agree, we will wait a long time.
Therefore, indeed, you have a very important task to perform. I wish you Godspeed. I would be pleased to answer any questions you might have.
The Chairman: Thank you, Professor Waters. We were encouraged by your group's report. I guess the bus study is part of the overall study of the situation as far as transportation is concerned.
I have just a few questions. I would like to have your views on the level of bus service that is available here in British Columbia and the fares that are charged.
Mr. Waters: Because we did not do any major studies on this it would be awkward for me to speak on this. That also varies across the country. Yet, as you will all appreciate, we tend to hear the complaints rather than the accolades. We hear complaints everywhere that there is not enough service and prices are too high. In this respect, I am sure British Columbia would be no exception.
By and large, the dilemma that we saw at CTAR, and the one I am sure you face as well, is the future. Right now things are working. Buses are running and service is being delivered. The real dilemma is buses are not making money.
We can continue in the way we are going. With CTAR we had to adopt roughly a ten-year horizon. We were trying to anticipate what would happen because cross-subsidizing of operations cannot go on forever unless there will be some sort of regulatory quid pro quo that will enable making money somewhere. I am sure you will hear complaints about prices, but the service is working. However, the industry everywhere is struggling. It is surviving, but we must worry about whether it will be able to sustain itself.
The Chairman: Which government policies would best support rural and small community service?
Mr. Waters: I mentioned one dilemma. In our report entitled ``Vision and Balance,'' the balance came from what we called the low-density markets. We were unanimous in supporting a transport policy direction, which we think is working, that relies more on markets and competition. However, we recognize that in Canada certain markets will be left behind. We are an urbanizing country. We are seeing changes taking place.
The concern about low-density markets applies to infrastructure as well. In the long run we foresee no choice other than governments will have to come to terms with the need to ration the amount of money we will spend to support rural infrastructure and some rural services. In the long term, we must have a mechanism to address this. Now we try to solve this indirectly by saying, ``Hopefully the bus industry is surviving. We will wipe our brow and, hopefully, five years hence, rather than now, your committee will have to deal with that.''
We did not have the answer to this. One of the big issues facing Canada in the next ten years is to recognize and confront the fact that we must ration the amount of money we will spend on uneconomic services. We are going to do it. We are not going to abandon people in small towns. However, we must figure out how to decide how much money to spend. As you know, we have some proposals such as our idea of road funds and the like.
We must come up with some sort of arm's-length bureaucracy apparatus to help identify priorities for subsidy. I am reluctant to just leave it to the political masters because of the danger that short-term concerns will dominate.
One of the biggest challenges is that it is not just the bus industry. It is also infrastructure and how we are going to address the need to deal with the low-density markets in our country.
The Chairman: What are the prospects for reversing the long-term decline in scheduled bus ridership?
Mr. Waters: I am very pessimistic. There is a fine line, or a sharp line, where we cross between the commercial for- profit industry, the not-for-profit and the informal market.
If service is abandoned it is not necessarily the case that people will be unable to move. They may have to call on their friends or hitch rides. There are ways that people do get around. We would like to have it more formalized than that. As you know, in some parts of the country there has been some success with the van concept. An individual can make a little bit of money with a low budget operation without a cushy air-conditioned bus. If we rely on the market, solutions will be forthcoming. The solutions may not be as good as what we have right now.
However, the presence of subsidized services actually blocks the possibility of commercial market undertakings coming forward. This is one of the limits we have with the urban transit services. A subsidized service really closes off opportunity for someone to come up with a more marginal operation. That it is one of the dilemmas.
If you adopt a regulated route with a longer term where you charge low prices, you will actually block opportunity. The issue is whether there will be sufficient opportunity to come forward. It is a big gamble. My panel had members representing three of the major parties. Over a period of time, we decided that we would gamble on the market commercial system. It is a gamble.
The Chairman: It surely is.
Senator Forrestall: As one of those who participated in a major way in the deregulation of air and rail in this country, I did so with the firm conviction that, by God, Canada is growing and we would be a major contender in the world. The sheer weight of people and other factors of our strength would determine that. I was utterly wrong in my belief that we were a growing nation. What we were was a shifting nation.
In the provinces the many census studies have not really been started yet, but I am sure there are those anxious to get at the data. I recognize that what we foresaw was overly simplistic: A movement to the larger centres within the regions of the provinces and within the province generally from those larger centres to the largest centre, not necessarily the capital, but the largest of the economic generators. We would have this applied as well to the nation as we moved from our larger provincial generators to the larger national generators. I suppose, for anyone who thought about it for 10 minutes, this was obvious and inevitable. In my youthful enthusiasm a few years ago I thought oh, my God, Canada is headed for 40 million and we will be a major factor. That did not happen.
From your many years of study and careful, very cogent thought with respect to transportation matters in our country, not just in the west, but the country generally, could you comment on the impact of this failure to attract growth? That impacts directly, for example, on the activities of our last witness on the Island. Do you have a comment or an observation on the impact of this failure to grow and what will happen with respect to regulation in the industry — and I use colleagues comments and observations and your own, for that matter,
In the ball of wax I made for myself, I have left several ends sticking out. You are free to choose any one that you would like to tackle. Is there something ahead of us that we do not foresee as we consider the regulatory/deregulatory proposition? Is there a message in the many senses?
Mr. Waters: In terms of what you would call ``shifting,'' which is to say that we are urbanizing, that just did not mean the major population centres. It also meant the middle of Saskatchewan. It is the major communities that are emerging — worldwide. The reality is we are becoming a more urbanized world. That does mean there are some minimal economies of scale in transportation and network industries. It means, inevitably, that we are gravitating to the cities. It means that the smaller communities will be left behind. We are fighting a losing battle. That is tough to say.
What is safe is the motor car and mobility. Not everyone can drive a car. At some point, we simply must acknowledge this is the way the world is going.
Without question, the deregulation movement, worldwide, produced many surprises. It was highly effective in many ways. If you consider the productivity gains in the world transportation industry, they are staggering. We are complaining. I will join the line complaining about Air Canada's monopoly as quickly as anybody but, if we actually examine the price of air travel, it has declined in real terms over the years.
There were some big surprises. As academics analyzing this all the way through, none of us saw the hub and spoke system coming. We feel dumb that we did not, but none of us envisioned that. The freedom to innovate revealed that is an economic way to run things. Consider the courier industry in the world, which was previously suppressed under regulation.
There are many things we now take for granted, but it does seem that scale and size became dominant characteristics. We now have a few giants and little guys and if you are in the middle you get run over by both. That is what we have ended up with. That is the way the world has unfolded.
Our competition policy is inadequate. We are in a learning period of trying to more effectively deal with the very large carriers. The market economics have spoken and that is what we now have. We are trying to find what can we do about it and whether there will be ways of restructuring so that we might be able to have several carriers once again. At the moment I do not know how that will happen.
Senator Forrestall: Is the Competition Tribunal a better option for us than the industry regulator avenue?
Mr. Waters: My panel members would agree, at least in part, that is the model we are hoping will work because the idea of detailed control is one for which we think the market is too complex. I am sorry to digress from bus fares, but let us consider airlines fares. It is our view that is impossible to regulate. That is a lost cause. You could not have a bureaucracy changing fast enough to keep up with it. You just cannot. We must find another way to do it. We hoped it would work.
A view that my panel members and I share is that it is very important, whether you have either regulators or competition regulators, to have knowledge of the industry. Across the world there has been quite a split between adopting regulatory models where one size tries to fit all — this is true of most competition bureaus — or old- fashioned models like our current Canadian Transportation Agency. You try to have people who have intimate knowledge of how the industry works. We tended to come out on the latter side, believing that it is important that whatever agency you use must have real knowledge and long-term understanding of the industry. There is a split in the world on that. Quite a lot of regulatory agencies and competition tribunals believe that general knowledge is all that is required. We did not think that. A history of understanding the industry is necessary.
I hope there is an answer in that for you, sir.
Senator Forrestall: There is, and I appreciate that very much.
You are right. That is a struggle and a challenge for this committee, Madam Chair, at some point in the preparation of our report, to deal with this.
If we consider the experience of letting Air Canada and Canadian Airlines, in their flight engineering complexities, judge whether a piece of machinery was properly tooled or properly fitted and credible enough to be in an airworthy, vast machine that carried hundreds of lives, they have done it very well without somebody looking over their shoulders. The reason, of course, is the person looking over their shoulders does not have the skill or the knowledge that the person doing the job has. Today I fear less the extension of their control over their own affairs. I am not afraid for the henhouse because it is a friendly fox in the henhouse and he knows how to get at the larder if he so wants.
Am I wasting my time in that thought process in trying to ease this, ``You cannot not let them do it because, good God, they cannot regulate themselves?'' In some cases I think today organizations can do that perhaps better than the government.
Mr. Waters: You make a good point. On safety regulation we have actually been quite effective, and what we have learned is that you do need knowledge. Safety inspectors know what is going on. They know much more about auditing the process. If you have checks and balances built in you can demonstrate that the mistakes or the errors or the risks should be uncovered. We have learned a lot and we could be quite effective at safety regulations. Indeed, our danger is almost that we might overdo it the other direction in many areas.
The issue is whether we can do the same thing on the economic side. Can we find a way of having knowledgeable people who will intervene on certain occasions? For the most part, again, we are hoping we can rely on letting the market system go. That means we must identify who, and on what grounds, and under what conditions to intervene. That is where we are still struggling. I warn you that if you want regulation of rates and service, this is a path that requires a fairly extensive form of regulation. It is not cheap. My colleagues and I tended to back away from it, not on ideological grounds, but really we were concerned whether we can rely on a large regulatory apparatus to achieve what the country and the users need in the long term.
Senator Forrestall: I appreciate that.
I hope I have not wandered. I know people here are interested in busing, but I think what I am concerned about applies.
Senator Jaffer: Because you have been part of the study and know the issues so well, I am curious to know if you think that the attitude toward bus travel has changed since September 11 and, if so, do you think this will persist?
Mr. Waters: That is a good question. I am sure the attitude has shifted, but I think that would be for the short term. More important probably are what the effects of delays in air travel and our new $24 or $12 fee for security services will have on short-haul routes. This will probably be a bit of a stimulus for the industry. Indeed, if the delays and fees continue at this level it could mean a resurgence of opportunity for short-haul intercity travel where buses can be competitive. That is not the optimal way to have brought about a market shift. The current delays in the air system cannot persist. We have to find a faster way. This will not last because it is too costly, but if the situation remains like this, that is a stimulus.
It has been pointed out for years that there are some advantages. The bus stations are not at the airports and if you want to operate a good feeder system you have to run buses to the airport. If that market opportunity were to open up there might be more opportunities if you raise the price of short-haul travel, but I would also point out that it will increase car travel between cities even more than it will increase bus travel. The major impact of raising the price of short-haul air travel is we will have more cars, which, by the way, being less safe, would mean there will actually be a negative safety impact from all this.
The Chairman: May I interject my last question? You mentioned using cars. Can you tell us more about the highway agency you wrote about in your report on the Transportation Act? How would that work to increase the cost of those who drive cars?
Mr. Waters: There are two issues here. One is infrastructure. We argue that this road management fund concept would be a better way of organizing routes. It is really a parallel to the airport corporatization and the like. When you already have growth and lots of volume and traffic, in fact, the users are paying enough in fuel taxes and the like to pay for these routes.
What we thought would work better would be a system whereby the funds were dedicated and the people providing the road space would be responsible directly to the users to account for the use of the money. That works for the major centres, urban and major highways, but what about the low-density markets? We must have a highway network around the country that includes most small communities. They cannot pay their way. We are going to do it. We must find a mechanism. One way would be to have agencies, with budgets, that are responsible for these multiple systems.
Certain user charges would be collected through gas taxes or whatever, but in the rural areas you would have to have a supplementary budget and the manager of this fund would be responsible to show how to use that money. What occurred to us was that you could use that same agency to address what kind of subsidized rural passenger services would be needed. That could be a bottomless pit, so you would have to have some sort of criteria to be set out to specify communities of this size or this distance from other centres. We must find a way to have a formula, or a formulaic approach to being able to propose this.
In urban areas it is easier because the technology exists to be able to track cars and charge them either for continuous use or, for being on the road at certain hours they must pay the peak load fees. Charging for roads is fairly easy on the major routes, but much more challenging on rural roads.
Senator Gustafson: In Canada, with the vast miles that we travel, transportation is one of the most important subjects we face and have faced. It seems to me that we deal with issues in isolation, as a country. The problem with which this committee is faced is we tend to branch off in other areas. It is very important to realize what is happening on the global scene.
I chair the Senate Agriculture Committee. We just returned from Brussels, Strasbourg and Northern Ireland, where, under Dr. Gracey's direction, environment, rural development, agriculture and forestry factors are being compiled. In fact, half of the farms there are already designed, with support from the European common countries and big dollars — half of the farms. Dr. Gracey is moving into the European countries, under the guidance of the European Parliament, to set up those kinds of projects there.
The same thing is happening in the United States. They are saying, ``We want a portion of $171 billion additional funds and ten years of subsidies to deal with rural development.'' In the United States there is a different problem. People are moving out of Atlantic City, buying 15 acres of farmland and putting a few horses on the land. They are just gobbling up the U.S.
In Canada we have one of the greatest opportunities in the world in the future, if we approach this properly, because we have land. Saskatchewan has 40 per cent of the arable land in Canada, and we are drowning.
You made the point that we must consider the larger scope of things, and, certainly, in transportation that is no different. At the expense of making a speech on this, we, in Canada, face a tremendous challenge of examining this whole thing in the global concept of what is happening — and it is happening very fast.
Mr. Waters: I have two comments: We all know the level of European subsidies in agriculture, which I presume is what is funding land developments. The frightening thing for Canada is that we do not have as much money to throw at it as Europe and the U.S. have. What is a frightening prospect for us is the massive amount of subsidy, but that is not the way we want the world to go.
Senator Gustafson: If I may interject, the lack of doing something about it will get us into a worse problem, to the point we will not have an industry. We say that farms will get bigger and bigger. I am well aware of big farms and I will tell you that they will be some of the first to go broke. We must consider this in a global sense, and that is a big challenge, but transportation is certainly a challenge in every direction.
Mr. Waters: You are right. It is, and it is truly a dilemma. As I said, we cannot wait for market enlightenment to come to Europe. We have been waiting a long time and it has not. How do we respond? Do we counter-subsidize? What do we do? You are right that many communities have formed, or have tried to form, more integrated kinds of development agencies, as indeed urban areas and provinces have. That is the way the world has gone.
To try to be more organized, my colleagues at UBC have been working on the gateway concept. One of my colleagues has been studying what is going on in Rotterdam and Singapore to determine the extent to which they seek sort of ``one-stop shopping,'' to at least integrate these various silos so somebody can deal with prospective corporations or countries that want to trade and develop.
I would caution that while, certainly, transportation is a part of this, building roads is not enough. Building roads will not bring development by itself. You can build roads to nowhere. We have a lot of experience in Canada of pouring money into transport in hope that development would follow. We all agree that what we need is a more enlightened kind of development plan to ensure what we spend money on really will work. It is paradoxical for a transport economist. I know how valuable transport can be, but I also know how you can blow money on building things when the complementary investment was not there. We certainly need a more comprehensive view when we set out to try and bring about these kinds of development projects. I hope we have the wisdom to do this.
Senator Lawson: On your last page you say that if a subsidy was going to be incurred by a transit agency, it might be able to offer this, or a smaller subsidy, to service provided by commercial carriers. Specifically, would you consider that to apply to a company like Gray Line?
Mr. Waters: It could, sure. One thing that has happened with urban transit agencies over the years, as it has here in B.C., is while carriers start off as core firms in cities they have been expanding to the suburbs, rural service and long distance commuters. These are buses that do not make very many trips. Maybe they have an advantage of being able to get extra utilization. In many of the services, it is not clear why it has to be the local transit monopolist. Why could that have not been a competitive bid? Indeed, there are some places that do this now in the world. I lived for four years in Australia, which has moved much more to the model of bus services being competitive tender. The paint colour is the same, but somebody else owns that bus and must bid for the rights for these routes. My panel members agree that there is a lot more that we can do in urban areas to try to get market and commercial forces at work.
Here is one that comes to mind concerning intercity bus industries. There may be opportunities if urban transport, in broad terms, were reorganized with a slightly different mindset.
Senator Lawson: You recall that when we had that bus strike an entrepreneur in White Rock decided he would provide a high quality van service to bring people to town. He made three trips with two passengers each time. The fare was high priced. It simply did not work.
Mr. Waters: There have been a lot of experiments with high-priced, high-cost bus service. My impression is, by and large, that does not work. We also know that there are services, which get publicity once in a while, that are not being allowed to be introduced because they contravene the rights of the incumbent carrier.
Senator Lawson: Madam Chair, when you talked about Nova Scotia's door-to-door service — which sounded excellent — did anybody ever tell you what cost was involved, what fee passengers had to pay? What was the cost for that door-to-door service?
The Chairman: You have to pay a fee. It is a bit cheaper than taking the bus.
Senator Lawson: Is it cheaper than taking the bus?
The Chairman: That is what I remember.
Senator Lawson: That sounds like a specialized taxi business. I would think the cost would be higher.
The Chairman: Thank you, Professor Waters, for your presentation. Your presence here today was very much appreciated.
Senators, our next witnesses are representatives of Motor Coach Canada.
Mr. Brian Crow, President, Motor Coach Canada: Honourable senators, Motor Coach Canada was created in 1997 to equally represent bus companies — the scheduled, charter, contract and tour operators across Canada. In our short history, we now have 95 bus companies and 110 tour operator members. Our mandate includes promoting the industry and coach travel and tours, enhancing the industry image and resolving issues affecting our industry. We do this with publications such as this, which we distribute around the world to promote tourists coming to Canada and using our services. We do this with two brochures, like those in your kit. We distribute them to government decision makers, to communities and to other stakeholders to inform about our industry.
You have our full written submission. In these few minutes I will highlight points so that we can have more time to for questions and discussion.
The slide that you now see is of a marble circular staircase. What has that to do with the bus industry? In fact, it is a bus that is on the road today. We do not want to suggest that this is a typical bus. Far from that, it is meant to show you that our industry is not just what people perceive it to be, nor must it be what people perceive it to be.
Canada is a large and diverse country, having world-class cities, farms that feed the world and communities that are the envy of the world. Canada is also facing transportation, tourism and travel challenges which require solutions that are world-class and that are different from the past. The status quo is not an option.
We start our submission with a brief introduction. In section 2 we provide definitions of words that sometimes mean different things to different people. We want readers to understand what we refer to.
You have been well briefed already on the intercity industry by Transport Canada. We do not repeat that information in our submission, but we add to it.
Section 3 of our submission provides an overview of the bus industry and its three segments: School, transit and intercity. Many companies, many of our members, provide all three. We further discuss the intercity segment in detail. We expand on Transport Canada's overview of the motor coach industry. Our scheduled services, our charter service to and from any community, our contract services, our size, our structure, our impact on tourism and economic development, our impact on rural Canada and Canadians. Section 3 also highlights the users of our service: Students, seniors, business people, tourists, commuters, professional athletes, sports fans, theatre-goers, any affinity group as well as politicians, especially during election campaigns when leaders charter coaches. They recognize that there is a place for air travel, but when it comes to being connected to all communities and getting to these cities and communities comfortably, safely and on time, they charter a motor coach.
Section 3 deals with our past and our present. Do we have a future? Section 4 examines our strengths. We are the most cost efficient service. We are the most effective service. We are the least subsidized service. We are the most affordable service. We are the most environmentally friendly service. We are the most reliable service. When ice storms shut down Eastern Canada they shut down rail and air, but coaches never missed a schedule between the major centres. We are the safest mode. We offer the most frequent service. We have an ability to add new service on short notice, in hours or days, compared to months and years for rail and air. We are the most flexible service. Why then are we not more successful?
Section 5 explains some constraints and barriers. There is unfair competition. We refer you to the CTA Review Panel for its recommendations on this issue. We are faced with subsidies to our competitors, and, again, we refer you to the CTA Review Panel. We have interference from government, especially at the municipal level. We have policy voids. There is uncertainty. There is a lack of enforcement, to name some difficulties. We believe we will get over the barriers, that we can capitalize on our strengths and that we have a bright future.
Section 6 provides our vision and our opportunities, which include growth in commuters, the short-haul industry, tours, charters and contract services, whether that be airport shuttle services, convention services or transit contracting. Especially in business, corporate and executive travel we foresee growth.
While we need action from our government, which we include in our recommendations, much of our future success is dependent on our industry changing perceptions and marketing new services to new customers.
Senators, I would like to introduce Sheldon Eggen, who is on our board of directors. He owns and operates the VTT Group and operates the coach companies that I highlighted to you.
The Chairman: Welcome, Mr. Eggen.
Mr. Crow: It is not just our industry that will benefit from more motor coach travel. Section 7 deals with the benefits to government and the public of more motor coach travel.
With respect to service, passengers benefit from reliable, responsive, flexible, any street, any time, anywhere service.
Concerning safety, all road users, passengers and our employees benefit from safe travel.
On subsidy reduction, taxpayers benefit from no direct subsidy, either capital or operating. We use the existing infrastructure.
Concerning sustainable environment, the environment and future generations will benefit from more motor coach travel. When questioned by the Senate committee in Ottawa, the minister agreed and confirmed that motor coach is better than rail.
With apologies to Shakespeare: To regulate or not to regulate, that is the question. You have already heard many opinions on the issue of economic regulation, and you will hear many more. You have heard of fragmentation. You have heard about government indecision and mixed messages. Carriers are divided on the issue. We have urged our members to provide their submissions and recommendations to you, as other parties will over the course of the hearings. We fear that you will not hear from the general user or potential user of any new service. You will not hear from the taxpayer. It is government's role to decide what is in the best interest of the public.
Our industry will adapt and survive but, like any other changing marketplace, there will be winners and there will be losers.
In section 8 we discuss how the four industry associations developed a common industry position. As industry representatives, we have deliberately chosen not to recommend regulation or deregulation with respect to economic regulation, but we urge you to decide what is in the best interest of the public and let our industry get on with serving the country, expanding services and growing our business to the benefit of Canadians.
We do recommend how to implement what choice you make. Let me be clear. We recommend that there be a requirement to get a licence to operate, especially for safety reasons, regardless of your decision on economic regulation. We also recommend that you define a bus.
If government decides to keep economic regulation, then we include a recommendation that it must be simplified, streamlined and be made current to the year 2002. It should be based on public necessity and convenience, and the onus of proof should be reversed. It should be based on the national transportation policy and it must be understandable, enforceable, enforced and effective.
If governments decide to deregulate economic regulation, then government and industry must immediately develop enhanced safety upgrades. This could take up to 36 months, with deregulation taking place in that defined time frame. It must apply to all segments of the industry, not just one component.
The full details of these recommendations are in our brief. Section 9 spells out those recommendations, again developed by the four industry associations. These two slides reference them, from defining a bus to defining our role in the overall transportation system. Time does not allow us to read them, let alone go into detail as our submission does.
We are pleased that the Senate has taken the opportunity to hear from our industry first-hand what we can do, not just what we did in the past. While statistics from the past are important, we focus our efforts and attention on the future. The statistic we want to realize is in dramatic and steady growth in the years ahead.
In conclusion, we are optimistically poised for an exciting future. Our contribution to the welfare of Canada is substantial. We can contribute much more. We are ready, willing and able to be part of the solution.
The Chairman: I will refer you to the presentation we had in Montreal. I must say that it seemed to us that it was very positive. People seemed to be very happy about the situation.
You indicate in at least three places in the presentation that, if government were to opt for economic deregulation, there is a need to move slowly and to wait at least two years. Does that not seem long to you, considering that it has already been 10 years since the royal commission recommended economic regulation?
Mr. Crow: What we are asking for is time to meet with the government and to work with the government to enhance safety. We believe that will take 36 months. There are a number of issues. New applicants to the industry right now may not be subject to the same safety requirements. You must have a safety record before penalties come into place and so forth. There are a number of things we want to clear up before you deregulate.
We want to be separated from the trucking industry in some regards. There are inspections and safety requirements that are made for the trucking industry. They are not made for our industry and, in fact, they contradict some of the stuff we do. We need that time frame, Madam Chair, before you deregulate.
The Chairman: You speak of the need for a national passenger strategy in section 5. The policy statement of the Canada Transportation Act calls for market forces. If market forces will match supply to demand, why is there a need for the government to devise a strategy, in effect, to direct the market?
Mr. Crow: We would like a national policy strategy for a number of reasons. One reason is to help us understand what our role is. The Minister of Transport, for example, has made it known he wants a high-speed rail service between downtown areas and airports. We are not convinced that is the way to go, obviously. We want to know, if we had a national passenger strategy that laid out what rail is good at, what air is good at and what coach is good at, we would know what our role is. We can then invest in that role. Right now we cannot even invest in terminals because we do not know whether in some areas of the country we will have business.
The Chairman: You say also that it is for government to decide on economic regulation and yet, among the principals you propose for a regulatory regime is: To serve public need and necessity. This is, of course, the public interest test for entering an economically regulated regime. This seems to indicate that one of your principles for a healthy bus transportation system is economic regulation. Is that the case?
Mr. Crow: We are suggesting, if the government decides it is in the public interest to keep regulation, then the test we want for that is the public need and convenience test. We want it on a reverse onus basis. We want it enforced. We want it enforceable and we want it very clear. Maybe I missed your question, Madam Chair, but we consider that it is up to the government to decide. If you decide to keep regulation, then those are our recommendations.
Senator Forrestall: You mentioned in part of your presentation the issue of federal fuel excise tax rebate. As much for the sake of the record as for our own understanding, could you tell us what kind or the extent of the impact that might have on your industry were it to be —
Mr. Crow: The federal excise tax is slightly over four cents per litre on diesel fuel. Fuel is probably about our third highest operating expense. We have to compete. We are competing against other carriers for business. American carriers obtain the rebate from the federal government in the United States.
Senator Forrestall: Do you know the level of the tax in the United States?
Mr. Crow: Yes, I do. It is 24 cents. In U.S. dollars, per U.S. gallon, the government rebates 17.1 cents per gallon in the United States. Do you want me to convert that to litres?
Senator Forrestall: You are a handsome young man. You are doing well. Could you give me a layman's overview of that? How does it relate? Is it higher or lower?
Mr. Crow: What we are suggesting and asking for is that we would get a rebate based on the same level that the American carriers get from the U.S. federal government. The U.S. government decided on that rebate because of the fuel efficiency of motor coach travel and it was trying to encourage passengers to travel by coach as opposed to car. The government rebates approximately 75 per cent of the fuel tax only to motor coach companies. We are recommending the same thing in Canada.
Senator Forrestall: Does the U.S. government give back 75 per cent?
Mr. Crow: That is correct.
Senator Forrestall: Do you have a dollar volume figure?
Mr. Crow: Of what that would equate to, no, we do not. I could find that out for you. We have trouble getting statistics on our industry, as, I believe, your Senate committee has found out, and it is hard to find out how many gallons we actually use. Sheldon could probably answer better from an operator's point of view. Coaches are generally getting 7 or 8 miles per gallon on diesel fuel, or in that range. A coach can do anywhere between 60,000 and 150,000 kilometres a year. We would have to do some calculations for you, senator, to work out that exact number.
Senator Forrestall: I suppose you are as well speaking to the issue of collection of data, storage of data, analysis and distribution of the results of the analysis and better representation to government, which presumably does not have this information either.
Mr. Crow: We have made a submission to the Minister of Finance and the Minister of Transport and I am a little embarrassed not to have that with me. I believe those numbers were included in that, or some estimate of those numbers.
Senator Forrestall: Do we have them elsewhere?
The Chairman: No. Could you provide that?
Mr. Crow: Yes, we will.
Senator Forrestall: We would appreciate that very much.
On the issue of comfort lanes for buses, smart highways and indeed good highways, if the government were to consider a 75 per cent rebate on fuel tax would that, or have you any way of knowing whether that would impact on the amount of money available for highway maintenance and upgrading? We do know that a lousy highway is damned expensive, particularly for people in the west who do not use good Michelin tires from Nova Scotia, so it is doubly hard on you. Do you have any way of knowing?
Mr. Crow: The amount the federal government collects in diesel fuel tax is not put back into the road system. The federal government funds very little, as far as a national highway system is concerned. The highways are left up to the municipalities and the province for construction, expansion, maintenance and repair. The provinces vary. On top of the four cents per litre to the federal government, we are paying in the neighbourhood of somewhere between 12 and 16 cents per litre to the provinces in fuel tax. All the road users combined pay more in fuel taxes, permits and licensing fees than is spent on highways in Canada. We are paying more than our share, and the amount that we pay to the federal government is not put back into highways at all.
Senator Forrestall: Virtually nothing at all goes back in and yet were the government to do that in a dedicated way — and I mean put money back in a big way — the cost savings to trucks, buses, cars and the private driver, as near as information available can give us an indication, would be a very extensive saving. Just on tires alone, rough shoulders are awfully hard on tires. I am aware of that. What about the issue of rebate from the provinces?
Mr. Crow: One or two of the provincial motor coach associations have asked the provincial governments to do such a rebate. The Quebec government does have a fuel rebate system. I think you heard about it Montreal.
Senator Forrestall: Which government gives a rebate?
Mr. Crow: The Government of Quebec has a rebate system for motor coach companies in Quebec if they meet certain criteria. I think that was outlined to the Senate group in Montreal. I do not have the details on that, senator.
Senator Forrestall: The issue we overrode a little bit is very important. How old is your association now? Is it four or five years?
Mr. Crow: It is five years old.
Senator Forrestall: Do you have any means of collecting data other than statistical reports available to you from the provinces? Have you have no independent means?
Mr. Crow: We have no independent means. Some regional associations attempted to collect data in the past and it has not been successful. Part of that, if not a major part of that, to be quite blunt, is the industry's fault. We have many industry members that want to see the results of statistics but they do not want to provide the input to develop those statistics. We are encouraging companies to do so. We are working with Statistics Canada on new statistic gathering that it is doing, but we do not have any other independent source of statistics, unfortunately.
Senator Forrestall: Do you cooperate with the trucking industry with respect to the identification of information that perhaps is being collected or perhaps should be collected by various levels of government? Do you cooperate in identifying what information is useful to you?
Mr. Crow: We cooperate quite a bit with the Canadian Trucking Alliance and the regional associations, but not on statistics. It is not that we do not cooperate. We have not yet seen an opportunity to work with them on those statistics. We are working directly with Statistics Canada to try to obtain statistics relative to our industry.
Senator Forrestall: How many people do you have on your staff?
Mr. Crow: Seven.
Senator Forrestall: Do you have an economist?
Mr. Crow: No, we do not.
Senator Forrestall: From a personal point of view, that is too bad. I recognize you are young. Perhaps that will come.
Mr. Crow: We would like to have an economist on staff. We would like to have marketing experts on staff to help market our industry. We need a lot of information on new technology, the GPS systems and so forth so. Senator, we are lacking staff in a number of areas — you are certainly right — including statistics gathering.
Senator Forrestall: Thank you for jumping into the fray this morning.
Senator Lawson: Thank you for your very excellent, positive presentation, with one exception that baffles me. You take no position on, either for or against, deregulation. Some of us feel very strongly that the government should not even consider deregulation without consulting the people who are out there making things happen to have the benefit of their knowledge and understanding of the industry. If the government calls you, you will say, ``On the one hand, if you want to do this, on the other hand — but it is your call.'' That is not much help. I do not understand your position.
Mr. Crow: Our industry is very divided on that issue. Half of our industry wants to regulate, half wants to deregulate, and I suggest even 50 per cent within those two groups could go either way. What has happened over the past years has been very hard on our industry. We cannot come up with a consensus to support deregulation or to support regulation. It is very tough for our industry. Some companies will be hurt by regulation and there are some companies that will be hurt by deregulation. That varies between carriers and between regions.
Mr. Eggen runs a bus company. He will no doubt be pleased to tell you his position on it. We have encouraged our members to put forward their company's position to help you make that decision.
Mr. Sheldon Eggen, Director, Motor Coach Canada: The bus companies recognize that the current system is not working. It is hard for us to judge if regulation or lack of enforcement is the problem. The only thing that we can all agree on is for us to properly evaluate this is if we have to operate under a regulated environment, it must be enforced and then we can determine if it is working or not.
Senator Lawson: You have had success under a regulated environment. Is there no place you can turn, such as the U.S., to determine success or failure under a deregulated environment?
Mr. Eggen: In British Columbia I believe that we have de facto deregulation. I believe that we survive fairly well, but it is an uneven playing field at this time.
Senator Lawson: Will it be a more level playing field after deregulation?
Mr. Eggen: A deregulated environment would encourage creativity and expansion of existing services through creativity and chasing new opportunities in a deregulated environment.
Mr. Crow: This morning, senator, in Halifax and other areas, you have heard both sides of it.
There are communities that will lose service in a deregulated environment. There are those who suggest there will be communities that lose service in a regulated environment. We are in the business of transporting people. We would love to transport every Canadian every day if we possibly could. We have the best infrastructure. We are the best mode to serve rural communities, whether that is on charter or scheduled services. We want consistency. We want to know our role concerning whether we should invest.
The issue of regulation and deregulation is to some degree a moot point. We suggested in our presentation: Spell out the role for us and eliminate the unfair competition that we face. Allow us to do what we do well. If that were the case I am not sure there would be this debate about regulation or deregulation.
Carriers have strong feelings, one way or the other. You have heard some of that passion. You will hear more of it. There are those who feel that they can grow the business and offer innovative and improved services under regulation. Some feel they could better provide those innovative new services under a deregulated environment. We have examples all across the country of different regulatory regimes.
Senator, you referred to the U.S. We have considered the U.S. and the U.K. and countries that have deregulated the bus industry. Opinions depend upon to whom you are talking. Some people consider deregulation in the States to be hurting the bus industry and hurting service to rural America. A lot of service to rural America was dropped after deregulation. Other people will suggest that happened because when the U.S. deregulated it was going into a recession and that could have possibly happened with or without deregulation. Concerning the U.K., you will hear people compare deregulation there to what we might get here, whether that is good or bad. The U.K. privatized and deregulated at the same time, so how do you know whether a positive effect or negative effect was because of deregulation or because of privatisation?
Canada, very fortunately, is unique in the world. Perhaps we cannot examine experiences elsewhere and determine that what fits there fits here. The task of government is to decide what is right for Canada.
Senator Lawson: The one constant in all those jurisdictions is that rural communities lost service. In the face of that from what we heard so far, that seems to be a constant that will happen here.
Mr. Crow: I am from a rural part of Canada. I am still basically a farmer at heart. There has been a lot of service to rural Canada. I heard from Senator Oliver in Montreal was that the farms and rural communities in Canada are becoming smaller. We heard that today as well. Communities are becoming smaller or farms are getting larger or disappearing regardless of whether they have bus service. There is a larger issue that you are addressing concerning the survival of rural Canada and its farming communities regardless of bus service.
We want to be there to provide for whoever wants service. Wherever there is a need, we will be there. The issue of rural Canada hinges a lot on the growth or lack of growth of rural Canada and the communities in rural Canada. When you are in rural Canada there is a feeling that you are dependent on having a car. You are not dependent on a bus. We have lost service, even under a regulated environment, because a lot of the rural Canadians travel by car. We would like to get more of these people back on our services, absolutely.
Senator Gustafson: I have been very concerned about rural Canada. One very positive service that you provide is coach service for our hockey and football teams. I think my grandchildren are on a coach all the time.
Mr. Crow: I love it.
Senator Gustafson: I just wanted to throw that in.
Senator Jaffer: Have you seen an increase in your services since September 11, especially from the U.S., and do you think that will persist?
Mr. Crow: Right after September 11 our service, like most other services and most industries, dropped significantly. The tour and the charter business — more so in Eastern Canada than Western Canada — dropped very significantly. The charter and the tour businesses have not yet come back. There has been some growth after September 11. The scheduled services immediately following September 11, in most cases, increased. The lack of air transportation was one factor in that. That increase has fallen back, but we are experiencing growth in some of the scheduled markets.
The tour and charter market you mentioned from the U.S. has not recovered yet. The statistics I read recently indicate it is still down significantly. We must work at that. Last week I was in Washington where U.S. tours are not back. It is very, very quiet. People are not taking charters and tours in the U.S., and they are not taking them to Canada either.
Senator Gustafson: I noticed you said ``safest.'' What are the statistics on that as they relate to boat, air, train, bus and car? Are you saying that yours is the safest of all means of travel?
Mr. Crow: There is a document from Transport Canada I will be sure to provide to you which indicates that the bus mode is the safest form of public transportation.
Senator Gustafson: Is that right?
Mr. Crow: That includes all those hockey teams buses that you mentioned, senator.
Senator Gustafson: They travel on a lot of icy roads.
Mr. Crow: We transport many professional athletes too, as you are probably aware. Pretty well every professional team takes a motor coach at some point in time, even from the airport. For sports, whether it be amateur teams, professional teams or fans who want to see Canada beat the U.S., we transport a lot of people.
Senator Gustafson: I have one short question. What does a modern coach cost?
Mr. Crow: Here's the gentleman that signs the cheques.
Mr. Eggen: It costs $550,000.
Senator Gustafson: I heard that in the Maritimes. That is expensive.
Mr. Crow: Plus taxes.
Senator Gustafson: That would make the cost $600,000.
Mr. Crow: If you want the marble staircase the cost is considerably more than that.
Senator Forrestall: How quickly can you write that down?
Mr. Eggen: We are allowed to write down 30 per cent a year, with only 50 per cent of that in the first year.
Senator Adams: You mentioned in your brief you are against the speed train between airport and town. Can you explain that?
Mr. Crow: We have proposed in major cities such as, obviously, Vancouver and Toronto, that there be a coach corridor built, as opposed to a rail corridor. In Toronto, specifically, the coach corridor could be on the same land as the railway land that will be used. That would be exclusively for use by coach companies. The advantage of a coach corridor versus rail corridor is that it would not only be the airport passengers who would use it, but the passengers who use transit buses, the intercity buses and all the commuter buses that come from the northwest quadrant into downtown could use it. Emergency service vehicles could use it. There are a lot of advantages to a much broader use than just rail.
I met with Transport Canada staff last week and officials said ``Yes, but rail is faster than motor coaches.'' That is not true. I asked how fast the train could get between downtown Toronto and the airport and the answer was 70 to 80 kilometres per hour. Motor coaches on exclusive right of ways can operate safely at that speed. We can accelerate a lot faster than rail. We could improve the travel time to the airport — and that is without the train making stops. We could service much more than the downtown area. You could feed into the service from all the streets with motor coach travel. It would open up the airport hotels to conventions in downtown Toronto, with 12 minutes travel between them. There are many advantages of motor coach corridors between the airport and downtown Toronto.
Unfortunately, the minister told me he has done 21 studies just between Pearson airport and downtown Toronto. Every single study was to determine what rail service was best. Not one study was to determine what transportation system was best.
To return to the senator's comment about policy and national passenger policy, how can you put on a mode of transportation when 21 studies have been done on which rail service and no studies have been done on which transportation service is best? We just would like a level playing field in that regard and an objective examination of what is the best transportation service. We are quite prepared to live with the results of any of those studies.
Did that answer your question?
Senator Adams: Yes.
I think the government cut off assistance for the rail about 10 years ago and privatized it. Has your business been affected since the train short runs were privatized?
Mr. Crow: We have one member whose corporate entity does own and operates trains and actually operates an airport as well, but not in this country. Some of our members have interest in getting into or being in partnerships with rail. A number of our members now interline with VIA Rail and Amtrak. A few years ago we viewed each other more as competitors. In the last five or six years we have become much more partners, but it is still very difficult to have a joint program or become a true partner with a rail company that receives such high subsidies. That can really harm you when it comes to pricing because they are also competitors.
We have had private companies invest in rail in British Columbia and Alberta. There is some interest in Eastern Canada in companies getting into rail services, but we do not foresee many of our members operating trains in the next little while.
Senator Adams: You have shuttle buses running between town and airport. My family came to Vancouver once and the bus ride cost $12 per person, which, for a family, is quite expensive. A taxi cost only $24.
Mr. Crow: Mr. Eggen owns and operates the Airporter here. He would be pleased to answer that.
Mr. Eggen: We have a family rate on the Airporter that was implemented in the last year and I believe that is $24 for a full family now. One of the problems we have with the Airporter service is that we pay many fees to pick up passengers at the airport, along with all the other fees that we pay, yet we still have to compete with B.C. Transit, which has hugely subsidized rates. It operates every few minutes from the airport. We are finding it very difficult to continue serving the airport.
Mr. Crow: May I just follow up on Mr. Eggen's valid point about competitiveness? B.C. Transit, Go Transit in Toronto and the Toronto Transit Commission, TTC, do not pay GST. They do not charge GST. They do not pay fees at the airport. A private carrier has to pay $50 a trip at Pearson. The public transit goes in there and pays no fee whatsoever and it has effectively, in an area, put a private carrier out of business that was offering a $6.50 fare from the subway to the airport. The transit property came along and said, ``We are going to do that.'' It charged $2.25 per fare and will not handle the luggage. There is no washroom. There is nothing on board. It provides terrible service, but the private carrier that developed the service and wants to take you and your family to and from the airport was put out of the business. That is what we need a passenger transportation policy for. We need a level playing ground so Mr. Eggen, or anybody else in the bus industry, can add and increase our services to you and for you.
The Chairman: Do you have overlapping membership with the Canadian Bus Association, or do you represent different segments of the industry?
Mr. Crow: We have overlapping membership. I am not totally familiar with its full membership, but I suspect there are only one or two that are not members of our association as well.
The Chairman: With regard to safety, is there a safety code as a national standard for buses, and, if so, what do you think about it? Is it adequate? Does it cover all types of buses, including smaller ones?
Mr. Crow: There is the National Safety Code. It is very good. It was developed with the federal government, the provinces, our industry and the trucking industry. However, it is enforced by the provinces. The federal government is not involved in enforcement. We are working with the government now on hours of service and driving hours. There are vehicle inspections.
I am sorry, I am not an expert and I do not participate personally in those meetings to know all the details. Certainly there is room for improvement and there are things we must do to enhance safety.
One of the issues referred to was, in some cases, segregating us from the trucking industry. If I might provide an example, every day a bus driver has to do a pre-trip inspection of a bus. Every day the law now requires the driver to test the pushrod travel of a brake. I won't get into technical detail, but that means the driver has to slide on his back or his belly underneath the motor coach to test this. That was developed for trucks. A truck driver can get out of his truck, walk back to the trailer and basically look under. He does not have to crawl underneath. Coaches are designed differently, as you know, and that is virtually impossible. I would not want to get Mr. Eggen in any trouble, but I would suspect that in the bus industry drivers are not doing this on a daily basis. I do not think our passengers would like to see that. It is not safe to do that. We are working with the government now to make those changes. We can achieve the same results without crawling underneath the vehicle and actually measuring pushrod travel.
To answer very briefly, there is a standard. It is good. It needs some twigging and enhancing, and we are really involved. One of my staff was in Ottawa for two days last week going over those exact things.
Senator Forrestall: What you want to do is have a very sensitive security risk at your terminal, and then you get the RCMP with the little mirrors to look at everything, twice, thrice or four times a day. My question is really how do you get around the actual feel? Is there motion? Is there movement or play? How do you get around that?
Mr. Eggen: One of the ways that we get around it is the new buses come with automatic slack adjusters so the bristles are continually adjusted like your car is. So they never get out of adjustment like the old brakes.
The Chairman: Thank you very much, Mr. Crow and Mr. Eggen, for your presentation this evening. Please feel free to send us more information if you have any. It will be distributed to all the members of the committee.
The committee adjourned.