Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 25 - Evidence (morning session)
CALGARY, Tuesday, March 26, 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: On behalf of committee members, I should like to welcome our witnesses and observers to public hearings here in Calgary of the Standing Senate Committee on Transport and Communications. The subject of our hearings is the committee's special study on intercity buses.
We have already heard from the public and others in Ottawa, Montreal, Halifax, and Vancouver, where we were yesterday, and we will be in Toronto tomorrow.
We already have some information about travel between Calgary and Edmonton. However, I am sure that there issues of concern throughout the province, issues similar to those we have heard elsewhere: declining populations in small communities; an overall aging population; and the need for public transportation to give older citizens access to healthcare and to give youth access to employment opportunities.
In addition, we expect to hear from witnesses from the other Prairie provinces while we are here.
The federal Minister of Transport asked this committee to undertake this study. We started our work at the end of last year, and we will report the results of our study to the Senate before the end of 2002.
In our research, we have benefited from numerous commissions and studies on the topic undertaken both federally and provincially, as well as reports from foreign countries.
However, essential to our study is hearing what the people have 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 — or 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.
The primary responsibility of our inquiry in our view 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 responsive service and appropriate regulation may become more straightforward.
Because of time constraints, we have not always been able to group our witnesses together as users, carriers and regulators, but I think that this is the most useful way in which to consider the testimony we will hear today. Concerns over equipment, business competition and 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 possible explanations for the decline. It could be that people are better off than before, 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 or that the regulation varies too much from one province to another.
This is what we hope to find in the days and months to come.
We will hear this morning from the Alberta Department of Transport. We are very pleased that the department accepted our invitation to appear before the committee. We have not been successful in other provinces.
Please proceed.
Mr. Peter Dawes, Senior Policy Advisor, Passenger Transportation, Alberta Department of Transport: I, too, should like to welcome all of the many members to Alberta. I should also like to bring greetings from our minister, the Honourable Ed Stelmach, who is the Minister of Transportation. We will be presenting this document on his behalf today.
We provided a copy of our presentation to committee staff, along with a translation of the executive summary. I trust that is sufficient. We have some additional copies here, should anybody like one.
I should like to start by saying that the Department of Transportation appreciates this opportunity to provide its views and information on the bus system in Alberta. Our interest in this goes back a fair amount of time now. We conducted a comprehensive review of scheduled bus regulatory policy in 1994, in cooperation with the bus companies, communities, Motor Transport Board and other stakeholders.
We, too, are concerned about the long-term viability of scheduled intercity bus services in the province. At the time, there were indications that the federal government was seriously considering deregulating extra-provincial bus services. Our province has a long-time position in being in favour of transport deregulation in all modes. At the time, there was a strong determination on behalf of our government to reduce regulatory burden on all Albertans. That was the backdrop for our review.
Our two main concerns are that Alberta have a top-class, accessible transportation system, capable of meeting the needs of this new century; and second, that we have a role in regulating this form of transportation through the Motor Transport Board.
When we started our review, Greyhound and Pacific Western Transportation — Red Arrow — were providing an excellent service to Albertans, and they continue to do that. We estimate that 95 per cent of our towns, 80 per cent of our villages and all of our cities were being served then, and still are, almost a decade later.
The main concern was that there had been a large drop in traffic during the preceding decade, and it sounds as though the committee is well aware of that.
The reasons we found for that decline were the state of the economy at that time, recent fare increases, widespread use of the automobile — and in Alberta the light truck is very much a factor in this; it is not just the automobile. There were structural changes of course going on in Alberta communities at that time.
Greyhound and Red Arrow continue to provide excellent service in this province. The rural routes are probably still a substantial financial drain, on Greyhound, in particular, which has been cross-subsidized by profits on other parts of their business.
We took part in the Canadian Intercity Bus Task Force in 1995. It was organized by Transport Canada. I will not go into the details here. I am sure the committee community is aware that the task force failed to develop a consensus at that time, and I guess that is why we are still in this process now.
Our paper describes our regulatory process here in Alberta and ends by attempting to answer the 20 questions that the committee posed in its discussion paper.
I will just quickly say that we continue to be regulated in Alberta both for safety and on an economic basis. We have streamlined the system considerably, though, in order to reduce the burden on the bus companies in particular. We still regulate from the point of view of public need and convenience where scheduled service is concerned.
Where charter is concerned, we have deregulated totally within the province. There are no more restrictions on where a charter can operate from; however, a charter company has to meet the safety requirements. The only regulation now with the charter involves out-of-province companies that wish to operate here, and that is purely a defensive stance at this time.
With respect to bus parcel express, Alberta does not regulate that at all, on the grounds that bus parcel express has enough trouble competing with all the courier companies.
We have attempted to ease entry into the business to some extent. For example, if a company wishes to provide an intercity service to one of our airports, our position, as transmitted to the Motor Transport Board, is that they should be allowed to do so if the airport operator wants that service to go there. In other words, they know far better than the Government of Alberta their needs, and they should be the ones to make that decision. That is an example of how we open things up within the bounds of a continuing public aid and convenience system.
Turning to rural services, our view is that the main routes should continue to be provided by the larger bus companies but that there are a number of alternatives that can be used to provide service on lower volume routes. This has been our experience here in Alberta. I will get into that in a little bit more detail in a minute.
Our paper also describes a number of initiatives that we have undertaken under the ``Barrier Free Transportation Plan.'' This is a very, very key issue for the Government of Alberta. We feel we have done a lot in that area. We want to do more to make sure that people with disabilities can access all parts of the transportation system.
To that end, just to mention a few things, we conducted specific workshops around the province on the matter of accessible service in the bus system. We also supported with Transport Canada an intercommunity bus demonstration project between Calgary and Edmonton. We have developed what we call in Alberta an intercommunity public transport guide Web site — and I encourage members to access that website, to see just the range of services that we have here in Alberta. It relates not only to intercity bus but also to air services, our limited rail services, and local transportation. The Web site indicates the degree of accessibility. I can give anyone who is interested the link. It is also contained in our document.
For the committee's information, all routes in Alberta operated by Greyhound and Red Arrow are wheelchair- equipped on demand, on 24-hour advance notice. We really want to again congratulate the bus industry for taking this initiative, on its own, not through any legislative background. We think they are leaders amongst transportation modes in this country in that regard. They deserve a lot of credit for that.
Now, turning to the issue of rural services, we think that the Alberta experience shows that you can have direct competition on high-volume routes and still have a perfectly adequate service on rural routes. There has been competition on the Calgary-Edmonton route for 20 years now between Greyhound and Red Arrow. There is also competition now between Edmonton and Fort McMurray.
Where Greyhound has chosen not to continue serving certain rural routes, in almost all cases smaller carriers have stepped in. Where even these small carriers have not been able to prosper, it has been simply because the traffic levels were too low for any carrier. For a $500,000 bus operated by a driver who is making good money to set out down a highway and have one or two passengers on average use the service, with little freight also, is not in anybody's interest. Unfortunately, that would be the case if all routes in Alberta were still to be operated at this time.
I will give you some examples of service that we have here. Ferguson Bus Lines operates a route between Consort and Red Deer in central Alberta on behalf of Greyhound. Jenalty Enterprises operates between Red Deer and Sylvan Lake, again on behalf of Greyhound. Northland Taxi provides a connector service between Lac La Biche and Greyhound's Fort McMurray-Edmonton mainline at a place called Grassland. Quality Time Tours operates a route between Elk Point and Edmonton, another former Greyhound route.
I just mention these to show that there is a range of options for serving these routes. We feel that if it can work in Alberta, it should be feasible elsewhere as well.
I wanted to clear up one matter from, I believe, the hearing in Ottawa. There was some testimony about the situation in Alberta and some comparisons were made between Alberta and Quebec. These comparisons were totally incorrect.
There was a comment regarding the town of Wetaskiwin having very bad service in comparison to Banff. Someone made the comment that it would be far more preferable to live in Quebec than Alberta because of the lousy rural bus service we have here.
I want to give you the current Greyhound schedule from Wetaskiwin, this community that supposedly has bad bus service. Southbound to Red Deer and Calgary: 0815, 1525 1945, 0140. Northbound to Edmonton: 1045, 1835, 2225 and 0425. I do not know why this testimony was given, but it was totally incorrect and very misleading in our view.
Senator Oliver: How many days a week does that schedule run?
Mr. Dawes: Six or seven. I think one of those services does not run on either Saturday or Sunday.
Let me address the topic of safety. In reading the transcripts, I note that there has been some concern about safety, especially of smaller vehicles.
Our position is that the National Safety Code more than adequately ensures safety in this country. If there are problems elsewhere in the country that have not occurred here, it may be because of ineffective enforcement. There may be an issue with very small vehicles being substituted, but we feel that can be taken care of as a separate issue from the matter of economic deregulation.
There was also testimony on the situation in the U.S.A. and the U.K. We would just caution that these are very different countries than Canada. The use of public transportation is different. We have a higher usage rate of public transportation in Canada than in the U.S., for example.
In Alberta, as I said, we have had a strong rural bus network going back decades. We just urge caution in taking the situation or the results of deregulation there and trying to apply them here.
I mentioned the matter of service to people with disabilities. As I said earlier, an individual can get a lift-equipped bus assigned to his or her service on 24-hour notice everywhere in Alberta that has Greyhound or Red Arrow service.
I would should like to congratulate the bus industry for allowing bona fide attendants to travel free of charge. This is a huge issue for people who have to have an attendant to go about daily business or recreation. The bus industry, ferry industry and VIA Rail all have implemented free attendant travel. Unfortunately, the air industry has not, and we feel they should.
We do acknowledge that there is a challenge with smaller bus carriers. Typically, they will not be able to provide a lift-equipped bus, unless it is a handi-bus type of vehicle. Hence, we acknowledge that that is an issue that would have to be dealt with.
The Government of Alberta encourages the federal government to legislate as soon as feasible the full economic deregulation of scheduled extra-provincial intercommunity busing, in order to remove what are, in effect, barriers to internal trade and innovation across the country. Having said that, the system we have now — partly because of the streamlining we have done as a government, we believe — certainly has provided good service in this province. Hence, although we are calling for full economic deregulation, we are not suggesting that things are bad here at the moment or that action needs to be taken right away. However, we certainly would encourage a move towards that on one condition, that is, that our neighbouring provinces and certainly the western provinces agree to fully deregulate as well.
We will not open things up and put our charter companies, for example, in jeopardy as long as companies and other provinces are protected. Our carriers have a lot of troubles operating in those jurisdictions. Hence, if we did move to deregulation, it would be important for all jurisdictions to honour that and not to use taxes, the authority process or any other impediment to defeat the purpose of going to deregulation, and that can easily happen if we are not careful. In other words, we would have to have reciprocity before Alberta would agree to take that step.
We would be pleased to answer any questions you might have.
The Chairman: Are the differences between the provincial bus regimes that have developed over the last decade detrimental to the industry or to the travelling public? If they are, what would be the appropriate remedy, and which level of government should implement it?
Mr. Dawes: I just referred to a problem that occurs because of what we call an unlevel playing field. Our friends in British Columbia have been a particular problem for our carriers in the past. It prevents innovation. For example, our charter companies have to run deadhead back. If they move into British Columbia, they often have to deadhead back because they are not allowed to pick up a load there. It is very difficult to deal with the authorities in British Columbia or any jurisdiction that has a regime like that.
Would there be any difference to the average bus user on a scheduled service? Again, we are not saying that the current system is grossly deficient; we have gone out of our way to praise what our industry has done here. Nevertheless, we feel that on balance it would be better to move to deregulation. For one thing, it would encourage a move to more appropriate forms of service for rural routes, something we think has been happening anyway. It would be in the interest of everybody if that occurred.
The Chairman: You generally support deregulation, but you do use the public necessity and convenience entry test for scheduled service. What do you use this entry test for?
Mr. Dawes: We continue to use it simply because other jurisdictions have not deregulated as well. As I mentioned, we started deregulating charter back in 1984, and now have a totally deregulated environment within the province.
Before that, certain charter carriers were able to operate from a certain area or city, and they could go to certain other areas. We have removed all of that, so now you can go wherever you want within the province. However, we do maintain these controls on out-of-province carriers; otherwise, our own companies would suffer greatly.
In fact, I did want to mention that in our consultation prior to preparing this paper some of our charter operators complained bitterly that the Government of Alberta is not tough enough on out-of-province carriers. We have been telling them for years that we have been expecting the other provinces to at least reciprocate on charter and to do that fairly soon. This is going back now a decade or more, and it has not happened. Our charter companies are getting very antsy about this, and they are hurting in some ways, which is another reason we want to go to deregulation.
The Chairman: Do your rules on entry to the market allow service by vans that seat, let us say, 9, 12, or 14 passengers?
Mr. Wayne Lilley, Manager, National Safety Code and Operating Authority, Alberta Department of Transport: Yes, they do, in Alberta. Every vehicle has a passenger that pays for that service. It is required to have an operating authority certificate regardless of the size of the bus, or van.
The Chairman: Of nine passenger, for example?
Mr. Lilley: Correct. The only exemption would a private company or association that had a van and was not charging their membership a riding fee. All others have to have an operating authority certificate.
The Chairman: Are you not concerned about the loss of rural services under economics of deregulation? You did say that there was cross-subsidization of rural routes in Alberta. Could you elaborate on that, please.
Mr. Dawes: As I mentioned, there are very few routes that we are aware of over the last, I would say, 30 years formerly operated by Greyhound that are now not now in operation.
I described a number of situations where those routes had been devolved to lower-cost operators, ranging from a taxi company to a van operator to an operator of a full highway bus, albeit an older type of bus and operated by a driver that would not be compensated at the same level as a Greyhound driver would, for example.
I am only aware of two routes that were in operation 30 years ago that are not in operation today in some form. So given that experience, it is hard for us to be overly concerned about what would happen with deregulation. Our friends from Greyhound I am sure will be describing their system here in Alberta.
However, when you devolve to these smaller carriers, you remove the need to cross-subsidize them. Of course, there may be some continuing funding from the large company, perhaps by allowing them to use their terminal; however, we would not be party to that. In principle, if you can get someone operating those routes at a profit, obviously it would not be necessary to cross-subsidize them anymore.
Perhaps our experience is somewhat coloured by the overall changes that have happened in our rural communities. Many of our rural communities no longer have a grain elevator, no longer have a rail line, probably do not have a school and may not even have a church any longer. It seems odd that in every case in perpetuity a Greyhound bus would still run through those towns, especially if there is no one there to use it.
The Chairman: When we were in Nova Scotia and P.E.I., people seemed to be very happy with the service provided by small vans. For example, a van would pick up a passenger at home and take the individual into town to a doctor's appointment. Young people are use vans to go to school or to go into town to look for a job.
Is that service popular here in Alberta? It is not popular in Vancouver, as we found out yesterday.
Mr. Dawes: No.
The Chairman: We tried to push it, but nobody reacted to that.
Mr. Dawes: I think it is a measure of the fact that we have such good service here at the moment. As I understand it — and I am loath to get into talking about another province after what I heard being said about Alberta in previous meetings — in Nova Scotia these were long-standing scheduled routes, all-stop, very slow, provided by the very traditional bus operator. There were entrepreneurs who came in and provided some form of door-to-door service, half the travel time to Halifax, or maybe two thirds at the most, and at competitive prices. They must have sprung up out of a need that was not being met.
We have not had that kind of service spring up here. Once in a while we will get an operator that tries to get in and operate illegally, but then we shut them down.
Mr. Lilley: We did have an application a number of years ago from a carrier that wished to operate a van service, a commuter service within Calgary itself. That application was given a public hearing, was submitted to the test of public need and convenience, but it was rejected because of the effect it would have on Calgary transit.
Senator Oliver: I have a number of questions designed to have you elaborate on some of the very important points that you have made, so that is what I will attempt to do in two or three questions.
First of all, our study is an ``intercity'' study; your paper relates to ``intercommunity.'' I like your word better because we are really dealing with trying to transport people from rural parts, not just between cities. Hence, the word ``community'' is perhaps a bit more appropriate.
At the very beginning of your comments today you talked about the province of Alberta, and you said that Greyhound covers 80 per cent of the villages and 90 per cent of the towns, that they have been for sometime and are continuing to do so.
In terms of the villages, what about the other 20 per cent? In terms of the towns, what about the other 10 per cent? As well, how are they being serviced, particularly the three classes of people you have referred to — children up to 18 years of age, the elderly who do not have a car, or a light truck, as you say, and the disabled?
Mr. Dawes: The first thing I would say is that those communities that are not covered have not been covered for an awful long time. It is not recently that those communities have no service.
That would be an interesting study in itself. Why do some communities not have service? I am not only talking about this province; I am also fairly familiar with Ontario. There are communities there that have not had bus service for 50 years. It does not necessarily seem to depend on whether they are thriving.
Senator Oliver: Is that not a public policy question that we as a committee should be looking at? Should not all Canadians, irrespective of where they live, have some kind of equal access by transportation to the main areas, to hospitals, schools and shopping?
Mr. Dawes: Yes. The question is what kind of service.
In Alberta, for example, from Red Deer north, there may be towns on a highway that no longer has bus service, or probably has not had bus service for decades. Often people will get a drive to where they can get the next intercity bus.
In Western Canada, it is nothing to drive for an hour, you know, frankly.
Senator Oliver: In your car or light truck.
Mr. Dawes: That is right.
People will often get a drive from relatives or friends. We have local transportation services in 185 Alberta towns and villages, the handi-bus type. Senior citizens might get a ride from, say, the Elk's Club or the Lion's Club. It is very rare that you will get somebody who absolutely does not have a ride to the nearest intercity bus. Alternatively, a lot of these local transportation providers will take senior citizens, for example, into the West Edmonton Mall, say, for shopping once a week. A number of these services, quite a few of them, are accessible as well. They will be operating a handi-bus kind of vehicle.
One measure is the number of complaints we would get in a year. It may be one or two. It may be a complaint related to a bad experience, say, something the driver did that an individual did not like. We get very few complaints about the service itself, which to me indicates that people are happy and are getting around in some manner, even if they do not have a bus going through their community, which is relatively rare.
Senator Oliver: On page 8, under ``Preserving Rural Services,'' you say:
The Board should encourage, but not order, carriers operating terminal, information, reservation and ticketing facilities to grant right-of-use to other carriers under appropriate terms, so as to promote coordination between services and thereby preserve the Alberta scheduled inter-community bus network.
Senator Oliver: Has that been working? Is it working now?
Mr. Dawes: Yes. For example, in the cases where Greyhound has devolved services — and I would defer to our friends from Greyhound who will be coming up next — it is my understanding that these services usually operate into their terminal. Hence, the connectivity is there. It is just like what it used to be when Greyhound operated the service.
In other cases, where you have feeder services, obviously they are totally connected. The feeder bus comes right up to the bus at a junction point on the highway, let us say.
Senator Oliver: So that policy is, in fact, working; there is some sharing; correct?
Mr. Dawes: Yes, definitely.
Senator Oliver: On page 4 of your presentation, I was very impressed with the streamlining initiatives you implemented.
A number of the witnesses who have come before us, those who are involved in providing the service, have complained about the regulatory burdens that they have encountered. You have broken down the regulatory process.
On page 4, you say, in part:
The following streamlining initiatives were implemented under Stage 1 of our policy for scheduled services:
repeal of passenger baggage weights, rules and conditions;
elimination of requirement to obtain Board approval of both passenger and parcel rates;
reduction of the time required by the Board to give public notice...
You have cut through a lot of the bureaucracy. That is a wonderful precedent. Do you intend to go further?
Mr. Dawes: We have gone about as far as we can, short of full deregulation. We do have some baggage regulations that are still in one of our regulations, but that is an administrative thing; we just have not been able to remove them.
I can give you an example of what used to happen. If Greyhound had a schedule out of Calgary to Edmonton that left at 12 noon, in order to change it to 12:01 under the previous system they had to go to the board and get approval. We just did not think that made any sense.
Senator Oliver: We heard a similar complaint yesterday in British Columbia, and we have heard the same thing in other provinces, but you seem to have corrected the problem, which is commendable.
Mr. Dawes: Yes. I wanted to mention our minimum frequency system here as well. We have categorized all of the scheduled routes in Alberta according to type of service: rural service, service between smaller cities, and service between big cities, basically.
What this means is that a carrier in the case of rural routes can reduce its service down to three times a week. Let us say it is operating a daily service. It can reduce the service to three times a week without getting approval from the board.
If they want to go below what we call a minimum frequency for that route, then they have to go through the whole process.
Senator Oliver: Do they have to file something? How would the public find out? Do they have to post it somewhere?
Mr. Dawes: Yes. If they want to go below the minimum frequency, they have to provide notice of their intention.
Senator Oliver: Would they have to file notice in the newspaper, on the Internet, or where?
Mr. Dawes: The regulation, I believe, says a newspaper. We should update that and include the Internet.
Senator Callbeck: You mentioned that in 1995 you did a review of the bus industry because you were concerned about a decline in the previous decade. Is your document that I have in front of me, your position paper, a result of recommendations that came from that review?
Mr. Dawes: Yes. We prepared what we called a policy statement in 1995, subsequent to the review, which is really for the guidance of the Motor Transport Board. They are a separate body; they are a semi-judicial entity. We do not want to be seen ordering or directing them, but we give them very strong recommendations, which they then follow in regulating the mode.
Senator Callbeck: So has this increased your ridership?
Mr. Dawes: Again, I would like to defer to our friends from Greyhound on that, but it is my understanding that ridership has been fairly steady since 1995 in the bus mode in general and in Alberta as well.
There may be variations on different types of route — for example, Edmonton-Grande Prairie, which is serving a lot of the activity that is happening in the oil patch in northern Alberta.
We are not privy to ridership information. We do not receive data from the bus companies, so I cannot say anything more than that.
Senator Callbeck: Did you say at the beginning that 95 per cent of villages are served?
Mr. Dawes: I said 95 per cent of the towns and 80 per cent of the villages were served.
Senator Callbeck: You talked about vans, too. I think you said that every bus that carries people for a charge must have a certificate. That is true with respect to a van, too, I believe. If a van is transporting 9 or 11 passengers and is charging for the service, it has to have a licence; correct?
Mr. Lilley: That is correct, an operating authority certificate providing that the passengers are paying for that service.
If it were a bus with capacity for 10 or more passengers, it would require a safety certificate under the National Safety Code.
Senator Callbeck: What is involved in getting that certificate?
Mr. Lilley: If you are a resident of Alberta, you have to supply us with an application form. The application form provides information about the company or persons applying, provides details about the demographics and provides us with insurance information so that we can ensure that they have met the minimum requirements, and that is basically all that is required.
Senator Forrestall: Fit, willing and able.
Senator Callbeck: We mentioned 9 or 11 people. What if it is a van carrying three people?
Mr. Lilley: If it is like a Chrysler minivan type of vehicle?
Senator Callbeck: If they are carrying people for a charge.
Mr. Lilley: If they are carrying people for a charge, then they have to have an operating authority certificate.
Senator Callbeck: Regardless of whether the vehicle is carrying three people?
Mr. Lilley: Correct. The type of certificate we issue would depend on the type of service. It may be a bus authority, a taxi service, as opposed to a charter or something like that, or a private bus. The type of service differentiates the type of certificate we would issue.
Senator Callbeck: You said that you would like to work toward economic deregulation, but not without the other Prairie provinces doing the same. Does that apply to all the provinces or just the Prairie provinces and B.C.?
Mr. Dawes: Yes. I am glad you added B.C. B.C. is the biggest problem for our carriers.
We have considered what would be the implication of deregulating economically if we could get all of our western neighbours to agree, and we have not come to a conclusion on that, but if we do not get deregulation across the country fairly soon it is an option that we want to consider very seriously.
Senator Callbeck: To do it own your own?
Mr. Dawes: No, to do it on a regional basis.
Senator Gustafson: I would like to make a couple of comments with respect to your statements.
The Senate Agriculture Committee, which I chair, was just in Europe. The Europeans seem to be way ahead of us in terms of rural development. We are the most urbanized country in the world; 80 per cent of our people live in cities. When it comes to rural development, it seems to me that we are on a slippery slope. Things seem to be going downhill. In the area in which I live, southern Saskatchewan, there are just a few main lines left. If you live along the Regina- Minneapolis line, you get good service. If you happen to be off of the mainline, the same is not the case.
You said that about 80 per cent of villages in Alberta have service. The percentage in Saskatchewan would probably be much lower than that. There is no doubt that this poses a problem for government.
The Europeans are dealing with these very things right now. They call it rural development, environmental direction, and agriculture, and they are combining those things to enhance rural life.
Canada is probably the greatest rural country in the world. People who visit here remark about the opportunities. Somehow or other, I do not think we are catching that vision. I am no doubt biased because of my background and where I live and the things I do, but I think it is an area that we really must look at.
I want to ask a question about the type of van that is used to transport people. Have you done any studies on safety as to which are the better vans?
My son has had three vans. When I am driving his van, it seems as though I could float right off the highway, compared to a heavy car that holds the road in icy conditions or the types of buses that take kids to hockey games and so on, which seem much more stable. Have you done any work on the type of vehicle that is the safest?
I would like you to respond to my first comments, and then answer with respect to the vans, if would you, please.
Mr. Dawes: I want to clarify one thing about the 80 per cent of villages.
If you start out for Edmonton in Saskatchewan, on Highway 13, and go through Provost, through Camrose and the famous Wetaskiwin into Edmonton, included in that 20 per cent of villages not served anymore will be places in between the larger towns or cities on that route I just described. Therefore, it is not that the buses are not perhaps passing through these places; it is just that the population is so low now that they are perhaps not stopping anymore. In some cases, the village can be located off the highway somewhat and the bus will no longer go in there.
Senator Gustafson: Or they meet them on the highway.
Mr. Dawes: Well, if the bus still stops there.
My point, however, is that in Alberta, and it may be different in Saskatchewan, we have found that our larger regional centres in the rural areas are doing quite well. They are either holding their own or they are actually growing. Camrose, which is now a city, has become quite a retirement centre; Wetaskiwin is another thriving town.
It is more a case of a change in the structure of the rural areas where people who were once being served are now not being served. The latter is not the case in very many instances, anyway. So I think you have to make that clarification.
With that in mind, we are not that concerned about the future of bus service to rural communities, based on the structural changes and the fact that we have many examples of services that have been devolved and continue to operate in a more appropriate fashion on those routes.
Turning to the matter of vehicles, the only thing we can go on is accidents that might occur with the different types of vehicles. To our knowledge, this has not been a problem in Alberta, and we would know, being the Department of Transportation.
For example, the van connector that Greyhound contracts with out of Lac La Biche seems to be operating safely. We have airporter services, one, for example, in Edmonton that operates on a fairly long stretch out to the international airport using vans at high speeds. There has not been any problem with them.
Therefore, in our view, the legislation that is there is adequate. If it is enforced properly there will not be a problem. However, that should not be a consideration as to whether to deregulate or not economically. I guess that would be our point.
Senator Adams: There are no buses where I live.
A company like Greyhound has different regulation in different provinces. There are regulations in Alberta and B.C. specific to the mountains. Saskatchewan and Manitoba have different regulations. Are the regulations across the country the same vis-à-vis safety?
Mr. Lilley: In terms of bus regulation for safety, that has mostly been dealt with under the National Safety Code, which is a national program. Each province applies slightly different ways, but the concept is to regulate under safety.
Once you are in, every jurisdiction maintains a carrier profile on that person or that company and regulates based on convictions, inspections and collisions. So a safety aspect is basically covered under that program.
Senator Adams: Is it true that across Canada, every six months, every bus has to be safety checked?
Mr. Lilley: Yes — but I will not speak for the other jurisdictions. I believe it is every six months in most jurisdictions. In Alberta, all buses have to have a mechanical safety inspection every six months.
Senator Adams: I believe bus drivers check their emergency brakes often. I believe they actually crawl underneath the buses to do that inspection. Is there any other way to know whether the safety cable is broken?
Mr. Lilley: Under the National Safety Code, carriers are required to have a preventative maintenance program, and in most jurisdictions, I believe in all jurisdictions, actually, drivers must do a pre-trip inspection prior to driving that vehicle and document any defects. To support that, jurisdictions have safety inspections, commonly referred to as a CVSA inspection — the Commercial Vehicle Safety Alliance. There is a standard set of inspection criteria used all over North America and Mexico. On-road enforcement people conduct random inspections and stop checks to verify the mechanical fitness of vehicles.
Senator Adams: How does the system work? Do you go to each company and check the licence number of every bus to see how many times it has been safety checked? How does it work?
Mr. Lilley: Part of it is on the road. When a vehicle is stopped, they have to produce proof, and they are issued a sticker, which is in turn attached to the vehicle. As the vehicle goes by, the enforcement people can determine the validity of the sticker by its colour, what corners are cut off and what year is punched, simply by looking at it.
Once a vehicle is stopped, there is a request for the certificate to see if it is valid and for that vehicle. So there is an on-road inspection portion that supports that program.
In addition, a new carrier coming in, like bus operating authorities, has to attach a copy of their certificates upon application, and upon renewal they have to give us at least one just to show us that they are maintaining their vehicles in that program.
Senator Adams: Are there any rules with regard to buses using diesel fuel? Do you have any restrictions on that? Do you do any checks? Do you do any enforcement in that area? I am concerned about this for environmental reasons. Do you have anything to do with that?
Mr. Lilley: Not in Alberta. I am not sure about the other jurisdictions. We do not do a lot of that type of checking.
Senator Adams: You have nothing to do with environmental concerns?
Mr. Lilley: Nothing to do with emissions per se, not a full program where we attach anything to the muffler or exhaust of a vehicle and look at it.
Senator Forrestall: You made the comment almost offhandedly, and I think it is very important, that a charter can take a busload from Alberta to Vancouver but cannot pick up a load there and bring it back to Calgary. The B.C. government has imposed that regulation.
Is there any restriction the other way? Could a bus from Vancouver solicit or pick up a load in Calgary and go to Prince George?
Mr. Lilley: A non-resident carrier could apply for a full-time operating authority, if he was, say, from B.C. In that case, they have to apply. We would go through an advertisement or application process. There would be a public hearing, an opportunity for people to oppose that application, and it could be rejected on public need and convenience.
Therefore, a carrier has the option to apply for a permit authority. A carrier is allowed 12 single-trip permits a year. However, if the carrier is a non-resident and wishing to pick up in Alberta, what we first require it to do is contact three carriers from that area to see if one of them can supply that service first. If not, we confirm with those carriers that they cannot, and we will issue a single-trip permit that comes out of this 12 a year.
Senator Forrestall: Who would want to go through that? I cannot imagine the time, the trouble, the legal expense, the advertising expense.
What about a national company like Greyhound? There is no national ticket. There is no one-stop shopping in this industry, is there?
Mr. Lilley: No, it is all delegated down to the provinces. Even the extra-provincial authorities are delegated down to the provinces to issue on their behalf.
Senator Forrestall: Would it not be easier for the provinces, perhaps through a conference of transportation ministers, if this was put forward as a barrier to national competition, national trade, if there were one-stop shopping?
You suggest that there is no industry association. I find that hard to believe, but maybe I am thinking of it in a different sense. Does the absence of an industry association raise a flag that we should be alerted to?
Mr. Dawes: There are various industry associations across the country, and presumably they could get together and take a common stand on this. However, as Mr. Lilley said, the regulations and the process for getting authority to operate are left to the various provinces under the delegation of authority from the federal government.
I did want to clarify one thing. There are some Alberta-based companies that do have operating authority in British Columbia. Certainly, national companies like Greyhound have authorities wherever they operate. It is difficult, however, for smaller Alberta companies to go in there. Basically, the only way to do it is to buy an existing authority, which is cost-prohibitive in many cases. Because the system is closed, it drives up the price of buying a company, in effect.
We deregulated internally to take the burden off both ourselves as a government and the industry, because they were tying themselves up in knots going before hearings trying to get authority to operate from Grande Prairie in addition to Red Deer. We feel this would be one of the advantages of deregulating nationally. The companies could concentrate on running their business rather than attending hearings trying to get the authority to operate.
Senator Forrestall: It seems to me that this question has been on the agenda of transportation ministers for a number of years, to no avail, which leads me to believe that the status quo seems to be okay and to hell with whether it affects prices up or down, and it is something to be regretted.
I would hope that as the years go by we get closer to one-stop shopping. It tends to keep prices down and make business a little easier for the men and women who have to run the industry. However, it is a private industry, and they will do what they want. In any event, they do it well. I am not suggesting they do not.
I have a question related to fuel systems. Is there any encouragement from the province with respect to fuel cells or upgrading some of the new diesel technology? Are you active in that area with the various companies?
Mr. Dawes: We have a climate change initiative in the Government of Alberta that is looking at every possible way of reducing emissions in a manner that is sensible and feasible, I guess I should add.
I would like to point out, though, that the intercity bus mode is one of the most energy-efficient modes, and if you look at emissions per passenger, it also ranks very well in that regard as well. Obviously, it would be better if emissions could be reduced, but they are certainly not a major problem in that regard.
Senator Forrestall: Are there provincial regulations with respect to the number of times tires can be retreaded in trucking industry, or is that judgment left to the industry?
Mr. Lilley: There are standards for the tread depth that a tire can have on the highway, and it is different, I believe, for steering tires than for carrying tires. The standards are enforced by the on-road enforcement people, as well as through the mandatory inspection that each vehicle is required to have.
In terms of retreading, I am not familiar with that end of the business.
Senator Forrestall: I am wondering at what point a tire absolutely wears out, the casing wears out.
Mr. Lilley: I am not familiar with that.
Senator Forrestall: It might be something you want to look at in terms of safety, because that is the context in which I asked the question.
You talk about highway checks. Are they carried out by the police?
Mr. Lilley: Yes, in Alberta they are carried out by enforcement people. We have an inspection services branch — they run the weigh scales and marked patrol units — that is mandated to concentrate on commercial traffic in Alberta, both truck and bus. All their inspectors are certified under the CVSA program.
In addition, other enforcement agencies are certified to conduct these inspections. I believe the City of Calgary, the City of Edmonton and the City of Lethbridge have truck inspection details. Some RCMP officers are certified to do inspections. As well, I think there are some county people that may have certified people to do on-road inspections.
Senator Forrestall: Those people are with the province or a municipal enforcement agency as opposed to police.
Mr. Lilley: Many of them — for example, Edmonton and Calgary — are police officers that are dedicated to truck detail. The RCMP who are inspectors are regular officers that are assigned to freeway patrol.
Some of the county people — although I am not sure — would probably be appointed under bylaws and such. They would not be considered as police officers per se.
Mr. Dawes: Let me just follow up on that. Of course, the RCMP here in Alberta are contracted by the provincial government to provide on-highway policing.
With regard to the tire issues, we do have standards, as Mr. Lilley said. Tires have to be of a certain thickness, whether we are talking about retreaded tires or otherwise. I just wanted to make that clear.
Senator Forrestall: You can appreciate that after awhile the casing will break down. The tread may look beautiful, the tire may look beautiful, but that which supports it has tended to deteriorate.
I just wondered from a safety point of view, particularly with steering tires, as well with the economical tires, whether there is a regulation that provides that a tire can only be retreaded, say, four times or six times, or until there is an indication that the casing is gone and the tire should be discarded. However, apparently you do not. It is just a point that has to do with safety.
Senator Phalen: You talk about going to B.C. and being deadheaded. How do you think that should operate?
Mr. Dawes: If there were no requirement to obtain operating authorities in each jurisdiction, then an Alberta-based company, provided it met all the safety requirements, could take a group to Vancouver, let us say, and then take another group back from Vancouver to Alberta.
Senator Phalen: In Montreal, we were told about a line switched bus drivers in Montreal. Do you see a depot-type situation at the border, where you could switch off?
Mr. Dawes: We would hope that that would not be necessary. If the company meets all the safety requirements and it is the province of domicile, that suggests that their drivers are qualified and that the vehicles are safe, and they should be able to go anywhere in Canada with a load and take a load from there to another jurisdiction and then come back to their home jurisdiction without restriction.
Senator Phalen: Do you have a depot in other areas in another province? How would you pick up your passengers coming back from British Columbia?
Mr. Dawes: If it were a charter operation, they would just go to an assembly point that the organization that is chartering the bus would specify. It could be a church; it could be the ferry terminal in Vancouver, if they are taking people from there into the mountains.
Senator Oliver: I want to make sure that I have on the record your opinion about what you would like to see in the report of this committee once it finishes all its hearings and studies.
On page 11, under ``Towards Full Economic Deregulation,'' you say:
The Department encourages the federal government to legislate, as soon as feasible, the full economic deregulation of scheduled, extra-provincial, inter-community busing, in order to remove what are in effect barriers to internal trade and innovation across Canada.
Is that what you would like to see come from our report?
Mr. Dawes: Yes.
Senator Oliver: You will recall that at the beginning of this hearing our chairman outlined what are the issues, and she talked about what the economists called the demand side. Do you feel that those demand-side conditions can be met with full economic deregulation?
Mr. Dawes: I am not sure what you mean by that.
Senator Oliver: If we have full economic deregulation, as you propose, will all those people across Canada that we have talked about, the disabled, the rural people, the elderly who do not have a car or truck, have an opportunity to be afforded transportation services by busing under your proposal?
Mr. Dawes: Based on the Alberta experience under a highly streamlined system of regulation, that is, relatively open to innovation and given the kind of innovation that we have seen from our two big carriers here, Greyhound and Red Arrow, we are confident that any demand from any segment of the population would be met under that kind of system, yes.
Senator Oliver: We will find out shortly how much cross-subsidization is going on to permit them to continue to do that, but if there were to be a rule that cross-subsidization could not go on, then your proposal for full deregulation economically would not work, would it?
Mr. Dawes: Our proposal depends on the rural routes being served by more appropriate vehicles operated by companies with an appropriate cost structure, which is the case on some routes here in this province and elsewhere in the country now. However, it is, we believe, not the case where Greyhound is still operating low volume routes like that.
Senator Oliver: As a department of the provincial government here in Alberta, do you envisage that some of the busing would be not for profit?
Mr. Dawes: I described the existence of a large number of local transportation providers that currently take seniors, or people with disabilities or youth groups either to a nearby connecting point on a mainline bus route or, frankly, more usually into a city themselves. Those are not-for-profit organization, and they definitely have a role to play. We have found that that type of service has been increasing because of changes in healthcare and social service delivery. There has been a change in the way local service providers provide transportation because people now often have to go to a nearby town to get to a hospital, for example — not for an emergency, obviously.
Senator Oliver: Day surgery.
Mr. Dawes: Well, at least ongoing care or follow-up care.
In summary, there would be a non-profit aspect to this as well working with the mainline bus companies.
Senator Oliver: And you factor that into your proposal.
Mr. Dawes: Yes.
The Chairman: Thank you again for your presence here today. The answers to all our questions are very important to us and will be dealt with when we prepare our report.
Our next witnesses are from the Greyhound Canada Transportation Corporation.
Please proceed.
Mr. Roger Pike, Senior Vice President, Operations Canada, Greyhound Canada Transportation Corporation: Madam Chair, honourable senators, thank you for the opportunity to appear before this committee. We believe that Minister Collenette's initiative to develop a transportation blueprint is essential in the formation of a coordinated transportation system, and we believe that the findings of this committee and those of the CTA review panel will undoubtedly assist in that process.
Greyhound Canada is a generic term; it includes Greyhound Canada Transportation Corp., Grey Goose and Voyageur. The core business of those three companies is the provision of intercity scheduled service, or if you prefer intercommunity scheduled service.
Greyhound Canada is a wholly owned subsidiary of Laidlaw. Laidlaw also owns the company that the witness from yesterday, Mike Cafferky, is with, that is, Island Coach Lines. It owns Gray Line Vancouver, Gray Line Banff, Gray Line Toronto, Gray Line Ottawa, PMCL, and ChaCo. The core business of those companies is mostly charters, sight- seeing and tours. Laidlaw also owns Greyhound U.S.
My comments today will be limited to Greyhound Canada and the scheduled intercity operations. I should like to briefly cover what we do. Our area of coverage extends from Montreal in the East to Vancouver in the West, and from Whitehorse in the Yukon and Hay River in the Northwest Territories. We have a pretty extensive coverage.
There is a map in our handout. I intend to paraphrase our handout. If you want to refer to the map later, then we can talk about the area of coverage.
Within our network, we have 633 agents that provide passenger depots. As well, we have 1,360-odd flag stops, as we call them. There is no agency at a flag stop; we just stop the bus, which may address some of the questions you had about communities earlier on. A flag stop is not an official bus stop. In addition to those flag stops, we have several company-operated terminals.
We have over 2,000 employees, and we also cause the hiring of another 1,000 full-time equivalents in our agency network. We carried 6.3 million scheduled passenger and operated 72 million bus miles in the last fiscal year. We handled 7 million parcels in the last year on both a depot-to-depot and door-to-door basis. We serve more than 4,000 parcel destination points. Bus charters form less than 8 per cent of Greyhound Canada's revenues. We utilize a fleet of 490 intercity buses, 12 tractor-trailer units and 54 bus parcel trailers. Those are the trailers that we pull behind buses.
I would like to talk about the density of markets, if I may, for a moment. Within our network, there are theoretically 200,000-plus possible intercity pairs. In any one year, only about 30,000 are actually used, and that 30,000 changes from year to year. We do not always get a passenger from Blind River to One Ring River.
That network is 70 times greater than Air Canada's, yet we only have 30 per cent of the their passengers. Of that 30,000 city pairs, 27,000 have between 1 and 99 annual passengers. That is pretty lean. Only the top 16 city pairs have over 25,000 passengers per year.
To put this into perspective, it is less than one bus round trip full a day. In other words, the top city pairs we have on the road account for less than one bus trip a day.
Without a comprehensive interconnecting network, only the top city pairs would see any scheduled service; the remainder would either see no service at all or monopoly service.
I will now talk about bus parcel markets. Greyhound has been in the bus parcel or courier market since its inception 73 years ago. The courier market, as Mr. Dawes mentioned, has been deregulated for a good many years, too. We are a player in the rural-to-rural markets and urban-to-rural marks, but not much of a player in the urban-to-urban market.
Just as many corner stores in Canada require multiple lines of business to remain viable, Greyhound routes require the synergies of passengers and parcels in order to make them viable. We cannot do it by just the one.
One third of Greyhound's revenues, and this comes as a surprise to most, is from the parcel business. In Western Canada, 50 per cent of our revenues are from the freight side of the business. Without that cross-subsidization, our whole network would implode.
I would like to talk a little bit about deregulation. Until a clear transportation policy can be developed that answers the question, ``Should rural Canada keep its only form of public transport?' then and only then can alternatives be developed. Assuming the answer to the question is yes, we want to continue rural service, then there are only two solutions: The first is the current regulated system; the second is some form of external subsidized system. The second begs the following questions: Where does the funding come from? Who will administer the process? What will the administrative costs be?
If, on the other hand, the answer is no, we do not care, then we have to look at what happened in the U.S. and the U.K. as examples of where that leaves us.
It is our opinion that bus deregulation is a solution looking for a problem. The search for this problem has been ongoing since 1994. In answer to why, the following reasons have been advanced.
Initially, it was supposed to fix the lack of harmony between the modes. Everybody else has got it; it is your turn. This reason was dropped in favour of the argument that deregulation would bring more competitors into the market, thereby providing the consumers with more choices. However, both U.S. and U.K. post-deregulation saw a shedding of unprofitable routes and the fairly rapid emergence of a deregulated monopoly. In the case of the U.S., even where there was bitter and long competition in the Northeast, they now have revenue-sharing pools between the operators and those routes that have been blessed by the U.S. government.
Hence, in summary, deregulation in other jurisdictions has not seen the outcome expected going in — far from it. We finished up with a deregulated monopoly.
We now hear from Transport Canada that bus deregulation is supposed to, one, address shrinking ridership and diminishing profitability and, two, solve the issue of regulatory fragmentation. Neither of these two issues is a problem in our view, and I will come back to them, both of them.
I should also like to point out that an incumbent carrier, particularly a dominant one like ourselves, or in the U.S., Greyhound Lines Inc., or in the U.K., National Express, tends to come out of deregulation as the dominant carrier going in and coming out. It is not difficult to explain why this happens. If you think about a corridor such as Calgary to Edmonton, a new entrant would come in trying to tackle that high-density corridor. Now, what market is open to that new entrant? It would be any traffic that moves from Calgary to Edmonton, from Edmonton to Calgary, or any point in between. That would be the new entrant's potential market.
In a network like ourselves, the market is much larger than that. It includes from Lloydminster to Calgary or from Lethbridge to Grande Prairie, and in our case, on that particular corridor, 50 per cent of the passengers travelling on it are from beyond or behind the origin and destination points of the route. So you can see how the incumbent carrier has an advantage.
In Canada, it is even more appropriate to explore this, because in the U.K. and the U.S., parcels were not a major part of their market going into deregulation. It was there, but it was not the big chunk like ourselves, 50 per cent.
The new entrant would have to break into the courier market to compete with us. What the new entrant is competing for is just that 25 per cent of the origin destination market and between the passenger market, leaving the other 75 per cent to the incumbent carrier, which is why in the U.S. case and in the U.K. case we saw such a concentration in a single monopoly.
I will now turn to the topic of ridership decline. There is no getting away from it — over the last 30 years, ridership has declined. The advent of two-car families, more economical vehicles and better roads have resulted in 92 per cent of all intercity trips being taken by the private automobile; the remaining 8 per cent share the rest. However, in the last five years, Greyhound's ridership has grown 32 per cent, 10 per cent of which is through internal growth, the remainder through acquisitions. As an aside, our parcel business has also grown by 10 per cent.
Passengers will choose a mode of travel by weighing a multitude of factors in their choices. Is an 80-minute airplane ride to Vancouver worth twice the price of a 14-hour bus ride? Depending on your income level, you may say yes to that question; depending on your time availability, you may say no. So how do you weigh these factors?
With respect to the regulatory framework, Greyhound operates in the greatest number of jurisdictions of any bus carrier in Canada. We do not have a problem with it; it works. Should it be streamlined? Is the Alberta model a good model? Yes, it is. However, if nobody else wants to adopt that model, then we can live with it. Less than one tenth of 1 per cent of our passenger revenues is spent on regulatory issues. As far as fighting with other carriers, it is so minuscule it is off the map. With respect to this concept that it is a big onerous issue on the carriers, we should be the ones to know, and we do not know of any real problem.
Let me now talk about corporate concentration and profitability. In Greyhound's 73 years, we have always turned a profit, except for two years when we tried to be an airline and we lost money. Do we make a massive return? No, we do not, but we do cover our costs and we do have enough to re-equip our fleet.
We are a wholly owned subsidiary, so we do not release detailed financial information. I would have to seek permission to grant that information. Either that, or I will be looking for another job.
Right now, the Laidlaw group of companies has a 45 per cent share of the scheduled bus industry, less than 15 per cent share of the chartered tour sightseeing industry and about a 65 per cent share of the bus courier industry, which in itself is only about 1 per cent of the total courier industry in Canada.
If economic regulation continues, the oversight is provided by the regulators. Should deregulation occur, nobody should be surprised to see what happened in the U.S. and the U.K. occurring in Canada. If the minister's concerns stem from the fact that this is exactly what happened to Air Canada and the subsequent domination of the Canadian air industry after deregulation, I can understand the question.
Modal subsidies: Greyhound receives no subsidy whatsoever from any level of government. The bus industry was recognized by the Royal Commission as being the least subsidized, if you take all the environmental issues into account, both direct and indirect. The Royal Commission and the CTA review panel also acknowledged that intercity bus travel is the lowest cost mode, the least environmentally damaging mode, the most extensive network coverage and, along with Class 1 air, the safest mode of transport.
One has to wonder why are we thinking about deregulating this industry.
Intermodalism: I know this is a favourite of the minister's. Greyhound is almost the tail wagging the dog. We have negotiated shared, co-sharing and interline agreements with Air Canada and VIA Rail and, recently, out of Prince George with WestJet. In all these cases, we initiated the dialogue.
In conclusion, it is our belief that dogma has overtaken thoughtful evaluation in advancing economic bus regulation. It is our position that the issue has not been researched in any meaningful way with the notable exception of the KPMG report that was commissioned by the bus industry. Incidentally, we invited Transport Canada to participate and they declined.
This underscores the need for a strategic overview and a more detailed study before decisions are made regarding the Canadian transportation strategy.
I would be more than pleased to answer any questions you may have.
The Chairman: Would the views of your corporation be reflected in the joint presentation by the Canadian Bus Association, Motor Coach Canada, the Ontario Motor Coach Association and the Quebec Bus Owners Association?
Mr. Pike: Our views are not at odds with that document, no.
The Chairman: Are the differences between the provincial bus regimes that have developed over the last decade detrimental to the industry or to the travelling public?
Mr. Pike: Certainly not detrimental to the travelling public. As I said earlier, we have used the greatest number of jurisdictions and we do not really have a problem at all. We would like to see it streamlined, but it is not realistic.
The Chairman: What are the prospects for reversing the long-term decline in scheduled bus ridership?
Mr. Pike: I would like to point out that when I said that Greyhound, through internal growth, has grown by 10 per cent in the last five years, WestJet was expanding in Western Canada at the same time, and we are still growing. To think about it, one airplane has twice the seats of two buses, and they have been parking themselves basically on our high-density corridors. Despite that, we are still growing, so we are doing something right.
The Chairman: You remind me of people we met in Montreal who are very happy. Business-wise, they make a lot of money they say. They are very busy; a lot of people are travelling on their buses. Why should we mention the decline then? There is no decline.
Mr. Pike: I did not say we make a lot of money.
The Chairman: Is there a decline in ridership throughout Canada?
Mr. Pike: There was a decline as the number of cars grew and as the airlines lowered and lowered their fares. However, I think we have stabilized it, and we are showing that we can compete in that market, particularly in those markets that are probably 500 miles and less.
Senator Forrestall: Could you tell us, Mr. Pike, something about your company's policy with respect to tires. I am thinking generally in terms of industry safety. At the same time, could you comment from your broad knowledge of the industry in Canada and your dominant role in it whether or not there are different rules and regulations province to province.
Do you, for example, have a policy with respect to your drive tires and is it perhaps a little less stringent than that of your steering tires? Could you give us some idea of this as a safety concern.
Mr. Pike: On the steering axle, we will not put retread tires. They have to be new tires. With respect to tire depth, there has to be more tread than what is found in the National Safety Code. We adopt a higher standard than the National Safety Code. Safety is vital to our existence, so we focus very heavily on that.
With respect to the tag axles, the drive axles, we will put retreads on those. However, we lease our tires, we do not buy them, and it is the manufacturer who will advise us whether the side walls are such that they need replacing.
Senator Forrestall: Do not be shy on this. Tell us where you get those magnificent tires from.
Mr. Pike: Goodyear.
Senator Forrestall: I have a couple of questions having to do with security and measures that your corporate structure has put in place.
Was security a concern — and, generally, 9/11 is what prompts the question. Did you have any formal security measures in place prior to September 11; and if so, have those changed since then, as a consequence of that disaster?
Mr. Pike: One of the tabs in the book illustrates exactly that point. However, yes, we did have security in place beforehand. At our major terminals, we have a security company. Our drivers are trained. People who are drunk and/ or obnoxious are not allowed in our terminals or on our buses, so there is that safety.
The events of September 11 opened another door for us, which was frightening for the world and for Greyhound. We tried to do a risk assessment, but, frankly, we did not have the skills or the background to be able to do it. We asked Transport Canada and CSIS if they would help us with this assessment, which they did.
As a result of those discussions, we are implementing additional security measures. It is always dangerous to make statements in this field, but their assessment of Greyhound Canada's risk was low. The most likely scenario they could come up with was a copycat-type situation, where, say, somebody watching T.V. and seeing bombs falling in Afghanistan would decide to high-jack a bus. That is a pretty long stretch of the imagination, but that is what we saw as being our danger at that time.
Unfortunately, people who board buses do not have a sign on their forehead reading ``I am safe'' or ``I am dangerous.'' So we have to make an assessment. We are a public carrier. We cannot refuse somebody based on race, or for other reasons.
Senator Forrestall: Do you have a screening process that might identify the mass that would represent a nuclear instrument in a so-called suitcase bomb?
Mr. Pike: No.
Senator Forrestall: You do not?
Mr. Pike: No, we do not.
Senator Forrestall: That surprises me. I thought you might have had that.
Mr. Pike: Senator, with 1,300 flag stops, how could we possible X-ray somebody's baggage before getting on the bus in the middle of nowhere?
Senator Forrestall: The assumption is that it would come from a major centre, because the bomb would not have been manufactured in Canada but would have come in by air or rail or by water.
Mr. Pike: I think the security measures are proportional to the risk.
Senator Forrestall: If I were going to take that thing to Vancouver, I would put it on the bus and beat the bus to Vancouver.
It does not have an impact on the costs for security.
Mr. Pike: It is significant, but it is a worthwhile cost to provide protection to our passengers. In Calgary itself, we probably have seven or eight security people. We are a 24/7 operation, so when I say seven or eight people, it is maybe one person per shift throughout the week, but we certainly have that.
Senator Forrestall: I have one final question. What is the engine in a bus?
Mr. Pike: It is a truck engine.
Senator Forrestall: Are you actively seeking out new methods, like fuel cells?
Mr. Pike: We are not bus manufacturers; we are bus users. However, we do take an active interest in what is out there. The fuel cell is of interest to us, but unless the fuel for that cell, hydrogen, is available through our network — our buses are not isolated in any location. We have to have the ability to fuel them. It would be a lot easier to incorporate that type of technology if you are operating a transit system where the buses come home every night.
However, we use AB 92 diesels, which have very low emissions.
Senator Callbeck: I want to come back to ridership, if I can. We hear that ridership is declining, and you mentioned that it is declining because of cars and better roads and so on. You then went on to say that in the last five years you have grown by 10 per cent. By that, do you mean that up until five years ago ridership was declining but it is now increasing?
Mr. Pike: It was probably declining until about 1990. When I said five years ago, it was just an arbitrary time.
Senator Callbeck: What has caused it to increase?
Mr. Pike: The skill of my friend here in pricing and scheduling.
Senator Callbeck: Have the prices gone down?
Mr. Brad Shephard, Director, Pricing and Scheduling, Greyhound Canada Transportation Corporation: On some of the competitive corridors where we are competing against airlines and other modes, we have definitely lowered our price and come into more competitive pricing as well as our scheduling. We have increased our schedules or looked at the times of the schedules that they depart to make sure we are competing on both levels.
Senator Callbeck: Can you provide those ridership figures in writing, as to what they were 10 years ago and what they are now?
Mr. Shephard: Yes, we can provide those figures.
Mr. Pike: We are talking about Greyhound, not the industry, because we do not share the industry stats.
Senator Callbeck: What about promoting bus service? Are you doing much of that to try to increase ridership?
Mr. Pike: Yes, we do. We spend about 3.5 per cent of our passenger revenues on developing our ridership. If you look at our document, you will see a series of print ads. We also commented on our television and radio advertising in a letter we wrote to the chairman of the committee. Yes, we spend a considerable amount on promoting our services, both our passenger and our courier product.
Senator Callbeck: Is that generally what you spend in the States? Is 3.5 per cent also what you spend in the United States?
Mr. Pike: My comments are strictly limited to Greyhound Canada.
Senator Callbeck: So you do not have that comparison? You do not really know what Greyhound is trying to do in the States?
Mr. Shephard: Off the top of my head, I do not know what they would spend on promotion and advertising.
Mr. Pike: I imagine they would be very close, because they spend a lot of money on it, too, but I cannot guarantee that.
Senator Callbeck: Is spending that 3.5 per cent helping to increase ridership?
Mr. Pike: I think it is, combined with better pricing, better scheduling, better access to information on fares and schedules. We are not completely there yet, but the Internet is becoming a more and more important tool for us in getting our message out, particularly to students.
Senator Callbeck: Is 3.5 per cent what you have been spending in the last 10 years? Has that been consistent, or has it been increased recently?
Mr. Shephard: It has increased slightly over the last, I would say, five years. We were about 2 per cent prior to that.
Mr. Pike: It has probably moved from 2 to 3.5 per cent in five years.
Mr. Shephard: Mainly on the courier side.
Senator Callbeck: Are you satisfied that that 3.5 per cent is doing the job, or are you giving any thought to increasing it?
Mr. Pike: I think the standard line about advertising is that 50 per cent of it is wasted, and you do not know which part of the 50 per cent you wasted. If there were a direct correlation, I would love to know how you do it.
Senator Callbeck: It is pretty difficult.
You talked about the parcel service. I was surprised that in Western Canada half of your revenue comes from parcels.
Mr. Pike: That is correct.
Senator Callbeck: How do your prices compare with other courier companies?
Mr. Pike: We are below midpoint. For sake of comparison, we are slightly cheaper than Loomis. If I may do an extension on this just for a moment, the reason we do not use vans on those corridors where there are only two or three or five or seven passengers is that on those corridors we tend to have the highest volume of freight, so we use the big bus, because you cannot get that freight on a little van.
Senator Callbeck: Has that 50 per cent been fairly consistent the last 10 years, or has it gone up or down?
Mr. Pike: It is gone up slightly. What has changed fairly significantly over the last little while is that our niche has always been the depot to depot. You drop off at the Greyhound depot and you pick up at the Greyhound depot. However, that represents only about 6 per cent of the total courier market in Canada. So we are flogging a dead horse trying to grow that business.
Therefore, we have expanded into the door-to-door market. Currently, 46 per cent of our revenue from courier is on door to door. We provide at the major locations our own delivery and pickup service, and in other locations our agency network provides it.
Senator Callbeck: Door to door, that is right to the person's house?
Mr. Pike: Yes.
Senator Oliver: You get it to your depot first, and then your subsidiary delivers the parcel to the home.
Mr. Pike: Yes. There are a number of dealerships also. John Deere is a big customer of ours.
Senator Adams: Do you have a travel agent that connects to an airline like Air Canada or any other airline coming into Canada?
Mr. Pike: No, we do not. We have a fares and access schedule system. One of the shortcomings with Canadian transportation is that the separate development of air, rail and bus has resulted in no interconnectivity. We have to work on that.
If our average fare is, say, $35, an agent charges about $5 to make a reservation. The cost to us to get into those systems would be a lot. We would lose money.
However, we have to find some way of doing that; you are quite right.
Senator Adams: Are you connected to any charter, say, from here to Banff, for example?
Mr. Pike: Yes. Within the Greyhound network, 8 per cent of our revenue is charter. However, Laidlaw also owns exclusive charter companies, such as Laidlaw Banff, who work with the airlines as well.
Senator Adams: Do you have any shares in the airline?
Mr. Pike: Do we have shares in the airlines?
Senator Adams: Yes.
Mr. Pike: No. I wish I had shares in WestJet, but I was too late.
We do have an international sales force that on behalf of the charter side of the organization attends all of the major shows around the world.
Senator Adams: Three or four years ago you had an airline. What happened?
Mr. Pike: We went broke, basically. It cost us a lot of money.
Senator Adams: What about competition? Are there any smaller bus companies that want to compete?
Mr. Pike: We do have one or two competitive routes. Red Arrow right here in Alberta offers service between Calgary, Edmonton and Fort McMurray, which is also our routing; and in Ontario, we have a few routes as well. However, by and large, on the routes we operate we tend to be the monopoly carrier.
Senator Adams: For extra passengers, are you able to hire or charter other buses or a private company?
Mr. Pike: We do not take reservations, so we operate on what is termed an overload system. If a bus fills up, we put on another one, and we keep doing that until everybody has been moved.
This is best illustrated by our Christmas period, where a single schedule, say, from Calgary to Vancouver, may operate with 12 buses. In that case, we would go outside to other carriers.
Senator Adams: What would happen if one of your buses were to break down halfway between cities? What contingency plan do you have in place for that?
Mr. Pike: One of two things would happen: Either we would provide another bus, because we have buses positioned all through our network to handle this, or we would call someone from the list of carriers that we use to bail us out of that type of situation. We would charter their bus, move our passengers to the next Greyhound location, and then carry on.
Senator Gustafson: Of all your statements, the most striking one to me — and one that is important to this committee and our recommendations — is that deregulation is a solution looking for a problem.
Would you please expand on that.
Mr. Pike: In our opinion, we should be defining what we want the bus industry to do within a bigger transportation framework, then decide on how to provide that service, rather than saying that what we have got right now needs to be deregulated because it does not serve any objective. What objective are we trying to serve? I do not know. Every time we questioned it, the reasons changed. Transport Canada moves the goal posts on us when we try to define what that is.
Senator Gustafson: Air Canada.
Mr. Pike: Air Canada? I am not going there.
Senator Oliver: I want to ask basically the same question that Senator Gustafson did, but I want to ask it in a different context.
First of all, I would like to commend you on the excellence of the booklet you have prepared. I have not read it all, because it is so thick, but it incorporates the kind of meat and detail we need to do our study.
This morning is interesting for me. First of all, we had a presentation from the provincial Department of Transport. Now we have you, the biggest user, giving your evidence. The position of the gentleman this morning is diametrically opposed to yours. This is like Hamlet's dilemma: to regulate or not regulate or to deregulate. It is really not different from that.
I read the letter that you sent to the chairman of this committee, dated February 20, 2002. We have a copy of that letter. In it, you complain bitterly about some comments made at an earlier hearing in Ottawa about Greyhound.
Mr. Pike: I did.
Senator Oliver: In the course of that letter, on page 3, you make an interesting comment that I would like you to elaborate on. I will read the comment. It says:
On page 25 (and elsewhere), Mr. Colborne —
And we will be seeing him later today.
Mr. Pike: He is sitting behind me, I believe.
Senator Oliver: In any event, your comment reads as follows:
On page 25 (and elsewhere), Mr. Colborne comments that where ``there is a market, someone will provide the service'' and where ``there is no market, there will be no service.''
This is one of the core issues surrounding the deregulation issue. In the end, governments must decide —
— Committees like ours have to weigh the pros and cons and consider what kind of recommendations we want to make to governments —
— upon their strategic goals in respect of intercity passenger transportation. If governments are willing to accept that many smaller communities will lose connecting bus service and that many more will receive a lower quality of connecting bus service (such as less service frequency, vehicles without washrooms, vehicles without accessible access, etc.), then deregulation is a plausible approach.
As a committee of the Senate of Canada with a national perspective and design to develop public policy for all Canadians, how can we possibly countenance to be willing to accept that many smaller committees will lose connecting bus services?
Mr. Pike: As an example, Senator Oliver, in the U.S., when deregulation occurred there, 50 per cent of all communities lost service either completely or significantly. Over time, that came back a little bit. In comparing then to now, about 30 per cent of communities lost service.
In Greyhound's case, on many of the rural routes, strictly rural routes or rural multiple stop services, we would probably cut back significantly on those and provide more service and faster service on the high-density corridors because that is where the competition will come from.
We would still try to provide our courier service because of its potential cross-subsidy. However, it would easier to find somebody to provide that type of service for us, to pick up and deliver for us on those rural routes, than to have a big bus running down those highways.
Senator Oliver: You just told us that the reason you for having a big bus in those small areas is that you would pick up the parcels that are too big for the smaller buses. That is what you told us.
Mr. Pike: I do not back away from that at all; that is true. However, it is not necessarily the best way of doing it.
Senator Oliver: I presume that you are also making money there. If you are making most of your money on parcels and if you take a big bus into the small community and load it up with these parcels and have it delivered, I presume you are making a fair dollar on it.
Mr. Pike: There are three levels of profitability in our organization. The first is fully allocated; in other words, the trip covers everything, including overhead, a profit and the ability to cross-subsidize other routes.
The second level of profitability is the routes that cover direct operating costs, that is, fuel, driver and commissions. Our agencies get paid on commission.
The third level of profitability is those routes that do not cover direct operating costs. You operate them either because they provide feed to the network or because the regulators have told you to operate there. Those are the routes that would get close attention under deregulation.
Senator Oliver: So you are telling us today that if deregulation took place the first thing you would do is likely cut back substantially on service to remote rural areas of Canada that you cover now; is that correct?
Mr. Pike: I cannot make that statement categorically because much would dependent on what level of competition was initiated against our network.
Senator Oliver: You have 490 buses in operation. How often do you sell an old bus and replace it with a new one? What is your replacement policy? Is it based on the number of kilometres, age of the bus? What is the test for you to get rid of a bus and buy a new one?
Mr. Pike: We depreciate the buses over 15 years.
Senator Oliver: Did you say 15?
Mr. Pike: Yes. Right now, our average passenger experience on a bus is about six to seven years old. We try to buy about 48 to 52 buses each year. Each one cost $500,000 to $600,000. We probably change the engine of a bus four or five times in its lifetime. With the newer engines, it will be less than that.
We run the new buses for approximately 200,000 miles a year in the first two, three and four years. As they get older, they are used as overload in remote areas or are converted, because we also have buses in the North Country that are freighters, parked passenger buses. The back end is converted to a freight hauler. Those buses probably run 40,000 miles a year. A new bus runs 200,000 miles a year.
Senator Oliver: Of the 40-odd new buses you buy each year, would they all be fully accessible and have washrooms and television sets and so on in them? Are you buying the Cadillac of buses?
Mr. Pike: They certainly would have washrooms; they would certainly be equipped with VCRs. They would also be equipped with a hook on the back to pull bus trailers. As well, a sufficient number of those buses would have wheelchair accessibility, to allow us to maintain our service level of providing wheelchair accessible transportation at 24-hours notice. Wheelchair accessibility is not necessary on every bus to provide that service.
Senator Oliver: I would image that it is very expensive to make a bus wheelchair accessible.
Mr. Pike: Yes. The difference in cost is approximately $30,000.
Senator Oliver: Is there anything you can suggest to this committee or anything we ought to keep in mind if we did not want smaller communities to lose connecting bus services and many more to receive a lower quality of connecting bus services? Is there anything you can recommend that we consider doing to prevent that?
Mr. Pike: I think in my presentation I mentioned two options. One is to leave the system alone, to have it operate the way it does now, with internal cross-subsidies by the bus operators. There could be a bidding process for each route. High-density corridors would turn a profit, and the low-density corridors would require a subsidy, and try and balance the two as we do internally. Alternatively, you could open up competition on the major routes and let somebody else figure out how to do the minor routes and provide a subsidy for that. Those are the only two alternatives I can see. There would be a subsidy for the low-density corridors one way or the other, whether it is provided by the carrier or by some level of government.
Senator Oliver: I know that you operate from Montreal to Vancouver. However, we are in Alberta and I am interested in your response to Alberta. Is there a lot of competition for the charter work you do in this province? Do you have a lot of competitors?
Mr. Pike: Yes. However, to put that in context — and I do not know the number of charter operators in, say, Calgary currently — there are probably a couple of dozen, at most. The lower mainland in B.C. has 200.
B.C. is a highly regulated charter market, yet it has a lot of charter operators; Alberta is an open market with a limited number of charter operators.
The Chairman: I want to go back to your letter. On page 3, you speak of the need of national passenger strategy. You use other words, but that is their meaning. Section 5 of the policy statement of the Canada Transportation Act calls for the market forces. If market forces will match supply to demand, why is there a need for the government to devise a strategy and, in effect, to direct the market?
Mr. Pike: I think, Madam Chairman, that over the years the bus industry has been used as an instrument of social policy. History has taken us to where we are at today, not market forces. We have to decide whether service to rural Canada, and the social values that accompany that, is valid. If so, then we have to find some way of making the system work. If it is not true, then deregulation is obviously the course to take.
Senator Forrestall: I have some concern that the existing process is very cumbersome, time-consuming and expensive. Do you have any thoughts about whether on a national basis the regulatory process might not better fall under the competition tribunal?
Mr. Pike: I really do not know how to answer that, senator. What I can say is that I think Mr. Dawes talked to it. In 1995, there was a federal-provincial-industry task force set up to look at regulation, bus regulation. The closest that task force got to consensus was adopting the Alberta streamline model. However, it never went any further than that; there was noble intent, but it never moved ahead.
The Chairman: Senators, our next witness is Mr. Andre Dimitrijevic.
Mr. Andre Dimitrijevic, Executive Director, Internal Trade Secretariat: Madam Chair, thank you for the invitation and the opportunity to present to the committee. I would like to talk to you today about the Agreement on Internal Trade and, in particular, about the transportation chapter in the Agreement on Internal Trade. What I would like to do is provide you with some background information and a context for some of the testimony that you have received and some that I understand you will be receiving later on.
I will spend a little bit of time talking about the agreement in general; I will then spend some time more specifically talking about the provisions in the transportation chapter.
The Agreement on Internal Trade was signed by First Ministers on July 18, 1994. The agreement, to which the federal government, the 10 provinces and the Northwest and Yukon Territories subscribe, came into effect on July 1, 1995. The objectives are to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services and investments within Canada and therefore to establish an open, efficient and stable domestic market.
In the application of the agreement, the parties — that is, the 13 signatory governments — are guided by four principles: The parties will not establish new barriers to internal trade and will facilitate the cross-boundary movement of persons, goods, services and investments within Canada; the parties will treat persons, goods, services and investments equally, irrespective of where they originate; the parties will reconcile relevant standards and regulatory measures to provide for such free movement; and the parties will ensure that their administrative policies operate to provide for the free movement of persons, goods, services and investment within Canada.
In applying these principles, the parties agree that they will recognize, among others, the need for full disclosure of information, legislation, regulations, policies and practices that have the potential to impede an open and stable domestic market; and the need for transition periods and exceptions, including exceptions required to meet regional development objectives in Canada.
There is a reaffirmation of constitutional powers and responsibilities that is part of the agreement itself.
To accomplish these objectives, the agreement provides some six general rules, and these rules can be found throughout the agreement in one shape or another. The rules are there to facilitate the removal of existing trade barriers and the reduction of existing ones. So we are talking about non-discrimination, right of entry and exit, no unnecessary obstacles, legitimate objectives — which means that in some cases there are opportunities to derogate from the provisions of the agreement to achieve a legitimate objective that is defined in the agreement — reconciliation of standards, and transparency.
There are 11 chapters in the agreement that provide specific obligations in each of the following economic sectors. The first is procurement — which probably represents the more substantial part of the agreement. Therefore, there is open tendering for government procurement above certain thresholds; there is open tendering for the greater public sector, that is, municipalities, academic institutions, and health and social services entities. Negotiations are in the final stages right now for extending some procurement provisions to the Crown corporation sector and other excluded government entities.
There is a chapter on investments. There is a code of conduct prohibiting poaching from one party to another; the local residency requirements have been eliminated; and extra-provincial corporate registration and reporting requirements have been streamlined.
There is a chapter on labour mobility, to facilitate mobility of qualified people across the country. There is a chapter on consumer-related measures. There is a chapter on agriculture and food goods, and one on alcoholic beverages. The chapter on energy is still under negotiation. We hope to be able to finalize it soon.
There is a chapter on natural resources processing dealing with measures adopted or maintained by a party relating to processing of natural resources, and a chapter on communications. There is a chapter on transportation, and I will spend more time on that chapter, and finally a chapter on environmental protection, which applies to environmental measures adopted or maintained by one of the parties that may affect interprovincial mobility.
In the agreement, the parties have also agreed on mechanisms for handling complaints. A dispute resolution process is in place. If memory serves me, 129 complaints have reached the dispute resolution stage since the agreement was signed, and most of them have been resolved. A number of them are resolved amicably by consultation with the parties, but provisions are in place for a dispute to go all the way up to the panel.
There are commitments in the agreement to further liberalize internal trade through negotiation, and the agreement of course provides for the creation of the secretariat with which I am employed.
The agreement is administered by a committee on internal trade. That committee is composed of the ministers responsible for internal trade for each of the 13 parties. Currently, the co-chairs are Mr. Alan Rock for Canada and Mr. Halvar Jonson for Alberta.
The Internal Trade Secretariat reports to the committee of ministers and provides operational and administrative support to the parties. We are an unincorporated association located in Winnipeg and funded by all 13 parties according to the formula.
Let me turn now to the transportation chapter. I believe I left a copy of that chapter for your information as well. The objectives of the transportation chapter are fairly broad. They are to ensure a seamless, integrated Canadian transportation system that is safe, secure, efficient and responsive to the needs of shippers and travellers and which promotes a competitive and sustainable economy throughout Canada; and to create effective procedures for the implementation and application of the chapter and for consultations to cooperatively resolve issues related to the application of the chapter and to expand and enhance its benefit.
The chapter applies to measures adopted or maintained by the federal government that relate to or affect trade in transportation services by carriers of a province; it also applies to measures adopted or maintained by a province that relate to or affect trade in transportation services by carriers of another province.
Each signatory party is responsible for compliance with this chapter by its other governmental bodies, including Crown corporations, and by non-governmental bodies that exercise authority delegated by law. For some of the obligations, that compliance also extends to regional, local, district or other forms of municipal government.
Keeping in mind that a party does have the right to invoke limited objectives and that there are certain rules that apply to how you can invoke that, the chapter requires that the federal government accord to carriers of a province treatment that is no less favourable than the best treatment that it accords to carriers of any other province or of a non- party that provide like, competitive or substitutable services; it also requires that the federal government not discriminate between carriers of any province and carriers of any other province that provide like, competitive or substitutable services.
Similarly, each province must accord to carriers of any other province treatment that is no less favourable than the best treatment that the province accords to its own carriers and carriers of a non-party, and does not discriminate between carriers of any province.
The chapter also provides that no party shall adopt or maintain any measure that restricts or prevents the movement of transportation services across provincial boundaries or that creates an obstacle to trade in transportation services.
Under the chapter, the parties agree to reconcile by harmonization, mutual recognition or any other means their regulatory or standards-related measures, including, among other things, motor vehicle weights and dimensions. There has been a fair bit of progress in that area, although it is in a continuing area of discussion and negotiation among the parties. It also includes extra-provincial truck carrier operating authorities, motor carrier safety rules, bill of lading — and I think there has been a lot of progress toward development of the national bill of lading format in that case — fuel and sales tax and vehicle registration administrative harmonization, and agents for service.
There are a couple of provisions in the agreement that you will note: One is there is as annex to the agreement, 1410, which lists a number of measures to which the chapter does not apply. As I reviewed my note this morning, I realized that we have to drop the words ``and Canada'' there. There is an upcoming protocol amendment to the agreement that that in fact is no longer one of the parties that has a measure listed to which the chapter does not apply.
The chapter specifies that the Council of Ministers Responsible for Transportation and Highway Safety shall, at least every two years, according to the chapter, ``endeavour to negotiate to liberalize or remove'' such listed measures.
There is also a second annex, 1411. It lists non-conforming measures and the provisions for their phase-out. Again, in this case from the list, B.C. and Canada can now be removed.
Finally, the chapter provides a mechanism for dispute resolution that includes consultations between the parties, calling for the assistance of the Council of Ministers in resolving an issue, and if that does not work, a referral to a dispute panel for resolution.
I would be pleased to answer any questions or provide you with any further information.
The Chairman: The agreement argues for open entry on bus service. Why has this has not happened since 1994?
Mr. Dimitrijevic: Negotiations under the agreement take necessarily a long time. All decisions under the agreement are decisions that are taken by consensus, which means there has to be agreement and no objection by any other party. As a result, in some cases, some of the timetables that are reflected in the agreement have not been met, although there is ongoing work and discussion among the parties to try to reach the effort. Those particular dates have not been met. I am not aware that there are specific reasons other than it takes time to get there.
The Chairman: That is a long time.
Mr. Dimitrijevic: It certainly is. It can be a frustrating process, but it does achieve results. Many results have been met through that process under the IT.
Senator Oliver: I am interested in dispute resolution. When I look at articles 1412 and 1413, and having listed to what you had to say about it, it strikes me as being incredibly cumbersome and not something that is set out to resolve a dispute quickly.
Article 1412 relates to consultations. If a party requests a consultation, article 1412 provides that consultations shall begin ``within 60 days after the date of delivery of the request.'' There are no guidelines whatsoever for how the parties should sit down to try to work something out. If they do not work things out, article 1413 provides that they have a right to go to someone else, and so on and so on.
Modern dispute resolution normally provides for mediation first. A professional mediator is appointed to try to resolve the dispute. It may be that the matter is resolved with a week, say.
What is before us is perhaps the most complicated procedure for dispute resolution I have seen anywhere. It would take a year to get some of this stuff done.
I wonder if you would comment on that.
Mr. Dimitrijevic: What is before us reflects the thinking and the will of the parties of the governments when they signed the agreement. They wanted to encourage the resolution of complaints and disputes to consultation. They felt that the initial step at least should reflect willingness on the part of the parties, in this case, the governments, to try to resolve between two parties issues that may arise, without having to refer the matter to any other parties. That philosophy is reflected throughout the agreement. Whether it is efficient or not, that is basic.
Senator Oliver: In my experience, most parties need some professional assistance, and that is why you bring in a mediator at a very early stage. In this instance before us, mediation comes in your third stage, after several months have gone by. To me, it seems an incredible waste of time and money, and it seems ineffective.
Mr. Dimitrijevic: That may very well be the case. Not only that, I think that as we take disputes through, particularly the disputes that reach the panel stage, which is the ultimate stage, the feedback that we are getting from a number of the parties is that they would like to see some structure placed around the consultations. As you pointed out, senator, the word consultation is there, but just the word; no structure is provided for the consultation process.
Hence, there is at least some recognition that it may be necessary to review the dispute resolution procedure.
Senator Oliver: I do not think there is any question about that.
There are annexes to the agreement, but there are no guidelines or regulations pursuant to this to make it any more specific; is that correct? Are there any guidelines or regulations pursuant to this agreement?
Mr. Dimitrijevic: No, the agreement stands as it is. However, the agreement is modified periodically, as changes occur — additions, deletions. For example, annex 1410.1, which is in the document circulated to you, will be modified. The new frontal end entry will be modified. However, there is nothing further; the agreement stands on its own.
Senator Callbeck: On page 4 of your presentation, you mention several economic sectors. Could you tell us in which of these sectors there has been agreement between the provinces.
Mr. Dimitrijevic: Procurement to some extent, except for the fact that there is still one sector that is being negotiated. There is open tendering for government procurement of goods over $25,000 and construction over $100,000; as well all procurement by what is referred to as the MASH sectors — municipalities, academic, et cetera — is covered right now. Also with respect to procurement, negotiations are ongoing with respect to the Crown sector. They have not been completed, but by the time the ministers responsible for internal trade meet, I expect that that too will be completed.
There has been progress and agreement on investments. The extra-provincial corporate registration reporting requirements have been streamlined. There is a code of conduct to prohibit incentives for relocation of industry — poaching. There is agreement to remove local residency requirements.
With respect to labour mobility, the governments have facilitated and encouraged regulated professions. They identified 51 of the regulated professions; 42 of the 51 have met and completed mutual recognition agreements. There are nine that are outstanding, but they are continuing to work to complete that.
Under consumer-related measures and standards, there has been agreement with respect to issues like direct selling and cost-of-credit disclosure.
The agriculture ministers have identified 10 technical barriers to trade. They are in place; disputes are being handled under that.
Every chapter has had significant progress. However, there are ongoing negotiations under a lot of the chapters.
Senator Callbeck: What about alcoholic beverages? Has that been worked out?
Mr. Dimitrijevic: Substantially, there has been some removal of certain of the non-conforming measures. A wine standard, which was one of the issues, particularly with respect to wine trade with our foreign trading partners, has been developed. Discussions are ongoing for it to be implemented. Substantially, there is free trade in terms of alcoholic beverages. It is no longer the case, as it used to be, that one can purchase Moose Head beer in New Jersey but not in Manitoba. Those days are gone.
Senator Callbeck: So there has been considerable process.
Mr. Dimitrijevic: There has been considerable progress in the agreement. There is more work to be done. The agreement really is a live document. New issues may arise or new conditions may come up that will require further work, but there has been substantial progress in its implementation.
The Chairman: Is it fair to say that consensus has been harder to achieve in the transportation area than in other sectors?
Mr. Dimitrijevic: No, there are some areas of significant difficulty. I am not sure I would qualify the transportation sector as being more difficult that some of the other areas. Some of the issues in energy and in procurement for Crown corporations have been much more difficult, in my opinion.
Senator Oliver: In your response to Senator Callbeck, you mentioned a wine standard. Senator Gustafson's committee just visited Europe, and it was told that the lack of a wine standard is the reason various Canadian provinces cannot sell their wine products in the European community. What did you say about there being a wine standard in Canada now?
Mr. Dimitrijevic: I said that a wine standard has been developed, but the means of implementation have not been agreed to by all the parties. Therefore, you are absolutely right — with respect to our foreign partners looking to us, there is not a standard.
Senator Oliver: In your estimation, when do you think the means of implementation will be agreed to with respect to the wine standard?
Mr. Dimitrijevic: There was a suggestion that they were trying to aim for the end of this month. I do not think that that date will be achievable, for concluding their discussion and negotiations. It is difficult for me to hazard a guess, but I would suspect that likely within this year that would be reached.
Senator Callbeck: How many people are employed by the secretariat?
Mr. Dimitrijevic: A staff of six people. In Canada, the secretariat is made up of six people in total located in Winnipeg. High-quality people, if I may say so, but nonetheless, six.
Senator Forrestall: How long has the wine standard issue been an issue?
Mr. Dimitrijevic: My understanding is that negotiations started shortly, if not before, the agreement was signed, so we are talking 1995 or thereabouts, or earlier. I do not have the exact date, but I would suspect that it has been a number of years.
Senator Forrestall: It had been an issue, no doubt, for 20 years before that.
Mr. Dimitrijevic: I would not put it past.
Senator Gustafson: One of the economic sectors in your document is agriculture and food goods. It seems that with respect to that sector we are operating as 10 vassal states in Canada. We just do not seem to be making any headway. It concerns me greatly. We seem to be miles away from any agreement. I wish I knew the answer.
I go back to the John Wise days, which was 23 or 24 years ago. He brought all the farm groups together to try to develop a policy with national standards, standards for all of Canada. Well, Alberta opted out, Ontario opted out, and Quebec opted out. We still do not have a program. What is the answer?
Mr. Dimitrijevic: I do not have an answer, except that it is my understanding that part of the difficulty with the agriculture chapter is finding out what is going to happen on the international scene and the impact of that. That is something I hear from my agricultural colleagues across the country.
Senator Gustafson: We were able to reach the Auto Pact agreement with the Americans. That was 25 years ago, or longer. When it comes to agriculture, I do not know whether there is a lack of interest, or just what the problem is. We cannot seem to get any agreement. I wish I had the answer.
The Chairman: Thank you very much, Mr. Dimitrijevic. If you have any other information, do not hesitate to send it to the committee.
The committee adjourned.