Transport Committee on March 1st, 2012

[The Chair, Conservative, Merv Tweed]

I have to interrupt there.

Ms. Chow is next.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Page 20 of your report, Ms. Burr, talks about the positive train control systems. It says:

Positive Train Control (PTC) systems will integrate ICT, train positioning systems and connectivity between locomotives, signals, switches and operation centres to control train movements with safety, security, precision, and efficiency. This will significantly reduce the probability of train collisions, casualties, damage to equipment and over speed accidents

I notice that the positive train control technology has been on a U.S. wish list since 1990, then in 1994, and again in 1997. They were pushing the rail companies to adopt this technology voluntarily, and of course the train companies didn't want to. Then they had a horrific train crash that killed 25 people in 2008. Since then, Congress has made it mandatory and has given the companies until 2015 to put the system in place.

It is costly. In about 15 minutes we will learn from the Transportation Safety Board on the costs of the crash, but whatever the cost may be, we don't know whether positive train control would or would not have assisted.

When there is a technology that you know of from your policy shop, and you know that it helps and you've seen other countries using this technology, how does the policy get translated into a submission, perhaps to the transport minister or the deputy, that would then turn it into a regulation so that something like the positive train control would become a reality?

Do you also look at the cost? If we say positive train control should be mandatory and it we know it will take five to 10 years to phase it in, do you estimate how much would it cost VIA and all the other smaller train companies? Do you do the cost analysis also?

[Kristine Burr]

In this area it would probably be worthwhile for the committee to invite our colleagues on the safety side of the department to give you better precision, but certainly in the development of regulations, there is a benefit-cost analysis process that is part of every regulatory process. While safety is paramount and is our number one priority at Transport Canada, the impact of safety measures, or any regulatory measures, on economic efficiency is all looked at as regulations are developed.

In the case of positive train control, we know it's applied in metro systems in many parts of the world. The system that has been mandated by the U.S. Senate is to focus on integrating positive train control on primarily freight rail lines in the U.S. where passenger rail or commuter rail is also operational. I think there's some discussion as to whether it's cost-effective beyond those tracks to mandate the requirement for positive train control on parts of the rail system where there is no passenger traffic currently. I think they're looking at that right now.

My understanding is that it's a fairly complex technical challenge to integrate positive train control into a system in which you have freight operations and passenger operations. The applications we know of around the world are probably more fixed on passenger-only metro services. What we certainly understand is that it's a very complicated question technically, and that's probably one of the reasons we've seen such a lag in the adoption of positive train control in freight operations.

We have people from our rail safety directorate sitting on committees in the United States and participating in the oversight of the development of these technologies. We have an integrated North American freight system, so our major carriers are going to be affected by the Senate ruling and the application in the United States. We will clearly have to look at it in Canada as well.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Would something...?

[The Chair, Conservative, Merv Tweed]

I'm sorry, but we're out of time. I have to go to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank all our guests for attending today.

I'm going to let you do more of the talking than me, which might feel rare.

I'd like to start with Ms. Burr.

Right out of the gate, you spoke in terms of the competitiveness challenge, and what struck me is that it says Canada's productivity is lower than that of our major competitors, particularly the United States. You go on to show with a couple of your charts that annual percentage labour productivity in the Canadian business sector over the last 60 years has steadily been declining, and compared to the United States, our productivity level is something like three-quarters of what it is in the United States.

Should we be concerned?

[Kristine Burr]

Well, we're concerned.

[Ed Holder, Conservative, London West, ON]

Should we be? I'm glad you are, but should we be?

[Kristine Burr]

I think so. There's considerable debate in Canada about the fact that we continue to lag behind our U.S. counterparts, and in the transportation system we saw in the 1990s that the transportation sector was one of the major contributors to Canada's overall productivity improvement. Since then this has levelled off, so from a transportation perspective it is one of the reasons we are putting a lot of emphasis on how we can be more innovative going forward. I would certainly recommend that you continue to focus on this as a part of your study.

[Ed Holder, Conservative, London West, ON]

It's rather interesting. In my other life in committees I sit on the international trade committee, and we have had probably the most proactive approach to opening up markets around the world since Canada became a country. For a trading nation, I think that just makes a lot of sense, but if we don't get the productivity piece down, how are we helping the Canadian worker and Canadian businesses to succeed?

I look at some of the various factors you have stated here. I know you have small domestic market as one of your points, but it strikes me that it might be less of an issue with the opening up of markets around the world.

You talk about skills mismatch and insufficient competitive pressure. I'm not sure I know exactly what that means. Could you elaborate? When you say “skills mismatch”, just help us understand that a little bit more, please.

[Kristine Burr]

One of the really interesting things of the last decade is that the application of computers and microchips to all modes of transportation means that even the cab of truck is not anything like the cab of a truck 20 or 30 years ago, yet our workforce in the transportation sector is one of the oldest demographically.

There's going to be a major changeover in the next few years. If you are inviting people from the various modes to come and speak to this committee, you will hear that a major concern of almost all the modes is the aging workforce and the need to attract new workers into the business over the next few years.

At the moment what we have are long-serving employees who sometimes feel threatened by technological change rather than embracing it. When industry talks to us, they tell us of the challenge of recruiting a new generation into the business, because in other sectors of the economy you don't work the hours you work in transportation. They are odd hours, long hours, often on weekends, and 24/7 is now the norm in a number of parts of the sector. Transportation jobs are not as attractive to the younger generation, perhaps, as jobs in other parts of the economy.

[Ed Holder, Conservative, London West, ON]

Would you think our workforce is sufficiently flexible to be able to accommodate that kind of innovation to improve productivity, which I understand from what you say is critical? Do you think our workforce is sufficiently flexible?

[Kristine Burr]

That's probably a question better answered by some of the individual business players in the transportation sector.

One of the other challenges we hear—and this is particularly arising in western Canada right now—is that it's hard to keep people in the transportation sector when the energy industry is so attractive and offers longer periods of time off, longer holidays, and better pay. There are challenges around the attractiveness of the industry, so flexibility.... It may be that it's from a rational point of view that people are choosing other sectors for what, at the individual level, are good reasons.

At the same time, the transportation sector offers some very interesting work, and it's much less likely to be labour-intensive. There are new technologies that make the jobs more interesting, so hopefully they'll attract new people.

[The Chair, Conservative, Merv Tweed]

Thank you.

Go ahead, Mr. Sullivan.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you, Mr. Chair, and thank you to our guests. It has been very enlightening.

The very first key finding in the document the transport department has provided is that the transportation sector lacks coordinated strategies to promote innovation. There is a “need for better information sharing, improved coordination of investments, and greater public and private leadership”.

I think we agree on this side of the table that strategies need to be better coordinated better. In fact, our last study was supposed to be about a national public transit strategy to encourage exactly what you're talking about—improved coordination of investments, greater public and private leadership—but unfortunately, at the end, it was turned into a national public transit study rather than a strategy.

Can you comment on what you would see as an example of a strategy the federal government could initiate and lead in both the transportation sector generally and in public transit specifically?

[Kristine Burr]

Public transit is generally a domain that resides within the provincial and municipal government levels. Through the consultation exercise that the Minister of Transport launched recently regarding a new generation of infrastructure programming, we're hoping to get input as to what the priorities and views of many of our partners will be going forward. I suspect that what emerges from that consultation process will form the framework for a future strategy for infrastructure more broadly, which would encompass transit.

[Mike Sullivan, NDP, York South—Weston, ON]

My colleague talked about positive train control, but I want to talk more generally about FRA compliance for public transit vehicles.

To an extent Canada just rubber-stamps what the U.S. says. The U.S. is now engaged in a lessening or a relaxing of those FRA compliance rules in California. That would lead to the possibility that investment in Canada could resurrect the creation of public transit vehicles that are non-compliant with the FRA regulations used all over Europe but not here, in part because we don't have positive train control and in part because we have these strangling regulations.

Are we looking at the same kind of thing here?

[Kristine Burr]

I'm really not in a position to give you a useful answer on that. I don't handle safety and security policy, but we'd be happy to go back and speak to our colleagues in rail safety and provide a response to the clerk, if that would be helpful.

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you. That would be helpful.

On the investment side and on intellectual property, we understand that there were a number of worldwide patents, most of them developed in Canada, that EMD took when it left and went to the U.S. Some of those patents, I'm certain, were probably funded in part by government R and D money. Is there something we should be paying attention to here when we help create...?

For example, one of the things they were working on more recently was non-urea tier 4 diesel vehicles. None of their competitors have a leg up on that issue yet. They seemed to have, but they're gone, and we now have the spectre of the U.S. investment banks lending money to a Canadian company to buy vehicles built in the U.S. The world has gone mad here. What is it we should be doing to protect our investment in R and D?

[Kristine Burr]

This may be an issue that bears further study as a result of the recommendations in the Jenkins report and more broadly.

I'm not in a position to speak to the specific case you mention, but we'd be happy to look into it and provide further information.

[Mitch Davies]

I'll just add that it's an interesting challenge. The automatic response might end up making it worse. When you offer intellectual property protection, it's the company that holds it, and it's their private right. They would build an investment plan around that because they have certainty over what they own.

The question then is what kind of overall environment you have for them to grow in, and whether they can grow to scale in the country. I think Jenkins also addressed this in terms of Canada having a fairly strong performance as a start-up nation, with many SMEs that are using excellent technology. The question is whether they have the capital to get started and then to get to a size where they can actually compete and win in world markets, and do it from here.

It was picked up on by the panel because Canada has built an enviable S and T system. Our higher education sector is world class with respect to the type of talent and the kind of brain power we can bring to bear. The question is whether we want those folks to stay in academia. The answer is that there will never be enough spaces and that you need them in the economy. Then the question is whether we hire those people into the economy and pay them at a level that would be available in other countries. The evidence is no.

It's a matter of business innovation and how we can incent businesses to grow knowledge-intensive, high-technology, globally oriented, export-oriented businesses in this country. The Jenkins panel recommendations cover a number of dimensions of policy where the government can do some things in terms of the overall competitive environment, but it also covers specific policies in the federal domain that could provide an overall better climate.

The question is whether you respond with something that would be narrower, and then perhaps end up getting more of the bad outcome that you're trying to avoid, rather than providing an overall framework that allows the growth to occur in Canada. We obviously have to respect the fact that we are a trading nation, so we won't see the gains we have from trade if we're closed off.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Watson is next.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for appearing.

Early in the presentation, I think it was you, Mr. Peets, who said that Canada ranked fourth in the world in the number of patents in fuel cells. I am wondering how many categories with respect to patents you track, relative to transportation technologies, and how does Canada rank in those against the rest of the world?

If you don't have that information, you can provide it to the clerk.

[Gerard Peets]

I would be happy to follow up with the Canadian Intellectual Property Office to look into that to see how much I can get.

[Jeff Watson, Conservative, Essex, ON]

I'd like an opinion from the witnesses. I'm not sure which witness would like to answer this, but with respect to fostering innovation, who has the best IP framework globally? Does Canada, or is it someone else? Is there a better jurisdiction we should be aiming for? One of the things the committee may want to concern itself with is whether we need to make changes in that particular regime.