Transport Committee on Oct. 16th, 2012

[The Chair, Conservative, Larry Miller]

I'm going to have to cut you off there, Mr. Wolf.

Mr. Coderre, you have seven minutes.

[Denis Coderre, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Gentlemen, thank you for joining us today.

Over the past few months, we have heard people advertise their batteries or say that we have to use propane gas, or methane, or electrification. I understand all that. Everyone is doing their own thing. Mr. Wolf said—and I agree with him—that it is about systems, transition and integration. That is where we are at.

The feds have a role to play. They have already invested quite a lot in this. Regardless of the government, the relationship with Bombardier is fantastic, particularly in terms of developing certain modes of transportation.

Today, during my seven minutes, I would like us to talk about regulations and about how the Canadian government can fully play its role as a partner. We are talking about smart regulations that are applied properly. Is it only a question of money? We are actually going through an economic crisis and taxpayers have to be respected. However, I certainly agree with you in saying that it is not an expense, but an investment.

What do we have to do in terms of safety and regulations? Since we are at the Standing Committee of Transport, imagine that you are the Minister of Transport. He has a role to play. It might have to do with research and development in the industry, but let's stick to transport. You talked about infrastructures. I could go back to that topic. If you each had a recommendation to make in terms of regulations, would it have to do with the integration of markets between Europe, Canada and North America? Are we better served by strictly limiting ourselves to North America? I don't think so.

Mr. Couture, you may start. Tell us in a few sentences what the role of the federal government is and what your recommendation is. I don't just want to hear about money.

[Etienne Couture]

Certainly. Thank you, Mr. Coderre.

The first thing to do is to create a Canada-wide sustainable mobility strategy. This system switch is obviously not going to get done by itself. First of all, we need leadership, which is lacking at the moment.

[Denis Coderre, Liberal, Bourassa, QC]

In practical terms, you would like to see a federal-provincial-territorial conference led by the Minister of Transport, Infrastructure and Communities, that would come up with an integrated version, complying with the various jurisdictions. Is that right?

[Etienne Couture]

Well said, well put.

[Denis Coderre, Liberal, Bourassa, QC]

In that case, I will end up joining the Réseau des ingénieurs du Québec.

[Etienne Couture]

Oh, oh!

Since you are talking about regulations, it must be said that we are also looking for specific incentives that can be applied right now. For instance, the so-called bonus-malus system would encourage electric vehicle purchases and would discourage petroleum vehicle purchases. In those cases, consumers would have a choice to make where, economically, the green energy option would be more appealing than the option of buying a model that they have seen before.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Seïn Pyun, Bombardier is an international leader. You are around those models every day and you must be dealing with many governments. In your view, what should the role of the Canadian government be in what we are currently looking for?

[Pierre Seïn Pyun]

We would support the idea of better integration nationally and provincially. It depends on the type of technology we are talking about.

For example, if we are talking about the public transit system in urban areas, what we see in Canada, as well as in other countries, is a lack of integration. There is a lot of room for saving money and for improving the operational effectiveness by aligning the requirements of cities that get rail equipment from public markets. The funding often comes from the same sources. We feel that the federal government should use levers to encourage a better integration of requirements between Canadian cities.

[Denis Coderre, Liberal, Bourassa, QC]

When you talk about integration and procurement policy, are you also referring to the made-in-Canada procurement legislation, or are you simply trying to make sure that we are all on the same page in terms of needs and equipment planning, for example?

[Pierre Seïn Pyun]

We don’t want to seem protectionist. Our company is export-driven. As a matter of fact, 93% of our revenue comes from markets outside Canada. We depend on exports.

However, in the rail sector, you have to realize that there are ongoing challenges around the world. There are local content requirements everywhere. You are well aware of what is happening in the United States, in Europe and in emerging markets. That is the reality we are faced with and that forces us to localize our production. We believe that Canada has some production sites that should be considered when purchases are made.

We're not saying we want free deals from the government. I think we have to compete. But this is the challenge we're facing in all the markets in which we operate.

Some consideration has to be given to what we value here in Canada: technologies being developed here and jobs being created here. We feel very confident that we can compete on the basis of our technologies in commercial terms, but we should not give up our capacity to develop technologies and invest in rail technologies here in Canada.

[Denis Coderre, Liberal, Bourassa, QC]

In a few words, Mr. Fuller, regarding regulation, I noticed that you spoke about the importance of being at the same level as those in Europe, and you said we have to make some choices depending on the rail and all that. If you were the Minister of Transport, what is the first thing you would have to do to make things happen?

[The Chair, Conservative, Larry Miller]

Be very brief, Mr. Fuller. Just name the regulation change that you would see.

[Denis Coderre, Liberal, Bourassa, QC]

The question was good, so the answer will be great.

[Garry Fuller]

I would re-evaluate what the FRA calls Rule 238. I would not impose that upon Canada at this time.

[The Chair, Conservative, Larry Miller]

Mr. Adler, you have seven minutes.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I want to welcome all of the witnesses here today. This is a very important discussion we're having.

I want to kick things off by getting a few items dealt with off the top, which I hope will enlighten my friends across the way from the NDP.

I'd like to ask the panel what an increase in corporate taxes, an imposition of a carbon tax, and a policy of no free trade agreements would do for your businesses. Would these be helpful of hurtful?

Let's start with Mr. Hébert.

[Etienne Couture]

I can answer that question.

There would be no interest in imposing corporate taxes for the benefit of Canadian companies. In terms of carbon emissions, we have to promote everything that can motivate Canadians to use green technologies. Does that mean that we are going to impose a carbon tax or, as I said earlier, promote green technology? It might be one and the same thing. I will let you be the judge of that.

For us, the number one priority is to send a clear message that the Canadian government is definitely a leader when it comes to switching to electric transportation and green technologies.

[Mark Adler, Conservative, York Centre, ON]

That doesn't answer my question, though: would it be helpful or hurtful to your business?

[Etienne Couture]

I am not able to answer that question directly.

[Mark Adler, Conservative, York Centre, ON]

Okay.

Bombardier?

[Pierre Seïn Pyun]

I have just a couple of points.

We operate in many different jurisdictions with many different regulatory environments, so I think we're well positioned to adapt ourselves and offer options, regardless of the regulatory environment that is in place in countries in which we do business. In some places, there are more stringent environmental regulations, and we can cope with them.

Certainly—and I've made this point—we would put forward the view that there's scope here in Canada to encourage in public procurement the greater use of smart and clean technologies, but I think it has to be done in a way that risks are managed and by being conscious that you want to provide the best value for taxpayers.

On free trade, I made the point that exports are very important for us, but in the rail transit business it's very decentralized, because the business model is very much around specific projects. I mentioned the challenge with the local content requirements we're faced with everywhere in the world, which compel us to localize our production to a great degree.

Free trade is important because a lot of benefits can be derived from free trade agreements. For instance, for a global company like Bombardier, anything that facilitates business mobility would be very helpful to us, and anything that facilitates exports of goods and services would be very helpful to us. But in general, in the free trade agreements that the Canadian government negotiates, I think we would advocate for a balanced outcome with genuine reciprocity.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

Mr. Fuller, please, just quickly.

[Garry Fuller]

I'll give you an example. In 1994 I did a contract with a Canadian railway and a U.S. manufacturer. Right now, Transport Canada has a rule stating that I do not have to do inspections of equipment every 92 days; I do it every 180 days. In the United States, you have to do it every 92 days. Because of your ruling, we were able to negotiate lower pricing for intra-Canadian railroading. Also, I think that last regulation is more important to you.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

I want to direct my questioning to Bombardier, if I may. Bombardier is probably the best example of a Canadian success story. The company started in 1946. Bombardier Aerospace, located in the great riding of York Centre, which I'm so fortunate to represent, employs over 4,000 people and, indirectly, 9,000 throughout the GTA. It's the largest private sector employer in the GTA. It's a cutting-edge company that has never lost its entrepreneurial spirit. It started from the production of a Ski-Doo, really, and now is a global company with $18.5 billion—it sounds like I'm giving you a commercial—in total revenues.

Could you speak about that sort of culture within Bombardier to keep striving for this excellence, striving for innovation, and striving for being the best that you can possibly be in terms of a transportation company? Could you address it from that angle?