Bill C-49 (Historical)

Transportation Modernization Act

An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts

This enactment amends the Canada Transportation Act in respect of air transportation and railway transportation.
With respect to air transportation, it amends the Canada Transportation Act to require the Canadian Transportation Agency to make regulations establishing a new air passenger rights regime and to authorize the Governor in Council to make regulations requiring air carriers and other persons providing services in relation to air transportation to report on different aspects of their performance with respect to passenger experience or quality of service. It amends the definition of Canadian in that Act in order to raise the threshold of voting interests in an air carrier that may be owned and controlled by non-Canadians while retaining its Canadian status, while also establishing specific limits related to such interests. It also amends that Act to create a new process for the review and authorization of arrangements involving two or more transportation undertakings providing air services to take into account considerations respecting competition and broader considerations respecting public interest.
With respect to railway transportation, it amends the Act to, among other things,
(a) provide that the Canadian Transportation Agency will offer information and informal dispute resolution services;
(b) expand the Governor in Council’s powers to make regulations requiring major railway companies to provide to the Minister of Transport and the Agency information relating to rates, service and performance;
(c) repeal provisions of the Act dealing with insolvent railway companies in order to allow the laws of general application respecting bankruptcy and insolvency to apply to those companies;
(d) clarify the factors that must be applied in determining whether railway companies are fulfilling their service obligations;
(e) shorten the period within which a level of service complaint is to be adjudicated by the Agency;
(f) enable shippers to obtain terms in their contracts dealing with amounts to be paid in relation to a failure to comply with conditions related to railway companies’ service obligations;
(g) require the Agency to set the interswitching rate annually;
(h) create a new remedy for shippers who have access to the lines of only one railway company at the point of origin or destination of the movement of traffic in circumstances where interswitching is not available;
(i) change the process for the transfer and discontinuance of railway lines to, among other things, require railway companies to make certain information available to the Minister and the public and establish a remedy for non-compliance with the process;
(j) change provisions respecting the maximum revenue entitlement for the movement of Western grain and require certain railway companies to provide to the Minister and the public information respecting the movement of grain; and
(k) change provisions respecting the final offer arbitration process by, among other things, increasing the maximum amount for the summary process to $2 million and by making a decision of an arbitrator applicable for a period requested by the shipper of up to two years.
It amends the CN Commercialization Act to increase the maximum proportion of voting shares of the Canadian National Railway Company that can be held by any one person to 25%.
It amends the Railway Safety Act to prohibit a railway company from operating railway equipment and a local railway company from operating railway equipment on a railway unless the equipment is fitted with the prescribed recording instruments and the company, in the prescribed manner and circumstances, records the prescribed information using those instruments, collects the information that it records and preserves the information that it collects. This enactment also specifies the circumstances in which the prescribed information that is recorded can be used and communicated by companies, the Minister of Transport and railway safety inspectors.
It amends the Canadian Transportation Accident Investigation and Safety Board Act to allow the use or communication of an on-board recording, as defined in subsection 28(1) of that Act, if that use or communication is expressly authorized under the Aeronautics Act, the National Energy Board Act, the Railway Safety Act or the Canada Shipping Act, 2001.
It amends the Canadian Air Transport Security Authority Act to authorize the Canadian Air Transport Security Authority to enter into agreements for the delivery of screening services on a cost-recovery basis.
It amends the Coasting Trade Act to enable repositioning of empty containers by ships registered in any register. These amendments are conditional on Bill C-30, introduced in the 1st session of the 42nd Parliament and entitled the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, receiving royal assent and sections 91 to 94 of that Act coming into force.
It amends the Canada Marine Act to permit port authorities and their wholly-owned subsidiaries to receive loans and loan guarantees from the Canada Infrastructure Bank. These amendments are conditional on Bill C-44, introduced in the 1st session of the 42nd Parliament and entitled the Budget Implementation Act, 2017, No. 1, receiving royal assent.
Finally, it makes related and consequential amendments to the Bankruptcy and Insolvency Act, the Competition Act, the Companies’ Creditors Arrangement Act, the Air Canada Public Participation Act, the Budget Implementation Act, 2009 and the Fair Rail for Grain Farmers Act.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Minister, for that answer, but with respect, I think the best investment incentive you could provide to the industry to ensure that the capacity is there particularly during peak times to move grain to tidewater is to move to a system where commercial forces can play a much greater role. I think that's the one big flaw in this bill that has not been addressed. I think we will be revisiting, in a crisis situation, the fact that western Canadian grain farmers cannot get their grain to tidewater when they need to. I think that's the major flaw in this bill.

I applaud you for the other initiatives that you've taken in this bill, but this is clearly an issue. It's not an issue that's new. It's an issue that's been around for the better part of two decades. We have two reports now, one commissioned by a Conservative government and one commissioned by a Liberal government, that have both concluded that the government should lift the maximum revenue entitlements and move the system slowly and gradually to a commercial basis to address this fundamental problem.

You know, in the 2001 report, it says, and I quote, the “failure to move quickly enough to a system where commercial forces are allowed to work” resulted in a crisis in the grain industry in terms of moving grain. The same conclusions were made in the report that David Emerson was involved with in February of last year. We know what the root problem is, and Bill C-49 does not address it.

Thank you, Madam Chair.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Madam Chair.

Thank you, Minister, for appearing in front of committee.

Minister, I think we would all agree that the privatization of Air Canada in the 1980s and the subsequent privatization of Canadian National Railway in the 1990s, along with the deregulation of parts of the transport system in allowing commercial forces to play a greater role in that system, have been successful. It's better for consumers and customers and better for companies.

What I don't understand is why the government didn't move in Bill C-49 in that direction for the movement of grain. We've had an ongoing crisis in the grain handling industry. This is not new. We had one in 2013-14 under the previous Conservative government. There was one in 2001 under a previous Liberal government. The crisis is only going to get worse. In fact, projections are that the amount of grains and oilseeds produced in Canada is going to continue to increase as a result of advances in crop science and techniques.

Both the June 2001 report, which was commissioned by a Liberal government, and the February 2016 report, commissioned by a Conservative government, recommended that we move toward a commercial grain handling system, and that we lift, over a period of time, the maximum revenue entitlements.

Maybe you could tell this committee why the government didn't move on those recommendations in this bill, particularly in light of the fact that two reports have now recommended that the government move on it, that we've had a number of crises in the grain handling industry over the last two decades, and that it's only going to get worse going forward as production continues to increase.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Of the short-line railways in this country, there are about 20 that come under federal control, and there are about 30 that come under provincial control. They carry products in this country. I think the total of rail transportation by short-lines is 12%. We did consult the short-lines in the development of Bill C-49, and their input is reflected. They are not subject to long-haul interswitching orders or to the new data requirements, as they were considered too burdensome for them.

Many of the concerns raised by short-line associations relate to infrastructure investment and are beyond the scope of Bill C-49. What I'm saying is that the short-line railways here don't have the funding, the capital, the deep pockets, that class I railways have. They are mostly concerned about that, and that is not addressed in Bill C-49.

Short-lines are eligible, on the other hand, to apply for funding under the national trade corridors fund which was announced in July 2017. However, it's true to say that projects involving regional short-lines tend to be to rehabilitate them rather than to eliminate bottlenecks. It's a little bit of a challenge with them.

We are looking at short-lines, though. We realize that they're an important element of the railway system. They're just not covered specifically in Bill C-49.

[Vance Badawey, Liberal, Niagara Centre, ON]

I want to touch on something that I think Ms. Raitt was trying to touch on, but she ran out of time: the impact of Bill C-49 on short-line railways. We heard a lot about—and I recognize this from my past experience in my former life—how it can be somewhat challenging, in both the operational side and the capital side of short-line railways, to really augment or be a part of the overall transportation system, especially working in tandem with the main lines. How will Bill C-49 and/or any regulations or recommendations that might come out of this process contribute to the overall health of our short-line railways?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Thank you, Mr. Badawey, for your question.

As I mentioned and as I think I emphasized in my opening remarks, Bill C-49 is a first step because, as you know, transportation 2030, which I outlined about a year ago, is much broader than simply the measures that are contained in Bill C-49. The Bill C-49 measures are an important first step to address a number of particularly important matters. The charter of rights for passengers is long awaited and has not been done in the past.

With regard to the modernization of freight rail, I can't emphasize how important that is. We need to improve safety on our railway systems because there are still too many derailments occurring.

As you know, there are five themes in transportation 2030. One of them is the air passenger experience. It also talks about green transportation and about innovative transportation. It talks about safety in all the forms of transportation, many of which are not addressed in Bill C-49. There is still much more work to do, and that is part of our ongoing work with respect to achieving the aims of transportation 2030, so there will be more projects that will be coming forth.

A simple example is that we have heard from air passengers that it takes too long to go through security at airports. That is still very much something that is on my mind, and it is part of the traveller experience.

We've heard that we need to make transportation greener in this country, and this is a commitment of our country.

There will be more on those as we go along as part of our mandate.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

Minister, thank you for being here this morning.

I am quite pleased and quite excited that the priority that we've established through your leadership is that of balance. We're balancing safety along with value return within the business community, and we're really listening to those thoughts that have come from all sectors.

One of the pillars contained within the government's transportation strategic plan places a strong emphasis on trade corridors, a catalyst to better position Canada to capitalize on global opportunities and to highly perform globally. We get that. However, I want to dig a bit deeper, especially with respect to the question that Mr. Fraser asked. We want to ensure a disciplined asset management plan, both operating capital.... In turn, we want to develop stronger trade-related assets—rail, marine, road, air—that will coordinate and contribute to support Canada's international competitiveness and therefore trade and prosperity. We see Bill C-49 as a component of that; there's no question.

In your own words, how do you see Bill C-49 building itself into the overall strategic plan, transportation 2030, and then ultimately becoming more of a mechanism to be better able to implement that overall strategy?

[Robert Aubin, NDP, Trois-Rivières, QC]

I understand.

I will now move on to something else.

When the Commissioner of Competition blocks a joint venture, as he did a few years ago, I feel protected as a consumer. I tell myself that the Commissioner of Competition had his reasons to say that the agreement was not good for the consumer. However, in Bill C-49, the commissioner's powers are relayed to advisory powers, and the minister can bypass them. That worries me.

Why is it necessary for the minister to be able to ignore the Commissioner of Competition's recommendations?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you. I understand that process.

When I say that this is an omnibus bill, it's because I think that different types of transportation could have been split up, and we could have started working on the charter much sooner, with the process you are proposing. As things stand, it will not be done before 2018, if everything goes well.

However, we are not reinventing the wheel. Similar charters exist elsewhere. The European charter, among others, is a very effective model. It was used as the basis for an NDP bill, which you endorsed.

Does that mean we won't be able to make any amendments to Bill C-49 that would provide specific guidelines and could at least inform the thinking of the consultation that will begin after the royal assent?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

That is extremely important to understand. We never intended to include the charter's contents in Bill C-49. The goal was to mandate the Canadian Transportation Agency to make regulations, so that we would have the flexibility to make adjustments much more quickly in the coming years.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Thank you for the question, Mr. Aubin.

First, I want to clarify that this is not an omnibus bill. In fact, 90% of the content of Bill C-49 has to do with the same piece of legislation, the Canada Transportation Act.

Second, as I very clearly explained, when it comes to the future charter of passenger rights, we decided that a regulatory process would be much more effective. So instead of including the charter's contents in the bill, we have mandated the Canadian Transportation Agency to prepare the charter, which will ultimately be submitted for my approval and will then be published as a regulation.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

Good morning, Minister. I have an omnibus list of questions to match Bill C-49, so let's try to be efficient. I will ask you short questions that you could answer briefly.

Let's begin with the charter. For at least a year and a half, I have been hearing you speak in some detail about rights that should be guaranteed under that charter. So why is Bill C-49 full of philosophical intentions with regard to a future consultation, instead of a true charter we could vote on?

[Sean Fraser, Liberal, Central Nova, NS]

Finally, we have about two minutes to go, and I'm curious as to your thoughts more generally speaking. This bill has a number of measures that impact the efficiency in our national transportation system. We're dealing in an era of international trade. I find that back home in Nova Scotia it's a difficult conversation to have and to say that “these trade deals, these investments in a national transportation corridor are going to make government and the economy work for you”. That's what people care about.

Could you perhaps elaborate on how some of the measures in Bill C-49 are going to create jobs for the fishermen in getting their product to market in my riding and for the manufacturers and the farmers not just in my community, but in communities like mine? How is this going to make a difference in the lives of the people we represent?

[Sean Fraser, Liberal, Central Nova, NS]

With the exemptions given to two airlines previously under more or less the same rules that are being implemented through Bill C-49, are you seeing action in that direction already?

[Marc Garneau, Liberal, Minister of Transport]

Thank you, Madam Chair. I'm delighted to be here. I've been looking forward to this for a long time.

Madam Chair and honourable members, I am pleased to meet with the committee today to talk about Bill C-49, the Transportation Modernization Act.

I would like to thank the committee for studying the bill before the House is scheduled to resume. That is very much appreciated. I know that you've had three very busy days.

A strong transportation system is fundamental to Canada's overall economic performance and competitiveness. This bill, once passed, would make amendments to the Canada Transportation Act and other related legislation that would position our country to capitalize on global opportunities and make improvements to better meet the needs and service expectations of Canadians.

The measures included in Bill C-49 reflect what Canadians told us they expect during the extensive consultations we undertook last year. We held more than 200 meetings and round tables across the country with transportation and trade stakeholders, indigenous groups, provinces and territories, and individual Canadians to hear their views on the future of transportation in Canada. Our work is aimed at creating and facilitating the conditions to achieve long-term success, and this is precisely what this bill proposes to do.

Bill C-49 is an important first step, and I emphasize “first step”, towards delivering on early and concrete measures in support of transportation 2030, which is the strategic plan for the future of transportation in Canada. This bill focuses on our immediate priorities in the air, rail, and marine sectors. It aims to implement a series of measures to promote an integrated transportation system that is safe, secure, green, and innovative, and that will contribute to our economic growth and a cleaner environment, not to mention the well-being of Canadians when they travel.

The concerns of Canadians have been highlighted in recent months with the much-publicized cases of unacceptable treatment of air travellers both in this country and elsewhere. Bill C-49 proposes to mandate the Canadian Transportation Agency to develop, in consultation with Transport Canada, new regulations to enhance Canada's air passenger rights. These new rules would ensure that air passenger rights are clear, consistent, and fair for both travellers and air carriers.

Some examples of issues the new regulations would address include denied boarding in cases of overbooking, delays, or cancellations; lost or damaged baggage; tarmac delays beyond a certain period of time; seating children next to a parent or guardian at no extra cost; and ensuring that carriers develop clear standards for transporting musical instruments. Clear information will be provided to travellers in plain language about carriers' obligations and how to seek compensation and file complaints.

Under this proposed legislation, Canadians and anyone travelling to, from, and within Canada would benefit from a uniform, predictable, and reasonable approach. My objective is to ensure that passengers would have a clear understanding of their rights as air travellers while ensuring that this new approach would not negatively impact access to air services or the cost of travel.

I've been clear that regulations would include provisions whose intent would be that any denied boarding due to overbooking is done voluntarily and that under no circumstances someone be involuntarily removed from an aircraft after they have boarded. As Canadians, we expect that air carriers serving our country treat their passengers with the respect they deserve and that they live up to their commitments.

This bill also proposes that regulations be made to require data from all air service providers to be able to monitor the air traveller experience, including compliance with the proposed air passenger rights.

The legislation also proposes to liberalize international ownership restrictions from 25% to 49% of voting interests for Canadian air carriers, with accompanying safeguards, while retaining the 25% limit for specialty air services.

These safeguards limit a single international investor to hold no more than 25% of the voting interests of a Canadian air carrier, and no combination of foreign air carriers could own more than 25% of a Canadian carrier.

The direct impact of higher levels of international investment would be that Canadian air carriers or companies wishing to create new air services would have access to a wider pool of risk capital. Consequently, that pool of capital, from both international and domestic sources, would allow the Canadian air sector to become more competitive, and would lead to more choices and to lower prices for Canadians.

Another improvement in the bill is that it proposes a new, streamlined and predictable process for the authorization of joint ventures between air carriers, taking into account competition and wider public interest considerations.

In Canada, air carrier joint ventures are currently examined from the perspective of possible harm to competition by the Competition Bureau, under the Competition Act. Unlike in many other countries, notably the United States, Canada's current approach does not allow for the consideration of the wider public interest benefits with respect to specific routes. Furthermore, the bureau's review is not subject to specific timelines.

This raises concerns that the current approach to assessing joint ventures may make Canadian carriers less attractive to global counterparts as joint venture partners and may be limiting the ability of Canadian carriers to engage in this industry trend.

The bill proposes measures that would allow the Minister of Transport to consider and approve air carrier joint ventures, where it is in the public interest, taking into account competition considerations. The minister would work in close consultation with the Commissioner of Competition to ensure that he or she be properly informed regarding any concerns with regard to competition. Air carriers that would choose to have their proposed joint ventures assessed through the new process would be given clear timelines for an expected decision.

Globally, airports are making unprecedented investments in passenger screening to facilitate travel and gain global economic advantages. Canada's largest airports have also expressed an interest in investing in this area, and smaller airports have shown interest in obtaining access to screening services to promote local economic development.

The bill would create a more flexible framework for the Canadian Air Transport Security Authority to provide screening services on a cost-recovery basis, supporting efforts to maintain an aviation system that is both secure and cost-effective.

Bill C-49 also proposes significant enhancements to increase the safety of the rail sector in order to build a safer, more secure rail transportation system that Canadians trust. As you all know, rail safety, as I've said many times, is my number one priority.

The proposed modifications to the Railway Safety Act would mandate the installation of voice and video recorders to strengthen rail safety by providing objective data about crew actions leading up to and during a rail accident or incident. Beyond that, the requirement would also increase opportunities to analyze identified safety concerns to prevent accidents from occurring.

This would not only require companies to install the recorders, but it would also limit how the recorded data could be used, within strict criteria. For instance, the Transportation Safety Board would have access to the recorded data for post-accident investigations. Transport Canada and railway companies would also have access to the data for proactive safety management and for following up on incidents and accidents not investigated by the Transportation Safety Board, but under specific conditions. The specific limits on the use of the data are designed to maximize the safety value of this technology while limiting its potential to infringe on employees' privacy rights.

Canada's freight rail system is critical to our economy. Bill C-49 would strengthen that system by enhancing its transparency, balance, and long-term efficiency. Let me highlight key examples.

Under this bill, shippers could seek reciprocal financial penalties for breaches of their service agreements by the railways. They would have fair access to more timely processes for settling service and rate disputes. More shippers would be eligible for the streamlined final arbitration process in particular. Further, new measures would ensure that the agency offers shippers informal dispute resolution options as well as guidance.

The bill would also introduce a new measure, long-haul interswitching, to give captive shippers across regions and sectors access to an alternative railway. Rates would be set based on comparable traffic, with the agency having discretion in determining comparability. The bill would modernize key grain measures, such as the maximum reserve revenue entitlement, to promote railway investments—and that's a key feature—and ensure that interswitching rates are updated regularly and compensate railways adequately.

Further, Bill C-49 would enhance sector transparency by requiring large railways to report some performance, service, and rate data about their Canadian operations. Transport Canada would have the authority to publicly report rate trends.

With these and other measures of this bill, we are taking important steps to ensure that Canadians have the freight rail system they need now and in the years ahead.

These aren't the only ways that we propose to improve trade to global markets. Bill C-49 would also amend the Coasting Trade Act and the Canada Marine Act to enhance marine transportation and to allow access for marine-related infrastructure funding. Specifically, amendments to the Coasting Trade Act would allow all vessel owners to reposition their owned or leased empty containers between locations in Canada using vessels of any registry. This would support greater logistical flexibility for industry. In addition, modifications to the Canada Marine Act would permit Canada port authorities to access the Canada infrastructure bank for loans and loan guarantees to support investments in key enabling infrastructure.

In conclusion, I believe that this proposed legislation advances important actions that will help to bring Canada's transportation system into the 21st century. Ultimately, we do need a system to meet the demands of today's economy so that we can keep Canada's travellers and cargo moving efficiently and safely. Passage of this bill as soon as possible this fall would represent a critical milestone in achieving tangible improvements to our national transportation system that will benefit Canadians for decades to come.

Thank you for your attention. I now look forward to answering your questions.

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling to order meeting number 70 of the Standing Committee on Transport, Infrastructure and Communities. Pursuant to the order of reference of Monday, June 19, 2017, we are considering Bill C-49, an act to amend the Canada Transportation Act and other acts respecting transportation and to make related and consequential amendments to other acts.

This is day four, I'd like to say to the minister, that parliamentarians have been here along with Hill staff to deal with Bill C-49. We're very pleased to see, Minister Garneau, that you and your staff have joined us. I'm going to turn the floor over to you for your opening remarks.