Bill S-2 (Historical)

Strengthening Motor Vehicle Safety for Canadians Act

An Act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another Act

This enactment amends the Motor Vehicle Safety Act for the purpose of strengthening the enforcement and compliance regime to further protect the safety of Canadians and to provide additional flexibility to support advanced safety technologies and other vehicle innovations. It provides the Minister of Transport with the authority to order companies to correct a defect or non-compliance and establishes a tiered penalty structure for offences committed under the Act. The enactment also makes a consequential amendment to the Transportation Appeal Tribunal of Canada Act.

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

I call to order this meeting of the Standing Committee on Transport, Infrastructure and Communities in the 42nd Parliament. Pursuant to the order of reference of Wednesday, September 20, 2017, we proceed with consideration of Bill S-2, an act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another act.

We have from the department today, as witnesses, Kim Benjamin, Donald Roussel, Alain Langlois, and Marie-France Taschereau.

Welcome. Thank you so much. It's nice to see all of you again.

Pursuant to Standing Order 75, consideration of clause 1 is postponed until the chair calls clause 2. We can start that discussion now.

Mr. Lobb, go ahead.

Bill C-48--Time Allocation Motion

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Mr. Speaker, I am disappointed in this, and we as a party are offended.

There was an agreement made two and a half weeks ago when this session started that we would work together with the government and not be obstructionist, but work to help pass bills that we were able to support.

The result so far is that the government has passed Bill S-2, C-21, C-47, and Bill C-58 all without time allocation, and progress was being made on three more bills, Bill C-55, C-57, and C-60.

There was one bill that we said we had a lot of interest in and would like to have enough time for all of our members to be able to speak, and that was Bill C-48. Now the House leader has broken her word. There is no other way to interpret this. If this is the way she is going to start this session after we have worked in such good faith for the last two and half weeks, all the members know that it will be a case of here we go again: a repeat of the failure we saw in the spring session.

Where in the world is the House leader's integrity and ability to keep her word?

[The Chair, Liberal, Judy Sgro]

Mr. Aubin, have you already submitted your witness list for Bill S-2?

[The Chair, Liberal, Judy Sgro]

You're saying on Bill S-2.

[The Chair, Liberal, Judy Sgro]

We've passed a motion that we would start Bill S-2 on the following meeting after the break.

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

Chair, are we not then going to consider Bill S-2 on Thursday?

[The Chair, Liberal, Judy Sgro]

We had normally scheduled the two days but, frankly, it's the will of the committee. By unanimous consent you can say that Thursday you'd rather we didn't meet, given the fact that we put in the extra hours this evening, along with the departmental officials. We can come back after the break and start on Bill S-2.

[Vance Badawey, Liberal, Niagara Centre, ON]

Madam Chair, I, too, want to congratulate the committee for moving this bill forward.

Madam Chair, in that spirit, I would like to move that the committee proceed to clause-by-clause consideration of Bill S-2, an act to amend the Motor Vehicle Safety Act and to make a consequential amendment to another act, on Tuesday, October 17, 2017. Members should submit their suggested amendments to the clerk of the committee no later than 5 p.m. on Thursday, October 12, 2017.

[David Adams]

From my perspective, I think the amendments that Mr. Nantais has identified would be amendments that we would share. I think the challenge becomes, again, dealing with this bill and its predecessor and moving it forward. As I said at the outset, our members by and large support Bill S-2, and it's important to move it forward, but also I think it's important to recognize that there are some—not many, but some—issues that I think are particularly problematic for all manufacturers.

[Mark Nantais]

Again, I think Bill S-2 has provisions that open avenues for us to bring more innovative technologies to Canada. We have to be careful. Let's be clear; simply because there's technology in other jurisdictions does not mean that it is the same as or equivalent to or better than ours; it could be less. One of the questions earlier today implied that some vehicles from other jurisdictions are better, when if you take the European certification process, it's less stringent than ours. Side impact was one of the examples given. Clearly, the side impact regulations that we ultimately harmonized with the United States are more stringent than European standards. We have to be very careful about those things.

Similarly with lighting, the key thing there is, in the United States is there going to be guidance coming out on that shortly? In fairness to Transport Canada, they raised some issues about glare with those lights.

We have to be mindful of that. I think every company wants to bring in innovative technologies, particularly when they can ultimately enhance safety, but you have to prove they enhance safety.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Does the flexibility that Bill S-2 gives to the Motor Vehicle Safety Act allow manufacturers to be able to innovate and make more advances in Canada in terms of vehicle safety technology?

[David Adams]

Sure. I think the intention of Bill S-2 is to provide the flexibility to develop the necessary regulatory regimes, if indeed they do become necessary, around things like automated vehicles and whatnot.

I know, from watching previous committee hearings, it's a concern with some of the members that we're not up to date with the U.S. or other jurisdictions. In some ways, that may not necessarily be a bad thing at this point in time. I think there's always a risk of over-regulating and stifling innovation, but at the same time our view would be that there is a role for the federal government to play in setting a regulatory framework for Canada on things like automated vehicles, recognizing that at the end of the day it ultimately is a shared issue with the provinces.

Ontario has a testing regime for automated vehicles right now, and other provinces are looking at that, but that deals with testing, not the regulation of the use of the vehicles on the road.

[Michael Hatch, Chief Economist, Canadian Automobile Dealers Association]

Thank you, Madam Chair, and thank you all members of this committee.

My name is Michael Hatch, and I'm the chief economist for the Canadian Automobile Dealers Association, CADA. We're the national association, as many of you know, for franchised new car dealers and truck dealers in Canada, with more than 3,200 across the country in virtually every town and community, employing over 150,000 Canadians in well-paying jobs.

We greatly appreciate the opportunity to bring the voice and concerns of our dealer network to this committee as it considers Bill S-2, which is a very important bill for our industry, both the retail and the manufacturing levels, as you will see this afternoon.

I'll say off the top that CADA supports this bill and hopes that it becomes law in a timely manner. We supported a similar bill under the previous government, and we appreciate the multipartisan support that it appears to enjoy.

I'm going to begin with a few points about recalls in general. First of all, recalls are increasingly common in today's vehicle market. That's no secret. It is a function of many factors. More cars are on the road. There's greater complexity in the components of new vehicles, and there's an improved system within the industry to identify issues that could necessitate a recall. These are all good things.

The volume of cars on the road and their complexity will inevitably lead to more not fewer recalls in future. The vast majority of them are handled well by manufacturers and dealers, and consumers' problems with their vehicles are solved in a timely and efficient manner.

Our proposed amendment to this bill in the Senate had four components: to ensure that manufacturers will continue to be responsible for the recall process; to ensure that dealers face no new obligations under the act; to extend buyback provisions to dealers in the event that a vehicle cannot be repaired; and, finally, to provide for manufacturer-paid reimbursement of dealer carrying costs in the event of long and lasting recall situations. I'll get into a little more detail on that last point.

We expect that the amendment to be moved at this committee will accomplish most of these objectives, and I thank Mr. Fraser for his comments earlier referring to that very amendment. We look forward to the specific language that it contains.

Dealers don't sell their inventory on consignment. The moment that a car arrives at the dealership, it becomes the property of the dealer, who must finance and maintain millions of dollars worth of inventory at any given time. When a vehicle is rendered unsellable due to a long-lasting recall where a fix is not immediately available, dealers bear a significant cost. Inventory must continue to be financed and maintained, and in these low-frequency cases—admittedly low-frequency—yet high-impact cases, dealers can be stuck with cars for months or more.

Imagine, for example, paying a mortgage on a million-dollar home every month, but you can't live in it or rent it out and you still have to pay the property taxes and keep the lights on. This, in effect, is the situation that dealers face when inventory is rendered unsellable for months or more on end due to long-lasting recalls. Again, these cases are rare, but very high impact when they do take place for our dealer network, which again consists primarily of small and medium-sized businesses across Canada.

Our amendment, among other things, sought to address this by providing for manufacturer-paid reimbursement of dealers' carrying costs over the period of the recall according to a formula. We arrived at this formula by consulting with our American counterparts where such dealer protection is enshrined in federal law.

I would note also, as all of you know no doubt, that part of the government's rationale for pursuing this bill is legislative harmony with the United States. Our amendment was inspired by the same motivation.

Our proposal was straightforward. Under a recall scenario, the manufacturer would be compelled to either make the fix available in a timely manner or buy the vehicle back from the dealer at the original dealer invoice price. In rare cases where the fix was delayed, the manufacturer would be compelled to reimburse the dealer for carrying costs over that time period for the vehicles affected, as is the case in the United States.

In subsequent discussions with the government, alluded to by the minister here a couple of days ago, on Tuesday, we arrived at a compromise position that we hope to be reflected in the new amendment to be tabled at this committee. Again, we look forward to the debate of this amendment in this forum.

Ultimately we want this bill to pass as the important piece of consumer safety legislation that it is. We will continue, as dealers and dealers associations, to pursue a legislative solution of the fundamental imbalance that exists between manufacturers and dealers in the context of long-lasting recall situations, but not as part of this bill.

As I've said, recalls will continue to increase in frequency, so this problem for dealers is not going to go away. We support the bill and don't want to stand in the way of its eventual passage, but we will continue, again, to pursue a legislative solution to protect dealers saddled with inventory when recalls drag on for months or sometimes even years.

Thank you very much to all members of this committee. I look forward to any questions that you have and I will do my best to answer them.

[David Adams, President, Global Automakers of Canada]

Madam Chair, committee members, I appreciate the opportunity to be with you today to discuss the important issue of motor vehicle safety and the proposed amendments to the Motor Vehicle Safety Act, as contemplated in Bill S-2. I am not going to bore you with the details of the promotional spiel on our association, but suffice it to say that we represent the international automakers in the Canadian marketplace—essentially, everybody but Mark's members.

At the outset, I want to say that safety is of paramount importance to each and every one of the GAC member companies. As I noted before your colleagues in the Senate last fall, our members have consistently been at the vanguard of the introduction of advanced safety technologies, such as the three-point seat belt, electronic stability control, and advanced lighting, currently the subject of CMVSS 108, which I also made reference to in my testimony to the Senate, and for which we are still looking for a final regulation from the department.

I was pleased to be at Tuesday’s meeting of the committee on Bill S-2 for part of the time. A number of the committee members expressed concern about the rapid pace with which technological innovation is happening in the automotive industry. I concur with you that the pace of change is both unprecedented and disruptive. In this regard, the Global Automakers of Canada supports the flexibility being afforded by Bill S-2 to accommodate adjustment to this rapid change with respect to propulsion, connectivity, and automation technologies. This flexibility, used prudently, should allow Canada to better stay at the forefront of new technological advancements and any regulatory regime required to support them.

I also want to comment briefly on the sections of the bill that are intended to bring Canada into greater regulatory alignment with the United States. The members of the Global Automakers of Canada support the recognition of U.S. standards across the NAFTA region, as our plants in the three countries are geared to serving the larger U.S. market, and building once for all three countries has the benefit of reducing complexity and yielding economies of scale.

That being said, vehicles meeting the UNECE global standards are similarly safe and often incorporate advances not yet adopted in the United States. We therefore believe that Canada should retain the flexibility to recognize other advanced standards, in addition to FMVSS, in order to deliver the greatest benefits to Canadians and to ensure that we are able to meet our CETA obligations.

Without such consideration, Canadians are being shortchanged. Transport Canada not only faces increasing regulatory irrelevance but also misses an opportunity to play a leading role in the North American regulatory framework, not by adopting a unique Canadian standard but rather by critically assessing standards in the rest of the world—i.e., the UNECE standards, as well as those of the United States—to ensure that Canadians are not being denied leading safety or environment technologies simply because the U.S. is unprepared or unwilling to embrace such standards. Canada can be, and frankly should be, innovative in its regulating, as well as capitalizing on the regulatory co-operation provisions with respect to regulations and standards in both the United States and the EU.

The association’s members support amendments to the Motor Vehicle Safety Act that would provide meaningful improvements to public safety. However, additional regulatory burden without benefits to the motoring public should be avoided.

The question was raised by a member on Tuesday with respect to whether the collection of more data would assist in improving safety. The members of the GAC are not against the provision of additional data, provided it is reasonable and useful, and ultimately improves safety. The experience of the United States has demonstrated that the identification of safety defects is often a very complex task and data alone is insufficient for that task. The U.S. gathers a tremendous amount of data, but that data did not help with respect to the early identification of some of the defects related to recent high-profile recall situations.

In this regard, our members do have a concern with respect to proposed subsection 8.1(1), which Mr. Nantais also referenced, which provides the minister with the power to order a company to “conduct tests, analyses or studies...to verify compliance with this Act, that the Minister considers necessary”. This is a wide-ranging, Canada-unique power that provides the minister with unfettered discretion to order these tests with no consideration as to the cost to the company, nor the potential charter implications of asking a company to conduct and pay for work that may subsequently be used by the government against the company.

This clause is problematic, and if the language cannot be tightened up in the legislation, then we believe regulations should be developed to provide guidance as to what conditions would justify such a request, what framework would be used to standardize expectations over how those requests are filled, and who would assume the costs of such tests.

There are other sections in this bill as amended by the Senate that raise concerns for our members, but my time has expired. Based on conversations amongst the committee and two years spent on this bill, I think time has expired in terms of moving the bill forward as well.

[Mark Nantais, President, Canadian Vehicle Manufacturers' Association]

Thank you very much, Madam Chair.

Good afternoon, members of the committee.

I'm here representing Fiat Chrysler, Ford, and General Motors, which are my member companies. In Canada, these companies operate five assembly plants, multiple parts and components plants; as well, each has research and engineering facilities with mandates for advanced vehicle technology development, including partnerships in related software development.

CVMA members remain committed to the development and manufacture of safe automobiles, proactively enhancing occupant protection technologies in the event of a crash, as well as many new and innovative advanced driver crash assistance technologies to improve safety by helping the driver avoid crashes in the first place.

We support Bill S-2. We continue to share the government's objective to advance or enhance the safety of Canadians and provide additional regulatory flexibility to support the introduction of advanced safety technologies as well as innovations as outlined in the bill.

In our written submission, we have identified four areas that have practical and business implications and need reconsideration, particularly since the bill includes the ability to delegate some existing and proposed ministerial powers. Our recommendations do not detract from the safety objectives of the bill.

We offer the following recommendations, which are really there to improve clarity and, in so doing, provide for more effective policy implementation and efficient administration.

The first is with respect to proposed new section 10.61, power to prohibit offering for sale—defect or non-compliance. Manufacturers sell, wholesale, new cars to dealers that are privately owned independent businesses; manufacturers do not sell vehicles to consumers, retail. The proposed language inappropriately holds the vehicle manufacturer or importer, which do not sell vehicles to consumers, criminally and administratively responsible for the actions of another independent business entity, namely the dealer, to sell vehicles under a recall and stop-sale order to consumers.

Vehicle manufacturers and importers should not be held criminally or administratively responsible for the actions of independently owned and operated new car dealers. The proposed language to prohibit offering for sale defective or non-complaint vehicles should more appropriately be applied to dealers, which are the entities that sell vehicles to consumers. Doing that would be more consistent with the United States' responsibilities and requirements.

We would recommend that this provision be revised to give the power to order vehicle manufacturers and importers to issue a notice to the dealers to remedy the vehicle prior to the first sale.

The second recommendation concerns proposed new section 8.1, power to order tests, analyses, or studies. We recognize that this unique-to-Canada power is proposed to collect information quickly for the purpose of verifying non-compliance or defects in certain cases where information is not voluntarily provided. We believe, however, that the proposed language is very broad and risks being misused beyond the specific intent, with the potential outcome being to order any test, analysis, or study in any scenario, potentially downloading Transport Canada's compliance and audit responsibilities onto companies in lieu of the department's oversight responsibilities.

This wording needs to be updated to clarify the intent of the provision, which is to order tests, analyses, or studies to verify non-compliance, and to include the notion of “reasonableness”.

Our third recommendation concerns proposed new subsection 10.4(1), correction date. CVMA members strive to provide the most accurate and up-to-date recall information to vehicle owners. The act currently requires that an initial recall notification letter be sent to vehicle owners no later than 60 days following the notification to Transport Canada. If the parts required to repair the vehicle are not immediately available at the time of the first notice, a follow-up notification letter is sent when parts become available.

At this preliminary stage of recall, information on availability of repair parts may not be available, and estimates of the date for parts availability may be revised multiple times. The end product of this, of course, is that you could end having multiple letters going out to consumers. Consumers tend to become less sensitive, or desensitized, to those notices. It loses its importance, and they tend to avoid the importance of that notice to begin with. This undermines public confidence in the system. We don't want that, and we don't believe Transport Canada wants that.

Prescribing the requirement in the act also prevents the leveraging of communication technologies that may be better suited for providing information in a more timely manner, such as manufacturer web-based recall lookup tools that our members already have in place.

This additional requirement is not needed in the act and can be addressed under section 15 of the motor vehicle safety regulations, which define all the information required in the notice to the minister and the notice to vehicle owners.

Our last recommendation concerns dealer compensation. Based on Mr. Fraser's description of the proposed amendment that he plans on introducing, we would welcome such an amendment that satisfies the concerns of both dealers and OEMs, original equipment manufacturers. CVMA members currently address compensation for new vehicles under recall with their independent dealerships in a fair and equitable manner, both in Canada and in the United States. We will continue to do that, and we continue to be open to further discussions to deal with their concerns.

Madam Chair, those are my remarks. I would be glad to answer any questions. I am hoping we can get some support for our recommendations in this specific case.