Good afternoon, ladies and gentlemen.
My name is John McKenna. I'm president and CEO of the Air Transport Association of Canada. I'm accompanied today by Mike Skrobica, vice-president, industry monetary affairs.
ATAC has represented Canada's commercial air transport industry for over 75 years. We have over 185 members engaged in commercial aviation in Canada, operating in every region, and providing service to a large majority of the more than 700 airports in the country.
We greatly appreciate the opportunity to speak to you today on an important aspect of aviation security, that being its financing through the Air Travellers Security Charge, the ATSC. We have many questions on this issue of security.
Why are Canada's security charges so high compared to those of other countries?
Where is the accountability between the ATSC revenues and CATSA funding?
Why do revenues collected through the ATSC far exceed the amount being spent on security?
What is the justification for a 50% increase in the ATSC? Is the minister simply going to increase CATSA's budget and the ATSC every time a new security loophole is discovered?
Where is the public review of CATSA and its finances that was announced by the Minister of Transport in February?
Canada's security charge was very high even before the latest increase. In 2008, ATAC conducted a survey to rank the 175 security fees charged by governments and airports worldwide. At that time, Canada's security charge was the second highest in the world, second only to the Netherlands.
After the increase announced in February, the Canadian security charge will be the highest in the world, we believe, with the international fee having increased 52%, from $17 to $25.91. In the U.S., the international security charge is $5.
So we ask, why are Canada's security charges so high compared to those of other countries? We do not applaud the government for striving to be number one by increasing a tax that was already yielding a surplus.
We are very concerned by the lack of accountability between the ATSC revenue and CATSA funding. How much money is collected through the ATSC? What percentage of it actually goes to CATSA? Does any of it end up in the general account?
The last report by the Auditor General on the ATSC dates back to 2005-06. Without audited information, we can only speculate as to the revenues generated versus the parliamentary appropriation to CATSA, which we have done. We looked at numbers supplied by CATSA and by Statistics Canada.
Our estimates are based on the 48 million passengers screened by CATSA in 89 Canadian airports during fiscal year 2008-09. The numbers put forth by CATSA concur with Statistics Canada reports of 108 million passengers emplaned or deplaned during calendar year 2008, with some 54 million departing passengers, CATSA's clientele. Statistics Canada indicates that 62.9% of these passengers were on domestic flights, 19.5% on transborder flights, and 17.6% on international flights.
Based on these numbers, it becomes a simple exercise to estimate the revenues generated by the ATSC. The spreadsheet that we handed out suggests that revenues generated by the ATSC well exceed the CATSA appropriation, even before the increase. Based on these calculations, more than $70 million was retained as general revenue by the Government of Canada, and not used to fund CATSA.
Once the increases in the ATSC have been factored in, and considering the budget allocation for CATSA of $1.5 billion over the next five years, the revenues generated by the ATSC will produce an annual surplus of over $330 million.
The ATSC should be used to fund CATSA and CATSA only. It is not an additional source of general revenue for the government, for which it does not have to account. CATSA's budget is entirely financed by the ATSC, whereas in the U.S., air travellers finance only 30% of the Transportation Security Administration's budget.
We fail to understand why a 50% increase in the ATSC is necessary.
Is the appropriation system appropriate for a crown corporation that does not have a stable funding requirement? How can the government establish a five-year appropriation for CATSA when it is so obviously prone to precipitate responses to incidents that lead to additional security measures?
We don't need more layers of security. What we need is more effective and better security.
Is the minister going to simply increase CATSA's budget and the ATSC every time a new security loophole is discovered?
How much security is enough security? How much security can we afford?
Increasing the ATSC is not the answer.
CATSA simply implements additional measures without doing any threat assessment whatsoever. That is done either by the RCMP or by CSIS. How much of the ATSC-generated revenues go to Transport Canada? How much go to the RCMP and to CSIS?
Has the government determined where there's a real security threat to Canada? Are we prepared for it? Is our equipment efficient, sufficient, or outdated?
Are security measures going to continue to accumulate or are the authorities going to dedicate themselves to developing and implementing a more efficient single-step screening process aimed at improving security and reducing the number of screening agents and the time and personnel required to process passengers? Industry sees the current airport security lines as inefficient and a real opportunity for terrorism.
Finally, is Canada able to come up with a way to measure security that reflects our own needs in light of the security threat in Canada?
Our other concern is CATSA's performance.
Has the government determined that CATSA's performance is comparable from an economic point of view to that of other screening agencies worldwide? If so, how did they arrive at this conclusion? Where is the evidence to support this and what parameters were used?
Where's the public review of CATSA and its finances, as announced by the Minister of Transport in February? The customers of our members are footing the security bill and they're entitled to receive this information.
Finally, why did the Minister of Transport announce a tax measure one week in advance of the budget? Does the government really think that the aviation community and travelling public are so gullible that they would not see the obvious ploy to protect the budget's claim of no tax increases?
In closing, let me reiterate that the commercial air transport industry believes in good and efficient security, but not in security at all costs.