Finance Committee on May 18th, 2023

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

Now we're going to go to the NDP. We have with us MP Bachrach.

Welcome to our committee. The floor is yours.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, colleagues, for allowing me to sit in on the finance committee.

Shifting our discussion a little bit to the topic of air passenger rights, I want to start by thanking Dr. Lukács for his tireless work on behalf of Canadian air passengers. He does this as a volunteer, and over the past several years has emerged as Canada's foremost consumer advocate in the air passenger space. I think a lot of the advancements that we've seen are due to his work. I'm very pleased that he's joined us today to talk about the portion of Bill C-47 dedicated to this government's attempt to finally fix Canada's air passenger protection regime.

Dr. Lukács, you and I worked closely on developing Bill C-327, the Strengthening Air Passenger Protection Act. I wonder if you could comment a little on the contrast between what is in that private member's legislation and what we see in Bill C-47 today.

[Dr. Gábor Lukács]

Thank you for the question. It's a pleasure to be here.

There are two main differences that are worth mentioning. The first and the most important one is about closing the loophole with respect to the “required for safety” reasons. Bill C-327 would hard-code in the primary legislation that compensation is the norm and that the airline can avoid compensation only in truly extraordinary circumstances. Those circumstances are spelled out in Bill C-327 clearly. They are not left to anybody else to decide.

In sharp contrast, the budget bill retains the loophole. It makes four references to the “required for safety” reasons if you do a search in the electronic text. On the longer timeline, it shunts the list of exceptions to the Canadian Transportation Agency in the form of regulations where we know—we have already heard just yesterday or the day before from the airlines—they would like to see the same loopholes retained, claiming that safety is so important that airlines should never have to pay compensation when a flight is cancelled due to so-called safety issues.

A second important difference relates to the burden of proof. In Bill C-327, it is clear and unambiguous that it doesn't matter whether the passenger goes to small claims court, provincial superior court or a class action in federal court, the burden of proof will always be on the carrier to show why a flight was delayed or cancelled or why a passenger was bumped.

In sharp contrast, in the budget implementation bill, that burden of proof is shifted only if the passenger agrees to forgo their right to due process before an impartial judge, agrees to a star chamber-like secretive process and goes through the Canadian Transportation Agency's kangaroo court.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

What the minister tells us and what the department tells us is that they're going to close the loophole using exemptions the Canadian Transportation Agency will be developing and that this will become evident around the next corner.

Is the CTA well positioned to craft these exemptions for the airlines?

[Dr. Gábor Lukács]

Unfortunately, the past four or five years have shown that the Canadian Transportation Agency is well positioned only to act in the airlines' private interests and does not serve the public interest. We have seen that recently during the pandemic in the refund versus voucher controversy. The agency lacks independence. It doesn't act in the public interest. It acts more as an excuse or as a cover for the government to avoid responsibility and say, “It wasn't us. It was them. It was the arm's-length body.” But that is actually a very stubby arm.

The Canadian Transportation Agency should not be entrusted with this. Furthermore, as it stands, there is nothing to legally prevent that agency from keeping the same requirement for a safety loophole, which has been causing such a tremendous amount of difficulties and a massive amount of backlog.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Dr. Lukács.

The government has claimed that Bill C-47 and this new approach to air passenger protections will make this the strongest air passenger protection regime in the world. Do you feel like that's a fair statement, given what you've seen of the legislation?

[The Chair, Liberal, Peter Fonseca]

Dr. Lukács, can you hear us?

We are going to suspend just for one second.

[The Chair, Liberal, Peter Fonseca]

We will reconvene.

Dr. Lukács, you can continue there. I don't know if you heard the question.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'm not sure if Dr. Lukács heard all of my question, but I could repeat it.

[The Chair, Liberal, Peter Fonseca]

Go ahead, MP Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

The question, Dr. Lukács, was that the government has claimed that this legislation is going to be the strongest air passenger protection regime in the world. Do you feel that's a fair statement?

[Dr. Gábor Lukács]

I'm afraid I'm unable to agree with that. The government is unfortunately perpetuating existing loopholes, creating a new loophole that would allow airlines to avoid paying a penalty or paying a fine when they are caught breaking passenger rights, if they sign a so-called compliance agreement. They are not closing the burden-of-proof loophole properly either, unfortunately.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Bachrach.

Members and witnesses, we are going to our second round of questions. We're starting with MP Lawrence for five minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

My questions will be directed toward you, Mr. Cross. Thank you for joining us today, especially on such late notice. Mainly, we'll focus on the article you wrote, I believe, on May 10. Lots of those comments were given in your opening comments, which is fine, but I'd love to give you the opportunity to elaborate a little bit more on those.

Just to reiterate what you said in your opening comments, we are in the worst economic growth rate, real GDP growth rate, since the 1930s. That's a true, empirical fact.

[Philip Cross]

That's based on Statistics Canada data, which is among the best in the world.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Our GDP growth for the last decade has been 0.8% per capita.

[Philip Cross]

That's right, but that 0.8% per capita is on average, per year.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Yes, thank you. It's 0.8% per capita per year.

Perhaps that's made even worse, because if we compare it to the United States, they have done far better over the same period of time. Is that correct as well?

[Philip Cross]

That's right. That's fundamental to the argument that this is not something that's been imported. We have to look within Canada for the reasons for this.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

As dim as that is, perhaps it even looks worse for the future as we are predicted to have the lowest economic growth in the OECD to 2060. Is that correct as well, Mr. Cross?

[Philip Cross]

That's right. It's the OECD that makes that forecast that Canada will have the worst productivity growth rate over the next 35 to 37 years.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'll make a couple of quick comments, and then we'll maybe get to some of the root causes, which you discuss as well in your article.

It must be shocking or somewhat surprising to you whenever you listen to the Minister of Finance talk, and she says things like the economy is roaring, the Canadian economy is strong, or we are doing exceptionally well. My favourite line of hers is when she actually mentions the ratings agency basically saying that we're not going bankrupt. I'd like to do better than that as a country. I'd like to actually grow, going forward.

Could you just summarize some of the root causes of Canada's productivity issues?

[Philip Cross]

First of all, I'm certainly not surprised that anything finance ministers say is going to be self-serving. I am encouraged that there is an increasing awareness out there that there is this gross problem in Canada. The Globe and Mail recently, just a couple of months ago, had an editorial that talked about Canada's sclerotic growth. There was a professor at University of Western Ontario who had an op-ed in the Globe this week, in which he compared Canada to what he called disasters in Argentina and countries like that. I think that's a little overstated, but I am encouraged.

Andrew Coyne has talked about Canada's growth crisis. I think it's getting into the conversation. It took a while. Some of us have been talking about this for several years, but after 10 years I think increasingly people are saying we've had 10 years of policies in which we have said deficit spending was going to fuel growth. We have had years in which we've said we didn't have to choose between the environment and economic growth, and it turned out we're not getting either. It's been noted that we've had—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

They made the worst choice and we got neither. You're exactly right.