Public Accounts Committee on April 3rd, 2017

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Lefebvre, you have five minutes.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

I'd like to continue the question that my colleague Mr. Badawey raised with respect to the manufacturers' processes to identify and report defects. I know a projet de loi is going through the House, Bill S-2.

Mr. Ferguson, I'm looking at your comments when it comes to the manufacturers. In paragraph 10 of your opening remarks, you say:

...manufacturers issued 318 recalls between 2010 and 2015 for safety-related issues that were not brought to the Department's attention...the Department did not have the authority to assess whether manufacturers implemented effective processes for identifying and reporting safety defects. This limited the Department's ability to investigate defects and better protect Canadians.

If they don't have that ability, you recommended that they “should request information from manufacturers on their internal processes for identifying and reporting safety defects”, and the transport department said they would try to do that. This recommendation was to be implemented by January 2017. That date has passed. I would like to know if you have implemented this recommendation. It's recommendation 4.94 of the Auditor General's report.

[Michael Keenan]

Mr. Chair, I think there are two parts to that. In this matter, we have taken some steps that respond directly to the recommendation of the Auditor General that we get manufacturers to provide information on their internal processes. I believe we've written to all of the manufacturers.

Ms. Benjamin, have they responded yet?

[Paul Lefebvre, Liberal, Sudbury, ON]

That's what I would like to know.

[Kim Benjamin]

At this point in time, about one-third of them have responded in giving us the information. We are still in negotiations with the others. They have some questions, and we're having some back and forth. We expect the response rate on this to be very good, but we don't have all the information yet.

[Paul Lefebvre, Liberal, Sudbury, ON]

So you would agree with me that the January deadline for this recommendation has not been met? You went out and requested the information. They have not come back to you yet.

[Kim Benjamin]

That's correct. Our agreement was that we would start the process and make the request by January, and we did do that. Now we're trying to build on that and bring it a further step to see what we can get and how we can use that information, if and when it all does come in.

[Paul Lefebvre, Liberal, Sudbury, ON]

Can you provide us with examples of the ones that have responded and respected us?

[Kim Benjamin]

I don't have that detail with me.

[Paul Lefebvre, Liberal, Sudbury, ON]

It's one thing to say that they will participate, but then if they don't give you anything concrete, it's just smoke and mirrors.

[Kim Benjamin]

Yes.

[Paul Lefebvre, Liberal, Sudbury, ON]

Back to you, Mr. Ferguson, what can we do here in going back to the Minister of Transportation to ensure that this is respected, that the follow-ups are done, and that there's actually something tangible behind this?

[Michael Ferguson]

Thank you, Mr. Chair.

I just want to start with a little bit of a preamble, which is that my sense of what we've heard today goes back into a lot of the history, perhaps, of this program in Transport Canada. I think it has very much been a program that has concentrated on who's doing the regulation: Transport Canada, and whom they are regulating, namely the manufacturers. Now, through these steps that Transport Canada is going to put in place, I think it's going to be an effort to shift the emphasis onto for whom they are doing the regulation. It's not just who is regulating, and whom they are regulating, but it's for whom they are doing the regulation, getting this type of information from the manufacturers about their processes and the types of defects they're looking at, and getting information from other stakeholders. I think all of those types of things will be a good approach to shifting that emphasis onto for whom these regulations are being put into place.

I think we've heard before about the department's coming back and talking about that. I think what they are going through is perhaps a shift in emphasis in how they are going to do some of this regulation. I think the idea of their coming back later on and explaining the progress they've made and being able to demonstrate that would be a good step

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you.

Very quickly, I just want to understand this. Do the manufacturers only have to do this voluntarily? In your comments, Mr. Auditor General, you said that the department did not have the authority to assess.

My first question is, who does have the authority? Does anybody have the authority? Again, I just want to be reassured. Is this only voluntary? Does nobody have the authority to even ask for this, and we're just hoping that we're going to collect this information?

[Michael Keenan]

If you'll permit it, Mr. Chair, I'll take a shot at answering this.

This was a clear request. The companies are complying on a voluntary basis. So far we're tracking who is and who is not.

This speaks to Bill S-2. Should Bill S-2 receive royal assent, then Transport Canada would have a much stronger set of authorities and powers to compel information from manufacturers. We put the regulations into place to effect that. For example, there is a new administrative monetary penalty scheme in Bill S-2. Once we've put the regulations in for the information requirements, should a manufacturer refuse, then they would be subject to administrative monetary penalties by the department. That would only after Bill S-2 comes into force, though.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Lefebvre and Mr. Keenan.

Mr. Jeneroux.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Mr. Chair. I won't take the five minutes. I'll give a bit of a preamble and then ask just one question.

First of all, I think you've gotten off a little bit easy with today's committee, mostly because we had requested that you come, as you know, a few weeks ago and we had two of your representatives show up. Being in opposition, we don't get a lot of time to sit here and question deputy ministers, and it's important that all deputy ministers show up. Regarding a lot of what we talked about today, you weren't there at the time of the audit. However, you were there to make the decision to not bring yourself to this committee and to send two representatives. I would recommend that when and every time you come back before this committee, that you come back, because not only has that set us back but we get only two hours in this committee meeting. That's now set us back. We had to cancel that meeting. There was the Auditor General's time. We've now had to push our entire agenda back the equivalent of a week because of that. There were no comments at the beginning about that, and I guess at this point, we're kind of into the committee, so it's kind of late to apologize, but I just want to highlight how important it is that deputy ministers show up before this committee.

That said, I'll move on to my question. You're welcome to address some of that in your answer.

I'm reading from paragraph number eight—and Ms. Shanahan was the first to bring this up—in Mr. Ferguson's statement today, where he said:

...Transport Canada was aware that child seat anchorages could fail under certain conditions, but it had not proposed a new regulation or issued an advisory by the audit completion date. The Department stated that introducing a unique-to-Canada requirement for anchorage strength in passenger vehicles would be detrimental to trade.

To me and, I imagine, to a lot of parents across the country, that's a pretty callous statement about your department's recognizing the impacts on trade. A lot of today's discussion has been about how you react to the trade implications through the U.S., but you gave us one example from approximately a decade ago of how the United States reacted to us. I'm curious as to the percentage of cases in which we forge the direction, but also is there a connection between your department and International Trade? Is there at least, I would hope, a monthly meeting of some sort to connect the two departments? It seems here that your department highlights a safety mandate first, but your department largely reacts to what the international trade department does, with the exception of that one example.

I'll leave it at that for you to comment. Thank you, sir.

That's my time.

[Michael Keenan]

Mr. Chair, the member raised a number of key issues.

First, I apologize. There was a miscommunication between the department and the committee. We thought the officials we had sent to the last meeting were aligned with the expectations of the committee. It turns out that we were woefully wrong. I apologize for that.

I'm happy to be here today. I am also happy to return at the committee's convenience to follow up on the matters in this report, or on any other matter that the committee sees fit, to bring some sunshine into the operations of our department.

You raised a number of really important questions related to safety performance. I will come back to the point that I, as the head of the department, continue to emphasize when engaging with our safety officials, that although there are many considerations, safety is the top consideration. We come to our safety regulations, our safety inspections, and our compliance and enforcement on the basis that safety is the key priority.

With regard to the issue of child restraint systems and car seats, those test results you're referring to contribute to Transport Canada's view that a child greater than 65 pounds or 30 kilograms is safer in a booster seat with a three-point seat belt than in a child restraint system. That's an area of permanent divergence between Canada and the United States in their regulations of child restraint systems. The reason for that divergence is the basis of safety assessment on the part of Transport Canada. We think that the Canadian regulations generate safer outcomes than the U.S. regulations. Therefore, we are purposely not aligning with the U.S., despite the cost of doing so, because we think that the Canadian regulations for child restraint systems are safer.

I think it's fair to point out that the immobilizer example I used is something that Canada did years ago. The U.S. is just doing it now. I would concede that there are multiple examples on the other side. The U.S. has put in place regulations for electronic stability control in heavy-duty vehicles. There's a really solid body of evidence showing that electronic stability control is effective in reducing accidents, deaths, and injuries. We are looking at following the U.S. in that matter.

We've looked at their studies and data, and when we put them in Canada Gazette, part I, we probably didn't put all of the studies in as clearly as we should have, because we've just put that in place. Once we do the revised regulation for Canada Gazette part II, we can commit that to actually having in the revised regulatory impact assessment statement the data and the studies to support moving with electronic stability control in heavy-duty vehicles in Canada. I do concede that's one where we are coming in a bit after the U.S. In fact, we are using some American data and studies as part of our data set because it's more efficient than just replicating it for the sake of replicating it in Canada.

[The Chair, Conservative, Kevin Sorenson]

We'll move back to Ms. Shanahan. She's the last one I have.

Mr. Masse, did you have another question? You're good.

All right, Ms. Shanahan, you may have to summarize everything here.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much, Mr. Chair.

Usually I like to focus on things like the performance measurement, things that the Auditor General has brought up in the past, the quality of data collection, the focus on the end-user, on Canadians as well, on the people who receive government services. I think that's absolutely critical in this stage.

However, when we're talking about the public accounts committee and looking at efficiency and effectiveness, usually we can talk about action plans and measurements and milestones and so on, and that gets the job done. I'm afraid that in this case I have to come back to the essence of the work of this regulatory body and how the work is actually initiated in the stakeholder consultations.

If we return to paragraph 4.30, the Auditor General has noted the following:

Transport Canada frequently did not seek input from stakeholders other than manufacturers. This meant there was little opportunity for others to influence regulatory initiatives. In particular, the Department did not issue public notifications of regulatory proposals for two of the three regulations....

These are discussed in the report, the “Lighting System and Retroflective Devices” and the “Side Door Strength”. The only one that had a notification was the “Occupant Protection in Frontal Impacts”.

Something like what we witnessed here today, when my colleague talked about asking the manufacturers to reimburse you for the cars, is something that could come out in an early round table, a let's talk about what we need to be doing kind of thing.

This is an audit that covers the period from January 2010 to September 2016. I'm afraid we're talking about long-standing practices with what sounds like a small group. My colleague Mr. McColeman asked how many people work there, and it's about 90 people. Am I correct?

Again, we see the statement repeated in several places, that it appears that “manufacturers may have exercised a disproportionate influence on regulatory decision making and caused delays in updating the regulations”. In fact, it's a concern that some of the safety inspectors were concerned about the companies themselves, whether they would have economic difficulties.

How can you assure us today that this is going to change?

[Michael Keenan]

Mr. Chair, first and foremost, I agree with the concerns raised by the member about past activities in the group. We have wholeheartedly accepted the Auditor General's recommendations, and we have already initiated changes.

I can commit to you, as the deputy minister of the department, that we are committed to ensuring that we have a world-class regulatory agency, both in terms of the development of regulations, in terms of compliance, and in terms of enforcement.

There are some areas where we want to do better and we need to do better. This is one of them. We are committed to creating a more transparent and more inclusive consultation process. We've already launched that, in terms of the regulatory process.

I'll be frank with you: we talk lots. I make a point, for example, whenever I'm travelling in the country, in a region, to sit down with the senior management team. I sit down separately with the front-line inspectors. I ask them what's going on. I want to understand the world of our front line of 1,447 people in Transport Canada who are in direct oversight. I want to ensure that they're actually focused on safety in exercising the discretion that we've given them through legislation and regulation.

We are committed to—

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

May I stop you there, Mr. Keenan?

I appreciate that you've been in your function now for a little over a year—12 months or so. Can you tell the committee whether you been brought in on a transformation mandate? Is that part of your role?

[Michael Keenan]

The minister has a number of priorities for Transport Canada. They start with safety in all domains. They include modernizing the organization. The comprehensive review process referred to a few minutes ago has been an extensive effort over the last year to identify areas where we can improve our regulatory processes and modernize our oversight practices.

I would say that Transport Canada overall does a great job in many areas, but there are areas where we need to do better. The Auditor General has found some in motor vehicle safety. We're committed to doing it in responding to the Auditor General's recommendations.

We're also committed to improving the overall performance of the department as we modernize and transform. We are administering 52 acts, federal pieces of legislation, and 350 sets of regulations. There is a need to modernize a number of those regulations and to improve the speed by which we revise regulations, because in all domains the Auditor General has, I think, correctly noted that in the world of vehicles with the advent of connected automated and autonomous vehicles, the world is changing rapidly. In this area, we're improving our internal management processes in the seven areas the Auditor General recommended. We're also seeking new legislative authorities under Bill S-2 to be able to deliver more effectively on a safety mandate in the context of a motor vehicle world that's being transformed before our eyes.

We are striving on multiple fronts to improve our performance because, quite frankly, if you want to be world class in regulating something, you always have to be improving, and you always have to take on board where things aren't working as they should, as the Auditor General discovered in this area—

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I appreciate those remarks, and indeed we're entering a whole new world.

On that note, my last question is for the Auditor General.

Mr. Ferguson, are Canadians at risk from what we've heard today in your report, from what we're looking at down the road? Are Canadians at risk when they get into their cars?

[Michael Ferguson]

Being somebody who drives quite a bit, I think we do have to put this in the context of driving being something that has become safer over the years. I think that's a reality.

But I find it quite concerning that, again, some of the regulatory changes we've identified in this report would take 10 years, and the state of change in the technology now is such that it doesn't wait for 10 years. I think the department has a very significant challenge of making sure that it can adjust its regulatory approach to something that is more nimble so that it can keep up with these types of changes.

When I look at this regulatory system overall, I see one that, in terms of things like lighting standards, is written in a way that in fact prevents some of the new innovative lighting approaches from being used in Canada, but then on the other hand doesn't prevent other types of innovations related to autonomous or semi-autonomous vehicles. I'm not saying that it should or shouldn't prevent something. I'm saying that when you look at the overall regulatory system, on the one hand you see that it can impede some innovation because of the way some of the regulations are written, but then on the other hand it lags the innovation taking place as well.

I think the department has a significant challenge, again, of making sure that it can have a regulatory system that can be nimble enough to adjust to how quickly the technology is changing in this area.