Transport Committee on Sept. 26th, 2006

[Lawrence Cannon, Conservative, Minister of Transport]

Thank you very much, Mr. Chairman.

First of all, I wish to extend my congratulations on the exceptional choice that the members have made to reconfigure, or re-elect, or push you into the position of chair. I want to congratulate also the two vice-chairs.

I'm accompanied by Helena Borges, who is the director general of surface transportation policy, and Brigita Gravitis-Beck, who is director general of air policy.

I appreciate the opportunity to address the members of the committee. I would like to open by reiterating the government's overall approach to amending the Canada Transportation Act. The act is a legislative framework for economic activities related to air and rail transportation in Canada and covers a number of general matters such as the role and responsibility of the Canadian Transportation Agency.

The act, which came into effect in 1996, included a requirement for a statutory review. The panel was appointed in June 2000 and undertook extensive consultations across Canada before submitting its report in June 2001.

In the five years since that review, amendments to the legislation have been introduced through bills tabled in Parliament twice: Bill C-26, in 2003; and Bill C-44, in 2005. Both of these bills died on the order paper.

The government recognizes that there have been extensive consultations and consensus-building with stakeholders over this, and that there was considerable support for many of the provisions that were in Bill C-44.

Stakeholders are anxious for the government to move forward with improvements to the CTA. The government wishes to proceed with CTA amendments on which there is consensus using the former Bill C-44 as the base, with appropriate revisions.

In order to expedite passage of the amendments, the government has decided to split C-44 into three more manageable components. As you know, Mr. Chairman, Bill C-3, an Act respecting international bridges and tunnels and making a consequential amendment to another act, is presently before the Senate.

Bill C-11 is the second component and deals with the air provisions, rail passenger provisions, railway noise, the grain revenue cap as well as a number of general provisions.

[The Chair, Conservative, Merv Tweed]

Welcome back, everybody. I do want to thank you for the opportunity to serve as your chair again, I welcome Mark to our committee, and I look forward to sharing some of the highlights.

Pursuant to the order of reference of Thursday, September 21, 2006, Bill C-11, an act to amend the Canada Transportation Act and the Railway Safety Act and to make consequential amendments to other acts, we are fortunate today to have the minister joining us. I would ask the minister to take the floor and make his presentation.

Mr. Cannon, please.

[Lawrence Cannon, Conservative, Pontiac, QC]

The third component will deal with shipper protection provisions. Consultations are under way with shippers and the railways on potential changes to those provisions. The intent is to table a bill later this fall.

Allow me to highlight some of the amendments contained in Bill C-11.

Section 5 of the act contains the national transportation policy declaration, which provides a general context for the legislation. You will recall that, in its report, the Canada Transportation Act review panel recommended that the policy statement be updated. Although the underlying principles are well accepted, the panel agreed with many stakeholders who said the statement is too long and too confusing. Furthermore, the statement needs to be updated to add principles related to the environment and security.

The act sets out the powers and responsibilities of the Canadian Transportation Agency. Amendments contained in Bill C-11 will affect the agency's role and structure. There will be a reduction in the number of full-time members, from seven to five, and members will be required to reside in the national capital region. This is expected to reduce its administrative costs without affecting the efficiency and the effectiveness of the agency.

Rather than relying solely on regulatory remedies, the CTA review panel supported the use of alternative dispute resolution mechanisms that emphasized negotiated solutions to disputes between carriers and their customers. Such approaches are often quicker, less costly, less confrontational, and more effective than regulatory measures.

In June 2000, the agency launched a pilot project based on mediation. This has proven quite successful. Bill C-11 will give the agency formal authority to engage in mediation on demand with respect to matters under its jurisdiction.

Bill C-11 also introduces a new merger review process that extends to all transportation carriers and service providers under federal jurisdiction, notably in the areas of air, rail, marine, buses, trucks, airports, and marine ports. This process would build on the strengths of the existing merger review process currently in place for the airlines.

Bill C-11 contains a number of important provisions related to air travel. In this regard, I want to emphasize that this government is committed to promoting competition in the air transportation sector and offering increased consumer choice to the travelling public. It is my intention to set out a more comprehensive air policy later on.

The bill contains several measures to enhance consumer protection. Among these is the obligation for carriers to display their terms and conditions of carriage more prominently at their business offices and on their Internet sites. Consumers are entitled to know the terms and conditions of the air service before they book a flight, to help them make informed travel choices. Amendments also help to ensure that consumers obtain fair airfare advertising that is clear, transparent, and not misleading.

Mr. Chairman, allow me to expand briefly on this last element: air fare advertising.

Good information helps Canadians make informed choices. Consumers want to be able to compare different airlines, advertised prices and to know, upfront, how much they will pay for air services when setting out to purchase airline tickets. Carriers are realizing this, and it is reflected in their changing practices today. Consumers are also becoming smarter as evidenced in the increasing use of the Internet for ticket sales.

However, concerns have been raised by some consumers that price advertisements, whether in newspapers or on Internet sites, still do not contain complete or clear pricing information. For that reason, the amendment proposed in the bill would give the minister, where required, the power to authorize the making of regulations respecting transparency in the advertising of prices of air services, regardless of the medium used.

The amendments provide guidance regarding what types of costs should be included in the base price of an airfare and what costs may be advertised separately. The regulations, should they become necessary, would be enforced by the agency and would ensure that the standards would be consistently applied across the industry.

The Office of the Air Travel Complaints Commissioner was created, you'll recall, in 2000 as part of a specific amendment to the act. It has served a useful function during the transition period of the last few years; however, the complaints function has become integrated into the regular work of the agency. With changes in the marketplace since 2000 and more competition, especially from low-cost carriers, the number of complaints against Air Canada and other carriers has stabilized to what we would call a normal level, approximately consistent with their market share. In addition, complaints now increasingly relate to matters that fall within the core functions of the agency.

Since the fall of 2004 the function of the commissioner has been entrenched in the agency through the implementation of the air travel complaints program. The agency has been able to continue to adequately respond to consumers' complaints in an informal manner and consistent with its ongoing mandate. The proposed amendments would therefore make permanent and transparent the complaints resolution function of the agency by integrating this function into the regular operations of the agency.

Bill C-11 also addresses the need of publicly funded passenger rail services. It will implement a more effective mechanism to resolve disputes during contract negotiations between passenger service providers and the freight railways.

VIA Rail, commuter rail authorities and other publicly funded passenger rail operators prefer to conclude commercial agreements with infrastructure owners. If negotiations prove unsuccessful, publicly funded passenger rail service providers will be allowed to seek adjudication from the agency on the terms and conditions of operations on federal rail lines, including access fees and charges for services provided by the railways. Adjudication will be precluded for existing commercial contracts except for resolving train priority issues under the existing VIA Rail agreements.

In addition, the line transfer and abandonment provisions will be extended to include urban corridors, passenger stations, and urban transit authorities.

I want to emphasize that the proposed improvements to the rail passenger provisions are strongly endorsed by the commuter rail operators in Vancouver, Toronto, and Montreal. They would like to see these changes implemented as soon as possible.

Bill C-11 also addresses the issue of railway noise. The agency used to consider complaints about noise from railway operations. However, in December 2000 the Federal Court of Appeal ruled that the agency lacked jurisdiction to hear noise complaints. Therefore, no federal regulatory body is presently mandated to regulate railway noise. Bill C-11 will amend the act to require that railways not cause unreasonable noise when constructing or operating a railway, taking into consideration the requirements of railway operations and the interests of affected communities. As well, the agency would be granted authority to resolve noise complaints if a voluntary settlement cannot be reached between the parties. The noise provisions have strong support from interested parties, including a number of members of Parliament.

Bill C-11 contains a provision that will enable the Minister of Transport to make a one-time-only request to the agency to adjust the revenue caps for grain movements to reflect current maintenance costs of hopper cars. This will provide for an adjustment that is not dependent upon a disposal. This amendment is widely supported by western Canadian grain producers.

Many of you may be curious about how Bill C-11 amends the Railway Safety Act. Let me explain in a couple of seconds. Under Bill C-11 the CTA is being amended to repeal the provisions that grant police powers to railway companies and to incorporate comparable provisions in the Railway Safety Act. In addition, amendments to the Railway Safety Act will require that the railways establish an independent review mechanism for responding to public complaints against railway police. The review mechanism will be filed with the minister for approval.

Before I close, Mr. Chairman, I would like to flag one other provision. Bill C-11 introduces a new provision that authorizes the transport minister to enter into an agreement with a provincial authority under which the provincial authority would regulate a railway in the same manner as the minister. This is aimed at facilitating the introduction of expanded O-Train service in Ottawa, which falls under federal jurisdiction and is therefore subject to federal safety regulations.

The city plans to convert the existing rail corridor into a dedicated two-track electrified streetcar-type light-rail train (LRT). However, since LRT typically operates with different control systems and different braking characteristics, LRT equipment and operations do not need the majority of the rules, regulations and standards currently set out pursuant to the Railway Safety Act.

A tentative agreement has been reached with the city and the province under which the city would assume all applicable responsibilities for the Ottawa LRT system.

Mr. Chairman, we believe these amendments will greatly improve the CTA and benefit air travellers and communities across the country, urban transit providers, grain producers, and the environment.

Thank you very much, Mr. Chairman and members of the committee.

[The Chair, Conservative, Merv Tweed]

Thank you, Mr. Minister.

The minister has a somewhat limited time schedule. What I am going to try to do is allow each party five minutes with response. If there is any time for the minister afterwards, we'll ask him to stay as long as he can.

Mr. McGuinty is next.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much, Mr. Chairman. Congratulations on your re-election.

Mr. Minister, welcome to the committee. It's good to see you again. Thank you for coming to speak on Bill C-11.

Let me thank you as well for your generous comments in the House last week, where you admitted that most of the heavy lifting on Bill C-11 and in fact, for that matter, most of your government's transportation agenda was done by the previous government, by the department, and by transportation stakeholders who have been working on this for over a decade. I appreciate your largesse in that regard.

I'd like to ask you two specific questions, and I want to know how the bill deals with both questions, if I could.

The first has to do with the safety of our airports. You've heard about the incident in Montreal earlier this month; a journalist was able to penetrate six or seven times on the periphery of Trudeau airport. Without identification, he was able to gain access without being stopped. With all due respect, Minister, your comments on this matter have been vague. They have been inconclusive. Canadians are very worried about this. It was compounded today by media reports, Mr. Chairman, about members of criminal organizations, including the Hell's Angels, intimidating security officers at our airports in order to operate--we take from the article--their flourishing drug trade.

How is this bill specifically going to deal with this question, in the first instance, of airport security?

[Lawrence Cannon, Conservative, Pontiac, QC]

Well, clearly, Mr. McGuinty, this bill doesn't address that specific issue. On the alleged infiltration of a reporter into the Trudeau airport in Montreal, of course I acted promptly and swiftly and instructed officials to inquire into the proceedings and to come back to me with information as to whether the system is functioning and did function correctly.

You know well, as I do, that in the case the report comes back, we do have a certain number of measures that can be applied, going from fines that can be levied to very stiff sanctions to the airport authorities as well as to those who play a major role in the security. That is an ongoing process.

As for the question dealing with personnel going into these areas, since 1986--this is not yesterday--the Government of Canada has been doing clearance work for all those people who wish to work in restricted areas of the airports. They are in a position to access information that will determine whether the individual does pose a risk to airport security or aviation security.

In the month of December, we will be putting in place a secure access system that will oblige everybody to have cards with them and to use these cards to access these areas. Those are ongoing.

As you mentioned in your radio interview two weeks ago, a lot has been done over the last three years. We are continuing in that direction. You know as well as I do that the Government of Canada, up to our election, had put in roughly $2.5 billion, if not $2.6 billion, into the security following 9/11--particularly in the aviation sector, which got a large chunk--and we have increased that amount of money by supporting CATSA with $133 million this year in our budget.

We have supported, also, an air cargo design program that I believe Senator Kenny had mentioned during some of his remarks previously, wherein he indicated that the former government should be involved. We've done that, so I feel quite proud of our mandate, and I feel quite proud of what we've done up to now in terms of making sure airport security and safety are uppermost and that Canadians can use that vehicle to go from one destination to another.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Minister. I have a second question I want to put to you. Time is ticking, and I am cognizant of it. It has to do with rail safety.

This committee has committed to examining rail safety when it has the time to get to it. Lately my colleague from North Vancouver, the vice-chair of this committee, Don Bell, has been responding to rail safety issues, particularly in B.C.

We've seen a lot of accidents on CN track. CN derailments jumped 35% last year. Your predecessor, Minister Lapierre, ordered an audit of CN safety management systems. He pledged to make the audit public once it had been completed. We had an election. The audit's been completed. You got it in June; your office received the audit in June, four months ago.

In July, unbeknownst to any member of Parliament, to my knowledge, you secretly issued a ministerial order to CN, under section 32 of the Railway Safety Act--the first time a minister has ever exercised such an extraordinary action and power--after CN reportedly failed to address the safety deficiencies found in the audit. I understand CN is now appealing the order, but there is no reason, to my mind, that you cannot release the audit to us and confirm the details of your subsequent section 32 order against CN, as the previous minister promised.

Can you assure this committee now, today, that you will in fact release both those documents?

[Lawrence Cannon, Conservative, Pontiac, QC]

I appreciate your comments and I'm very happy to answer that question, Mr. McGuinty. I know that Mr. Julian has been very preoccupied by this; I've been very preoccupied by this.

Historically, you're absolutely right; my predecessor, Mr. Lapierre, did go forward, and an audit was undertaken. That audit was completed in June. Subsequent to that, before issuing section 32, I did ask for another audit to make sure the findings were substantially correct. We did receive a great deal of push-back from CN in terms of their compliance with it. That's the reason I issued section 32.

As you know, it's gone in front of the appeals board, and I am limited in being able to comment on that specific issue, but when this whole issue is brought forward at the appeals process, I do intend to make this audit public. I believe there is no reason in the world that we would not want to make it public. I would add, though, that through an ATIP--through the access to information officer--that has been requested. Third party acknowledgement, therefore--in this case, CN--has to be obtained, and CN has refused us the chance, or at least the opportunity, of making this public. Until such time as the official Information Commissioner statutes on this issue, I am bound legally to respect the terms and conditions governing that institution.

This issue is extremely serious. I met last week with Mr. Hunter Harrison, who is the chair, president, and chief operating officer of CN. As a matter of fact, we discussed this issue. I've indicated to him in no uncertain terms that we will go forward with the appeal process and we will not accept systematic obstruction to the rail safety issue. I would further say to you today, and be on record, that I am looking at different options now as to how we can go forward, including a process that would involve this committee.

[The Chair, Conservative, Merv Tweed]

Mr. Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you, Mr. Chairman.

Thank you for appearing before the committee, Minister. I am going to make a comment and ask two questions.

My comment deals with what was said by my Liberal colleague, Mr. McGuinty. You are quite right: Bill C-11 does not deal with security problems, including problems at the Pierre-Elliott-Trudeau airport, and neither did Bill C-44, which was introduced by the Liberal government.

This morning, there were again problems on the tarmac with smuggling. There has been infiltration by organized crime and concerns about employees. I think that this is worrisome, Minister, but I am sure that you will address these problems in upcoming legislation. But that is not the thrust of the bill that we are considering here today.

I will now go to my two questions.

Transit authorities are asking some questions. I know that you understand the situation because of your experience at the municipal level and in the transportation industry. Will this legislation make it possible to somehow force the hand of companies that have abandoned rail lines, so that they can be used for public transit? Could that be done through mediation? It is not because they have abandoned rail lines that companies will necessarily decide to negotiate in good faith. Have you thought about that, or is this something that the committee might look at improving?

[Lawrence Cannon, Conservative, Pontiac, QC]

To my knowledge, Mr. Laframboise, the idea would be to enable a public transit authority, like the AMT in Montreal, to negotiate rates for the use of rail lines belonging to CN, CP or some other company, in order to plan its operations better.

As for abandoned rail lines, I will ask the experts to answer your question, more specifically about intentions for legislation.

[Helena Borges, Director General, Surface Transportation Policy, Department of Transport]

The intention is to give the agency adjudication powers so that freight rail companies and transit authorities can negotiate agreements that meet the needs of those responsible for passenger service.

For urban transit authorities, the process will include giving up branch lines, sidings and passenger stations. That will be included in the process. Transit authorities will be able to submit a bid to the company to purchase it at net value.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

And that would apply, even if the company was unwilling to be involved. There would be a negotiation process. That is basically what I understand.

My second question concerns noise regulations. As you no doubt know, it is often people in major urban areas that are affected by this problem. I understand the aim of the bill, which is to give the agency powers that it does not currently have. The court of appeal turned the agency down on that in 2000.

I also come from the municipal level, and I know that there are standards, a decibel level and so on, but that is not the approach taken in this bill. Instead, it takes into account industry needs and where industry is located. I would like to know whether some improvements could be made.

Regarding decibel levels, will it be possible to impose restrictions where the noise level is really too high, or are you going to stick to the industry standards? In that scenario, the agency would be the one to adjudicate and would try to find the solution that best met the needs of everyone concerned.

You know what will happen. I have concerns about that. I am pleased to see the agency being granted this power, but I do not think that it goes far enough. Do you think that we can improve the bill in this area?

[Lawrence Cannon, Conservative, Pontiac, QC]

Departmental officials have already consulted the Federation of Canadian Municipalities to find out what concerns they really have about this in urban areas. There is noise, but there is also the problem of vibrations. I think that there are usually vibrations when there is noise. But the reverse is not always true.

For that reason, department staff will use an adjudication process — since there might very well be rail friction or other factors — to identify the nature of the problem and the tools needed to fix it. In some cases, the decibel level might be used, but other techniques may come into play as well.

I think that the legislator's intention is to ensure that in urban areas, when you, I or any other MP receive complaints about noise, we will have the appropriate tools at our disposal to correct and resolve the situation. I would not rule out the idea at this point that the agency might be given the means to fix the problem or make the necessary recommendations to have it fixed.

In my opinion, it would be shortsighted to attempt indirectly to refine things so much that they end up having no application at all. I think that we need to have the courage to implement these tools to fix the problems. I hope that creativity and the appropriate tools can be used to meet those objectives.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

So basically, you will not allow any amendments about vibrations. You think that if we deal with the noise problem, that will eliminate the vibration problem?

[Lawrence Cannon, Conservative, Pontiac, QC]

Yes, that is essentially my view.

[The Chair, Conservative, Merv Tweed]

Mr. Julian is next.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair. Congratulations on assuming your new role.

Thank you, Mr. Minister, for coming today.

I'll start by doing something I haven't done with you before, and that's compliment you. I'd like to thank you for the decision you made last week on flight attendants. Our concern was that you were right on the edge of a precipice, a cliff, and my understanding is

that even if it did take quite a while for Mr. Fast to ask his question in the House, all the questions about changes and reduced safety on planes are now off the table permanently.

[Lawrence Cannon, Conservative, Pontiac, QC]

A future government or a future minister may want to revisit this issue, but as Minister of Transport, Infrastructure and Communities, I do not intend to change the regulations.

I met with the flight attendants' union in my office. That was the first such meeting, as far as I know. I do not believe that my predecessor did that. The representatives expressed their concerns to me and provided me with data. I then asked the departmental officials to review the information.

I have to admit that I was uncomfortable because the answers I received were not satisfactory. They did not tell me what I needed to hear in order to go ahead with that initiative. I would like to see more consultation and then in-depth study. The issue is not on my political agenda for now or the near future.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that, because it was a matter of some concern to this committee. I appreciate that decision.

I'd like to come back to the issue Mr. McGuinty raised, which was the question of the CN accidents, the safety audit that was done, and the actual decision or order for CN to comply with certain components. It remains outside of the public purview. I would like to say that safety is much better when the public is not kept in the dark.

I understand your reasons for not making that issue open for the moment. However, I would urge you, as I have on previous appearances you've made before this committee, to hold a public inquiry into current railway safety. It is a matter of great concern, particularly in British Columbia. We saw more accidents this summer and tragic loss of life. I believe very strongly that a public inquiry in which people can come forward and raise these concerns, particularly with CN but also with other rail companies, is the only way to really clear the air.

You raised the issue of looking at possible options. Is a public inquiry one of the options you're looking at?

[Lawrence Cannon, Conservative, Pontiac, QC]

That's correct, sir. That is part of the options we're looking at. I've asked my officials to look at that and give me a document of pros and cons.

I will tell you, Mr. Julian, at the outset that I'm very preoccupied by what has occurred. The audit will be public. We will find a way when all of these legal challenges are complete. That will happen.

Both the aviation industry and the marine industry have a number of regulations. I can't say as much for the rail industry. We don't necessarily have the same tools spread across the other sectors equally. That's why I've asked my officials to look at that review process. I will be getting back to you and the members of this committee and the House shortly on that.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.

I have two questions specifically on Bill C-11. You mentioned in your opening remarks that the pilot project around air traffic complaints raised against the airlines has proven successful. How did you determine that success? What level of complaints are we talking about? How were they dealt with? How were the actual passengers themselves who raised the concerns questioned in terms of whether or not they felt the process had been a valid one? What information or documentation is available to us?

This is very relevant given the changes in Bill C-11, and some concerns should have been raised as to whether or not this is the best approach to take in terms of air traffic complaints.

[Lawrence Cannon, Conservative, Pontiac, QC]

Thank you for the questions. I will ask our experts here to respond.

[Brigita Gravitis-Beck, Director General, Air Policy, Department of Transport]

What I would say is that we look very much at the level of activity in terms of complaints received. We also look at the report made annually by the agency--the most recent report is for 2005 activity--that reported on satisfaction levels in terms of how complaints were handled. In fact, the satisfaction ratings they noted were very high. They were in the order of 90%-plus for level one. There are different categories of complaints. Both categories rated very high in terms of customer satisfaction.

We also looked at the number of complaints that moved from the informal process into the more formal semi-judicial process. That level has remained very small, which gives us a great deal of assurance that, of the thousands of complaints that are looked at annually, only a very small number--for 2005 it was some seven complaints--were not resolved with the informal process and moved to a more semi-judicial process.

Those are two measures. One is that we are noticing that the level of complaint activity has remained relatively constant, that it is very consistent with the market shares of the carriers, which again is what we would expect in a stable market where there would be certain concerns raised with all of the participants for various reasons; the satisfaction rates, which are reported by the agency itself most recently through its annual report; and then how many of those complaints are actually resolved versus how many moved to a more formal process--all of those are considerations we took into account to assess success.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Can that documentation be made available to the committee--not the individual responses, of course, but the compilation?