Transport Committee on May 5th, 2009

[The Chair, Conservative, Merv Tweed]

Order, please.

Thank you, and good afternoon, everyone. Welcome to the Standing Committee on Transport, Infrastructure and Communities. This is meeting number 16.

Orders of the day are that pursuant to the order of reference of Monday, March 30, 2009, we will consider Bill C-7, An Act to amend the Maritime Liability Act and the Federal Courts Act and to make consequential amendments to other Acts.

Joining us today from the Tourism Industry Association of Canada is Mr. Christopher Jones. He's the vice-president of public affairs. We've already had a discussion. He's going to make his presentation, and then we'll go to the committee for questioning.

Please go ahead, Mr. Jones.

[Christopher Jones, Vice-President, Public Affairs, Tourism Industry Association of Canada]

Thank you, Mr. Chair. I'm pleased to be here today on behalf of the Tourism Industry Association of Canada to provide our views on the amendments in Bill C-7 to the Marine Liability Act.

Let me begin by saying a little bit about the marine adventure tourism industry.

It's a little difficult to determine the number of water-based adventure tourism operators at the present time. As seasonal operators, they lack a national association, and a reliable and aggregated source of statistical data is unavailable. They have had different associations come and go in the provinces, but at the moment they lack a national outfit. However, the industry is growing and is particularly robust in British Columbia, Ontario, Quebec, and parts of the Northwest Territories.

As a niche tourism sector, marine-based adventure tourism is on the rise in North America, so let me say a few words about the Marine Liability Act of 2001 and its impact on marine tourism operators.

First, it subjected all marine operators to the same insurance regime. It set limits on liability at $350,000 per person, it promised the introduction of compulsory insurance requirements, and it subjected tourism operators to a presumption of fault in the case of the death or injury of a passenger. The onus was on the operator to prove otherwise. It also invalidated waivers of liability.

In terms of the reaction to the MLA of 2001, many marine adventure tourism companies and their insurance companies had been operating under the assumption that the MLA did not apply to them. The Marine Liability Act did not clearly define which marine tourism activities were subject to the act. As the legislation was conceived, the MLA applied wholly to vessels that are commercial in nature--largely ferries and cruise ships--and not at all to vessels used for pleasure purposes.

The confusion arose because marine adventure tourism companies were engaged in a commercial business, but the marine tourism sector offers a wide range of activities, all of which are undertaken for pleasure purposes. I might add that there are also instances in which the participant or passenger is often part of the propulsion of the vessel, or in some cases involved in the steering of the vessel or craft, which is an important distinction to make.

If the MLA's insurance regime were applied to marine adventure tourism, a number of consequences would result. The same liability regime would apply equally to marine adventure tourism operators and commercial passenger vessels such as ferries and cruise ships. Insurance would become unaffordable or unavailable to increased numbers of tourism operators.

To put the $350,000-per-person compulsory coverage into perspective, many rafting companies on the Ottawa River operate with 12-person rafts. At $350,000 per person, coverage would work out to $4.2 million just for one boat. Forcing operators to carry prescribed amounts of coverage adds to the regulatory burden on SMEs. The insurance regime envisaged in the MLA was not designed to apply to the participants in an adventure tourism excursion.

With respect to waivers and marine adventure tourism, the purpose of the waiver is to have the participants acknowledge and assume the risks that are inherent in this activity. Without waivers, adventure tourism operators cannot get insurance. Insurance companies are not willing to take on that kind of risk. Many operators would fold altogether. Passengers are still protected under tort law by being able to sue for negligence, and a court has the ability to set aside a waiver when the circumstance dictate.

I want to state on the record that TIAC supports Bill C-7 inasmuch as it seeks to amend the Marine Liability Act to specifically exclude marine adventure tourism from part 4 of the act, namely the sections dealing with the insurance regime and the restrictions on the use of waivers. TIAC supports this bill because, first, operators in the marine adventure tourism industry have experienced difficulties securing affordable liability insurance; second, because the bill reinstates and condones the practice of informed consent; and third, because safety standards for marine adventure tourism already exist and are distinct from those related to other commercial passenger vessels subject to the Marine Liability Act.

I want to just briefly go through some of the safety standards for marine adventure tourism that exist today.

The Canada Shipping Act currently regulates the marine adventure tourism industry through something known as the special-purpose vessels regulations. These set out mandatory regulations for the safe operation of commercial river rafting. They incorporate industry best practices and address such matters as vessel and safety equipment requirements, which cover helmets, life jackets, and the circumstances in which they must be worn. Second, they deal with operational requirements: guides and outfitters must possess first aid and CPR, they must give a safety briefing to participants, and guides must participate in a minimum number of runs before they are qualified to lead an excursion.

As well, the industry is now regulated under a new set of regulations called the small vessel regulations, also under the Shipping Act, which attempt to regulate the seaworthiness of a craft or vessel. These new inspection and registration rules are coming into force in 2009. In fact, they're in the Canada Gazette at the moment. These essentially determine what conditions of seaworthiness must apply. It is a self-regulation system. Obviously Transport Canada is not going to inspect every single pleasure vessel out there, but they have an element of self-inspection under a set of rules.

In addition, the insurance industry itself also imposes requirements on the operators. One eastern Canadian broker who is heavily involved in providing coverage to the operators on the Ottawa River tells me they have a risk management system and an on-site inspection system every second year as part of the requirements to obtain insurance.

The industry in Canada has committed to not only complying with the regulations but to exceeding many of the standards and requirements. Many require their excursion leaders to have passed courses in river rescue or to have had previous significant experience in a whitewater environment. In practice, a safety first philosophy governs the operations of the reputable rafting companies in Canada, with the result that the incidence of injuries in water-based adventure tourism operations is far lower than it is for alpine skiing.

That concludes my brief presentation. I'd be happy to attempt to take some questions on this subject.

[The Chair, Conservative, Merv Tweed]

Thank you very much, Mr. Jones.

Mr. Volpe.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you, Mr. Jones, for coming to share with us some of your views.

You've probably already heard about some of the outcomes or read about them in Hansard. Other members may want to ask other questions, but I welcome your effort to raise the issue about insurance and insurability of some of the adventure craft operators.

What this act really tries to do, unless I'm mistaken, is remove the current status quo. The situation for them is one where, as one adventure tour operator pointed out to us, they have paid in excess of $1 million in premiums and the companies have paid out about $70,000 in claims. Therefore, the operators like them don't need to be required to have insurance.

I wonder whether, in your experience, that operator is the exception that proves the rule, or whether that operator is the norm in the business.

[Christopher Jones]

Let me confess off the top that this is an issue I've come to grapple with over the last week or 10 days. My understanding, from speaking with people in this sector, is that the majority of reputable companies have insurance and are embodying best practices.

It's a seasonal business, and some of the smaller operators in different parts of the country--it was mentioned to me that Quebec is one--occasionally do not have insurance in place. But for most of the ones I spoke to, there was a very clear sense that in order to have their participants come back and for them to maintain and stay in business, they needed to have insurance.

I'm sorry, I couldn't hear all of the beginning of your question.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

If they're finding it difficult to get insurance and they're still operating, I guess they're engaging in.... I don't mean to attribute anything negative to them, but the old solid politic says, if you don't like the law, change the law. So they're operating outside the law, and they want to change the law so that they don't operate outside the law. Is that the norm, in your experience, or is that the exception?

[Christopher Jones]

My understanding is that the operators in this sector believe their vessels must meet certain seaworthiness requirements, and they have a vested interest in maintaining that. But they're also operators who are engaged in an inherently risky activity at one level. There is a series of classifications of the rivers that they run. But the participants in this are aware of that. They take the steps that they think are reasonable.

If we were to impose on them extremely onerous and high insurance liability requirements, essentially they wouldn't be in business. If they had followed the changes that were introduced in 2001 to the letter of the law, it would have put most of them out of business. So in practice, I think, many of them continued with the policy of having a participant sign the waiver.

This is the problem with these smaller types of operations whose revenues aren't that huge but that still want to cater to a market of people who want to have these experiences.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Jones, I really do appreciate your work on behalf of your membership and your association.

I'm still wrestling with the perplexity that position poses for me. If some people find it difficult to obey the law, they operate outside the law and then come to Parliament to change the law so that they are brought within the law. But the safety of the individuals who participate, which initially was the focus of the law, is now being put over to one side so that the business interests of those who have been operating outside the law can be satisfied.

[Christopher Jones]

I think you're overlooking the point I tried to make. They are subject to a number of regulations and laws under the Canada Shipping Act. Their insurance companies also impose on them a number of fairly strict safety protocols in order for their insurance to be renewed. They have a vested interest in not having accidents.

One of the operators may have mentioned to you last week during his appearance that he takes 30,000 people a year on his river operation, and on average he expects to have maybe one broken leg every two years. He also owns a ski operation, and that ski operation typically has a broken bone of some kind on almost a weekly basis.

The point we're trying to make is that there is some intrinsic risk to riding these rapids, and so on. But when you look at the number of claims and the incidence of injury, they're lower than in alpine skiing. We have to balance this between the viability of this business and the fact that it's not making the kinds of claims that would suggest it's an inordinately risky activity.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I guess I need to have a sense of satisfaction on behalf of those who are looking to us for at least some critical inquiry into what the legislation means.

The individual to whom you made reference didn't give us an indication of the comparative premiums in insurance he had to pay for the two activities. Secondly, he didn't give us an indication of the payouts of the insurance companies in the two activities. But more importantly, from my perspective—and it's an uneducated perspective, but I hazard it's probably valid anyway—shooting down rapids or going on some very risky adventure, where it is not simply a question of physical injury but death, compared to what happens when you go down a ski slope is probably a little bit of a stretch. That's where one would say we're comparing apples and oranges in terms of the risk associated.

Mind you, there are people who have died while skiing because they've hit trees, they've died while skiing because they weren't wearing helmets--we've seen occasions of that--or they've died while skiing because they decided to go off a cliff instead of going where they should have been going.

I take all of these things into consideration. But nobody has taken me through the dollars-and-cents approach of calculating risk and assuming responsibility. How much of it is laid on the participant and how much on the operator?

[Christopher Jones]

When I was reading the material in this section, I noticed about 250 deaths a year in small vessels were attributed to pleasure activities or pursuits. I would imagine that the majority of those were private owners and operators of vessels, and not people running licensed river rafting, canoeing, and kayaking operations.

Yes, it is a risky activity, and as you quite correctly point out, the risk of drowning or of sustaining a head injury exists, but the insurance people I spoke with this morning said they have far fewer claims of this nature. Given that there's an informed consent verifying that people are aware of the risk and that the guides and operators are trained, are running routes that are reasonably well known to them, and are trying to avoid demonstrably unsafe conditions, that would suggest to me that this is a balance of risk.

People want to do this kind of thing in society. We can legislate them out of existence by imposing extremely high insurance rates on them if you want to, but that will also mean that we will lose an activity that many people find pleasurable.

[The Chair, Conservative, Merv Tweed]

Mr. Laframboise.

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

I think we have a good understanding of the difference between adventure tourism and tourism. Among other things, in this committee, we've talked about whale-watching excursions, but also about the industry that enables people to get closer using rafts. Some people are prepared to pay for an experience that involves a little more challenge. We in the Bloc Québécois believe that by being too demanding of the adventure tourism industry, especially in terms of insurance—and we know how that works—we risk destroying it. That industry exists, but it often involves small businesses, sometimes medium-size businesses. You're quite familiar with that field, and I would like you to explain to us the difference between tourism and adventure tourism.

[Christopher Jones]

The classical definition is probably that tourism of the kind we normally associate the word with is the non-risk type and involves a passive appreciation of some activity, site, location, or destination, whereas adventure tourism involves the participant assuming some heightened level of risk. What's becoming quite common are these ecotourism sites that involve clambering about in the tops of treetops or engaging in water-based sport tourism, mountain biking, and these kinds of things.

Perhaps it's a generational thing. There is a desire now, and we see that these niche segments of tourism are in fact the growth parts of tourism in the world. People aren't just coming to see the sites and sounds blandly; they are coming to do sport and adventure tourism, culinary and wine tourism, health and wellness tourism, and medical tourism.

What I'm saying is that these are growing and emerging facts, and it's predominantly young people. If you look at the age profiles, lots of the people wanting to do these kinds of things are in their twenties and thirties and forties, and Canada is attempting to cater to that market.

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

Since 2001, because of the way things worked, the cost of insurance has been so high that some aren't even insured. That's somewhat what you were saying earlier. Is that correct?

[Christopher Jones]

Could you repeat your question?

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

You said earlier that some operators did not have insurance coverage, probably because the costs were too high as a result of the legislation in effect since 2001.

[Christopher Jones]

In the immediate wake of September 11, 2001, insurance rates skyrocketed for lots of operators and lots of businesses, not just adventure tourism, but it was particularly acutely felt in our sector. I heard numbers suggesting that for several years afterwards the numbers went up about 27% or 28%. They have since come down, but only a limited number of underwriters and people are willing to insure this particular line of business. I've heard that fewer than 10 in this country engage in underwriting this kind of activity.

They weigh the risks. They are doing it only because it is profitable. In other words, they have made an assumption on the basis of actuarial evidence, I suppose, that the payouts they are required to pay are less than the premiums they earn from the sector. In other words, the claims, as I tried to indicate earlier, are not that high yet.

I heard a number this morning from an insurance agent. They are typically asking one operator to pay about $3,500 a year in insurance, so it has come down significantly.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

Thank you, Mr. Jones, for being here and sharing with us more information on this.

It seems that with this bill there's a fair bit of support for this section, but to some degree we seem to be running into definitional issues. What is an adventure tourism pursuit? What is risk? What is greater risk? These are things that are seemingly difficult to define in this bill because of giving exemptions.

Would it make more sense to have defined categories of activities? If you were to characterize all the water-based activities that could possibly fit under “significantly higher risk” to the passengers, over and above normal carriage, what activities would fit?

[Christopher Jones]

Well, clearly, canoeing, kayaking, and whitewater rafting are activities that incorporate an element of risk, but to come back to the premise of your question, the original act, as I understood it, was to deal with commercial vessels. The passenger on a ferry or a cruise ship is not assuming that he's going to get wet during his trip. He's basically assuming a pretty standard set of conditions for his trip. The people in this sector--and this is why I don't think they should be covered under this amendment, under the original act--are actively entering the activity with the assumption that they are going to participate in it, that they will run some degree of risk, and that they may be involved in the propulsion of the vessel through paddling or steering the vessel.

We just think that this was the wrong place to cover their activities.

[Dennis Bevington, NDP, Western Arctic, NT]

So you wouldn't think that there would be any harvesting activities, let's say, that people might be involved with, such as fishing or hunting on the water, that would carry significant risks and would be considered adventure tourism or that would allow someone to apply for an exemption based on the fact that there is significant risk involved in the activity they're engaged in? Or perhaps there's someone offering diving or swimming expeditions. So would that fit under adventure tourism and using a boat with significant risk?

[Christopher Jones]

Well, I'm not a lawyer, but I think, Mr. Bevington, that you've made a good point. There may well be a need for some kind of definitional clarity on what adventure tourism consists of. There is a distinction to be made between somebody who is using his own private vessel or craft to go fishing.... I'm not sure if the discharging of a firearm is probably what they're doing from the boat.

These are operations that are led, guided, or outfitted by people whose job it is and whose training it is to take people on these kinds of activities. I think that's an important distinction.

[Dennis Bevington, NDP, Western Arctic, NT]

Well, I--

[The Chair, Conservative, Merv Tweed]

You're way over time. Thank you.

Mr. Jean.