Transport Committee on May 2nd, 2016

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

Good afternoon, everyone. I call to order the Standing Committee on Transport, Infrastructure, and Communities, according—

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Point of order, Madam Chair.

With respect to the current study, I simply want to draw to the committee members' attention that the NDP put forward a motion to extend the committee's consideration of the bill and to allow it to hold meetings outside Ottawa.

[The Chair, Liberal, Judy Sgro]

Mr. Boulerice, I'm sorry, but we don't have you signed in yet and so you're not part of the quorum. You'll have to wait until you're signed in. We will get the meeting started, and when your whip comes in and files the appropriate papers, then we'll continue on.

We'll start again. Welcome, everybody, to this meeting of the Standing Committee on Transport, Infrastructure, and Communities of the 42nd Parliament, first session. Pursuant to the order of reference of Wednesday, April 20, 2016, we are studying Bill C-10, an act to amend the Air Canada Public Participation Act and to provide for certain other measures.

We're joined by the parliamentary secretary, Ms. Kate Young, and of course, by our Honourable Minister of Transport, Marc Garneau, and his two staff, Catherine Higgens, associate assistant deputy minister, policy; and Daniel Blasioli, senior counsel.

Welcome. We appreciate very much having you here today, and I will turn the floor over to you, Minister Garneau.

[Marc Garneau, Liberal, Minister of Transport]

Thank you very much, Madam Chair, and thank you to the members of the committee for organizing today and for allowing me to provide testimony in relation to Bill C-10.

I am very pleased to appear before you today, as part of your study on Bill C-10, An Act to amend the Air Canada Public Participation Act.

Bill C-10 will grant Air Canada the flexibility to be competitive in the face of a constantly evolving air transport sector. At the same time, this bill continues to support Canada's aerospace sector by reinforcing the government's expectation that Air Canada will undertake aircraft maintenance in certain parts of the country.

The bill seeks to amend paragraph 6(1)(d) of the act, which currently imposes on Air Canada the obligation to include, in its articles of continuance, provisions to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga. The proposed amendments would replace the reference to the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga with a reference to the provinces of Manitoba, Quebec, and Ontario

The bill also seeks to amend the reference to the operational and overhaul centres, and replace it with a reference to aircraft maintenance activities, which would include maintenance relating to airframes, engines, components, equipment, or parts.

The bill also specifies that Air Canada is not under any obligation when it comes to the type or volume of the aircraft maintenance activities it undertakes, either directly or indirectly, in Manitoba, Ontario, or Quebec. Nor is it under any obligation as to the level of employment it must maintain.

This change ensures that Air Canada's aircraft maintenance work will continue to be performed in these provinces, while giving the airline the flexibility to keep up with the changing aviation sector and to organize its activities accordingly.

This is important because it allows the company to compete in an aggressive global marketplace. If Air Canada were not able to derive the best possible value for money, the result would be higher costs for the company, and ultimately, for the travelling public and shippers.

On February 17, 2016, Air Canada announced that, following the acquisition of up to 75 Bombardier C Series aircraft, it will partner with the Government of Quebec to establish a centre of excellence in aircraft maintenance. According to the Quebec government, the centre of excellence could generate as many as 1,000 jobs for Quebec's aerospace sector, in addition to the resulting manufacturing jobs.

In light of this development, the Government of Quebec and Air Canada announced an agreement to discontinue the litigation over Air Canada's compliance with the Air Canada Public Participation Act, once the purchase of the Bombardier aircraft was finalized.

On March 14, 2016, Air Canada announced an agreement with Manitoba to create a western Canada centre of excellence in that province. This centre will result in the creation of 150 new jobs in the aircraft maintenance sector as of 2017, with the potential for additional jobs in the future.

Given all these positive developments, we believe this is the perfect time to modernize the Air Canada Public Participation Act to give the airline the flexibility to better respond to changing market conditions.

For Air Canada to be competitive into the future, it must be able to adapt its supply chain to manage its costs and remain competitive, as all of its competitors are doing. Bill C-10 will allow the carrier to do this while ensuring that it remains committed to undertaking aircraft maintenance activities in three communities. This is consistent with Canada's policy to maintain a robust and competitive air transport sector well into the future while also supporting the employment of highly skilled workers in the aerospace sector.

Members of the committee, I now welcome your questions.

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Minister Garneau. We appreciate that very much.

We now go over to Ms. Block for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair.

Thank you once again, Minister, for joining us and speaking to this piece of legislation.

I do have a number of questions, so I hope I'll be able to get through them in the six minutes I have.

Minister, when did you first get the idea to introduce this legislation? What precipitated this legislation needing to be introduced at this time? Would you be willing to submit any briefing notes from your department that would have perhaps recommended this move?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

The idea of modernizing this law had been raised, I think, probably prior to my arrival there. Given the fact that the Quebec government, with the Government of Manitoba as an intervenor, was in a process with Air Canada, it was felt that we would wait until there was some kind of conclusion to that. Then it was felt—and I supported this—that it would be an ideal opportunity for us to modernize the act, to clarify it, in the hopes of avoiding litigation in the future. As you know, the Quebec government and the Manitoba government had expressed their intention to do this as a result of Air Canada working with both those governments.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Would you have introduced this bill if Air Canada had not made a firm order for the C Series aircraft?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

We certainly would have followed that process, which was under way, and which, as you know, would have potentially reached the Supreme Court, and we would have waited and certainly not done anything at that point.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Given that it's one of the first pieces of legislation that's been debated in this Parliament, why wasn't this need to modernize the legislation included in the election platform?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I can't speak to that, but there are a lot of things that are in the election platform, and there are things that you will no doubt see us do in the course of the next four years that may not have been in the election platform. It's the nature of government that you can't put absolutely everything in that you're going to do during the next four years.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

That's fine. Thank you.

In response to my question during the debate, I questioned the Emerson report and the ways that Air Canada could be supported that wouldn't affect jobs in Canada during the bill's second reading. The parliamentary secretary to the Minister of International Trade said, “We did not accept every suggestion. We picked the ones we thought were the best”.

I'm wondering what other options were considered before you decided this was the best one. Do the parliamentary secretary's comments mean that this exercise of consulting over and over on the Emerson report is a sham and that you've actually made up your mind on which recommendations you're going to support and which ones you're not?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I spoke at the Economic Club of Canada last Wednesday and outlined the plan ahead of us with respect to the Canada Transportation Act review undertaken by Mr. Emerson. There are, as you know, some 60 recommendations in there. I've outlined that on five different themes—safety, trade corridors, green transportation, our coasts in the north, and innovation—we will be undertaking a number of critical stakeholder consultations this spring, this summer, and into the early fall. That's a separate process.

With respect to this bill and modernizing it, as I've said repeatedly, the fact that Quebec and Manitoba, as a result of agreements that they negotiated with Air Canada, intend to let the litigation go provided us with an opportunity to do two things. The first is to clarify the act to prevent the possibility or minimize the possibility of litigation in the future. The second, as I said in my opening remarks, is that we also want to allow Air Canada, which is an international carrier—it's competitive, it has 25,000 employees—to compete in a very competitive marketplace not only for domestic flights but for international flights. Its competitors are not given specific restrictions with respect to things like where they must do their maintenance. We wanted to level the playing field a little more for this company in the process while also recognizing the need to continue maintenance in the three provinces that we've mentioned, but not with the same constraints.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I'll follow up on my first question.

Would you be willing to provide this committee with any recommendations that would have come from the department in terms of modernizing Bill C-10, or modernizing the act?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I think the recommendations that came from the department have made their way into the act as it is proposed and which you are studying at this committee at the moment.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Block.

Six minutes over to Mr. Hardie.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Madam Chair.

I'll be splitting my time with some of my colleagues here. I actually have just one question.

The arrangement with Air Canada was established for a reason, and it brought forward aircraft that had previously been crown assets, plus other things. Are there any ongoing benefits conferred in that original agreement with Air Canada that give Air Canada now a competitive advantage over the other airlines in Canada?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Historically, the act that we're amending at the moment is an act that was instituted back in 1989 under the Conservative government of Prime Minister Mulroney. The decision was made to privatize Air Canada, which previously was with the government. Essentially, there were four broad requirements, strings that remained attached to Air Canada. One is the requirement with respect to maintenance, which we're discussing now. But it also had three other obligations imposed upon it. One was that its headquarters had to be in the urban community of Montreal. Another one was that it had to implement the Official Languages Act on its flights. The third one, which actually applies to all Canadian airlines, was a limit of 25% on foreign ownership. Those three that I've just named, the last three, headquarters, official languages, and the 25% limit, remain in place. They are not touched by this act. They are not, apart from the 25% limit, imposed on Air Canada's competitors.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Good afternoon, Minister.

We were all disappointed when Aveos declared bankruptcy in 2012. Many workers lost their jobs.

Could you explain to us how Bill C-10 will help create new jobs, especially in Quebec and Manitoba?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Thank you for your question.

I, too, have a lot of sympathy for those Aveos workers who lost their jobs in 2012. It's always unfortunate when any worker, in any field, loses their job.

The job outlook today, however, is promising. As you know, Air Canada has committed to purchasing between 45 and 75 aircraft and to making sure the maintenance of those aircraft is performed in Quebec. As soon as those aircraft start flying, they will be maintained in Quebec for a period of at least 20 years. That's certainly positive news as far as job creation is concerned.

What's more, as I mentioned, the Manitoba government and Air Canada reached an agreement that will result in at least 150 new jobs in that province, with the potential for more in the future. I realize that doesn't entirely offset the jobs lost in 2012, but I think it represents a solid commitment on Air Canada's part to create jobs in Quebec and Manitoba.

I would just like to add that the Province of Ontario was not involved in the litigation between the airline and the other two provinces because of the tremendous number of people Air Canada already employed in Ontario. The airline has made a serious commitment to create jobs in Quebec and Manitoba.

[The Chair, Liberal, Judy Sgro]

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair, and thank you, Minister, for being here this afternoon.

Minister, airlines such as Air Canada, Delta, WestJet, United, etc., have smaller aircraft that feed their hub airports, and then they have the larger aircraft that move people around the country as well as the globe.

Over the past 10 years, has there been an increase in the number of smaller aircraft operating in Canada with the growth of Porter, the creation of WestJet Encore, and Air Canada Express?

Would that growth in the number of smaller aircraft mean more maintenance jobs serving those airlines as well as those aircraft?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

I'm afraid I don't have specific numbers for you in terms of small aircraft and what they're defined as—how many passengers, what size to what size—but definitely there are more passengers today, and more flights today than there were three decades ago. So yes, potentially there are more employment opportunities for maintenance with respect to the growing number of aircraft.

Some of these maintenance jobs are done in different parts of the country, including places like Vancouver and Kelowna and other places that have some capability with respect to maintenance, and some of it is done abroad. Overall the picture is good in terms of the increase in the number of people and the number of aircraft flying today in Canada and, as we predict, for the coming decades.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Boulerice, you have six minutes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Madam Chair.

I'd just like to take this opportunity to say how eager I am to discuss the NDP motion seeking to extend the committee's consideration of Bill C-10. The motion also seeks to allow the committee to travel and meet with people who were affected by the decision in communities across the country.

Minister, thank you for being here today.

Unfortunately, Bill C-10 will only fuel the anger and cynicism of a large segment of the population. It wasn't that long ago that the current prime minister was protesting on Parliament Hill alongside Aveos workers and chanting in solidarity with them. Today, we see that he has changed his tune.

What's more, at the time, a Liberal MP criticized the federal government at a press conference for failing to live up to its obligation to enforce the Air Canada Public Participation Act, which stated very clearly that the airline had to keep maintenance operations in Montreal, Mississauga, and Winnipeg.

Mr. Garneau, you were the one who made those comments in 2012. The workers were right. The Superior Court of Québec sided with them, the Appeal Court of Québec sided with them, and the Supreme Court would have sided with them. I'd like to know what you have to say to the 2,600 families who were counting on you to stand up for their jobs.