Transport Committee on April 30th, 2019

[Stephen Hankinson]

The standards for security are set by government, so you're going to see variation by country based on the regulation applied nationally. It's government accountability to set that standard. You see variation in process between Heathrow and Hong Kong because they operate in different regimes. That's number one.

Number two, in terms of what Canada needs, we need to ensure that the experience of the traveller is consistent and that, whether you are a trusted traveller—a NEXUS card-carrying customer—it's an experience that is similar across airports, and that's one area of significant opportunity with the DSA.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We go on to Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you very much, Madam Chair.

May I first state, Madam Chair, that I do reject the comment that was made earlier, I believe by Mr. Bergamini, with respect to this being a bully pulpit legislation process?

The fact of the matter is that we've heard clearly from industry that there exist current inefficiencies within the current regime. With that and the new direction we're taking with business—and that's what this is, folks—we have future revenue opportunities that will help finance both capital and operations, including the financing of debt. I agree with Monsieur Laroche's assessment on that in response to Mr. Pugliese's assessment.

With respect to timing, this is a sale, yes, but there will be a process that will follow this, a process that will include and involve each and every one of you.

The second point I want to make is that the CTA review done by Mr. Emerson was very clear in its recommendations. With that, in our opinion, Minister Garneau is simply being decisive with respect to offering less subsidy from the taxpayer. There's a big difference here between a taxpayer, although it's sometimes the same people, obviously, but the overall taxpayer, versus the customer.

The second part of that is levels of service. The levels of service, obviously, are going to be enhanced and, with that, once again I want to repeat myself by saying with less taxpayer subsidy.

Mr. Laroche, when you look at the process to date and where we've come, do find that—the word “outcomes” was used loosely, but I want to tighten that up—the outcomes expected by the customer will be realized?

[Mark Laroche]

It's a good question.

I used “outcomes” in the regulation sense. What I want in order for this DSA to be successful, because we all want it to be successful, is moving from a regulation that's prescriptive to a regulation that is based on outcomes. For me, that's a process that has to evolve at the same time as we are moving to this DSA. We're not going to change screening regulations overnight, but we have to have that commitment with Transport Canada that they're going to move there, or else we're just going to have the same organization with a different charging fee.

I want this organization to be successful, so if Transport Canada acts as a regulator and says, “Do it securely. We're not going to tell you how in detail to do it; you know better than us, you are the experts”, that's the type of regulation that we have to move to.

Nav Canada operates under that regime, and they have been tremendously successful. They're providing air navigation service that is world class, and I think that is an essential condition. Let's get the legislation through, and then let's work on aviation security regulations so it becomes more outcome based.

[Vance Badawey, Liberal, Niagara Centre, ON]

In terms of the airports, and this is the crux of it with me personally, with respect to the customers—and I won't go to the taxpayer subsidization; I think I hit that one hard—are the service levels going to be enhanced, or will the travelling experience in fact be enhanced?

[Mark Laroche]

I'll give it a shot.

Yes, it will. That's not from day one, because there are going to be transition costs that we're going to have to figure out, and we have to have access to that data to determine what the charging principles are going to be and how much.

We're on the same page with airlines, in that the cost of travel in Canada is very expensive and we can't increase that cost. The efficiency gains have to be achieved by having an outcome-based regulation that will allow creativity, use of technology and increased efficiencies to proceed.

I think with a DSA that's independent, they will be achieving that in the short term.

[Ferio Pugliese]

I would argue that this doesn't take place unless you have adequate consultation, with a process that allows for that.

[Vance Badawey, Liberal, Niagara Centre, ON]

Which—

[Ferio Pugliese]

Which today, that's not in front of us.

[Vance Badawey, Liberal, Niagara Centre, ON]

Which we're going to embark on once the sale happens. The expectation is that we're going to embark on that consultation as well as—

[Ferio Pugliese]

I guess my question to you, Mr. Badawey, is that if Mr. Garneau is so decisive, why hasn't he given us a transfer date? Why hasn't he articulated a process for this that is similar to something as important as NavCan, which took two years?

[Vance Badawey, Liberal, Niagara Centre, ON]

I can't—

[Ferio Pugliese]

Why hasn't he? That's a good question for you.

[Vance Badawey, Liberal, Niagara Centre, ON]

I can't answer that question.

I'm sure he will when he's here to talk about it. However, that's the expectation, that there will be a sale, and we're going to see that happen.

[The Chair, Liberal, Judy Sgro]

Your five minutes is up.

[Ferio Pugliese]

I look forward to the answer.

[The Chair, Liberal, Judy Sgro]

Mr. Blaney.

[Jared Mikoch-Gerke]

I have a another comment with respect to taxpayer subsidization. Should the taxpayer not subsidize this entity?

Then, once the entity has the ability to set its own charges, the government should commit to the repealing of the Air Travellers Security Charge Act, which it hasn't done.

[Vance Badawey, Liberal, Niagara Centre, ON]

Well I can argue with the fact that what your CEO is getting paid, $11.5 million a year, taxpayers are currently subsidizing as well.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Badawey.

Mr. Blaney, you have the floor.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Madam Chair, thank you for having me at the committee.

I can't stop myself from making a comment about Mr. Badawey's statement, which was meant to be reassuring, with some nice promises about a bill. This is the same government that promised us that there would not be a deficit in 2019, but there is a $20-billion deficit and we are not going back to a balanced budget.

Mr. Badawey, I'd like to believe your pious wishes, but I'm not reassured by what I have heard today about the bill.

Mr. Bergamini, my question is for you. I'd like to know how to put this bill back on the rails, because there are concerns. You tell us that the current government imposed the carbon tax on you. Who is going to pay? The people who buy airplane tickets. There are still problems with regard to the comfort of passengers. Who is going to pay? People who take the plane.

Moreover, there is this new agency—and I'll go back to you, Mr. Pugliese. In fact, we are going to add a large debt to a system which is already lacking in funding and money. Who is going to pay? Once again, it will be the passengers, and the government, which has a $20-billion debt.

It would seem that we agree on the objective of having an efficient agency, but how can we make sure that it won't be a big indebted white elephant and that we won't in the end have worse service than we have now? That is my big concern given the way things are developing. As my colleague said, aren't we giving the government a blank cheque to obtain a lesser level of service?

Mr. Bergamini, how can we put this bill back on the rails? Are there amendments that would ensure that your absolutely legitimate concerns are heard? This will have an impact on taxpayers, and on people who buy airplane tickets, who may be taken for a ride and be the victims.

[Massimo Bergamini]

Thank you very much for your question.

First, it's important to say that we absolutely share the same objectives, 100%. To us, the departure point has to be negotiation. We are not convinced that going to the negotiating table with a ready-made bill will give us the leeway or leverage needed to arrive at the results we all want.

With regard to the amendments, you are procedural experts. We are not. We know there are limits to what the committee can do. We don't have a problem with framework legislation, but you must remove predetermined factors in the transition transfers.

In our opinion, this must come from negotiations. You have to remove the elements that put the federal government in an absolutely undue position of strength on the verge of negotiations, and then we will be able to sit at the table. However, if the government asks us to go to the negotiating table and it has all the cards, I think there is a problem.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

I think we are putting the cart before the horse. It is all the more unfortunate that we are before a government that is a few months away from an election, as you were saying.

One of the big issues—Mr. Pugliese, you were the one who presented it—is that CATSA's assets are going to be transferred. You said they were worth between $500 and $800 million.

This is a new private enterprise that is starting up with a large debt. It is somewhat behind technologically, and it does not meet international standards as we would like it to. We are telling its representatives to invest and be more effective, and mentioning in passing that we would like it to cost less.

How can we square that circle with regard to the bill before us, Mr. Pugliese?

[Ferio Pugliese]

That's a good question. My immediate reaction would be that the transfer of assets should be done at a nominal rate, so you're not burdening this new entity with debt, and they're not generating revenue to cover operating costs. This is going to be a not-for-profit entity, like Nav Canada. They generate navigational fees. With Nav Canada, for example, they go back into the entity. Those rates and fees are transferred back to the airlines, and that's transferred to the customers.

As a Crown corporation running independently, that entity has had good governance. It has been able to work through efficiencies that over time have actually reduced rates and fees.

In this case, we suggest following a very similar model. We are not opposed to this. We think it is much needed, as my colleagues in airports have said, but let's do it right, take the time and not burden this agency up front with unnecessary debt that, at the end of the day, taxpayers or the travelling public are going to pay. It will not reduce the cost of air travel. When air travel is not reduced, service gets compromised and suspended. That's not the business we're in.

[The Chair, Liberal, Judy Sgro]

Thank you very much.