Transport Committee on Sept. 11th, 2017

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

I call to order meeting number 67 of the Standing Committee on Transport, Infrastructure and Communities, 42nd Parliament, first session, pursuant to the order of reference on Monday, June 19, 2017, Bill C-49, an act to amend the Canada Transportation Act and other acts respecting transportation and to make related and consequential amendments to other acts. We will start this process now.

Welcome to all our members. Thank you very much for coming back a week earlier than everyone else on the Hill. It shows everyone's commitment to seeing that we continue and get our work done.

To the staff who are here as well, welcome. I hope you all had a good summer.

I will now ask the departmental officials if they would introduce themselves and proceed.

[Helena Borges, Associate Deputy Minister, Department of Transport]

Thank you, Madam Chair. It's a pleasure to be here today.

I am Helena Borges, the associate deputy minister of transport. I have been before this committee before, so maybe you'll remember me.

I have with me several colleagues from the department, as well as the Competition Bureau. Alain Langlois is our chief counsel on this file. Brigitte Diogo is our director general of rail safety. I have Marcia Jones, who is our director of rail policy; Sara Wiebe, who is our director general of air policy; and Mark Schaan from ISED.

First, I would echo the chair's thanking you for coming back early and taking the time to study this bill before Parliament resumes. I must say that if you haven't been in Ottawa all summer, this is officially the first week of summer, at least weather-wise, because it has been raining here non-stop. This is actually summer as we'll have it.

Bill C-49, the transportation modernization act, contains proposed legislative changes that would allow the government to move forward in delivering on initial measures as part of transportation 2030, the government's strategic plan for the future of transportation in Canada, which the minister announced last fall. The plan was announced following an extensive consultation process with industry stakeholders, indigenous groups, provincial and territorial governments, and Canadians, which built on the findings and recommendations from the Canada Transportation Act review report. You will hear from Mr. Emerson, who was the chair of that panel, later today. This process allowed us to hear a broad range of views on the future of transportation over the next 20 to 30 years, and how we can ensure that the national transportation system continues to support Canada's international competitiveness, trade, and prosperity.

Bill C-49 promotes transparency, system efficiency and fairness. The bill proposes legislative amendments that would better meet the needs and service expectations of Canadian travellers and shippers, while creating a safer and more innovative transportation network that would better position Canada to capitalize on global opportunities and thrive in a high-performing economy.

Let me highlight the key features of the bill.

I will begin with the air initiatives. Bill C-49 proposes the creation of new regulations to enhance Canada's air passenger rights, ensuring that they are clear, consistent, and fair for both travellers and carriers. The Canadian Transportation Agency would be mandated to develop, in consultation with Transport Canada, these new regulations and would consult Canadians and stakeholders should royal assent be given to this bill.

The overriding objective of this new approach is to ensure that Canadians and anyone travelling to, from, and within Canada understand their rights as air travellers without negatively impacting access to air services and the cost of air travel for Canadians.

Bill C-49 specifies that these regulations would include provisions regarding the following most frequently experienced irritants, some of which you may have heard about: providing passengers with plain language information about carriers' obligations and how to seek compensation or file complaints; setting standards for the treatment of passengers in the case of overbooking, delays, and cancellations, including appropriate compensation for these; standardizing compensation levels for lost or damaged baggage; establishing standards for the treatment of passengers in the case of tarmac delays over a certain period of time; seating children close to a parent or guardian at no extra charge; and requiring carriers to develop standards for transporting musical instruments.

Finally, this bill also proposes that regulations be made for data to be collected in order to be able to monitor the air traveller experience, including air carrier compliance with the proposed passenger rights approach.

The legislation also proposes to liberalize international ownership restrictions from 25% to 49%. To protect the competitiveness of our air sector and support connectivity, this provision is accompanied by associated safeguards.

These safeguards include restrictions that a single international investor would not be able to hold more than 25% of the voting interests of a Canadian air carrier and that no combination of foreign air carriers could own more than 25% of a Canadian carrier.

This policy change would not apply to Canadian specialty air services such as heli-logging, aerial photography or firefighting, which would retain international ownership levels at 25%.

Liberalizing international ownership restrictions means Canadian air carriers—and this includes passenger and cargo transportation service providers—would have access to more investment capital that they can use for innovation and, potentially, further expansion.

This would bring more competition into the Canadian air sector, provide more choice for Canadians, and generate benefits for airports and suppliers, including new jobs.

More competition in the market could in turn reduce the cost of air transportation and open other markets to consumers and shippers in Canada. This could include the creation of new ultra-low cost carriers serving new areas of the Canadian market.

The bill also proposes a new, transparent, and predictable process for the authorization of joint ventures between air carriers, taking into account competition and wider public interest considerations and establishing clear timelines for the rendering of a decision.

Joint ventures are a common practice in the global air transport sector. They enable two or more carriers to coordinate functions on specific routes, including scheduling, pricing, revenue management, marketing and sales.

Whereas currently proposed joint ventures in Canada are solely examined by the Competition Bureau under the Competition Act, and thus focus exclusively on anti-competitive impacts on specific markets for air travel, the proposed new legislation would allow for the consideration of wider public interest benefits.

In addition, the new process would include clear timelines for the review process, both for the review of potential competition considerations by the bureau and the assessment of public interest benefits to be undertaken by Transport Canada. It is anticipated that this more holistic and timely review would allow Canadian carriers to engage in this industry trend, which confers benefits not only to the partnering air carriers, but also to consumers who will gain from enhanced flight connectivity and Canadian tourism, which we expect to grow based on expanded network options.

Canada's aviation sector has shown interest in investing in and accessing passenger screening services, beyond those already provided by the Canadian Air Transport Security Authority, in order to facilitate travel and gain economic advantages.

The proposed amendments allow for this opportunity on a cost-recovery basis.

Let me now move to the rail initiatives.

A reliable freight rail network is critical to Canada's success as a trading nation. Many of our commodities, from minerals to forest products to grain, depend on rail to move to markets both here and abroad. Canada enjoys efficient rail service with the world's lowest rates.

To sustain this, Bill C-49 aims to address pressures in the system so that it can continue to meet the needs of users and the economy over the long term. To this end, the bill promotes transparency, efficiency and strong private sector investment in the rail system, as well as accessible shipper remedies. The key measures include new data reporting requirements for railways on rates, service, and performance that would greatly increase system transparency; a definition of adequate and suitable rail service affirming that railways should provide shippers with the highest level of service they reasonably can in the circumstances; the ability for shippers to seek reciprocal financial penalties for breaches of their service agreements with railways; updated remedies for rate and service complaints, to make them easier for shippers to access; and more timely, long-haul interswitching, a new measure for giving captive shippers across all sectors and regions the option of accessing a competing railway.

These measures would address the needs of shippers for greater competition in the freight rail system while also safeguarding the ability of railways to make crucial investments in the railway network, which benefits all shippers and the broader economy.

The proposed amendments to the Railway Safety Act to mandate installation of voice and video recorders in railway locomotives are designed to further enhance rail safety while safeguarding the privacy of employees. They respond to recommendations from this committee, the CTA review panel, and the Transportation Safety Board, whom you will hear from immediately afterwards.

These recorders would further strengthen rail safety by providing objective data about crew actions leading up to, and during, a rail accident. This technology would also provide companies with an additional safety tool for analyzing trends identified through their safety management systems with the objective of preventing accidents before they happen.

Through its oversight role, Transport Canada would ensure that companies comply with the limits on use and privacy requirements specified in the proposed legislation.

I will now turn to marine initiatives.

Finally, Bill C-49 proposes to amend the Coasting Trade Act to allow all vessel owners to reposition their owned or leased empty containers between locations in Canada using vessels of any registry. This measure would support industry's request for greater logistical flexibility and address the shortage of empty containers for export purposes.

Bill C-49 also proposes to amend the Canada Marine Act to allow Canada Port Authorities access to loans and loan guarantees from the Canada Infrastructure Bank, which is starting to happen.

In conclusion, this bill combines proposed legislative initiatives into a single bill that are essential to advancing priority measures related to improving the efficiency and safety of the Canadian transportation system.

In addition to having undertaken a comprehensive consultation process, these proposed amendments are based on solid evidence. For instance, with respect to freight rail measures, we sought technical expertise of stakeholders from the rail sector, the Canadian Transportation Agency, key federal departments, and other authorities as part of consultations for the bill. We analyzed freight rates, investments across jurisdictions, as well as commodity movements across Canada using internal data, and grain monitoring program, and railway waybill data, as well as other data.

The measures contained in this bill are a reflection of the priorities we heard from stakeholders and Canadians during the consultation process. It brings forward proposed legislative changes that promote a safer, more efficient transportation system that would enable growth while strengthening the rights of Canadian travellers to better meet their needs and expectations.

I would add that this bill responds to many of the recommendations this committee put forward in a study last year of the Fair Rail for Grain Farmers Act.

I would like to thank the committee once again for having me here today. My colleagues and I are available to answer any questions at this meeting and throughout the entire study of the bill. We would be happy to provide any information that you don't have.

On that point, I will mention that we have made available to the committee a series of issue papers and fact sheets that may help you in understanding some of the provisions and the history behind some of the issues that we're dealing with here, the frequently asked questions on some of the items, because we know that there may be confusion amongst stakeholders about what these mean and how they would apply, as well, of course, the clause-by-clause. If there's anything more we can provide, we'd be happy to do so.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Borges. We appreciate very much all of the information you have provided to us today.

We will start with our questioning.

Ms. Block, for seven minutes, please.

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

Thank you very much, Madam Chair, and I would echo the comments welcoming all of you here today. I appreciate the opportunity to ask you questions about Bill C-49.

You welcomed us here and thanked us for taking the time to be here, but it was because of a motion by this committee that we're actually here a week early, and so I want to thank you for being here and taking the time.

I also want to extend a welcome to my colleagues. I hope everyone had a good summer and I am looking forward to working with all of you, going into this session. Of course, there could be some changes. I also want to welcome my two colleagues on this side of the table who aren't normally members of this committee but who have graciously accepted the duty and the opportunity to be here as we work through Bill C-49.

I do appreciate the work that has gone into a bill like Bill C-49, and I think even your own opening remarks demonstrate how broadly this bill casts its net. In fact, we would have suggested that it were an omnibus bill, covering three modes of transportation and addressing a number of issues. One would probably also readily admit that the bill may not be perfect, and so I think what we're here to do is to have the opportunity to ask questions, and hear from witnesses to find out for ourselves what measures you got right, and whether there are amendments or recommendations that our stakeholders might offer.

Given those initial observations, I guess what I would like to ask is when and why was the decision made to create this very large bill that addresses so many different modes of transportation?

[Helena Borges]

The proposed legislative amendments have been put together in one bill since they collectively support the commitments made in the government's strategic plan for transportation 2030. All of these elements are included in the five themes that the minister announced last November when he put forward the plan to modernize Canada's transportation system. The majority of the proposed legislative amendments also include input from the CTA review panel report that was made public on February 25, 2016. Their genesis is in those recommendations.

Further, almost 90% of the amendments will be to one act, which in and of itself is an omnibus act. The Canada Transportation Act is the main piece of legislation for the economic regulation of the air sector and rail sector, and with the powers of the agency in dealing with disputes, and all of those kinds of things. So the majority of them are amendments. A small portion of them are consequential amendments from the amendments made to the Canada Transportation Act, such as the change in the foreign ownership for airlines, which results in consequential amendments to the Air Canada Public Participation Act or the CN privatization act and others.

So to us it makes sense to package all of these together, based on the rooting in those three pieces. As well, I must say that this committee has given us a wealth of information in some of the reports that you've done over the past year on rail safety, on the rail freight legislation, and we thought that putting them together would provide a holistic and wholesome approach to the amendments we are proposing in this bill.

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

Thank you.

I'll follow up with another question that drills a bit further down into one of the reasons I asked that question. Given that a review of the Railway Safety Act has just been initiated, I believe, why would we include the provisions for the LVVR measures in Bill C-49 rather than looking to include them in the Railway Safety Act?

[Helena Borges]

Thank you very much for that question.

As you may be aware, the recommendations on LVVR have been around for some time. We've been looking at this issue since the early 2000s. More recently, the Transportation Safety Board has put it on their watch-list, and we take the safety board's watch-list very seriously.

In fact, one of the recommendations from this committee, when they reviewed our rail safety measures, was to implement LVVRs as soon as possible. Also, I'll say that a supplementary one was to get on with responding to the safety board's recommendations more quickly than we have in the past.

There are a lot of other reasons why we are moving forward on that, given the benefit that LVVR could have on improving railway safety, and we think now is the right time to move ahead with it, because it will require regulations as well. We could wait for the Railway Safety Act, but that would delay it by at least another year, if not longer. Based on the Transportation Safety Board's recommendations, we agree that we need to move ahead with this quickly.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Block.

Mr. Sikand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Good morning. I'd also like to welcome you back.

In your opinion, do you think there's a gap between Bills C-49 and C-30?

[Helena Borges]

I have looked at all of the recommendations that were in your study of Bill C-30. I believe you had 17 recommendations. We've gone through all of those, and I would say that we have addressed them all, as well as actually implementing some of the recommendations you had in there and allowing some to sunset. Those that sunset are two that were in Bill C-30. We have a rationale for letting those sunset: it is basically because the situation has changed considerably since 2013-14.

I don't believe there is a gap. I think we have addressed all of the recommendations well. In fact, I would say that we have gone beyond in addressing other recommendations that the CTA review panel put forward and for which stakeholders have been asking for a few years.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

In your opening remarks you mentioned consultations that were undertaken in regard to rail. I wonder if you have undertaken general consultations in regard to the entirety of the proposed amendments.

[Helena Borges]

I can tell you that we have done exhaustive consultation. We normally do not consult on amendments that are in a bill, as that is a parliamentary privilege, but we do consult on the issues and the policy direction that we are looking at taking.

That consultation has happened over the last 18 months, with the minister launching it right after he tabled the CTA review panel report last February. He launched a series of 10 round tables across the country that were focused on the themes of the transportation plan he announced last fall. In addition to that, he had two Facebook Live sessions with Canadians. We also had opportunities for stakeholders to put comments online and received about 230 submissions. We had over 70 written submissions sent in as part of our consultation, and another 70 went directly to the minister. Those submissions have informed our advice and our amendments. We also involved our provincial and territorial colleagues in that process.

Since then, we have continued to work exhaustively with the railways and the rail sector—shippers that use the railways, and other players in the rail sector—to make sure we understand their concerns and that in putting forward this package we are addressing the issues they had.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

How do Canadians benefit from these changes?

[Helena Borges]

I would say that is probably one of the most important elements of this bill. We and the minister have been hearing for years about air travel and how people are frustrated with their air travel experiences. The passenger rights that are included in the bill are in fact revolutionary from a Canadian perspective.

We've really looked across the globe at what other countries have in place and have taken the best of what we've seen, making sure we are addressing the irritants I listed in my speech, because that is what matters to Canadians. This is an issue that has been quite active in the media even as late as last week here in Ottawa with the Air Transat situation.

I think that is really important for Canadians, but I'd say that the measures in the rest of the bill, particularly the rail freight and marine measures, are also important.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Let me interject here quickly. I'm running a little short on time.

Something in regard to passenger rights that caught my eye was that penalties aren't actually built into the legislation. What are the merits of this?

[Helena Borges]

You'll notice that the amendments to the act give the Canadian Transportation Agency the authority to make regulations. The details of the compensation regimes—the way those irritants will be addressed—will be in regulations.

We will work with the agency. We want to make sure that Canadians have an opportunity to voice their views on what the compensation should be, to make sure that it addresses their concerns.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Okay. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Monsieur Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair. It is a pleasure to see you at the helm of our committee again.

Welcome to everyone with whom I had the pleasure of working last year and whose faces are familiar to me. Welcome also to those of you who are joining us, and I hope you will be here permanently. If not, I heartily commend you. That is all for my greetings, since I probably have more questions to ask than the time available will allow.

I would like to draw particular attention to a sentence in your opening remarks. You said that Bill C-49 seeks transparency, fairness and efficiency. I must admit that I stumbled over the word “efficiency”. Let me cite a few examples from various modes of transportation that do not illustrate efficiency.

The first example is probably voice and video recorders. The report about these recorders, conducted by a working group of the Transportation Safety Board, or TSB, found that the use of these recorders would have been helpful in arriving at definitive conclusions in their investigations in less than 1% of cases. Less than 1% of cases. If we are talking about recorders, that is unfortunately because there has been an accident. In the interest of efficiency, I would think that train conductor fatigue should be addressed before the recorders. In our air safety study last year, we found that pilot fatigue was an important factor to be considered.

Why is Bill C-49 so specific about requirements for recorders while saying so little about conductor fatigue?

[Helena Borges]

Thank you for your question. I will let my colleague Brigitte answer, as she is responsible for these matters. She can tell you about ongoing measures related to conductor fatigue.

[Brigitte Diogo, Director General, Rail Safety, Department of Transport]

Hello. Thank you for your question.

In order to improve rail safety, we are currently considering a range of measures including fatigue. We have in fact begun discussions and preliminary consultations with the industry and unions to review regulations pertaining to fatigue. This was discussed at the rail safety advisory committee's last meeting. In early October, the minister will issue a notice inviting input on the regulatory changes pertaining to fatigue.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you. If I understand you correctly, you are holding consultations, gathering input and considering the issue of fatigue. In the bill before us, however, which is practically an omnibus bill, we would have expected to see concrete measures. The same can be said for passenger rights. As my colleague Mr. Sikand so rightly pointed out, two years later, there are still no regulations. Rather, you are saying that consultations will begin after royal assent to determine what the bill of rights should include. In other words, it will take at least another year until passengers find out the basis for their rights.

Are we about to miss the train or the plane on this?

In the previous Parliament, a bill of rights was introduced which the minister—who was not the minister at the time—was very favourable to. He even voted for that bill of rights.

Why can the process not be speeded up in order to serve the public?

[Helena Borges]

Thank you very much for your question.

I would like to clarify something. We already have legislative powers and regulations pertaining to fatigue, and we are going to amend the legislation. On the other hand, we do not have legislative powers pertaining to locomotive voice and video recorders. That is something the bill would establish. We need that power in order to introduce regulations.

The same thing applies to passenger rights. At present, the Canada Transportation Act does not yet give the Canadian Transportation Agency the flexibility or power to make regulations on passenger rights. Once this bill is passed, as we hope it will be, we will then, together with the Canadian Transportation Agency, be able to accelerate the regulation process in order to implement the technical aspects of those rights as quickly as possible. The same is true for locomotive voice and video recorders. We have to conduct consultations, but we are prepared to work as quickly as possible in order for these aspects to be in place in 2018.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Borges.

I'm sorry, Mr. Aubin, but your time is up.

Mr. Badawey.