Transport Committee on Sept. 26th, 2017

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

In the fall of 2015 you initiated an audit. We saw this piece of legislation going to the Senate in the form of Bill S-2 in the spring of 2016. You were in the middle of your audit at this point in time. The bill then passes third reading in the Senate in February 2017, but by now Bill S-2 has been introduced.

I'm wondering whether there was a missed opportunity here. You had initiated an audit, and then this legislation was introduced while you were in the middle of the audit.

Do you have any role in terms of perhaps providing some advice to legislators as to whether it might be a good idea to wait until an audit is complete before they begin a process around introducing a piece of legislation that could have looked very different if we had the report in front of us?

[Michael Ferguson]

When we do audits we walk into many different situations. Sometimes, in fact, we will walk into a situation where a department will tell us, “Look, we're working on something. Please wait until we've done that and come back and do the audit after we've implemented it.” We hear that a number of times.

Also, there are situations where, yes, our audit results could have an effect on the changes that people want to bring forward.

Sometimes our audits will help to spur something along. A department may have been working on something but it may have been put on a back burner. We come in and we do an audit on a situation and that spurs them to get it completed.

We walk into a number of different situations. Fundamentally, though, it's not our job to try to set policy or to try to say when policy should be changed, or legislation, or any of those types of things. What we do is decide what topics we want to audit, when we want to audit them, and we go in and do that.

Occasionally we will change our audit schedule if we feel that the department is in a particularly significant transformation period for that program and that it makes more sense to come in after they've completed that. Occasionally we will do that, but usually we just keep going with our audit schedule no matter where things are. Sometimes they line up with the legislative calendar and sometimes they don't, but that's not really something we take into account or that we try to influence.

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

Is there a prescribed length of time that it takes for you to conduct an audit? Do you know, going in, how much time you have to complete the audit?

[Michael Ferguson]

Our normal planning period really is from the time we officially say that, yes, we are doing this audit, until we get it tabled in Parliament. It is usually 18 months.

If we scope an audit down so that it's only looking at one item and if the area isn't overly complex, we can do audits more quickly than that. But for these types of performance audits, we have to make sure, first of all, that we understand the topic area. Building up our knowledge of business on the area takes some time. Then there's making sure that we have the time to talk to all of the people we need to talk to, getting the advice that we need to get, and going through multiple iterations of draft reports with the department to make sure we haven't gotten any facts wrong. All of that usually takes us about 18 months from beginning to end.

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

You did note that it is not your role to form policy. I'm wondering if you believe there is room for the work you do to inform policy after the fact.

I would suggest, as a parliamentarian, that in a perfect world, I might have waited until your audit was complete on this specific area to see if there was anything in that report that would have fit well into this piece of legislation. I suppose we do have the opportunity to amend the legislation, now having been able to look at the recommendations you've made. That would just be one observation I make.

[The Chair, Liberal, Judy Sgro]

Mr. Ferguson, I'm sorry, but we're way over time here. Maybe you can figure out how to tag that answer in somewhere else, or if you really think it's imperative, then we'll have to find a minute for you.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

One of the big take-aways from your testimony for me today is essentially the timeliness of our ability to implement regulations, particularly when we have such focus on trade and harmonization with the U.S. I think you've laid out the problem very well.

One of the things I'm still trying to search for mentally is how we overcome that barrier. Is this simply going to be a direction by the Minister of Transport Canada to say, “Forget what's going on with the RCC and forget what's going on in the U.S. You have the information to enhance safety through these regulations, and just do it”?

What are the obstacles that we're facing to doing this in a more expeditious manner?

[Michael Ferguson]

I think the obstacles in this are formidable. With respect to the things the department needs to balance, there are serious competing interests. I go back to the starting point of when issues are identified, and it takes 10 years to put a regulation in place, that sounds like a system that isn't completely working. When technology is changing as fast as this technology changes, when you have regulations that deal with the types of lights on a vehicle but there is nothing that says anything about some of the semi-autonomous and autonomous software that allows cars to operate with less driver intervention, it makes you wonder whether the regulatory system is complete and robust enough.

I start with what the end result looks like, and say that what the department needs to figure out is what the regulatory system should be doing. The types of things they need to consider, as I said, are formidable. What's going on in the U.S.? Do we need to harmonize with the U.S.? What's the impact on trade? What's the impact on the cost of a vehicle? What's the impact on the environment of having regulations or not having regulations? How much research do they need to have before they bring in a regulation?

There are a number of things they need to sort out within that regulatory framework. But it seems to me that right now, the regulatory framework is one that just cannot keep pace with the rate of change. The fundamental question is whether the way they're operating the regulatory system right now is achieving what it was intended to achieve.

[Sean Fraser, Liberal, Central Nova, NS]

In very broad strokes, I'm thinking what a framework should do is keep pace with technology and improve safety. When the information is there or is attainable, go get the information and make the regulations as quick as you can to effect the change you're hoping for. I'm still struggling to understand how we do that. Do we need Transport Canada to do a survey of all the things we're behind in right now? Do we need to be prioritizing research to get there, or am I getting into the realm of policy, which is beyond your role as an auditor?

[Michael Ferguson]

In terms of all of the details of that, that's something which I think Transport Canada needs to sort out. They need to sort out what an efficient regulatory system would look like, what it is intended to achieve. Getting down into that level of detail is beyond my knowledge and expertise. Fundamentally, though, when you look at the results of the audit, you may question whether the regulatory system is really doing what it should be doing.

[Sean Fraser, Liberal, Central Nova, NS]

Most of the report is not specifically tied to Bill S-2, but you mentioned one item today that I saw in the report and which I think is fairly applicable, and good news for the safety of Canadians. You highlighted that we're pretty good at identifying defects and discussing plans with manufacturers. It seems that's not a bottleneck in the system right now. With the new power to order recalls in Bill S-2, do you think, given that we're half-decent at this, the minister is going to have the information required to order recalls for things that do pose safety risks to Canadians?

[Michael Ferguson]

Well, I'm always very careful as an auditor, in that there has to be something we can actually audit, as opposed to speculating on whether a change will or will not deal with it.

[Sean Fraser, Liberal, Central Nova, NS]

Perhaps I can rephrase my question. Did you find any cause for concern in your audit that suggested there wouldn't be full information for the minister to identify these defects and make an order?

[Michael Ferguson]

We found instances where manufacturers were investigating potential defects and the department didn't know about it. We found instances where the Canadian subsidiary didn't know that the American parent was investigating potential defects in vehicles. We identified situations where Transport Canada didn't have access to all of the information, and we felt they should have more ability to get access to some of that information, but—

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Ferguson.

Mr. Chong.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Ferguson, for appearing in front of us.

I want to focus on the emergence of autonomous driving technologies and vehicles. I'm very worried that we're going to miss the boat on what is a very important industry in our country. The auto manufacturing sector is incredibly important to employment in southwestern Ontario. It's one of our key industries. I've been reading reports that the autonomous, driverless vehicle industry could be worth up to $100 billion in about a decade in North America. It seems to me that one of the risks preventing us from being a big part of that is that our regulatory framework is not keeping up.

We already have autonomous vehicles on the highways today. A Mercedes S-Class can drive itself down the 401, can come to a complete stop in stop-and-go traffic, can accelerate up to 200 kilometres an hour, all without the driver touching the brake or accelerator. It can steer itself down the highway. It can steer itself indefinitely, although they haven't turned that on, but it will steer itself for a period of time before alarms start going off.

This technology is already here, and we don't have a clear regulatory framework on how to proceed. You identified this in your report of a year ago, that this was a big gap in the department's regulatory approach. You've mentioned numerous times here that there are lengthy delays to implement regulations and standards, sometimes in excess of 10 years. In your report of a year ago, you also said there were already semi-autonomous vehicles on the roads back then. In your report, the department responded to your recommendation 4.35, which says that Transport Canada should provide regular public updates on the status of its regulatory plans. The department committed to delivering on that last April.

We just had the minister here, and we were unable to get a clear answer as to when the new regulatory framework for autonomous vehicles is going to be released by Transport Canada. It seems to me they're not even meeting the commitments that they made to you for the gaps you identified in your report.

I just make that as a point. We're losing time here. Ten years is not that far out, and this is a critically important industry to workers and companies in Ontario.

[The Chair, Liberal, Judy Sgro]

Would you like to respond?

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

That's just a comment. If the Auditor General has a comment in response to that, it would be appreciated. There's a sense of urgency here, and I don't sense from the department and the minister that we're getting that urgency in return.

[Michael Ferguson]

Madam Chair, the important message coming out of this audit in terms of the regulatory system is that there is a regulatory system—or there was at the point in time that we looked at it—that was going at one pace and an industry that was going at another pace.

I think for the government to make sure the regulatory system is relevant, it needs to make sure that regulatory system can keep up with the pace of the industry, the pace of the innovation in that industry. We've identified a number of gaps, and we identified a number of places where that regulatory process was taking too long. I think that is the real challenge for the department, getting a regulatory system that is keeping pace with the industry and figuring out how to get that regulatory system quite quickly.

[The Chair, Liberal, Judy Sgro]

Mr. Aubin.

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

Thank you, Madam Chair.

In your opening statement, you made some comments that particularly troubled me. You said:

We also found that Transport Canada did not plan or fund its research and regulatory activities for the longer term.

We are no longer talking about delays here, but of a lack of planning. You go on to say:

As a result, the Department could not prioritize resources and spending decisions accordingly.

In your seven recommendations, is there one that addressed this problem specifically?

I am quoting from paragraph 9 of your opening statement.

[Michael Ferguson]

Okay.

In paragraph 4.63 of the report, we say:

Recommendation. Transport Canada should develop a long-term operational plan for the Motor Vehicle Safety Directorate. This plan should identify planned activities, budget, and level of effort needed to deliver on its mandate.

In my opinion, the relevance here is that the department should have a plan, a budget, and activities, and that all those aspects of the plan are specified so that the department in able to conduct all its activities in a rigorous way. All the aspects have to included in the plan.

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

You say “in a rigorous way”, but I imagine you could also add the words “and more coherent”. My impression is that the management is very ad hoc.

In paragraph 8 of your opening statement, you say: “The Department stated ... “ Going back to the issue of the anchorages, it is patently clear that commerce has been prioritized over safety in this case.

Can any link be established between this example and the disproportionate influence of the consultations with the major manufacturers that you mention in another part of the audit?

[Richard Domingue]

We are not clear on what manufacturers and the Retail Council of Canada, the RCC, contributed to the resistance that the department was putting up to the idea of regulating anchorages at the time of the audit. They were proposing a label on the car seat as a solution. By the way, the audit did not examine the accessories, specifically the car seats and the tires. However, since the anchorages are components of the car, they were part of our audit.

Their solution is not to regulate the vehicle by modifying the strength of the anchorage, but to amend the regulations about the use of the children's car seats. The idea is to advise parents that, after a certain weight, they must use the anchorage as well as the harness.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Aubin.

Thank you very much to our witnesses. We appreciate your taking the time to come and answer the questions.

If we could excuse the witnesses, we have a short bit of committee business to do, or at least I hope it will be short.

[Proceedings continue in camera]