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EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 25, 1996

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[English]

The Chairman: Order. Before we begin with the presentations, I should note that we'll be interrupted this morning by not one but two votes. There will be a thirty-minute bell starting at10:15 a.m. Might I suggest to committee members that we then interrupt our hearings at 10:30 a.m. Fifteen minutes would give us enough time to get over.

But I'm told there will be a second vote and a second bell at the conclusion of the vote, and they will then take place at 10:45 a.m. So we may be interrupted for as much an hour in total. If we are to finish today - today is our last day of hearings on this - it would require sitting until close to 1 p.m. or 1:30 p.m.

That was seeking agreement. I will take the friendly silence as wild support for that proposition.

Our first witness is from Air Canada, Mr. Geoffrey Elliot.

I note we have allocated you an entire hour. Normally I ask presenters to keep their remarks to about ten minutes. I'll give you a little more time, but we want to have as much time as possible for members to ask all their questions.

I would ask the Canadian Airports Council and the Greater Toronto Airport Authority, if we were to move expeditiously, would you be able to go earlier? Given what I've just said about the votes, I will attempt to do that.

Mr. Gouk (Kootenay West - Revelstoke): Just for my own clarification, and certainly I have nothing against Air Canada, can you give me some idea why Air Canada got or even required an hour, as opposed to some of the other singular presenters? It's not a thing against Air Canada. I just don't understand where they fit into this that they would need an hour where most other people are getting half an hour, particularly users, other types of user groups representing big...

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The Chairman: Mr. Gouk, I am told that there had also been a request from NAV CANADA to do it. But Mr. Elliot has indicated that he feels he doesn't need it, so we'll attempt to move as expeditiously as we can -

Mr. Gouk: I was just trying to get how it came to be.

The Chairman: - to try to get the first presenters in prior to the vote.

Mr. Elliot.

Mr. Geoffrey Elliot (Senior Vice-President, Corporate Affairs and Government Relations, Air Canada): Thank you very much, Mr. Chairman. On behalf of Air Canada, I welcome this opportunity to contribute Air Canada's views on your deliberations regarding Bill C-20.

Let me say at the outset that Air Canada does not require an hour for this presentation. My remarks will be for only a few minutes, and how long you want to spend with me after that is up to the committee.

As Canada's largest domestic and international airline, Air Canada of course has a vital interest in Bill C-20. The future of Air Canada depends on ensuring a safe, reliable, efficient, and cost-effective air navigation system, or ANS.

I have a short statement to make for the record, and then I'll be more than pleased to answer any questions you might have.

Air Canada recognizes that the government's primary motivation for introducing Bill C-20 is to save money. We understand and support the government's efforts to restore fiscal integrity to public financing. We have no problem in principle with any of the government's privatization initiatives - and that includes Bill C-20 and privatization of the air navigation system.

Privatization of air navigation will provide a one-time $1.5 billion revenue gain to government from the sale of the assets to NAV CANADA. Privatization will shift a large number - I understand over 6,000 - civil servants now engaged in the operation of the air navigation system off the public service payroll and into the private sector. Privatization will eliminate a substantial and ongoing government financial responsibility for future capital investment and necessary technology improvements to the air navigation system. At the same time, the legislation will change fundamentally the way in which air navigation is funded in Canada.

Bill C-20 will eliminate the current tax-based system - the air transportation tax, or ATT - and replace that with NAV CANADA fees for service. Those NAV CANADA fees will also be applied more broadly, including to foreign overflight users of the system. We understand that the new user charges will enable NAV CANADA to eliminate the current $200 million, roughly, annual drain on the federal treasury.

Finally, safety is not an issue. NAV CANADA will continue to be subject to independent safety regulation by Transport Canada. In fact, the introduction of an arm's length relationship between the service provider and the safety regulator should enhance the safety of the system.

So, anyway you look at it, the privatization initiative has to be seen as being a very good deal for government.

The big question for Air Canada is whether or not Bill C-20 and air navigation system privatization is a good deal for Air Canada and other commercial users of the system.

The bottom line for Air Canada is that reduced costs to government should not be achieved by simply shifting the financial burden to commercial users of the system, like Air Canada. We don't really care whether the system is private or government owned as long as the quality of the service is high, the ANS is operated in an efficient and cost-effective manner, and the fees and charges to Air Canada reflect those efficiencies.

By definition, the provider of air navigation services will always be a monopoly, and with monopolies there's always a risk that even if they don't set out to abuse their market position, nevertheless they will fail to exercise necessary vigilance regarding costs. There are plenty of examples of that around, with certain public sector utilities perhaps being the most notable.

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Because of that, Air Canada wanted to be sure that NAV CANADA will in fact achieve the required and anticipated cost efficiencies by applying sound business practices to its operations.

Air Canada also believes that it's important that all users of the ANS system pay their fair share. We would be concerned, for example, if our customers are required to cover the costs of high airline fees in order to subsidize the use of the same navigation service by other categories of users. Nevertheless, we recognize and support provisions to protect small users of the ANS network, including private and recreational users.

Air Canada believes that both the government and the NAV CANADA board of directors have a good understanding of all of these Air Canada concerns. Moreover, we believe sensitivity to these concerns is reflected in the legislation and in the structure of NAV CANADA.

Air Canada certainly supports the proposed structure of NAV CANADA as a non-share corporation with substantial user representation on the board of directors. Provision for the Air Transport Association of Canada, or ATAC, to appoint four of the fifteen directors should provide a very real user voice in the affairs of NAV CANADA, including an appropriate influence over major business and management decisions. This we believe to be essential to ensure that the required cost and other disciplines are achieved.

As a matter of fact, Air Canada would have welcomed similar recognition of the desirability of airline user participation on the boards of the new privatized local airport authorities, where today airlines have no representation, either individually or collectively.

Air Canada supports the proposed changes in the way the system will be financed. Replacing the ATT by a fee-based system should ensure that appropriate financial contributions will be made by all users of the air navigation system.

One accounting consideration is that user fees will become a new cost of doing business for the airlines, whereas the air transportation tax is a direct charge to our customers on scheduled flights.

The ATT is currently shown separately on airline tickets for scheduled flights, under the code CA, but is collected by the airlines and added to the price of the ticket just as the GST is. Obviously, airlines will have to find a way to recover the new user charges through increased fares. This should have no significant effect, impact, on our customers, however, or on the airlines, provided ANS user fees and consequential fair increases are not greater than the ATT previously collected by airlines and remitted to government.

Air Canada also agrees with initiating user fees for overflights by foreign airlines. This will help to spread the cost burden more equitably while increasing the revenue base. This introduction of user fees to foreign overflight users of the ANS system is perhaps the most bold and innovative - in the Canadian context, at least - feature of the proposed funding changes.

Some foreign carriers and their governments may not be pleased, and there is a small risk of foreign government reaction that could be harmful to Air Canada interests. Nevertheless, Air Canada has been paying similar user fees for overflights over many European and Asian countries for many years as a matter of routine. Canada, along with the U.S., is one of the few exceptions in not collecting fees for overflights by foreign carriers.

The bottom line is that Air Canada supports user fees for overflights provided the fees are not excessive in comparison to the practice in other jurisdictions.

Finally, and in sum, the financial and other benefits to government that will result from ANS privatization, including NAV CANADA's $1.5 billion purchase of the existing assets, the substantial airline user participation in NAV CANADA to promote safety, quality of service, efficiency, and cost-effectiveness, and the new arrangements to fund the system, all make a great deal of sense to Air Canada. Air Canada therefore believes that privatization of the ANS, the creation of NAV CANADA, and Bill C-20, which is designed to make it all happen, add up to a win-win package that is in everyone's interest and deserves the full support of this committee.

Thank you very much. That concludes my formal statement.

The Chairman: Thank you, Mr. Elliot.

Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you for your brief.

I have a short question on two of the paragraphs on the first page of your brief.

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The first says:

The last paragraph on the same page says:

It seems to me that there is a contradiction in those two paragraphs. At any rate, it raises a question because NAV CANADA has to continue buying expensive equipment which requires significant investments which will be met otherwise.

How will you make sure that the choices will not solely be financially-oriented, but instead safety-oriented?

[English]

Mr. Elliot: You're absolutely right. There will be a need for future investment in new technology in the way the air navigation system is operated. But I don't think there's any inconsistency in my statement. The presumption is that as a private corporation the NAV CANADA organization will itself be responsible for funding the necessary capital acquisitions out of the user fees it collects for the provision of the service. In that context the government would no longer be required to fund that future investment. In that way that will be a saving to government.

But in the context of ensuring the safety of the system it is Transport Canada that will still ensure the safety of the system by adopting its own regulations on safety, and the air navigation system and NAV CANADA will be required to comply with them on an ongoing basis. So I don't see any inconsistency there.

[Translation]

Mr. Crête: You say that the structure for reimbursing the costs should be quite fair.

Air Canada owns small carriers like Air Alliance. However, there are small independent carriers which do not have the chance to benefit from the same advantages.

Given Air Alliance's link to a larger parent company, do you not think that it will result in unfair competition and that others will not necessarily be able to maintain the same pace with respect to costs?

[English]

Mr. Elliot: I'm not sure whether your question is directed to the impact of the privatization of the air navigation system or it's related to commercial operations of airlines in general.

The cost of running an airline is not totally a function of the size of the airline. One of the biggest challenges for Air Canada in its operations in Canada today is the competition we receive from what we call the tier 2 carriers: the Air Transats and the other charter-type carriers, which have much lower costs than we have in transporting Canadians across the country. That has had the result that the yields on domestic transportation are less attractive for Air Canada than they are on international services.

When one gets to competition between a regional operator such as Air Alliance and smaller competitors in Quebec, I suspect the same circumstances may apply. There'll be some areas where size is an advantage in terms of the ability to provide better service to the public, and there'll be other areas where the overhead for a smaller carrier is much less, and where, on a point-to-point basis, it'll be able to provide a very competitive service.

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I think the market will determine what the public will require with respect to the positions of smaller airlines in competition with the larger ones in the marketplace, both in Quebec and the rest of the country.

The Chairman: Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

Mr. Elliot, I have three points I'd like to touch on briefly. First of all, you mentioned how you trust that the fees will be kept comparable to other similar jurisdictions issuing such charges. In fact, for the current proposed fee structure, based on cost per mile, wouldn't the Canadian charge be much lower than what most of the European jurisdictions are currently charging?

Mr. Elliot: I'm not sure of the precise structure of the fares. I understand that what you say is correct. My point was that as long as they are not higher I don't think there's a problem.

Mr. Gouk: In regard to the airline ticket tax in the new system, where it becomes a cost of doing business as opposed to the customer paying a specific tax, do you consider this a levelling of the playing field for different carriers? If you charge a large fee and they charge a small fee, won't they still pay on the per mile basis as opposed to a percentage of a much lower fare when they're in direct competition with another airline?

Mr. Elliot: I'm not sure I understand the question.

Mr. Gouk: Okay, take the example of Westjet charging $70 when Air Canada charges $300, or at least when it used to. They pay a ticket tax percentage of their $69 while Air Canada's customers pay a ticket tax percentage of $300, if in fact that fee structure remains. Would this then be a levelling of that field, where the tax will be based on the aircraft itself and on the distance travelled as opposed to a percentage of varying rate structures within the ticket charge?

Mr. Elliot: I understand it'll be based on the size of the aircraft and the distance travelled.

Mr. Gouk: Okay. Finally, I assume you're aware that there are several groups with bargaining agents - or certainly more than one group - in NAV CANADA. Currently they are centrally prevented from striking, insofar as they're allowed to strike but in the event of a strike they all still have to report for work to do their normal duties.

Under this legislation they will now be free to strike and potentially shut down the air industry in this country. Have you any thoughts on the concept of how that might be presented? What is your initial impression of a final dispute mechanism being placed in this legislation that would involve final-offer selection arbitration as a final-dispute settlement mechanism as opposed to a possible strike?

Mr. Elliot: Certainly Air Canada would prefer not to be faced with a situation where the system was closed down because of a strike at NAV CANADA. I have to say that there are also other unionized segments of our business that have the ultimate ability to strike and shut down the airline. So if that were to happen in the context of NAV CANADA it would not be unique. For example, if our pilots went on strike we wouldn't be flying to many places.

I don't have a personal view in terms of the preference between the final arbitration...I'm not sure of the terminology -

Mr. Gouk: Final-offer selection...

Mr. Elliot: - that you mentioned, but clearly Air Canada would be concerned if we were faced with a strike situation.

Mr. Gouk: There's just one specific distinction to clear up. If Air Canada is on strike, Canadian travellers and businesses still have other alternatives. If NAV CANADA shuts down, the air industry in this country ceases to operate.

Mr. Elliot: I suspect that at the end of the day, if there were a disruption to the Canadian air transportation system, it would be possible for Parliament to take the necessary action to ensure that service was resumed.

Mr. Gouk: No doubt.

Thank you, Mr. Chairman.

The Chairman: I have three questioners over here, Mr. Fontana, Mr. Keyes and Mr. Hubbard, and we'll try to save time for... Are there other questions over here? Okay, perhaps we can dispose of those three.

Mr. Fontana (London East): My questions are very brief.

I think the question of safety - I think you alluded to it, Mr. Elliot - is covered off separately in the Aeronautics Act. Essentially, the Aeronautics Act is supreme even over this particular one as it relates to safety.

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But, Mr. Elliot, as it relates to safety, I was a little troubled when I heard your Canadian Air Line Pilots Association essentially say that it didn't have faith in the system. In fact, it was rather negative. I thought it was rather irresponsible for a pilot for Air Canada to suggest that there was a great risk in flying.

Obviously you must have heard or seen his comments. I'm just wondering whether or not you can give us some insight as to whether or not he was really concerned about safety or whether he was concerned about the flight times issue, the hours the government has reviewed and put in place. I'm rather concerned. Do you have equal concerns about where your pilots stand on this particular issue?

Mr. Elliot: I was aware of the statement made by a representative of our pilots before the committee. Frankly, we're puzzled about what motivated it.

In the context of what I think you were referring to, the regulations that relate to the number of hours a pilot can fly, my understanding is that in fact Air Canada pilots fly for far fewer hours than are permitted. That ceiling is not really a factor in the context of our pilot operations. The number of hours they fly is governed by their union contract with us, so even changing the permitted hours wouldn't really make a difference in the context of our operations.

I really don't know what motivated that statement. Certainly that doesn't reflect the views of Air Canada.

Mr. Fontana: His other concern was the fact that the pilots themselves, as a user group, don't have a seat at the table per se, other than through the advisory committee, as I understand it. Now, whether or not the advisory committee puts a chair at the table for the Air Canada pilots... How do you believe, in terms of the pilots...?

The user of the system obviously is the operator of the airline - that's one user - and you're at the table. But as far as the advisory committee and... I guess a pilot now has the exclusive authorization, in that if he or she feels it's unsafe to fly for whatever reason, be it weather, technology, whatever the case may be, the pilot can essentially not fly. Is that right?

Mr. Elliot: I believe that's the case.

Mr. Fontana: So they have the ultimate authority regardless of whether or not they have a chair at the table.

The Chairman: Thank you, Mr. Fontana. If we're going to get to the other questions, perhaps we could have just a very brief response to that.

Mr. Elliot: It seems to me, as you pointed out, that safety is governed by separate legislation. It seems to me that if there's a problem with safety there are other avenues for the pilots' concerns. Indeed, if there is a real issue in the context of safety, NAV CANADA will have to comply with the requirements laid down by the Department of Transport. That's the more appropriate avenue to use.

I don't think participation on the board of directors that relates to the running of NAV CANADA would be central to the issue of safety at all.

The Chairman: Mr. Hubbard.

Mr. Hubbard (Miramichi): Thank you, Mr. Chairman.

The presentation has been rather reassuring. I'd just like to ask a few questions about the finances. You indicated that there's a $200 million cost to the government under the present system, on an operational basis. We know there has to be a $1.5 billion loan or amount of money to purchase this system. We see the idea being presented that it's going to be more efficient.

Where is the money going to come from to make this great saving? If you borrow $1.5 billion you're going to have to pay probably at least $100 million a year in financing charges. There's a$200 million loss at present. How is the new system going to develop economies of operation to enable it to exist over a period of time?

Mr. Elliot: Of course, there will also be a new source of funding in the context of the fees for overflights. That was not a part of the pre-existing system.

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In addition to that, my understanding from talking to those who've done the sums is that they've sorted out their fee structures and they've done their calculations, and the expectation is that the end result will be a wash. In other words, the cost to the airlines will be roughly the same as the ATT, which is remitted today. The fees collected, including the fees for overflights, will be sufficient to deal with the current drain on the federal treasury.

I didn't do the sums and certainly it would be Air Canada's hope and expectation that running NAV CAN like a business, with the efficiencies inherent in that, will ensure that at the end of the day the fee structure will be comparable and that the operation will be successful in covering its costs. I believe it's the provision for fees for overflights that will provide the basis for the infusion of new funds into the operation of the system.

Mr. Hubbard: Do you have any concept of what these fees for overflights might be? Would they be, for example, 35% of the total operating costs?

Mr. Elliot: I don't know personally.

A voice: They would be pretty close, Mr. Chairman.

Mr. Hubbard: But you are reassuring us that this economy can be achieved and the Canadian people can fly safely and airlines can continue to exist at all levels and the thing will work as well as it is working now?

Mr. Elliot: Those are the assurances that have been given to us, Mr. Hubbard. In our examination of the documentation we're satisfied that this will be the result.

As I indicated in my presentation, you always have to be concerned that in any monopoly situation there will be less than full discipline on costs because the operation will tend to work on a cost-plus basis. So that's where the challenge for the NAV CAN management will be.

The Chairman: Thank you, Mr. Elliot. Thank you, Mr. Hubbard.

Perhaps we could have Mr. Keyes for a very short question. Mr. Gouk has indicated that he also has one very short question and then we'll move on.

Mr. Keyes (Hamilton West): Thank you, Mr. Chairman. My question is almost a supplemental to that of my colleague, Mr. Hubbard. It has to do with fees as well.

Mr. Elliot, thank you for your presentation. We had the general aviation community before us earlier this week, and they are of the opinion that as recreational operators and as smaller group operators they should be exempt from fees. As a major carrier, do you have an opinion on such a message?

Mr. Elliot: I think the position of Air Canada is that all users of the system should participate in an appropriate way. We have recognized and acknowledged the need for provision for recreational and private users in the structure of the fee system, but I don't think we would be advocates of providing them with access to the system at no cost.

Mr. Keyes: Thank you.

The Chairman: Mr. Gouk.

Mr. Gouk: In the Air Canada pilots' submission there were three components that they named specifically. The one Mr. Fontana brought up is primarily between Air Canada and the government and in fact it doesn't actually have anything to do with NAV CANADA itself.

One other one that was brought up was AWOS. Outside of government departments, I have not found anybody who supports AWOS. My personal position is that it is a safety issue. I would just like to ask if Air Canada has any comments with regard to using airports relying on information from AWOS.

Mr. Elliot: I don't pretend to know very much about AWOS, but my understanding is that there are problems in terms of making the system work properly. My company is cooperating in terms of providing pilot and other facilities in relation to the testing of the system to ensure that it works. That really is the sum total of my knowledge of that system, but obviously it has to work. It will not be satisfactory to anyone if the system doesn't provide the information pilots need to operate their aircraft safely.

The Chairman: Thank you very much, Mr. Elliot.

Mr. Elliot: Thank you, Mr. Chairman.

The Chairman: Perhaps I could invite the members of the Canadian Airports Council and the Greater Toronto Airport Authority to the table.

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Given the desire to hear from both groups, and the time pressures that will befall us with the vote, we have a considerable amount of time here. Originally I would ask for about a ten-minute presentation from each group.

Are you going to do a collective presentation or two separate presentations?

Mr. David Dover (Chairman, Canadian Airports Council): With the permission of the chair, we'd like to do them both together and entertain questions afterwards.

The Chairman: Terrific. Thank you very much. Welcome.

Mr. Dover, since you spoke, perhaps you could introduce the other members and help us get going.

Oh, I see there's a slide show.

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The Chairman: Okay, Mr. Dover.

Mr. Dover: Mr. Chairman, on behalf of the Canadian Airports Council, I'd like to thank you and the members of the Standing Committee on Transport for the opportunity to express the views of the council.

At the outset, in principle the Canadian Airports Council supports Bill C-20, an act respecting the commercialization of civil air navigation services. On a personal level, I must tell you that I've been an IFR pilot for over thirty years. I've flown my own aircraft in North America, Central America, across the North Atlantic and into Europe, and I concur with the CAC position. So I have a working knowledge of air traffic control.

I would like to introduce my colleagues: Ernie Caron is the vice-chairman of the Canadian Airports Council; Steve Shaw and Don Ross are from Toronto; and we also have Paul O'Neill from Ottawa's Macdonald-Cartier International Airport with us.

The Canadian Airports Council was started in 1989. It was formed by the four transferred airports of Vancouver, Edmonton, Calgary and Montreal. Since then, our membership has increased to include Calgary, Edmonton, Moncton, Halifax, Toronto, Montreal, Ottawa, Victoria, Winnipeg, Saskatoon, Regina and Thunder Bay.

We meet once a quarter, and the main aim of the Canadian Airports Council is to allow all of the airport operators across Canada to join together to discuss mutual economic benefits to our community, mutual purchasing agreements, and operational procedures, so that we can provide the best system on the ground that exists probably anywhere.

On March 28, by resolution at our directors meeting, we requested Toronto to research the ramifications of Bill C-20. We identified one major issue, which Mr. Caron will address, and there was additional director input as the members came on board, and Steve and Don will address that.

We will be meeting again on June 20 in Moncton to develop the policy that will apply to all of the airports across Canada. Just before I ask Ernie, I want to say that the Canadian Airports Council really represents you, because we're the economic generators in each one of the cities and the towns you represent. We have a great deal of accountability and a great place within this nation, so it's absolutely imperative that we work in concert with NAV CAN and that we understand totally what is contained in Bill C-20.

Ernie.

Mr. Ernie Caron (Vice-Chairman, Canadian Airports Council): Thank you.

The presentation I'm going to make - and I'd ask you to follow me on the slides, if you wouldn't mind - is on a single issue that we'd like to bring forward. It's an issue that has unanimous concern amongst the members of the Calgary Airport Authority. There is a membership list attached to the presentation. It will be left with you so that you know who is involved.

The issue is very simply the proposed legislation, the Civil Air Navigation Services Commercialization Act, Bill C-20, and specific language in clause 23 of Bill C-20.

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The language in clause 23 we believe enables some users of NAV CANADA services either to handicap or to prevent the operations of other users. In other words, we believe some of the language there can in fact restrict competition. The logical sequence of facts that ultimately leads us to our assumption that certain users can restrict or handicap the operations of others is as follows.

Clause 23 gives NAV CANADA the unilateral right to determine the levels of service at each community it serves through the proclamation of its service policies. It has only two provisos, that such policies meet the test of consistency and that they comply with specified safety standards. Subclause 23(5) of the bill permits any person to request services in excess of the level provided in NAV CANADA'S level-of-service policy, with two provisions. It's one of these provisions that's of concern to us.

There are two provisions. First is that the person requesting provide written evidence that a consensus in favour of the request exist amongst all users. Second is that the person agree to pay all incremental costs for such additional services. The end result is that even if a person is prepared to pay, other users can deny that person the service.

We believe these are highly unusual powers for a monopoly company. We have had discussions with NAV CANADA on this issue right up until yesterday. We've looked at different language to try to resolve the issue. Unfortunately, although a lot of progress has been made and a lot of understanding has been shown by NAV CANADA, we've been unable to resolve this issue amicably between the parties.

That is the succinctness of this issue and the end of my presentation.

Mr. Steve Shaw (Director of Strategic Planning, Greater Toronto Airport Authority): Mr. Chairman, if I may phase into our submission, I'm the director of strategic planning with the Greater Toronto Airport Authority. Don Ross is our legal counsel.

As Mr. Dover said, we were tasked by the CAC to review the bill and to determine, in conjunction with other airports, other members of the CAC, the key issues. Our presentation reflects that. We have passed this submission across to other members of the CAC and have received general support. I would like to speak to the submission rather than read it, and I will just highlight some of the matters.

First is the context in which we see this bill. It fits in with the four principal pillars, as we call them, of the national airports policy. I would just draw your attention to those:

- the Government of Canada, through the Minister of Transport, who will remain responsible for the regulation of aeronautics and the imposition of standards, including safety standards;

- the airport operators, including the CAC members in their role as operators of the airports in the national airport system;

- NAV CANADA, with its responsibility for operating the civil air navigation system across the country; and

- the aircraft operators, who must use both the airports and the air navigation system to provide air transportation to the public in Canada.

In reviewing Bill C-20, the GTAA - that's the Greater Toronto Airport Authority - focused on specific areas to improve effective coordination and integration between the air navigation system, which will be operated by NAV CANADA, and the national airport system, operated by the members of the CAC. Our comments on this bill are designed solely to try to ensure that such a consistent and integrated system will exist after Bill C-20 becomes law. To again underline whatMr. Dover said, we support this process and the bill. What we're seeking to present to you here are matters for clarification and improvement.

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The first issue is the one Mr. Caron identified. We felt the word "consensus" has more then one meaning. We also felt the only circumstance in which users should be able to block the provision of additional services is the condition or state where a majority of the users will be affected and can establish that the additional services will have a material adverse effect upon them. We believe that material adverse effect should not simply arise from increased competition among the users.

We suggest rewording part of paragraph 23(5)(a) to try to provide words that will facilitate users who want to offer new services, airport operators trying to develop their airports, or communities wanting more services then they would otherwise receive. Let me give you an example.

I'm not totally familiar with St. John's, but I understand it gets a lot of fog sometimes. Suppose the community decides it desires to have a higher standard of air navigation system to improve the reliability of the airport, and it's prepared to put money into providing and maintaining that service to extend the airport's operating capacity. We believe the community should be allowed to do that, and the wording should allow that to happen without any veto by users.

Finally, a section of the bill mentions incremental costs payable. We believe those costs should be incremental costs, net of any incremental revenues that might be generated from NAV CANADA by the improvements.

Our suggestion is for an amendment. We recognize there has been a lot of discussion to try to get the right words, but this is our suggestion for subclause 23(5):

That's our suggestion for rewording and addressing the issue Mr. Caron focused on as our major concern.

Let me move to the second aspect. This concerns the interface between air navigation and airport operation. This is simply a matter of clarification. As the bill reads, NAV CANADA is not responsible for the provision of an apron advisory service. We would like to clarify that to make it clear that the movement of aircraft on the apron is not the responsibility of NAV CANADA, and to enable NAV CANADA to continue or take on this operation responsibility after proclamation of this legislation by agreement between NAV CANADA and an airport operator.

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Let me stress that this is just a matter of clarification. I'm not certain we have the right words, but it's just to make sure the point is clear.

So we suggest, in subclause 2(1), adding the following words to the end of the definition of air traffic control services to make it clear:

The definition of airport air traffic control services would also be amended in the same way.

Our third issue - and these are just points we raise to seek clarification and improvement of the bill - concerns the compliance with operational obligations of airport authorities.

Clause 9 of this bill requires NAV CANADA to initially provide the same level of civil air navigation services that the Department of Transport provides. However, NAV CANADA is free to establish service policies that are different from those of the Department of Transport, provided that prior to changing them it complies with the notice provisions in clauses 14 to 22 of the bill.

Clause 14 requires that any changes in the standards must be in accordance with the Aeronautics Act. I won't go into that, but let me just get to the point of it.

Under the terms of the transfer of an airport to a Canadian airport authority, we are required to meet objective standards that go beyond safety requirements. If an airport authority does not continue to operate the airport to a predetermined standard over time, the government may terminate the ground lease for the airport authority and take the airport back. However, an airport authority may not be able to provide this standard of service, in practice, if NAV CANADA does not provide the required civil air navigation services.

Let me give you an example. Forgive me, because it is an extreme example, but it makes a subtle point. In Toronto at Lester B. Pearson we obviously have a program. At the moment we are building a fourth runway and have plans for a fifth and a sixth. A runway is inadequate and of no use unless the correct air navigation services are provided. As the bill appears to be worded at the moment, NAV CANADA could decide not to provide the required facilities we need. However, we need the capacity, so we find ourselves in the bind of being required to provide an effective airport service at a world standard, and yet being constrained by the lack of provision of air traffic control services.

It's an extreme example, but appreciate that it could in some ways arise in other situations. So we suggest that at the end of clause 14 after the words, "safety of the public" the following words be added:

Finally, we have two further points, which again are just matters of clarification. It is clear from NAV CANADA's incorporating documents, article V(f), that it is committed to consultation. Article V(f) of the NAV CANADA by-laws states that: "The Corporation shall also consult with such persons as are reasonably appropriate" in respect of changes in charges, facilities and levels of service, and that "such consultation shall include the provision by the Corporation of those persons of justification...".

There's no disagreement about the need to consult. We would just like to see in the wording of the bill under subclause 15(1) and also under clause 23 - I won't go into the details - the indication that an aerodrome operator will be included in those consulted, just to make it quite clear so there is no misunderstanding.

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We believe the bill is a good bill, but with the suggested changes or improvements, we anticipate a harmonious and successful relationship with NAV CAN as the operator of the air navigation system. If I may speak for the Greater Toronto Airport Authority as the largest Canadian airport authority and for the other members of the Canadian Airports Council, we believe the relationship will be harmonious and successful, and we look forward to it.

Thank you very much for your consideration.

Mr. Dover: Thank you, Steve.

Finally, I would like to submit the report of the Winnipeg Airports Authority, in which they have identified an issue concerning the Department of National Defence.

In 1995 at Winnipeg there were 23,126 military movements, which is 15% of the total aircraft at the Winnipeg Airport. If NAV CANADA is to take Winnipeg as a profit centre, then the costs of the operations to supply the services to the Department of National Defence will have to be borne by the other users within the Winnipeg area, because NAV CANADA is restricted from charging the Department of National Defence any kind of remuneration. So the recommendation from Winnipeg is that the charges for the same services must be the same within Canada for the Department of National Defence.

As these other submissions come, we will submit them to you.

That concludes our presentation. Thank you very much, sir.

The Chairman: Thank you.

May I have the attention of members for a minute? The bell has begun fifteen minutes earlier than anticipated.

An hon. member: That's the opening of Parliament.

The Chairman: Oh, is it? Then I will step back from my about-to-be-made statement and suggest that we move to questions.

Monsieur Crête.

[Translation]

Mr. Crête: I would like to thank you for the quality of your brief. You clearly demonstrate the danger of a monopoly that could arise if additional guidelines are not imposed, particularly with respect to the protection of services.

You have proposed some amendments, primarily to clause 23 of the bill. However, I was wondering if you would not prefer incorporating a sort of preamble in the bill which would say that safety services must be protected specifically, and which could set out your concerns regarding the protection of services and user access. That could be included in the preamble, instead of in clause 23. Since the preamble would precede the first clause of the bill, it would have an interpretive value for the whole bill, which would, at some point, prevent NAV CANADA from doing things in a roundabout way.

Do you think that this would be additional protection or are the amendments you are proposing enough?

[English]

Mr. Dover: Thank you, Mr. Crête, for your kind opening remarks. I appreciate that.

The safety and security, of course, is a different issue from the levels of service. We have to rely upon the Solicitor General and Transport Canada, because safety and security ultimately lie with the Minister of Transport.

I would ask my colleagues to comment on the security of service. By security, do you mean a consistency in service, or a certain level, or is security the protection of the public at large?

[Translation]

Mr. Crête: My question was not so much on safety, as I already have that information. Rather, I want to ensure that for NAV CANADA, there will not be ways for it to sidestep safety concerns in favour of economic interests. In fact, economic decisions could contribute to the closure of a small airport, because installing some piece of equipment or another would be too costly.

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You have commented on the dangers of a monopoly, and I was wondering whether you considered it important to specify that in the preamble or whether you felt your proposed amendments would be sufficient.

[English]

Mr. Dover: I'm going to ask Mr. Shaw to reply to that.

Mr. Shaw: Thank you for those remarks. Our comment back is simply whatever will work best, whatever brings clarity and strength to the bill, will be quite acceptable.

The Chairman: Mr. Gouk.

Mr. Gouk: Thank you, Mr. Chairman.

Gentlemen, I've talked to a few of you and to other port authorities, and I'd like to ask you, for the record, if you're aware that Bill C-20 changes the status of several of the employee groups to the extent that where a strike shutting down the airport industry was not possible, once this transfer takes place it will in fact be possible. Is that a concern to the Canadian Airports Council?

Mr. Caron: Unquestionably that is a concern. The ability to shut down the entire air transportation system in Canada and particularly in our individual communities is a major concern to us.

Mr. Gouk: Thank you.

Another area I want to touch on is your concern, which you referred to by way of your slides, with regard to paragraph 23(5)(a). Your slide says a consensus in favour of the request exists amongst all users, and it stops at that point, but in actual fact the legislation refers to all users that are affected by the change. For example, if some northern airport said they wanted an ILS approach instead of an ADS approach, it would only involve the consensus of the users that would be affected by putting that in, in other words, the users of that specific airport.

Does this not maybe make a bit of difference in the context of the concern you brought forward? Would making that clear resolve some of your concerns?

Mr. Caron: No. My apologies for not making clear in my presentation that it is in fact the users that are affected at a given airport, but that doesn't change our position on this issue. We believe that within a community some users can in fact prevent services being provided that may be necessary to other users.

I have a favourite example, if I may give it. NAV CANADA may decide that services during midnight hours perhaps are not required, so those services may be discontinued. I'm talking about tower coordination services. It becomes particularly significant between ground operations during the wintertime, as an example, when you have twelve or fourteen pieces of equipment on the runway, and airplanes that may be attempting to approach or land. This could in the end prevent the carrier that has to operate at midnight, such as a courier operator, from operating at all during those hours of the day, and that's their time of operation.

That's an example of what could take place, but the concern is that a group of users could in fact prevent another single user or other groups of users from using the services.

Mr. Gouk: I would like to clarify that the example you used, instead of putting a new service in, deals with service reduction or elimination, which is covered by a different section of the legislation. I would be concerned that we don't get a situation where one small user is in a position to require an expensive piece of operation, either by way of manpower or equipment or both, that is going to be paid for more broadly, and all the people who aren't going to be able to utilize it are going to have to pay because of that particular user wanting to be able to keep that service. Keep in mind that we're talking about a different section now.

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Mr. Caron: Yes. Of course that's the other side of the coin, if you will, and a concern of NAV CANADA. We understand that concern and have been searching for some kind of language that may be put in the legislation that will satisfy both issues. We certainly understand that issue and would not want to be so open that that kind of thing could happen.

Mr. Gouk: I want to get one last point in. Certainly you can carry that one further at some point if you wish.

With regard to the military operations in Winnipeg, the way you posed that suggests to me that you're concerned that there would be a regional charge to make up for the difference of not collecting that 15%. Is not this a globally based charge that they're paying on a nationally determined mileage fee, combination of mileage and weight of aircraft, as opposed to a regional charge that would recognize regional costs minus the revenues they've lost because of the high density of military traffic?

Mr. Dover: The issue in Winnipeg is that if NAV CANADA in its operation is to establish specific-cost profit centres - Winnipeg having a high concentration within the Winnipeg area, whereas other centres, such as Calgary, do not - then the people who operate within Winnipeg would have to pay for that type of military operation. Therefore, they're suggesting that a formula be worked out that would apply to the Department of National Defence no matter where they go so it wouldn't become specific site, centre, cost areas.

Mr. Gouk: I understand. Thank you.

Mr. Fontana: Let me congratulate CAC on their fine job and their enthusiasm with regard to our airports policy and for really taking the initiative in driving the airports agenda, which obviously at the end of the day is going to provide better services to all the communities.

I want to touch on the concern you have. Sometimes when lawyers draft certain clauses all kinds of red flags go up, and I'm just wondering if it's an overreaction on your part.

I appreciate the slides and the example you used, Ernie, and that Jim posed the same question. I understand there's a level of service that is defined by NAV CANADA, and in turn by the Aeronautics Act, in terms of safety, but it's the level of service in excess of the level of service that's requested by a particular community. You used the example either of St. John's or an airport that might not have a curfew; for example, Hamilton, which goes for 24 hours a day, whereas some other airports don't.

In excess of what's established, that's where you have to go and get consensus.

First, I understand that NAV CANADA has to provide it. It's written that it "must", one, if you're prepared to pay for it, and two, if in fact there's consensus amongst the users. I take it that "the users" does not necessarily mean the airport, but could be other users who may be affected.

In the example Ernie used, it was cargo operations. Say an airport in a community was able to attract a cargo operator that came in at 2 a.m. or 3 a.m., and that was the only time, and obviously you wanted air navigation services for that time period. If the user - and I'm talking about the airline or the cargo operator - decides to pay for it, what is wrong with that? I'm sure that NAV CANADA would want to do that. The airport obviously is looking for revenues too. You're all partners in this.

This is what's so unique about NAV CANADA: all the users are sitting at the same table trying to determine how best we can get the system to be much more efficient and working together.

I'm just wondering if it's not really an overreaction on your part to how subclause 23(5) is drafted.

Mr. Dover: Thank you, Mr. Fontana, for your kind remarks, and we look forward to the day when London will be part of the -

Mr. Fontana: May 8 or May 9.

Mr. Dover: - Canadian Airports Council, sir.

Mr. Caron: I don't believe it's an overreaction. I guess one of the reasons why we feel strongly is that we've actually had the experience in Calgary, where we had the services withdrawn, arbitrarily, between the hours of 12 a.m. and 6 a.m. It was determined that this service wasn't necessary, and this lasted for a period of about three months or so, but effectively we had a very serious problem with operations not being able to operate.

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If everything's CAVU and there are no problems where equipment would have to be around, then really airplanes can come and go on their own hook, so to speak. When there's equipment there has to be some coordination between the equipment, and that coordination is normally and will always be provided by either NAV CANADA or the tower services.

It became a situation where we either had to get somebody in the tower or close the runway for the period of time, if there was snow removal taking place, for example. It effectively had the ability to shut us down during a period of time.

Does the legislation provide that? As we read it, it does. Our point is that if you're prepared to pay for the additional services, why aren't those services provided? We don't have any qualms at all about paying for the service if it's over and above what's provided. The problem is the possibility that someone could say no even though you're prepared to pay.

Mr. Fontana: Ernie, I could say the same thing about your users on not-for-profit airport authorities essentially having the same difficulty with airport boards in establishing fees and everything else. I think it could be worked out.

Just let me ask one question. Have you talked to NAV CANADA, which in fact has users sitting on its board, about your concern?

Mr. Caron: We have had considerable discussions with NAV CANADA right up to yesterday afternoon, as a matter of fact, and NAV CANADA does understand this issue from our perspective. They've shown a large degree of consideration and have proposed various ideas to comfort us, if you will. I think we're very close to a mutual understanding, but as of yesterday we were unable to agree on a solution.

Mr. Dover: Mr. Chairman, Mr. Ross has a short statement on this.

Mr. Don Ross (Legal Counsel, Greater Toronto Airport Authority): Mr. Chairman, I can address Mr. Fontana's question from the legalese perspective.

I think we agree that there's a concern both ways. Our problem with the language as it's presently drafted is twofold.

First of all, the word "consensus" has a somewhat unclear meaning, as Mr. Shaw has explained. It can mean unanimity, it can mean most people, or it can mean a majority. We want to make it clear that it's not unanimity, where somebody can hold everybody else to ransom. It's not even most people, where a few people can hold everyone else to ransom. It should be a majority. That's our first point.

Our second point is that, as Mr. Shaw and Mr. Caron have indicated, the request can come from any person. It could come from an airport authority, it could come from a courier, it could come from a municipality. As long as the users are not materially harmed by that request, we don't think they should be able to say no. That's what the language we're proposing in the brief is intended to do. So it's not that there isn't a point here, it's just a question of what's the best way to address it.

The Chairman: Thank you.

I am conscious, as I suspect we all are, of our life ticking away here with that bell, and I would like to ask the guidance of members. I'm told that NAV CANADA is here and their opening statement will be somewhere between 5 and 10 minutes. We are currently facing a 30-minute bell, of which 8 minutes have elapsed. Would you like to finish questioning on this? Are there more questions on this group, or would you like to move to the opening statement from NAV CANADA and come back for questions?

Mr. Jordan, do you have a short question for this group?

Mr. Jordan (Leeds - Grenville): Yes, and it's to Mr. Ross.

If you think there are risks involved here, don't you think you should have some form of appeal? If you think there's been an injustice or if you think monopoly powers have been imposed upon you and you've had an experience with it...? I personally think maybe you're overreacting a little bit, but you've experienced something else and you wouldn't agree with me. Don't you think some form of appeal...if you think powers have been misplaced?

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The Chairman: Mr. Ross.

Mr. Ross: In putting together this submission, Mr. Jordan, we actually considered that issue. I think our conclusion was that if we could get these changes we wouldn't need that right. We were reluctant to impose an appeal process on NAV CANADA because it would mean that effectively they were no longer necessarily really running the show. People could keep appealing.

Mr. Jordan: Yes, but you're not likely to ever get it written down so that each side will be totally satisfied, are you? You're always going to find some way of looking at it, some way in which you think you've been hard done by. Wouldn't an appeal mechanism just as a safety for...?

Mr. Ross: There is of course always an appeal to the court on whether or not the law has been complied with.

Mr. Jordan: I wasn't thinking of the court. I was thinking of goodwill.

Mr. Ross: Yes.

Mr. Jordan: I don't think anyone would deprive you unless they had a reason for doing it. They are not going to do it just for the sake of making life miserable for you, so there must be a rationale behind their depriving you of what you are asking for, although you may not have agreed with it.

I think what you need is a dialogue; they need to go on to say what the reason is for not offering that to you. I think you should have the opportunity to have it explained to you in some fashion.

Mr. Ross: Certainly the explanation concept is part of the last point. We'd like consultation that will force explanations.

The Chairman: Are there any other questions?

I've done some quick mathematics and had some input from other members of the committee. I think we will hold off and have the NAV CAN presentation when we return from the vote.

I apologize to folks for this interruption. We are but servants of the House. I'm told that this is a 30-minute bell, to be followed by a vote, to be followed by another 30-minute bell. We may not be back in this room until some time around 11:45 a.m. The clerk will endeavour to keep you posted on that and we will be back as expeditiously as we can so we can hear from NAV CANADA and have the full discussion I know everybody would like.

Mr. Dover, Mr. Shaw, Mr. Ross, Mr. Caron, thank you very much. We appreciate the time you've taken to be here.

The room will be secured.

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The Chairman: Attention please, members.

Let's get under way, gentlemen. It seems that I added to the confusion. We were able to do away with the second 30-minute bell and I appreciate your returning so quickly.

Mr. Crichton, are you going to lead off?

Mr. John Crichton (Chairman, NAV CANADA): Yes, Mr. Chairman.

The Chairman: I have been asking presenters to try to confine their remarks to about ten minutes, but given that you are both the last presenter and the major reason why we are here, we'll give you some latitude on that.

Oh, excuse me, you're not the last presenter. But if you would care to limit your remarks somewhat, that will give us as much time for questions as possible.

Mr. Crichton: Thank you, Mr. Chairman and members of the committee. NAV CANADA certainly welcomes the opportunity to appear before this committee to attempt to assist you in your deliberations on Bill C-20 in any way we can.

I'd like to introduce Monsieur Michel Vennat, director of NAV CANADA; and Mr. Ken Copeland, president and chief executive officer of NAV CANADA.

We filed our brief and submission to the committee with the clerk approximately 10 days ago. As briefly as possible, it attempts to cover the history of this project and to deal with the main issues arising from Bill C-20 as we understood them at that time. It's not our intention to read that brief. We know the committee wants to ask questions.

Instead I would like to first ask Monsieur Vennat and then Mr. Copeland to make some brief opening remarks. I'll have a small point to make at the end of their remarks, and then with your permission we could turn to questions.

[Translation]

Mr. Michel Vennat, O.C., Q.C. (Honorary Director, Chairman of the Human Resources and Remuneration Committee, member of the Pension Committee, NAV CANADA): NAV CANADA is an institution of very canadian inspiration, which was created in a particular way. I mean by that that it is the result of a consultative process conducted, over a one-year period, by Transport Canada, in conjunction with all interested stakeholders, including commercial carriers, general aviation and the unions, from the Air Navigation Service to the airport employees and pilots.

At the end of this year of consultation, a rather remarkable consensus developed among the stakeholders, which is reflected in the structure of NAV CANADA, in its letters patent and its bylaws. Before they were tabled, the statutes were discussed and approved by the Department of Transport.

The makeup and the structure of the board of directors reflect not only this consensus, but also the healthy balance between the various stakeholders. Of its 15 members, three are appointed by the government, two by the unions and five by industry representatives, and four are independent directors. The fifteenth is obviously the chief executive officer. As a result of this structure, no group or interested party can monopolize nor exert too much influence over the management of the corporation's business.

In addition, the corporation's statutes and the act provide for an advisory committee composed of 15 members who are elected by the associate members of NAV CANADA themselves. They are free to determine what issues they want to deal with and have regular access to NAV CANADA management, which adds a consultative characteristic to the corporation.

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We feel that these internal bylaws are the key to a successful operation and protect the general interest of the public, as well as the specific interests of the various stakeholders.

In addition, I remind you that bill C-20 contains provisions which limit NAV CANADA's ability to modify its statutes without the consent of the Minister of Transport, which is an additional safeguard for the public.

Although none of the stakeholders are fully satisfied with each aspect of NAV CANADA's structure, we feel, however, that there is a very important and clear consensus with respect to our statutes, the way we are structured and bill C-20.

The second issue I would like to cover concerns services in French provided by NAV CANADA. Bill C-20 and our statutes stipulate that we will be subject to the Official Languages Act as if NAV CANADA were a federal institution. Our statutes and bylaws were tabled in both languages and both versions are equally authoritative.

We unreservedly support these provisions, as we have repeated and proclaimed on several occasions, the most recent being during our first general assembly. Bilingual air traffic control will be maintained in all designated regions and expanded as required.

Canadians will be able to deal with NAV CANADA in the official language of their choice. This commitment is taken very seriously by the board of directors, by management at the corporation, and it is perfectly attainable, since we will inherit from the department personnel and policies which are already well established and well defined in this respect. Thank you.

[English]

The Chairman: Thank you, Mr. Vennat.

Mr. Copeland.

Mr. Ken Copeland (President and Chief Executive Officer, NAV CANADA): Thank you, Mr. Chairman. I welcome the chance to make some short remarks as the president and CEO of NAV CANADA.

NAV CANADA represents the future of our country's air navigation system. It also represents a truly remarkable common vision. Users, employees and the federal government alike believe that commercializing the air navigation service will improve Canada's ability to respond to new technologies and maintain the highest possible safety standards, while reducing costs for the aviation public and the travelling public.

Commercialization obviously signals an extended period of change. NAV CANADA's challenge will be to manage this change in digestible pieces that are supported by our employees and our customers.

Our first responsibility is to manage the current system while rethinking the fundamentals of how we will do business. In the early days we will emphasize stability and the maintaining of full confidence in our operational capabilities. Four words will help to describe how we govern and manage our business: people, safety, technology and service.

People are at the heart of every business and critically important to NAV CANADA's success. As our system grows more sophisticated, NAV CANADA's human resources continue to become our single most important asset.

Training and development will be a cornerstone of NAV CANADA, and an opportunity to do international business. Our training institute in Cornwall has recently been successful in winning training contracts within Canada and in the Middle East, and is working on numerous global opportunities.

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Safety will be at the core of every operating policy, procedure and activity performed by NAV CANADA, thus ensuring the continued high level of aviation safety that the world has come to expect from Canada. Transport Canada will continue to furnish and establish the safety regulations and standards to which NAV CANADA will adhere.

Technology management is NAV CANADA's greatest initial challenge and opportunity. Development and deployment of modern technologies for air traffic control will substantially enhance aviation economics, safety and convenience. NAV CANADA must respond effectively to changes, such as the introduction of global positioning satellites, by constantly upgrading our technological and our human resources. At the same time, the discipline imposed by commercialization must cause us to justify all technology investments in a business context.

Service and system reliability are the immediate demands of our customers that NAV CANADA will fully meet. Canada, more than other countries, is bound together by air transportation links that must be reliable, safe and competitive. Service also means that NAV CANADA will consult our users to justify major expenditures, and we will demonstrate how our operations can help users reduce costs and improve their efficiencies. We will be examining all areas of spending, including capital expenditures and organization size, to ensure that our efficiency benchmarks to meet or exceed other air navigation systems in the world.

Since joining NAV CANADA a few short months ago, I have been deeply impressed by the widely felt desire to succeed. Government officials, our future employees, union leaders, the aviation community, and particularly NAV CANADA's chair and board of directors, have shown their commitment to make this organization one in which our country will take pride. It's in that in infectious spirit that I wish to share my personal confidence and enthusiasm for NAV CANADA's future. We're building on a successful future, based on a successful past.

I thank the committee for the opportunity to make these remarks.

The Chairman: Thank you, Mr. Copeland.

Mr. Crichton.

Mr. Crichton: Thank you, Mr. Chairman. With your permission, and just before turning questions, I would perhaps just remind the committee of one part of our brief. I guess it's what we could call a technical amendment to Bill C-20. What we're requesting relates to a provision to ensure that the Telecommunications Act does not apply to the rate-making and the charges provided for in Bill C-20. That is not in the bill at the moment. The advice NAV CANADA has received to ensure that clarity is that the bill should be amended to stipulate that. I would make that reminder to the committee. And to the extent that there are questions, we'll certainly attempt to deal with them on that issue.

The Chairman: Thank you.

[Translation]

Mr. Crête: Thank you for your presentation. I will ask my questions one after the other and then you can answer them.

Various witnesses we have met have shown us that NAV CANADA will in some ways have full autonomy over decisions concerning equipment in control towers. When, for example, a decision is made that could result in the closure of an airport or eliminate available services because of analysis that is purely economic, do you provide for some way of consulting the social and economic communities, such as the elected officials in a region?

Let us take a hypothetical case like that of the Mont-Joli airport. After several years in operation, the airport needs new equipment to meet standards. However, a decision is made that it would not be economically viable to buy it. How can the community influence your decisions? Will there be a formal structure for consultations?

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I would like to raise a second point, concerning a proposal that was made just prior to your presentation by the representatives from the Canadian Airports Council concerning clause 23. In their assessment, it makes provision for the right to unilaterally determine the level of service for each community. And we would like clients who want to join in to be able to do so without having to face a unanimous decision by users. You heard the presentation and I would like you to clarify this for me.

I would also like to say a few words about charges, and how they will work. Since you will be responsible for their administration, could you please give us a more comprehensive overview of the kinds of charges that will be imposed.

[English]

Mr. Crichton: Let me attempt to deal with each of the questions in turn.

In terms of NAV CANADA's consultations on either the contraction or expansion of facilities and levels-of-service policy - and I would interpret that in the range of levels-of-service policies - the bill provides for a very broad and inclusive consultative process. Essentially, it says that any interested person - not necessarily a user, by any means, but any interested person - has the right, upon notification to NAV CANADA, to be put on the consultative list. So I think the bill is very broad and very inclusive. Any interest that feels that it has a legitimate interest in any significant decision in that area that NAV CANADA is going to do has the right to be consulted in that regard.

On the question of clause 23, which was raised by the Canadian Airports Council, regarding changes in levels of service or requests for additional levels of service beyond those established, there are a number of things to appreciate in this respect.

I believe the bill was drafted with the understanding that virtually in all circumstances there is a symmetrical confluence of interest, if you will, between the levels of service that a user, an operator of an airplane, will want to have and the interests, say, of an airport.

By way of example, I simply indicate to you that an ANS service that is deficient in terms of its level will virtually always result in a delay being imposed on the operator of an airplane. That is almost always the case. Of course, the party that is most affected by that is the operator of the airplane. Delays cost money, and the operator of the airplane will feel that in his pocketbook right away.

So I think there is an understanding that we need to address the concerns of the people who will be the most affected and who, under this bill, have to pay all of the costs of providing the service, and that while nothing in life is 100% perfect, we believe - and we have not as yet been able to come across any genuine or legitimate examples to the contrary - that by structuring the bill in the fashion in which it has been fashioned we will in fact look after those concerns.

I think the history in Canada has been that the request for additional air navigation services almost always comes from the people operating the aircraft and who must live with the system.

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I would remind the committee that the very initiative to commercialize this system had its genesis in the mid-1980s, when the commercial aviation industry in this country was suffering huge financial losses as a result of the inability of the system to deal with the capacities being imposed on it. This was particularly the case in Toronto, but it was affecting the entire country. We were losing literally tens of millions of dollars a month through delays. So the initiative to ask the government to find a better way to commercialize the system came, in fact, from the users, because they wanted expanded service and they wanted a more efficient service.

We have engaged in consultations with the Canadian Airports Council, as Mr. Caron mentioned to you earlier, and I would certainly agree with his characterization that some of those provisions in clause 23 have to be fine-tuned and that some of the concerns they have must be looked after. We're certainly willing to do that, and I think we have made a proposal that in fact does that.

If I understood Mr. Crête's last question with respect to tariffs or charges that would be made, obviously the actual structure of the charges has not yet been arrived at. It is far too early in the process. However, there are several clauses of Bill C-20 that impose a very heavy onus on the corporation when it comes to establishing those charges and consulting with respect to them. There are also clauses that place some very clear obligations on the corporation in terms of what it can and cannot do in arriving at those structures.

I can certainly tell you at this point that the board and management of NAV CANADA is extremely sensitive to the entire user community - both Canadian and foreign large, small, and medium-sized carriers - and NAV CANADA will be engaging in consultations that will be very broad-reaching. Indeed, NAV CANADA will be seeking, ab initio, the input of users even before initial proposals are made. But we will certainly be respecting all of the principles set out in the bill and we will be very sensitive to them.

The Chairman: Thank you.

[Translation]

Mr. Crête: I would like more details on the socio-economic criteria. Perhaps I didn't formulate my question clearly. I wasn't really focusing on consultations. What I wanted was some kind of assurance that your decision will take socio-economic, regional, and other criteria into account.

[English]

Mr. Crichton: The only way I could answer that at this time is to suggest that this is a matter that is ultimately up to the board of NAV CANADA, both in terms of assessing the merits of any submissions that are made to it, and depending on the matter they were attempting to deal with.

I think the principle behind the commercialization is that NAV CANADA is a private corporation that is seeking to obtain the object set out in its letters patent. It is not a regional economic development arm of the government. On the other hand, I think the bill is inclusive enough when it invites consultations, and I think the board is very broad, very diverse, as Mr. Vennat has indicated. It comes from all parts of Canada and would be sensitive to all submissions.

But at this point I think it would be presumptuous of me to say what, on any list of issues, the board of NAV CANADA would necessarily take into account. I think it would depend on the facts of the circumstances.

The Chairman: Thank you.

Mr. Gouk.

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Mr. Gouk: Thank you, Mr. Chairman.

Gentlemen, I commend you and all of the other partners in this.

Early on, although there were a lot of options as to how Transport Canada could divest itself of the air navigation system, it seemed two came to the forefront: the not-for-profit corporation and the crown corporation. I have been in favour of the not-for-profit corporation right from the start, and I think the efforts made by all of the various partners in this are what led to this becoming the final resolution.

The bill itself I do not have a great deal of difficulty with. I think it's primarily a good bill. We've heard a lot of concerns brought before us, and for some of these a few of us will be considering some small amendments, but I don't think there will be anything of major impact.

However, there is one area I am concerned about. As I know you're now aware, a number of the bargaining agents that will be involved in this have the capability of shutting down the air industry in this country. We've already seen a port strike in 1994 that had crippling effects on our economy and resulted in legislation to put them back to work. We had the same thing in 1995 with the rail industry, also resulting in legislation.

We had legislation that covered some of the bargaining agents and essentially prevented them from shutting down the air industry in Canada. That legislation will no longer apply to them as they transfer from the public sector to the private sector. I would ask if you are aware of this situation and are concerned about the potential of a strike that would shut down the national air system in this country, and if you would be in favour of some form of final dispute mechanism - some labour dispute settlement mechanism that treats both sides fairly - being put in this bill to ensure that kind of national devastation does not occur.

Mr. Copeland: Mr. Gouk, when I came to NAV CANADA and met with the board prior to my selection, there was a great deal of discussion around this very point. This is one of the challenges of NAV CANADA. As it moves from its current status into commercialization, there are some obvious changes relative to labour relations.

I wish to assure you that much of my time in the past three months and a bit has been focused on getting ahead of and getting ready for this reality as depicted by Bill C-20. I'm very cognizant of the concerns you've expressed. It will take a great deal of good management ahead of us to ensure that nothing of calamity happens.

Relative to your point about some sort of arbitration, I would make the point that to be here today, NAV CANADA has reached certain agreements with the bargaining agents that do not include the sort of mechanism you've described. Of course we would need to study such further in conjunction with them and other stakeholders. I can only depict an openness to do so as we move ahead.

Mr. Gouk: I'm not asking you to endorse it or ask for a specific thing to be put in place. I'm asking if NAV CANADA has an objection to such a thing possibly being put in place. I'm not asking you to lead the charge or even to say, yes, we think that would be great; we would love you to put that in. Rather, I'm asking whether you have any concerns or objections specifically to an attempt to put something like that in to prevent the kinds of national problems I've outlined.

Mr. Copeland: Mr. Gouk, I'm having some difficulty with the fine line between endorsement and no objection.

Some hon. members: Oh, oh!

Mr. Gouk: The fundamental difference is I'm not asking you to ask us to do it. I'm asking if you would raise an objection if we did it.

Mr. Copeland: I believe NAV CANADA would remain open to having discussions on this front.

The Chairman: Well stated.

Mr. Keyes: Leave it in the hands of the legislators.

Some hon. members: Oh, oh!

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The Chairman: Thank you, Mr. Gouk. Mr. Comuzzi is next.

Mr. Comuzzi (Thunder Bay - Nipigon): Thank you. My questions are much the same, Mr. Chairman.

Good morning, gentlemen. I was interested in your remarks, Mr. Copeland. At one of our first meetings in transport some several years ago, someone sitting in that chair said exactly what you said, which is that human resources are our single most important asset in this country. That was said by the president and chief executive officer of CNR, Mr. Lawless.

He proceeded to sell his trucking arm under Route Canada. That's now ended up in the courts. We have a judge looking into the unfortunate events for 2,400 to 2,500 employees. Then we proceeded to get rid of about 10,000 CN employees after he made that statement. So I hope destiny doesn't come back to haunt us on that statement.

I am particularly concerned about what Mr. Gouk has said and brought up. In order to get to where you are today, I understand there have been substantial negotiations and a very lucrative severance package, one that makes everyone in the industry rather shy that they weren't part of that severance package. Be that as it may, it's negotiated, so we're not going to talk about it.

What concerns me in the process is this. We have eight bargaining units, as I'm told. There are several bargaining units within those eight bargaining units. Although everybody is shaking hands and happy and smiles and kisses at this stage of the game, it's not always going to be that way. I can see that down the road we're going to have some problems for which we are going to impose the necessity on the House of Commons to come in with back-to-work legislation.

I think now is the time for us to use our minds to try to prevent that in whatever way we can at the outside of the transactions rather than when it starts to happen and when we have no chance. I would like to hear what you three gentlemen have to say about that particular aspect of a labour negotiation and the threat of closing down the whole airline industry.

Mr. Copeland: Thank you for the question. I understand the past reference to somebody else saying that human resources are the single most important asset. I always say that with misgivings, because any accountant will tell you that human resources can't be put on the balance sheet as an asset. So it's a figure of speech. Notwithstanding, it is one that is very important.

The severance package that was put forth was part of the relationship with government, as you know, I would expect, and from my viewpoint was simply the terms of the contract.

There are eight and some further bargaining units here. I don't want to minimize this challenge of ensuring that we move to look ahead at a win-win environment. I am not totally inexperienced in labour relations and employee relations matters, though I've had the fortune of not having a strike in my past. But I acknowledge it is always an outcome of negotiations that have not proceeded as they might have. That is a simple reality of running a commercial company today under the Canada Business Corporations Act.

Notwithstanding that, I want to put forth a view that we have, by the very terms of our transition, some time to work with the unions and the employees before the first bargaining contract comes up. We'll be making a simple statement that management will be working extremely hard to ensure that in a commercial context we find labour peace and that we are able to operate the situation with both effectiveness for the users and efficiency.

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There very well might be a point at which we're going to re-engineer some of the parts of the system that have a different impact on the employees. I've spoken to many of them at both the individual level and the bargaining unit level, and they're aware of that. They just want it to be done with respect, with notice and under a good human relations, labour relations and employee relations manner. That's what I intend to do.

Mr. Comuzzi: Let's go back. Are all the contracts going to expire at the same time?

Mr. Copeland: No, sir. They start in the spring of 1997. The bigger ones come up later that year.

Mr. Comuzzi: So you stand at this point in time, or at several times during the course of a year, faced with the eventual possibility of a work stoppage by one of the eight bargaining units?

Mr. Copeland: That's a possibility.

Mr. Comuzzi: Is it not wise to try to bring those times together at the outset?

Mr. Copeland: That is foreseen as part of the transition process, such that there would be some amalgamation of the employees into a simpler bargaining process under fewer units, though it hasn't been determined if it is one or a few, and what is meant by that. It's certainly fewer than the eight that are there now. I cannot be specific in terms of that. It's going to happen over a transition period, or longer.

The Chairman: Mr. Jordan, do you have a question?

Mr. Jordan: If I understand you correctly, Mr. Copeland, these negotiations have gone on, or are now going on, with people who have become employees from eight different former unions. How is it going?

Mr. Copeland: I'm surprised. Many of you who have had a chance to see my CV may have noted that my last portfolio was running Ontario's workers' compensation system, which has some significant labour relations dynamics, both internally within the company and among some parties outside that are also interested, called labour and management.

I'm considerably encouraged by the enlightenment - I don't want to be naive here - of our discussions with both labour and management. I have had them both. There's a fair degree of skepticism by both. I'm saying to them: do we want to go backwards in terms of how labour relations have worked here in the past, or do you want to move forward and find a new plane with possibly more of a mix of what we call employee relations elements in place to balance off some of the labour relations in the far past that have caused problems? I find the people on both the management end and the labour end are open to such things and encouraged.

There's a little bit of skepticism, but it's about each other. Management believes they could get there, and labour would be difficult. Interestingly enough, labour has expressed the same concerns. They say they could be open to such views and certainly want to communicate with me to develop them, but they say I have such a big job in moving the management of the current organization to such views, which is almost an identical view to what they've expressed.

So I think that with some good management, we can move forward on some very different views of labour relations and employee relations. I'm very encouraged.

Mr. Jordan: We had this concern expressed to us a day or two ago. I've forgotten which group it was. I think what they were saying is that they wanted to make sure they take with them every conceivable advantage they had with their present employer. I suppose that's a natural thing to want to do.

I know what you're going through, because I brought together 23 groups one time that were represented by different employees. But at some point you have to stop and say, "This is a good package we're offering you. It's different from the one to which you've grown accustomed. You must be prepared to be somewhat flexible, or perhaps you shouldn't become an employee of ours."

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Is that the kind of language that will develop? I can't see going into this if you have all these different people thinking they can take everything they had with them.

I can see, to a degree, where you'd recognize somebody who had worked for the government for 20 or 25 years - long-standing service - of an age that he probably doesn't have too many opportunities. I can see maybe giving some special consideration there. But I don't envy you your job, because I know it can be very taxing.

The Chairman: Thank you, Mr. Jordan.

Mr. Copeland, perhaps you could make a brief response to that. Mr. Keyes has a question and there's one other question. Then we should try to close this session.

Mr. Copeland: I would like to thank Mr. Jordan for his comments. With his experience in23 such situations, I'll know where to look to get advice on this matter.

The Chairman: Mr. Mercier has indicated he has a small question. Perhaps I'll go toMr. Mercier, then back to Mr. Keyes and out.

[Translation]

Mr. Mercier (Blainville - Deux-Montagnes): When an organization is privatized, some provisions favourable to employees and customers while the organization was under federal control may no longer apply, because, through negligence or omission, they have not been provided for in the legislation. Official languages are provided for. Let me quote section 96.

96. The Official Languages Act applies to the Corporation as if it were a federal institution.

That's all very well. The witness after you is Mr. Bruce Phillips, Privacy Commissioner of Canada. We have received his brief in advance, and we know that he will be suggesting the inclusion of a privacy provision, modelled on the style of section 96. His suggested provision reads:

The Privacy Act applies to the Corporation as if it were a federal institution.

According to Mr. Phillips, a provision of this nature would enhance customer and employee confidence in NAV CANADA. How do you feel about that?

[English]

Mr. Crichton: To be as succinct as I can, we do not believe it would be appropriate to require the Privacy Act to apply to a private sector corporation such as NAV CANADA. Having said that, I think it's very important to make the committee aware that in the agreement to transfer that we have entered into with the government, we have made specific provisions, at the request of the government as a transitionary matter, to incorporate what I understand are most of the substantive provisions of the Privacy Act with respect to the transferring of employees.

I sincerely believe that the issues raised there have been dealt with in the course of the negotiations and are reflected in the transaction documents.

[Translation]

Mr. Mercier: But that is not in the bill.

[English]

The Chairman: Thank you.

Mr. Keyes: Do you want to respond to that?

The Chairman: We're running very tight here.

Mr. Crichton: It's a signed agreement, enforceable against the parties in accordance with its terms. As far as I know, that's part of the law of Canada.

The Chairman: Mr. Keyes.

Mr. Keyes: Thank you, Mr. Chairman. Clearly I'm a supporter, with my colleague Mr. Gouk, of the philosophy that government should get out of the business of running business.

I'd like to take this opportunity to thank NAV Canada for presenting us with this fresh and straightforward structure for the future of air navigation in the country. Thanks to the extensive consultations, these gentlemen have to be congratulated for the high degree of consensus that has been reached by the stakeholders and parties that have a stake in a safe, cost-effective and affordable air navigation system in the country.

I want to come back to the issue of labour. Call me an optimist, but I like to see the glass half full on this one. Given their track record of consultation and the work that has been taking place between NAV CANADA and its future employees, it has certainly been demonstrated, even by the witnesses who have come before us, that there might be some fine-tuning or tweaking between the parties, but certainly nothing of the degree that even labour is concerned about.

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It's not my intention to discount anything Mr. Gouk has suggested, but in the event of a disruption of the magnitude Mr. Gouk is suggesting the new not-for-profit corporation may be faced with, there is always going to be the final hammer of peace, order, and good government to ensure that these employees are put back to work. It would then move on, in the context of the Canada Labour Code, to exactly how the final resolution mechanism would take place between the two parties.

I think this is the kind of arrangement between the two parties that has taken place. The track record is there and I wish them the best of luck.

Gentlemen, your concerns about the CRTC have certainly been noted.

I have a quick question on the issue of general aviation. Some individuals brought forward the notion that they would like to see a no-fee structure applied against them, as opposed to the bigger airlines. Can I have an opinion from you on their request?

Mr. Crichton: We're very sensitive to the concerns of general aviation, or perhaps it could be more accurately described as people who own and operate smaller aircraft, because the concerns are shared by people who have privately registered aircraft of the smaller variety, as well as many of Canada's smaller commercial operators.

From the day the first advisory committee looking into this project began, almost two years ago to the day, that issue has been discussed many times. I think there was a pretty strong consensus among all of the parties that special provisions had to be made there.

In Bill C-20 you will see evidence of some of the arrangements that have been made, and I'll just point to two of them. One of them is the requirement that charges for private and recreational aircraft not be unreasonable or undue. I would also point to another clause that perhaps you haven't noticed. I've forgotten the number, but there is an explicit provision to exempt the corporation from the charging principle to permit it to charge flat annual fees or flat fees to a category or categories of users.

That is in the bill at the request of NAV CANADA because we anticipate, when we consult with the users and all the different varieties of users, that for a number of reasons this may be the best way to reflect the spirit and intent of what the consensus was. Such fees obviously would be deemed to be relatively modest.

I also don't think the notion that an entire category of users should be exempt was ever part of the understandings. It would create for NAV CANADA, as well as Canada, some problems respecting certain international commitments. I think it might very well open a Pandora's box of problems that really wouldn't be in anyone's interest.

The Chairman: Thank you.

Could you respond to the question that was raised by the Canadian Airports Council about airports that have a large DND presence? Because DND will not be charged, will the cost for that be borne by all of the users of the system, or will it be specific to that particular profit centre?

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Mr. Crichton: Mr. Chairman, unfortunately I wasn't present when that question was raised.

Let me explain the arrangements that have been made with respect to National Defence and indeed with respect to the military of some other countries.

The first thing to understand is that there are two air navigation systems in Canada. There is a civilian air navigation system, which is what NAV CANADA is purchasing, and there is a parallel military air navigation system.

Each respective system has certain assets, certain responsibilities, certain personnel, and so on. For many years there have been numerous interdepartmental agreements. I think there are over one hundred different specific agreements, MOUs and so on, with respect to exchange of services. For example, in certain areas there is no civilian radar coverage, but there is military radar coverage, and the military agrees to provide the repeating of the radar to the civilian controllers to expedite the movement of civilian traffic, etc.

We have agreed on an arrangement with the Canadian military whereby those exchanges of services will continue at no cost and the Canadian military have agreed to give up their existing right to charge civilian aircraft for the provision of air navigation services. A quid pro quo was established throughout the negotiations that, from NAV CANADA's point of view, should in the long term be a reasonable trade-off with respect to the Canadian military and the exchange of services.

However, we were confronted with an international flavour in the negotiations. Canada has entered into bilateral and multilateral arrangements with other states whereby the state aircraft and the military aircraft are exempt from such charges. We have to respect that obligation.

The Chairman: Perhaps I could restate my question.

The argument put forward was that for certain airports that have a large military presence, if the amount of service provided to the military is a factor in determining the charges within that locale and they cannot derive any revenue for that, will all those charges be borne by the entire system or will they be determined based on site-specific characteristics?

Mr. Crichton: First of all, I'm not aware of any airport in Canada where the military flight movements...if somebody suggested that there was a preponderance of the movements in Winnipeg or even a very significant number of the movements in Winnipeg caused by the military, I don't believe that would be correct.

At any rate, the answer to your question is that the military are exempt from the charges. We are doing a contra, if you will, for services that otherwise would cost the corporation money that in turn would have had to be billed to users. There is a general division between the terminal charges, the cost base of terminal charges among all airports, and the en route costs. The costs of providing services in terminal areas will be calculated and will be borne by all users.

The Chairman: Thank you, Mr. Crichton.

I will not pursue this any further, although I might write to you about this before we get to our clause-by-clause consideration.

Yes, Mr. Gouk.

Mr. Gouk: Mr. Chairman, on a point of clarification, I have a 20-second statement.

In regard to the comment by the parliamentary secretary about peace, order and good government, when he said that legislation would resolve a strike situation, I point out that if Parliament happened to be in recess it could take upwards of a week to recall Parliament, including the recall of the Minister of Transport from his west of the west coast of B.C. riding.

The Chairman: Thank you, Mr. Gouk.

Thank you, gentlemen. I appreciate the time you've taken to be here and wish you the very best of luck in this.

Might we now have Mr. Phillips?

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Mr. Phillips, welcome. You are our last witness on this phase of these hearings. Could you introduce the people with you and begin? You have about ten minutes for your remarks.

Mr. Bruce Phillips (Privacy Commissioner of Canada): I'll do my best, Mr. Alcock. I was about to say that maybe the last will be the best, but you'll be the judge of that, not me.

Thank you very much. Just let me introduce Holly Harris, the general counsel for the Office of the Privacy Commissioner, and Julien Delisle, the executive director.

By way of introduction, I think it's worth... I haven't had the opportunity to meet all the members of this committee before, although I see Mr. Comuzzi here, one distinguished citizen of my hometown. I'm always happy to give Thunder Bay a plug.

Mr. Comuzzi: Thank you, Bruce. There are a few of us left.

Mr. Phillips: As Privacy Commissioner, I am independent of and do not report to any department of government. I am an officer of Parliament, one of those strange animals, and I report only and exclusively to the Parliament of Canada. I am the watchdog on privacy issues for the members of this committee and for every member of Parliament. It is my duty, as well as my pleasure, to bring to your attention issues that I think you should know about and that you should have an opportunity to consider.

In connection with this particular issue, I do so with more than normal concern, principally because of the large numbers of people involved, because of the immense amount of personal information that is involved, and because of the larger, broader issue of privatization as it affects an important Canadian civil right.

The devolution of previously government-operated activities to the private sector has been going on for some time. I'm not here to comment on the principle of that, nor on the bill and its merits, or otherwise in terms of turning the air navigational system over to the private sector. That is not my business. I am concerned solely with the impact in terms of the privacy rights of Canadians.

Broadly speaking, the Privacy Act applies to all federal government informational collection, retention, usage and disposal and sets out a code of fair information practices to which every employee of the Government of Canada is entitled. Similarly, any information gathered by the Government of Canada in its function as the operator of a air navigational system similarly enjoys the protections of the Privacy Act, if that information is personal information.

By way of example, I will cite a private pilot filing a flight plan from Thunder Bay to Dryden, Ontario. That is personal information. As a consequence, its usage, control and disposal would be subject to the Privacy Act.

As a consequence of Bill C-20, notwithstanding what I heard from the previous witness, all of the provisions of the Privacy Act concerning this information will fall away. In the first instance, that will affect some 6,500 people whose employment will be transferred to the private sector. As the system takes over and develops, it will also apply to the millions of pieces of personal information generated by the operation of the air navigational system.

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I might say the same observations would apply to almost any devolutionary project undertaken by the Government of Canada to transfer activities to the private sector. This one is particularly important because of its size, but the others are no less important in the sense that an important civil right is being diminished.

I took note particularly of what Monsieur Mercier had to say, that the responsibility of the Government of Canada with respect to rights in the process of privatization has not been entirely neglected, because in this particular bill there is a provision requiring the Official Languages Act to be respected as though NAV CAN were a federal institution. I would make the same argument on behalf of ensuring that the privacy rights of Canadians, both the employees of the new corporation and the thousands and thousands of clients, operators of aircraft and travellers, also be protected by including in this statute a simple provision that the Privacy Act would continue to apply.

The previous witness did say it was his understanding that the provisions of the existing Privacy Act would substantially apply to the new corporation. That is not my understanding. I know this only informally, so perhaps you may want to pursue it more directly with other people, but as I understand the arrangement, particularly for employee records, persons being offered transfer from the government to the private corporation will be asked to give their permission for the transfer of their records. As far as I know, that is the only discretion being offered here, and I would not argue that it constitutes informed consent in any way. If your job is going to depend on whether you agree or not agree to the transfer of your records, there's not much doubt about what the answer is going to be.

I have raised this issue with departments of government, both with respect to NAV CANADA and with respect to the general issue involved. I must be fair and point out that the existence of the issue is recognized by the relevant government departments. I think it's fair to say also that they are wrestling with the problem.

There is a comprehensive answer, which is the extension of legal privacy rights across the whole of Canadian society, and that's under consideration now. But what is required for a great many of these devolutionary schemes is some interim answer. I put it to you that you might wish to consider taking the same approach to the Privacy Act as has been taken to the Official Languages Act.

I note that NAV CANADA is a monopoly. It is a not-for-profit corporation and will not face any competitive problem with respect to its operations. That might - might, I say - provide some basis for arguing on behalf of an exemption, although I would point out to this committee that Canada Post, though it became a corporation, continues to operate with the Privacy Act in a highly competitive business. It has not impaired their operation.

That is the substance of my position and why I came here today. I wanted to bring this to the committee's attention. It's a serious problem.

Let me conclude by saying this is an issue that I hope will seize the attention of Parliament more and more as the days go on, because there is a rising level of public concern with informational privacy, thanks to the marriage of modern computer and communications technology. By our last surveys, 90% of the people of this country are very concerned that their control over their information and openness in the process is being lost. I expect that's going to continue and not diminish.

So there is an issue here that is worthy of the attention of parliamentarians, and certainly worthy of the attention of this committee.

Thank you.

The Chairman: Thank you, Mr. Phillips.

Mr. Mercier.

[Translation]

Mr. Mercier: Mr. Phillips, you have heard what NAV CANADA's president said in response to my question on the lack of a privacy provision in the bill.

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Essentially, he said that a privacy provision was not necessary, because the federal government and NAV CANADA have signed an agreement which contains provisions to protect privacy.

Have you seen this agreement? Specifically, have you seen the provisions which NAV CANADA's president assures me protect privacy? If you have, could you tell me why you consider them inadequate? You must find them inadequate in some way, since you are asking for their inclusion in the bill.

[English]

Mr. Phillips: Merci, monsieur Mercier.

No, I am not aware of any such agreement. The only undertaking I'm aware of by NAV CAN with respect to privacy is contained in that portion of their agreement dealing with transfer of records. The transfer of employee records from Transport Canada to NAV CAN will be subject to an agreement by the employees themselves that they are willing to have their records transferred. That's all. Once the records are transferred, they come under the exclusive and unfettered control of NAV CANADA. There is no protection of the privacy rights of the employees as currently expressed by their relationship with the Government of Canada.

The same situation applies to information on clients, the people who will use the NAV CANADA service. Am I making myself clear on that point? If I misunderstand it, then you might wish to ask NAV CANADA to clarify it, but I understand that this piece of paper I have is an extract from the agreement concerning records.

The fair information practices of the Privacy Act provide the following things. Employees have access to their records. They have the right to correct them and to annotate them. The subsequent unrelated use of their records requires their consent. This is why they have to give their consent now to the transfer. None of those things will apply, at least as a matter of obligation, on the part of NAV CANADA. They might agree to them as a matter of corporate policy, but they won't be obliged to do so.

It's a long stretch to argue that what is a right established in law today becomes a discretionary right at the whim of the company itself tomorrow. That's the issue here.

[Translation]

Mr. Mercier: Thank you, Mr. Phillips.

[English]

The Chairman: Mr. Gouk.

Mr. Gouk: Thank you. Gentlemen, I'll tell you first that after I've asked my question I'm going to have to run, because I'm ten minutes late for my next appointment already.

The information you've brought forward is certainly interesting. My initial reaction is to agree with you that it is a concern. I was in the air navigation system myself for a number of years. I would have some of the same concerns that you have raised.

However, if what you are suggesting is valid, which I think it is, then why in your position do you not approach this in a broader sense and have an amendment of the Privacy Act itself to declare that any time something changes from government to the private sector, such as CN and a number of other things that have either happened or are about to happen, that be the rule and the condition of that transfer? Would that not take care of it, rather than what is a relatively piecemeal approach of amending Bill C-20, in this case?

Mr. Phillips: That's a very interesting suggestion, sir. I would defer any kind of a categorical answer and ask Ms Harris whether she has any opinion on that in terms of its impact on the Privacy Act.

Our own view in my office is that the government really ought to extend privacy rights to all federally regulated institutions. Therefore, we wouldn't be having this discussion at all because NAV CAN would be automatically covered. That may happen someday, but in the meantime we have a problem here. We have a problem today. We have the problem of 6,500 employees of Transport Canada and millions and millions of pieces of personal information generated by the air navigation system.

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So let me say that's a pretty interesting suggestion, and one we'll certainly pursue. But it does not answer this immediate problem, and I'm concerned about what will happen in the next few months.

Mr. Gouk: I have some loose ends, but I don't know how we can tie them up in a short period. So I'll take what he said on that basis.

Mr. Keyes: Mr. Gouk brings up a good point. An appropriate venue for this would be an amendment to the Privacy Act itself.

I understand, Mr. Phillips, you have a job to do, but it does appear as though in this particular case you're singling out Bill C-20 to decide to go after this particular amendment rather than the Privacy Act itself and doing the work of the privacy commission through an amendment there.

Your response to Mr. Gouk was that we have Bill C-20 now and we have a problem here. But do we have a problem if none of these concerns have been expressed by the unions who have come forward and addressed us here? If they haven't expressed their concerns, why are we playing at big brother government?

Mr. Phillips: Mr. Keyes, with great respect, I don't think it's playing at big brother government to stand up on behalf of basic civil rights, ever, at any time, in any place.

Mr. Keyes: If it's brought forward by the employees.

Mr. Phillips: Well, frequently people aren't as aware of some of these problems as they might be. Some unions in the government are quite concerned about this issue, and perhaps some are less so. I haven't talked to them. It may be that for other reasons, good relations with their future employers or something... I don't know why they might have remained silent on this issue.

I would simply point out that the Supreme Court itself has argued that privacy is the fundamental value that is expressed by section 8 of the Charter of Rights and Freedoms, having to do with unreasonable search. This is a basic right, and we all have a common interest in protecting it.

Mr. Keyes: That being the case, I would agree with you that where we want to go with this thing is to the Privacy Act itself, making an amendment there to carry out your expressions here today on an overall scale.

Does this mean that today it is Bill C-20 and you're going to keep an eye on some other legislation that may commercialize or privatize and then go after that one, and then something else, and then something else? You're going to be a very busy person. Maybe you hope to continue in your occupation, but let's get something a bit broader and maybe put our efforts in that direction, rather than single out one piece of legislation.

Mr. Phillips: Mr. Keyes, I certainly wouldn't want to debate the merits of your suggestion. It's a very good one, and in the end it is the complete and comprehensive answer.

With respect to whether I'm going to keep coming up, probably it's fair to say that I have missed this issue along the way. We have a very small staff. We try to keep abreast of as many things as we can. There have been other privatization issues that maybe we should have come up to the Hill to talk about, but they are multiplying now. There are going to be more and more of them.

Even if this committee does not see merit in the specific suggestion I make, it's important that at least this committee and some other organizations in the House be seized of this issue and accept the proposition that there is a serious problem developing here that must be dealt with.

So, yes, in the future I will probably seize every opportunity to come up and do a little haranguing on this issue. But I'm not doing this just to make a lot of noise. It is important, and it's going to be more so.

Mr. Keyes: And I appreciate your attendance here today, Mr. Phillips.

Mr. Jordan: I don't think you can be too careful, but isn't there some provision in Bill C-20 for at least an acknowledgement to be conscious of the need to respect the Privacy Act? Is it not mentioned at all?

Mr. Phillips: No, the Privacy Act is not mentioned.

Mr. Jordan: If it were to be rewritten in such a way as to recognize the requirements of the Privacy Act, would that satisfy you?

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Mr. Phillips: Well, if you're going to go that far, I think you might as well go the whole way. I was taken with the observation of the previous witness when he said he thinks we've agreed to substantially respect the Privacy Act anyway. If that is so, why would he object to having it in this statute?

Mr. Jordan, that's an interesting idea. If language of that kind were to be inserted into the statute, it would certainly be better than what's there right now, which is nothing at all.

Mr. Jordan: Of course, it has to go two ways. You'd have to be prepared not to get hung up on every possible, conceivable technicality in the writing of it if you go at it with the idea that you want a deal to be made with NAV CANADA, and with the best of intentions on their part. You're not assured that they have any intention of having any recognition of the Privacy Act as you sit now, are you?

Mr. Phillips: No, I would not say that. I would not argue, Mr. Jordan, that there is not the best will in the world on the part of the executives and directors of the company. I take at face value their commitment to respect the rights of their employees and their clients - and let me emphasize their clients, because they're far more numerous than their employees.

The difference here is whether or not a basic civil right is going to be weighed in terms of its importance and the degree to which it's going to apply to anybody. Whether it's going to be done by a corporation with many other considerations, or whether it's going to be done by a basic standard available to everybody by way of a law - that is the essential difference here.

Mr. Jordan: You're steeped in this stuff because it's your job to be, right?

Mr. Phillips: Yes, but we're all involved here.

Mr. Jordan: I know that. But on the other hand, if you can put yourself in NAV CANADA's position - the one in which they are trying to put this thing together - I think an acknowledgement can at least be made note of. They did acknowledge the fact that there's an awareness out there that the privacy of individuals and future employees would have to be recognized - or whatever it is that you want to do. Would that not satisfy you?

The Chairman: Thank you, Mr. Jordan.

Mr. Phillips: It would certainly be something.

Mr. Jordan: It would be helpful.

Mr. Phillips: May I, Mr. Alcock, make just one more observation on this general subject about the relationship of corporations to privacy law? Corporations, reflexively almost, do not welcome the necessity to observe any more law and regulation than they can get away with, and I understand that. But I am not impressed by the argument that it represents any real impediment to the efficient and economic conduct of business.

We ought not to forget that in Canada, the province of Quebec - alone, unhappily - has a privacy law that covers all commercial activity in Quebec. It's been that way for several years, and it has not proved in any way a serious burden to business. In fact, the stories we get back say that most businesses are finding this is an easy act to work with. It doesn't require huge bureaucracy, and in fact it makes business better because it improves consumer and public confidence in the way things are done.

Mr. Keyes: Why is it taking you so long to bring forth the amendment?

Some hon. members: Oh, oh!

The Chairman: Mr. Phillips, thank you very much.

Members, we meet next Tuesday morning in room 209 in the West Block to begin our joint hearings with the Standing Committee on Agriculture and Agri-Food. The subject is hopper cars.

The meeting is adjourned.

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