Chair and CEO Scott Streiner addresses the Economic Club of Canada on May 26, 2016
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It’s a pleasure to be here today, 10 months after I assumed leadership of the Canadian Transportation Agency. That’s still early enough, I think, to look at the organization and issues before it with fresh eyes, but long enough to have developed some views and plans. I would like to share some of these with you, and in particular, our plan to embark on the first major overhaul in a generation of the regulations administered by the Agency. But first, some history and context.
A (re-)introduction to the Agency
The Agency has been around since 1904 and gone through various incarnations: the Board of Railway Commissioners, the Board of Transportation Commissioners, the Canadian Transport Commission, the National Transportation Agency, and, since 1996, the Canadian Transportation Agency.
We are Canada’s longest-standing administrative tribunal – though not the only one. Successive governments and Parliaments have decided to establish arms-length bodies to oversee all major sectors falling under federal jurisdiction, the largest of which are telecommunications, banking, and of course, transportation. These bodies are relied upon to deliver regulatory and/or adjudicative functions with impartiality, based on their extensive subject-matter expertise and the evidence before them.
The Agency performs both functions, and has three core responsibilities:
- Its oldest mandate – and the one with the greatest economic impact – is to keep the national transportation system running efficiently and smoothly.
- A more recent mandate is to protect the fundamental human right of persons with disabilities to an accessible transportation system.
- The newest mandate – and the one that generates the largest number of applications to the Agency – is to provide consumer protection for air travellers.
To deliver these mandates, the Agency has three types of tools at its disposal:
- It makes and applies rules of the game, which can take the form of binding regulations or more voluntary guidelines, codes of practice, or interpretation notes.
- It resolves disputes using a range of approaches, from relatively informal facilitation and mediation to more formal arbitration and adjudication.
- And it provides information on the transportation system, the rights and responsibilities of transportation providers and users, and its own legislation and services.
Our responsibilities are distinct from those of the Transportation Safety Board, which investigates accidents and makes recommendations, and Transport Canada, which regulates for safety and security, manages grant and contribution programs, and is the main source of public service policy advice to the Minister of Transport.
The Agency’s enabling statute is the Canada Transportation Act. That Act’s policy statement makes it clear that competition and market forces should be the primary drivers of reasonable prices, good service, and innovation in the transportation sector. The Agency’s role is to help create a level playing field and to act in a targeted fashion when there is a market failure or when market forces alone cannot produce desired outcomes.
The national transportation system
The Agency’s evolution over its 112 years of existence has reflected the development of the country, the shifting priorities and attitudes of citizens, and changes in the national transportation system itself.
The enduring importance of that system is rooted in Canada’s geography: ours is a vast country whose population, agricultural production, factories, and natural resources are widely dispersed.
For this reason, getting people and goods from one place to another has always been a matter of national interest – and indeed, national identity.
Canada's very establishment involved transportation-related commitments. The British North America Act contained a clause providing for construction of a railway connecting the country's founding provinces. And the Terms of Union with British Columbia, Prince Edward Island, and Newfoundland each required the extension of transportation links to those provinces.
Some of our most iconic imagery relates to transportation. Think of:
- Indigenous peoples and voyageurs canoeing across thousands of rivers and lakes.
- Lord Strathcona hammering in the last spike of the longest railway in the world.
- Alexander Graham Bell's Silver Dart taking off from the frozen surface of Baddeck Bay.
- The thousands of immigrants arriving at Pier 21 in Halifax, and boarding trains to begin a new life in the West.
It is no exaggeration to say that transportation built Canada, as Canadians built the transportation system. Transportation, after all, is about people:
- The visionaries, financiers, and labourers who constructed the system, some of whom worked under difficult conditions and paid a heavy price.
- The million Canadians directly employed in the transportation sector today.
- The farmers, miners, and manufacturers who depend on the system to get their goods to market.
- The entrepreneurs and employees in the retail and tourism sectors who rely on the system to bring them merchandise and visitors.
- Everyone who commutes to work, orders products online, and travels to see family, friends, or new places.
Just how important is the transportation system to Canada’s prosperity and social fabric? Let me share a few numbers:
- 1.7 trillion dollars' worth of Canada’s economy is tied to transportation.
- Last year, 287 million metric tonnes of freight travelled by rail in Canada, including 24 million tonnes of wheat and 26 million tonnes of wood. That's enough wheat to fill 250,000 hopper cars and enough wood to build 650,000 detached homes.
- Canada's ports handle 400 billion dollars' worth of goods every year. That’s $11,000 for each man, woman and child in the country.
- Some 50 million passengers flew in Canada in 2015. That’s the equivalent of 2525 Air Canada centres.
But as deep as the transportation system’s roots are, and as big and complex as the system is, it is facing major challenges:
- The ongoing globalization of trade and travel provides opportunities for Canadian companies to grow. But it also increases competition, creating constant pressure on both transportation providers and shippers to find efficiencies.
- The emergence of new technologies is transforming how transportation companies are run and services are bought. Two decades ago, most of us booked our flights with travel agents; today, we usually do so online. New technologies allow for increased automation, faster movement, shorter turnaround times, and reduced carbon emissions. But they also increase transparency and raise expectations for ever-better service at ever-lower cost.
- And as Canadians’ deference has declined and social media have exploded, consumers, shippers, communities, and travellers with disabilities have all become more assertive about their interests and rights.
Transportation providers are responding to these challenges and opportunities with new business strategies:
- The airline industry is making growing use of international alliances and code sharing, unbundling fares into individual components that travellers can choose whether or not to purchase, and setting up no-frills, low-cost operations.
- Railway companies are achieving velocity and productivity gains through precision scheduling and unit trains whose length would have astonished railroaders just a decade or two ago.
- Marine shipping companies are consolidating through mergers and alliances, building vessels of unprecedented size, and sending large parts of their older fleets to the scrapyard.
- Airports are putting ever-increasing emphasis on facilitation in order to get travellers through their terminals quickly.
- Ports and inland terminals are adopting increasingly sophisticated intermodal and logistics management.
The system’s users and neighbours are also responding to broader trends and pressures – and to changes in providers’ business models:
- Shippers are raising their voices when they think railway companies are failing to deliver appropriate service. Exhibit A comes from the winter of 2013-14, which witnessed difficult weather conditions, a record-breaking grain harvest, noisy public sparring between grain shippers and railway companies, and passage by Parliament of special legislation requiring CN and CP to moved minimum amounts of grain each week and allowing for extended interswitching limits in the Prairies.
- Consumers are turning to the Internet to find the best possible fares and challenge air carriers for what they see as price or service shortcomings.
- Persons with disabilities – individually and through advocacy groups – are demanding accessible facilities and services, and taking legal action to secure their rights.
- Community groups are becoming increasingly vocal regarding issues stemming from the proximity of rail and airport operations to residential neighbourhoods.
These changing conditions inevitably prompt questions around public policy and administration. Some of you may have been present at the Economic Club event on April 27, when the Minister of Transport announced that consultations would be held over the spring and summer about the future of transportation. The Minister indicated that this process will consider, though not be limited to, the recommendations of the Canada Transportation Act Review, which were tabled in Parliament on February 25. As the arms-length administrator of many provisions of the Act, the Agency is ready to provide whatever data and analysis would be helpful as Minister Garneau and his officials gather information and weigh options.
Responding to change
Even as possible legislative amendments are being studied, the Agency needs to ensure that the ways it applies the Act keep pace with the on-the-ground realities faced by transportation companies, the travellers and shippers who use their services, and the communities where they operate.
Let me describe some of the steps we’re taking to make sure this happens.
The first was to make sure the organization was ready to meet the challenges before it. On April 1, the Agency was restructured to achieve internal synergies and efficiencies, emphasize delivery, and reinforce capacity in key areas. This reorganization included a regrouping and reorienting of functions to create a Centre of Expertise for Accessible Transportation, an Analysis and Regulatory Affairs team, a specialized Rail and Marine Alternate Dispute Resolution unit, and an integrated Compliance Monitoring group.
The focus internally has now turned to encouraging collaboration across organizational boundaries, fostering innovation, and tightening up business processes.
These changes build on the Agency’s strengths – its expertise, its impartiality, its professional and dedicated workforce – while positioning it to be agile and effective in a fast-moving world. We are now ready to undertake a series of initiatives to respond to evolving realities. In the interests of time, I will highlight three.
Regulatory Modernization Initiative
The biggest relates to the first of the three tools I mentioned earlier: rule-making. I am pleased to announce that the Agency is launching an initiative to review and modernize the full suite of regulations it is responsible for applying. Many of these regulations date back 20 or 25 years and have not kept up with changes in business models, user expectations, and best practices in the regulatory field. An update is overdue.
The Regulatory Modernization Initiative will be anchored in three goals:
- Ensuring that industry’s obligations are clear, predictable, and relevant to a range of existing and emerging business practices.
- Ensuring that the demands associated with compliance are only as high as necessary to achieve the regulations’ purposes.
- Facilitating the efficient and effective identification and correction of instances of non-compliance, both because compliance with regulations is inherently important but also because it helps to guarantee a level playing field and that players who respect the rules aren't penalized when others don't.
These goals will prompt some pretty fundamental questions, such as:
- Could we achieve a more accessible transportation system by converting existing voluntary codes of practice into regulations?
- Should accessibility-related standards already established for some carriers through the adjudication of cases – such as the one-person-one-fare rule for domestic Air Canada and WestJet flights – apply more widely in the interest of a level playing field and to protect the rights of persons with disabilities?
- Could the tariffs that lay out the terms and conditions for air travel be clearer, more consistent, and less legalistic so that passengers better understand their rights and responsibilities?
- Could we lighten the administrative burden on air carriers who engage in code sharing?
- Could we streamline the issuance of international charter permits?
- Could we find a more timely way of updating regulated rail rates to reflect evolving market conditions?
- Should there be changes to rail interswitching rules?
These are complex matters that will need broad input. To get that input, we will actively engage a wide range of stakeholders, including the transportation industry, shippers, consumer advocates, and disability rights organizations. And we’ll make it easy for all interested Canadians to share their views with us through online consultations.
The initiative will proceed in phases. Phase 1 will focus on accessibility; phase 2, on consumer protection for air travellers; phase 3, on air licensing requirements; and phase 4, on rail matters. We will proceed with care, but also with a sense of urgency. We plan to complete consultations and the drafting of modernized regulations by the end of 2017, and to move through approvals and implementation of those regulations in 2018. This is an ambitious schedule, but it is within the realm of the possible. Keep watching this space.
Moving to the Agency’s second tool, dispute resolution, we intend to actively promote and leverage our mediation capacity – particularly for rail-related issues, since the vast majority of air travel applications are already resolved through informal facilitation. Settlements achieved through mediation cost less, take less time, and do more to preserve business relationships than resolutions arrived at through adjudication. These advantages are especially important to smaller shippers and local communities, who may find the prospect of drawn-out, fractious adjudications daunting. If we can use neutral, confidential, and specialized mediation services to help nip in the bud issues between railway companies and their customers and neighbours, everyone wins.
With respect to the Agency’s third tool, information, we have set ourselves a simple objective: providing and gathering more of it. Data, dialogue, transparency, and the sharing of perspectives and insights are in all parties’ interests.
Increased engagement will take a variety of forms:
- We will consult more on major files. Last January, for example, we posted a discussion paper on whether resellers should be required to hold an air licence, and received over two dozen submissions that informed our March 29 determination on the matter. And we have just completed a consultation with the freight rail industry on implementation of new insurance requirements. This type of engagement on key files will become the norm.
- We will return to oral hearings, after a nine-year hiatus, for selected cases where they will help us make sense of complex issues, test contested evidence, and hear from a range of interested parties.
- We will work with stakeholders representing disparate interests to develop objective information. In March, for example, we released guidance about noise and vibration from idling locomotives which was developed in consultation with representatives from the railway industry and municipal governments.
- We will get information to Canadians in new and innovative ways. We have, for instance, produced short videos on the rights and responsibilities of air travellers and air carriers – which are already available on our website and YouTube, and will soon be coming to screens at an airport near you.
Indeed, this very speech is an expression of the Agency’s commitment to sharing information and views. So let me conclude by emphasizing my conviction that we are most effective when we spend time talking to and hearing from stakeholders and other interested Canadians. As long as we proceed thoughtfully and remain within appropriate boundaries, our ability to make and apply rules fairly and resolve disputes impartially will not be impaired by engagement. The opposite is true.
Ultimately, the Agency, like any government institution, is more a means than an end. We have a job to do. By doing that job well, we help ensure a fluid national transportation system that provides employment and income for a large number of Canadian families. A system that meets the needs of those who grow our food, mine and harvest our natural resources, manufacture our products, and ship our goods. A system that is accessible to Canadians with disabilities, and offers good service to all travellers. A system that unlocks wealth, drives prosperity, and connects Canadians to one another and to the world. A system, in short, that works to the benefit of the country as a whole.
It is a privilege to lead the Agency during this time of change, an honour to follow in the footsteps of the 31 Canadians who preceded me in this role, and as I said at the outset, a pleasure to be with you today. The Agency, like the transportation system and its users, is on the move. I want to thank the Economic Club for arranging this opportunity to provide an overview of our strategic directions, and thank all of you for coming to listen. Now it’s time to turn the microphone around and invite your questions and comments.